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, 2001 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-13105 Title of the Plan - ARCH COAL, INC. EMPLOYEE THRIFT PLAN Name and Address of the issuer of the Securities Held Pursuant to the Plan - Arch Coal, Inc. One CityPlace Drive, Suite 300 St. Louis, Missouri 63141
FINANCIAL STATEMENTS AND EXHIBITS Financial Statements and Schedule Independent Auditors' Report Statements of Net Assets Available for Benefits Statement of Changes in Net Assets Available for Benefits Notes to Financial Statements Schedule of Assets Held for Investment Purposes at End of Year Exhibits: 23.1 Consent of Rubin, Brown, Gornstein & Co. LLP, Independent Auditors 23.2 Consent of Stone Carlie & Company, L.L.C., Independent Auditors ================================================================================
ARCH COAL, INC. EMPLOYEE THRIFT PLAN FINANCIAL STATEMENTS DECEMBER 31, 2001 ================================================================================
CONTENTS - --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT To the Trustees Arch Coal, Inc. Employee Thrift Plan St. Louis, Missouri We have audited the accompanying statement of net assets available for plan benefits of the Arch Coal, Inc. Employee Thrift Plan as of December 31, 2001 and the related statement of changes in net assets available for plan benefits for the year 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 plan benefits at December 31, 2001, and the changes in net assets available for benefits for the year then ended in conformity with accounting principles generally accepted in the United States of America. /S/ Rubin, Brown, Gornstein & Co. LLP Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri June 15, 2002 Page 1
INDEPENDENT AUDITORS' REPORT To the Administrator Arch Coal, Inc. Employee Thrift Plan We have audited the accompanying statement of net assets available for benefits of the Arch Coal, Inc. Employee Thrift Plan as of December 31, 2000. This financial statement is the responsibility of the Plan's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statement referred to above presents fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. /S/ Stone Carlie & Company, L.L.C. - ---------------------------------- Stone Carlie & Company, L.L.C. St. Louis, Missouri June 29, 2001 Page 2
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2001
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 1. DESCRIPTION OF THE PLAN The Arch Coal, Inc. Employee Thrift Plan was established by Arch Coal, Inc. for the benefit of the eligible employees of the Company, its subsidiaries and controlled affiliates. The following description of the Plan provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions. Certain provisions of the Plan as described below do not apply to or have been modified for certain subsidiaries and affiliates of the Company. GENERAL The Plan, which has been adopted by Arch Coal, Inc. is a defined contribution profit sharing plan which includes a 401(k) provision. The Plan covers all full-time salaried employees, all full-time nonunion hourly employees, and certain union employees where specified by applicable collective bargaining agreements of the Company, its subsidiaries, and any controlled affiliates that elect to participate in the Plan. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). CONTRIBUTIONS Participants may elect to defer between 1 percent and 17 percent of compensation, depending upon the location of the employee. The percentage of employer match or nondiscretionary contribution also depends upon the location. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions, the employer's matching contribution, if applicable, or employer non-discretionary contribution, if applicable, and an allocation of Plan earnings. The allocation of earnings is determined by the earnings of the participant's investment selection based on each participant's account balance, as defined in the Plan agreement. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Participants are fully vested in their contributions plus actual earnings. All eligible employees of the Company at December 31, 1997 became fully vested in the Plan. Eligible employees hired subsequent to December 31, 1997 vest in Company contributions and earnings upon the completion of three full and consecutive years of service. - -------------------------------------------------------------------------------- Page 5
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- Notes To Financial Statements (Continued) All participants become fully vested upon death while employed, total disability, or normal retirement age, regardless of the number of months of participation. NOTES RECEIVABLE - PARTICIPANTS Active participants, with some exceptions, may borrow from their fund accounts a minimum of $500 or up to a maximum equal to the lesser of $50,000 or 50 percent of their vested account balances. Loan terms range from one to five years or longer for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at the prime rate listed in the Wall Street Journal on the day the loan is processed. Principal and interest is paid ratably through payroll deductions. PAYMENT OF BENEFITS Upon death, termination of service, or attainment of age 70-1/2, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested interest in his or her account, a single annuity, a joint and survivorship annuity with various survivor options or a series of installment payments. FORFEITED ACCOUNTS Forfeited amounts of employer contributions are used to offset future company matching contributions of the Plan. At December 31, 2001, forfeited amounts available to reduce future company contributions were $185,074. INVESTMENT OPTIONS Participants may direct the investment of their entire account balance among the following investment options: AMERICAN CENTURY INCOME & GROWTH FUND This fund seeks capital growth. The fund typically invests at least 90% of assets in equities selected for their appreciation potential. The majority of these securities are common stocks issued by companies that meet management's standards for earnings and revenue growth. The fund may only purchase securities of companies that have operated more than 3 years. ARCH COAL, INC. COMMON STOCK Funds are invested in Arch Coal, Inc. common stock. - -------------------------------------------------------------------------------- Page 6
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- Notes To Financial Statements (Continued) BARCLAY'S LIFEPATH 2010 This fund seeks total return for investors retiring near the year 2010. The fund uses an asset allocation approach. The allocation changes become more conservative as the fund nears its maturation. The fund allocates among securities contained in various domestic and foreign indexes. BARCLAY'S LIFEPATH 2020 This fund seeks total return for investors retiring near the year 2020. Asset allocation is the same as the Barclay's Lifepath 2010 as noted above. BARCLAY'S LIFEPATH 2030 This fund seeks total return for investors retiring near the year 2030. Asset allocation is the same as the Barclay's Lifepath 2010 as noted above. BARCLAY'S LIFEPATH 2040 This fund seeks total return for investors retiring near the year 2040. The fund uses an asset allocation approach with a neutral mix consisting of 100% equities. Otherwise, asset allocation is the same as the Barclay's Lifepath 2010 as noted above. CSFB DIRECT PERSONAL CHOICE RETIREMENT ACCOUNT This is an option wherein a plan participant can invest directly in equity and debt securities through a CSFB Direct brokerage account. FRANKLIN TEMPLETON BALANCE SHEET FUND This fund invests in common stocks, preferred stocks, and debt securities and seeks high total return and long-term growth by following a value-oriented investment approach. PRIMCO STABLE VALUE FUND This is a guaranteed investment account which is separately managed for Arch Coal, Inc. The fund invests in long-term investment contracts issued by a variety of insurance carriers, collective trusts, pooled separate accounts, and money market funds. The objective of this fund is to generate current income, while providing protection against loss of capital. PIMCO TOTAL RETURN FUND This fund seeks a total return consistent with preservation of capital. The fund invests at least 65% of assets in debt securities, including U.S. government securities, corporate bonds, and mortgage-related securities. - -------------------------------------------------------------------------------- Page 7
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- Notes To Financial Statements (Continued) PUTNAM BALANCED FUND This fund invests in a combination of stocks and bonds and seeks to provide current income and the opportunity for long-term growth. PUTNAM GROWTH OPPORTUNITIES FUND This fund principally invests in growth stocks of large U.S. companies. It may invest in foreign securities, preferred stocks, convertible securities, debt instruments, and derivatives. The fund invests in securities that the advisor believes will benefit from long-term economic trends. PUTNAM INTERNATIONAL GROWTH FUND This fund invests primarily in common stocks of foreign companies and seeks long-term growth subject to the volatility inherent in international investing. PUTNAM MONEY MARKET FUND This fund seeks a high rate of current income. This fund invests in instruments that are high quality and have short-term maturity. PUTNAM OTC EMERGING GROWTH FUND This fund seeks capital appreciation. The fund normally invests at least 65% of assets in stocks issued by companies that are in early stages of development and have records of profitability. It may invest up to 20% of assets in foreign securities. PUTNAM S&P 500 INDEX This fund invests in a broad portfolio of common stocks and seeks to track the performance of the Standard & Poor's 500 Index. PUTNAM VISTA FUND This fund invests primarily in common stocks of U.S. companies, with a focus on growth stocks. The fund invests mainly in mid-sized companies. It can invest in foreign securities and options and futures. - -------------------------------------------------------------------------------- Page 8
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- Notes To Financial Statements (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. BASIS OF ACCOUNTING The financial statements of the Plan are prepared under the accrual method of accounting. INVESTMENT VALUATION AND INCOME RECOGNITION Investments in mutual funds are valued at reported net asset value at December 31 as determined by the fund manager. Investment income is recorded as earned on the accrual basis. PAYMENT OF BENEFITS Benefits are recorded when paid. - -------------------------------------------------------------------------------- Page 9
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- Notes To Financial Statements (Continued) 3. INVESTMENTS The Company has established a Pension Committee to oversee the activities of the Plan and has appointed the Vice President - Human Resources as the Plan Administrator. Fleet Bank is the trustee for the Plan and Putnam Fiduciary Trust Company is the Plan recordkeeper. Investments at fair value as of December 31, 2001 and 2000 consist of the following:
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- Notes To Financial Statements (Continued) CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS:
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of assets held for investment purposes is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary data required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Income Security Act of 1974. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /S/ Rubin, Brown, Gornstein & Co. LLP Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri June 15, 2002 Page 12
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- E.I.N. 43-0921172 PLAN 006 SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 2001
ARCH COAL, INC. EMPLOYEE THRIFT PLAN - -------------------------------------------------------------------------------- E.I.N. 43-0921172 PLAN 006 SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 2001
SIGNATURE PAGE Pursuant to the requirements of the Securities Exchange Act of 1934, the duly authorized Plan Administrator has executed this annual report. ARCH COAL, INC. EMPLOYEE THRIFT PLAN Date: June 28, 2002 By: /s/ Bradley M. Allbritten ------------ ---------------------------------- Bradley M. Allbritten Plan Administrator
INDEX TO EXHIBITS
EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-32777) pertaining to the Arch Coal, Inc. Employee Thrift Plan of our report dated June 15, 2002, with respect to the financial statements and supplemental schedule of Arch Coal, Inc. Employee Thrift Plan included in this Annual Report on Form 11-K for the year ended December 31, 2001. /S/ Rubin, Brown, Gornstein & Co. LLP - ------------------------------------- Rubin, Brown, Gornstein & Co. LLP June 28, 2002
EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-32777) pertaining to the Arch Coal, Inc. Employee Thrift Plan of our report dated June 29, 2001, with respect to the December 31, 2000 financial statement of Arch Coal, Inc. Employee Thrift Plan included in this Annual Report on Form 11-K for the year ended December 31, 2001. /S/ Stone Carlie & Company, L.L.C. - ---------------------------------- Stone Carlie & Company, L.L.C. St. Louis, Missouri June 28, 2002