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:
PEABODY WESTERN-UMWA 401(k) PLAN
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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
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 Administrator
Western Surface Agreement 401(k) Plan Committee
We have audited the accompanying statements of net assets available for benefits
of Peabody Western-UMWA 401(k) Plan 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
Peabody Western-UMWA 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
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ASSETS
Investments, at fair value:
Investments in mutual funds $5,745,088 $5,376,045
Investment in Company stock 7,379 --
Participant notes receivable 372,591 --
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Total investments 6,125,058 5,376,045
Receivables:
Employee contributions -- 35,257
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Net assets available for benefits $6,125,058 $5,411,302
========== ==========
See accompanying notes.
2
Peabody Western-UMWA 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
YEARS ENDED DECEMBER 31
2001 2000
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ADDITIONS
Interest and dividends $ 124,176 $ 547,354
Net realized and unrealized depreciation of investments (400,817) (336,517)
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Net investment (loss) income (276,641) 210,837
Contributions:
Employee 1,106,310 975,299
Employer 14,980 23,165
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Total contributions 1,121,290 998,464
DEDUCTIONS
Withdrawals by participants (130,893) (430,843)
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Net increase in net assets available for benefits 713,756 778,458
Net assets available for benefits at beginning of year 5,411,302 4,632,844
------------ ------------
Net assets available for benefits at end of year $ 6,125,058 $ 5,411,302
============ ============
See accompanying notes.
3
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2001 and 2000
1. DESCRIPTION OF THE PLAN
The following description of the Peabody Western-UMWA 401(k) Plan (the Plan)
provides only general information. Participants should refer to the plan
agreement for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan. Employees of Peabody Western Coal Co.,
Big Sky Coal Co., and Seneca Coal Co. (Employers) who are members of the United
Mine Workers of America (UMWA) collective bargaining unit covered by the Western
Surface Agreement are eligible for participation in the Plan on the effective
date of the Plan or the first day of the month following an employee's date of
employment. The Plan excludes employees who are members of a collective
bargaining unit other than the UMWA covered by the Western Surface Agreement,
nonresident aliens with no U.S. source of income, and leased employees. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
The Plan allows participants to invest among several mutual funds. 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
Participants may contribute any whole percentage from 2 to 16 percent of their
annual compensation, subject to certain applicable limits. Participants may also
defer the cash equivalent of up to ten employee benefit days per calendar year.
Prior to February 1, 2000, participants could contribute up to 10 percent of
their annual compensation. Participants may change their contribution percentage
and change fund allocations for future contributions daily. Prior to February 1,
2000, participants could change their contribution percentage on the first
business day of the first, fourth, seventh, and tenth months of the plan year. A
participant may discontinue contributions without withdrawing from the Plan.
The employer shall make matching contributions to the Plan on behalf of all
qualified participants. The amount of matching contributions for each qualified
participant for the plan year is 25 percent of the cash equivalent of the
employee benefit days that a
4
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
participant defers. In order to be a qualified participant eligible to receive
employer-matching contributions for a plan year, an employee must be credited
with one hour of service in the plan year.
PARTICIPANT LOANS
Effective April 1, 2001, loans and hardship withdrawals were permitted under the
Plan. 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 vested 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.
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.
PAYMENT OF BENEFITS
Participants may receive their vested account balances upon retirement,
disability, death, or termination of employment. Participants who have attained
age 59 1/2 have the right to withdraw all or part of their vested account
balance.
VESTING
Employer and employee contributions are vested 100 percent at the time of
contribution.
PLAN TERMINATION
The Plan could be terminated through the collective bargaining process, subject
to the provisions of ERISA. Currently, there is no intention to terminate the
Plan. In the event of plan termination, participants' accounts remain 100
percent vested.
5
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
ADMINISTRATIVE EXPENSES
The administrative expenses of the Plan are paid by the Employers.
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 additions and deductions during
the reporting period. Actual results could differ from these estimates.
VALUE 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. The stock fund is valued at year-end unit closing
price (comprised of the year-end market price plus any uninvested cash
position). Participant loans are valued at cost, which approximates market
value.
Purchases and sales of securities 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.
6
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
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:
2001 2000
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Mutual funds $ (402,052) $ (336,517)
Company stock 1,235 --
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$ (400,817) $ (336,517)
========== ==========
Investments that represent 5 percent or more of fair value of the Plan's net
assets at December 31 are as follows:
2001 2000
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Mutual funds:
Vanguard Explorer Fund $1,721,606 $1,596,187
Vanguard International Growth Fund 479,730 555,697
Vanguard LifeStrategy Moderate Growth Fund 388,501 354,992
Vanguard Prime Money Market Fund 434,526 348,875
Vanguard PRIMECAP Fund 1,279,236 1,379,803
Vanguard Total Bond Market Index Fund 370,053 Less Than 5%
Vanguard Windsor II Fund 916,603 841,284
All investments in the Plan are participant-directed.
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated March 26, 1998 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.
7
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
5. SUBSEQUENT EVENTS
Effective April 1, 2002, participants may contribute, subject to limitations of
applicable law, up to 50 percent of pretax 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.
8
Supplemental Schedule
Peabody Western-UMWA 401(k) Plan
Employer ID #13-2606920
Plan #001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT CURRENT VALUE
----------------- ------------------------- -------------
Vanguard Explorer Fund* 28,546 shares of mutual fund $1,721,606
Vanguard International Growth Fund* 31,961 shares of mutual fund 479,730
Vanguard LifeStrategy Conservative Growth Fund* 1,645 shares of mutual fund 23,128
Vanguard LifeStrategy Growth Fund* 5,794 shares of mutual fund 100,996
Vanguard LifeStrategy Income Fund* 2,388 shares of mutual fund 30,709
Vanguard LifeStrategy Moderate Growth Fund* 24,388 shares of mutual fund 388,501
Vanguard Prime Money Market Fund* 434,526 shares of mutual fund 434,526
Vanguard PRIMECAP Fund* 24,830 shares of mutual fund 1,279,236
Vanguard Total Bond Market Index Fund* 36,494 shares of mutual fund 370,053
Vanguard Windsor II Fund* 35,819 shares of mutual fund 916,603
Peabody Energy Stock Fund* 262 shares of common stock 7,379
Various participants Participant loans, interest rates from 372,591
6.0% to 8.5%, maturities through
6/2/2011
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$6,125,058
==========
*Party-in-interest.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the plan
administrator of the Peabody Western-UMWA 401(k) Plan has duly caused this
annual report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Peabody Western-UMWA
401(k) Plan
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