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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 1(d)
of the Securities Exchange Act of 1934
For the fiscal year ended: December 31, 2000
or
[_] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-13105
ARCH COAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0921172
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
63141
CityPlace One, Suite 300, St. Louis, (Zip Code)
MO
(Address of principal executive
offices)
(314) 994-2700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
------------------- -----------------------------------------
Common Stock, $.01 par value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[X]
At March 1, 2001, based on the closing price of the registrant's common
stock on the New York Stock Exchange on that date, the aggregate market value
of the voting stock held by non-affiliates of the registrant was approximately
$701,416,462. In determining this amount, the registrant has assumed that all
of its executive officers and directors, and persons known to it to be the
beneficial owners of more than five percent of its common stock, are
affiliates. Such assumption shall not be deemed conclusive for any other
purpose.
At March 1, 2001, there were 43,446,008 shares of the registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of the registrant's definitive proxy statement, to be filed with
the Securities and Exchange Commission no later than May 1, 2001, are
incorporated by reference into Part III of this Form 10-K.
2. Portions of the registrant's Annual Report to Stockholders for the year
ended December 31, 2000 are incorporated by reference into Parts I, II and IV
of this Form 10-K.
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TABLE OF CONTENTS
Page
----
PART I
Item 1.Business......................................................... 1
Item 2.Properties....................................................... 10
Item 3.Legal Proceedings................................................ 12
Item 4.Submission of Matters to a Vote of Security Holders.............. 12
PART II
Item 5.Market For Registrant's Common Equity and Related Stockholder
Matters......................................................... 12
Item 6.Selected Financial Data.......................................... 12
Item 7.Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 13
Item 7A.Quantitative and Qualitative Disclosures about Market Risk...... 13
Item 8.Financial Statements and Supplementary Data...................... 13
Item 9.Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure............................................ 13
PART III
Item 10.Directors and Executive Officers of the Registrant.............. 13
Item 11.Executive Compensation.......................................... 13
Item 12.Security Ownership of Certain Beneficial Owners and Management.. 13
Item 13.Certain Relationships and Related Transactions.................. 13
PART IV
Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-
K............................................................... 14
PART I
ITEM 1. BUSINESS
General
Arch Coal, Inc. ("Arch Coal" or the "Company") is one of the largest coal
producers in the United States. The Company mines, processes and markets
compliance and low-sulfur coal from mines located in both the eastern and
western United States, enabling it to ship coal cost-effectively to most of
the major domestic coal-fired electric generation facilities. As of December
31, 2000, the Company had 28 operating mines and controlled approximately 3.37
billion tons of proven and probable coal reserves, approximately 1.90 billion
tons of which were assigned reserves and approximately 1.47 billion tons of
which were unassigned reserves. Arch Coal sold 105.5 million tons of coal in
2000. The Company sells substantially all of its coal to producers of electric
power.
The Company owns a 99% membership interest in Arch Western Resources, LLC
("Arch Western"), a joint venture that was formed in connection with the
Company's acquisition of the United States coal operations of Atlantic
Richfield Company on June 1, 1998. The principal operating units of Arch
Western are Thunder Basin Coal Company, L.L.C., which operates the Black
Thunder and Coal Creek mines in the Southern Powder River Basin in Wyoming;
Mountain Coal Company, L.L.C., which operates the West Elk mine in Colorado;
Canyon Fuel Company, LLC ("Canyon Fuel"), which operates three mines in Utah;
and Arch of Wyoming, LLC, which operates two mines in the Hanna Basin of
Wyoming. Arch Western owns 100% of the membership interests of Thunder Basin
Coal Company, L.L.C., Mountain Coal Company, L.L.C. and Arch of Wyoming, LLC.
Arch Western owns a 65% membership interest in Canyon Fuel, with the remaining
35% membership interest owned by ITOCHU Coal International Inc., a subsidiary
of ITOCHU Corporation of Japan.
Recent Developments
On February 22, 2001, the Company completed a public offering of 9,927,765
shares of its common stock. The offering consisted of 5,170,797 shares sold
directly by the Company and 4,756,968 shares held by Ashland Inc. The net
proceeds realized by the Company from the offering of $93.2 million were used
to pay down debt.
Business Environment
United States Coal Markets. Production of coal in the United States has
increased from 434 million tons in 1960 to over 1.08 billion tons estimated in
2000. The following table sets forth demand trends for United States coal by
consuming sector through 2020 as compiled and estimated(e) or forecasted(f) by
the United States Department of Energy/Energy Information Agency. 2000 numbers
supplied from the Agency throughout this document are annualized using results
from the first ten months of the year.
Annual
Growth
1998-
Consumption by Sector 1998 1999 2000e 2005f 2010f 2015f 2020f 2020f
--------------------- ----- ----- ----- ----- ----- ----- ----- ------
(tons in millions)
Electric Generation........... 939 940 960 1,069 1,122 1,149 1,186 1.2%
Industrial.................... 69 66 65 83 84 85 86 0.5%
Steel Production.............. 28 28 30 26 23 21 19 (1.9%)
Residential/Commercial........ 6 5 4 5 5 5 5 0.4%
Export........................ 78 58 58 60 58 54 56 (0.2%)
----- ----- ----- ----- ----- ----- ----- ----
Total....................... 1,120 1,097 1,117 1,243 1,292 1,314 1,352 1.1%
===== ===== ===== ===== ===== ===== ===== ====
Electricity Generation. Over the past several decades, coal has consistently
maintained a 50% to 53% market share over competing energy sources to generate
electricity because of its relatively low cost and its availability throughout
the United States. On an average, all-in cost per megawatt-hour basis, coal-
fired
1
generation is substantially less expensive than electricity generated
utilizing natural gas, oil or nuclear power. Hydroelectric power is
inexpensive but is limited geographically, and there are few suitable sites
for new hydroelectric power dams. Consequently, approximately 91% of the coal
produced in the United States in 2000 was sold in the domestic market as a
fuel to the electric generation segment. The remainder of the tons were sold
as steam coal for industrial and residential purposes, into the export market,
and as metallurgical coal. In addition to the relative competitiveness of
coal-fired generation plants, coal consumption patterns are also influenced by
the demand for electricity, governmental regulation impacting coal production
and power generation, technological developments and the location,
availability and quality of competing sources of coal, as well as alternative
fuels such as natural gas, oil and nuclear and alternative energy sources such
as hydroelectric power.
Long-term demand for electric power will depend upon a variety of economic,
regulatory, technological and climatic factors beyond the Company's control.
Historically, domestic demand for electric power has increased as the United
States economy has grown. Two important regulatory initiatives, one designed
to increase competition among utilities and lower the cost of electricity for
consumers, and another to improve air quality by reducing the level of sulfur
emitted from coal-burning power generation plants, have had and are expected
to continue to have significant effects on the electric utility industry and
its coal suppliers.
According to the Energy Information Agency, coal is expected to remain the
primary fuel for electricity generation through 2020. The following table sets
forth the source fuel for electricity generation from 1990 through 2020 as
compiled and estimated(e) or forecasted(f) by the Energy Information Agency.
1990 1995 1999 2000e 2005f 2010f 2015f 2020f
----- ----- ----- ----- ----- ----- ----- -----
(billion kilowatt hours)
Coal............................ 1,590 1,710 1,881 1,956 2,137 2,248 2,298 2,350
Petroleum....................... 124 75 108 111 42 27 27 29
Natural Gas..................... 378 499 583 629 823 1,157 1,542 1,886
Nuclear......................... 577 673 728 752 740 720 639 574
Hydro/Renewable/other........... 356 401 407 377 415 440 451 455
----- ----- ----- ----- ----- ----- ----- -----
Total......................... 3,025 3,358 3,707 3,825 4,157 4,592 4,957 5,294
===== ===== ===== ===== ===== ===== ===== =====
Coal's primary advantage is its relatively low cost compared to other fuels
used to generate electricity. The following table sets forth the Energy
Information Agency's forecast of delivered fuel prices to electric utilities
through 2020. The table contains two data-sets. The top data-set is derived
from the Energy Information Agency's Long-Term forecast published in December
2000 and is presented in 1999 dollars. The lower data-set is derived from the
Energy Information Agency's Short-Term outlook published in February 2001. The
expected prices for petroleum fuel-oil and natural gas for 2001 and 2002 are
considerably above the forecasted prices published in December 2000, which
highlights the pricing volatility of petroleum and natural gas compared to
coal.
1998 1999 2000e 2001f 2002f 2005f 2010f 2015f 2020f
----- ----- ----- ----- ----- ----- ----- ----- -----
(dollars per million Btus)
Annual Energy Outlook
Petrol (Residual)....... $2.22 $2.42 $4.06 $3.93 $3.55 $3.52 $3.88 $4.00 $4.07
Natural Gas............. 2.41 2.55 3.90 3.79 3.27 2.88 3.03 3.24 3.59
Coal.................... 1.27 1.21 1.20 1.19 1.18 1.13 1.05 1.01 0.98
Short-Term Energy
Outlook
Petrol (Residual)....... $4.22 $4.03 $3.87
Natural Gas............. 4.22 5.22 5.02
Coal.................... 1.20 1.20 1.19
2
Coal Production. United States coal production was over one billion tons in
2000. The following table, derived from data prepared by the Energy
Information Agency except where noted, sets forth principal United States
production statistics for the periods indicated.
1980 1985 1990 1995 1998 1999 2000(e)
------- ------- ------ ------ ------ ------ -------
Total Tons (in
millions).............. 820 884 1,026 1,033 1,118 1,093 1,087
Percent of Total Tons
East.................. 69% 63% 61% 53% 51% 48% 47%
West.................. 31 37 39 47 49 52 53
Underground........... 40 40 41 38 37 36 35*
Surface............... 60 60 59 62 63 64 65*
Number of Mines
Underground........... 1,875 1,695 1,422 977 827 753 713*
Surface............... 1,997 1,660 1,285 1,127 899 870 870*
------- ------- ------ ------ ------ ------ -----
Total................. 3,872 3,355 2,707 2,104 1,726 1,623 1,583*
Average Number of Mine
Employees
Underground........... 150,328 107,357 84,154 57,879 49,391 43,325 **
Surface............... 74,610 61,924 47,152 32,373 37,866 34,352 **
Average Production per
Mine (tons in
thousands)
Underground........... 175 207 298 406 505 516 536*
Surface............... 246 321 469 565 779 810 812*
--------
* Company estimate.
** Data not yet available.
Sales and Marketing
The Company sells coal both under long-term contracts, the terms of which
are greater than 12 months, and on a current market or spot basis. When the
Company's coal sales contracts expire or are terminated, it is exposed to the
risk of having to sell coal into the spot market, where demand is variable and
prices are subject to greater volatility. Historically, the price of coal sold
under long-term contracts has exceeded prevailing spot prices for coal.
However, in the past several years new contracts have been priced at or near
existing spot rates.
The terms of the Company's coal sales contracts result from bidding and
extensive negotiations with customers. Consequently, the terms of these
contracts typically vary significantly in many respects, including price
adjustment features, provisions permitting renegotiation or modification of
coal sale prices, coal quality requirements, quantity parameters, flexibility
and adjustment mechanisms, permitted sources of supply, treatment of
environmental constraints, options to extend and force majeure, suspension,
termination and assignment provisions.
Provisions permitting renegotiation or modification of coal sale prices are
present in many of the Company's more recently negotiated long-term contracts
and usually occur midway through a contract or every two to three years,
depending upon the length of the contract. In some circumstances, customers
have the option to terminate the contract if prices have increased by a
specified percentage from the price at the commencement of the contract or if
the parties cannot agree on a new price. The term of sales contracts has
decreased significantly over the last two decades as competition in the coal
industry has increased and, more recently, as electricity generators have
prepared themselves for federal Clean Air Act requirements and the impending
deregulation of their industry.
There are some contract terms that differ between a standard "eastern United
States" contract and a standard "western United States" contract. In the
eastern United States, many customers require that the coal be sampled and
weighed at the destination. In the western United States, virtually all
samples are taken at the source. More
3
eastern United States coal is purchased on the spot market. The eastern United
States market has more recently been a shorter-term market because of the
larger number of smaller mining operations in that region. Western United
States contracts sometimes stipulate that some production taxes and coal
royalties be reimbursed in full by the buyer rather than as a pricing
component within the contract. These items comprise a significant portion of
western United States coal pricing.
A factor that may impact the Company's sale of coal in the future is the
development of coal commodity trading. The New York Mercantile Exchange
initiated electricity commodity trading a few years ago and has developed
standards for a coal contract. The Exchange has announced that it intends to
initiate coal contract trading based on a Huntington, West Virginia barge
loading hub. However, the Exchange has not yet initiated trading. The
development of standards to determine pricing has been difficult because of
the non-homogeneous character of coal and diversity in mining locations,
conditions and operations. Nonetheless, in anticipation of commodity trading,
some brokerage and marketing firms have entered the coal markets and devised
transactions that mimic commodity activity. Today, limited, but growing, over-
the-counter trading is being conducted on both firm-forward transactions as
well as put, call and other options. The trend to more commodity-type
transactions could mark a significant change in how coal is sold. The Company
is unable to predict whether this trend will have a material effect on its
sales and whether any such effect would be positive or negative on its
operating results.
Competition
The coal industry is intensely competitive, primarily as a result of the
existence of numerous producers in the coal producing regions in which the
Company operates. The Company competes with several major coal producers in
the Central Appalachian and Powder River Basin areas. It also competes with a
number of smaller producers in those and its other market regions.
4
Operations
As of December 31, 2000, the Company operated a total of 28 mines, all
located in the United States. Coal is transported from the Company's mining
complexes to customers by means of railroad cars, river barges or trucks, or a
combination of these means of transportation. As is customary in the industry,
virtually all the Company's coal sales are made F.O.B. mine or loadout,
meaning that customers are responsible for the cost of transporting purchased
coal to their facilities. The following table provides the location and a
summary of information regarding the Company's principal mining complexes and
the coal reserves associated with these operations as of December 31, 2000:
Captive Contract Mining
Mining Complex (Location) Mine(s)* Mine(s)* Equipment(/1/) Transportation
------------------------- -------- -------- -------------- --------------
Central Appalachia
Mingo Logan (WV)............... U U(3), S L, LW, C NS
Coal-Mac (WV).................. S S L Barge/NS
Dal-Tex (WV)(/2/).............. -- -- -- CSX
Hobet 21 (WV).................. S, U U D, L, S(/3/)C CSX
Arch of West Virginia (WV)..... S U D, L, S(/4/) CSX
Samples (WV)................... S U D, L, S(/5/) Barge, CSX
Campbells Creek (WV)........... -- U(2) -- Barge
Lone Mountain (KY)............. U(2) -- C NS/CSX
Pardee (VA).................... S, U U L, C NS
Western United States
Black Thunder (WY)............. S -- D, S(/6/) UP, BN
Coal Creek (WY)(/7/)........... -- -- -- UP, BN
West Elk (CO)(/8/)............. U -- LW, C UP
Skyline (UT)(/9/).............. U -- LW, C UP
SUFCO (UT)(/9/)................ U -- LW, C UP
Dugout Canyon (UT)(/9/)........ U -- C(/10/) UP
Arch of Wyoming (WY)........... S(2) -- D, S(/11/) UP
*Amounts in parenthesis indicate the number of captive and contract mines at
the mining complex or location. Captive mines are mines which we own and
operate on land owned or leased by us. Contract mines are mines which other
operators mine for us under contracts on land owned or leased by us.
S = Surface Mine LW = Longwall
U = Underground Mine C = Continuous Miner
D = Dragline UP = Union Pacific Railroad
L = Loader/Truck CSX = CSX Transportation
S = Shovel/Truck BN = Burlington Northern Railroad
NS = Norfolk Southern Railroad
5
Tons Produced Cost(/12/)/ Total Assigned
in 2000 Book Value Recoverable Reserves Proven Probable
Mining Complex (Location) (in millions) (in millions) (in millions of tons) (in millions of tons) (in millions of tons)
------------------------- ------------- ------------- --------------------- --------------------- ---------------------
Central Appalachia
Mingo Logan (WV)....... 9.8 113/35 20.2 20.2 --
Coal-Mac (WV).......... 0.9 33/13 -- -- --
Dal-Tex (WV)(/2/)...... -- 2/1 84.2 69.9 14.3
Hobet 21 (WV).......... 5.6 53/31 83.4 79.2 4.2
Arch of West Virginia
(WV).................. 3.6 123/22 20.4 20.4 --
Samples (WV)........... 6.5 139/60 25.2 24.9 0.3
Campbells Creek (WV)... 1.3 3/0 12.0 12.0 --
Lone Mountain (KY)..... 2.3 87/34 58.5 53.1 5.4
Pardee (VA)............ 1.7 39/9 12.9 12.9 --
Western United States
Black Thunder (WY)..... 60.1 256/212 987.6 987.6 --
Coal Creek (WY)(/7/)... 4.2 41/36 233.5 233.5 --
West Elk (CO)(/8/)..... 3.5 102/68 124.0 99.3 24.7
Skyline (UT)(/9/)...... 3.3 N/A 73.7 73.7 --
SUFCO (UT)(/9/)........ 5.8 N/A 126.1 70.2 55.9
Dugout Canyon
(UT)(/9/)............. 0.5 N/A 34.6 26.1 8.5
Arch of Wyoming (WY)... 0.8 53/3 0.9 0.9 --
----- --------- ------- ------- -----
Totals................... 109.9 1,044/524 1,897.2 1,783.9 113.3
===== ========= ======= ======= =====
--------
(/1/Reported)for captive operations only.
(/2/The)Company idled its mining operations at the Dal-Tex complex on July
23, 1999 due to a delay in obtaining mining permits resulting from legal
action in the U.S. District Court for the Southern District of West
Virginia.
(/3/Utilizes)an 83-cubic-yard dragline and a 51-cubic-yard shovel. A dragline
is a large machine used in the surface mining process to remove layers of
earth and rock covering coal.
(/4/Utilizes)a 49-cubic-yard dragline, a 43-cubic-yard shovel, a 22-cubic-
yard shovel and a 28-cubic-yard loader at the Ruffner mine.
(/5/Utilizes)a 118-cubic-yard dragline, two 53-cubic-yard shovels, a 22-
cubic-yard hydraulic excavator, three 28-cubic-yard loaders and one 23
cubic yard loader.
(/6/Utilizes)170-cubic-yard, 130-cubic-yard, 90-cubic-yard and 45-cubic-yard
draglines and 53-cubic-yard, 60-cubic-yard and 82-cubic-yard shovels.
(/7/The)Company idled its mining operations at Coal Creek during the third
quarter of 2000 because its cost structure was not competative in the
current market environment.
(/8/The)Company idled its mining operations at West Elk from January 28, 2000
to July 12, 2000 following the detection of higher-than-normal levels of
carbon monoxide in a portion of the mine.
(/9/Mines)are operated by Canyon Fuel. Canyon Fuel is an equity investment
and its financial statements and tons produced are not consolidated into
the Company's financial statements and tons produced.
(/10/Currently)under development; partial production projected to begin in the
second quarter of 2001.
(/11/Utilizes)76-cubic-yard and 64-cubic-yard draglines at Medicine Bow and a
32-cubic-yard dragline at Seminoe II.
(/12/Reflects)the cost of plant and equipment.
6
Transportation
Coal from the mines of the Company's subsidiaries is transported by rail,
truck and barge to domestic customers and to Atlantic or Pacific coast
terminals for shipment to domestic and international customers.
The Company's Arch Coal Terminal is located on a 60-acre site on the Big
Sandy River approximately seven miles upstream from its confluence with the
Ohio River. Arch Coal Terminal provides coal storage and transloading
services.
The Company's Paint Creek Terminal is located on leased property on the
Kanawha River at Crown Hill, West Virginia. The facility transloads coal
trucked from the Campbells Creek and Samples mines for shipment by barge to
the Company's customers.
Company subsidiaries together own a 17.5% interest in Dominion Terminal
Associates ("DTA"), which leases and operates a ground storage-to-vessel coal
transloading facility (the "DTA Facility") in Newport News, Virginia. The DTA
Facility has a rated throughput capacity of 20 million tons of coal per year
and ground storage capacity of approximately 1.7 million tons. The DTA
Facility serves international customers, as well as domestic coal users
located on the eastern seaboard of the United States.
As of December 31, 2000, Arch Western owned a 5.3% equity interest and
Canyon Fuel owned a 9.0% equity interest in the Los Angeles Export Terminal
("LAXT"), which owns and operates a dry bulk terminal operation within the
Port of Los Angeles. LAXT is served by the Union Pacific railroad. Current
annual rated capacity at the terminal is 10 million tons. The City of Los
Angeles owns the land upon which the facility has been constructed. LAXT has
entered into a 35 year lease with the City which provides compensation for its
contribution of cash and land to the venture. The total cost of the facility
was approximately $144 million.
Regulations Affecting Coal Mining
The information contained in the "Contingencies--Reclamation" and "Certain
Trends and Uncertainties--Environmental and Regulatory Factors" sections of
"Management's Discussion and Analysis" of the Company's 2000 Annual Report to
Stockholders is incorporated herein by reference.
Glossary Of Selected Mining Terms
Assigned Reserves. Recoverable coal reserves that have been designated for
mining by a specific operation.
Auger Mining. Auger mining employs a large auger, which functions much like
a carpenter's drill. The auger bores into a coal seam and discharges coal out
of the spiral onto waiting conveyor belts. After augering is completed, the
openings are reclaimed. This method of mining is usually employed to recover
any additional coal left in deep overburden areas that cannot be reached
economically by other types of surface mining.
Btu--British Thermal Unit. A measure of the energy required to raise the
temperature of one pound of water one degree Fahrenheit.
Coal Seam. A bed or stratum of coal.
Coal Washing. The process of removing impurities, such as ash and sulfur
based compounds, from coal.
Compliance Coal. Coal which, when burned, emits 1.2 pounds or less of sulfur
dioxide per million Btus. Compliance coal requires no mixing with other coals
or use of sulfur dioxide reduction technologies by generators of electricity
to comply with the requirements of the federal Clean Air Act.
Continuous Mining. One of two major underground mining methods now used in
the United States (also see "Longwall Mining"). This process utilizes a
machine--a "continuous miner"--that mechanizes the entire
7
coal extraction process. The continuous miner removes or "cuts" the coal from
the seam. The loosened coal then falls on a conveyor for removal to a shuttle
car or larger conveyor belt system.
Dragline. A large machine used in the surface mining process to remove the
overburden, or layers of earth and rock, covering a coal seam. The dragline
has a large bucket suspended from the end of a long boom. The bucket, which is
suspended by cables, is able to scoop up great amounts of overburden as it is
dragged across the excavation area.
Longwall Mining. One of two major underground coal mining methods currently
in use (see also "Continuous Mining"). This method employs a rotating drum,
which is pulled mechanically back and forth across a face of coal that is
usually several hundred feet long. The loosened coal falls onto a conveyor for
removal from the mine. Longwall operations include a hydraulic roof support
system that advances as mining proceeds, allowing the roof to fall in a
controlled manner in areas already mined.
Low-Sulfur Coal. Coal which, when burned, emits 1.6 pounds or less of sulfur
dioxide per million Btus.
Metallurgical Coal. The various grades of coal suitable for distillation
into carbon in connection with the manufacture of steel. Also known as "met"
coal.
Overburden. Layers of earth and rock covering a coal seam. In surface mining
operations, overburden is removed prior to coal extraction.
Preparation Plant. A preparation plant is a facility for crushing, sizing
and washing coal to prepare it for use by a particular customer. The washing
process has the added benefit of removing some of the coal's sulfur content.
Probable Reserves. Reserves for which quantity and grade and/or quality are
computed from information similar to that used for proven reserves, but the
sites for inspection, sampling and measurement are farther apart; therefore,
the degree of assurance, although lower than that for proven (measured)
reserves, is high enough to assume continuity between points of observation.
Proven Reserves. Reserves for which (a) quantity is computed from dimensions
revealed in outcrops, trenches, workings or drill holes; grade and/or quality
are computed from the results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well established.
Reclamation. The restoration of land and environmental values to a mining
site after the coal is extracted. Reclamation operations are usually underway
where the coal has already been taken from a mine, even as mining operations
are taking place elsewhere at the side. The process commonly includes
"recontouring" or shaping the land to its approximate original appearance,
restoring topsoil and planting native grass and ground covers.
Recoverable Reserves. The amount of proven and probable reserves that can
actually be recovered from the reserve base taking into account all mining and
preparation losses involved in producing a saleable product using existing
methods and under current law.
Spot Market. Sales of coal under an agreement for shipments over a period of
one year or less.
Steam Coal. Coal used in steam boilers to produce electricity.
Surface Mine. A mine in which the coal lies near the surface and can be
extracted by removing overburden.
Tons. References to a "ton" mean a "short" or net tonne, which is equal to
2,000 pounds.
Unassigned Reserves. Recoverable coal reserves that have not yet been
designated for mining by a specific operation.
8
Underground Mine. Also known as a "deep" mine. Usually located several
hundred feet below the earth's surface, an underground mine's coal is removed
mechanically and transferred by shuttle car or conveyor to the surface.
Employees
As of March 1, 2001, the Company employed a total of 3,655 persons, 521 of
whom were represented by the UMWA under a collective bargaining agreement that
expires in 2002 and 142 of whom are represented by the Scotia Employees
Association under a collective bargaining agreement that expires in 2003.
Executive Officers
The following is a list of the Company's executive officers, their ages and
their positions and offices held with the Company during the last five years.
Bradley M. Allbritten, 43, is Vice President--Human Resources of the Company
and has served in such capacity since March 1, 2000. Mr. Allbritten served as
the Company's Director of Human Resources from February 1999 through February
2000.
C. Henry Besten, Jr., 52, is Vice President--Strategic Marketing of the
Company and President of the Company's Arch Energy Resources, Inc. subsidiary
and has served in such capacities since July 1997. Mr. Besten also served as
Acting Chief Financial Officer of the Company from January 2000 to December
2000. During the past five years, Mr. Besten has also served as Senior Vice
President--Marketing for Ashland Coal, Inc., ("Ashland Coal"), which merged
with a subsidiary of the Company in July 1997.
John W. Eaves, 43, is Senior Vice President--Marketing of the Company and
President of the Company's Arch Coal Sales Company, Inc. and has served in
such capacities from March 1, 2000 and September 1995, respectively. Mr. Eaves
served as Vice President--Marketing of the Company from July 1997 through
February 2000.
Robert G. Jones, 44, is Vice President--Law, General Counsel and Secretary
of the Company and has served in such capacity since March 1, 2000. Mr. Jones
served the Company as Assistant General Counsel from July 1997 through
February 2000 and as Senior Counsel from August 1993 to July 1997.
Steven F. Leer, 48, is President and Chief Executive Officer and a Director
of the Company and has served in such capacity since 1992.
Robert J. Messey, 55, is Senior Vice President and Chief Financial Officer
of the Company and has served in such capacity since December 2000.
Terry L. O'Connor, 55, is Vice President--External Affairs of the Company
and has served in such capacity since June 1998.
David B. Peugh, 46, is Vice President--Business Development of the Company
and has served in such capacity since 1993.
Robert W. Shanks, 47, is Vice President--Operations of the Company and has
served in such capacity since July 1997. Since June 1998 he has also served as
President of Arch Western Resources. During the past five years, Mr. Shanks
has also served as President of the Company's Apogee Coal Company subsidiary.
Kenneth G. Woodring, 51, is Executive Vice President--Mining Operations of
the Company and has served in such capacity since July 1997. During the past
five years, Mr. Woodring has also served as Senior Vice President--Operations
of Ashland Coal.
9
ITEM 2. PROPERTIES
The Company estimates that it owned or controlled, as of December 31, 2000,
approximately 3.37 billion tons of proven and probable recoverable reserves,
approximately 1.90 billion tons of which were assigned reserves and
approximately 1.47 billion tons of which were unassigned reserves. Assigned
reserves are recoverable coal reserves that have been designated to be mined
by a specific operation. Unassigned reserves are recoverable reserves that
have not yet been designated for mining by a specific operation. Recoverable
reserves include only saleable coal and do not include coal which would remain
unextracted, such as for support pillars, and processing losses, such as
washery losses. Reserve estimates are prepared by the Company's engineers and
geologists and reviewed and updated periodically. Total recoverable reserve
estimates and reserves dedicated to mines and complexes change from time to
time to reflect mining activities, analysis of new engineering and geological
data, changes in reserve holdings and other factors. The following table
presents the Company's estimated recoverable coal reserves at December 31,
2000:
Total Recoverable Reserves (tonnage in millions)
Sulfur Content Reserve
Total (lbs. per million Btus) Control Mining Method
Recoverable --------------------------- ------------ -------------------
Reserves Proven Probable <1.2 1.2-2.5 >2.5 Owned Leased Underground Surface
----------- ------ -------- --------- --------- ------- ----- ------ ----------- -------
Wyoming................. 1,412 1,366 46 1,409 3 -- 98 1,314 156 1,256
Central Appalachia...... 1,302 927 375 552 688 62 498 804 614 688
Illinois................ 298 217 81 -- 8 290 248 50 270 28
Utah*................... 234 170 64 215 19 -- 5 229 234 --
Colorado................ 124 99 25 124 -- -- 3 121 124 --
----- ----- --- --------- ------- ------- --- ----- ----- -----
Total................. 3,370 2,779 591 2,300 718 352 852 2,518 1,398 1,972
===== ===== === ========= ======= ======= === ===== ===== =====
--------
* Represents 100% of the reserves held by Canyon Fuel, in which the Company
has a 65% interest.
Assigned Recoverable Reserves (tonnage in millions)
Total Sulfur Content Reserve
Assigned (lbs. per million Btus) Control Mining Method
Recoverable --------------------------- ------------ -------------------
Reserves Proven Probable <1.2 1.2-2.5 >2.5 Owned Leased Underground Surface
----------- ------ -------- --------- --------- ------- ----- ------ ----------- -------
Wyoming................. 1,222 1,222 -- 1,222 -- -- -- 1,222 -- 1,222
Central Appalachia...... 317 293 24 184 127 6 94 223 164 153
Illinois................ -- -- -- -- -- -- -- -- -- --
Utah*................... 234 170 64 215 19 -- 5 229 234 --
Colorado................ 124 99 25 124 -- -- 3 121 124 --
----- ----- --- --------- ------- ------- --- ----- ----- -----
Total................. 1,897 1,784 113 1,745 146 6 102 1,795 522 1,375
===== ===== === ========= ======= ======= === ===== ===== =====
--------
* Represents 100% of the reserves held by Canyon Fuel, in which the Company
has a 65% interest.
Unassigned Recoverable Reserves (tonnage in millions)
Total Sulfur Content Reserve
Unassigned (lbs. per million Btus) Control Mining Method
Recoverable --------------------------- ------------ -------------------
Reserves Proven Probable <1.2 1.2-2.5 >2.5 Owned Leased Underground Surface
----------- ------ -------- --------- --------- ------- ----- ------ ----------- -------
Wyoming................. 190 144 46 187 3 -- 98 92 156 34
Central Appalachia...... 985 634 351 368 561 56 404 581 450 535
Illinois................ 298 217 81 -- 8 290 248 50 270 28
Utah*................... -- -- -- -- -- -- -- -- -- --
Colorado................ -- -- -- -- -- -- -- -- -- --
----- ----- --- --------- ------- ------- --- ----- ----- -----
Total................. 1,473 995 478 555 572 346 750 723 876 597
===== ===== === ========= ======= ======= === ===== ===== =====
--------
* Represents 100% of the reserves held by Canyon Fuel, in which the Company
has a 65% interest.
10
Over 98% of the Company's recoverable reserves consists of steam coal, which
is coal used in steam boilers to make electricity. Less than 2% of the
Company's recoverable reserves consists of metallurgical coal, which is a
grade of coal used in the production of steel. Metallurgical coal represents
an immaterial amount of the Company's operations.
As of December 31, 2000, approximately 87,057 acres (which includes 100% of
the acreage held by Canyon Fuel) out of the Company's total of 579,000 acres
of coal land was leased from the federal government. These leases have terms
expiring between 2001 and 2019, subject to readjustment or extension and to
earlier termination for failure to meet diligent development requirements. The
Company has entered into leases covering substantially all of its leased
reserves which are not scheduled to expire prior to expiration of projected
mining activities. The Company also controls, through ownership or long-term
leases, approximately 5,850 acres of land which are used either for its coal
processing facilities or are being held for possible future development.
Royalties are paid to lessors either as a fixed price per ton or as a
percentage of the gross sales price of the mined coal. The Company pays
percentage-based royalties under the majority of its significant leases. The
terms of most of these leases extend until the exhaustion of mineable and
merchantable coal. The remaining leases have initial terms ranging from one to
40 years from the date of their execution, with most containing options to
renew. In some cases, a lease bonus, or prepaid royalty, is required, payable
either at the time of execution of the lease or in annual installments. In
most cases, the prepaid royalty amount is applied to reduce future production
royalties.
The Pine Creek, Black Bear, Campbells Creek, Samples, Ruffner and Holden
25/Ragland preparation plants and related loadout facilities are located on
properties held under leases which expire at varying dates over the next
thirty years with either optional 20-year extensions or with unlimited
extensions, and the balance of the Company's preparation plants and loadout
facilities are located on property owned by the Company.
All of the identified coal reserves held by the Company's subsidiaries have
been subject to preliminary coal seam analysis to test sulfur content. Of
these reserves, approximately 68.2% consist of compliance coal while an
additional 21.3% could be sold as low-sulfur coal. The balance is classified
as high-sulfur coal. Some of the Company's low-sulfur coal can be marketed as
compliance coal when blended with other compliance coal. Accordingly, most of
the Company's reserves are primarily suitable for the domestic steam coal
markets. However, a substantial portion of the low-sulfur and compliance coal
reserves at the Mingo Logan operations may also be used as a high-volatile,
low-sulfur, metallurgical coal.
Title to coal properties held by lessors or grantors to the Company and its
subsidiaries and the boundaries of properties are normally verified at the
time of leasing or acquisition. However, in cases involving less significant
properties and consistent with industry practices, title and boundaries are
not completely verified until such time as the Company's independent operating
subsidiaries prepare to mine such reserves. If defects in title or boundaries
of undeveloped reserves are discovered in the future, control of and the right
to mine such reserves could be adversely affected.
From time to time, lessors or sublessors of land leased by the Company's
subsidiaries have sought to terminate such leases on the basis that such
subsidiaries have failed to comply with the financial terms of the leases or
that the mining and related operations conducted by such subsidiaries are not
authorized by the leases. Some of these allegations relate to leases upon
which the Company conducts operations material to the Company's consolidated
financial position, results of operations and liquidity, but the Company does
not believe any pending claims by such lessors or sublessors have merit or
will result in the termination of any material lease or sublease.
The Company must obtain permits from applicable state regulatory authorities
before it begins to mine particular reserves. Applications for permits require
extensive engineering and data analysis and presentation, and must address a
variety of environmental, health and safety matters associated with a proposed
mining operation. These matters include the manner and sequencing of coal
extraction, the storage, use and disposal of waste and other substances and
other impacts on the environment, the construction of overburden fills and
water containment areas, and reclamation of the area after coal extraction.
The Company is required to post bonds to
11
secure performance under its permits. As is typical in the coal industry, the
Company strives to obtain mining permits within a time frame that allows it to
mine reserves as planned on an uninterrupted basis. The Company generally
begins preparing applications for permits for areas that it intends to mine up
to three years in advance of their expected issuance date. Regulatory
authorities have considerable discretion in the timing of permit issuance and
the public has rights to comment on and otherwise engage in the permitting
process, including through intervention in the courts.
The Company's reported coal reserves are those that could be economically
and legally extracted or produced at the time of their determination. In
determining whether the Company's reserves meet this standard, it takes into
account, among other things, the Company's potential inability to obtain a
mining permit, the possible necessity of revising a mining plan, changes in
estimated future costs, changes in future cash flows caused by changes in
costs required to be incurred to meet regulatory requirements and obtaining
mining permits, variations in quantity and quality of coal, and varying levels
of demand and their effects on selling prices. Except as described elsewhere
in this document with respect to permits to conduct mining operations
involving valley fills, which has been taken into account in determining the
Company's reserves, the Company is not currently aware of matters which would
significantly hinder its ability to obtain future mining permits with respect
to its reserves.
The carrying cost of the Company's coal reserves at December 31, 2000 (which
does not include the Company's 65% share of Canyon Fuel) was $910.7 million,
consisting of $19.8 million of prepaid royalties and the $890.9 million net
book value of coal lands and mineral rights.
The Company's executive headquarters occupy approximately 50,000 square feet
of leased space at CityPlace One, St. Louis, Missouri. See "Item 1. Business"
for a further description of the Company's subsidiaries' mining complexes,
mines, transportation facilities and other operations. The Company's
subsidiaries currently own or lease the equipment utilized in their mining
operations.
ITEM 3. LEGAL PROCEEDINGS
The information required by this Item is contained in the "Contingencies--
Legal Contingencies" section of "Management's Discussion and Analysis"
contained in the Company's 2000 Annual Report to Stockholders and is
incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders of the Company
through the solicitation of proxies or otherwise during the fourth quarter of
2000.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is contained in the Company's 2000
Annual Report to Stockholders under the caption "Stockholder Information" and
is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is contained in the Company's 2000
Annual Report to Stockholders under the caption "Selected Financial
Information" and is incorporated herein by reference.
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is contained in the Company's 2000
Annual Report to Stockholders under the caption "Management's Discussion and
Analysis", and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is contained in the Company's 2000
Annual Report to Stockholders under the caption "Management's Discussion and
Analysis", and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to Part IV, Item 14 of this Annual Report for the
information required by Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference into this Annual Report on Form
10-K the information appearing under the subcaptions "Nominee For a Two-Year
Term That Will Expire in 2003," "Nominees For a Three-Year Term That Will
Expire in 2004", "Directors Whose Terms Will Expire in 2002", and "Directors
Whose Terms Will Expire in 2003" which appear under the caption "Election of
Directors" in the Company's Proxy Statement to be distributed to Company
stockholders in connection with the Company's 2001 Annual Meeting (the "2001
Proxy Statement"). See also the list of the Company's executive officers and
related information under "Executive Officers" in Part I, Item 1 herein.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference into this Annual Report on Form
10-K the information appearing in the "Summary Compensation Table", the
sections entitled "Stock Option Grants", "Stock Option Exercises", and "Long-
Term Incentive Plan Award", the "Fiscal Year-End Option Values" table, the
Pension Plan section (including the table therein), the Employment Agreements
section, and the Compensation of Directors section in the 2001 Proxy
Statement. No portion of the Personnel and Compensation Committee Report on
Executive Compensation for 2000 or the Arch Coal Performance Graph is
incorporated herein in reliance on Regulation S-K, Item 402(a)(8).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference into this Annual Report on Form
10-K the information appearing under the caption "Ownership of Arch Coal
Common Stock" in the 2001 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of Arch Coal, Inc.
and subsidiaries included in the Company's 2000 Annual Report to Stockholders
are incorporated by reference:
Consolidated Statements of Operations--Years Ended December 31, 2000,
1999 and 1998
Consolidated Balance Sheets--December 31, 2000 and 1999
Consolidated Statements of Stockholders' Equity--Years Ended December 31,
2000, 1999 and 1998
Consolidated Statements of Cash Flows--Years Ended December 31, 2000,
1999 and 1998
Notes to Consolidated Financial Statements
The following financial statements of Canyon Fuel Company, LLC are
incorporated by reference to Exhibit 99 to this Annual Report on Form 10-K:
Statements of Operations--Years Ended December 31, 2000, 1999 and 1998
Balance Sheets--December 31, 2000 and 1999
Statements of Members' Equity--Years Ended December 31, 2000, 1999 and
1998
Statements of Cash Flows--Years Ended December 31, 2000, 1999 and 1998
Notes to Financial Statements
(a)(2) The following consolidated financial statement schedule of Arch Coal,
Inc. and subsidiaries is included in Item 14 at the page indicated:
II--Valuation and Qualifying Accounts at page 22.
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore,
have been omitted.
(a)(3) Exhibits filed as part of this Report are as follows:
2.1 Purchase and Sale Agreement dated as of March 22, 1998 among Atlantic
Richfield Company, ARCO Uinta Coal Company, Arch Coal, Inc. and Arch
Western Acquisition Corporation (incorporated herein by reference to
Exhibit 2.1 of the Company's Current Report on Form 8-K filed June 15,
1998)
2.2 Contribution Agreement among Arch Coal, Inc., Arch Western Acquisition
Corporation, Atlantic Richfield Company, Delta Housing, Inc. and Arch
Western Resources LLC, dated as of March 22, 1998 (incorporated herein
by reference to Exhibit 2.2 of the Company's Current Report on Form 8-K
filed June 15, 1998)
3.1 Restated Certificate of Incorporation of Arch Coal, Inc. (incorporated
herein by reference to Exhibit 3.1 of the Company's Quarterly Report on
Form 10-Q for the Quarter Ended March 31, 2000)
3.2 Restated and Amended Bylaws of Arch Coal, Inc. (filed herewith)
4.1 Stockholders Agreement, dated as of April 4, 1997, among Carboex
International, Ltd., Ashland Inc. and Arch Coal, Inc. (formerly Arch
Mineral Corporation) (incorporated herein by reference to Exhibit 4.1
of the Company's Registration Statement on Form S-4 (Registration No.
333-28149) filed on May 30, 1997)
14
4.2 Assignment of Rights, Obligations and Liabilities under the
Stockholders Agreement between Carboex International, Limited and
Carboex, S.A. effective as of October 15, 1998 (incorporated herein by
reference to Exhibit 4.2 of the Company's Annual Report on Form 10-K
for the Year Ended December 31, 1998)
4.3 Registration Rights Agreement, dated as of April 4, 1997, among Arch
Coal, Inc. (formerly Arch Mineral Corporation), Ashland Inc., Carboex
International, Ltd. and the entities listed on Schedules I and II
thereto (incorporated herein by reference to Exhibit 4.2 of the
Company's Registration Statement on Form S-4 (Registration No. 333-
28149) filed on May 30, 1997)
4.4 Assignment of Registration Rights between Carboex International,
Limited and Carboex, S.A. effective as of October 15, 1998
(incorporated herein by reference to Exhibit 4.4 of the Company's
Annual Report on Form 10-K for the Year Ended December 31, 1998)
4.5 Agreement Relating to Nonvoting Observer, executed as of April 4,
1997, among Carboex International, Ltd., Ashland Inc., Ashland Coal,
Inc. and Arch Coal, Inc. (formerly Arch Mineral Corporation)
(incorporated herein by reference to Exhibit 4.3 of the Company's
Registration Statement on Form S-4 (Registration No. 333-28149) filed
on May 30, 1997)
4.6 Assignment of Right to Maintain a Non-Voting Observer at Meetings of
the Board of Directors of Arch Coal, Inc. between Carboex
International, Limited and Carboex, S.A. effective as of October 15,
1998 (incorporated herein by reference to Exhibit 4.6 of the Company's
Annual Report on Form 10-K for the Year Ended December 31, 1998)
4.7 Agreement for Termination of the Arch Mineral Corporation Voting
Agreement and for Nomination of Directors, dated as of April 4, 1997,
among Hunt Coal Corporation, Petro-Hunt, L.L.C., each of the trusts
listed on Schedule I thereto, Ashland Inc. and Arch Mineral
Corporation (incorporated herein by reference to Exhibit 4.4 of the
Company's Registration Statement on Form S-4 (Registration No. 333-
28149) filed on May 30, 1997)
4.8 $600,000,000 Revolving Credit Facility, $300,000,000 Term Loan Credit
Agreement by and among Arch Coal, Inc., the Lenders party thereto, PNC
Bank, National Association, as Administrative Agent, Morgan Guaranty
Trust Company of New York, as Syndication Agent, and First Union
National Bank, as Documentation Agent, dated as of June 1, 1998
(incorporated herein by reference to Exhibit 4.1 of the Company's
Current Report on Form 8-K filed June 15, 1998)
4.9 Amendment 1 to Credit Agreement by and among Arch Coal, Inc., the
Lenders party thereto, PNC Bank, National Association, as
Administrative Agent, Morgan Guaranty Trust Company of New York, as
Syndication Agent, and First Union National Bank, as Documentation
Agent, dated as of January 21, 2000 (incorporated by reference to the
Company's Annual Report on Form 10-K for the Year Ended December 31,
1999)
4.10 $675,000,000 Term Loan Credit Agreement by and among Arch Western
Resources LLC, the Banks party thereto, PNC Bank, National
Association, as Administrative Agent, Morgan Guaranty Trust Company of
New York, as Syndication Agent, and NationsBank N.A., as Documentation
Agent dated as of June 1, 1998 (incorporated herein by reference to
Exhibit 4.2 of the Company's Current Report on Form 8-K filed June 15,
1998)
4.11 Omnibus Amendment Agreement dated as of June 1, 1998 in respect to
Arch Coal Trust no. 1998-1, Parent Guaranty and Suretyship Agreement,
Lease Intended as Security, Subsidiary Guaranty and Suretyship
Agreement, each dated as of January 15, 1998, among Apogee Coal
Company, Catenary Coal Company, Hobet Mining, Inc., Arch Coal, Inc.,
Great-West Life & Annuity Insurance Company, Bank of Montreal,
Barclays Bank, PLC, First Union National Bank, BA Leasing and Capital
Corporation, First Security Bank, National Association, Arch Coal
Sales Company, Inc., Ark Land Company and Mingo Logan Coal Company
(incorporated herein by reference to Exhibit 4.3 of the Company's
Current Report on Form 8-K filed June 15, 1998)
15
4.12 Lease Intended as Security dated as of January 15, 1998, among Apogee
Coal Company, Catenary Coal Company and Hobet Mining, Inc., as
Lessees; The First Security Bank, National Association, as Lessor, and
the Certificate Purchasers named therein. (incorporated herein by
reference to Exhibit 4.5 of the Company's Annual Report on Form 10-K
for the Year Ended December 31, 1997)
4.13 Form of Rights Agreement, dated March 3, 2000, between Arch Coal, Inc.
and First Chicago Trust Company of New York, as Rights Agent
(incorporated herein by reference to Exhibit 1 to a current report on
Form 8-A filed on March 9, 2000)
10.1 Retention Agreement between Arch Coal, Inc. and Steven F. Leer, dated
June 5, 2000 (incorporated herein by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30,
2000)
10.2 Form of Retention Agreement between Arch Coal, Inc. and each of its
Executive Officers (other than its Chief Executive Officer)
(incorporated herein by reference to Exhibit 10.2 of the Company's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2000)
10.3 Coal Off-Take Agreement, executed as of April 4, 1997, among Arch
Coal, Inc. (formerly Arch Mineral Corporation), Carboex International,
Ltd. and Ashland Inc. (incorporated herein by reference to Exhibit
10.1 of the Company's Registration Statement on Form S-4 (Registration
No. 333-28149) filed on May 30, 1997)
10.4 Sales Agency Agreement, executed as of April 4, 1997, among Arch Coal,
Inc. (formerly Arch Mineral Corporation), Ashland Inc. and Carboex
S.A. (incorporated herein by Reference to Exhibit 10.2 of the
Company's Registration Statement on Form S-4 (Registration No. 333-
28149) filed on May 30, 1997)
10.5 Assignment, Assumption and Amendment of Coal Sales Agency Agreement,
executed as of April 4, 1997, among Arch Coal, Inc. (formerly Arch
Mineral Corporation), Ashland Coal, Inc., Saarbergwerke AG and Carboex
International, Ltd. (incorporated herein by reference to Exhibit 10.3
of the Company's Registration Statement on Form S-4 (Registration No.
333-28149) filed on May 30, 1997)
10.6 Deed of Lease and Agreement between Dingess-Rum Coal Company and
Amherst Coal Company (predecessor to Ark Land Company), dated June 1,
1962, as supplemented January 1, 1968, June 1, 1973, July 1, 1974,
November 12, 1987, Lease Exchange Agreement dated July 2, 1979 amended
as of January 1, 1984 and January 7, 1993; February 24, 1993; Partial
Release dated as of May 6, 1988; Assignments dated March 15, 1990,
October 5, 1990 (incorporated herein by reference to Exhibit 10.8 of
the Company's Registration Statement on Form S-4 (Registration No.
333-28149) filed on May 30, 1997)
10.7 Agreement of Lease by and between Shonk Land Company, Limited
Partnership and Lawson Hamilton (predecessor to Ark Land Company),
dated February 8, 1983, as amended October 7, 1987, March 9, 1989,
April 1, 1992, October 31, 1992, December 5, 1992, February 16, 1993,
August 4, 1994, October 1, 1995, July 31, 1996 and November 27, 1996
(incorporated herein by reference to Exhibit 10.9 of the Company's
Registration Statement on Form S-4 (Registration No. 333-28149) filed
on May 30, 1997)
10.8 Lease between Little Coal Land Company and Ashland Land & Development
Co., a wholly-owned subsidiary of Ashland Coal, Inc. which was merged
into Allegheny Land Company, a second tier subsidiary of the Company
(incorporated herein by reference to Exhibit 10.11 of a Post-Effective
Amendment No. 1 to a Registration Statement on Form S-1 (Registration
No. 33-22425), as amended, filed by Ashland Coal, Inc., a subsidiary
of the Company, on August 11, 1988)
10.9 Agreement of Lease dated January 1, 1988, between Courtney Company and
Allegheny Land Company (legal successor by merger with Allegheny Land
Co. No. 2, the assignee of Primeacre Land Corporation under October 5,
1992, assignments), a second-tier subsidiary of the Company
(incorporated herein by reference to Exhibit 10.3 to the Annual Report
on Form 10-K for the Year Ended December 31, 1995, filed by Ashland
Coal, Inc., a subsidiary of the Company)
16
10.10 Lease between Dickinson Properties, Inc., the Southern Land Company,
and F. B. Nutter, Jr. and F. B. Nutter, Sr., predecessors in interest
to Hobet Mining & Construction Co., Inc., an independent operating
subsidiary of the Company that subsequently changed its name to Hobet
Mining, Inc. (incorporated herein by reference to Exhibit 10.14 of a
Post-Effective Amendment No. 1 to a Registration Statement on Form S-1
(Registration No. 33-22425), as Amended, filed by Ashland Coal, Inc.,
a subsidiary of the Company, on August 11, 1988)
10.11 Lease Agreement between Fielden B. Nutter, Dorothy Nutter and Hobet
Mining & Construction Co., Inc., an independent operating subsidiary
of the Company that Subsequently changed its name to Hobet Mining,
Inc. (incorporated herein by reference to Exhibit 10.22 of a Post-
Effective Amendment No. 1 to a Registration Statement on Form S-1
(Registration No. 33-22425), as amended, filed by Ashland Coal, Inc.,
a subsidiary of the Company, on August 11, 1988)
10.12 Lease and Modification Agreement between Horse Creek Coal Land
Company, Ashland and Hobet Mining & Construction Co., Inc., an
Independent operating subsidiary of the Company that subsequently
changed its name to Hobet Mining, Inc. (incorporated herein by
reference to Exhibit 10.24 of a Post-Effective Amendment No. 1 to a
Registration Statement on Form S-1 (Registration No. 33-22425), as
Amended, filed by Ashland Coal, Inc., a subsidiary of the Company, on
August 11, 1988)
10.13 Lease Agreement between C. C. Lewis Heirs Limited Partnership and
Allegheny Land Company, a second-tier subsidiary of the Company
(incorporated herein by reference to Exhibit 10.25 of a Post-Effective
Amendment No. 1 to a Registration Statement on Form S-1 (Registration
No. 33-22425), as amended, filed by Ashland Coal, Inc., a subsidiary
of the Company, on August 11, 1988)
10.14 Sublease between F. B. Nutter, Sr., et al., and Hobet Mining &
Construction Co., Inc., an independent operating subsidiary of the
Company that subsequently changed its name to Hobet Mining, Inc.
(incorporated herein by Reference to Exhibit 10.27 of a Post-Effective
Amendment No. 1 to a Registration Statement on Form S-1 (Registration
No. 33-22425), as amended, filed by Ashland Coal, Inc., a subsidiary
of the Company, on August 11, 1988)
10.15 Coal Lease Agreement dated as of March 31, 1992, among Hobet Mining,
Inc. (successor by merger with Dal-Tex Coal Corporation) as lessee and
UAC and Phoenix Coal Corporation, as lessors, and related Company
Guarantee (incorporated herein by reference to a Current Report on
Form 8-K dated April 6, 1992 filed by Ashland Coal, Inc., a subsidiary
of the Company)
10.16 Lease dated as of October 1, 1987, between Pocahontas Land Corporation
and Mingo Logan Collieries Company whose name is now Mingo Logan Coal
Company (incorporated herein by reference to Exhibit 10.3 to Amendment
No. 1 to a Current Report on Form 8-K filed on February 14, 1990 by
Ashland Coal, Inc., a subsidiary of the Company)
10.17 Consent, Assignment of Lease and Guaranty dated January 24, 1990,
among Pocahontas Land Corporation, Mingo Logan Coal Company, Mountain
Gem Land, Inc. and Ashland Coal, Inc. (incorporated herein by
reference to Exhibit 10.4 to Amendment No. 1 to a Current Report on
Form 8-K filed on February 14, 1990 by Ashland Coal, Inc., a
subsidiary of the Company)
10.18 Federal Coal Lease dated as of June 24, 1993 between the United States
Department of the Interior and Southern Utah Fuel Company
(incorporated herein by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K for the Year Ended December 31, 1998)
10.19 Federal Coal Lease between the United States Department of the
Interior and Utah Fuel Company (incorporated herein by reference to
Exhibit 10.18 of the Company's Annual Report on Form 10-K for the Year
Ended December 31, 1998)
10.20 Federal Coal Lease dated as of July 19, 1997 between the United States
Department of the Interior and Canyon Fuel Company, LLC (incorporated
herein by reference to Exhibit 10.19 of the Company's Annual Report on
Form 10-K for the Year Ended December 31, 1998)
17
10.21 Federal Coal Lease dated as of January 24, 1996 between the United
States Department of the Interior and the Thunder Basin Coal Company
(incorporated herein by reference to Exhibit 10.20 of the Company's
Annual Report on Form 10-K for the Year Ended December 31, 1998)
10.22 Federal Coal Lease Readjustment dated as of November 1, 1967 between
the United States Department of the Interior and the Thunder Basin
Coal Company (incorporated herein by reference to Exhibit 10.21 of the
Company's Annual Report on Form 10-K for the Year Ended December 31,
1998)
10.23 Federal Coal Lease effective as of May 1, 1995 between the United
States Department of the Interior and Mountain Coal Company
(incorporated herein by reference to Exhibit 10.22 of the Company's
Annual Report on Form 10-K for the Year Ended December 31, 1998)
10.24 Federal Coal Lease dated as of January 1, 1999 between the Department
of the Interior and Ark Land Company (incorporated herein by reference
to Exhibit 10.23 of the Company's Annual Report on Form 10-K for the
Year Ended December 31, 1998)
10.25 Federal Coal Lease dated as of October 1, 1999 between the United
States Department of the Interior and Canyon Fuel Company, LLC
(incorporated herein by reference to Exhibit 10 of the Company's
Quarterly Report on Form 10-Q for the Quarter Ended September 30,
1999)
10.26 Form of Indemnity Agreement between Arch Coal, Inc. and Indemnitee (as
defined therein) (incorporated herein by reference to Exhibit 10.15 of
the Company's Registration Statement on Form S-4 (Registration No.
333-28149) filed on May 30, 1997)
10.27 Arch Coal, Inc. 1998 Incentive Compensation Plan (incorporated herein
by reference to Exhibit 10.22 of the Company's Annual Report on Form
10-K for the Year Ended December 31, 1997)
10.28 Arch Coal, Inc. (formerly Arch Mineral Corporation) Deferred
Compensation Plan (incorporated herein by reference to Exhibit 4.1 of
the Company's Registration Statement on Form S-8 (Registration No.
333-68131) filed on December 1, 1998)
10.29 Arch Coal, Inc. 1997 Stock Incentive Plan (incorporated herein by
reference to Annex E to Appendix A to the Proxy Statement/Prospectus
forming part of the Company's Registration Statement on Form S-4
(Registration No. 333-28149) filed on May 30, 1997)
10.30 Arch Mineral Corporation 1996 ERISA Forfeiture Plan (incorporated
herein by reference to Exhibit 10.20 to the Company's Registration
Statement on Form S-4 (Registration No. 333-28149) filed on May 30,
1997)
10.31 Arch Coal, Inc. Outside Directors' Deferred Compensation Plan
effective January 1, 1999 (incorporated herein by reference to Exhibit
10.30 of the Company's Annual Report on Form 10-K for the Year Ended
December 31, 1998)
10.32 Second Amendment to the Arch Mineral Corporation Supplemental
Retirement Plan effective January 1, 1998 (incorporated herein by
reference to Exhibit 10.31 of the Company's Annual Report on Form 10-K
for the Year Ended December 31, 1998)
13 Portions of the Company's Annual Report to Stockholders for the year
ended December 31, 2000 (filed herewith)
18 Preferability Letter of Ernst & Young LLP dated May 11, 1999
(incorporated herein by Reference to Exhibit 18 of the Company's
Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1999)
21 Subsidiaries of the Company (filed herewith)
23.1 Consent of Ernst & Young LLP (filed herewith)
18
24 Power of Attorney (filed herewith)
99 Financial Statements of Canyon Fuel Company, LLC (filed herewith)
--------
* Exhibits 10.27, 10.28, 10.29, 10.30 and 10.32 are executive compensation
plans.
** Upon written or oral request to the Company's Secretary, a copy of any of
the above exhibits will be furnished at cost.
(b) Reports on Form 8-K
None.
(d) Financial Statements of Canyon Fuel Company, LLC (incorporated by
reference to Exhibit 99 of this Annual Report on Form 10-K for the Year Ended
December 31, 2000).
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Arch Coal, Inc.
(Registrant)
/s/ Steven F. Leer
By: _________________________________
Steven F. Leer
President and Chief Executive
Officer
Date: March 14, 2001
Signatures Capacity
---------- --------
/s/ Steven F. Leer President and Chief Executive Officer and
______________________________________ Director
Steven F. Leer
/s/ Robert J. Messey Senior Vice President and Chief Financial
______________________________________ Officer (Principal Financial Officer)
Robert J. Messey
/s/ John W. Lorson Controller
______________________________________
John W. Lorson
* Director
______________________________________
James R. Boyd
Director
______________________________________
Phillip W. Block
* Director
______________________________________
Frank M. Burke
* Director
______________________________________
Ignacio Dominguez Urquijo
* Director
______________________________________
Thomas L. Feazell
* Director
______________________________________
Robert L. Hintz
20
Signatures Capacity
---------- --------
* Director
______________________________________
Douglas H. Hunt
* Director
______________________________________
James L. Parker
* Director
______________________________________
A. Michael Perry
* Director
______________________________________
Theodore D. Sands
/s/ Robert G. Jones
*By: _________________________________
Robert G. Jones
As Attorney-in-fact
ORIGINAL POWERS OF ATTORNEY AUTHORIZING STEVEN F. LEER AND ROBERT G. JONES,
AND EACH OF THEM, TO SIGN THIS ANNUAL REPORT ON FORM 10-K AND AMENDMENTS
THERETO ON BEHALF OF THE ABOVE-NAMED PERSONS HAVE BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AS EXHIBIT 24 TO THIS REPORT.
21
SCHEDULE II
ARCH COAL, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions(1) Other(2) of Year
----------- ---------- ---------- ------------- -------- -------
Year Ended December 31,
2000.....................
Reserves Deducted from
Asset Accounts.........
Other Assets--Other
Notes and Accounts
Receivable........... 541 -- 482 -- 59
Current Assets--
Supplies Inventory... 23,542 4,223 7,926 -- 19,839
Year Ended December 31,
1999.....................
Reserves Deducted from
Asset Accounts.........
Other Assets--Other
Notes and Accounts
Receivable........... 582 325 366 -- 541
Current Assets--
Supplies Inventory... 23,901 5,966 6,325 -- 23,542
Year Ended December 31,
1998.....................
Reserves Deducted from
Asset Accounts.........
Other Assets--Other
Notes and Accounts
Receivable........... 471 306 195 -- 582
Current Assets--
Supplies Inventory... 17,681 2,292 5,999 9,927 23,901
--------
(1) Reserves utilized, unless otherwise indicated.
(2) Balances acquired in the Arch Western transaction.
22