-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BetnGaOOr8taLksog6ZspNLpwjpJsAdyn36suERZMrFOymIyv+LtBnllevqe9A1K zRiaIyMyL/ubcb3o5Wclwg== 0000898431-98-000225.txt : 19980630 0000898431-98-000225.hdr.sgml : 19980630 ACCESSION NUMBER: 0000898431-98-000225 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCH COAL INC CENTRAL INDEX KEY: 0001037676 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE SURFACE MINING [1221] IRS NUMBER: 430921172 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-13105 FILM NUMBER: 98657037 BUSINESS ADDRESS: STREET 1: CITY PLACE ONE STE 300 STREET 2: ARCH MINERAL CORP CITY: ST LOUIS STATE: MO ZIP: 63141 BUSINESS PHONE: 3149942700 MAIL ADDRESS: STREET 1: CITYPLACE ONE SUITE 300 STREET 2: ARCH MINERAL CORP CITY: CREVE COEUR STATE: MO ZIP: 63141 FORMER COMPANY: FORMER CONFORMED NAME: ARCH MINERAL CORP DATE OF NAME CHANGE: 19970411 11-K 1 FORM 11-K, ARCH COAL, INC. THRIFT PLAN 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: Arch 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 Arch Coal, Inc. Employee Thrift Plan Year Ended December 31, 1997 with Report of Independent Auditors Arch Coal, Inc. Employee Thrift Plan Financial Statements and Schedules Year Ended December 31, 1997 CONTENTS Report of Independent Auditors............................................1 Financial Statements 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..........................14 Schedule of Reportable Transactions......................................15 Report of Independent Auditors To the Administrator Arch Coal, Inc. Employee Thrift Plan We have audited the accompanying statements of net assets available for benefits of the Arch 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 conducted 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. The 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 the 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
Arch Coal, Inc. Employee Thrift Plan Statements of Net Assets Available for Benefits, with Fund Information December 31, 1997 INVESCO ARCH COAL, INTERMEDIATE INVESCO INVESCO INVESCO INC. COMMON GOVENRMENT SELECT HIGH YIELD TOTAL RETURN TOTAL STOCK FUND BOND FUND INCOME FUND BOND FUND FUND ------------- ----------------------------------------------------------------------------- ASSETS Investments Common stock $ 91,195 $ 91,195 $ -- $ -- $ -- $ -- Mutual funds 68,685,454 -- 8,091,573 7,346,224 2,904,865 19,123,491 Pooled separate account 2,020,411 -- -- -- -- -- Investment contracts 6,007,769 -- -- -- -- -- Collective trust 13,820,591 -- -- -- -- -- Participant notes receivable 4,786,256 -- -- -- -- -- ---------- --------- ---------- --------- --------- ----------- Total investments 95,411,676 91,195 8,091,573 7,346,224 2,904,865 19,123,491 ---------- --------- ---------- --------- --------- ----------- Cash 126,492 -- -- -- -- -- ---------- --------- ---------- --------- --------- ----------- Net assets available for benefits $95,538,168 $ 91,195 $ 8,091,573 $ 7,346,224 $ 2,904,865 $19,123,491 =========== =========== =========== =========== =========== =========== TABLE CONTINUED INVESCO INVESCO INVESCO INVESCO CAPITAL INDUSTRIAL DYNAMICS INTERNATIONAL EMERGING PRESERVATION INCOME FUND FUND GROWTH FUND GROWTH FUND FUND LOAN FUND ----------------------------------------------------------------------------------------------- ASSETS Investments Common stock $ -- $ -- $ -- $ -- $ -- $ -- Mutual funds 13,716,282 11,694,364 1,727,160 3,458,050 623,445 -- Pooled separate account -- -- -- -- 2,020,411 -- Investment contracts -- -- -- -- 6,007,769 -- Collective trust -- -- -- -- 13,820,591 -- Participant notes receivable -- -- -- -- -- 4,786,256 ---------- --------- ---------- --------- ---------- --------- Total investments 13,716,282 11,694,364 1,727,160 3,458,050 22,472,216 4,786,256 ---------- --------- ---------- --------- ---------- --------- Cash -- -- -- -- 126,492 -- ---------- --------- ---------- --------- ---------- --------- Net assets available for benefits $13,716,282 $11,694,364 $ 1,727,160 $ 3,458,050 $22,598,708 $ 4,786,256 =========== =========== =========== =========== =========== ===========
SEE ACCOMPANYING NOTES. 2
Arch Coal, Inc. Employee Thrift Statement of Net Assets Available for Benefits, with Fund Information December 31, 1996 INVESCO INTERMEDIATE INVESCO INVESCO INVESCO GOVENRMENT SELECT HIGH YIELD TOTAL RETURN TOTAL BOND FUND INCOME FUND BOND FUND FUND ------------- ------------------------------------------------------------------------------- ASSETS Investments Mutual funds $57,234,889 $8,323,729 $7,030,008 $2,046,421 $14,231,068 Investment contracts 7,602,039 -- -- -- -- Collective trust 12,543,920 -- -- -- -- Participant notes- receivable 4,750,950 -- -- -- -- ----------- --------- --------- --------- ----------- Total investments 82,131,798 8,323,729 7,030,008 2,046,421 14,231,068 ----------- --------- --------- --------- ----------- Receivables Participant 187,676 22,500 17,388 6,495 35,958 Employer 120,596 16,154 11,205 3,935 23,239 Participant note repayments 75,006 -- -- -- -- ----------- --------- --------- --------- ---------- Total receivables 383,278 38,654 28,593 10,430 59,197 ----------- --------- --------- -------- ---------- Total assets 82,515,076 8,362,383 7,058,601 2,056,851 14,290,265 LIABILITIES Administrative expenses payable (27,315) (2,828) (2,389) (695) (4,835) ----------- --------- --------- -------- ---------- Net assets available for benefits $82,487,761 $8,359,555 $7,056,212 $2,056,156 $14,285,430 =========== ========== ========== ========== =========== TABLE CONTINUED INVESCO INVESCO INVESCO INVESCO CAPITAL INDUSTRIAL DYNAMICS INTERNATIONAL EMERGING PRESERVATION INCOME FUND FUND GROWTH FUND GROWTH FUND FUND LOAN FUND ------------------------------------------------------------------------------------------------- ASSETS Investments Mutual funds $11,578,106 $8,851,312 $1,780,162 $2,521,986 $ 872,097 $ -- Investment contracts -- -- -- -- 7,602,039 -- Collective trust -- -- -- -- 12,543,920 -- Participant notes receivable -- -- -- -- -- 4,750,950 ---------- --------- --------- --------- ---------- --------- Total investments 11,578,106 8,851,312 1,780,162 2,521,986 21,018,056 4,750,950 ---------- --------- --------- --------- ---------- --------- Receivables Participant 21,523 24,550 5,620 6,387 47,255 -- Employer 12,967 14,635 3,258 3,512 31,691 -- Participant note repayments -- -- -- -- -- 75,006 ---------- --------- --------- --------- ---------- --------- Total receivables 34,490 39,185 8,878 9,899 78,946 75,006 ----------- ---------- ---------- --------- ---------- --------- Total assets 11,612,596 8,890,497 1,789,040 2,531,885 21,097,002 4,825,956 LIABILITIES Administrative expenses payable (3,934) (3,007) (605) (857) (7,141) (1,024) ---------- --------- --------- --------- ---------- --------- Net assets available for benefits $11,608,662 $8,887,490 $1,788,435 $2,531,028 $21,089,861 $4,824,932 =========== ========== ========== ========== =========== ========== SEE ACCOMPANYING NOTES.
3
Statement of Changes in Net Assets Available for Benefits, with Fund Information Year ended December 31, 1997 INVESCO ARCH COAL, INTERMEDIATE INVESCO INVESCO INVESCO INC. COMMON GOVERNMENT SELECT HIGH YIELD TOTAL RETURN TOTAL STOCK FUND BOND FUND INCOME FUND BOND FUND FUND ---------- -------------------------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments $ 4,700,149 $(3,487) $ 60,722 $ 135,036 $ 28,788 $ 2,964,655 Interest and dividend income 8,145,922 1,937 424,243 662,659 363,695 769,398 ---------- ------ --------- --------- -------- ---------- 12,846,071 (1,550) 484,965 797,695 392,483 3,734,053 Contributions Participant 5,778,358 13,635 563,166 453,437 261,601 1,142,465 Employer 3,626,728 3,975 396,882 296,930 140,949 723,381 ---------- ------ --------- --------- -------- ---------- 9,405,086 17,610 960,048 750,367 402,550 1,865,846 ---------- ------ --------- --------- -------- ---------- Total additions 22,251,157 16,060 1,445,013 1,548,062 795,033 5,599,899 Benefits paid to participants (9,116,115) (396) (588,869) (853,169) (181,641) (1,050,385) Administrative expenses (84,635) (15) (10,710) (7,876) (3,987) (16,793) ---------- ------ --------- --------- -------- ---------- Net increase prior to transfers 13,050,407 15,649 845,434 687,017 609,405 4,532,721 Interfund transfers (net) -- 75,546 (1,113,416) (397,005) 239,304 305,340 ---------- ------ --------- --------- -------- ---------- Net increase (decrease) 13,050,407 91,195 (267,982) 290,012 848,709 4,838,061 Net assets available for benefits Beginning of year 82,487,761 -- 8,359,555 7,056,212 2,056,156 14,285,430 ---------- ------ --------- --------- -------- --------- End of year $95,538,168 $91,195 $ 8,091,573 $ 7,346,224 $2,904,865 $ 19,123,491 =========== ======= =========== ========== ========== ============ TABLE CONTINUED INVESCO INVESCO INVESCO INVESCO CAPITAL INDUSTRIAL DYNAMICS INTERNATIONAL EMERGING PRESERVATION INCOME FUND FUND GROWTH FUND GROWTH FUND FUND LOAN FUND ---------------------------------------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in fair value of investments $ 1,449,987 $ 765,193 $ (341,295) $ (359,450) $ -- $ -- Interest and dividend income 1,693,409 1,413,068 295,578 803,046 1,352,097 366,792 ---------- --------- --------- -------- --------- -------- 3,143,396 2,178,261 (45,717) 443,596 1,352,097 366,792 Contributions Participant 728,787 781,996 197,408 292,045 1,343,818 -- Employer 416,481 473,465 110,663 154,573 909,429 -- ---------- --------- --------- -------- --------- -------- 1,145,268 1,255,461 308,071 446,618 2,253,247 -- ---------- --------- --------- -------- --------- -------- Total additions 4,288,664 3,433,722 262,354 890,214 3,605,344 366,792 Benefits paid to participants (2,459,023) (622,680) (235,659) (288,659) (2,609,301) (226,333) Administrative expenses (9,047) (29,935) (3,420) (2,852) -- -- ---------- --------- --------- -------- --------- -------- Net increase prior to transfers 1,820,594 2,781,107 23,275 598,703 996,043 140,459 Interfund transfers (net) 287,026 25,767 (84,550) 328,319 512,804 (179,135) ---------- --------- --------- -------- --------- -------- Net increase (decrease) 2,107,620 2,806,874 (61,275) 927,022 1,508,847 (38,676) Net assets available for benefits Beginning of year 11,608,662 8,887,490 1,788,435 2,531,028 21,089,861 4,824,932 ---------- --------- --------- -------- --------- -------- End of year $13,716,282 $11,694,364 $1,727,160 $3,458,050 $22,598,708 $4,786,256 =========== =========== ========== ========== =========== ========== SEE ACCOMPANYING NOTES.
4 Arch 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 Arch Coal, Inc. Employee Thrift Plan (the Plan) (formerly known as the Arch Mineral Corporation Employee Thrift Plan) was amended to provide for a new Arch Coal common stock investment option. References herein to "the Company" relate to Arch Mineral 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 is a defined contribution plan established by the Company and affiliates under the provisions of Section 401(a) of the Internal Revenue Code (IRC), which includes a qualified deferred arrangement as described in Section 401(k) of the IRC, for the benefit of eligible salaried and nonunion hourly employees. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Company is the plan administrator. A Pension Committee, comprised of senior officers of the Company, oversees the activities of the Plan as agent of the employer. INVESCO Retirement Plan Services (INVESCO) is the Plan's trustee. Benefit Services Corporation is the Plan's recordkeeper. CONTRIBUTIONS Participants may contribute up to 16% of gross wages, as defined by the Plan. The Company contributes an amount equal to 100% of the first 6% contributed by each participant. Participants and the Company contribute biweekly. 5 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 1. PLAN AMENDMENT AND DESCRIPTION OF THE PLAN (CONTINUED) VESTING Participants are fully vested in their contributions and all earnings. Vesting in Company matching contributions is based on years of continuous service. During 1997, participants vest according to the following schedule: VESTED YEARS OF SERVICE PERCENTAGE --------------------------- ------------ Less than 2 years 0% More than 2 but less than 3 25 More than 3 but less than 4 50 More than 4 but less than 5 75 5 years or more 100% All participants are automatically fully vested in the case of death while employed, total disability or at retirement age, regardless of the number of months of participation. Forfeitures of terminated participants' nonvested accounts are used to reduce the Company's future contributions. Restoration of such forfeitures to reemployed participants is made in accordance with the Plan's provisions. BENEFITS Upon termination of service due to death, disability or retirement, a participant may elect to receive an amount equal to the value of the participant's vested interest in his or her account. The form of payment is a lump-sum distribution. Effective July 1, 1996, a participant who is disabled or eligible for retirement may elect to receive payment in installments. The minimum installment allowed is $500 and installments are paid quarterly, semiannually or annually. 6 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 1. PLAN AMENDMENT AND DESCRIPTION OF THE PLAN (CONTINUED) PARTICIPANT ACCOUNTS Individual accounts are maintained for each of the Plan's participants to reflect the participant's share of the Plan's income, the Company's contribution and the participant's contribution. Allocations are based on participant account balances, as defined. LOANS TO PARTICIPANTS Participants who have been in the Plan for at least 12 months may borrow a portion of their account in accordance with the provisions of the Plan. No loan shall be made if, immediately after the loan, the unpaid balance of all loans to the participant would exceed the lesser of: (A) $50,000 (B) 50% of the vested portion of the participant's account. The maximum loan repayment period is the earlier of 5 years or the date of the participant's termination of employment. If the loan is used for the purchase of a primary residence, the repayment period is the earlier of 15 years or when the participant terminates employment. Loans are secured by assignment of the participant's account and the participant's collateral promissory note for the amount of the loan. Interest rates are based on the prime rate on the first working day of the month in which the loans are taken. INVESTMENT OPTIONS Participants direct contributions, including Company matching contributions, into ten investment options in 1% increments. Participants may change their investment elections daily. A description of each investment option is provided below: Arch Coal, Inc. Common Funds are invested in Arch Coal's common stock. Stock Fund This investment option became available to participants on July 1, 1997. 7 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 1. PLAN AMENDMENT AND DESCRIPTION OF THE PLAN (CONTINUED) INVESTMENT OPTIONS (CONTINUED) Invesco The mutual fund invests primarily in obligations of Intermediate the United States government and government agencies Government Bond Fund and instruments maturing in three to five years. Invesco At least 50% of the mutual fund's assets are invested Select Income Fund in investment grade debt securities. The balance of the fund may be invested in corporate bonds rated below investment grade. Invesco The mutual fund invests primarily in higher yielding High Yield Bond Fund corporate bonds (including convertible issues) and preferred stocks with medium to lower credit ratings. Invesco The mutual fund invests, at a minimum, 30% in equities Total Return Fund and 30% in fixed and variable income securities. The remaining 40% of the portfolio will vary in asset allocation. Invesco The mutual fund may invest between 60% and 75% of its Industrial Income assets in dividend-paying common stocks of domestic Fund industrial issuers. The remaining assets are invested in other income-producing securities, mostly convertible bonds, preferred stocks, and straight debt securities. Invesco The mutual fund invests in common stocks of companies Dynamics Fund traded on U.S. securities exchanges and over-the- counter. The fund is designed for aggressive investors by investing in stocks of emerging growth companies. Invesco The mutual fund invests substantially all of its assets International Growth in foreign securities, principally equity securities. Fund This fund is considered aggressive, and may hold speculative investments. Invesco The mutual fund normally invests in equity securities Emerging Growth Fund of undervalued companies with market capitalizations under $500 million. The remaining assets maybe invested in U.S. Government securities and foreign securities. 8 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 1. PLAN AMENDMENT AND DESCRIPTION OF THE PLAN (CONTINUED) Capital Preservation This fund invests in long-term investment contracts Fund issued by a variety of insurance carriers, a collective trust, a pooled separate account and a money market fund. The objective of this fund is to provide current income, while providing protection against loss of capital. The investment contracts included in this fund had average yields of 7.39% and 8.24% for the years ended December 31, 1997 and 1996, respectively. The average crediting interest rates were 7.34% and 7.88% for December 31, 1997 and 1996, respectively. The fair values of the guaranteed insurance contracts were $8,169,467 and $7,813,537 at December 31, 1997 and 1996, respectively. ADMINISTRATIVE EXPENSES The Company pays the salaries and related benefits of employees who administer the Plan. Effective July 1, 1996, participants pay for loan, withdrawal and distribution fees. All other administrative expenses are paid by the Plan. 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 set forth in ERISA. In the event of Plan termination, participants will become fully vested in their accounts. The net assets of the Plan will be allocated to provide benefits to participants as prescribed by ERISA. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accompanying financial statements are prepared on the accrual basis of accounting. 9 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENT VALUATION Investments of the Plan are stated at fair value. Securities traded in public markets are valued at their quoted market prices. Investments in mutual funds are valued at published market value on the last business day of the plan year based on the number of unit shares held. The investment contracts are stated at contract value (which represents cost plus accumulated interest, less funds to pay for certain benefits and loans to participants) because they are fully benefit responsive. The fair value of the participation units owned by the Plan in the collective trust fund and pooled separate account are based on quoted redemption values on the last business day of the plan year. Participant notes receivable are valued at their outstanding balances, which approximates fair value. 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. RECLASSIFICATIONS Certain 1996 amounts have been reclassified to conform to 1997 presentation. 10 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 3. INVESTMENTS The Plan's investments are held by a 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., 9,668 shares $ 91,195 $ - Mutual funds INVESCO Intermediate Government Bond Fund, 644,747 and 668,036 shares, respectively 8,091,573 8,323,729 INVESCO Select Income Fund, 1,101,383 and 1,073,284 shares, respectively 7,346,224 7,030,008 INVESCO High Yield Fund, 288,228 and 401,779 shares, respectively 2,904,865 2,046,421 INVESCO Total Return Fund, 657,391 and 585,640 shares, respectively 19,123,491 14,231,068 INVESCO Industrial Income Fund, 919,938 and 860,186 shares, respectively 13,716,282 11,578,106 INVESCO Dynamics Fund, 837,705 and 686,681 shares, respectively 11,694,364 8,851,312 INVESCO International Growth Fund, 128,318 and 107,045 shares, respectively 1,727,160 1,780,162 INVESCO Emerging Growth Fund, 308,479 and 201,437 shares, respectively 3,458,050 2,521,986 INVESCO Treasurer's Fund, 623,445 and 872,097 shares, respectively 623,445 872,097 ---------- ----------- 68,685,454 57,234,889 Pooled separate account John Hancock Mutual Life 2,020,411 -
11 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED)
DECEMBER 31 1997 1996 ---------- ---------- Investment contracts Commonwealth Life Insurance, #00128TR-1 $ 992,408 $ 971,470 Commonwealth Life Insurance, #00128TR-2 947,123 925,732 Commonwealth Life Insurance, #00128TR-3 999,611 976,530 Commonwealth Life Insurance, #00128TR-4 521,357 524,085 Commonwealth Life Insurance, #00128TR-5 502,380 502,803 Commonwealth Life Insurance, #00128TR-6 516,254 512,953 Commonwealth Life Insurance, #00128TR-7 1,027,185 - United of Omaha Life Insurance, #11491 501,451 - Hartford Life Insurance, #9601 - 3,188,467 ---------- ---------- 6,007,769 7,602,039 Collective trust fund I.R.T Stable Value Fund 13,820,591 12,543,920 Investments at estimated fair value: Participant notes receivable, 8-9% 4,786,256 4,750,950 ---------- ---------- Total investments at fair value $ 95,411,676 $ 82,131,798 ============ ============
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 $ (3,487) Mutual funds 4,703,636 ------------ $ 4,700,149 ============ 12 Arch Coal, Inc. Employee Thrift Plan Notes to Financial Statements (continued) 4. TAX STATUS OF THE PLAN The Internal Revenue Service ruled on August 9, 1996 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 plan administrator 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. The Plan has investments in the common stock of the sponsoring company as well as in mutual funds and a collective trust 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 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. For plan participants employed on or before December 31, 1997, the Plan provides for immediate vesting of matching Company contributions. 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. 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. 13 Schedules Arch Coal, Inc. Employee Thrift Plan Item 27a - Schedule of Assets Held for Investment Purposes EIN #43-0921172, Plan Number 006 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 stock: Arch Coal, Inc. Stock Fund* 9,668 shares $ 94,297 $ 91,195 Mutual funds: INVESCO Intermediate Government Bond Fund* 644,747 shares 8,098,148 $ 8,091,572 INVESCO Select Income Fund* 1,101,383 shares 7,183,420 7,346,224 INVESCO High Yield Bond Fund* 401,779 shares 2,844,858 2,904,865 INVESCO Total Return Fund* 657,391 shares 14,148,131 19,123,491 INVESCO Industrial Income Fund* 919,938 shares 12,076,366 13,716,283 INVESCO Dynamics Fund* 837,705 shares 10,926,678 11,694,364 INVESCO International Growth Fund* 128,318 shares 2,038,255 1,727,160 INVESCO Emerging Growth Fund* 308,479 shares 3,961,489 3,458,050 INVESCO Treasurer's Fund* 623,445 shares 623,445 623,445 ----------- ----------- 61,900,790 68,685,454 Pooled separate account: John Hancock Mutual Life 2,020,411 units 2,020,411 2,020,411 Investment contracts: Commonwealth Life Insurance Company, contract #00128TR-1 992,408 992,408 Commonwealth Life Insurance Company, contract #00128TR-2 947,123 947,123 Commonwealth Life Insurance Company, contract #00128TR-3 999,611 999,611 Commonwealth Life Insurance Company, contract #00128TR-4 521,357 521,357 Commonwealth Life Insurance Company, contract #00128TR-5 502,380 502,380 Commonwealth Life Insurance Company, contract #00128TR-6 516,254 516,254 Commonwealth Life Insurance Company, contract #00128TR-7 1,027,185 1,027,185 United of Omaha Life Insurance, contract#11491 501,451 501,451 ---------- ---------- 6,007,769 6,007,769 Collective trust: I.R.T Stable Value Fund* 13,820,591 units 13,820,591 13,820,591 Loans to participants 8-9% - 4,786,256 ----------- $95,411,676 =========== *Indicates Party-in-interest to the Plan
14 Arch Coal, Inc. Employee Thrift Plan Item 27d - Schedule of Reportable Transactions EIN #43-0921172, Plan Number 006 Year Ended December 31, 1997
Current Value of Asset on Net Purchase Selling Cost of Transaction Gain Identity of Party Description of Assets Price Price Asset Date (Loss) - --------------------- ------------------------- --------- ---------- ---------- ----------- --------- CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS INVESCO Trust Company Dynamics Fund $5,784,577 $ - $5,784,577 $5,784,577 $ - Dynamics Fund - 3,706,718 3,340,654 3,706,718 366,064 INVESCO Trust Company Industrial Income Fund 6,006,569 - 6,006,569 6,006,569 - Industrial Income Fund - 5,318,381 4,302,957 5,318,381 1,015,424 INVESCO Trust Company Total Return Fund 4,819,822 - 4,819,822 4,819,822 - Total Return Fund - 2,892,031 2,151,460 2,892,031 740,571 There were no category (i), (ii), or (iv) reportable transactions during 1997.
15 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 By: /s/ Jeffry N. Quinn ------------------------- Plan Administrator Date: June 29, 1998 INDEX TO EXHIBITS EXHIBIT ITEM 23 Consent of Independent Auditors EX-23 2 EXHIBIT 23 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 Arch 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 -----END PRIVACY-ENHANCED MESSAGE-----