SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ending December 31, 2001
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Commission File Number 1-16463
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Full title of the plan and the address of the plan, if different from that of
the issuer named below:
LEE RANCH COAL COMPANY RETIREMENT AND
SAVINGS PLAN FOR HOURLY EMPLOYEES
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Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
PEABODY ENERGY CORPORATION
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701 MARKET STREET, ST. LOUIS, MISSOURI 63101-1826
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(Address of principal executive offices) (Zip Code)
TABLE OF CONTENTS
Report of Independent Auditors...........................................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits -
December 31, 2001 and December 31, 2000.............................................................2
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 2001 and 2000..............................................................3
Notes to Financial Statements.......................................................................4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) ..........................................9
Signatures..............................................................................................10
Exhibit Index...........................................................................................11
Exhibit 23 - Consent of Independent Auditors............................................................12
Report of Independent Auditors
Plan Administrators and Participants
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
We have audited the accompanying statements of net assets available for benefits
of Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees as of
December 31, 2001 and 2000, and the related statements 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 auditing standards generally accepted
in the 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 examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes 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, 2001 and 2000, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2001 is presented for purposes of
additional analysis and is not a required part of the 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. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
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Ernst & Young LLP
St. Louis, Missouri
May 17, 2002
1
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
------------ ------------
ASSETS
Investments, at fair value:
Investments in mutual funds $ 3,511,674 $ 3,768,619
Investments in common/collective trust 3,158,408 2,609,096
Investment in Company stock 4,578 --
Participant notes receivable 833,689 802,454
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Total investments 7,508,349 7,180,169
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Total assets 7,508,349 7,180,169
LIABILITIES
Payable to Lee Ranch Coal Company Retirement and Savings Plan for
Salaried Employees -- (204,400)
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Total liabilities -- (204,400)
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Net assets available for benefits $ 7,508,349 $ 6,975,769
============ ============
See accompanying notes.
2
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2001 2000
------------ ------------
ADDITIONS
Interest and dividends $ 311,022 $ 421,762
Net realized and unrealized depreciation of investments (434,002) (353,208)
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Net investment (loss) income (122,980) 68,554
Contributions:
Employee 689,290 597,539
Employer 224,214 200,780
Rollover 51,756 8,113
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Total contributions 965,260 806,432
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Total additions 842,280 874,986
DEDUCTIONS
Withdrawals by participants (317,508) (347,285)
Transfers from (to) other plans 10,053 (182,000)
Other expenses (2,245) (5,178)
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Total deductions (309,700) (534,463)
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Net increase in net assets available for benefits 532,580 340,523
Net assets available for benefits at beginning of year 6,975,769 6,635,246
------------ ------------
Net assets available for benefits at end of year $ 7,508,349 $ 6,975,769
============ ============
See accompanying notes.
3
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Notes to Financial Statements
Years Ended December 31, 2001 and 2000
1. DESCRIPTION OF THE PLAN
The following description of the Lee Ranch Coal Company (the Company) Retirement
and Savings Plan for Hourly Employees (the Plan) provides only general
information. Participants should refer to the plan document for a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering all hourly employees of the
Company who have completed 30 days of service and all employees that previously
participated in the Santa Fe Pacific Coal Company Retirement and Savings Plan
for Hourly Employees. It is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). Effective January 1, 2001, employees are
eligible for participation in the Plan on the date of their employment or any
time afterward.
The Plan allows participants to invest among several mutual funds and common/
collective trusts. Effective October 2001, the Plan allows participants to
invest in the Peabody Energy Stock Fund, as a result of Peabody Energy
Corporation's initial public offering of common stock in May 2001. All
investments in the Plan are participant-directed.
CONTRIBUTIONS
Each year, participants may contribute up to 16 percent of pretax or after-tax
annual compensation, as defined in the Plan. Participants direct the investment
of their contributions into various investment options offered by the Plan. The
Company makes matching contributions of an amount equal to 100 percent of the
first 3 percent of compensation that a participant contributes to the Plan on a
pretax basis. Participants direct the investment of employer matching
contributions. All contributions are subject to certain limitations.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contribution and (b) plan earnings. Allocations
are based on participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's vested account.
4
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Participants are vested immediately in their contributions plus actual earnings
thereon. Vesting in the Company contribution portion of their accounts is based
on years of continuous service. Employer matching contributions become 20
percent vested for each year of service, as defined, with 100 percent vesting
after five years of service.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50 percent of their account balance.
The loans are secured by the balance in the participant's account and bear
interest at rates commensurate with the prime interest rate as published in the
Wall Street Journal on the first business day of the month in which the loan was
made. Principal and interest is paid ratably through payroll deductions.
PAYMENT OF BENEFITS
On termination of service due to death, disability, or retirement, a participant
may elect to receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account or annual installments. For
termination of service for other reasons, a participant may receive the value of
the vested interest in his or her account as a lump-sum distribution. A
participant may also elect to take a withdrawal of all or a portion of his or
her employee after-tax contribution account after being a participant for three
months. This withdrawal cannot be made more than once in any three-month period.
Withdrawals in cases of hardship, as defined in the Plan, are also permitted.
FORFEITED ACCOUNTS
Employer contributions are reduced by forfeitures of non-vested amounts. The
forfeiture credits amounted to $0 and $4,278 for the years ended December 31,
2001 and 2000, respectively.
PLAN TERMINATION
Although it has not expressed any 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
5
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
provisions of ERISA. In the event of plan termination, participants' accounts
become fully vested.
ADMINISTRATIVE EXPENSES
Most administrative expenses of the Plan are paid by the Company. Loan fees are
paid by participants.
OTHER EXPENSES
Other expenses amounted to $2,245 and $5,178 for the years ended December 31,
2001 and 2000, respectively. These amounts consisted of administrative expenses
of approximately $2,245 and $900 and interdivisional forfeiture transfers of $0
and $4,278 for the years ended December 31, 2001 and 2000, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities at the date of the
financial statements, and reported amounts of revenue and expenses during the
reporting period. Actual results could differ from these estimates.
VALUATION OF INVESTMENTS AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Shares of mutual funds are
valued at quoted market prices, which represent the net asset value of shares
held by the Plan at year-end. Units in common/collective trust are valued at net
asset value at year-end. The stock fund is valued at year-end unit closing price
(comprised of the year-end market
6
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
price plus any uninvested cash position). Participant loans are valued at cost,
which approximates market value.
Purchases and sales are recorded on a trade-date basis. Interest income is
recorded when earned. Dividends are recorded on the ex-dividend date. Capital
gain distributions are included in dividend income.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
3. INVESTMENTS
The Plan's investments (including investments purchased or sold, as well as held
during the year) appreciated (depreciated) in fair value as determined by quoted
market prices as follows:
YEAR ENDED DECEMBER 31
2001 2000
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Mutual funds $ (434,582) $ (344,166)
Company stock 580 (9,042)
------------ ------------
$ (434,002) $ (353,208)
============ ============
Investments that represent 5 percent or more of the fair value of the Plan's net
assets at December 31 are as follows:
2001 2000
------------ ------------
Mutual funds:
Vanguard 500 Index Fund $ 1,683,836 $ 1,953,086
Vanguard Wellington Fund LESS THAN 5% 371,959
Vanguard Windsor II Fund 550,006 569,866
Common/collective trust:
Vanguard Retirement Savings Trust 3,158,408 2,609,096
All investments in the Plan are participant-directed.
7
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated January 2, 1996, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan was amended
subsequent to the IRS determination letter. The Plan's administrator believes
the Plan is being operated in compliance with the applicable requirements of the
Code and, therefore, believes the Plan is qualified and the related trust is
tax-exempt. The Plan has applied for a new determination letter.
5. TRANSFERS TO OTHER PLAN
The amount payable to another plan at December 31, 2000 represents participant
account balances that were transferred to the Lee Ranch Coal Company Retirement
and Savings Plan for Salaried Employees.
6. SUBSEQUENT EVENTS
Effective April 1, 2002, participants may contribute, subject to limitations of
applicable law, up to 50 percent of pretax or after-tax annual compensation, as
defined in the Plan.
Also effective April 1, 2002, in the calendar year that a participant is age 50
or older and each year thereafter, certain participants meeting additional
specific criteria will be permitted to make catch-up contributions to the Plan.
Participants will be able to contribute amounts over and above the maximum
otherwise permitted by the Plan subject to certain limitations.
Beginning April 1, 2002, the Company match was increased to an amount equal to
100 percent of the first 4 percent of compensation that a participant
contributes to the Plan on a pretax basis. After a participant's pretax
contributions reach the pretax limit established by the IRS, the Company matches
an amount equal to 100 percent of the first 4 percent of compensation that a
participant contributes to the Plan on an after-tax basis.
8
Supplemental Schedule
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Employer ID #51-0332232
Plan #203
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT CURRENT VALUE
----------------- ------------------------- -------------
Fidelity Equity-Income II Fund* 101 shares of mutual fund $ 2,129
Gabelli Growth Fund* 26 share of mutual fund 738
Harbor Capital Appreciation Fund* 2 shares of mutual fund 50
Janus Investment Fund* 114 shares of mutual fund 2,807
Janus Worldwide Fund* 43 shares of mutual fund 1,868
Managers Special Equity Fund* 1 share of mutual fund 65
T. Rowe Price Science/Technology Fund* 73 shares of mutual fund 1,520
T. Rowe Price Small-Cap Stock Fund, Inc.* 14 shares of mutual fund 358
Vanguard 500 Index Fund* 15,902 shares of mutual fund 1,683,836
Vanguard Explorer Fund* 2,064 shares of mutual fund 124,453
Vanguard GNMA Fund* 445 shares of mutual fund 4,616
Vanguard International Growth Fund* 7,321 shares of mutual fund 109,894
Vanguard LifeStrategy Conservative Growth Fund* 163 shares of mutual fund 2,290
Vanguard LifeStrategy Growth Fund* 904 shares of mutual fund 15,752
Vanguard LifeStrategy Income Fund* 382 shares of mutual fund 4,917
Vanguard LifeStrategy Moderate Growth Fund* 127 shares of mutual fund 2,021
Vanguard Prime Money Market* 289,792 shares of mutual fund 289,792
Vanguard REIT Index Fund* 553 shares of mutual fund 6,711
Vanguard Small-Cap Index Fund* 6 shares of mutual fund 115
Vanguard Total Bond Market Index Fund* 7,657 shares of mutual fund 77,640
Vanguard Total Stock Market Index Fund* 23 shares of mutual fund 581
Vanguard U.S. Growth* 14,534 shares of mutual fund 273,970
Vanguard Wellington Fund* 13,043 shares of mutual fund 355,545
Vanguard Windsor II Fund* 21,493 shares of mutual fund 550,006
Vanguard Retirement Savings Trust* 3,158,408 shares of common/ 3,158,408
collective trust
Peabody Energy Stock Fund* 162 shares of common stock 4,578
Various participants Participant loans, interest rates 833,689
from 4.8% to 9.5%, maturities
through 1/21/2016
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$7,508,349
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*Parties-in-interest.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the plan
administrator of the Lee Ranch Coal Company Retirement and Savings Plan for
Hourly Employees has duly caused this annual report to be signed on its behalf
by the undersigned, hereunto duly authorized.
Lee Ranch Coal Company Retirement and
Savings Plan for Hourly Employees
Date: June 28, 2002 By: /s/ SHARON D. FIEHLER
--------------------------------------
Sharon D. Fiehler
Peabody Energy Corporation
Executive Vice President,
Human Resources & Administration
10
EXHIBIT INDEX
The exhibits below are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
EXHIBIT
NUMBER DESCRIPTION
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23 Consent of Ernst & Young LLP, Independent Auditors
11