SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 Registered Public Accounting Firm.................. 1
Financial Statements
Statements of Net Assets Available for Benefits -
December 31, 2004 and 2003.......................................... 2
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 2004 and 2003.............................. 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 Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
The Plan Administrator
Defined Contribution Administrative Committee
We have audited the accompanying statements of net assets available for benefits
of Peabody Western-UMWA 401(k) Plan as of December 31, 2004 and 2003, 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 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. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included 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, and
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, 2004 and 2003, and the changes in its net assets available for
benefits for the years then ended, in conformity with U.S. generally accepted
accounting principles.
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, 2004, 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. This 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
June 2, 2005
1
Peabody Western-UMWA 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2004 2003
---------- ----------
ASSETS
Investments, at fair value:
Investments in mutual funds $9,137,353 $7,857,341
Investment in Peabody Energy Stock Fund 79,091 33,050
Participant notes receivable 510,430 529,709
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Net assets available for benefits $9,726,874 $8,420,100
========== ==========
See accompanying notes.
2
Peabody Western-UMWA 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2004 2003
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ADDITIONS
Interest and dividends $ 153,457 $ 123,130
Net realized and unrealized appreciation of investments 948,544 1,532,428
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Net investment income 1,102,001 1,655,558
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Contributions:
Employee 1,056,450 1,080,315
Employer 9,329 5,323
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Total contributions 1,065,779 1,085,638
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Total additions 2,167,780 2,741,196
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DEDUCTIONS
Withdrawals by participants (858,906) (365,082)
Transfers to other plans -- (2,372)
Administrative expenses (2,100) (1,800)
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Total deductions (861,006) (369,254)
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Net increase in net assets available for benefits 1,306,774 2,371,942
Net assets available for benefits at beginning of year 8,420,100 6,048,158
----------- -----------
Net assets available for benefits at end of year $ 9,726,874 $ 8,420,100
=========== ===========
See accompanying notes.
3
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2004 and 2003
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
documents for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan, and participation in the Plan is
voluntary. Employees of Peabody Western Coal Co., Big Sky Coal Co., and Seneca
Coal Co. (collectively, the "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 on the date of their 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 Employers are indirect, wholly-owned subsidiaries of
Peabody Energy Corporation. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
The Plan allows participants to invest in a selection of mutual funds and the
Peabody Energy Stock Fund. All investments in the Plan are participant-directed.
CONTRIBUTIONS
Each year participants may contribute any whole percentage from 2% to 50% of
pre-tax base compensation, as defined in the Plan. In addition, participants may
also contribute distributions from other qualified defined benefit or defined
contribution plans. Participants may also defer the cash equivalent of up to 10
employee benefit days per calendar year. Participants may change their
contribution percentage and change fund allocations for future contributions
daily. All contributions are subject to certain limitations as defined by the
Plan and the Internal Revenue Service ("IRS"). A participant may discontinue
contributions without withdrawing from the Plan.
In the calendar year that a participant is age 50 or older and each year
thereafter, certain participants meeting additional specific criteria are
permitted to make catch-up contributions to the Plan. These participants are
able to contribute amounts in excess of the maximum otherwise permitted by the
Plan, subject to certain limitations.
4
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
The Employers 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% of the cash equivalent of the employee
benefit days that a participant defers. 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
Participants may borrow up to 50% of their vested account balance from their
fund accounts, subject to a minimum of $1,000 and a maximum of $50,000. The loan
is secured by the balance in the participant's account and bears interest at 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, plus 1%. Principal and
interest are paid ratably through payroll deductions. Only one loan may be
outstanding at a time.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions,
employer contributions, and plan earnings. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's account.
PAYMENT OF BENEFITS
Participants may receive their account balances upon retirement, disability,
death, or termination of employment. The participant, or their beneficiary, may
elect to receive either a lump-sum payment equal to the value of the
participant's vested interest in their account, or installments paid quarterly
or annually. Participants may also elect a direct rollover to an individual
retirement account or another qualified plan. Participants who have attained the
age of 59 1/2 have the right to receive a partial or complete distribution of
their vested account balance upon request, without penalty. Withdrawals in cases
of hardship, as defined in the Plan, are also permitted.
VESTING
Employer and participant contributions are vested 100% at the time of
contribution.
5
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PLAN TERMINATION
The Plan could be terminated through the collective bargaining process, subject
to the provisions of ERISA. Participants' accounts would remain fully vested
upon termination of the Plan. Currently, the Employers have no intention to
terminate the Plan.
ADMINISTRATIVE EXPENSES
All significant administrative expenses of the Plan are paid by the Employers.
Participants are required to pay their own loan fees.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those 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 the 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. RELATED PARTY TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of its
trustee, Vanguard Fiduciary Trust Company, a party-in-interest with respect to
the Plan. These transactions are covered by an exemption from the "prohibited
transaction" provisions of ERISA and the Internal Revenue Code of 1986 (the
"Code"), as amended. The Plan also invests in Peabody Energy Corporation stock,
through the Peabody Energy Stock Fund, which is a permitted party-in-interest
transaction.
4. INVESTMENTS
The Plan's investments, including those purchased, sold or held during the year,
appreciated in fair value as determined by quoted market prices as follows:
2004 2003
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Mutual funds $ 914,915 $1,520,547
Peabody Energy Stock Fund 33,629 11,881
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$ 948,544 $1,532,428
========== ==========
Investments representing 5% or more of the fair value of the Plan's net assets
at December 31 were as follows:
2004 2003
---------- ----------
Mutual funds:
Vanguard Explorer Fund $2,050,822 $1,982,313
Vanguard International Growth Fund 817,279 670,766
Vanguard LifeStrategy Moderate Growth Fund 716,822 600,455
Vanguard Prime Money Market Fund 962,038 851,740
Vanguard PRIMECAP Fund 1,892,801 1,609,152
Vanguard Total Bond Market Index Fund 685,787 595,600
Vanguard Windsor II Fund 1,481,060 1,143,550
7
Peabody Western-UMWA 401(k) Plan
Notes to Financial Statements (continued)
5. INCOME TAX STATUS
The Plan received a determination letter from the IRS dated March 3, 2003,
stating that the Plan is qualified under Section 401(a) of 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, as
amended, is qualified and the related trust is tax-exempt. The Plan's sponsor
has indicated that it will take the necessary steps, if any, to maintain the
Plan's qualified status.
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 statements of net
assets available for benefits.
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, 2004
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT TYPE CURRENT VALUE
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Vanguard Explorer Fund* 27,502 shares of mutual fund $ 2,050,822
Vanguard International Growth Fund* 43,334 shares of mutual fund 817,279
Vanguard LifeStrategy Conservative
Growth Fund* 8,415 shares of mutual fund 128,410
Vanguard LifeStrategy Growth Fund* 13,663 shares of mutual fund 273,805
Vanguard LifeStrategy Income Fund* 9,500 shares of mutual fund 128,529
Vanguard LifeStrategy Moderate
Growth Fund* 40,024 shares of mutual fund 716,822
Vanguard Prime Money Market Fund* 962,038 shares of mutual fund 962,038
Vanguard PRIMECAP Fund* 30,382 shares of mutual fund 1,892,801
Vanguard Total Bond Market Index Fund* 66,776 shares of mutual fund 685,787
Vanguard Windsor II Fund* 48,196 shares of mutual fund 1,481,060
Peabody Energy Stock Fund* 2,337 units of stock fund 79,091
Various participants Participant loans, interest rates
from 5.0% to 8.5%,
maturities through May 27, 2013 510,430
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$ 9,726,874
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* Parties-in-interest.
9
SIGNATURES
Peabody Western - UMWA 401(k) Plan. Pursuant to the requirements of the
Securities Exchange Act of 1934, the plan administrator 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 27, 2005 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
No. Description of Exhibit
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23 Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm
11