Arch Coal, Inc. Reports Second Quarter 2014 Results

             Arch Coal, Inc. Reports Second Quarter 2014 Results

Arch's second quarter cash margin per ton expands 71% versus first quarter

Strong second quarter cost control drives full year 2014 cost guidance
reduction

Arch enhances metallurgical platform to lower costs and improve quality

PR Newswire

ST. LOUIS, July 29, 2014

ST. LOUIS, July 29, 2014 /PRNewswire/ --Arch Coal, Inc. (NYSE: ACI) today
reported a net loss of $97 million, or $0.46 per diluted share, in the second
quarter of 2014 compared with a $72 million net loss, or $0.34 per diluted
share, in the second quarter of 2013. Revenues totaled $714 million for the
three months ended June 30, 2014, and adjusted earnings before interest,
taxes, depreciation, depletion and amortization ("EBITDA") from continuing
operations was $65 million.

Earnings Highlights
                                        Quarter Ended       Six Months Ended
In $ millions, except per share         6/30/14   6/30/13   6/30/14   6/30/13
data
Revenues ^1                             $713.8    $766.3    $1,449.7  $1,503.7
Loss from Operations ^1                 (35.8)    (36.3)    (108.9)   (87.7)
Net Loss                                (96.9)    (72.2)    (221.0)   (142.3)
Diluted LPS                             (0.46)    (0.34)    (1.04)    (0.67)
Adjusted Diluted LPS ^2                 (0.46)    (0.29)    (1.06)    (0.62)
Adjusted EBITDA from continuing         $64.9     $93.1     $92.5     $149.0
operations ^2
1/- Excludes discontinued
operations.
2/- Defined and reconciled under "Reconciliation of
non-GAAP measures."

"During the second quarter of 2014, increased shipments, higher pricing and
strong cost control drove margin expansion in each of our operating regions
compared with the first quarter," said John W. Eaves, Arch's president and
chief executive officer. "Our successful cost control efforts to date –
underscored by strong operating performances at Leer in Appalachia and West
Elk in Colorado – have allowed us to reduce our cost-per-ton expectations for
those segments in 2014."

For the first half of 2014, Arch generated adjusted EBITDA from continuing
operations of $93 million compared with $149 million recorded in the first
half of 2013. Total revenues declined slightly to $1.4 billion during the
first six months of 2014, largely due to lower metallurgical coal revenues
versus the prior-year period.

"Recently, we've announced the idling of our Cumberland River complex in
response to weak global metallurgical coal prices," said Eaves. "Although
idling higher-cost coking coal capacity lowers our metallurgical coal volume
expectations for 2014, it also shifts our mine portfolio toward higher-margin
metallurgical coal operations and enhances our competitive cost position in
that region."

Financial Position

As of June 30, 2014, Arch had a total liquidity position of roughly $1.25
billion, with nearly $1.0 billion of that liquidity in the form of cash and
short-term investments. The company had no borrowings under its revolving
credit facility at June 30, 2014, and has no long-term debt maturities due
until mid-2018.

"Through this cyclical downturn, we have been focused on controlling our costs
and capital spending, and we have further reduced our capital outlay and
administrative spending expectations for full year 2014," said John T.
Drexler, Arch's senior vice president and chief financial officer. "We remain
confident that these ongoing initiatives – along with an expected strong
operational performance in the second half – will help us maintain our solid
financial footing going forward, and strategically position Arch to capitalize
on a coal market recovery."

Core Values

During the second quarter of 2014, Arch's lost-time safety incident rate
improved nearly 30 percent compared with the first quarter. In addition, both
the Leer and the Mountain Laurel mines in Appalachia each reached new
milestones of operating an entire year without a single lost-time safety
incident. Furthermore, Arch recently earned three safety and environmental
awards, including the state of Wyoming's top honor for reclamation excellence
and wildlife habitat creation at the Black Thunder and Coal Creek mines.

"We're extremely proud of our employees for these achievements and recognize
their continued dedication to advancing Arch's core values," said Paul A.
Lang, Arch's executive vice president and chief operating officer. "We also
congratulate the six operations that attained A Perfect Zero – the dual
accomplishment of operating without an environmental violation or reportable
safety incident – during the second quarter of 2014."

Operational Results

"Our mines turned in solid performances in the second quarter, supported by
cost reductions that improved margins across our operating platform versus the
first quarter," said Lang. "Looking ahead, we expect strong cost performances
in our Appalachian and Bituminous Thermal segments to continue, and we plan to
remain nimble in response to market conditions."

                                     Arch Coal, Inc.
                                           2Q14             1Q14       2Q13
Tons sold (in millions)                    32.7             31.4       33.0
Average sales price per ton                $20.34           $20.09     $21.37
Cash cost per ton                          $17.43           $18.39     $17.89
Cash margin per ton                        $2.91            $1.70      $3.48
Total operating cost per ton              $20.55           $21.70     $21.19
Operating margin per ton                   ($0.21)          ($1.61)    $0.18
Consolidated results may not tie to regional breakout due to exclusion of
other assets, rounding.
Operating results exclude former Canyon Fuel
subsidiary.
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP
measures".
Operating cost per ton is the sum of cash costs and depreciation,
depletion
and amortization expense divided by
tons sold.

Second quarter 2014 consolidated cash margin per ton expanded 71 percent
versus the first quarter, reflecting both higher prices and lower costs per
ton in each operating segment. The improvement in consolidated sales price per
ton was largely driven by higher-priced domestic thermal coal sales, slightly
offset by lower pricing obtained on metallurgical coal shipments. Consolidated
cash cost per ton declined 5 percent in the second quarter of 2014 versus the
prior- quarter period, due to successful cost-containment efforts and the
effect of higher shipment levels in the Powder River Basin.

                                   Powder River Basin
                                        2Q14           1Q14           2Q13
Tons sold (in millions)                 26.9           25.7           27.1
Average sales price per ton             $12.79         $12.73         $12.56
Cash cost per ton                       $11.09         $11.45         $10.47
Cash margin per ton                     $1.70          $1.28          $2.09
Total operating cost per ton           $12.61         $12.98         $12.02
Operating margin per ton                $0.18          ($0.25)        $0.54
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP
measures".
Operating cost per ton is the sum of cash costs and depreciation, depletion
and amortization expense divided by
tons sold.

Second quarter 2014 cash margin per ton increased 33 percent in the Powder
River Basin, when compared to the first quarter. Average sales price per ton
increased modestly over the same time period, while cash cost per ton declined
3 percent, benefitting from the effect of increased shipments and strong cost
control.

                                     Appalachia
                                             2Q14         1Q14        2Q13
Tons sold (in millions)                      3.7          3.6         4.0
Average sales price per ton                  $69.36       $67.70      $74.18
Cash cost per ton                            $62.36       $65.48      $65.70
Cash margin per ton                          $7.00        $2.22       $8.48
Total operating cost per ton                $76.25       $80.80      $79.56
Operating margin per ton                     ($6.89)      ($13.10)    ($5.38)
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP
measures".
Operating cost per ton is the sum of cash costs and depreciation,
depletion
and amortization expense divided by tons
sold.

In Appalachia, Arch earned a cash margin of $7.00 per ton in the second
quarter of 2014 versus $2.22 per ton in the first quarter. Average sales price
per ton increased 2 percent over the same time period, reflecting higher
prices on thermal and industrial coal sales as well as a larger percentage of
metallurgical coal in the company's regional volume mix. Cash cost per ton
decreased 5 percent versus the first quarter, driven by a shift in production
toward the company's lower-cost mines in the region and the Leer mine's
successful ongoing ramp up to full production.

                                      Bituminous Thermal
                                               2Q14          1Q14      2Q13
Tons sold (in millions)                        2.0           2.1       1.8
Average sales price per ton                    $31.34        $28.64    $35.69
Cash cost per ton                              $19.83        $22.64    $22.43
Cash margin per ton                            $11.51        $6.00     $13.26
Total operating cost per ton                   $24.51        $27.17    $28.40
Operating margin per ton                       $6.83         $1.47     $7.29
Operating results exclude former Canyon Fuel
subsidiary.
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP
measures".
Operating cost per ton is the sum of cash costs and depreciation,
depletion
and amortization expense divided by tons sold.

In the Bituminous Thermal segment, Arch's cash margin nearly doubled versus
the first quarter to $11.51 per ton in the second quarter of 2014. Average
sales price per ton increased 9 percent over the same time period, reflecting
increased domestic demand and lower export volumes. Arch recorded a cash cost
of $19.83 per ton in the second quarter of 2014, a 12 percent decline versus
the first quarter, driven by strong operating performances at the mines in the
segment.

Market Trends

Arch believes the current coal market downturn is unsustainable over the long
term. While global metallurgical coal prices are expected to remain soft
throughout 2014, global steel production, a driver of metallurgical coal
demand, has increased by 2.5 percent year-to-date and appears poised for
continued expansion. Announced closures of higher-cost metallurgical coal
supply have accelerated as 2014 has progressed, and many capital growth
projects have been delayed or cancelled as current prevailing prices do not
justify incremental investment. Arch expects all of these factors to bring
better balance to global metallurgical markets over time.

Adding to near-term pressures, prevailing soft seaborne thermal and
metallurgical prices are likely to limit U.S. coal exports this year. Arch
expects industry-wide coal exports from the United States to decline below 100
million tons for 2014 compared with 2013 export levels of 117 million tons.

In the domestic coal market, U.S. electric generation grew 2 percent through
the first half of 2014, according to the Edison Electric Institute. Coal
stockpiles at U.S. power generators have declined markedly this year, due to
higher competing fuel prices and increased power load.

With prevailing mild summer temperatures to date, Arch now expects domestic
coal consumption to increase by approximately 20 million tons in 2014 compared
to last year. Even with the mild summer weather, however, coal stockpiles at
power generators are likely to shrink – and could end the year at around 50
days of supply. Customer coal inventories in some regions, such as the Powder
River Basin, could decline to below-normal levels.

Company Outlook

                             2014                           2015
                             Tons        $ per ton      Tons $ per ton
Sales Volume (in millions
tons)
Thermal                      124.0 - 130.0
Met                          6.3   - 6.9
Total                        130.3 - 136.9
Powder River Basin
Committed, Priced                    109.8          $13.00  74.9   $13.72
Committed, Unpriced                  3.6                    9.7
Total Committed                      113.4                  84.6
Average Cash Cost                          $10.80 - $11.10
Appalachia
Committed, Priced Thermal            7.3            $57.72  3.4    $56.71
Committed, Unpriced Thermal          0.2                    -
Committed, Priced                    6.0            $82.44  1.6    $85.53
Metallurgical
Committed, Unpriced                  0.2                    0.3
Metallurgical
Total Committed                      13.7                   5.3
Average Cash Cost                          $62.50 - $64.50
Bituminous Thermal
Committed, Priced                    7.6            $31.00  3.3    $36.32
Committed, Unpriced                  0.2                    -
Total Committed                      7.8                    3.3
Average Cash Cost                          $21.00 - $23.00
Corporate (in $ millions)
D,D&A                                      $410   - $430
S,G&A                                      $118   - $124
Interest Expense                          $382   - $392
Capital Expenditures                       $170   - $180

Based on current expectations, Arch is reducing its sales volume targets for
2014, reflecting the result of ongoing transportation bottlenecks affecting
thermal coal deliveries and the impact of metallurgical production
curtailments. Arch now expects thermal sales volumes for 2014 to be in the
range of 124 million to 130 million tons. The company has lowered its
metallurgical coal sales guidance, and now expects to ship between 6.3 million
and 6.9 million tons for 2014.

Offsetting the volume reductions, Arch has reduced its annual
cash-cost-per-ton guidance range for both its Appalachian and Bituminous
Thermal segments. However, the company anticipates the timing of two longwall
moves in West Virginia and the cost of idling Cumberland River to temporarily
impact the Appalachian reported costs during the third quarter. Additionally,
Arch is further reducing its capital expenditures for 2014, and now expects to
spend $170 million to $180 million for capital programs, inclusive of land and
reserve additions.

"Looking ahead, we remain focused on those factors within our control to
position Arch for a future market rebound," said Eaves. "As coal markets turn,
Arch can leverage its superior low-cost thermal and metallurgical asset base
to create substantial value for our stakeholders."

A conference call regarding Arch Coal's second quarter 2014 financial results
will be webcast live today at 11 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 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 June   Six Months Ended June 30,
                          30,
                          2014         2013         2014          2013
                          (Unaudited)
Revenues                  $713,776     $766,332     $1,449,747    $1,503,702
Costs, expenses and other
operating
Cost of sales        622,137      656,198      1,308,451     1,305,941
Depreciation,
depletion and             102,464      111,085      206,887       221,278
amortization
Amortization of
acquired sales contracts, (3,239)      (2,209)      (6,935)       (5,019)
net
Change in fair value
of coal derivatives and   (2,992)      (9,008)      (2,078)       (7,700)
coal trading activities,
net
Asset impairment     1,512        20,482       1,512         20,482
costs
Selling, general and 29,931       34,302       59,067        67,511
administrative expenses
Other operating      (232)        (8,239)      (8,230)       (11,081)
income, net
                          749,581      802,611      1,558,674     1,591,412
Loss from       (35,805)     (36,279)     (108,927)     (87,710)
operations
Interest expense, net
Interest expense     (97,960)     (94,756)     (194,431)     (189,830)
Interest and         2,036        1,216        3,879         4,052
investment income
                          (95,924)     (93,540)     (190,552)     (185,778)
Loss from continuing
operations before income  (131,729)    (129,819)    (299,479)     (273,488)
taxes
Benefit from income taxes (34,869)     (49,468)     (78,480)      (108,821)
Loss from continuing      (96,860)     (80,351)     (220,999)     (164,667)
operations
Income from discontinued  —            8,145        —             22,412
operations, net of tax
Net loss                  $ (96,860)   $ (72,206)   $ (220,999)  $ (142,255)
Losses per common share
Basic and diluted LPS -                             $          $   
Loss from continuing      $  (0.46)  $  (0.38)  (1.04)        (0.78)
operations
Basic and diluted LPS -   $  (0.46)  $  (0.34)  $          $   
Net loss                                            (1.04)        (0.67)
Basic and diluted
weighted average shares   212,225      212,082      212,198       212,072
outstanding
Dividends declared per    $     —  $   0.03  $         $    
common share                                        0.01          0.06
Adjusted EBITDA From      $ 64,932    $ 93,079    $   92,537  $  149,031
Continuing Operations(A)
Adjusted EBITDA (A)       $ 64,932    $110,550     $   92,537  $  194,179
Adjusted diluted loss per $  (0.46)  $  (0.29)  $          $   
common share (A)                                    (1.06)        (0.62)
(A) Amounts 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)
                                                     June 30,     December 31,
                                                     2014         2013
                                                     (Unaudited)
Assets
Current assets
Cash and cash equivalents                       $  740,154  $  911,099
Short term investments                          248,647      248,414
Trade accounts receivable                       203,782      198,020
Other receivables                               35,369       31,553
Inventories                                     228,726      264,161
Prepaid royalties                               7,932        8,083
Deferred income taxes                           48,786       49,144
Coal derivative assets                          14,122       14,851
Other current assets                            54,270       56,746
Total current assets                            1,581,788    1,782,071
Property, plant and equipment, net                   6,603,458    6,734,286
Other assets
Prepaid royalties                               87,494       87,577
Equity investments                              229,514      221,456
Other noncurrent assets                         153,854      164,803
Total other assets                         470,862      473,836
Total assets                                         $8,656,108   $ 8,990,193
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable                                $  160,209  $  176,142
Accrued expenses and other current liabilities  294,317      278,587
Current maturities of debt                      27,266       33,493
Total current liabilities                  481,792      488,222
Long-term debt                                  5,116,353    5,118,002
Asset retirement obligations                    395,813      402,713
Accrued pension benefits                        13,925       7,111
Accrued postretirement benefits other than      38,034       39,255
pension
Accrued workers' compensation                   74,083       78,062
Deferred income taxes                           332,207      413,546
Other noncurrent liabilities                    172,512      190,033
Total liabilities                          6,624,719    6,736,944
Stockholders' equity
Common stock                                    2,141        2,141
Paid-in capital                                 3,044,082    3,038,613
Treasury stock, at cost                         (53,848)     (53,848)
Accumulated deficit                             (994,471)    (771,349)
Accumulated other comprehensive income          33,485       37,692
Total stockholders' equity                 2,031,389    2,253,249
Total liabilities and stockholders' equity           $8,656,108   $ 8,990,193



Arch Coal, Inc. and Subsidiaries
Schedule of Consolidated Debt
(In thousands)
                                                      June 30,    December 31,
                                                      2014        2013
                                                      (Unaudited)
Term loan due 2018 ($1.92 billion and $1.93 billion   $1,898,697  $ 1,906,975
face value, respectively)
7.00% senior notes due 2019 at par                    1,000,000   1,000,000
9.875% senior notes due 2019 ($375.0 million face     362,867     362,358
value)
8.00% senior secured notes due 2019 at par            350,000     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                                                 32,055      32,162
                                                      5,143,619   5,151,495
Less: current maturities of debt                      27,266      33,493
Long-term debt                                        $5,116,353  $ 5,118,002
Calculation of net debt
Total debt                                            $5,143,619  $ 5,151,495
Less liquid assets
Cash and cash equivalents                        740,154     911,099
Short term investments                           248,647     248,414
                                                      988,801     1,159,513
Net debt                                              $4,154,818  $ 3,991,982

Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
                                                     Six Months Ended June 30,
                                                     2014          2013
                                                     (Unaudited)
Operating activities
Net loss                                             $(220,999)    $(142,255)
Adjustments to reconcile to cash provided by
operating activities:
Depreciation, depletion and amortization        206,887       237,668
Amortization of acquired sales contracts, net   (6,935)       (5,019)
Amortization relating to financing activities   7,757         12,346
Prepaid royalties expensed                      3,575         9,251
Employee stock-based compensation expense       5,469         5,804
Asset impairment costs                          1,512         20,482
Gains on disposals and divestitures, net        (18,506)      (2,819)
Deferred income taxes                           (78,568)      (102,172)
Changes in:
Receivables                                267           (3,909)
Inventories                                3,522         8,771
Accounts payable, accrued expenses and     10,495        (4,062)
other current liabilities
Income taxes, net                          (571)         (29)
Other                                           7,749         17,988
Cash provided by (used in) operating       (78,346)      52,045
activities
Investing activities
Capital expenditures                            (95,746)      (169,064)
Payments of minimum royalties                   (3,341)       (10,162)
Proceeds from sale-leaseback transactions       —             5,080
Proceeds from disposals and divestitures        43,245        34,919
Purchases of short term investments             (168,951)     (61,870)
Proceeds from sales of short term investments   166,018       47,097
Investments in and advances to affiliates       (9,501)       (8,142)
Change in restricted cash                       —             2,368
Cash used in investing activities          (68,276)      (159,774)
Financing activities
Payments on term loan                           (9,750)       (8,250)
Net payments on other debt                      (9,390)       (11,703)
Debt financing costs                            (1,957)       —
Dividends paid                                  (2,123)       (12,735)
Change in restricted cash                       (1,103)       —
Cash used in financing activities          (24,323)      (32,688)
Decrease in cash and cash equivalents                (170,945)     (140,417)
Cash and cash equivalents, beginning of period       911,099       784,622
Cash and cash equivalents, end of period             $ 740,154     $ 644,205



Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands, except per share data)
Included in the accompanying release are certain non-GAAP measures as defined
by Regulation G.
The following reconciles these items to cost of sales, 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 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 June 30,
                        2014           2013
                        Total Company  Continuing   Discontinued  Total
                                       Operations   Operations    Company
                        (Unaudited)
Net loss                $  (96,860)   $ (80,351)  $   8,145   $  (72,206)
Income tax         (34,869)       (49,468)     1,603         (47,865)
provision (benefit)
Interest expense,  95,924         93,540       8             93,548
net
Depreciation,
depletion and           102,464        111,085      7,715         118,800
amortization
Amortization of
acquired sales          (3,239)        (2,209)      —             (2,209)
contracts, net
Asset impairment   1,512          20,482       —             20,482
costs
Adjusted EBITDA         $  64,932    $  93,079   $  17,471    $  110,550
                        Six Months Ended June 30,
                        2014           2013
                        Total Company  Continuing   Discontinued  Total
                                       Operations   Operations    Company
                        (Unaudited)
Net loss                $ (220,999)   $(164,667)   $  22,412    $ (142,255)
Income tax         (78,480)       (108,821)    6,325         (102,496)
provision (benefit)
Interest expense,  190,552        185,778      21            185,799
net
Depreciation,
depletion and           206,887        221,278      16,390        237,668
amortization
Amortization of
acquired sales          (6,935)        (5,019)      —             (5,019)
contracts, net
Asset impairment   1,512          20,482       —             20,482
costs
Adjusted EBITDA         $  92,537    $ 149,031    $  45,148    $  194,179

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 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 June  Six Months Ended June 30,
                           30,
                           2014       2013          2014          2013
                           (Unaudited)              (Unaudited)
Net loss                   $         $ (72,206)   $(220,999)    $ (142,255)
                           (96,860)
Amortization of
acquired sales contracts,  (3,239)    (2,209)       (6,935)       (5,019)
net
Asset impairment      1,512      20,482        1,512         20,482
costs
Tax impact of         622        (6,578)       1,952         (5,567)
adjustments
Adjusted net loss          $         $ (60,511)   $(224,470)    $ (132,359)
attributable to Arch Coal  (97,965)
Diluted weighted average   212,225    212,082       212,198       212,072
shares outstanding
Diluted loss per share     $       $   (0.34)  $   (1.04)  $   
attributable to Arch Coal  (0.46)                                 (0.67)
Amortization of
acquired sales contracts,  (0.02)     (0.01)        (0.03)        (0.02)
net
Asset impairment      0.01       0.10          0.01          0.10
costs
Tax impact of         0.01       (0.04)        0.01          (0.03)
adjustments
Adjusted diluted loss per  $       $   (0.29)  $   (1.06)  $   
share                      (0.46)                                 (0.62)

Cash costs per ton
Cash costs per ton exclude the costs of depreciation, depletion and
amortization and pass-through transportation costs, and may be adjusted for
other items that, due to accounting rules, are classified in "other
income/expense" on the statement of operations, but relate directly to the
costs incurred to produce coal. Cash costs per ton are not measures of
financial performance in accordance with generally accepted accounting
principles. We believe cash costs per ton better reflect our controllable
costs and our operating results by including all cash costs incurred to
produce coal. The adjustments made to arrive at these measures are significant
in understanding and assessing our financial condition. Therefore, cash costs
per ton should not be considered in isolation, nor as an alternative to cost
of sales per ton under generally accepted accounting principles.
The following reconciles cost of sales on our condensed consolidated statement
of operations to cash cost per ton.

                                Three Months Ended June 30,  Three Months
                                                             Ended March 31,
                                2014            2013         2014
                                (Unaudited)
Cost of sales on condensed                                   $        
consolidated statement of       $  622,137     $ 656,198    686,314
operations
Transportation costs billed to  (50,613)        (63,968)     (106,959)
customers
Settlements of heating oil
derivatives used to manage      1,684           3,584        1,879
diesel fuel purchase price risk
Other (other operating
segments, operating overhead,   (3,929)         (6,155)      (4,689)
land management, etc.)
Total cash costs          $  569,279     $ 589,659    $        
                                                             576,545
Total tons sold            32,663          32,953       31,357
Total cash cost per ton    $   17.43    $   17.89  $        
                                                               18.39

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SOURCE Arch Coal, Inc.

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