Arch Coal, Inc. Reports Third Quarter 2013 Results

              Arch Coal, Inc. Reports Third Quarter 2013 Results

Liquidity increases to $1.6 billion with sale of Canyon Fuel thermal assets

Strong 3Q13 cost performance leads to 2013 annual cost guidance reduction

PR Newswire

ST. LOUIS, Oct. 29, 2013

ST. LOUIS, Oct. 29, 2013 /PRNewswire/ --Arch Coal, Inc. (NYSE: ACI) today
reported a net loss of $128.4 million, or $0.61 per diluted share, in the
third quarter of 2013. Excluding non-cash accretion of acquired coal supply
agreements and asset impairment costs, Arch's third quarter 2013 adjusted net
loss was $1.8 million, or $0.01 per diluted share. In the third quarter of
2012, the company reported adjusted net income of $41.8 million, or $0.20 per
diluted share.

                                         Earnings Highlights
                                         Quarter Ended      Nine Months Ended
In $ millions, except per share data     9/30/13  9/30/12   9/30/13   9/30/12
Revenues ^1                              $791.3   $975.2    $2,295.0  $2,901.1
Income (Loss) from Operations ^1         (234.8)  119.2     (322.5)   (449.9)
Net Income (Loss) ^2                     (128.4)  45.8      (270.6)   (388.5)
Diluted EPS/LPS                          (0.61)   0.22      (1.28)    (1.83)
Adjusted Net Income (Loss) ^2,3          (1.8)    41.8      (134.1)   12.0
Adjusted Diluted EPS/LPS ^3              (0.01)   0.20      (0.63)    0.06
Adjusted EBITDA ^3                       $193.4   $256.5    $387.6    $617.3
1/- Excludes discontinued operations.
2/- Net income (loss) attributable to
ACI.
3/- Defined and reconciled under "Reconciliation of
non-GAAP measures."

(Logo: http://photos.prnewswire.com/prnh/20120727/CG47668LOGO)

Revenues totaled $791.3 million in the third quarter of 2013 on modestly
higher sales volumes than in the year-ago period. Arch generated adjusted
earnings before interest, taxes, depreciation, depletion and amortization
("EBITDA") of $193.4 million in the third quarter of 2013 compared with $256.5
million in the prior-year period. Third quarter 2013 results include a $115.7
million pre-tax gain from the sale of the company's Canyon Fuel assets, and
exclude non-cash, asset impairment charges of $200.4 million. In the third
quarter of 2012, results included an $80 million benefit from the reversal of
a previously recorded legal contingency.

"Arch is successfully navigating challenging global coal markets by
controlling costs and capital spending and effectively managing liquidity,"
said John W. Eaves, Arch's president and chief executive officer. "From an
operational perspective, we are pleased to have delivered the best cost
performance in the Powder River Basin since 2010. We also significantly
enhanced our financial flexibility with the Canyon Fuel sale – and ended
September with $1.4 billion in cash."

For the first nine months of 2013, Arch generated adjusted EBITDA of $387.6
million compared with $617.3 million in the prior-year period. Revenues
declined to $2.3 billion for the nine months ended Sept. 30, 2013, largely due
to lower metallurgical coal revenues versus the prior-year period.
Year-to-date in 2013, Arch recorded a free cash outflow of $36.6 million, as
cash from operations totaled $186.6 million and capital expenditures equaled
$223.2 million.

As of Sept. 30, 2013, Arch had a total liquidity position of $1.6 billion,
with roughly $1.4 billion of that total in the form of cash and short-term
investments. The company had no borrowings under its revolving credit facility
at the end of the third quarter, and has no debt maturities until August 2016.

"We are re-aligning our portfolio to focus on those core assets with the best
long-term value and growth potential, particularly the Powder River Basin
thermal franchise and the Appalachian metallurgical coal platform," said
Eaves. "To that end, we're making steady progress on the Leer mine
development, and expect the longwall to begin operation in December."

Key Developments

Arch completed the sale of its Canyon Fuel subsidiary on Aug. 16, 2013, and
received net cash proceeds of $423 million. The sale included the Sufco and
Skyline longwall mines and the Dugout Canyon continuous miner operation as
well as a total of 105 million tons of coal reserves in Utah.

Arch also recorded asset impairment charges of $200.4 million in the third
quarter of 2013. The charges primarily relate to the reduction in the carrying
value of the Hazard thermal mining complex in eastern Kentucky due to ongoing
weak thermal market conditions in Appalachia, as well as the write down of an
equity investment in a coal conversion project. These charges have no impact
on the company's cash flows, financial maintenance covenant calculations or
ongoing business operations.

In October 2013, Arch entered into an agreement with Patriot Coal ("Patriot")
that is subject to approval by the bankruptcy court and contingent upon
Patriot's exit from bankruptcy. Under this agreement, Arch will acquire the
Guffey reserve property from Patriot for $16 million. The metallurgical
reserves are owned in-fee, are contiguous to Arch's Tygart Valley reserves and
the Leer mine, and are comparable in quality to Leer's high-volatile "A"
coking coal. The addition of these reserves will enable Arch to recover up to
an incremental 8 million tons of metallurgical coal at the Leer mine, thereby
extending the estimated mine life by nearly three years. The agreement also
resolves all pending and potential legal claims with Patriot related to Arch's
sale of coal companies to Magnum Coal Company, a subsidiary of ArcLight
Capital Partners LLC, in 2005 and the subsequent purchase of those companies
by Patriot in 2008. During the third quarter, Arch recorded a $5 million
accrual for this legal settlement.

"As part of our effort to re-align the asset portfolio, Arch continues to
execute its plan to divest non-core assets and reserves, idle operations or
trim production in response to market conditions, and concentrate on core
operations that will drive our profitability as coal markets improve," said
Eaves. "We are also pursuing value-enhancing growth initiatives in our
strategic areas of focus. One such example is the Guffey acquisition, which
represents a unique, synergistic, bolt-on opportunity that extends the
reserves and mine life at Leer, one of our key metallurgical coal operations."

Core Values

During the third quarter of 2013, seven of Arch's operations and facilities
attained A Perfect Zero – a dual accomplishment of operating without a single
environmental violation or reportable safety incident. Arch's efforts will be
honored with two national safety awards for exemplary 2012 safety
achievements. In addition, several of the company's subsidiaries reached new
safety milestones during the three months ended Sept. 30, 2013. In August, the
Coal Creek mine in Wyoming and the Hazard complex in Kentucky each completed 1
million employee hours without a lost-time incident. In September, the West
Elk mine in Colorado achieved 2 million employee hours without a lost-time
incident.

"Our employees continue to live Arch's core values by achieving new safety
milestones and remaining committed to our ultimate goal of A Perfect Zero
across all operations," said Paul A. Lang, Arch's executive vice president and
chief operating officer. "We want to achieve continuous improvement in mine
safety, and operate as a responsible energy company with strong safety and
environmental performance records every year."

Operational Results

"As our third quarter results demonstrate, we remain focused on controlling
costs across our operating platform," said Lang. "Higher shipment levels and
strong cost control in the third quarter led to the best cost-per-ton
performance in 10 consecutive quarters in the Powder River Basin; and our
ongoing success in that area has allowed us to lower our full year 2013 cost
guidance again in key operating regions." 

                            Arch Coal, Inc.
                                  3Q13                  2Q13           3Q12
Tons sold (in millions)           38.3                  35.0           37.5
Average sales price per ton       $19.54                $22.34         $25.57
Cash cost per ton                 $16.51                $18.57         $20.16
Cash margin per ton               $3.03                 $3.77          $5.41
Total operating cost per          $19.37                $21.90         $23.50
ton
Operating margin per ton          $0.17                 $0.44          $2.07
Consolidated results may not tie to regional breakout due to exclusion of
other assets, rounding.
Operating results include Canyon Fuel subsidiary through transaction
close.
Operating cost per ton includes depreciation, depletion and amortization per
ton.
Amounts reflected in this table have been adjusted for certain
transactions.
For a description of adjustments, refer to the regional schedule at
http://investor.archcoal.com

Compared with the second quarter of 2013, consolidated cash margin per ton
declined in the third quarter, mainly due to a larger percentage of Powder
River Basin coal in Arch's overall volume mix. The decline in average sales
price per ton was partially offset by a decrease in consolidated cash cost per
ton, due to higher sales volume and strong cost control in Arch's western
operations.

                                Powder River Basin
                                    3Q13              2Q13           3Q12
Tons sold (in millions)             31.5              27.1           27.7
Average sales price per ton         $12.26            $12.56         $13.79
Cash cost per ton                   $10.20            $10.47         $10.92
Cash margin per ton                 $2.06             $2.09          $2.87
Total operating cost per ton       $11.68            $12.02         $12.51
Operating margin per ton            $0.58             $0.54          $1.28
Operating cost per ton includes depreciation, depletion and amortization per
ton.
Amounts reflected in this table have been adjusted for certain
transactions.

In the Powder River Basin, third quarter 2013 cash margin declined to $2.06
per ton. Average sales price declined $0.30 per ton versus the second quarter,
on lower pricing on export and market-based tons shipped in the quarter just
ended. This decline in pricing was mostly offset by a 3 percent decrease in
cash cost per ton over the same time period, reflecting continued strong cost
containment efforts and the impact of increased volume levels.

                                Appalachia
                                    3Q13             2Q13            3Q12
Tons sold (in millions)             3.3              4.0             4.7
Average sales price per ton         $73.71           $74.18          $83.84
Cash cost per ton                   $67.99           $65.70          $69.19
Cash margin per ton                 $5.72            $8.48           $14.65
Total operating cost per ton       $82.03           $79.56          $82.41
Operating margin per ton            ($8.32)          ($5.38)         $1.43
Operating cost per ton includes depreciation, depletion and amortization per
ton.
Amounts reflected in this table have been adjusted for certain
transactions.

In Appalachia, Arch earned a cash margin of $5.72 per ton in the third quarter
of 2013 versus $8.48 per ton in the second quarter. Third quarter 2013 sales
volumes declined moderately versus the second quarter, partly reflecting lower
metallurgical coal production at Mountain Laurel due to less favorable mining
conditions that are expected to normalize by 2014. Average sales price per ton
decreased over the same time period, due to a smaller percentage of
metallurgical coal in the company's regional volume mix. Cash cost per ton
increased 3.5 percent in the third quarter of 2013 versus the prior-quarter
period, mainly driven by the impact of lower volume levels.



                         Bituminous Thermal
                              3Q13                2Q13              3Q12
Tons sold (in millions)       3.5                 3.8               5.2
Average sales price per       $33.74              $36.92            $36.18
ton*
Cash cost per ton*            $24.49              $26.20            $25.48
Cash margin per ton           $9.25               $10.72            $10.70
Total operating cost per      $29.17              $31.00            $29.30
ton*
Operating margin per ton      $4.57               $5.92             $6.88
*Sales prices and costs in the region are presented f.o.b. point for domestic
customers.
Operating results include Canyon Fuel subsidiary through transaction close.
Operating cost per ton includes depreciation, depletion and amortization per
ton.
Amounts reflected in this table have been adjusted for certain
transactions.

Arch's newly designated Bituminous Thermal segment includes assets in Colorado
and Illinois as well as partial quarter results for recently divested assets
in Utah. Arch recorded a cash margin of $9.25 per ton in the third quarter of
2013 compared with $10.72 per ton in the second quarter. Sales volumes
decreased slightly over the same time period, reflecting the sale of the
Canyon Fuel assets on Aug. 16, 2013. Average sales price per ton declined
moderately versus the second quarter, largely due to lower pricing on export
tons. Partially offsetting that price decline was a 7 percent decrease in the
cash cost per ton, driven by a solid operational performance at the West Elk
mine and the divestiture of the Canyon Fuel operations.

Market Trends

Arch believes coal markets are poised to improve, as evidenced by the
following trends:

  oWhile U.S. power demand has declined slightly through August 2013 and
    natural gas prices have averaged approximately $3.65 per million Btu, U.S.
    coal demand for power generation has increased by more than 30 million
    tons for the first eight months of the year. Currently, the natural gas
    forward price curve is well above this average, suggesting that western
    coals will remain competitively priced for power generation for the
    foreseeable future.
  oSince the second quarter of 2013, U.S. production declines have
    accelerated in Appalachia and Arch expects production in that region to
    decline to 130 million tons for full year 2013. This decline would
    represent a loss of more than 50 million Appalachian tons since 2010. Arch
    also expects 2013 coal production in the largest supply region, the Powder
    River Basin, to remain flat or even decline modestly versus last year's
    levels.
  oCoal stockpiles at U.S. power generators have declined by more than 25
    million tons since the beginning of 2013, and continued to liquidate in
    September, a month in which stockpiles have traditionally increased. Arch
    estimates that customer stockpiles could end 2013 at around 150 million
    tons, which should help set the stage for a more balanced U.S. thermal
    market going forward.
  oMetallurgical markets remain weak, due to excess global supply and
    continued softness in European steel demand. However, external forecasts
    project continued steel production growth in Asia and North America as
    well as stabilization in Europe in 2014. A continued rebound in coking
    coal demand, along with global production curtailments and delayed mining
    capital investments, should tighten metallurgical markets in the future.
  oU.S. coal exports remain sizable, totaling 80 million tons year-to-date
    through August, despite some slowing in the second half of 2013. Arch
    predicts that U.S. coal exports should reach 105 million to 110 million
    tons for full year 2013, and the company believes that longer-term growth
    prospects remain bright.

Company Outlook

For 2013, Arch now expects thermal sales volumes to be in the range of 134
million to 137 million tons. The company has lowered its metallurgical sales
expectations, and now expects to ship between 6.9 million and 7.3 million tons
into coking coal and pulverized coal injection (PCI) markets during 2013.

"We have reduced our sales volume expectations for coking and PCI coal in 2013
due to a combination of events," said Eaves. "Of note, we have recently
shifted some personnel from our Sentinel mine to Leer in anticipation of the
longwall start-up in December. We have also opportunistically sold some
PCI-quality coal into the industrial market. And, we have deferred some
previously contracted tons into 2014 due to a force majeure event with a
customer."

For 2013, Arch has reduced its annual cash cost per ton guidance range for
both the Powder River Basin and Appalachia. The company also has lowered its
guidance range for general and administrative expenses and further tightened
its range for capital expenditures in 2013.

"We remain focused on those factors and dynamics within our control to
position Arch for a future market rebound," added Eaves. "We have curtailed
capital spending, cut costs and expenses, and further streamlined our
diversified asset portfolio. We have also significantly increased our
liquidity, and we have an ample cash position to weather the current market."



                             2013                           2014
                             Tons        $ per ton      Tons $ per ton
Sales Volume (in millions
tons)
Thermal                      134.0 - 137.0
Met                          6.9   - 7.3
Total                        140.9 - 144.3
Powder River Basin
Committed, Priced                    114.1          $12.55  83.7   $13.31
Committed, Unpriced                  1.5                    9.0
Total Committed                      115.6                  92.7
Average Cash Cost                          $10.40 - $10.60
Appalachia
Committed, Priced Thermal            7.6            $61.77  4.3    $57.75
Committed, Unpriced Thermal          -                      0.3
Committed, Priced                    6.7            $88.95  0.5    $96.40
Metallurgical
Committed, Unpriced                  0.2                    0.7
Metallurgical
Total Committed                      14.5                   5.8
Average Cash Cost                          $65.00 - $69.00
Bituminous Thermal
Committed, Priced                    7.9            $33.23  3.1    $38.50
Committed, Unpriced                  0.5                    0.2
Total Committed                      8.4                    3.3
Average Cash Cost                          $23.50 - $25.50
Corporate (in $ millions)
D,D&A                                      $420   - $450
S,G&A                                      $126   - $130
Interest Expense                          $370   - $375
Capital Expenditures                       $290   - $300

A conference call regarding Arch Coal's third quarter 2013 financial results
will be webcast live today at 10 a.m. Eastern time. The conference call can be
accessed via the "investor" section of the Arch Coal website
(http://investor.archcoal.com).

U.S.-based Arch Coal, Inc. is one of the world's top coal producers for the
global steel and power generation industries, serving customers in 25
countries on five continents. Its network of mining complexes is the most
diversified in the United States, spanning every major coal basin in the
nation. The company controls more than 5 billion tons of high-quality
metallurgical and thermal coal reserves, with access to all major railroads,
inland waterways and a growing number of seaborne trade channels. For more
information, visit www.archcoal.com.

Forward-Looking Statements: This press release contains "forward-looking
statements" – that is, statements related to future, not past, events. In
this context, forward-looking statements often address our expected future
business and financial performance, and often contain words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," or "will."
Forward-looking statements by their nature address matters that are, to
different degrees, uncertain. For us, particular uncertainties arise from
changes in the demand for our coal by the domestic electric generation
industry; from legislation and regulations relating to the Clean Air Act and
other environmental initiatives; from operational, geological, permit, labor
and weather-related factors; from fluctuations in the amount of cash we
generate from operations; from future integration of acquired businesses; and
from numerous other matters of national, regional and global scale, including
those of a political, economic, business, competitive or regulatory nature.
These uncertainties may cause our actual future results to be materially
different than those expressed in our forward-looking statements. We do not
undertake to update our forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by law.
For a description of some of the risks and uncertainties that may affect our
future results, you should see the risk factors described from time to time in
the reports we file with the Securities and Exchange Commission.



Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
                          Three Months Ended        Nine Months Ended
                          September 30,            September 30,
                          2013           2012       2013          2012
                          (Unaudited)
Revenues                  $ 791,269      $975,170   $2,294,971    $2,901,092
Costs, expenses and other
operating
 Cost of sales           688,712        808,489    1,994,653     2,414,306
 Depreciation, depletion 106,323        118,942    327,601       374,631
and amortization
 Amortization of
acquired sales contracts, (2,568)        (4,093)    (7,587)       (22,561)
net
 Change in fair value of
coal derivatives and coal 9,753          5,840      2,053         (29,827)
trading activities, net
 Asset impairment and    200,397        (2,144)    220,879       523,439
mine closure costs
 Goodwill impairment     —              —          —             115,791
 Legal contingencies     —              (79,532)   —             (79,532)
 Selling, general and    28,800         33,266     96,311        99,305
administrative expenses
 Other operating income, (5,395)        (24,840)   (16,476)      (44,606)
net
                          1,026,022      855,928    2,617,434     3,350,946
  Income (loss) from  (234,753)      119,242    (322,463)     (449,854)
operations
Interest expense, net
 Interest expense        (95,624)       (75,710)   (285,454)     (229,210)
 Interest and investment 697            1,459      4,749         3,568
income
                          (94,927)       (74,251)   (280,705)     (225,642)
Other nonoperating
expense
Net loss resulting from
early retirement and      —              —          —             (19,042)
refinancing of debt
Income (loss) from
continuing operations     (329,680)      44,991     (603,168)     (694,538)
before income taxes
Provision for (benefit    (121,913)      20,318     (230,734)     (262,656)
from) income taxes
 Income (loss) from      (207,767)      24,673     (372,434)     (431,882)
continuing operations
Income from discontinued  79,404         21,078     101,816       43,618
operations, net of tax
 Net income (loss)   (128,363)      45,751     (270,618)     (388,264)
 Less: Net income
attributable to           —              —          —             (268)
noncontrolling interest
 Net income (loss)
attributable to Arch      $(128,363)     $ 45,751  $ (270,618)  $ (388,532)
Coal, Inc.
Income (loss) from
continuing operations
Basic EPS - Income (loss) $           $       $          $    
per common share          (0.98)         0.12       (1.76)        (2.04)
Diluted EPS - Income      $           $       $          $    
(loss) from continuing    (0.98)         0.12       (1.76)        (2.04)
operations
Net income (loss)
attributable to Arch
Coal, Inc.
Basic EPS - Net income    $           $       $          $    
(loss) per common share   (0.61)         0.22       (1.28)        (1.83)
Diluted EPS - Net income  $           $       $          $    
(loss) attributable to    (0.61)         0.22       (1.28)        (1.83)
Arch Coal, Inc.
Basic weighted average    212,111        212,053    212,085       211,931
shares oustanding
Diluted weighted average  212,111        212,076    212,085       211,931
shares outstanding
Dividends declared per    $    0.03  $       $         $    
common share                             0.03       0.09         0.17
Adjusted EBITDA (A)       $ 193,384      $256,511   $  387,563   $  617,259
Adjusted diluted income   $           $       $         $    
(loss) per common share   (0.01)         0.20       (0.63)        0.06
(A)

(A) Adjusted EBITDA and Adjusted diluted income (loss) per common share are
defined and reconciled under "Reconciliation of Non-GAAP Measures" later in
this release.







Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
                                                  September 30,  December 31,
                                                  2013           2012
                                                  (Unaudited)
Assets
Current assets
 Cash and cash equivalents                      $ 1,133,128   $   784,622
 Restricted cash                                —              3,453
 Short term investments                         248,724        234,305
 Trade accounts receivable                      190,723        247,539
 Other receivables                              24,116         84,541
 Inventories                                    287,409        365,424
 Prepaid royalties                              8,350          11,416
 Deferred income taxes                          67,381         67,360
 Coal derivative assets                         22,836         22,975
 Other                                          46,972         92,469
 Total current assets                           2,029,639      1,914,104
Property, plant and equipment, net                6,778,225      7,337,098
Other assets
 Prepaid royalties                              85,001         87,773
 Goodwill                                       265,423        265,423
 Equity investments                             223,554        242,215
 Other                                          149,613        160,164
  Total other assets                          723,591        755,575
Total assets                                      $ 9,531,455   $10,006,777
Liabilities and Stockholders' Equity
Current liabilities
 Accounts payable                               $   207,273  $   224,418
 Coal derivative liabilities                    421            1,737
 Accrued expenses and other current liabilities 349,033        318,018
 Current maturities of debt                     23,050         32,896
 Total current liabilities                   579,777        577,069
 Long-term debt                                 5,074,384      5,085,879
 Asset retirement obligations                   411,121        409,705
 Accrued pension benefits                       68,539         67,630
 Accrued postretirement benefits other than     44,279         45,086
pension
 Accrued workers' compensation                  82,014         81,629
 Deferred income taxes                          484,130        664,182
 Other noncurrent liabilities                   205,557        221,030
  Total liabilities                           6,949,801      7,152,210
Stockholders' equity
 Common Stock                                   2,141          2,141
 Paid-in capital                                3,035,732      3,026,823
 Treasury stock, at cost                        (53,848)       (53,848)
 Accumulated deficit                            (393,765)      (104,042)
 Accumulated other comprehensive loss           (8,606)        (16,507)
  Total stockholders' equity                  2,581,654      2,854,567
Total liabilities and stockholders' equity        $ 9,531,455   $10,006,777







Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
                                               Nine Months Ended September 30,
                                               2013               2012
                                               (Unaudited)
Operating activities
Net loss                                       $ (270,618)       $(388,264)
Adjustments to reconcile to cash provided by
operating activities:
 Depreciation, depletion and amortization    348,863            399,672
 Amortization of acquired sales contracts,   (7,587)            (22,561)
net
 Amortization relating to financing          18,525             14,345
activities
 Prepaid royalties expensed                  11,973             19,802
 Employee stock-based compensation expense   8,909              9,435
 Asset impairment and noncash mine closure   220,879            501,942
costs
 Amortization of premiums on debt securities 3,679              —
held
 Gain on sale of Canyon Fuel                 (115,679)          —
 Goodwill impairment                         —                  115,791
 Net loss resulting from early retirement of —                  19,042
debt and financing activities
 Changes in:
  Receivables                              72,436             102,252
  Inventories                              21,387             (16,635)
  Coal derivative assets and liabilities   (1,568)            (29,523)
  Accounts payable, accrued expenses and   19,287             (51,968)
other current liabilities
  Income taxes, net                        787                22,048
  Deferred income taxes                    (184,418)          (255,530)
  Other                                    39,737             (83,453)
  Cash provided by operating activities  186,592            356,395
Investing activities
 Capital expenditures                        (223,168)          (303,968)
 Minimum royalty payments                    (10,901)           (9,192)
 Proceeds from dispositions of property,     8,799              22,624
plant and equipment
 Proceeds from sale-leaseback transactions   34,919             —
 Proceeds from sale of Canyon Fuel           422,663            —
 Purchases of short term investments         (85,418)           (99,628)
 Proceeds from sales of short term           67,255             —
investments
 Investments in and advances to affiliates   (11,124)           (12,685)
 Purchase of noncontrolling interest         —                  (17,500)
 Change in restricted cash                   3,453              6,872
  Cash provided by (used in) investing   206,478            (413,477)
activities
Financing activities
 Proceeds from issuance of term loan         —                  1,386,000
 Payments on term loan                       (12,375)           (3,500)
 Payments to retire debt                     (384)              (452,806)
 Net decrease in borrowings under lines of   —                  (381,300)
credit
 Net payments on other debt                  (12,700)           (13,078)
 Debt financing costs                        —                  (34,686)
 Dividends paid                              (19,105)           (36,072)
 Proceeds from exercise of options under     —                  5,131
incentive plans
  Cash provided by (used in) financing   (44,564)           469,689
activities
Increase in cash and cash equivalents          348,506            412,607
Cash and cash equivalents, beginning of period 784,622            138,149
Cash and cash equivalents, end of period       $1,133,128         $ 550,756







Arch Coal, Inc. and Subsidiaries
Schedule of Consolidated Debt
(In thousands)
                                                   September 30,  December 31,
                                                   2013           2012
                                                   (Unaudited)
Term loan ($1.63 billion face value) due 2018      $ 1,617,097   $ 1,627,384
8.75% senior notes ($600.0 million face value)     592,646        590,999
due 2016
7.00% senior notes due 2019 at par                 1,000,000      1,000,000
9.875% senior notes ($375.0 million face value)    361,779        360,042
due 2019
7.25% senior notes due 2020 at par                 500,000        500,000
7.25% senior notes due 2021 at par                 1,000,000      1,000,000
Other                                              25,912         40,350
                                                   5,097,434      5,118,775
Less: current maturities of debt                   23,050         32,896
Long-term debt                                     $ 5,074,384   $ 5,085,879
Calculation of net debt
Total debt                                         $ 5,097,434   $ 5,118,775
Less liquid assets
Cash and cash equivalents                          1,133,128      784,622
Short term investments                             248,724        234,305
                                                   1,381,852      1,018,927
Net debt                                           $ 3,715,582   $ 4,099,848







Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands, except per share data)
Included in the accompanying release, we have disclosed certain non-GAAP measures as
defined by Regulation G.
The following reconciles these items to net income and cash flows as reported under GAAP.
Adjusted EBITDA
Adjusted EBITDA is defined as net income attributable to the Company before the effect of
net interest expense, income taxes, depreciation, depletion and amortization, and the
amortization of acquired sales contracts. Adjusted EBITDA may also be adjusted for
items that may not reflect the trend of future results.
Adjusted EBITDA is not a measure of financial performance in accordance with generally
accepted accounting principles, and items excluded from Adjusted EBITDA are significant
in understanding and assessing our financial condition. Therefore, Adjusted EBITDA should
not be considered in isolation, nor as an alternative to net income, income from
operations, cash flows from operations or as a measure of our profitability, liquidity or
performance under generally accepted accounting principles. We believe that Adjusted
EBITDA presents a useful measure of our ability to incur and service debt based on
ongoing operations. Furthermore, analogous measures are used by industry analysts to
evaluate our operating performance. In addition, acquisition related expenses are
excluded to make results more comparable between periods. Investors should be aware that
our presentation of Adjusted EBITDA may not be comparable to similarly titled measures
used by other companies. The table below shows how we calculate Adjusted EBITDA.
               Three Months Ended September 30,
               2013                                  2012
               Continuing  Discontinued  Total       Continuing  Discontinued  Total
               Operations  Operations    Company     Operations  Operations    Company
               (Unaudited)
Income (loss)  $(207,767)  $ 79,404     $           $  24,673  $ 21,078     $  45,751
                                         (128,363)
 Income tax
(benefit)      (121,913)   39,704        (82,209)    20,318      (4,360)       15,958
expense
 Interest    94,927      5             94,932      74,251      —             74,251
expense, net

Depreciation,  106,323     4,872         111,195     118,942     7,896         126,838
depletion and
amortization

Amortization
of acquired    (2,568)     —             (2,568)     (4,093)     —             (4,093)
sales
contracts, net
 Asset
impairment and 200,397     —             200,397     (2,144)     (50)          (2,194)
mine closure
costs
Adjusted       $  69,399  $123,985      $          $ 231,947   $ 24,564     $ 256,511
EBITDA                                   193,384
               Nine Months Ended September 30,
               2013                                  2012
               Continuing  Discontinued  Total       Continuing  Discontinued  Total
               Operations  Operations    Company     Operations  Operations    Company
               (Unaudited)
Income (loss)  $(372,434)  $101,816      $           $(431,882)  $ 43,618     $(388,264)
                                         (270,618)
 Income tax
(benefit)      (230,734)   46,029        (184,705)   (262,656)   7,293         (255,363)
expense
 Interest    280,705     26            280,731     225,642     —             225,642
expense, net

Depreciation,  327,601     21,262        348,863     374,631     25,041        399,672
depletion and
amortization

Amortization
of acquired    (7,587)     —             (7,587)     (22,561)    —             (22,561)
sales
contracts, net
 Asset
impairment and 220,879     —             220,879     523,439     129           523,568
mine closure
costs
 Goodwill    —           —             —           115,791     —             115,791
impairment
 Other
nonoperating   —           —             —           19,042      —             19,042
expenses
 Net income
attributable
to             —           —             —           (268)       —             (268)
noncontrolling
interest
Adjusted       $ 218,430   $169,133      $          $ 541,178   $ 76,081     $ 617,259
EBITDA                                   387,563
Adjusted net income (loss) and adjusted diluted earnings (loss) per share
Adjusted net income (loss) and adjusted diluted earnings (loss) per common share are
adjusted for the after-tax impact of acquisition related costs and are not measures of
financial performance in accordance with generally accepted accounting principles. We
believe that adjusted net income (loss) and adjusted diluted earnings (loss) per common
share better reflect the trend of our future results by excluding items relating to
significant transactions. The adjustments made to arrive at these measures are
significant in understanding and assessing our financial condition. Therefore, adjusted
net income (loss) and adjusted diluted earnings (loss) per share should not be considered
in isolation, nor as an alternative to net income (loss) or diluted income (loss) per
common share under generally accepted accounting principles.
               Three Months Ended        Nine Months Ended
               September 30,             September 30,
               2013        2012          2013        2012
               (Unaudited)
Net income
(loss)         $(128,363)  $ 45,751     $           $(388,532)
attributable                             (270,618)
to Arch Coal

Amortization
of acquired    (2,568)     (4,093)       (7,587)     (22,561)
sales
contracts, net
 Asset
impairment and 200,397     (2,194)       220,879     523,568
mine closure
costs
 Goodwill    —           —             —           115,791
impairment
 Other
nonoperating   —           —             —           19,042
expenses
 Tax impact  (71,218)    2,326         (76,785)    (235,261)
of adjustments
Adjusted net
income (loss)  $          $ 41,790     $           $  12,047
attributable   (1,752)                  (134,111)
to Arch Coal
Diluted
weighted       212,111     212,076       212,085     211,931
average shares
outstanding
Diluted
earnings
(loss) per     $         $   0.22   $        $  
share          (0.61)                    (1.28)      (1.83)
attributable
to Arch Coal

Amortization
of acquired    (0.01)      (0.02)        (0.03)      (0.11)
sales
contracts, net
 Asset
impairment and 0.95        (0.01)        1.04        2.47
mine closure
costs
 Goodwill    —           —             —           0.55
impairment
 Other
nonoperating   —           —             —           0.09
expenses
 Tax impact  (0.34)      0.01          (0.36)      (1.11)
of adjustments
Adjusted
diluted        $                       $        $  
earnings       (0.01)      $   0.20   (0.63)      0.06
(loss) per
share





SOURCE Arch Coal, Inc.

Website: http://www.archcoal.com
Contact: Jennifer Beatty, Vice President, Investor Relations, 314/994-2781