Supplemental Consolidating Financial Information | Supplemental Consolidating Financial Information Pursuant to the indentures governing Arch Coal, Inc.’s senior notes, certain wholly-owned subsidiaries of the Company have fully and unconditionally guaranteed the senior notes on a joint and several basis. The following tables present consolidating financial information for (i) the Company, (ii) the issuer of the senior notes, (iii) the guarantors under the senior notes, and (iv) the entities which are not guarantors under the senior notes (Arch Receivable Company, LLC and the Company’s subsidiaries outside the United States): Condensed Consolidating Statements of Operations and Comprehensive Income Year Ended December 31, 2015 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 2,573,260 $ — $ — $ 2,573,260 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 22,378 2,186,804 — (2,749 ) 2,206,433 Depreciation, depletion and amortization 3,775 375,568 2 — 379,345 Amortization of acquired sales contracts, net — (8,811 ) — — (8,811 ) Change in fair value of coal derivatives and coal trading activities, net — (1,583 ) — — (1,583 ) Asset impairment and mine closure costs 15,437 2,612,866 — — 2,628,303 Losses from disposed operations resulting from Patriot Coal bankruptcy 116,343 — — — 116,343 Selling, general and administrative expenses 69,384 25,737 5,725 (2,063 ) 98,783 Other operating expense (income), net 5,869 13,021 (4,192 ) 4,812 19,510 233,186 5,203,602 1,535 — 5,438,323 Loss from investment in subsidiaries (2,574,565 ) — — 2,574,565 — Loss from operations (2,807,751 ) (2,630,342 ) (1,535 ) 2,574,565 (2,865,063 ) Interest expense, net Interest expense (478,432 ) (26,284 ) (4,916 ) 111,653 (397,979 ) Interest and investment income 27,510 82,881 5,692 (111,653 ) 4,430 (450,922 ) 56,597 776 — (393,549 ) Net loss resulting from early retirement of debt and debt restructuring (27,910 ) — — — (27,910 ) Loss from continuing operations before income taxes (3,286,583 ) (2,573,745 ) (759 ) 2,574,565 (3,286,522 ) Provision for (benefit from) income taxes (373,441 ) — 61 — (373,380 ) Net loss (2,913,142 ) (2,573,745 ) (820 ) 2,574,565 (2,913,142 ) Total comprehensive loss $ (2,918,198 ) $ (2,579,601 ) $ (820 ) $ 2,580,421 $ (2,918,198 ) Condensed Consolidating Statements of Operations and Comprehensive Income Year Ended December 31, 2014 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 2,937,119 $ — $ — $ 2,937,119 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 3,016 2,566,572 — (3,395 ) 2,566,193 Depreciation, depletion and amortization 5,154 413,559 35 — 418,748 Amortization of acquired sales contracts, net — (13,187 ) — — (13,187 ) Change in fair value of coal derivatives and coal trading activities, net — (3,686 ) — — (3,686 ) Asset impairment and mine closure costs 3,642 20,471 — — 24,113 Selling, general and administrative expenses 79,902 29,739 6,626 (2,044 ) 114,223 Other operating income, net (4,480 ) (15,726 ) (4,987 ) 5,439 (19,754 ) 87,234 2,997,742 1,674 — 3,086,650 Loss from investment in subsidiaries (13,085 ) — — 13,085 — Loss from operations (100,319 ) (60,623 ) (1,674 ) 13,085 (149,531 ) Interest expense, net Interest expense (463,823 ) (26,137 ) (4,259 ) 103,273 (390,946 ) Interest and investment income 31,389 74,511 5,131 (103,273 ) 7,758 (432,434 ) 48,374 872 — (383,188 ) Loss from continuing operations before income taxes (532,753 ) (12,249 ) (802 ) 13,085 (532,719 ) Provision for (benefit from) income taxes 25,600 — 34 — 25,634 Net loss (558,353 ) (12,249 ) (836 ) 13,085 (558,353 ) Total comprehensive loss $ (592,804 ) $ (34,439 ) $ (836 ) $ 35,275 $ (592,804 ) Condensed Consolidating Statements of Operations and Comprehensive Income Year Ended December 31, 2013 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 3,014,357 $ — $ — $ 3,014,357 Costs, expenses and other — Cost of sales (exclusive of items shown separately below) 9,117 2,657,583 — (3,564 ) 2,663,136 Depreciation, depletion and amortization 5,949 420,458 35 — 426,442 Amortization of acquired sales contracts, net — (9,457 ) — — (9,457 ) Change in fair value of coal derivatives and coal trading activities, net — 7,845 — — 7,845 Asset impairment and mine closure costs 78,150 142,729 — — 220,879 Goodwill impairment — 265,423 — — 265,423 Selling, general and administrative expenses 88,820 39,825 7,038 (2,235 ) 133,448 Other operating income, net 4,209 (34,856 ) (5,370 ) 5,799 (30,218 ) 186,245 3,489,550 1,703 — 3,677,498 Loss from investment in subsidiaries (328,889 ) — — 328,889 — Income (loss) from operations (515,134 ) (475,193 ) (1,703 ) 328,889 (663,141 ) Interest expense, net Interest expense (449,614 ) (24,747 ) (4,214 ) 97,308 (381,267 ) Interest and investment income 30,285 68,248 5,378 (97,308 ) 6,603 (419,329 ) 43,501 1,164 — (374,664 ) Other non-operating expense Net loss resulting from early retirement of debt (42,921 ) — — — (42,921 ) Loss from continuing operations before income taxes (977,384 ) (431,692 ) (539 ) 328,889 (1,080,726 ) Provision for (benefit from) income taxes (335,552 ) — 54 — (335,498 ) Loss from continuing operations (641,832 ) (431,692 ) (593 ) 328,889 (745,228 ) Income from discontinued operations, net of tax — 103,396 — — 103,396 Net Loss (641,832 ) (328,296 ) (593 ) 328,889 (641,832 ) Total comprehensive income (loss) $ (587,633 ) $ (304,278 ) $ (593 ) $ 304,871 $ (587,633 ) Condensed Consolidating Balance Sheets December 31, 2015 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Assets Cash and cash equivalents $ 337,646 $ 100,428 $ 12,707 $ — $ 450,781 Short term investments 200,192 — — — 200,192 Restricted cash — — 97,542 — 97,542 Receivables 12,463 3,153 124,581 (4,430 ) 135,767 Inventories — 196,720 — — 196,720 Other 83,017 38,794 969 — 122,780 Total current assets 633,318 339,095 235,799 (4,430 ) 1,203,782 Property, plant and equipment, net 7,747 3,610,869 — 413 3,619,029 Investment in subsidiaries 4,887,905 — — (4,887,905 ) — Intercompany receivables — 2,253,312 — (2,253,312 ) — Note receivable from Arch Western 675,000 — — (675,000 ) — Other 39,302 243,806 819 — 283,927 Total assets $ 6,243,272 $ 6,447,082 $ 236,618 $ (7,820,234 ) $ 5,106,738 Liabilities and Stockholders’ Equity (Deficit) Accounts payable $ 8,495 $ 119,633 $ 3 $ — $ 128,131 Accrued expenses and other current liabilities 162,268 170,575 1,037 (4,430 ) 329,450 Current maturities of debt 5,096,460 10,750 — — 5,107,210 Total current liabilities 5,267,223 300,958 1,040 (4,430 ) 5,564,791 Long-term debt — 30,953 — — 30,953 Intercompany payables 2,043,308 — 210,005 (2,253,313 ) — Note payable to Arch Coal — 675,000 — (675,000 ) — Asset retirement obligations 1,005 395,654 — — 396,659 Accrued pension benefits 12,390 14,983 — — 27,373 Accrued postretirement benefits other than pension 79,826 19,984 — — 99,810 Accrued workers’ compensation 24,247 88,023 — — 112,270 Deferred income taxes — — — — — Other noncurrent liabilities 59,976 58,847 348 — 119,171 Total liabilities 7,487,975 1,584,402 211,393 (2,932,743 ) 6,351,027 Stockholders’ equity (deficit) (1,244,703 ) 4,862,680 25,225 (4,887,491 ) (1,244,289 ) Total liabilities and stockholders’ equity (deficit) $ 6,243,272 $ 6,447,082 $ 236,618 $ (7,820,234 ) $ 5,106,738 Condensed Consolidating Balance Sheets December 31, 2014 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Assets Cash and cash equivalents $ 572,185 $ 150,358 $ 11,688 $ — $ 734,231 Short term investments 248,954 — — — 248,954 Restricted cash — — 5,678 — 5,678 Receivables 9,656 15,933 211,043 (4,615 ) 232,017 Inventories — 190,253 — — 190,253 Other 89,211 41,455 952 — 131,618 Total current assets 920,006 397,999 229,361 (4,615 ) 1,542,751 Property, plant and equipment, net 10,470 6,442,623 2 363 6,453,458 Investment in subsidiaries 7,464,221 — — (7,464,221 ) — Intercompany receivables 2,021,110 — (2,021,110 ) — Note receivable from Arch Western 675,000 — — (675,000 ) — Other 131,884 300,058 1,572 — 433,514 Total assets $ 9,201,581 $ 9,161,790 $ 230,935 $ (10,164,583 ) $ 8,429,723 Liabilities and Stockholders’ Equity Accounts payable $ 23,394 $ 156,664 $ 55 $ — $ 180,113 Accrued expenses and other current liabilities 85,899 220,017 1,095 (4,615 ) 302,396 Current maturities of debt 27,625 9,260 — — 36,885 Total current liabilities 136,918 385,941 1,150 (4,615 ) 519,394 Long-term debt 5,084,839 38,646 — 5,123,485 Intercompany payables 1,817,755 — 203,355 (2,021,110 ) — Note payable to Arch Coal — 675,000 — (675,000 ) — Asset retirement obligations 981 397,915 — — 398,896 Accrued pension benefits 5,967 10,293 — — 16,260 Accrued postretirement benefits other than pension 4,430 28,238 — — 32,668 Accrued workers’ compensation 9,172 85,119 — — 94,291 Deferred income taxes 422,809 — — — 422,809 Other noncurrent liabilities 50,919 102,461 386 — 153,766 Total liabilities 7,533,790 1,723,613 204,891 (2,700,725 ) 6,761,569 Stockholders’ equity 1,667,791 7,438,177 26,044 (7,463,858 ) 1,668,154 Total liabilities and stockholders’ equity $ 9,201,581 $ 9,161,790 $ 230,935 $ (10,164,583 ) $ 8,429,723 Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2015 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Cash provided by (used in) operating activities $ (445,136 ) $ 314,535 $ 86,234 $ — $ (44,367 ) Investing Activities Capital expenditures (1,108 ) (117,916 ) — — (119,024 ) Additions to prepaid royalties — (5,871 ) — — (5,871 ) Proceeds from disposals and divestitures — 2,191 — — 2,191 Purchases of short term investments (246,735 ) — — — (246,735 ) Proceeds from sales of short term investments 290,205 — — — 290,205 Proceeds from sales of equity investments and securities — 2,259 — — 2,259 Withdrawals (deposits) of restricted cash — — (91,864 ) — (91,864 ) Investments in and advances to affiliates (913 ) (10,589 ) — — (11,502 ) Cash provided by (used in) investing activities 41,449 (129,926 ) (91,864 ) — (180,341 ) Financing Activities Payments on term loan (19,500 ) — — — (19,500 ) Net payments on other debt (2,692 ) (8,640 ) — — (11,332 ) Expenses related to debt restructuring (27,910 ) — — — (27,910 ) Transactions with affiliates, net 219,250 (225,899 ) 6,649 — — Cash provided by (used in) financing activities 169,148 (234,539 ) 6,649 — (58,742 ) Increase (decrease) in cash and cash equivalents (234,539 ) (49,930 ) 1,019 — (283,450 ) Cash and cash equivalents, beginning of period 572,185 150,358 11,688 — 734,231 Cash and cash equivalents, end of period $ 337,646 $ 100,428 $ 12,707 $ — $ 450,781 Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2014 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Cash provided by (used in) operating activities $ (324,688 ) $ 305,048 $ (13,942 ) $ — $ (33,582 ) Investing Activities Capital expenditures (2,700 ) (144,586 ) — — (147,286 ) Additions to prepaid royalties — (7,317 ) — — (7,317 ) Proceeds from disposals and divestitures 57,625 4,733 — — 62,358 Purchases of short term investments (211,929 ) — — — (211,929 ) Proceeds from sales of short term investments 205,611 — — — 205,611 Proceeds from sales of investments in equity securities 9,464 — — — 9,464 Withdrawals (deposits) of restricted cash — — (5,678 ) — (5,678 ) Investments in and advances to affiliates (2,541 ) (14,116 ) — — (16,657 ) Cash provided by (used in) investing activities 55,530 (161,286 ) (5,678 ) — (111,434 ) Financing Activities Payments on term loan (19,500 ) — — — (19,500 ) Net payments on other debt (1,258 ) (4,437 ) — — (5,695 ) Debt financing costs (2,219 ) — (2,300 ) — (4,519 ) Dividends paid (2,123 ) — — — (2,123 ) Other (15 ) — — — (15 ) Transactions with affiliates, net 67,125 (89,385 ) 22,260 — — Cash provided by (used in) financing activities 42,010 (93,822 ) 19,960 — (31,852 ) Increase (decrease) in cash and cash equivalents (227,148 ) 49,940 340 — (176,868 ) Cash and cash equivalents, beginning of period 799,333 100,418 11,348 — 911,099 Cash and cash equivalents, end of period $ 572,185 $ 150,358 $ 11,688 $ — $ 734,231 Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2013 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Cash provided by (used in) operating activities $ (632,060 ) $ 637,193 $ 50,609 $ — $ 55,742 Investing Activities Capital expenditures (3,320 ) (293,664 ) — — (296,984 ) Proceeds from disposals and divestitures — 433,453 — — 433,453 Proceeds from sales-leaseback transaction — 34,919 — — 34,919 Investments in and advances to affiliates (5,451 ) (10,321 ) — 512 (15,260 ) Purchases of short term investments (213,726 ) — — — (213,726 ) Proceeds from sales of short term investments 194,537 — — — 194,537 Additions to prepaid royalties — (14,947 ) — — (14,947 ) Change in restricted cash 3,453 — — — 3,453 Cash provided by (used in) investing activities (24,507 ) 149,440 — 512 125,445 Financing Activities Contributions from parent — 512 — (512 ) — Proceeds from term loan and senior notes 644,000 — — — 644,000 Payments to retire debt (628,660 ) — — — (628,660 ) Payments on term loan (17,250 ) — — — (17,250 ) Net payments on other debt (6,324 ) (512 ) — — (6,836 ) Debt financing costs (19,864 ) — (625 ) — (20,489 ) Dividends paid (25,475 ) — — — (25,475 ) Transactions with affiliates, net 838,160 (786,683 ) (51,477 ) — — Cash provided by (used in) financing activities 784,587 (786,683 ) (52,102 ) (512 ) (54,710 ) Increase in cash and cash equivalents 128,020 (50 ) (1,493 ) — 126,477 Cash and cash equivalents, beginning of period 671,313 100,468 12,841 — 784,622 Cash and cash equivalents, end of period $ 799,333 $ 100,418 $ 11,348 $ — $ 911,099 |