16. Supplemental Guarantor/Non-Guarantor Financial Information (CPE Resources only)

In accordance with the indenture governing the senior notes, certain wholly-owned U.S. subsidiaries of CPE Resources (the “Guarantor Subsidiaries”) have fully and unconditionally guaranteed these senior notes on a joint and several basis. These guarantees of either series of senior notes are subject to release in the following customary circumstances:

· a sale or other disposition (including by way of consolidation or merger or otherwise) of the Guarantor Subsidiary or the sale or disposition of all or substantially all the assets of the Guarantor Subsidiary (other than to the CPE Resources or a Restricted Subsidiary (as defined in the indenture) of CPE Resources) otherwise permitted by the indenture,

· a sale of the majority of the capital stock of a Guarantor Subsidiary to a third person otherwise permitted by the indenture, after which the applicable Guarantor Subsidiary is no longer a Restricted Subsidiary,

· upon a liquidation or dissolution of a Guarantor Subsidiary so long as no default under the indenture occurs as a result thereof,

· the designation by CPE Resources in accordance with the indenture of the Guarantor Subsidiary as an Unrestricted Subsidiary or the Guarantor Subsidiary otherwise ceases to be a Restricted Subsidiary of CPE Resources in accordance with the indenture,

· defeasance or discharge of such series of senior notes or

· the release, other than the discharge through payment by the Guarantor Subsidiary, of all other guarantees by such Restricted Subsidiary of Debt (as defined in the indenture) of CPE Resources or the co-issuer of the senior notes.

Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management believes that such information is not material to the senior note holders. The following historical financial statement information is provided for the Guarantor/Non-Guarantor Subsidiaries:

Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income

(in thousands)

	Three Months Ended March 31, 2013
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	1		$	335,565		$	2,486		$	—		338,052
Costs and expenses
Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)	8			272,455			3,566			—			276,029
Depreciation and depletion	652			23,249			(689		)	—			23,212
Accretion	—			2,938			1,189			—			4,127
Derivative mark-to-market gains	—			(13,652		)	—			—			(13,652		)
Selling, general and administrative expenses	265			13,342			—			—			13,607
Other operating costs	—			110			—			—			110
Total costs and expenses	925			298,442			4,066			—			303,433
Operating income (loss)	(924		)	37,123			(1,580		)	—			34,619
Other income (expense)
Interest income	125			—			—			—			125
Interest expense	(10,147		)	(276		)	(60		)	—			(10,483		)
Other, net	(158		)	(283		)	200			—			(241		)
Total other (expense) income	(10,180		)	(559		)	140			—			(10,599		)
Income (loss) before income tax provision and earnings (losses) from unconsolidated affiliates	(11,105		)	36,564			(1,439		)	—			24,020
Income tax benefit (expense)	1,000			(10,317		)	482			—			(8,836		)
Earnings from unconsolidated affiliates, net of tax	4			207			—			—			211
Earnings (losses) from consolidated affiliates, net of tax	25,496			(958		)	—			(24,538		)	—
Net income (loss)	15,395			25,496			(958		)	(24,538		)	15,395
Other comprehensive income
Retiree medical plan amortization of prior service cost	444			444			—			(444		)	444
Other postretirement plan adjustments	30			30			—			(30		)	30
Income tax on retiree medical plan adjustments	(171		)	(171		)	—			171			(171		)
Other comprehensive income	303			303			—			(303		)	303
Total comprehensive income (loss)	$	15,698		$	25,799		$	(958	)	$	(24,841	)	$	15,698

Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income

(in thousands)

	Three Months Ended March 31, 2012
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	369,228		$	3,675		$	—		$	372,903
Costs and expenses
Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)	7			276,817			6,121			—			282,945
Depreciation and depletion	556			21,645			1,190			—			23,391
Accretion	—			2,330			319			—			2,649
Derivative mark-to-market gains	—			2,056			—			—			2,056
Selling, general and administrative expenses	214			14,529			—			—			14,742
Other operating costs	—			93			—			—			93
Total costs and expenses	777			317,469			7,630			—			325,876
Operating income (loss)	(777		)	51,759			(3,955		)	—			47,027
Other income (expense)
Interest income	446			—			—			—			446
Interest expense	(5,666		)	(168		)	(16		)	—			(5,850		)
Other, net	—			58			—			—			58
Total other expense	(5,220		)	(110		)	(16		)	—			(5,346		)
Income (loss) before income tax provision and earnings (losses) from unconsolidated affiliates	(5,996		)	51,648			(3,971		)	—			41,681
Income tax benefit (expense)	7,151			(23,666		)	1,414			—			(15,101		)
Earnings from unconsolidated affiliates, net of tax	6			32			—			—			38
Earnings (losses) from consolidated affiliates, net of tax	25,457			(2,557		)	—			(22,900		)	—
Net income (loss)	26,618			25,457			(2,557		)	(22,900		)	26,618
Other comprehensive income
Retiree medical plan amortization of prior service cost	394			394			—			(394		)	394
Other postretirement plan adjustment	90			90			90			(180		)	90
Income tax on retiree medical plan adjustments	(174		)	(174		)	(32		)	206			(174		)
Other comprehensive income	310			310			58			(368		)	310
Total comprehensive income (loss)	$	26,928		$	25,767		$	(2,499	)	$	(23,268	)	$	26,928

Supplemental Condensed Consolidating Balance Sheet

(in thousands)

	March 31, 2013
	Parent Company (CPE Resources)		Guarantor Subsidiaries	Non- Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	217,514	319	771		—		218,604
Investments in marketable securities	80,473		—	—		—		80,473
Accounts receivable	—		24,257	74,456		—		98,713
Due from related parties	—		482,522	—		(482,522	)	—
Inventories, net	5,501		71,295	4,239		—		81,034
Deferred income taxes	—		19,665	—		(27	)	19,638
Derivative financial instruments	—		27,461	—		—		27,461
Other assets	61		21,994	120		—		22,175
Total current assets	303,548		647,513	79,586		(482,549	)	548,098
Noncurrent assets
Property, plant and equipment, net	9,489		1,662,410	3,712		—		1,675,611
Goodwill	—		35,634	—		—		35,634
Deferred income taxes	23,869		18,211	17,280		—		59,361
Other assets	1,718,877		—	4,470		(1,679,833	)	43,514
Total assets	$	2,055,783	2,363,768	105,048		(2,162,382	)	2,362,218

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	2,357	60,189	2,041		—		64,587
Royalties and production taxes	—		134,101	1,290		—		135,391
Accrued expenses	14,670		43,536	2,237		—		60,443
Due to related parties	427,123		—	64,363		(482,522	)	8,963
Current deferred income taxes	27		—	—		(27	)	—
Current portion of federal coal lease obligations	—		63,191	—		—		63,191
Other liabilities	50		1,756	966		—		2,772
Total current liabilities	444,227		302,773	70,896		(482,549	)	335,347
Noncurrent liabilities
Senior notes	596,621		—	—		—		596,621
Federal coal lease obligations, net of current portion	—		122,928	—		—		122,928
Asset retirement obligations, net of current portion	—		165,180	73,504		—		238,684
Other liabilities	45		72,087	6,090		(24,475	)	53,748
Total liabilities	1,040,893		662,968	150,489		(507,024	)	1,347,328
Commitments and Contingencies (Note 9)
Total member’s equity	1,014,890		1,700,800	(45,441	)	(1,655,358	)	1,014,890
Total liabilities and member’s equity	$	2,055,783	2,363,768	105,048		(2,162,382	)	2,362,218

Supplemental Condensed Consolidating Balance Sheet

(in thousands)

	December 31, 2012
	Parent Company (CPE Resources)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	195,076	$	—	$	2,615		$	—		$	197,691
Investments in marketable securities	80,341		—		—			—			80,341
Accounts receivable	—		74,008		2,108			—			76,117
Due from related parties	—		385,102		42			(385,144		)	—
Inventories, net	6,741		71,312		3,622			—			81,675
Deferred income taxes	—		21,124		—			(28		)	21,096
Derivative financial instruments	138		13,647		—			—			13,785
Other assets	7		16,100		117			—			16,224
Total current assets	282,303		581,293		8,504			(385,172		)	486,929
Noncurrent assets
Property, plant and equipment, net	9,239		1,666,020		3,035			—			1,678,294
Goodwill	—		35,634		—			—			35,634
Deferred income taxes	22,807		24,650		18,679			—			66,136
Other assets	1,682,267		—		4,470			(1,646,259		)	40,478
Total assets	$	1,996,616	$	2,307,597	$	34,688		$	(2,031,430	)	$	2,307,471

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	2,558	$	45,896	$	1,117		$	—		$	49,571
Royalties and production taxes	—		126,726		2,625			—			129,351
Accrued expenses	2,087		41,529		292			—			43,908
Due to related parties	396,137		—		—			(385,144		)	10,993
Current deferred income taxes	27		—		—			(27		)	—
Current portion of federal coal lease obligations	—		63,191		—			—			63,191
Other liabilities	49		1,754		966			—			2,769
Total current liabilities	400,858		279,096		5,001			(385,172		)	299,783
Noncurrent liabilities
Senior notes	596,506		—		—			—			596,506
Federal coal lease obligations, net of current portion	—		122,928		—			—			122,928
Asset retirement obligations, net of current portion	—		164,626		74,365			—			238,991
Other liabilities	61		77,655		5,806			(33,449		)	50,073
Total liabilities	997,425		644,305		85,172			(418,621		)	1,308,281
Commitments and Contingencies (Note 9)
Total member’s equity	999,190		1,663,293		(50,484		)	(1,612,809		)	999,190
Total liabilities and member’s equity	$	1,996,615	$	2,307,598	$	34,688		$	(2,031,430	)	$	2,307,471

Supplemental Condensed Consolidating Statement of Cash Flows

(in thousands)

	Three Months Ended March 31, 2013
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	23,654		$	21,533		$	(7,844	)	$	—		$	37,343

Investing activities
Purchases of property, plant and equipment	(1,085		)	(11,946		)	—			—			(13,030		)
Investments in marketable securities	(13,051		)	—			—			—			(13,051		)
Maturity and redemption of investments	12,920			—			—			—			12,920
Investment in project development	—			(2,429		)	—			—			(2,429		)
Contributions made to subsidiary	—			(6,000		)	—			6,000			—
Other	—			23			—			—			23
Net cash provided by (used in) investing activities	(1,216		)	(20,352		)	—			6,000			(15,567		)

Financing activities
Payment of debt issuance costs	—			(863		)	—			—			(863		)
Contributions received from parent	—			—			6,000			(6,000		)	—
Net cash provided by (used in) financing activities	—			(863		)	6,000			(6,000		)	(863		)

Net increase (decrease) in cash and cash equivalents	22,438			318			(1,844		)	—			20,913
Cash and cash equivalents at beginning of year	195,076			—			2,615			—			197,691
Cash and cash equivalents at the end of year	$	217,514		318			771			—			218,604

Supplemental Condensed Consolidating Statement of Cash Flows

(in thousands)

	Three Months Ended March 31, 2012
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	35,665		$	15,919		$	1,425		$	—		$	53,009

Investing activities
Purchases of property, plant and equipment	(2,056		)	(12,222		)	(60		)	—			(14,338		)
Cash paid for capitalized interest	—			—			—			—			—
Investments in marketable securities	(28,349		)	—			—			—			(28,349		)
Maturity and redemption of investments	5,930			—			—			—			5,930
Return of restricted cash	71,245			—			—			—			71,245
Partnership escrow deposit	—			—			(4,470		)	—			(4,470		)
Contributions made to subsidiary	—			(4,470		)	—			4,470			—
Other	—			773			—			—			773
Net cash provided by (used in) investing activities	46,770			(15,919		)	(4,530		)	4,470			30,791

Financing activities
Contributions received from parent	—			—			4,470			(4,470		)	—
activities	—			—			4,470			(4,470		)	—

Net increase (decrease) in cash and cash equivalents	82,435			—			1,365			—			83,800
Cash and cash equivalents at beginning of year	401,087			2			3,151			—			404,240
Cash and cash equivalents at the end of year	$	483,522		$	2		$	4,516		$	—		$	488,040