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, 2003
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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 ENERGY CORPORATION EMPLOYEE STOCK PURCHASE 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
PAGE
Report of Independent Auditors ...................................... 2
Financial Statements:
Statements of Net Assets Available for Benefits-
December 31, 2003 and 2002 ..................................... 3
Statements of Changes in Net Assets Available for Benefits-
Years Ended December 31, 2003, December 31, 2002 and Period from
May 22, 2001 (date of inception) through December 31, 2001 ..... 4
Notes to Financial Statements .................................. 5
Signatures .......................................................... 9
Exhibit Index ....................................................... 10
Exhibit 23 - Consent of Independent Auditors ........................ 11
REPORT OF INDEPENDENT AUDITORS
The Plan Administrators and Participants
Peabody Energy Corporation Employee Stock Purchase Plan
We have audited the accompanying statements of net assets available for benefits
of Peabody Energy Corporation Employee Stock Purchase Plan as of December 31,
2003 and 2002, and the related statements of changes in net assets available for
benefits for the years ended December 31, 2003 and 2002, and for the period from
May 22, 2001 (date of inception) through December 31, 2001. These financial
statements are the responsibility of the Company'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, 2003 and 2002, and the changes in its net assets available for
benefits for the years ended December 31, 2003, 2002, and for the period from
May 22, 2001 (date of inception) through December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
St. Louis, Missouri
March 18, 2004
PEABODY ENERGY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
------------
2003 2002
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ASSETS
Participant deposits due from Peabody
Energy Corporation $1,139,357 $676,916
LIABILITIES
Stock purchase payable 1,139,357 676,916
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NET ASSETS AVAILABLE FOR BENEFITS $ -- $ --
========= =======
See accompanying notes to financial statements
3
PEABODY ENERGY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Period from
May 22, 2001 (date
Year Ended Year Ended of inception) to
December 31, 2003 December 31, 2002 December 31, 2001
----------------- ----------------- -----------------
ADDITIONS TO NET ASSETS:
Participant contributions $ 2,198,057 $ 2,883,183 $ 2,352,066
DEDUCTIONS FROM NET ASSETS:
Contributions held for future
stock purchases (1,139,357) (676,916) (1,048,492)
Contributions used for stock
purchases (1,058,700) (2,206,267) (1,303,574)
---------- ---------- ----------
NET CHANGE -- -- --
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period -- -- --
---------- ---------- ----------
End of period $ -- $ -- $ --
========== ========== ==========
See accompanying notes to financial statements
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PEABODY ENERGY CORPORATION EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
1. DESCRIPTION OF PLAN
General
The following general description of the Peabody Energy Corporation Employee
Stock Purchase Plan (the "Plan") is provided for general information purposes
only. Participants should refer to the Plan document for complete information.
Peabody Energy Corporation (the "Company") is the Plan sponsor.
The Plan is an employee stock purchase plan, established on May 22, 2001, that
enables eligible employees of the Company and certain of its subsidiaries to
purchase Peabody Energy Corporation common stock at a discount from fair market
value. The purchase price is equal to 85 percent of the lower of the fair market
value of the stock on the first or last business day of an offering period. Fair
market value is the closing price on each of the applicable dates, as quoted on
the New York Stock Exchange ("NYSE"). Each plan year contains two serial
offering periods of six-month duration. Subsequent six-month offering periods
automatically commence unless otherwise specified by the Plan administrator. The
Company issues purchased shares of common stock to participant brokerage
accounts maintained by the Plan custodian outside of the Plan.
In December 2002, the Plan Administrator changed the Plan offering periods to
coincide with the Plan's fiscal year. As a result, the offering periods changed
from April 1 through September 30 and October 1 through March 30 to January 1
through June 30 and July 1 through December 31. To transition to the new
offering periods in 2003, a shortened offering period occurred for the period
April 1, 2003 through June 30, 2003.
The Plan terminates the earlier of May 22, 2011 or upon issuance of all
available shares, as amended from time to time. One million five hundred
thousand shares of the Company's common stock are available for sale under the
Plan and as of December 31, 2003, 337,378 shares of this allotment had been
sold. Common stock sold under the Plan may be newly issued or sold from treasury
stock.
The Plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the "Code").
The Plan is not intended to be a qualified pension, profit-sharing or stock
bonus plan under Code Section 401(a), nor is it subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
Administration of the Plan
The Plan is administered by a committee appointed by the Peabody Energy
Corporation Board of Directors. Allecon Stock Associates, L.L.C. serves as the
recordkeeper and A.G. Edwards & Sons, Inc. serves as the custodian for the Plan.
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Eligibility
Current employees of the Company or a participating subsidiary of the Company
are eligible to participate in the Plan if:
- their customary employment is more than 20 hours per week and they
are employed more than five months per year; and
- they own less than five percent of the total combined voting power
of all outstanding shares of all classes of securities of the
Company.
Participation begins on the first day of the offering period.
Participant Accounts
A separate account is maintained by the custodian for each Plan participant.
Each plan participant account reflects the quantity and pricing of that
participant's share purchases and sales, dividends reinvested and investment
gains and losses. Assets held in participant accounts are neither assets of the
Plan or the Company.
Contributions
The Plan allows participants to elect an after-tax contribution rate of 1% to
15% of the employee's eligible compensation, which includes straight time wages
or base salary. Bonuses, incentive compensation, overtime, commissions and shift
premiums paid to an employee are not included in eligible compensation. Plan
participants may modify their contribution rate once during each offering
period. Contributions are made through payroll deductions and are held by the
Company until shares are purchased. Employees may not purchase more than $25,000
worth of stock through the Plan in any calendar year; contributions in excess of
this amount are refunded to the employee. No interest is paid on contributions
made during an offering period. The Company does not make contributions to the
Plan.
Employee contributions are used to purchase shares of the Company's stock on the
purchase date, or the last day during which the NYSE is open during each
offering period. Purchases are made in whole and fractional shares. A
participant may withdraw or discontinue their contributions to the Plan prior to
15 days before the purchase date. If contributions are discontinued, the
participant may either elect to have all contributions made during the offering
period refunded or leave all contributions deducted during the current offering
period to purchase stock at the end of the offering period. Any shares
previously purchased remain in the participant's account despite discontinuing
contributions or withdrawing from the Plan. Purchases are made automatically,
unless a participant withdrawal is executed.
Sale of Stock
Shares purchased under the Plan are subject to a restriction period of 18 months
from the date the shares are purchased. Shares may not be sold, pledged or
transferred during this 18-month restriction period.
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Dividends
Dividends paid on stock held in participant accounts are automatically
reinvested in additional shares or fractional shares of the Company's stock.
Shares purchased with dividends are priced at 100 percent of the fair market
value of the stock on the date dividends are paid. There is no time requirement
for holding shares purchased with dividends.
2. ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are maintained on the accrual basis of
accounting.
Plan Expense
Administrative fees and expenses of the Plan are paid by the Company.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Plan Administrator and the
Company to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results may differ from
these estimates.
3. PARTICIPANT DEPOSITS DUE FROM PEABODY ENERGY CORPORATION AND STOCK PURCHASE
PAYABLE
At December 31, 2003 and 2002, the Plan had an obligation to purchase the
Company's common stock on behalf of the participants in an amount equal to the
participant contributions held on deposit by the Company. The liability is
reflected in the accompanying Statements of Net Assets Available for Benefits as
"Stock purchase payable." Amounts contributed by Plan participants during the
offering period from July 1, 2003 to December 31, 2003 and October 1, 2002 to
December 31, 2002 are reflected as "Participant deposits due from Peabody Energy
Corporation." The offering periods in place at December 31, 2003 and 2002
terminated on December 31, 2003 and March 31, 2003, respectively.
On April 1, 2003 the Plan purchased 53,507 shares of common stock at a cost of
$1.2 million. On July 1, 2003, the Plan purchased 22,558 shares of common stock
at a cost of $0.5 million. All shares purchased were deposited directly to the
participants' accounts.
The offering period in place at December 31, 2001 terminated on March 31, 2002.
On April 1, 2002, the Plan purchased 94,869 shares of common stock at a cost of
$1.9 million. On October 1, 2002, the Plan purchased 62,362 shares of common
stock at a cost of $1.4 million. All shares purchased were deposited directly to
the participants' accounts.
The Plan's initial offering period ran from May 22, 2001 through September 30,
2001. On October 1, 2001, the Plan purchased 63,636 shares of common stock at a
total cost of $1.3 million. All shares purchased were deposited directly to the
participants' accounts.
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4. TAX STATUS
The Plan, and the rights of participants to make purchases thereunder, is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code. The Plan is not qualified under Section 401(a) of the Code. Pursuant
to Section 423 of the Code, no income, other than dividends on shares held in
participant accounts, will be taxable to a participant until disposition of the
shares purchased under the Plan. Upon the disposition of the shares, the
participant will generally be subject to tax and the amount and character of the
tax will depend upon the holding period and disposition price. Dividends
received on shares held in the participant's account are taxable to the
participant as ordinary income. The Plan does not provide for income taxes.
5. PLAN MODIFICATIONS
The Peabody Energy Corporation Board of Directors may amend or suspend the Plan
at any time. However, no amendment can adversely affect participant rights under
the Plan in the current offering period.
Although it has not expressed any intent to do so, the Peabody Energy
Corporation Board of Directors may terminate the Plan at any time. If it does,
the Plan will terminate in its entirety, and no further purchase rights will be
granted or exercised and no further payroll contributions will be collected. In
the event of a termination of the Plan, all contributions held by the Plan would
be refunded to the Plan participants at the time of termination.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the plan
administrator of the Peabody Energy Corporation Employee Stock Purchase Plan has
duly caused this annual report to be signed on its behalf by the undersigned,
hereunto duly authorized.
Peabody Energy Corporation
Employee Stock Purchase Plan
Date: March 26, 2004 By: /s/ Sharon D. Fiehler
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Sharon D. Fiehler
Peabody Energy Corporation
Executive Vice President,
Human Resources & Administration
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EXHIBIT INDEX
The exhibits below are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
Exhibit
No. Description of Exhibit
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23 Consent of Ernst & Young LLP, Independent Auditors
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