Table of Contents

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

FORM 11-K

 

(Mark One)

 

x

Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934

 

 

 

 

 

 

For the fiscal year ended December 31, 2011

 

 

 

OR

 

 

 

 

o

Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934

 

 

 

 

 

For the transition period from                 to                 .

 

Commission file number:  1-13105

 

Arch Coal, Inc. Employee Thrift Plan
(Full title of the plan and the address of the plan, if different from that of the issuer named below)

 

Name and Address of the issuer of the Securities
Held Pursuant to the Plan —

 

Arch Coal, Inc.

One CityPlace Drive, Suite 300

St. Louis, Missouri 63141

(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)

 

 

 



Table of Contents

 

ARCH COAL, INC.

EMPLOYEE THRIFT PLAN

FINANCIAL STATEMENTS

DECEMBER 31, 2011

 



Table of Contents

 

Contents

 

 

Page

 

 

Report Of Independent Registered Public Accounting Firm

1

 

 

Financial Statements

 

 

 

Statement Of Net Assets Available For Benefits

2

 

 

Statement Of Changes In Net Assets Available For Benefits

3

 

 

Notes To Financial Statements

4 - 15

 

 

Supplementary Information

 

 

 

Report Of Independent Registered Public Accounting Firm On Supplementary Information

16

 

 

Schedule Of Assets Held At End Of Year

17 - 18

 



Table of Contents

 

Report Of Independent Registered Public Accounting Firm

 

The Retirement Committee

Arch Coal, Inc. Employee Thrift Plan

St. Louis, Missouri

 

We have audited the accompanying statement of net assets available for benefits of the Arch Coal, Inc. Employee Thrift Plan (the Plan) as of December 31, 2011 and 2010, and the related statement of changes in net assets available for benefits for the years then ended.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2011 and 2010, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

 

/s/ RubinBrown LLP

St. Louis, Missouri

June 27, 2012

 



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS

 

 

 

December 31,

 

 

 

2011

 

2010

 

Assets

 

 

 

 

 

Investments, At Fair Value

 

 

 

 

 

Cash

 

$

122,954,529

 

$

 

Money market fund

 

2,876,866

 

3,205,840

 

Mutual funds

 

141,841,419

 

198,874,936

 

Stable value fund

 

81,339,807

 

78,214,788

 

Company stock

 

27,824,221

 

48,289,018

 

Collective trust funds

 

109,830,970

 

48,218,249

 

Brokerage securities

 

10,837,571

 

12,153,958

 

Total Investments At Fair Value

 

497,505,383

 

388,956,789

 

 

 

 

 

 

 

Receivables

 

 

 

 

 

Company contributions

 

 

658,368

 

Participant contributions

 

 

890,430

 

Notes receivable from participants

 

21,911,424

 

19,865,218

 

Total Receivables

 

21,911,424

 

21,414,016

 

 

 

 

 

 

 

Net Assets Available For Benefits At Fair Value

 

519,416,807

 

410,370,805

 

 

 

 

 

 

 

Adjustment From Fair Value To Contract Value For Fully Benefit-Responsive Investment Contracts

 

(3,717,995

)

(2,841,340

)

 

 

 

 

 

 

Net Assets Available For Benefits

 

$

515,698,812

 

$

407,529,465

 

 

See the accompanying notes to financial statements.

 

2



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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

STATEMENT OF CHANGES IN NET ASSETS

AVAILABLE FOR BENEFITS

 

 

 

For The Years

 

 

 

Ended December 31,

 

 

 

2011

 

2010

 

Additions To Net Assets Attributed To:

 

 

 

 

 

Contributions

 

 

 

 

 

Participant salary deferral

 

$

25,739,721

 

$

23,391,009

 

Company

 

20,470,322

 

18,233,022

 

Participant after-tax

 

1,455,507

 

1,347,890

 

Rollover

 

1,115,450

 

786,352

 

Total Contributions

 

48,781,000

 

43,758,273

 

 

 

 

 

 

 

Deductions From Net Assets Attributed To:

 

 

 

 

 

Benefits paid directly to participants

 

32,079,198

 

24,453,314

 

Administrative fees

 

521,037

 

414,395

 

Total Deductions

 

32,600,235

 

24,867,709

 

 

 

 

 

 

 

Investment Income (Loss):

 

 

 

 

 

Dividends and interest

 

7,817,887

 

8,965,614

 

Net appreciation (depreciation) in fair value of investments

 

(39,592,854

)

43,107,886

 

Net Investment Income (Loss)

 

(31,774,967

)

52,073,500

 

 

 

 

 

 

 

Interest Income On Notes Receivable From Participants

 

809,020

 

817,693

 

 

 

 

 

 

 

Transfer Of Assets Into Plan

 

122,954,529

 

 

 

 

 

 

 

 

Net Increase

 

108,169,347

 

71,781,757

 

 

 

 

 

 

 

Net Assets Available For Benefits - Beginning Of Year

 

407,529,465

 

335,747,708

 

 

 

 

 

 

 

Net Assets Available For Benefits - End Of Year

 

$

515,698,812

 

$

407,529,465

 

 

See the accompanying notes to financial statements.

 

3


 


Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 And 2010

 

1.                                      Description Of The Plan

 

The Arch Coal, Inc. Employee Thrift Plan (the Plan) was established by Arch Coal, Inc. (the Company) for the benefit of the eligible employees of the Company, its subsidiaries and controlled affiliates.

 

The following description of the Plan provides only general information.  Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.

 

Certain provisions of the Plan, as described below, do not apply to or have been modified for certain subsidiaries and affiliates of the Company.

 

General

 

The Plan is a defined contribution plan that covers substantially all salaried employees, nonunion hourly employees, and certain union employees where specified by applicable collective bargaining agreements of the Company, its subsidiaries, and any controlled affiliates that elect to participate in the Plan.  It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

 

During 2011, the Company completed the acquisition of International Coal Group Inc. (ICG).  On December 31, 2011, the assets of the International Coal Group, Inc. 401(k) Savings and Retirement Plan totaling $122,954,529 were transferred into the Plan.  Employees of ICG became participants of the Plan at that time.

 

Contributions

 

Participants may elect to defer between 1% and 50% of compensation.  Highly compensated employees may contribute up to 16% of compensation.  The Company is required to make matching contributions equal to 100% of participant salary deferral contributions up to the first 6% of eligible compensation.

 

The Plan includes an automatic enrollment provision for all eligible employees.  The automatic enrollment provides for default salary deferral contributions of 6% of eligible compensation, which will be invested in a target retirement fund.  The participant has the option to make changes to the salary deferral percentage and investment allocation at any time.

 

4



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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

Participant Accounts

 

Each participant’s account is credited with the participant’s salary deferral contributions; the Company’s matching contribution, and Company discretionary contributions, if applicable, and an allocation of Plan earnings.  The allocation of earnings is determined by the earnings of the participant’s investment selection based on each participant’s account balance, as defined in the Plan Document.  In addition, each participant’s account is charged for applicable Plan expenses.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Vesting

 

Participants are fully vested in their salary deferral contributions plus actual earnings.  All eligible employees of the Company at December 31, 1997 became fully vested in the Plan.  Eligible employees hired subsequent to December 31, 1997 vest in Company contributions and earnings upon the completion of three full years of service.  The hourly employees at Mingo Logan and Mountain Laurel are fully vested after the completion of two full years of service.

 

All participants become fully vested upon death while employed, total disability, or normal retirement age, regardless of the number of months of participation.

 

Notes Receivable From Participants

 

Active participants, with some exceptions, may borrow from their account a minimum of $500 or up to a maximum equal to the lesser of $50,000 or 50% of their vested account balances.  Note terms range from one to five years or longer for the purchase of a primary residence.  The notes are secured by the balance in the participant’s account and bear interest at the prime rate listed in the Wall Street Journal on the first day of the month the loan is processed.  Principal and interest are paid ratably through weekly and bi-weekly payroll deductions.  At December 31, 2011, interest rates on the notes receivable range from 3.25% to 9.25%.  The final installments are due at various dates through December 2026.

 

Payment Of Benefits

 

Upon death, termination of service, or attainment of age 70-1/2, a participant may receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account.  Participant accounts with vested balances of $1,000 or less will be automatically distributed unless otherwise instructed.

 

5



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

In-Service Withdrawals

 

Subject to certain qualifications, upon reaching age 59-1/2 or upon experiencing a qualifying financial hardship, a participant may withdraw of all or part of his or her vested account.  Hardship withdrawals will be approved only if they conform to the Plan provisions and established Internal Revenue Service (IRS) safe harbors.  Participants may also withdraw all or part of his or her vested portion of Company contributions if he or she has participated in the Plan for at least three consecutive years.  Participants may withdraw after-tax participant contributions after he or she has participated in the Plan for 12 months.

 

Forfeited Accounts

 

Forfeited amounts of Company contributions are used to offset future Company contributions to the Plan.  At December 31, 2011 and 2010, forfeited amounts that were available to reduce future Company contributions were $300,227 and $263,287, respectively.  During the Plan years ended December 31, 2011 and 2010, $584,897 and $929,414, respectively, in forfeited funds were used to offset Company contributions.

 

Investment Options

 

Upon enrollment in the Plan, a participant may direct contributions in a number of investment options offered by the Plan.

 

Administrative Expense

 

All expenses related to the administration of the Plan are paid from Plan assets.

 

2.                                      Summary Of Significant Accounting Policies

 

Basis Of Accounting

 

The financial statements of the Plan are prepared under the accrual basis of accounting.

 

Estimates And Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of additions to and deductions from net assets during the reporting period.  Actual results could differ from those estimates.

 

6



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

Investment Valuation And Income Recognition

 

The Plan’s investments are reported at fair value.  Fair value is the price that would be received in an asset sale or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  See Note 3 for a discussion of fair value measurements.

 

Investment income is recorded as earned on the accrual basis.  Purchases and sales of securities are recorded on a trade-date basis.  Dividends are recorded on the ex-dividend date.

 

As required by accounting standards, investment contracts held by a defined-contribution plan are required to be reported at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.  The Plan invests in fully-benefit responsive investment contracts through its investment in the Invesco Stable Value Fund.  The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts, as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

 

Notes Receivable From Participants

 

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest.  Delinquent participant notes are reclassified as distributions based upon the terms of the Plan Document.

 

Payment Of Benefits

 

Benefits are recorded when paid.

 

3.                                      Investments

 

The Company has established a Retirement Committee to oversee the activities of the Plan and has appointed the Vice President - Human Resources as the Plan Administrator.  Mercer Fiduciary Trust Company is the Trustee for the Plan and Mercer HR Services is the Plan’s Recordkeeper.

 

7



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

Investments consist of the following at:

 

 

 

December 31,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Cash And Cash Equivalents

 

 

 

 

 

Cash

 

$

122,954,529

*

$

 

Money Market Funds

 

2,876,866

 

3,205,840

 

Total Cash And Cash Equivalents

 

125,831,395

 

3,205,840

 

 

 

 

 

 

 

Mutual Funds

 

 

 

 

 

American Century Income and Growth Fund

 

16,090,329

 

16,307,331

 

Growth Fund of America

 

20,026,826

 

21,087,195

*

Investment Company of America

 

8,487,637

 

8,618,054

 

Black Rock Small Cap Core Equity Fund

 

 

3,015,997

 

Royce Special Equity Fund

 

2,966,172

 

 

Dodge & Cox Balanced Fund

 

45,847,093

*

42,114,799

*

Franklin Templeton Balance Sheet Fund

 

9,840,584

 

12,079,133

 

Artio International Equity Fund

 

7,886,081

 

11,488,144

 

PIMCO Total Return Fund

 

24,630,768

 

27,938,788

*

Jennison Mid Cap Growth Fund

 

6,065,929

 

5,806,920

 

Wells Fargo Advantage Outlook 2010

 

 

3,669,815

 

Wells Fargo Advantage Outlook 2020

 

 

11,047,536

 

Wells Fargo Advantage Outlook 2030

 

 

12,107,813

 

Wells Fargo Advantage Outlook 2040

 

 

23,593,411

*

Total Mutual Funds

 

141,841,419

 

198,874,936

 

 

 

 

 

 

 

Stable Value Fund

 

 

 

 

 

(At Contract Value)

 

77,621,812

*

75,373,448

*

 

 

 

 

 

 

Company Stock

 

27,824,221

*

48,289,018

*

 

 

 

 

 

 

Collective Trust Funds

 

 

 

 

 

Wells Fargo Dow Jones Target Today

 

85,695

 

 

Wells Fargo Dow Jones Target 2010

 

1,569,863

 

 

Wells Fargo Dow Jones Target 2015

 

2,953,553

 

 

Wells Fargo Dow Jones Target 2020

 

6,712,675

 

 

Wells Fargo Dow Jones Target 2025

 

6,256,559

 

 

Wells Fargo Dow Jones Target 2030

 

5,589,129

 

 

Wells Fargo Dow Jones Target 2035

 

7,557,634

 

 

Wells Fargo Dow Jones Target 2040

 

8,332,836

 

 

Wells Fargo Dow Jones Target 2045

 

10,067,020

 

 

Wells Fargo Dow Jones Target 2050

 

9,020,724

 

 

Northern Trust Collective S&P 500 Equity

 

 

 

 

 

Index Fund

 

51,685,282

*

48,218,249

*

Total Collective Trust Funds

 

109,830,970

 

48,218,249

 

 

 

 

 

 

 

Brokerage Securities

 

10,837,571

 

12,153,958

 

 

 

 

 

 

 

 

 

$

493,787,388

 

$

386,115,449

 


*Investment represents 5% or more of net assets at the end of the respective Plan year.

 

8



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

During 2011 and 2010, the Plan’s investments, including gains and losses on investments bought and sold, as well as held during the year, appreciated (depreciated) in value as follows:

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Mutual funds

 

$

(9,683,540

)

$

16,677,069

 

Company stock

 

(29,830,923

)

19,190,959

 

Collective trust funds

 

1,038,753

 

6,200,210

 

Brokerage securities

 

(1,117,144

)

1,039,648

 

 

 

 

 

 

 

 

 

$

(39,592,854

)

$

43,107,886

 

 

Stable Value Fund

 

The Plan invests in the Invesco Stable Value Fund (the Fund), a benefit-responsive investment managed exclusively for the Plan by Invesco Institutional, N.A. (Invesco).  Invesco maintains the contributions in a managed account, which is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses.  The Fund’s key objectives are to provide preservation of principal, maintain a stable interest rate, and provide daily liquidity at contract value for participant withdrawals and transfers in accordance with the provisions of the Plan.

 

The Fund invests in synthetic guaranteed interest contracts (GICs), which are wrap contracts paired with an underlying investment or investments, usually a portfolio, owned by the Plan, of common collective trust funds.  The Plan purchases wrapper contracts from financial services institutions.  Synthetic GICs credit a stated interest rate for a specified period of time.  Investment gains and losses are amortized over the expected duration through the calculation of the interest rate applicable to the Plan on a prospective basis.  Synthetic GICs provide for a variable crediting rate, which typically resets monthly and quarterly, and the issuer of the wrap contract provides assurance that future adjustments to the crediting rate cannot result in a crediting rate less than zero.  The crediting rate is primarily based on the current yield-to-maturity of the covered investments, plus or minus amortization of the difference between the market value and contract value of the covered investments over the duration of the covered investments at the time of the computation.  The crediting rate is most affected by the change in the annual effective yield-to-maturity of the underlying securities, but is also affected by the difference between the contract value and the market value of the covered investments.  Depending on the change in duration from reset period to reset period, the magnitude of the impact to the crediting rate of the contract to market difference is heightened or lessened.

 

9



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

As described in Note 2, because the Fund is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the Fund.  Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.

 

Certain events limit the ability of the Plan to transact at contract value with the issuer.  Such events include the following: (1) material, adverse amendments to the Plan documents (including complete or partial Plan termination or merger with another plan), or (2) the decision by the Company to withdraw all assets from the funds and reinvest in another investment vehicle.  The Plan Administrator does not believe that the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants, is probable.

 

The investment contracts included in the Fund had an average yield of 1.46% and 2.13% for the years ended December 31, 2011 and 2010, respectively.  The average crediting interest rate was 2.77% and 3.48% at December 31, 2011 and 2010, respectively.

 

Collective Trust Funds

 

Equity Index Fund

 

The Plan invests in collective trust funds in which the primary objective is to approximate the risk and return of the S&P 500 Index.  This index is commonly used to represent the large cap segment of the U.S. equity market.  The collective trust funds do not have any unfunded commitments relating to their investments or any significant restrictions on redemptions.  Participant-directed redemptions can be made on any business day and do not have a redemption notice period.

 

Target Date Funds

 

The Plan invests in collective trust funds in which the primary objective is to approximate the risk and return of the Dow Jones Target Index Funds.  The funds invests in a combination of equity, fixed income and money market securities using an asset allocation strategy.  The collective trust funds do not have any unfunded commitments relating to their investments or any significant restrictions on redemptions.  Participant-directed redemptions can be made on any business day and do not have a redemption notice period.

 

10



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

Fair Value Measurements

 

The Plan follows current accounting standards, which establish a framework for measuring fair value.  The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value are described below:

 

Level 1                                                        Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

 

Level 2                                                        Inputs to the valuation methodology include:

 

·                  Quoted prices for similar assets or liabilities in active markets;

 

·                  Quoted prices for identical or similar assets or liabilities in inactive markets;

 

·                  Inputs other than quoted prices that are observable for the asset or liability;

 

·                  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3                                                        Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

11



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

Following is a description of the valuation methodologies used for assets measured at fair value:

 

Money Market Fund And Mutual Funds

 

Valued at the net asset value (NAV) of shares held by the Plan at year end, based on quoted market prices.

 

Stable Value Fund

 

Valued at NAV based on the market value of the underlying investment assets divided by the number of units outstanding at the end of the Plan year.  The fund seeks to provide preservation of principal, maintain a stable interest rate and provide daily liquidity at contract value for participant withdrawals and transfers in accordance with the provisions of the Plan.

 

Collective Trust Funds

 

Valued at NAV as determined by the Trustee based on the market value of the underlying investment assets divided by the number of units outstanding at the end of the Plan year.

 

Company Stock And Brokerage Securities

 

Valued at the closing price reported on the active market on which the individual securities are traded.

 

The methods described above may produce fair value calculations that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

12



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

The following tables set forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of:

 

 

 

December 31, 2011

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

2,876,866

 

$

 

$

 

$

2,876,866

 

Mutual funds

 

 

 

 

 

 

 

 

 

Growth funds

 

29,058,927

 

 

 

29,058,927

 

Balanced funds

 

45,847,093

 

 

 

45,847,093

 

Blended funds

 

16,373,718

 

 

 

16,373,718

 

Value funds

 

25,930,913

 

 

 

25,930,913

 

Income fund

 

24,630,768

 

 

 

24,630,768

 

Total mutual funds

 

141,841,419

 

 

 

141,841,419

 

 

 

 

 

 

 

 

 

 

 

Collective trust funds

 

 

 

 

 

 

 

 

 

Target date funds

 

 

58,145,688

 

 

58,145,688

 

Equity index fund

 

 

51,685,282

 

 

51,685,282

 

Total collective trust funds

 

 

109,830,970

 

 

109,830,970

 

 

 

 

 

 

 

 

 

 

 

Stable value fund

 

 

81,339,807

 

 

81,339,807

 

Company stock

 

27,824,221

 

 

 

27,824,221

 

Brokerage securities

 

10,837,571

 

 

 

10,837,571

 

 

 

 

 

 

 

 

 

 

 

Total investments at fair value

 

$

183,380,077

 

$

191,170,777

 

$

 

$

374,550,854

 

 

 

 

December 31, 2010

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

3,205,840

 

$

 

$

 

$

3,205,840

 

Mutual funds

 

 

 

 

 

 

 

 

 

Growth funds

 

29,910,115

 

 

 

29,910,115

 

Balanced funds

 

92,533,374

 

 

 

92,533,374

 

Blended funds

 

20,106,198

 

 

 

20,106,198

 

Value funds

 

28,386,464

 

 

 

28,386,464

 

Income fund

 

27,938,785

 

 

 

27,938,785

 

Total mutual funds

 

198,874,936

 

 

 

198,874,936

 

 

 

 

 

 

 

 

 

 

 

Stable value fund

 

 

78,214,788

 

 

78,214,788

 

Company stock

 

48,289,018

 

 

 

48,289,018

 

Collective trust fund

 

 

48,218,249

 

 

48,218,249

 

Brokerage securities

 

12,153,958

 

 

 

12,153,958

 

 

 

 

 

 

 

 

 

 

 

Total investments at fair value

 

$

262,523,752

 

$

126,433,037

 

$

 

$

388,956,789

 

 

13



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

There have been no changes in the methodologies used at December 31, 2011 or 2010.

 

4.                                      Plan Termination

 

Although it has not expressed intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA.  In the event of Plan termination, participants will become 100% vested in their accounts.

 

5.                                      Income Tax Status

 

The Plan obtained its latest determination letter on July 17, 2009 in which the IRS stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code.  The Plan has been amended since receiving the determination letter.  The Plan Administrator believes the amendments made will maintain the tax qualification of the Plan and the related trust will continue to be tax exempt.

 

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS.  The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.  The Plan’s federal tax returns for tax years 2008 and later remain subject to examination by taxing authorities.

 

6.                                      Risks And Uncertainties

 

The Plan invests in various investment securities.  Investment securities are exposed to various risks such as interest rate, market and credit risks.  Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statement of Net Assets Available For Benefits.

 

14



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Notes To Financial Statements (Continued)

 

7.                                      Related Party Transactions

 

The Plan’s investments include shares of Company common stock.  The Company is the Plan Sponsor, and therefore, these transactions qualify as allowable party-in-interest transactions.

 

8.                                      Reconciliation Of Financial Statements To Form 5500

 

Following is a reconciliation of net assets available for benefits and net increase per the financial statements to the Form 5500:

 

 

 

December 31,

 

 

 

2011

 

2010

 

Net assets available for benefits per the financial statements

 

$

515,698,812

 

$

407,529,465

 

Adjustment from contract value to fair value for fully benefit-responsive contracts

 

3,717,995

 

2,841,340

 

 

 

 

 

 

 

Net Assets Available For Benefits Per The Form 5500

 

$

519,416,807

 

$

410,370,805

 

 

 

 

For The

 

 

 

 

 

Year Ended

 

 

 

 

 

December 31,

 

 

 

 

 

2011

 

 

 

Net increase per the financial statements

 

$

108,169,347

 

 

 

Adjustment from contract value to fair value for fully benefit-responsive contracts prior year

 

(2,841,340

)

 

 

Adjustment from contract value to fair value for fully benefit-responsive contracts current year

 

3,717,995

 

 

 

 

 

 

 

 

 

Net Increase Per The Form 5500

 

$

109,046,002

 

 

 

 

15



Table of Contents

 

Report Of Independent Registered Public Accounting Firm

On Supplementary Information

 

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental schedule of assets held at end of year is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan’s management.  The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

 

/s/ RubinBrown LLP

June 27, 2012

St. Louis, Missouri

 

16



Table of Contents

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

E.I.N.: 43-0921172 PLAN NO.: 006

SCHEDULE OF ASSETS HELD AT END OF YEAR

Page 1 Of 2

December 31, 2011

 

 

 

 

 

Current

 

Identity Of Issuer

 

Description Of Investment

 

Value

 

 

 

 

 

 

 

Cash

 

Cash

 

$

122,954,529

 

 

 

 

 

 

 

Money Market Fund

 

 

 

 

 

Federated

 

Prime Obligation Money Market Fund

 

2,876,866

 

 

 

 

 

 

 

Mutual Funds

 

 

 

 

 

American Century

 

American Century Income and Growth Fund

 

16,090,329

 

American Fund Corporation

 

Growth Fund of America

 

20,026,826

 

American Fund Corporation

 

Investment Company of America

 

8,487,637

 

Royce

 

Royce Special Equity Fund

 

2,966,172

 

Dodge & Cox Funds

 

Dodge & Cox Balanced Fund

 

45,847,093

 

Franklin Investments

 

Franklin Templeton Balance Sheet Fund

 

9,840,584

 

Artio Investments

 

Artio International Equity Fund

 

7,886,081

 

PIMCO Investments

 

PIMCO Total Return Fund

 

24,630,768

 

Jennison Investments

 

Jennison Mid Cap Growth Fund

 

6,065,929

 

Total Mutual Funds

 

 

 

141,841,419

 

 

 

 

 

 

 

Company Stock

 

 

 

 

 

Arch Coal, Inc.*

 

Common stock

 

27,824,221

 

 

 

 

 

 

 

Collective Trust Funds

 

 

 

 

 

Wells Fargo

 

Wells Fargo Dow Jones Target Today

 

85,695

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2010

 

1,569,863

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2015

 

2,953,553

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2020

 

6,712,675

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2025

 

6,256,559

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2030

 

5,589,129

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2035

 

7,557,634

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2040

 

8,332,836

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2045

 

10,067,020

 

Wells Fargo

 

Wells Fargo Dow Jones Target 2050

 

9,020,724

 

Northern Trust

 

Collective Daily S&P 500 Equity Index Fund

 

51,685,282

 

Total Collective Trust Funds

 

 

 

109,830,970

 

 

 

 

 

 

 

Brokerage Securities

 

 

 

 

 

Mercer Securities

 

Mercer Securities Account (Participant Directed Brokerage Accounts)

 

 

 

 

 

 

 

10,837,571

 

 

 

 

 

 

 

Balance Carried Forward

 

 

 

293,211,047

 

 

17



Table of Contents

 

 

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

E.I.N.: 43-0921172 PLAN NO.: 006

SCHEDULE OF ASSETS HELD AT END OF YEAR

Page 2 Of 2

December 31, 2011

 

 

 

 

 

Current

 

Identity Of Issuer

 

Description Of Investment

 

Value

 

 

 

 

 

 

 

Balance Brought Forward

 

 

 

$

293,211,047

 

 

 

 

 

 

 

Stable Value Fund

 

 

 

 

 

Bank of America

 

IGT Invesco Short-Term Bond Fund

 

14,055,083

 

Bank of America

 

IGT BlackRock Core Fixed Income Fund

 

395,480

 

Bank of America

 

IGT Invesco Core Fixed Income Fund

 

393,904

 

Bank of America

 

IGT Goldman Sachs Core

 

393,782

 

Bank of America

 

IGT PIMCO Core Fixed Income Fund

 

394,457

 

Bank of America

 

Wrapper Contract

 

18,977

 

ING Life & Annuity

 

IGT Invesco Short-Term Bond Fund

 

19,217,745

 

JP Morgan Chase Bank

 

IGT Invesco Multi-Manager Intermediate Government/Credit Fund

 

13,213,195

 

JP Morgan Chase Bank Wrapper

 

Wrapper Contract

 

88,862

 

Monumental Life Insurance Co.

 

IGT Invesco Short-Term Bond Fund

 

10,341,378

 

Monumental Life Insurance Co.

 

IGT Invesco Core Fixed Income Fund

 

1,738,899

 

Monumental Life Insurance Co.

 

IGT BlackRock Core Fixed Income Fund

 

1,745,841

 

Monumental Life Insurance Co.

 

IGT Goldman Sachs Core

 

1,738,346

 

Monumental Life Insurance Co.

 

IGT PIMCO Core Fixed Income Fund

 

1,741,312

 

Monumental Life Insurance Co.

 

Wrapper Contract

 

15,797

 

Prudential Insurance Company

 

IGT Jennison Intermediate Government/Credit Fund

 

3,349,104

 

State Street Bank & Trust Co.

 

IGT BlackRock Intermediate Government/ Credit Fund

 

3,302,459

 

State Street Bank & Trust Co.

 

IGT Invesco Intermediate Government/Credit Fund

 

3,286,650

 

State Street Bank & Trust Co.

 

IGT PIMCO Intermediate Government/ Credit Fund

 

3,271,397

 

State Street Bank & Trust Co.

 

Money Market Fund

 

2,637,139

 

Total Stable Value Fund

 

 

 

81,339,807

 

 

 

 

 

 

 

Plan Participants*

 

Notes receivable, bearing interest at 3.25% - 9.25%, due at various dates through December 2026

 

21,911,424

 

 

 

 

 

 

 

Total

 

 

 

$

519,416,807

 

 


* Represents party-in-interest

 

The above information is a required disclosure for IRS Form 5500, Schedule H, Part IV, line 4i.

 

18



Table of Contents

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on their behalf by the undersigned thereunto duly authorized.

 

 

Arch Coal, Inc. Employee Thrift Plan

 

 

 

By:

/s/ John Ziegler, Jr.

 

 

John Ziegler, Jr.

 

 

Plan Administrator

 

 

 

June 27, 2012

 

 

 



Table of Contents

 

Exhibit Index

 

Exhibit

 

Description

23.1

 

Consent of Independent Registered Public Accounting Firm