Arch Coal, Inc. Reports Fourth Quarter and Full Year 2013 Results

      Arch Coal, Inc. Reports Fourth Quarter and Full Year 2013 Results

U.S. generator coal stockpiles reached lowest year-end level since 2006

Leer mine to increase metallurgical sales volume and reduce costs in 2014

Arch expects to significantly reduce capital spending in 2014

PR Newswire

ST. LOUIS, Feb. 4, 2014

ST. LOUIS, Feb. 4, 2014 /PRNewswire/ --Arch Coal, Inc. (NYSE: ACI) today
reported revenues of $719.4 million and adjusted earnings before interest,
taxes, depreciation, depletion and amortization ("EBITDA") of $38.4 million in
the fourth quarter of 2013. The company's results reflect a softer pricing
environment for metallurgical and thermal coals than in the prior-year
quarter, as well as the impact of previously disclosed rail service issues in
the Powder River Basin and geological challenges encountered in Appalachia.

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

                                       Earnings Highlights
                                       Quarter Ended        Year Ended
In $ millions, except per share        12/31/13  12/31/12   12/31/13  12/31/12
data
Revenues ^1                            $719.4    $867.0     $3,014.4  $3,768.1
Income (Loss) from Operations ^1       (340.7)   (307.2)    (663.1)   (757.0)
Net Income (Loss) ^2                   (371.2)   (295.4)    (641.8)   (684.0)
Diluted EPS/LPS                        (1.75)    (1.39)     (3.03)    (3.24)
Adjusted Net Income (Loss) ^2,3        (95.1)    (88.7)     (229.2)   (76.9)
Adjusted Diluted EPS/LPS ^3            (0.45)    (0.42)     (1.08)    (0.36)
Adjusted EBITDA ^3                     $38.4     $71.2      $425.9    $688.5
1/- Excludes discontinued
operations.
2/- Net income (loss) attributable to
ACI.
3/- Defined and reconciled under "Reconciliation of non-GAAP
measures."

"The December start-up of longwall operations at the Leer mine in Appalachia
helped to counterbalance the impact of rail service disruptions and adverse
geologic issues we faced in the fourth quarter of 2013," said John W. Eaves,
Arch's president and chief executive officer. "Looking ahead, we expect the
new Leer mine to deliver a strong return on our $400 million investment given
its high quality and strategic access to seaborne markets."

During the fourth quarter of 2013, Arch reported a net loss of $371.2 million,
or $1.75 per diluted share. The fourth quarter results include a non-cash
goodwill impairment charge of $265.4 million, which has no impact on the
company's liquidity, operating cash flow and ongoing business operations.
Excluding the charge for goodwill impairment, early debt retirement, other
one-time costs, non-cash accretion of acquired coal supply agreements and the
related tax impacts of these items, Arch's adjusted net loss was $95.1
million, or $0.45 per diluted share, in the fourth quarter of 2013. In the
prior-year quarter, Arch reported an adjusted net loss of $88.7 million, or
$0.42 per diluted share.

Additionally, Arch recorded a $12.0 million charge in the fourth quarter of
2013 to reflect the settlement of legal claims brought by the United Mine
Workers of America ("UMWA") against Arch subsequent to Patriot Coal's
bankruptcy. As previously announced, Arch also completed the acquisition of
the Guffey metallurgical coal reserves from Patriot Coal in December 2013 for
$16.0 million. These reserves will extend the life of the Leer mine by nearly
three years.

2013 Highlights

"Arch achieved measurable success in 2013 by extending its strong safety track
record, containing costs in key operating regions, reducing capital spending
across the organization, exercising disciplined liquidity management,
monetizing non-strategic thermal coal mines and completing a new metallurgical
coal mine in West Virginia," said Eaves. "However, due to a soft market
environment particularly for metallurgical coal, Arch's earnings decreased in
2013 compared to a year ago." 

For full year 2013, revenues totaled $3.0 billion on coal sales of 140 million
tons. The company generated adjusted EBITDA of $426.0 million in 2013 compared
with $688.5 million in 2012. Arch also reported an adjusted net loss of $229.2
million, or $1.08 per share, in 2013. 

Of particular note, Arch divested its Canyon Fuel subsidiary for $422.7
million in cash in August 2013. The company recorded a total gain of $120.3
million on the sale, and anticipates cumulative capital and administrative
cost savings of more than $200 million during the next four years due to the
divestiture of those assets.

"Arch's achievements during 2013 helped advance the company's long-term
strategy of re-aligning the portfolio to focus on core assets with the best
return potential," said Eaves. "One such core asset is the Leer mine, which
will upgrade and expand our Appalachian metallurgical coal platform. That
platform, combined with our strong Powder River Basin franchise, creates a
compelling long-term value proposition for shareholders – one that provides
diversity to manage the volatility in the industry as well as significant
growth potential as coal markets correct."

Financial Items

In December of 2013, Arch completed the tender of its $600 million senior
unsecured notes due 2016. To redeem the notes, Arch successfully issued $350
million in senior secured second lien notes due 2019 and increased its secured
first lien term loan due 2018 by $300 million. Arch also amended its senior
secured revolving credit facility to relax certain financial covenants and
eliminate others while providing the company with further flexibility during
the term of that facility. As of Dec. 31, 2013, Arch had total available
liquidity of $1.4 billion, of which $1.2 billion was in cash and short-term
interest-bearing securities.

"The financing transactions completed during the fourth quarter enhanced
Arch's liquidity and eliminated debt maturities until 2018 without increasing
our cost of capital," said John T. Drexler, Arch's senior vice president and
chief financial officer. "At the same time, we have maintained a significant
portion of our capital structure in pre-payable debt financing, which will
allow Arch to de-lever as coal markets correct."

Core Values

Arch delivered its second-best safety performance in company history with a
2013 total incident rate that was nearly 20 percent lower than its 2012 rate.
The company's 2013 lost-time incident rate also outperformed the national coal
industry average by more than three times. In addition, Arch achieved its
second-best environmental performance in 2013, with a 30 percent improvement
compared with its 2012 rate.

Arch subsidiaries attained numerous awards for excellence, and achieved
several notable milestones, in pursuit of the company's core values. Arch
earned more than 30 safety and environmental honors in 2013, including two
prestigious national Sentinels of Safety awards. Major safety milestones were
achieved by the West Elk mine in Colorado, which operated 2 million employee
hours without a lost-time incident, as well as the Coal Creek mine in Wyoming
and the Hazard complex in Kentucky, which each completed 1 million employee
hours without a lost-time incident.

"I would like to congratulate our employees for achieving strong safety and
environmental performances in 2013," said Paul A. Lang, Arch's executive vice
president and chief operating officer. "We made measured progress in driving
down incident rates, and our efforts to achieve the ultimate goal of operating
without an environmental violation or reportable safety incident will
continue."

Operational Results

"Arch successfully delivered on its cost containment and capital constraint
goals for 2013, despite a challenging fourth quarter operating environment,"
said Lang. "Specifically, we reduced costs per ton in our key regions, the
Powder River Basin and Appalachia, and significantly lowered our capital
expenditures by close to $100 million from 2012 levels."

                      Arch Coal, Inc.
                          4Q13            3Q13           FY13         FY12
Tons sold (in             32.3            38.3           139.6        140.7
millions)
Average sales price per   $19.91          $19.54         $20.85       $25.90
ton
Cash cost per ton         $18.10          $16.51         $17.76       $20.49
Cash margin per ton       $1.81           $3.03          $3.09        $5.41
Total operating cost per  $21.10          $19.37         $20.91       $24.17
ton
Operating margin per ton  ($1.19)         $0.17          ($0.06)      $1.73
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

Arch earned $1.81 per ton in consolidated cash margin in the fourth quarter of
2013 compared with $3.03 per ton in the third quarter. Consolidated sales
price per ton increased 2 percent over the same time period, while
consolidated cash cost per ton increased 10 percent, primarily reflecting the
impact of rail disruptions in the company's Powder River Basin segment.

For full year 2013, Arch earned consolidated cash margin of $3.09 per ton
versus $5.41 per ton in the prior year. Consolidated 2013 sales price per ton
declined versus 2012 levels, due to lower pricing on metallurgical and export
thermal coal sales and a larger percentage of lower-priced tons in the
company's volume mix. The lower annual sales price per ton was partially
offset by a decrease in the company's consolidated cash cost per ton over the
same time period, due to strong cost control measures in the Powder River
Basin and Appalachian segments.

                             Powder River Basin
                                  4Q13         3Q13        FY13        FY12
Tons sold (in millions)           26.4         31.5        111.7       104.4
Average sales price per ton       $12.28       $12.26      $12.44      $13.61
Cash cost per ton                 $11.37       $10.20      $10.65      $11.19
Cash margin per ton               $0.91        $2.06       $1.79       $2.42
Total operating cost per ton     $12.90       $11.68      $12.18      $12.79
Operating margin per ton          ($0.62)      $0.58       $0.26       $0.82
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, Arch recorded a cash margin of $0.91 per ton in the
fourth quarter of 2013 compared with $2.06 per ton in the third quarter. While
the company's fourth quarter 2013 sales price per ton was comparable to the
third quarter, cash cost per ton increased, driven by the impact of
lower-than-planned shipment levels stemming from rail service issues on the
Joint Line as well as higher maintenance expense.

For full year 2013, Arch earned a cash margin of $1.79 per ton in the Powder
River Basin versus $2.42 per ton in 2012. Annual sales price per ton in 2013
declined 9 percent versus the prior year, driven by softer pricing on domestic
and export tons. Annual cash cost per ton decreased 5 percent over the same
time period, due to operating efficiencies and successful cost control
initiatives at the company's mines in the region.

                             Appalachia
                                4Q13           3Q13         FY13       FY12
Tons sold (in millions)         3.5            3.3          14.2       18.6
Average sales price per ton     $69.54         $73.71       $73.07     $85.06
Cash cost per ton               $67.41         $67.99       $67.00     $69.46
Cash margin per ton             $2.13          $5.72        $6.07      $15.60
Total operating cost per        $80.36         $82.03       $81.27     $84.09
ton
Operating margin per ton        ($10.82)       ($8.32)      ($8.20)    $0.97
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 $2.13 per ton in the fourth
quarter of 2013 compared with $5.72 per ton in the third quarter. Sales price
per ton decreased 6 percent over the same time period, due to a larger
percentage of lower-priced thermal tons in Arch's regional volume mix. The
fourth quarter 2013 cash cost per ton decreased slightly versus the
prior-quarter period, as strong cost control at several operations more than
offset the impact of geological challenges at the Mountain Laurel mine.

For full year 2013, Arch earned a cash margin of $6.07 per ton in Appalachia
compared with $15.60 per ton in 2012. Annual sales volumes in 2013 declined
more than 4 million tons when compared with 2012, with the majority of the
reduction representing thermal tons from operations that were idled in
response to soft market conditions. Annual sales price per ton decreased over
the same time period, driven by lower pricing on metallurgical and thermal
tons. Annual cash cost decreased by $2.46 per ton in 2013 versus 2012,
benefitting from successful cost control in the region.

                     Bituminous Thermal
                          4Q13              3Q13            FY13       FY12
Tons sold (in             2.4               3.5             13.7       17.7
millions)
Average sales price       $32.17            $33.74          $35.12     $36.35
per ton*
Cash cost per ton*        $20.65            $24.49          $24.57     $23.89
Cash margin per ton       $11.52            $9.25           $10.55     $12.46
Total operating cost      $25.51            $29.17          $29.36     $28.41
per ton*
Operating margin per      $6.66             $4.57           $5.76      $7.94
ton
*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.

In the Bituminous Thermal segment, fourth quarter 2013 cash margin per ton
increased 25 percent versus the third quarter. Sales price per ton declined 5
percent over the same time period, but was more than offset by a 16 percent
decline in cash cost per ton, attributable to a strong performance at West Elk
and the effect of the divestiture of the company's Canyon Fuel Utah subsidiary
in August 2013.

For full year 2013, cash margin in the Bituminous Thermal segment totaled
$10.55 per ton versus $12.46 per ton in 2012. The sale of the company's Utah
operations in August 2013 impacted the comparison of results. Annual sales
price per ton in 2013 decreased versus 2012, partially driven by lower pricing
on export tons. Cash cost per ton increased marginally over the same time
period, primarily due to a strong performance by the Utah operations during
2012.

Market Trends

Domestic thermal coal market fundamentals improved over the course of 2013.
According to internal estimates, U.S. coal consumption for power generation
rose by more than 35 million tons in 2013, while U.S. coal production totaled
984 million tons, the first time since 1993 that domestic coal supplies fell
below the 1-billion-ton mark. As a result, U.S. power generator coal
stockpiles fell meaningfully over the course of the year, and reached the
lowest year-end level since 2006 of approximately 148 million tons.

Arch expects U.S. thermal coal markets to tighten further in 2014, with
favorable weather trends and healthier economic activity driving increased
power demand. In addition, elevated natural gas prices compared with prior
years should ensure that western coals – as well as most eastern coals – are
competitively priced for power generation. Even with growth in U.S. coal
supply, Arch projects additional drawdown on coal stockpiles during 2014. If
such a drop in stockpiles occurs, coal inventories at thermal customers would
fall to levels not seen since 2005.

While thermal markets are gaining momentum, global metallurgical coal markets
remain weak. However, seaborne metallurgical prices are likely at
unsustainably low levels, making it difficult to justify ongoing and new
capital investment. While new global metallurgical coal supply entered the
market during 2013 and must be absorbed, incremental production increases
going forward should be largely offset by rationalization of higher-cost
metallurgical supply. These trends should tighten metallurgical markets in the
future.

2014 Plans

                             2014                           2015
                             Tons        $ per ton      Tons $ per ton
Sales Volume (in millions
tons)
Thermal                      124.0 - 134.0
Met                          7.5   - 8.5
Total                        131.5 - 142.5
Powder River Basin
Committed, Priced                    91.2           $13.18  52.4   $13.78
Committed, Unpriced                  8.0                    8.6
Total Committed                      99.2                   61.0
Average Cash Cost                          $10.70 - $11.00
Appalachia
Committed, Priced Thermal            5.0            $57.07  1.9    $57.75
Committed, Unpriced Thermal          0.3                    -
Committed, Priced                    3.5            $84.84  1.4    $87.01
Metallurgical
Committed, Unpriced                  0.7                    0.2
Metallurgical
Total Committed                      9.5                    3.5
Average Cash Cost                          $63.00 - $67.00
Bituminous Thermal
Committed, Priced                    3.9            $36.20  2.5    $38.95
Committed, Unpriced                  0.6                    -
Total Committed                      4.5                    2.5
Average Cash Cost                          $25.00 - $28.00
Corporate (in $ millions)
D,D&A                                      $430   - $460
S,G&A                                      $122   - $130
Interest Expense                          $385   - $395
Capital Expenditures                       $180   - $200

"Looking ahead, we will remain focused on what we can control – costs, capital
spending and sales commitments," said Eaves. "Our goal in 2014 will be to once
again tighten our belts to reduce cash outflow further and increase
operational efficiencies. In addition, we will continue to evaluate ways to
strengthen and optimize our asset portfolio. With signs that a rebound in U.S.
thermal coal demand and pricing may be forthcoming, we are managing our
operations in a manner that will enable us to benefit from that rebound as it
occurs."

Arch expects to sell between 124 million and 134 million tons into thermal
markets during 2014. The company also expects to ship between 7.5 million and
8.5 million tons into coking coal and pulverized coal injection (PCI) markets
during this calendar year. That range reflects the impact of metallurgical
coal production reductions and cutbacks made in 2013, offset by incremental
longwall production from the Leer mine.

Currently, Arch anticipates that 2014 costs in the Powder River Basin will be
slightly higher than 2013 levels, offset by lower estimated costs in
Appalachia. Arch also expects a reduction in general and administrative
expenses in 2014 versus 2013 levels. Capital expenditures totaled $297
million in 2013, which was nearly $100 million less than the company spent in
2012. For 2014, Arch currently expects capital spending of less than $200
million, inclusive of $75 million for scheduled payments for land reserve
additions.

A conference call regarding Arch Coal's fourth quarter and full year 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 December  Year Ended December 31,
                     31,
                     2013           2012          2013           2012
                     (Unaudited)
Revenues             $ 719,386      $ 867,034     $3,014,357     $3,768,126
Costs, expenses and
other operating
 Cost of sales      668,483        740,793       2,663,136      3,155,099
 Depreciation,
depletion and        98,841         117,580       426,442        492,211
amortization
 Amortization of
acquired sales       (1,870)        (2,628)       (9,457)        (25,189)
contracts, net
 Change in fair
value of coal
derivatives and coal 5,792          13,237        7,845          (16,590)
trading activities,
net
 Asset impairment
and mine closure     -              15,743        220,879        539,182
costs
 Goodwill           265,423        214,889       265,423        330,680
impairment
 Contract
settlement resulting -              58,335        -              58,335
from Patriot Coal
bankruptcy
 Reduction in
accrual related to   -              -             -              (79,532)
acquired litigation
 Selling, general
and administrative   37,137         34,994        133,448        134,299
expenses
 Other operating    (13,742)       (18,751)      (30,218)       (63,357)
income, net
                     1,060,064      1,174,192     3,677,498      4,525,138
  Loss from       (340,678)      (307,158)     (663,141)      (757,012)
operations
Interest expense,
net
 Interest expense   (95,813)       (88,405)      (381,267)      (317,615)
 Interest and       1,854          1,905         6,603          5,473
investment income
                     (93,959)       (86,500)      (374,664)      (312,142)
Nonoperating expense
Net loss resulting
from early           (42,921)       (4,626)       (42,921)       (23,668)
retirement and
refinancing of debt
Loss from continuing
operations before    (477,558)      (398,284)     (1,080,726)    (1,092,822)
income taxes
Benefit from income  (104,764)      (91,251)      (335,498)      (353,907)
taxes
 Loss from
continuing           (372,794)      (307,033)     (745,228)      (738,915)
operations
Income from
discontinued         1,580          11,610        103,396        55,228
operations, net of
tax
 Net loss           (371,214)      (295,423)     (641,832)      (683,687)
  Less: Net
income attributable  -              -             -              (268)
to noncontrolling
interest
  Net loss
attributable to Arch $(371,214)     $(295,423)    $ (641,832)   $ (683,955)
Coal, Inc.
Loss from continuing
operations
Basic loss per       $   (1.76)   $   (1.45)  $           $   
common share                                      (3.52)         (3.50)
Diluted loss per     $   (1.76)   $   (1.45)  $           $   
common share                                      (3.52)         (3.50)
Net Loss
attributable to Arch
Coal, Inc.
Basic loss per       $   (1.75)   $   (1.39)  $           $   
common share                                      (3.03)         (3.24)
Diluted loss per     $   (1.75)   $   (1.39)  $           $   
common share                                      (3.03)         (3.24)
Basic weighted
average shares       212,136        212,048       212,098        211,381
outstanding
Diluted weighted
average shares       212,136        212,048       212,098        211,381
outstanding
Dividends declared   $   0.03    $   0.03   $    0.12  $    0.20
per common share
Adjusted EBITDA (A)  $  38,359     $  71,195    $  425,922    $  688,454
Adjusted diluted                                  $           $   
loss per common      $   (0.45)   $   (0.42)  (1.08)         (0.36)
share (A)

(A) Adjusted EBITDA and Adjusted diluted 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)
                                                    December 31,
                                                    2013         2012
                                                    (Unaudited)
Assets
Current assets
 Cash and cash equivalents                         $  911,099  $   784,622
 Restricted cash                                   -            3,453
 Short term investments                            248,414      234,305
 Trade accounts receivable                         198,020      247,539
 Other receivables                                 31,553       84,541
 Inventories                                       264,161      365,424
 Prepaid royalties                                 8,083        11,416
 Deferred income taxes                             49,144       67,360
 Coal derivative assets                            14,851       22,975
 Other current assets                              56,746       92,469
 Total current assets                              1,782,071    1,914,104
Property, plant and equipment, net                  6,734,286    7,337,098
Other assets
 Prepaid royalties                                 87,577       87,773
 Goodwill                                          -            265,423
 Equity investments                                221,456      242,215
 Other noncurrent assets                           164,803      160,164
  Total other assets                             473,836      755,575
Total assets                                        $8,990,193   $10,006,777
Liabilities and Stockholders' Equity
Current liabilities
 Accounts payable                                  $  176,142  $   224,418
 Coal derivative liabilities                       12           1,737
 Accrued expenses and other current liabilities    278,575      318,018
 Current maturities of debt                        33,493       32,896
  Total current liabilities                      488,222      577,069
 Long-term debt                                    5,118,002    5,085,879
 Asset retirement obligations                      402,713      409,705
 Accrued pension benefits                          7,111        67,630
 Accrued postretirement benefits other than        39,255       45,086
pension
 Accrued workers' compensation                     78,062       81,629
 Deferred income taxes                             413,546      664,182
 Other noncurrent liabilities                      190,033      221,030
  Total liabilities                              6,736,944    7,152,210
Stockholders' equity
 Common Stock                                      2,141        2,141
 Paid-in capital                                   3,038,613    3,026,823
 Treasury stock, at cost                           (53,848)     (53,848)
 Accumulated deficit                               (771,349)    (104,042)
 Accumulated other comprehensive income (loss)     37,692       (16,507)
  Total stockholders' equity                     2,253,249    2,854,567
Total liabilities and stockholders' equity          $8,990,193   $10,006,777



Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
                                                       Year Ended December 31,
                                                       2013         2012
                                                       (Unaudited)
Operating activities
Net loss                                               $(641,832)   $(683,687)
Adjustments to reconcile to cash provided by operating
activities:
 Depreciation, depletion and amortization             447,704      525,508
 Amortization of acquired sales contracts, net        (9,457)      (25,189)
 Amortization relating to financing activities        24,789       20,238
 Prepaid royalties expensed                           13,706       22,650
 Employee stock-based compensation expense            11,790       11,822
 Amortization of premiums on debt securities held     3,680        -
 Gain on sale of Canyon Fuel                          (120,321)    -
 Asset impairment and noncash mine closure costs      220,879      531,234
 Goodwill impairment                                  265,423      330,680
 Net loss resulting from early retirement of debt and 42,921       23,668
financing activities
 Changes in:
  Receivables                                      62,881       113,531
  Inventories                                      44,635       9,468
  Coal derivative assets and liabilities           3,606        (13,158)
  Accounts payable, accrued expenses and other     (77,521)     (171,580)
current liabilities
  Income taxes, net                                (4,520)      27,545
  Deferred income taxes                            (263,099)    (336,036)
  Asset retirement obligations                     17,432       (42,531)
  Other                                            13,046       (11,359)
 Cash provided by operating activities         55,742       332,804
Investing activities
 Capital expenditures                                 (296,984)    (395,225)
 Minimum royalty payments                             (14,947)     (13,269)
 Proceeds from dispositions of property, plant and    10,790       22,825
equipment
 Proceeds from sale-leaseback transactions            34,919       -
 Proceeds from sale of Canyon Fuel                    422,663      -
 Purchases of short term investments                  (213,726)    (236,862)
 Proceeds from sales of short term investments        194,537      1,754
 Investments in and advances to affiliates            (15,260)     (17,758)
 Purchase of noncontrolling interest                  -            (17,500)
 Change in restricted cash                            3,453        6,869
  Cash provided by (used in) investing          125,445      (649,166)
activities
Financing activities
 Proceeds from term loan                              294,000      1,633,500
 Proceeds from issuance of senior notes               350,000      359,753
 Payments to retire debt                              (629,172)    (452,934)
 Payments on term loan                                (17,250)     (7,625)
 Net decrease in borrowings under lines of credit     -            (481,300)
 Net payments on other debt                           (6,324)      (682)
 Debt financing costs                                 (20,489)     (50,568)
 Dividends paid                                       (25,475)     (42,440)
 Proceeds from exercise of options under incentive    -            5,131
plans
 Cash provided by (used in) financing          (54,710)     962,835
activities
Increase in cash and cash equivalents                  126,477      646,473
Cash and cash equivalents, beginning of period         784,622      138,149
Cash and cash equivalents, end of period               $ 911,099    $ 784,622



Arch Coal, Inc. and Subsidiaries
Schedule of Consolidated Debt
(In thousands)
                                                  December 31,    December 31,
                                                  2013            2012
                                                  (Unaudited)
Term loan due 2018 ($1.93 billion and $1.65       $  1,906,975  $ 1,627,384
billion face value, respectively)
8.75% senior notes ($600.0 million face value)    —               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)   362,358         360,042
due 2019
8.00% senior secured notes due 2019 at par        350,000         —
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                                             32,162          40,350
                                                  5,151,495       5,118,775
Less: current maturities of debt                  33,493          32,896
Long-term debt                                    $  5,118,002  $ 5,085,879
Calculation of net debt
Total debt                                        $  5,151,495  $ 5,118,775
Less liquid assets
Cash and cash equivalents                         911,099         784,622
Short term investments                            248,414         234,305
                                                  1,159,513       1,018,927
Net debt                                          $  3,991,982  $ 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 condition. Therefore, Adjusted EBITDA should not be
considered in isolation, nor as an alternative to net income, income items excluded from
Adjusted EBITDA are significant in understanding and assessing our financial 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 December 31,
               2013                                  2012
               Continuing  Discontinued  Total       Continuing  Discontinued  Total
               Operations  Operations    Company     Operations  Operations    Company
               (Unaudited)
Net income     $(372,794)  $   1,580   $           $(307,033)  $ 11,610     $
(loss)                                   (371,214)                            (295,423)
 Income tax
(benefit)      (104,764)   3,063         (101,701)   (91,251)    12,897        (78,354)
expense
 Interest    93,959      -             93,959      86,500      6             86,506
expense, net

Depreciation,  98,841      -             98,841      117,580     8,256         125,836
depletion and
amortization

Amortization
of acquired    (1,870)     -             (1,870)     (2,628)     -             (2,628)
sales
contracts, net
 Earnings
before
Interest,      (286,628)   4,643         (281,985)   (196,832)   32,769        (164,063)
Taxes and DD&A
(EBITDA)

Adjustments:
Asset
impairment and -           -             -           15,743      -             15,743
mine closure
costs
Goodwill       265,423     -             265,423     214,889     -             214,889
impairment
Settlement of
UMWA legal     12,000      -             12,000      -           -             -
claims
Other
nonoperating   42,921      -             42,921      4,626       -             4,626
expenses
Total
adjustments,   320,344     -             320,344     235,258     -             235,258
pre-tax
Adjusted       $  33,716  $   4,643   $          $  38,426  $ 32,769     $ 
EBITDA                                   38,359                               71,195
               Year Ended December 31,
               2013                                  2012
               Continuing  Discontinued  Total       Continuing  Discontinued  Total
               Operations  Operations    Company     Operations  Operations    Company
               (Unaudited)
Net income     $(745,228)  $ 103,396     $           $(738,915)  $ 55,228     $
(loss)                                   (641,832)                            (683,687)
 Income tax
(benefit)      (335,498)   49,092        (286,406)   (353,907)   20,190        (333,717)
expense
 Interest    374,664     26            374,690     312,142     6             312,148
expense, net

Depreciation,  426,442     21,262        447,704     492,211     33,297        525,508
depletion and
amortization

Amortization
of acquired    (9,457)     -             (9,457)     (25,189)    -             (25,189)
sales
contracts, net
 Earnings
before
Interest,      (289,077)   173,776       (115,301)   (313,658)   108,721       (204,937)
Taxes and DD&A
(EBITDA)
 Asset
impairment and 220,879     -             220,879     539,182     129           539,311
mine closure
costs
 Goodwill
and other
intangible     265,423     -             265,423     330,680     -             330,680
asset
impairment
 Settlement
of UMWA legal  12,000      -             12,000      -           -             -
claims
 Other
nonoperating   42,921      -             42,921      23,668      -             23,668
expenses
 Net income
attributable
to             -           -             -           (268)       -             (268)
noncontrolling
interest
Total
adjustments,   541,223     -             541,223     893,262     129           893,391
pre-tax
Adjusted       $ 252,146   $ 173,776     $          $ 579,604   $108,850      $ 
EBITDA                                   425,922                               688,454
Adjusted net loss and adjusted diluted loss per share
Adjusted net loss and adjusted diluted 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 loss and adjusted diluted 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 loss and adjusted diluted
loss per share should not be considered in isolation, nor as an alternative to net loss
or diluted loss per common share under generally accepted accounting principles.
               Three Months Ended        Year Ended December
               December 31,              31,
               2013        2012          2013        2012
               (Unaudited)
Net loss                                 $
attributable   $(371,214)  $(295,423)    (641,832)  $(683,955)
to Arch Coal
 Sales
contract       (1,870)     (2,628)       (9,457)     (25,189)
amortization
Other
adjustment
items          320,344     235,258       541,223     893,391
listed
above
 Tax impact  (42,342)    (25,905)      (119,127)   (261,166)
of adjustments
Adjusted net
loss           (95,082)    (88,698)      (229,193)   (76,919)
attributable
to Arch Coal
Diluted
weighted       212,136     212,048       212,098     211,381
average shares
outstanding
Diluted loss
per share      (1.75)      (1.39)        (3.03)      (3.24)
attributable
to Arch Coal
 Sales
contract       (0.01)      (0.01)        (0.04)      (0.12)
amortization
 Other       1.51        1.11          2.55        4.23
adjustments
 Tax impact  (0.20)      (0.12)        (0.56)      (1.23)
of adjustments
Adjusted       $                       $        $  
diluted loss   (0.45)      $   (0.42)  (1.08)      (0.36)
per share



SOURCE Arch Coal, Inc.

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