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:
BLACK BEAUTY COAL COMPANY 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 Black Beauty Coal Company 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
---------------------
Ernst & Young LLP
St. Louis, Missouri
June 2, 2005
1
Black Beauty Coal Company 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2004 2003
------------ ------------
ASSETS
Investments, at fair value:
Investments in mutual funds $ 57,345,585 $ 46,685,604
Investment in common/collective trust 4,142,848 2,903,832
Investment in Peabody Energy Stock Fund 1,903,638 133,891
------------ ------------
Total investments 63,392,071 49,723,327
Receivables:
Employer contributions 2,490,281 --
------------ ------------
Net assets available for benefits $ 65,882,352 $ 49,723,327
============ ============
See accompanying notes.
2
Black Beauty Coal Company 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2004 2003
------------ ------------
ADDITIONS
Interest and dividends $ 992,834 $ 655,604
Net realized and unrealized appreciation
of investments 5,392,240 8,215,536
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Net investment income 6,385,074 8,871,140
------------ ------------
Contributions:
Employee 5,873,726 4,951,620
Employer 5,971,901 2,885,859
Rollover 112,195 302,420
------------ ------------
Total contributions 11,957,822 8,139,899
------------ ------------
Total additions 18,342,896 17,011,039
------------ ------------
DEDUCTIONS
Withdrawals by participants (2,183,871) (1,587,654)
------------ ------------
Net increase in net assets available for benefits 16,159,025 15,423,385
Net assets available for benefits at beginning of year 49,723,327 34,299,942
------------ ------------
Net assets available for benefits at end of year $ 65,882,352 $ 49,723,327
============ ============
See accompanying notes.
3
Black Beauty Coal Company 401(k) Plan
Notes to Financial Statements
Years Ended December 31, 2004 and 2003
1. DESCRIPTION OF THE PLAN
The following description of the Black Beauty Coal Company (the "Company")
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. The Company is an indirect, wholly-owned subsidiary of Peabody
Energy Corporation.
GENERAL
The Plan is a defined contribution plan offered by the Company and its
divisions, Black Beauty Underground and Black Beauty Mining and its subsidiaries
GIBCO Motor Express, LLC and GIBCO Fuels, LLC. Participation in the Plan is
voluntary, and all full-time employees who are not covered by a collective
bargaining agreement are eligible for participation in the Plan on the date of
their employment, or at any time afterward. Prior to March 15, 2004, the Plan
covered all full-time employees who had completed one year of service, had
attained 21 years of age, and were not covered by a collective bargaining
agreement. 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, a
common/collective trust, and the Peabody Energy Stock Fund. All investments in
the Plan are participant-directed.
CONTRIBUTIONS
Each year, participants may contribute any whole percentage from 1% to 60% of
pre-tax base compensation, as defined in the Plan. Participants may also
contribute distributions from other qualified defined benefit or defined
contribution plans.
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.
The Company makes matching contributions equal to 90% of the first 6% of
eligible compensation that a participant contributes to the Plan. Prior to July
1, 2003, the Company made matching contributions equal to 85% of the first 6% of
eligible compensation that a participant contributed to the Plan.
4
Black Beauty Coal Company 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
Participants direct the investment of employee and employer matching
contributions into various investment options offered by the Plan. All
contributions are subject to certain limitations as defined by the Plan and the
Internal Revenue Service ("IRS").
In 2004, the Plan participants became eligible for a performance contribution as
established by the Board of Directors of Peabody Energy Corporation. The Board
of Directors establishes desired minimum and maximum performance targets that
require the Company to pay a performance contribution into the account of each
active, eligible employee between 0% and 4% of the employee's base compensation
as of the end of the fiscal year, based upon Peabody Energy Corporation's level
of achievement of the approved target. If the minimum performance targets set by
the Board of Directors for a fiscal year are not met, the Board of Directors may
authorize the Company to contribute a discretionary amount to the Plan. If the
maximum performance targets set by the Board of Directors for a fiscal year are
exceeded, the Board of Directors, at its discretion, may authorize the Company
to contribute up to an additional 2% of base compensation to the Plan.
At December 31, 2004, a receivable for $2.5 million was recorded for a
performance contribution of 4% of eligible employees' salaries related to the
2004 plan year.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions, the
Company's contributions, and plan earnings. The benefit to which a participant
is entitled is the benefit that can be provided from the participant's vested
account.
PAYMENT OF BENEFITS
On termination of service, a participant generally may elect to receive either a
lump-sum amount equal to the value of the participant's interest in their
account, or monthly, quarterly, annual, or semiannual installments. In the event
of the participant's death, the beneficiary is eligible for a lump sum payment.
Withdrawals in cases of hardship, as defined in the Plan, are also permitted.
VESTING
Employer and employee contributions are vested 100% at the time of contribution.
5
Black Beauty Coal Company 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PLAN TERMINATION
The Plan is voluntary on the part of the Company. The Company may terminate the
Plan in whole or in part subject to the provisions of ERISA. Upon termination or
complete discontinuance of all contributions to the Plan, participants' accounts
remain fully vested. Currently, the Company has no intention to terminate the
Plan.
ADMINISTRATIVE EXPENSES
All significant administrative expenses of the Plan are paid by the Company.
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.
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 the 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 price plus any uninvested cash
position).
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
Black Beauty Coal Company 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
---------- ----------
Mutual funds $4,871,909 $8,192,188
Peabody Energy Stock Fund 520,331 23,348
---------- ----------
$5,392,240 $8,215,536
========== ==========
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:
Fidelity Magellan Fund $ 19,784,801 $ 18,792,078
Vanguard LifeStrategy Moderate
Growth Fund 10,721,760 8,907,114
Vanguard PRIMECAP Fund 13,423,473 10,090,062
Common/collective trust:
Vanguard Retirement Savings Trust 4,142,848 2,903,832
5. INCOME TAX STATUS
The underlying nonstandardized prototype plan received an opinion letter from
the IRS dated August 22, 2001, stating that the written form of the underlying
prototype document is qualified under Section 401(a) of the Code, and that any
employer adopting this form of the plan will be considered to have a plan
qualified under Section 401(a) of
7
Black Beauty Coal Company 401(k) Plan
Notes to Financial Statements (continued)
5. INCOME TAX STATUS (CONTINUED)
the Code. 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 opinion 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
Black Beauty Coal Company 401(k) Plan
Employer ID #35-1799736
Plan #001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
DESCRIPTION OF
IDENTITY OF ISSUE INVESTMENT TYPE CURRENT VALUE
------------------------------------- ----------------------------- -------------
Fidelity Magellan Fund* 190,623 shares of mutual fund $ 19,784,801
Vanguard 500 Index Fund* 28,504 shares of mutual fund 3,182,170
Vanguard Explorer Fund* 13,215 shares of mutual fund 985,406
Vanguard Extend Mkt Index Fund* 23,437 shares of mutual fund 734,995
Vanguard Int'l Growth Fund* 133,208 shares of mutual fund 2,512,307
Vanguard LifeStrategy Conserv Growth* 14,068 shares of mutual fund 214,674
Vanguard LifeStrategy Growth Fund* 29,120 shares of mutual fund 583,572
Vanguard LifeStrategy Income Fund* 32,269 shares of mutual fund 436,600
Vanguard LifeStrategy Moderate
Growth Fund* 598,647 shares of mutual fund 10,721,760
Vanguard PRIMECAP Fund* 215,465 shares of mutual fund 13,423,473
Vanguard Total Bond Mkt Index* 263,082 shares of mutual fund 2,701,853
Vanguard Windsor Fund* 37,308 shares of mutual fund 674,150
Vanguard Windsor II Fund* 45,227 shares of mutual fund 1,389,824
Vanguard Retirement Savings Trust* 4,142,848 shares of common/
collective trust 4,142,848
Peabody Energy Stock Fund* 56,254 units of stock fund 1,903,638
------------
$ 63,392,071
============
* Parties-in-interest.
9
SIGNATURES
Black Beauty Coal Company 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.
Black Beauty Coal Company
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