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