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, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 1-13105.
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: Ashland Coal, Inc. Employee Thrift Plan.
B. Name of issuer of the securities to be held pursuant to the plan and the
address of its principal executive office: Arch Coal, Inc., CityPlace One,
Suite 300, St. Louis, Missouri, 63141.
FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements and Schedules
Report of Independent Auditors
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
Schedule of Reportable Transactions
Exhibits
23 - Consent of Ernst & Young LLP, independent auditors
Financial Statements
and Schedules
Ashland Coal, Inc. Employee
Thrift Plan
Year Ended December 31, 1997
with Report of Independent Auditors
Ashland Coal, Inc. Employee Thrift Plan
Financial Statements
and Schedules
Year Ended December 31, 1997
Contents
Financial Statements
Report of Independent Auditors............................................1
Statements of Net Assets Available for Benefits...........................2
Statement of Changes in Net Assets Available for Benefits.................4
Notes to Financial Statements ............................................5
Schedules
Schedule of Assets Held for Investment Purposes..........................13
Schedule of Reportable Transactions .....................................14
Report Of Independent Auditors
To the Administrator
Ashland Coal, Inc. Employee Thrift Plan
We have audited the accompanying statements of net assets available for benefits
of the Ashland Coal, Inc. Employee Thrift Plan as of December 31, 1997 and 1996,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1997. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1997 and reportable
transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and are not
a required part of the basic financial statements. These supplemental schedules
are the responsibility of the Plan's management. The Fund Information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
June 25, 1998 /s/ Ernst & Young LLP
1
Ashland Coal, Inc. Employee Thrift Plan
Statements of Net Assets Available for Benefits, with Fund Information
December 31, 1997
AMERICAN AMERICAN AMERICAN
CENTURY- CENTURY- CENTURY-
ARCH COAL ASHLAND INC. TWENTIETH TWENTIETH TWENTIETH
INC. COMMON COMMON CENTURY CENTURY CENTURY
TOTAL STOCK FUND STOCK FUND GROWTH FUND ULTRA FUND VISTA FUND
------------ -----------------------------------------------------------------------
ASSETS
Cash $ 10,643 $ 169 $ -- $ -- $ 60 $ 46
Investments
Common stock 1,787,075 1,787,075 -- -- -- --
Mutual funds 14,479,466 -- -- 2,308,311 3,111,522 1,769,150
Common trust funds 12,179,030 -- -- -- -- --
Participant notes
receivable 425,998 -- -- -- -- --
---------- ---------- ------- --------- --------- ---------
Total investments 28,871,569 1,787,075 -- 2,308,311 3,111,522 1,769,150
---------- --------- ------- --------- --------- ---------
Receivables
Participant 137,092 7,628 -- 15,533 19,950 14,931
Employer 89,679 4,990 -- 10,161 13,050 9,767
---------- ---------- ------- --------- --------- ---------
Total receivables 226,771 12,618 -- 25,694 33,000 24,698
---------- ---------- ------- --------- --------- ---------
Net assets available
for benefits $29,108,983 $1,799,862 $ -- $2,334,005 $3,144,582 $1,793,894
=========== ========== ========= ========== ========== ==========
TABLE CONTINUED
AMERICAN
CENTURY- AMERICAN
BENHAM CENTURY-
AMERICAN INTERMEDIATE- TWENTIETH BENHAM
CENTURY TERM AMERICAN CENTURY STABLE VALUE
BALANCED GOVERNMENT CENTURY INTERNATIONAL BARCLAYS GOVERNMENT PARTICIPANT
FUND FUND VALUE FUND GROWTH FUND EQUITY INDEX FUND LOAN FUND
---------------------------------------------------------------------------------------------------------
ASSETS
Cash $ 2,732 $ 1,801 $ 65 $ 48 $ 2,904 $ 2,818 $ --
Investments
Common stock -- -- -- -- -- -- --
Mutual funds 1,339,714 696,763 3,843,262 1,410,744 -- -- --
Common trust funds -- -- -- -- 3,429,359 8,749,671 --
Participant notes
receivable -- -- -- -- -- -- 425,998
--------- -------- --------- --------- --------- --------- ---------
Total investments 1,339,714 696,763 3,843,262 1,410,744 3,429,359 8,749,671 425,998
--------- -------- --------- --------- --------- --------- ---------
Receivables
Participant 7,394 3,716 16,831 11,040 18,140 21,929 --
Employer 4,837 2,431 11,010 7,222 11,866 14,345 --
--------- -------- --------- --------- --------- --------- ---------
Total receivables 12,231 6,147 27,841 18,262 30,006 36,274 --
--------- -------- --------- --------- --------- --------- ---------
Net assets available
for benefits $1,354,677 $704,711 $3,871,168 $1,429,054 $3,462,269 $8,788,763 $425,998
========== ======== ========== ========== ========== ========== ========
SEE ACCOMPANYING NOTES.
2
Ashland Coal, Inc. Employee Thrift Plan
Statements of Net Assets Available for Benefits, with Fund Information
December 31, 1996
AMERICAN AMERICAN AMERICAN
CENTURY- CENTURY- CENTURY-
ARCH COAL ASHLAND INC. TWENTIETH TWENTIETH TWENTIETH
INC. COMMON COMMON CENTURY CENTURY CENTURY
TOTAL STOCK FUND STOCK FUND GROWTH FUND ULTRA FUND VISTA FUND
------------ -----------------------------------------------------------------------
ASSETS
Cash $ 9,733 $ 9,702 $ 31 $ -- $ -- $ --
Investments
Common stock 2,760,011 2,466,531 293,480 -- -- --
Mutual funds 12,397,552 -- -- 1,971,847 2,542,921 1,999,938
Common trust funds 9,400,967 -- -- -- -- --
Participant notes
receivable 275,501 -- -- -- -- --
----------- ----------- -------- ----------- ----------- -----------
Total investments 24,834,031 2,466,531 293,480 1,971,847 2,542,921 1,999,938
----------- ----------- -------- ----------- ----------- -----------
Receivables
Participant 100,962 3,703 -- 8,283 11,229 9,687
Employer 43,419 1,588 -- 3,557 4,848 4,154
----------- ----------- -------- ----------- ----------- -----------
Total receivables 144,381 5,291 -- 11,840 16,077 13,841
----------- ----------- -------- ----------- ----------- -----------
Net assets available for
benefits $24,988,145 $2,481,524 $293,511 $1,983,687 $2,558,998 $2,013,779
=========== =========== ======== =========== =========== ===========
TABLE CONTINUED
AMERICAN
CENTURY- AMERICAN
BENHAM CENTURY-
AMERICAN INTERMEDIATE- TWENTIETH BENHAM
CENTURY TERM AMERICAN CENTURY STABLE VALUE
BALANCED GOVERNMENT CENTURY INTERNATIONAL BARCLAYS GOVERNMENT PARTICIPANT
FUND FUND VALUE FUND GROWTH FUND EQUITY INDEX FUND LOAN FUND
------------------------------------------------------------------------------------------------------
ASSETS
Cash $ -- $ -- $ -- $ -- $ -- $ -- $ --
Investments
Common stock -- -- -- -- -- --
Mutual funds 1,100,293 859,030 2,798,170 1,125,353 2,335,542 7,065,425 --
Common trust funds
Participant notes
receivable -- -- -- -- -- -- 275,501
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total investments 1,100,293 859,030 2,798,170 1,125,353 2,335,542 7,065,425 275,501
---------- ---------- ---------- ---------- ---------- ---------- ----------
Receivables
Participant 4,031 8,946 20,436 8,929 14,387 11,331 --
Employer 1,745 3,834 8,765 3,832 6,170 4,926 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total receivables 5,776 12,780 29,201 12,761 20,557 16,257 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for
benefits $1,106,069 $ 871,810 $2,827,371 $1,138,114 $2,356,099 $7,081,682 $ 275,501
========== ========== ========== ========== ========== ========== ==========
SEE ACCOMPANYING NOTES.
3
Ashland Coal, Inc. Employee Thrift Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1997
AMERICAN AMERICAN AMERICAN
CENTURY- CENTURY- CENTURY- AMERICAN
ARCH COAL ASHLAND INC. TWENTIETH TWENTIETH TWENTIETH CENTURY
INC. COMMON COMMON CENTURY CENTURY CENTURY BALANCED
TOTAL STOCK FUND STOCK FUND GROWTH FUND ULTRA FUND VISTA FUND FUND
------------ ----------------------------------------------------------------------------------
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation) in
fair value of
investments $ 1,002,482 $ (14,844) $ 39,773 $ 218,296 $ (35,164) $ (283,672) $ 56,299
Interest and
dividend income 2,622,668 36,120 6,253 344,812 642,650 108,296 133,315
--------- --------- --------- --------- --------- --------- --------
3,625,150 21,276 46,026 563,108 607,486 (175,376) 189,614
Less investment
management fees (2,186) (87) -- (256) (282) (253) (93)
--------- --------- --------- --------- --------- --------- --------
3,622,964 21,189 46,026 562,852 607,204 (175,629) 189,521
Contributions
Participant 1,956,462 102,943 -- 213,696 284,458 219,799 95,492
Employer 1,093,991 60,919 -- 117,233 158,860 117,737 63,011
--------- --------- --------- --------- --------- --------- --------
3,050,453 163,862 -- 330,929 443,318 337,536 158,503
--------- --------- --------- --------- --------- --------- --------
Total additions 6,673,417 185,051 46,026 893,781 1,050,522 161,907 348,024
Benefits paid
to participants (2,552,579) (98,006) (11,526) (122,796) (232,749) (60,744) (138,329)
--------- --------- --------- --------- --------- --------- --------
Net increase
(decrease) prior
to transfers 4,120,838 87,045 34,500 770,985 817,773 101,163 209,695
Interfund transfers (net) -- (768,707) (328,011) (420,667) (232,189) (321,048) 38,913
--------- --------- --------- --------- --------- --------- --------
Net increase (decrease) 4,120,838 (681,662) (293,511) 350,318 585,584 (219,885) 248,608
Net assets available
for benefits
Beginning of year 24,988,145 2,481,524 293,511 1,983,687 2,558,998 2,013,779 1,106,069
---------- --------- --------- --------- --------- --------- ---------
End of year $29,108,983 $1,799,862 $ -- $2,334,005 $3,144,582 $1,793,894 $1,354,677
=========== ========== ========= ========== ========== ========== ==========
TABLE CONTINUED
AMERICAN
CENTURY- AMERICAN
BENHAM CENTURY-
INTERMEDIATE- TWENTIETH BENHAM
TERM AMERICAN CENTURY STABLE VALUE
GOVERNMENT CENTURY INTERNATIONAL BARCLAYS GOVERNMENT PARTICIPANT
FUND VALUE FUND GROWTH FUND EQUITY INDEX FUND LOAN FUND
-----------------------------------------------------------------------------------------
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation) in
fair value of
investments $ 16,956 $ 162,732 $ 43,925 $ 798,181 $ -- $ --
Interest and
dividend income 39,873 622,898 196,974 -- 462,181 29,296
-------- --------- -------- --------- --------- ------
56,829 785,630 240,899 798,181 462,181 29,296
Less investment
management fees (93) (232) (161) (266) (463) --
-------- --------- -------- --------- --------- ------
56,736 785,398 240,738 797,915 461,718 29,296
Contributions
Participant 42,899 233,079 145,963 234,164 383,969 --
Employer 29,869 119,992 78,888 134,195 213,287 --
-------- --------- -------- --------- --------- ------
72,768 353,071 224,851 368,359 597,256 --
-------- --------- -------- --------- --------- ------
Total additions 129,504 1,138,469 465,589 1,166,274 1,058,974 29,296
Benefits paid
to participants (64,673) (344,086) (105,005) (230,427) (1,105,018) (39,220)
-------- --------- -------- --------- --------- ------
Net increase
(decrease) prior
to transfers 64,831 794,383 360,584 935,847 (46,044) (9,924)
Interfund transfers (net) (231,930) 249,414 (69,644) 170,323 1,753,125 160,421
-------- --------- -------- --------- --------- -------
Net increase (decrease) (167,099) 1,043,797 290,940 1,106,170 1,707,081 150,497
Net assets available
for benefits
Beginning of year 871,810 2,827,371 1,138,114 2,356,099 7,081,682 275,501
-------- --------- -------- --------- --------- -------
End of year $ 704,711 $3,871,168 $1,429,054 $3,462,269 $8,788,763 $425,998
========= ========== ========== ========== ========== ========
SEE ACCOMPANYING NOTES.
4
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements
December 31, 1997
1. PLAN AMENDMENT AND DESCRIPTION OF PLAN
Pursuant to an April 4, 1997 Agreement and Plan of Merger among Ashland Coal,
Inc., Arch Mineral Corporation, and AMC Merger Corporation (AMC) (a wholly-owned
subsidiary of Arch Mineral), Arch Mineral's name was changed to Arch Coal, Inc.
and Ashland Coal, Inc. merged with AMC effective July 1, 1997, thereby becoming
a wholly-owned subsidiary of Arch Coal, Inc. On the effective date of the
merger, the Ashland Coal, Inc. Employee Thrift Plan (the Plan) was amended to
eliminate the Ashland Coal, Inc. Stock Fund and to provide for a new Arch Coal
common stock investment option in its place. All outstanding Ashland Coal shares
held in the Plan were automatically converted to Arch Coal stock. References
herein to "the Company" relate to Ashland Coal prior to the merger and to Arch
Coal after the merger.
The following description of the Plan provides only general information.
Participants should refer to the summary plan description, copies of which are
available from Arch Coal, for a more complete description of the Plan's
provisions.
GENERAL
The Plan was established as a defined contribution plan covering eligible
employees of the Company and its participating subsidiaries. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
CONTRIBUTIONS
Subject to applicable limitations, participating employees may contribute an
amount up to 16 percent of their salaries or wages to the Plan, on either a
before-tax or after-tax basis. Through July 31, 1997, the Company contributed an
amount equal to 70 percent of the amount of "Basic Contributions" by plan
participants. "Basic Contributions" are amounts contributed by employees up to 6
percent of their salaries or wages. Effective August 1, 1997, the Company
"matching" contributions on "Basic Contributions" were increased to 100 percent
of the first 6 percent contributed by the plan participants.
5
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
1. PLAN AMENDMENT AND DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT ACCOUNTS
The accounts of the Plan are maintained on the accrual basis of accounting.
Contributions from employees and related employer contributions are recorded
when the employer makes payroll deductions from Plan participants. Investment
income (or loss), less investment management fees, is allocated to participants'
accounts on the basis of each participant's proportionate interest in the fund.
The value of the fund and the value of each participant's interest will
fluctuate with the fair value of the securities in which the fund is invested.
VESTING
Participants are immediately vested in their contributions, as well as rollover
contributions and any qualified Company contributions, plus actual earnings
thereon. Matching Company contributions of participants first hired prior to
August 1, 1996 are fully vested and non-forfeitable, but matching Company
contributions of participants first hired on or after August 1, 1996 only become
vested after the participant completes five years of continuous service.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employer and employee
contributions in any of the following investment options:
Arch Coal, Inc. Common Funds invested in Arch Coal's common stock. This
Stock Fund investment option became available to participants
on July 1, 1997.
Ashland Coal, Inc. Funds invested in Ashland Coal's common stock. This
Common Stock Fund investment option was replaced by the above option
on July 1, 1997.
Ashland Inc. Common Funds invested in common stock of Ashland Inc.
Stock Fund Effective December 31, 1997, this investment option
was discontinued. Prior to year end, funds were
reallocated based on individual instructions by the
affected plan participants.
6
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
1. PLAN AMENDMENT AND DESCRIPTION OF PLAN (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
American Century - An equity mutual fund that seeks capital growth
Twentieth Century over time by investing in common stocks considered
Growth Fund by American Century Services, Inc. (American
Century), previously named Twentieth Century Services,
Inc., to have better-than-average prospects for
appreciation. Stocks in Growth's portfolio are not
required to pay dividends.
American Century - An aggressive equity mutual fund that seeks capital
Twentieth Century Ultra growth over time by investing in common stocks
Fund considered by American Century to have
better-than-average prospects for appreciation.
Ultra typically invests in medium-to-large sized
companies.
American Century - An aggressive equity mutual fund that seeks capital
Twentieth Century Vista growth over time by investing in common stocks
Fund considered by American Century to have
better-than-average prospects for appreciation.
Vista typically invests in small-to-medium sized
companies.
American Century A balanced mutual fund that seeks capital growth
Balanced Fund and current income by investing approximately 60
percent of its assets in growth stocks and the
remainder in fixed income securities. This combination
of equity and fixed income investments is designed to
provide investors with current income as they invest
for growth.
American Century - The mutual fund invests in securities issued by the
Benham U.S. government and its agencies, including
Intermediate-Term mortgage-backed securities. The weighted average
Government Fund maturity of the fund is between three and ten years.
American Century Value A conservative equity mutual fund that seeks
Fund long-term capital growth. Income is a secondary
objective. To pursue its objective, the fund invests
primarily in equity securities of well-established
companies that are believed by American Century to be
undervalued at the time of purchase.
7
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
1. PLAN AMENDMENT AND DESCRIPTION OF PLAN (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
American Century - The mutual fund seeks capital growth over time by
Twentieth Century investing in common stocks of foreign companies
International Growth considered by American Century to have better-than-
Fund average prospects for appreciation. To find the best
opportunities for growth, the fund spreads its
investments across many countries and continents.
The fund may invest in U.S. companies when
circumstances warrant, but its primary purpose
is to diversify investments across a broad range
of overseas companies.
Barclays Equity Index The common trust fund seeks the long-term capital
appreciation potential of large capitalization
Blue Chip stocks while minimizing risk through
broad diversification. The fund invests in Barclays
Equity Index Fund, a highly diversified portfolio
of the stocks included in the Standard & Poor's 500
Composite Stock Price Index (S&P 500 Index).
Benham Stable Value The common trust fund seeks to provide current
Government Fund income, while maintaining a stable share price. The
investment objective of the Benham Fund is to earn
current income that is relatively consistent over time,
while preserving capital and relative stability of
principal, while investing exclusively in a diversified
pool of fixed income obligations of the U.S. government
and its agencies.
PARTICIPANT NOTES RECEIVABLE
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum of the lesser of $50,000 or 50 percent of their account balance. Loan
transactions are treated as a transfer from (to) the investment fund to (from)
the loan fund. Loan terms range from 1-5 years or up to 10 years for the
purchase of a primary residence. The loans are secured by a lien on the
participant's Plan accounts. Loans bear an interest rate of the prime rate in
effect as of the first day of the month in which the loan was entered, plus 1
percent. Principal and interest is paid ratably through payroll deductions.
8
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
1. PLAN AMENDMENT AND DESCRIPTION OF PLAN (CONTINUED)
PAYMENT OF BENEFITS
On termination of service, a participant may receive a lump-sum amount equal to
the value of the account, or upon death, disability or retirement, may elect to
receive payment in optional payment forms which include installment payments,
life annuities, or joint and survivor annuities.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of a termination of the
Plan, the Plan and related trust shall be continued until such time as all
accounts have been fully distributed, at which time the Plan and trust shall
terminate.
2. SUMMARY OF ACCOUNTING POLICIES
The financial statements of the Plan are prepared on the accrual basis of
accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments are stated at fair value. Securities traded on a national securities
exchange are valued at the closing market price on the last business day of the
plan year. The shares of mutual funds are valued at quoted market prices which
represent the net asset values of shares held by the Plan at year-end. The fair
value of the participation units owned by the Plan in common trust funds are
based on quoted redemption values on the last business day of the Plan year. The
participant notes receivable are valued at their outstanding balances, which
approximate fair value. The cost of investments disposed of is determined on the
basis of average historical cost.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
9
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
3. INVESTMENTS
The Plan's investments are held by a bank administered trust fund and are
presented in the following table.
DECEMBER 31
1997 1996
------------ ------------
Investments at fair value determined by quoted
market price:
Common stock
Arch Coal, Inc., 65,272 shares $ 1,787,075 $ --
Ashland Coal, Inc., 88,884 shares -- 2,466,531
Ashland Inc., 6,689 shares -- 293,480
----------- -----------
1,787,075 2,760,011
Mutual funds
American Century-Twentieth Century
Growth Fund, 96,140 and 90,121 shares, 2,308,311 1,971,847
respectively
American Century-Twentieth Century Ultra
Fund, 113,975 and 90,528 shares, 3,111,522 2,542,921
respectively
American Century-Twentieth Century Vista
Fund, 142,444 and 137,832 shares, 1,769,150 1,999,938
respectively
American Century Balanced Fund, 73,854 and
63,748 shares, respectively 1,339,714 1,100,293
American Century-Benham Intermediate-Term
Government Fund, 66,044 and 88,743 shares,
respectively 696,763 859,030
American Century Value Fund, 552,987 and
424,609 shares, respectively 3,843,262 2,798,170
American Century-Twentieth Century
International Growth Fund, 172,252 and
141,376 shares, respectively 1,410,744 1,125,353
----------- -----------
14,479,466 12,397,552
Common trust funds
Barclays Equity Index, 150,147 and 135,945
units, respectively 3,429,359 2,335,542
Benham Stable Value Government Fund,
8,749,671 and 7,065,425 units, 8,749,671 7,065,425
respectively
----------- -----------
12,179,030 9,400,967
Investments at estimated fair value:
Participant notes receivable 425,998 275,501
----------- -----------
Total investments at fair value $28,871,569 $24,834,031
=========== ===========
10
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
During the year ended December 31, 1997, the Plan's investments (including
investments bought, sold, as well as held during the year) appreciated in fair
value as follows:
Investments at fair value determined by quoted market price:
Common stocks $ 24,929
Mutual funds 179,372
Common trust funds 798,181
-------
$ 1,002,482
===========
4. TAX STATUS OF THE PLAN
The Internal Revenue Service ruled on February 25, 1997 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
related trust is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Company is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan's
qualified status.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Company engages the services of a third party service provider to assist it
in carrying out certain administrative and record keeping functions under the
Plan. All expenses of administering the Plan are paid by the Company. The Plan
is not charged for administrative services performed on its behalf by the
Company. The Plan has investments in the common stock of the sponsoring company
as well as in mutual funds sponsored by the third party service provider of the
Plan.
6. SUBSEQUENT EVENT
On January 1, 1998, Arch Coal merged three similar plans sponsored by Arch Coal
and affiliated companies, including the Ashland Coal, Inc. Employee Thrift Plan,
into the Arch Coal, Inc. Employee Thrift Plan. Effective with the merger of the
plans, all Plan participants became fully vested in their participant accounts
as the Arch Coal, Inc. Employee Thrift Plan provides for immediate vesting of
matching Company contributions for Plan participants employed on or before
December 31, 1997. Participants hired on or after January 1, 1998 are fully
vested in their participant accounts, but will only become fully vested in the
matching Company contribution account upon the completion of three full and
consecutive years of service.
11
Ashland Coal, Inc. Employee Thrift Plan
Notes To Financial Statements (continued)
7. YEAR 2000 ISSUE (UNAUDITED)
The Company has developed a plan to modify its internal information technology
to be ready for the year 2000 and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become year 2000 compliant. The
Company currently expects the project to be substantially complete by the third
quarter of 1999. The Company does not expect this project to have a significant
effect on plan operations.
12
Schedules
Ashland Coal, Inc. Employee Thrift Plan
EIN #61-0880012, Plan Number 010
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
DESCRIPTION OF
INVESTMENT,
INCLUDING MATURITY
DATE, RATE OF
INTEREST, PAR OR
IDENTITY OF ISSUE, BORROWER, LESSOR OR SIMILAR PARTY MATURITY VALUE COST CURRENT VALUE
- --------------------------------------------------------------------- ---------------------- ------------- ---------------
Common stocks:
Arch Coal, Inc. 65,272 shares $ 1,706,569 $ 1,787,075
Mutual funds:
American Century-Twentieth Century Growth Fund* 96,140 shares 2,243,208 2,308,311
American Century-Twentieth Century Ultra Fund* 113,975 shares 3,138,419 3,111,522
American Century-Twentieth Century Vista Fund* 142,444 shares 2,077,016 1,769,150
American Century Balanced Fund* 73,854 shares 1,308,146 1,339,714
American Century-Benham Intermediate-Term Government Fund* 66,044 shares 681,536 696,763
American Century Value Fund* 552,987 shares 3,565,095 3,843,262
American Century-Twentieth Century International Growth Fund* 172,252 shares 1,389,266 1,410,744
----------- -----------
14,402,686 14,479,466
Common trust funds:
Barclays Equity Index 150,147 units 2,303,917 3,429,359
Benham Stable Value Government Fund 8,749,671 units 8,749,671 8,749,671
----------- -----------
11,053,588 12,179,030
Participant loans 9-10% -- 425,998
-----------
$28,871,569
* Indicates Party-in-interest to the Plan ===========
13
Ashland Coal, Inc. Employee Thrift Plan
EIN #61-0880012, Plan Number 010
Line 27d - Schedule of Reportable Transactions
Year Ended December 31,1997
Current
Value of
Asset on Net
Identity Purchase Selling Cost of Transaction Gain
of Party Description of Assets Price Price Asset Date (Loss)
- ----------- --------------------------------- --------- ---------- --------- -------------- -------
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS
OF 5% OF PLAN ASSETS
Ashland
Coal, Inc.
Arch Coal, Inc. Common Stock $ 286,094 $ -- $ 286,094 $ 286,094 $ --
Arch Coal, Inc. Common Stock -- 965,585 909,710 965,585 55,875
Arch Coal, Inc. Common Stock 893,135 -- 893,135 893,135 --
Arch Coal, Inc. Common Stock -- 906,972 5,355 906,972 901,617
Ashland
Inc.
Ashland Coal, Inc. Common Stock 201,166 -- 201,166 201,166 --
Ashland Coal, Inc. Common Stock -- 199,334 -- 199,334 199,334
Ashland Inc. Common Stock -- 341,369 140,890 341,369 200,479
American
Century
American Century-Twentieth Century
Growth Fund 860,443 -- 860,443 860,443 --
American Century-Twentieth Century
Growth Fund -- 1,087,087 963,150 1,087,087 123,937
American Century-Twentieth Century
Ultra Fund 990,717 -- 990,717 990,717 --
American Century-Twentieth Century
Ultra Fund -- 1,029,600 914,250 1,029,600 115,350
American Century-Twentieth Century
Vista Fund 834,626 -- 834,626 834,626 --
American Century-Twentieth Century
Vista Fund -- 890,038 941,988 890,038 (51,950)
American Century Balanced Fund 361,037 -- 361,037 361,037 --
American Century Balanced Fund -- 311,230 299,012 311,230 12,218
American Century-Benham
Intermediate-Term Government Fund 933,495 -- 933,495 933,495 --
American Century-Benham
Intermediate-Term Government Fund -- 1,152,164 1,161,304 1,152,164 (9,140)
American Century Value Fund 1,085,453 -- 1,085,453 1,085,453 --
American Century Value Fund -- 825,992 722,229 825,992 103,763
American Century-Twentieth Century
International Growth Fund 690,497 -- 690,497 690,497 --
American Century-Twentieth Century
International Growth Fund -- 646,006 585,287 646,006 60,719
Barclays Equity Index 1,227,267 -- 1,227,267 1,227,267 --
Barclays Equity Index -- 931,599 763,191 931,599 168,408
SEI Trust
Company
Benham Stable Value Government Fund 4,240,290 -- 4,240,290 4,240,290 --
Benham Stable Value Government Fund -- 3,018,232 3,018,232 3,018,232 --
There were no category (i), (ii), or (iv) reportable transactions during 1997.
14
SIGNATURES
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 (successor by merger
to the Ashland Coal, Inc. Employee
Thrift Plan)
By: /s/ Jeffry N. Quinn
---------------------------------
Plan Administrator
Date: June 29, 1998
INDEX TO EXHIBITS
EXHIBIT ITEM
23 Consent of Independent Auditors
EXHIBIT 23
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 25, 1998, with respect to the financial statements and
schedules of the Ashland Coal, Inc. Employee Thrift Plan included in this Annual
Report (Form 11-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
Louisville, Kentucky
June 25, 1998
