Arch Coal, Inc. Reports First Quarter Results

Highlights:



-- Net income of $6.1 million, or $.15 per share, vs. a net loss of

$15.0 million, or $.39 per share, in 1Q00

-- Adjusted EBITDA of $80.3 million, vs. $63.6 million in 1Q00

-- Total debt reduction of $98.7 million, or 9%

-- Revenues of $381.4 million, vs. $357.8 million in 1Q00

-- Coal sales of 27.2 million tons, vs. 27.8 million tons in 1Q00



Apr 23, 2001, 01:00 ET from Arch Coal, Inc.

    ST. LOUIS, April 23 /PRNewswire Interactive News Release/ -- Arch Coal,
 Inc. (NYSE:   ACI) announced today that it had net income of $6.1 million, or
 $.15 per share, for its first quarter ended March 31, 2001.  In comparison,
 Arch had a net loss of $15.0 million, or $.39 per share, in the same quarter
 of 2000.
     "As previously announced, Arch Coal realized very strong margins on the
 limited tonnage that was open to market-based pricing during the quarter,"
 said Steven F. Leer, Arch Coal's president and chief executive officer.
 "Moreover, nearly all of our mines performed well during the period, and
 continue to operate at high levels of efficiency today."
     The one operation that struggled during the quarter was the West Elk mine
 in Colorado, which encountered higher-than-expected methane levels following
 the relocation of its longwall mining system to a new reserve area in late
 February.  "We have made progress in combating the problem, and we are
 optimistic that the mine can return to reasonably strong levels of production
 in the second half of the year," Leer said.  "However, the problem did lead to
 a substantial curtailment of planned shipments in the first quarter, and it
 will have an impact on shipments during the second quarter as well."
     In addition to strong market-based pricing on its open tonnage, the
 company also benefited from income tax credits related to depletion and a
 $3.5 million pre-tax gain associated with the reversal of certain previously
 recorded reclamation liabilities.  Offsetting those benefits were accruals
 related to stock-based compensation benefit programs that could be realized in
 future periods as a result of improved stock performance.
     Arch had revenues of $381.4 million and coal sales of 27.2 million tons in
 the first quarter of 2001, compared to $357.8 million and 27.8 million tons in
 the same period of 2000.  Adjusted EBITDA for the quarter totaled
 $80.3 million, compared to $63.6 million in the first quarter of 2000.
 
     Coal markets
     Coal markets continued to strengthen during the quarter, especially in
 Arch's two principal producing regions.  "The spot price of Powder River Basin
 coal has tripled in the past 12 months, and the spot price of central
 Appalachian compliance coal has doubled," Leer said.  "We are particularly
 encouraged by the fact that prices continued to improve in both regions during
 March and April, months when electricity demand typically falls off and coal
 prices soften."
     As previously announced, Arch had committed nearly all of its expected
 production for 2001 before the year began, and has only about 1.5 million tons
 of coal to ship at current spot pricing for the remainder of 2001.  The
 company currently has approximately 30% of its expected production open to
 market-based pricing in 2002, 50% in 2003, and 75% in 2004.
     "In recent years, power generators have waited until the summer months or
 even later before seeking to secure new supply commitments for the following
 year," Leer said.  "In contrast, we have already received a substantial number
 of solicitations for 2002 business and are engaged in active negotiations with
 some of these generators.  We view this development as a positive indication
 that pricing for our open-to-market business in 2002 could be quite strong."
 
     Debt reduction
     During the quarter, Arch reduced its total debt by $98.7 million, or more
 than 9%, principally through the use of proceeds raised in an equity offering
 in early February made in connection with a secondary offering by Ashland Inc.
 "We continue to view the strengthening of our balance sheet as our top
 financial priority and one of the best options we have to create value for our
 shareholders," Leer said.
     Leer noted that the company was able to achieve this debt reduction
 despite the fact that capital spending is historically higher in the first
 quarter due to the timing of reserve acquisition payments for the Thundercloud
 lease and Arch's normal capital budget cycle.  Arch made the third of five
 annual payments of $31.6 million on the Thundercloud lease in January 2001.
 
     West Elk mine
     In recent weeks, West Elk has completed revisions to its ventilation plan
 and has made progress in diluting the liberated methane levels.  "We are
 making strides in addressing the higher methane levels, and we are optimistic
 about our ability to effectively manage the problem over the long term," Leer
 said.  West Elk is in the process of drilling degasification holes inside the
 mine and will soon drill similar holes from the surface that should help
 control methane levels over time.
     The West Elk mine was idle for roughly six months in 2000 due to a fire
 that occurred in the western section of the mine.  In February 2001, West Elk
 completed mining the last longwall panel in the western section and moved its
 longwall mining system to a new reserve area on the mine's east side.  West
 Elk recently completed efforts to permanently seal the entire west side of the
 mine.
 
     Operating statistics
     Regional analysis: Of the 27.2 million tons of coal that Arch sold during
 the first quarter, approximately 8.9 million tons originated at its eastern
 operations and 18.3 million tons originated at its western operations.  Arch
 Coal had an average operating realization of $13.24 per ton and average
 operating costs of $12.12 per ton.  The eastern operations had an average
 realized sales price of $27.76 per ton and an average cost of $24.57 per ton
 during the quarter.  The western operations had an average realized sales
 price of $6.28 per ton and an average cost of $6.14 per ton during the
 quarter.  (Western operations data does not include the results of 65%-owned
 Canyon Fuel Company, which is accounted for on the equity method.)
     Expected 2001 production: In the east, Arch expects to sell a total of
 approximately 34 million tons of coal in 2001 from its mines in central
 Appalachia.  In the west, Arch expects to sell approximately 65 million tons
 of coal at its Black Thunder mine in the Powder River Basin of Wyoming and
 between
 4 million and 6 million tons of coal at the West Elk mine in Colorado.  The
 actual volume produced at West Elk will be largely dependent on the company's
 ability to manage the high methane levels currently being experienced there.
     Financial: Arch currently expects depreciation, depletion and amortization
 to total approximately $225 million in 2001, which includes $54.1 million in
 the quarter just ended.  Capital expenditures are expected to total
 approximately $130 million, which includes $51.5 million expended in the
 quarter just ended.  (Projections for depreciation, depletion and amortization
 and capital expenditures include Arch's ownership percentage in Canyon Fuel
 Company.)
 
     Looking ahead
     "In recent weeks, we have received a substantial number of solicitations
 from power generators that are looking to secure a supply of coal for 2002 and
 thereafter," Leer said.  "Given the current tightness in U.S. coal markets, we
 expect favorable pricing for our tonnage that is uncommitted or open to
 market-based pricing."
     "Moreover, we continue to be encouraged by other developments that should
 continue to exert a positive influence on coal prices," Leer continued.
 "Natural gas prices remain high, hydroelectric output is being adversely
 affected by drought-like conditions in the western United States, and the
 nuclear system is producing at near its practical capacity.  Furthermore, coal
 stockpiles at U.S. power plants were 35% lower at the outset of 2001 than a
 year earlier, and given current coal production levels we could see a further
 erosion of those stockpiles this summer."
     Meanwhile, coal-fired power plants are operating at a utilization rate of
 only 70%.  "Clearly, coal demand will continue to climb as power generators
 seek to run these plants at ever-higher levels of efficiency," Leer said.
     The longer-term demand picture is strengthening as well.  "The high price
 of competing fuels has spurred a renewed interest in new coal-fired
 generation," Leer added.  "The announced additional capacity that is expected
 to come on-line towards the middle of the decade should provide a smooth
 transition for continued coal demand growth as existing coal-fired plants
 begin to approach their effective capacity limits."
     So far, plans to build roughly 20,000 megawatts of new coal-fired capacity
 have already been announced, according to Energy Ventures Analysis.  That
 equates to between 60 million and 80 million tons of new coal demand annually.
     A conference call concerning first quarter earnings will be webcast live
 today at 11 a.m. EST.  The conference call can be accessed via the "investor
 info" section of the Arch Coal web site ( www.archcoal.com ).
     Arch Coal is the nation's second largest coal producer with subsidiary
 operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah.
 Through these operations, Arch Coal provides the fuel for approximately 6% of
 the electricity generated in the United States.
 
     Definition: Adjusted EBITDA is presented above because it is a widely
 accepted financial indicator of a company's ability to incur and service debt.
 Adjusted EBITDA should not be considered in isolation or as an alternative to
 net income, operating income, cash flows from operations, or as a measure of a
 company's profitability, liquidity or performance under generally accepted
 accounting principles.  Adjusted EBITDA is defined as income from operations
 before the effect of net interest expense; income taxes; and depreciation,
 depletion and amortization for Arch Coal, Inc., its subsidiaries and its
 ownership percentage in its equity investments.
 
     Forward-Looking Statements:  Statements contained in this press release
 which are not statements of historical fact are forward-looking statements
 within the "safe harbor" provision of the Private Securities Litigation Reform
 Act of 1995.  These forward-looking statements are based on our current
 expectations and projections about future events, some or all of which may be
 incorrect, and which are also subject to various risks and uncertainties that
 could cause actual results to differ materially from those projected in the
 statements.  These expectations, assumptions and uncertainties include the
 following:  our expectation of continued growth in the demand for electricity;
 our belief that legislation, regulations and the relatively higher costs of
 competing fuels will increase demand for our compliance and low-sulfur coal;
 projected production and financial results; our expectation of improving
 market conditions for the price of our coal; our expectation that we will
 continue to have adequate liquidity from our cash flow from operations,
 together with available borrowings under our credit facilities, to pay down
 our debt and to finance our working capital needs; a variety of operational,
 geologic, permitting, labor and weather-related factors, including equipment
 availability; and other risks and uncertainties detailed from time to time in
 the company's reports filed 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
                                                            March 31
                                                       2001           2000
                                                           (Unaudited)
     Revenues
      Coal sales                                     $360,043       $344,399
      Income from equity investment                     6,059          3,631
      Other revenues                                   15,325          9,771
                                                      381,427        357,801
 
     Costs and expenses
      Cost of coal sales                              329,525        329,985
      Selling, general and administrative expenses     13,794          9,756
      Amortization of coal supply agreements            7,586         10,096
      Other expenses                                    4,329          5,066
                                                      355,234        354,903
       Income from operations                          26,193          2,898
 
     Interest expense, net:
       Interest expense                               (21,354)       (22,920)
       Interest income                                    251            295
                                                      (21,103)       (22,625)
 
         Income (loss) before income taxes              5,090        (19,727)
     Benefit from income taxes                         (1,000)        (4,700)
 
         Net income (loss)                             $6,090       $(15,027)
 
 
     Basic and diluted earnings (loss) per
      common share                                      $0.15         $(0.39)
 
     Weighted average shares outstanding               40,411         38,164
 
 
     Dividends declared per share                     $0.0575        $0.0575
 
 
     Adjusted EBITDA (A)                              $80,313        $63,589
 
 
     (A)  Adjusted EBITDA is defined as income from operations before the
          effect of net interest expense; income taxes; depreciation, depletion
          and amortization for Arch Coal, Inc., its subsidiaries and its
          ownership percentage in its equity investments.
 
 
 
                        Arch Coal, Inc. and Subsidiaries
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
 
                                                      March 31,    December 31,
                                                        2001           2000
     Assets                                         (Unaudited)
      Current assets
       Cash and cash equivalents                       $2,349         $6,028
       Trade receivables                              153,628        141,727
       Other receivables                               24,305         38,540
       Inventories                                     51,288         47,930
       Prepaid royalties                                3,459          2,262
       Deferred income taxes                           27,440         27,440
       Other                                           14,911         13,963
 
                   Total current assets               277,380        277,890
 
     Property, plant and equipment, net             1,441,749      1,430,053
 
 
     Other assets
       Prepaid royalties                               33,500         17,500
       Coal supply agreements                         101,298        108,884
       Deferred income taxes                          194,067        179,343
       Investment in Canyon Fuel                      174,004        188,700
       Other                                           29,393         30,244
                                                      532,262        524,671
                   Total assets                    $2,251,391     $2,232,614
 
 
     Liabilities and stockholders' equity
      Current liabilities
       Accounts payable                              $115,164       $103,014
       Accrued expenses                               154,402        152,303
       Current portion of debt                         95,000         60,129
                   Total current liabilities          364,566        315,446
     Long-term debt                                   957,070      1,090,666
      Accrued postretirement benefits other
       than pension                                   332,837        336,663
     Accrued reclamation and mine closure             116,133        118,928
     Accrued workers' compensation                     79,637         78,593
     Accrued pension cost                              21,453         19,287
     Obligations under capital leases                  10,596         11,348
     Other noncurrent liabilities                      63,118         41,809
                   Total liabilities                1,945,410      2,012,740
 
     Stockholders' equity
      Common stock                                        435            397
      Paid-in capital                                 550,940        473,428
      Retained deficit                               (231,385)      (234,980)
      Treasury stock, at cost                               -        (18,971)
      Accumulated other comprehensive loss            (14,009)             -
                   Total stockholders' equity         305,981        219,874
 
                   Total liabilities and
                    stockholders' equity           $2,251,391     $2,232,614
 
 
                        Arch Coal, Inc. and Subsidiaries
                Condensed Consolidated Statements of Cash Flows
                                 (In Thousands)
 
                                                         Three Months Ended
                                                             March 31,
                                                        2001           2000
                                                            (Unaudited)
     Operating activities
     Net income (loss)                                 $6,090       $(15,027)
     Adjustments to reconcile to cash
        provided by operating activities:
      Depreciation, depletion and amortization         44,240         51,769
      Prepaid royalties expensed                        1,607          1,590
      Net gain on disposition of assets                (3,435)        (2,343)
      Income from equity investment                    (6,059)        (3,631)
      Net distributions from (contributions to)
       equity investment                               20,755         (7,800)
      Changes in:
        Receivables                                     2,334         18,953
        Inventories                                    (3,358)        (1,191)
        Accounts payable and accrued expenses          14,249         26,307
        Income taxes                                   (5,767)        (4,642)
        Accrued postretirement benefits other
         than pension                                  (3,826)          (661)
        Accrued reclamation and mine closure           (2,795)           699
        Accrued workers' compensation benefits          1,044         (6,325)
        Other                                             413         (1,711)
 
       Cash provided by operating activities           65,492         55,987
 
     Investing activities
     Additions to property, plant and equipment       (48,547)       (50,129)
     Proceeds from dispositions of property,
      plant and equipment                               3,631          2,942
     Additions to prepaid royalties                   (18,804)       (17,901)
 
       Cash used in investing activities              (63,720)       (65,088)
 
     Financing activities
     Net (payments on) borrowings from revolver
      and lines of credit                             (98,725)        11,101
     Reductions of obligations under captital lease      (752)             -
     Dividends paid                                    (2,495)        (2,195)
     Proceeds from sale of common stock                77,550              -
     Proceeds from sale of treasury stock              18,971              -
 
       Cash provided by (used in) financing
        activities                                     (5,451)         8,906
 
     Decrease in cash and cash equivalents             (3,679)          (195)
     Cash and cash equivalents, beginning of period     6,028          3,283
 
     Cash and cash equivalents, end of period          $2,349         $3,088
 
     Canyon Fuel Company cash flow information
        (Arch Coal Ownership Percentage)
      Depreciation, depletion and amortization          9,880          8,922
      Additions to property, plant and equipment        2,901          1,637
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X76220765
 
 

SOURCE Arch Coal, Inc.
    ST. LOUIS, April 23 /PRNewswire Interactive News Release/ -- Arch Coal,
 Inc. (NYSE:   ACI) announced today that it had net income of $6.1 million, or
 $.15 per share, for its first quarter ended March 31, 2001.  In comparison,
 Arch had a net loss of $15.0 million, or $.39 per share, in the same quarter
 of 2000.
     "As previously announced, Arch Coal realized very strong margins on the
 limited tonnage that was open to market-based pricing during the quarter,"
 said Steven F. Leer, Arch Coal's president and chief executive officer.
 "Moreover, nearly all of our mines performed well during the period, and
 continue to operate at high levels of efficiency today."
     The one operation that struggled during the quarter was the West Elk mine
 in Colorado, which encountered higher-than-expected methane levels following
 the relocation of its longwall mining system to a new reserve area in late
 February.  "We have made progress in combating the problem, and we are
 optimistic that the mine can return to reasonably strong levels of production
 in the second half of the year," Leer said.  "However, the problem did lead to
 a substantial curtailment of planned shipments in the first quarter, and it
 will have an impact on shipments during the second quarter as well."
     In addition to strong market-based pricing on its open tonnage, the
 company also benefited from income tax credits related to depletion and a
 $3.5 million pre-tax gain associated with the reversal of certain previously
 recorded reclamation liabilities.  Offsetting those benefits were accruals
 related to stock-based compensation benefit programs that could be realized in
 future periods as a result of improved stock performance.
     Arch had revenues of $381.4 million and coal sales of 27.2 million tons in
 the first quarter of 2001, compared to $357.8 million and 27.8 million tons in
 the same period of 2000.  Adjusted EBITDA for the quarter totaled
 $80.3 million, compared to $63.6 million in the first quarter of 2000.
 
     Coal markets
     Coal markets continued to strengthen during the quarter, especially in
 Arch's two principal producing regions.  "The spot price of Powder River Basin
 coal has tripled in the past 12 months, and the spot price of central
 Appalachian compliance coal has doubled," Leer said.  "We are particularly
 encouraged by the fact that prices continued to improve in both regions during
 March and April, months when electricity demand typically falls off and coal
 prices soften."
     As previously announced, Arch had committed nearly all of its expected
 production for 2001 before the year began, and has only about 1.5 million tons
 of coal to ship at current spot pricing for the remainder of 2001.  The
 company currently has approximately 30% of its expected production open to
 market-based pricing in 2002, 50% in 2003, and 75% in 2004.
     "In recent years, power generators have waited until the summer months or
 even later before seeking to secure new supply commitments for the following
 year," Leer said.  "In contrast, we have already received a substantial number
 of solicitations for 2002 business and are engaged in active negotiations with
 some of these generators.  We view this development as a positive indication
 that pricing for our open-to-market business in 2002 could be quite strong."
 
     Debt reduction
     During the quarter, Arch reduced its total debt by $98.7 million, or more
 than 9%, principally through the use of proceeds raised in an equity offering
 in early February made in connection with a secondary offering by Ashland Inc.
 "We continue to view the strengthening of our balance sheet as our top
 financial priority and one of the best options we have to create value for our
 shareholders," Leer said.
     Leer noted that the company was able to achieve this debt reduction
 despite the fact that capital spending is historically higher in the first
 quarter due to the timing of reserve acquisition payments for the Thundercloud
 lease and Arch's normal capital budget cycle.  Arch made the third of five
 annual payments of $31.6 million on the Thundercloud lease in January 2001.
 
     West Elk mine
     In recent weeks, West Elk has completed revisions to its ventilation plan
 and has made progress in diluting the liberated methane levels.  "We are
 making strides in addressing the higher methane levels, and we are optimistic
 about our ability to effectively manage the problem over the long term," Leer
 said.  West Elk is in the process of drilling degasification holes inside the
 mine and will soon drill similar holes from the surface that should help
 control methane levels over time.
     The West Elk mine was idle for roughly six months in 2000 due to a fire
 that occurred in the western section of the mine.  In February 2001, West Elk
 completed mining the last longwall panel in the western section and moved its
 longwall mining system to a new reserve area on the mine's east side.  West
 Elk recently completed efforts to permanently seal the entire west side of the
 mine.
 
     Operating statistics
     Regional analysis: Of the 27.2 million tons of coal that Arch sold during
 the first quarter, approximately 8.9 million tons originated at its eastern
 operations and 18.3 million tons originated at its western operations.  Arch
 Coal had an average operating realization of $13.24 per ton and average
 operating costs of $12.12 per ton.  The eastern operations had an average
 realized sales price of $27.76 per ton and an average cost of $24.57 per ton
 during the quarter.  The western operations had an average realized sales
 price of $6.28 per ton and an average cost of $6.14 per ton during the
 quarter.  (Western operations data does not include the results of 65%-owned
 Canyon Fuel Company, which is accounted for on the equity method.)
     Expected 2001 production: In the east, Arch expects to sell a total of
 approximately 34 million tons of coal in 2001 from its mines in central
 Appalachia.  In the west, Arch expects to sell approximately 65 million tons
 of coal at its Black Thunder mine in the Powder River Basin of Wyoming and
 between
 4 million and 6 million tons of coal at the West Elk mine in Colorado.  The
 actual volume produced at West Elk will be largely dependent on the company's
 ability to manage the high methane levels currently being experienced there.
     Financial: Arch currently expects depreciation, depletion and amortization
 to total approximately $225 million in 2001, which includes $54.1 million in
 the quarter just ended.  Capital expenditures are expected to total
 approximately $130 million, which includes $51.5 million expended in the
 quarter just ended.  (Projections for depreciation, depletion and amortization
 and capital expenditures include Arch's ownership percentage in Canyon Fuel
 Company.)
 
     Looking ahead
     "In recent weeks, we have received a substantial number of solicitations
 from power generators that are looking to secure a supply of coal for 2002 and
 thereafter," Leer said.  "Given the current tightness in U.S. coal markets, we
 expect favorable pricing for our tonnage that is uncommitted or open to
 market-based pricing."
     "Moreover, we continue to be encouraged by other developments that should
 continue to exert a positive influence on coal prices," Leer continued.
 "Natural gas prices remain high, hydroelectric output is being adversely
 affected by drought-like conditions in the western United States, and the
 nuclear system is producing at near its practical capacity.  Furthermore, coal
 stockpiles at U.S. power plants were 35% lower at the outset of 2001 than a
 year earlier, and given current coal production levels we could see a further
 erosion of those stockpiles this summer."
     Meanwhile, coal-fired power plants are operating at a utilization rate of
 only 70%.  "Clearly, coal demand will continue to climb as power generators
 seek to run these plants at ever-higher levels of efficiency," Leer said.
     The longer-term demand picture is strengthening as well.  "The high price
 of competing fuels has spurred a renewed interest in new coal-fired
 generation," Leer added.  "The announced additional capacity that is expected
 to come on-line towards the middle of the decade should provide a smooth
 transition for continued coal demand growth as existing coal-fired plants
 begin to approach their effective capacity limits."
     So far, plans to build roughly 20,000 megawatts of new coal-fired capacity
 have already been announced, according to Energy Ventures Analysis.  That
 equates to between 60 million and 80 million tons of new coal demand annually.
     A conference call concerning first quarter earnings will be webcast live
 today at 11 a.m. EST.  The conference call can be accessed via the "investor
 info" section of the Arch Coal web site ( www.archcoal.com ).
     Arch Coal is the nation's second largest coal producer with subsidiary
 operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah.
 Through these operations, Arch Coal provides the fuel for approximately 6% of
 the electricity generated in the United States.
 
     Definition: Adjusted EBITDA is presented above because it is a widely
 accepted financial indicator of a company's ability to incur and service debt.
 Adjusted EBITDA should not be considered in isolation or as an alternative to
 net income, operating income, cash flows from operations, or as a measure of a
 company's profitability, liquidity or performance under generally accepted
 accounting principles.  Adjusted EBITDA is defined as income from operations
 before the effect of net interest expense; income taxes; and depreciation,
 depletion and amortization for Arch Coal, Inc., its subsidiaries and its
 ownership percentage in its equity investments.
 
     Forward-Looking Statements:  Statements contained in this press release
 which are not statements of historical fact are forward-looking statements
 within the "safe harbor" provision of the Private Securities Litigation Reform
 Act of 1995.  These forward-looking statements are based on our current
 expectations and projections about future events, some or all of which may be
 incorrect, and which are also subject to various risks and uncertainties that
 could cause actual results to differ materially from those projected in the
 statements.  These expectations, assumptions and uncertainties include the
 following:  our expectation of continued growth in the demand for electricity;
 our belief that legislation, regulations and the relatively higher costs of
 competing fuels will increase demand for our compliance and low-sulfur coal;
 projected production and financial results; our expectation of improving
 market conditions for the price of our coal; our expectation that we will
 continue to have adequate liquidity from our cash flow from operations,
 together with available borrowings under our credit facilities, to pay down
 our debt and to finance our working capital needs; a variety of operational,
 geologic, permitting, labor and weather-related factors, including equipment
 availability; and other risks and uncertainties detailed from time to time in
 the company's reports filed 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
                                                            March 31
                                                       2001           2000
                                                           (Unaudited)
     Revenues
      Coal sales                                     $360,043       $344,399
      Income from equity investment                     6,059          3,631
      Other revenues                                   15,325          9,771
                                                      381,427        357,801
 
     Costs and expenses
      Cost of coal sales                              329,525        329,985
      Selling, general and administrative expenses     13,794          9,756
      Amortization of coal supply agreements            7,586         10,096
      Other expenses                                    4,329          5,066
                                                      355,234        354,903
       Income from operations                          26,193          2,898
 
     Interest expense, net:
       Interest expense                               (21,354)       (22,920)
       Interest income                                    251            295
                                                      (21,103)       (22,625)
 
         Income (loss) before income taxes              5,090        (19,727)
     Benefit from income taxes                         (1,000)        (4,700)
 
         Net income (loss)                             $6,090       $(15,027)
 
 
     Basic and diluted earnings (loss) per
      common share                                      $0.15         $(0.39)
 
     Weighted average shares outstanding               40,411         38,164
 
 
     Dividends declared per share                     $0.0575        $0.0575
 
 
     Adjusted EBITDA (A)                              $80,313        $63,589
 
 
     (A)  Adjusted EBITDA is defined as income from operations before the
          effect of net interest expense; income taxes; depreciation, depletion
          and amortization for Arch Coal, Inc., its subsidiaries and its
          ownership percentage in its equity investments.
 
 
 
                        Arch Coal, Inc. and Subsidiaries
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
 
                                                      March 31,    December 31,
                                                        2001           2000
     Assets                                         (Unaudited)
      Current assets
       Cash and cash equivalents                       $2,349         $6,028
       Trade receivables                              153,628        141,727
       Other receivables                               24,305         38,540
       Inventories                                     51,288         47,930
       Prepaid royalties                                3,459          2,262
       Deferred income taxes                           27,440         27,440
       Other                                           14,911         13,963
 
                   Total current assets               277,380        277,890
 
     Property, plant and equipment, net             1,441,749      1,430,053
 
 
     Other assets
       Prepaid royalties                               33,500         17,500
       Coal supply agreements                         101,298        108,884
       Deferred income taxes                          194,067        179,343
       Investment in Canyon Fuel                      174,004        188,700
       Other                                           29,393         30,244
                                                      532,262        524,671
                   Total assets                    $2,251,391     $2,232,614
 
 
     Liabilities and stockholders' equity
      Current liabilities
       Accounts payable                              $115,164       $103,014
       Accrued expenses                               154,402        152,303
       Current portion of debt                         95,000         60,129
                   Total current liabilities          364,566        315,446
     Long-term debt                                   957,070      1,090,666
      Accrued postretirement benefits other
       than pension                                   332,837        336,663
     Accrued reclamation and mine closure             116,133        118,928
     Accrued workers' compensation                     79,637         78,593
     Accrued pension cost                              21,453         19,287
     Obligations under capital leases                  10,596         11,348
     Other noncurrent liabilities                      63,118         41,809
                   Total liabilities                1,945,410      2,012,740
 
     Stockholders' equity
      Common stock                                        435            397
      Paid-in capital                                 550,940        473,428
      Retained deficit                               (231,385)      (234,980)
      Treasury stock, at cost                               -        (18,971)
      Accumulated other comprehensive loss            (14,009)             -
                   Total stockholders' equity         305,981        219,874
 
                   Total liabilities and
                    stockholders' equity           $2,251,391     $2,232,614
 
 
                        Arch Coal, Inc. and Subsidiaries
                Condensed Consolidated Statements of Cash Flows
                                 (In Thousands)
 
                                                         Three Months Ended
                                                             March 31,
                                                        2001           2000
                                                            (Unaudited)
     Operating activities
     Net income (loss)                                 $6,090       $(15,027)
     Adjustments to reconcile to cash
        provided by operating activities:
      Depreciation, depletion and amortization         44,240         51,769
      Prepaid royalties expensed                        1,607          1,590
      Net gain on disposition of assets                (3,435)        (2,343)
      Income from equity investment                    (6,059)        (3,631)
      Net distributions from (contributions to)
       equity investment                               20,755         (7,800)
      Changes in:
        Receivables                                     2,334         18,953
        Inventories                                    (3,358)        (1,191)
        Accounts payable and accrued expenses          14,249         26,307
        Income taxes                                   (5,767)        (4,642)
        Accrued postretirement benefits other
         than pension                                  (3,826)          (661)
        Accrued reclamation and mine closure           (2,795)           699
        Accrued workers' compensation benefits          1,044         (6,325)
        Other                                             413         (1,711)
 
       Cash provided by operating activities           65,492         55,987
 
     Investing activities
     Additions to property, plant and equipment       (48,547)       (50,129)
     Proceeds from dispositions of property,
      plant and equipment                               3,631          2,942
     Additions to prepaid royalties                   (18,804)       (17,901)
 
       Cash used in investing activities              (63,720)       (65,088)
 
     Financing activities
     Net (payments on) borrowings from revolver
      and lines of credit                             (98,725)        11,101
     Reductions of obligations under captital lease      (752)             -
     Dividends paid                                    (2,495)        (2,195)
     Proceeds from sale of common stock                77,550              -
     Proceeds from sale of treasury stock              18,971              -
 
       Cash provided by (used in) financing
        activities                                     (5,451)         8,906
 
     Decrease in cash and cash equivalents             (3,679)          (195)
     Cash and cash equivalents, beginning of period     6,028          3,283
 
     Cash and cash equivalents, end of period          $2,349         $3,088
 
     Canyon Fuel Company cash flow information
        (Arch Coal Ownership Percentage)
      Depreciation, depletion and amortization          9,880          8,922
      Additions to property, plant and equipment        2,901          1,637
 
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 SOURCE  Arch Coal, Inc.