PERIOD ENDED DECEMBER 31, 2003 Annual ... - Peabody Energy

PEABODY ENERGY 2003 Annual ReportPEABODY ENERGY CORPORATION701 Market StreetSt. Louis, MO 63101PeabodyEnergy.com2003 Annual ReportPEABODY ENERGYNYSE: BTU

‘The World’s BestCoal Company’Rock solid. It’s proven by a wall ofcoal 80 feet high at the largest coalmine in North America. It’s provenby the progress and prospects ofPeabody Energy, the world’s largest2coal company. And it’s proven byrecognition like the “Coal Companyof the Year” Award by Platts andBusiness Week at the 2003 GlobalEnergy Awards.31(In Millions)20032002ChangeRevenues $2,829.5 $ 2,717.1 4.1%1Operating Profit $ 144.8 $ 173.7 (16.6%)Adjusted EBITDA$410.3$406.11.0%Interest Expense $ 98.5 $ 102.5 (3.8%)Income2Financial Highlights$81.7$105.5(22.6%)Stockholders’ Equity $1,132.1 $1,081.1 4.7%Market Capitalization $ 2,279 $ 1,531 48.8%312002 includes$37.1 million benefit fromcontract settlements.2Adjusted EBITDA is definedas income from continuingoperations before deductingnet interest expense, earlydebt extinguishmentcharges, income taxes,minority interests, assetretirement obligationexpense, and depletion,depreciation and amortization.32003 excludes $50.3 millionin after-tax debt extinguishmentcharges and cumulativeeffects of accounting changes.2000 and 2001 excludediscontinued operations.Table of ContentsFinancial Highlights 1Sales Volume(Tons in Millions)Revenues(In Millions)Adjusted EBITDA(In Millions)2Income(In Millions)3Chairman’s Message 2Strategy 1:Manage Safe, Low-Cost Operations 8Strategy 2:Apply World-Class Sales & Trading Skills 12Strategy 3:Manage Our Vast Resource Position 16176194198203$2,323$2,589$2,717$2,829$331$381$406$410$106$82Peabody, Energy & the Environment 20Selected Financial Data 28Management’s Discussion & Analysis 29Report of Management &Report of Independent Auditors 39Financial Statements 40Notes to Financial Statements 44Board of Directors & Executives 76$(61)$16Investor Information 772000 2001 2002 20032000 2001 2002 20032000 2001 2002 20032000 2001 2002 20031

Peabody Energy Corporation (NYSE: BTU) is the world’sOur MissionOur StrategiesOur Accomplishmentslargest coal company. Our products fuel approximately9.8 percent of America’s electricity and nearly2.5 percent of the world’s electricity. BTU’s share pricerose 49 percent from our May 2001 initial public offeringthrough December 2003, far outpacing the S&P 500 ®and other major public coal companies.Peabody’s mission is to be aworldwide supplier of low-costenergy, which contributes toeconomic prosperity and a betterquality of life.We are committed to rewardingshareholders with superior earningsperformance and sustainedearnings growth.We operate under three strategiesto create value:Strategy 1Managing safe, low-cost operationsStrategy 2Applying world-class salesand trading techniquesStrategy 3Aggressively managing our vastnatural resource positionIn 2003, Peabody:■ Achieved a total shareholderreturn of 45 percent■ Met management’s Adjusted EBITDAand earnings targets every quarter■ Set an industry record withcoal sales of 203.2 million tons■ Improved our safety accidentrate another 18 percent■ Operated the most productivemine in America and three ofthe six most productive mines■ Purchased the remaining18 percent of Black BeautyCoal CompanyBTU Share Price Performance■ Announced preliminaryagreements to acquire mines inAustralia, Colorado and Venezuela50403020BTU+49.0%■ Lowered interest expensethrough a $1.7 billion refinancing■ Received four outstandingreclamation and community10awards from the U.S. DepartmentPercent Change0-10-20-30-40-50S&P 500 ®-15.3%of the InteriorMay 21,2001, IPODec. 31,2001Dec. 31,2002Dec. 31,2003(FOLDOUT)

Dear Shareholder,The phrase “rock solid” brings forth a numberof images: strong… decisive… consistent…reliable. These qualities apply both to PeabodyEnergy and its employees. We are at an excitingtime in the history of both our company and ourindustry, with an expanding array of opportunitiesto grow the company and create value.●flexibilityand interest expense through a comprehensive$1.7 billion refinancing; andWas named “Coal Company of the Year“ atthe Platts and Business Week Global EnergyAwards ceremony, and earned four U.S.Department of the Interior Excellence in SurfaceMining Awards for reclamation.Peabody’s team of 6,900 employees reached anumber of rock-solid milestones in 2003, andour company is positioned well for future growth.Peabody Energy (NYSE: BTU) is the world’s largestcoal company. In 2003, our products fueledapproximately 9.8 percent of America’s electricityand nearly 2.5 percent of the world’s electricity.Among our 2003 accomplishments, Peabody:●●Improved sales volume, revenues, Adjusted EBITDAand share price for the third consecutive year;Continued our industry leadership position forthe 34th consecutive year, setting an industryrecord with coal sales of 203 million tons;These accomplishments have led to superior shareprice performance. BTU’s total shareholder return was45 percent in 2003, and Peabody’s share price hasoutperformed the S&P 500 every year since ourMay 2001 initial public offering. Those who invested$1,000 in shares of BTU at the time of our initialpublic offering had $1,490 at year-end, comparedwith just $847 for a comparable investment in theS&P 500 and $738 for our three largest peers.I’m pleased to report that Peabody is currentlyexperiencing some of the strongest coal marketfundamentals that I’ve seen in my 13-plus yearsas CEO. And the remarkable aspect of the marketstrength is its existence in most coal markets around(From left) Peabody’s senior management team includes Executive Vice President of Legal and External Affairs and Secretary Fred Palmer;Executive Vice President of Human Resources and Administration Sharon Fiehler; Executive Vice President and Chief Financial Officer Rick Navarre;Chairman and Chief Executive Officer Irl Engelhardt; Executive Vice President of Sales, Marketing and Trading Rick Whiting; President andChief Operating Officer Greg Boyce; and Executive Vice President of Corporate Development Roger Walcott.achieve higher electricity output due to the strengtheningeconomy and problems with competing fuels. matched by consistent action. Simply put, we focusnatural resource position. These words have beenLonger term, the development of new coal plants on executing the fundamentals at our portfolio ofis progressing at its strongest levels since the 1970s. operations and in our business relationships. WePromising technologies such as coal gasification and then add value by trading around our sales position,hydrogen initiatives are gaining increased attention. managing our extensive holdings of coal reservesAnd America’s generators continue to invest in emissioncontrol equipment for current and future plants, through accretive acquisitions. By implementingand surface lands, and growing organically andimproving emissions from coal-fueled generation these strategies, we have posted results that areas coal use increases.unmatched by other publicly traded coal companies.●Improved our accident rate 18 percent whileoperating the most productive mine in Americaand three of the six most productive mines;the world. For a low-cost, reliable producer likePeabody, with operations that serve a number ofmarkets, the future is very bright.Peabody is positioned to grow and prosper, bothnear and long term, through the execution of ourthree strategies: (1) Managing safe, low-costWe welcome Greg Boyce as President and ChiefOperating Officer and expect him to take us to a higherlevel in safety, productivity and cost management at our●Achieved our targeted earnings per share andIn the near term, existing generating plants in theoperations; (2) Applying world-class sales and tradingoperations. Prior to joining us in October 2003, GregAdjusted EBITDA each quarter, while improvingUnited States are expected to increase coal use totechniques; and (3) Aggressively managing our vastwas the chief executive officer for energy at Rio Tinto.23

Peabody Energy is positioned to grow andprosper through execution of our three strategies,presented on the following pages.Nearly seven tons per second, every minute of every day... more than 200 milliontons per year. That’s how much coal Peabody ships to customers around the world.Here, unit trains snake through Wyoming’s plains, carrying coal from the 80-plus millionton-per-year North Antelope Rochelle Mine, the largest coal operation in North America.

Manage Safe, Low-Cost OperationsPeabody’s first strategy is to manage safe, low-costoperations, in that order.Safety comes first at our operations. Awareness,communications, training, best practices and personalresponsibility embody the Safety – A Way of Lifeprogram. These time-tested approaches led to an18 percent improvement during 2003 in Peabody’salready low average accident rate, to 4.5 incidentsper 200,000 hours worked. This rate is better thanthe average of other U.S. industrial and servicesectors, including manufacturing, construction, agricultureand even wholesale and retail.Leading in safety was the North Antelope RochelleMine, America’s largest coal mine, where employeesworked an astounding 1.6 million combined hourswithout registering a single lost-time accident. Twoand our Rawhide Mine has celebrated seven yearswithout a lost-time accident.Peabody’s long-held belief is that a safe mine is alsoa productive mine. We have the most productive minein America – and three of the six most productive –based on the latest U.S. government data throughnine months.Productivity is a surrogate for costs, and ourthree Powder River Basin mines were also thelowest-cost Peabody operations. The companyheld the line on costs in 2003 both at Easternand Western operations in the face of a numberof external cost pressures.The Peabody team uses a number of tools tocontain costs:■ We hire and retain the best people. Our voluntaryThe 5 million ton-per-year Federal No. 2 Mine in West Virginia completed a transition to new reserves in 2003. Maintenance Supervisor AllenPollastrini tests the new longwall system at the mine. Peabody also began production at the new 4 million ton-per-year Highland Mine in Kentucky.average U.S. retention rate of 73 percent. Thecompany’s labor productivity has risen 191 percentsince 1990, to 98 tons per miner shift.■ We access the world’s best reserve base amongcoal companies. With a reserve-to-production ratioof more than 45 years, Peabody uses its extensiveresource position to establish optimal long-termmine plans and lower costs. For example, whilemost mines in the Powder River Basin move aboutthree yards of earth for each ton of coal extracted,our Rawhide Mine moves just one yard of earthto access each ton of coal.■ We increase production from low-cost operations.Peabody’s three lowest-cost operations will eachincrease their output in 2004 to serve customerPeabody’s Safety & Productivity TransformationProductivity (Tons per Miner Shift)100181680604020019901991199219931994199519961997199819992000200120022003Peabody’s safety accident rate improved another 18 percent in 2003,while Peabody maintained strong productivity levels.14121086420Safety (Accident Rate Per 200,000 Hours)other operations also met the goal of zero accidents,retention rate of 96 percent outpaces thecommitments.Source: Company and U.S. Mine Safety and Health Administration data.89

The Rocklick preparationfacility in West Virginiaprocesses metallurgicaland steam coal productsfor shipment on multiplerail systems. Nearly allcoal is transported toRocklick using a 12-mileconveyor system thatenhances safety in theregion by keeping trucksoff the road.■ We continually modernize our asset base. Peabodyhas added 14 mines since 1998. Newer mines reducedistance to loadout facilities, employ newer equipment,allow for optimal mine planning and can offer transportationadvantages for the customer.■ We drive out bottlenecks and inefficiencies. Employees atall levels are expected to recommend and implementimprovements in safety, equipment availability, maximumcoal recovery ratios and throughput.■ We capitalize on the best technologies and economiesof scale. Technology continues to improve in all aspectsof the operation and includes computerized mineplanning systems; Global Positioning System-aidedcore sampling, dozer operations and reclamation; andenhanced production and productivity from largerequipment with digital components.Peabody continues to implement productivity and processimprovement initiatives in 2004 aimed at increased safety,expanded productivity and lower costs to expand margins.People, technology and best practices allowed Peabody to hold theline on costs in 2003. Here, Russell Yoney, an operator at the FederalNo. 2 Mine, monitors computerized controls that are capable ofadvancing the longwall shields and diagnosing changing geologic andequipment conditions.1011

Apply World-Class Sales & Trading SkillsPeabody’s second strategy is to apply world-classsales, marketing and trading skills to createadditional value from its backlog of business andbusiness relationships.Peabody is the world’s largest coal company, aposition it has held for 34 years. Our coal fuelsapproximately 9.8 percent of U.S. electricity generationand nearly 2.5 percent of the world’s electricity. Weserve approximately 270 generating plants and industrialcustomers in 11 countries on five continents.Peabody’s industry-record 2003 sales volume of203.2 million tons includes record production fromthe Powder River Basin, the fastest growing coal regionin America. Peabody holds leadership positions in thePowder River, Southwestern and Midwestern regions.The mission of Peabody’s sales, trading, brokerageand analytical team is to provide superior customerservice, satisfy customer needs and create beneficialtransactions for all parties. Our sales backlog exceeds1 billion tons and includes customer agreementswith durations ranging from one to 18 years. Thisbacklog offers good revenue visibility; reduces therisk in capital deployment decisions; allows theoperations to optimize costs due to the secure salesbase; and provides opportunities to create customersolutions and increase value.Peabody expects to benefit from near-term andlong-term market trends that indicate greater coaldemand. Near term we expect coal demand toincrease as existing generating plants operate athigher capacity levels to satisfy the improvingeconomy, and competing fuels continue to facerestrictions or high prices.Longer term, the construction of new coal-fueledgenerating plants will also increase Peabody’s salesExport activities bustle at the DTA coal export terminal in Newport News, Va., which exported 5.2 million tons of coal in 2003. DTA, which is30 percent owned by Peabody, is anticipating increased throughput of steam and metallurgical coal in 2004 to meet growing global demand.opportunities. More than 90 new coal plants havebeen announced in the past three years, and anumber of them advanced in development andconstruction in 2003. With significant reserves andoperations in all key regions, Peabody is uniquelypositioned as a reliable, financially strong supplierof fuel for the new generating investments.For example, in 2003 Peabody entered intolong-term coal supply agreements with the ownersand operators of the Springerville GeneratingStation, which is increasing its capacity to servethe Southwest. Under the new agreements,Peabody will supply up to 51.5 million tonsof coal from our mines in New Mexico andWyoming, furthering a long-term relationshipwith the Springerville owners.Peabody is the Leader in Sales and Reserves2003 Sales (Tons in Millions)200Peabody150100Primary U.S. Competitors5000 2 4 6 8 10Reserves (Tons in Billions)Peabody is the largest coal company in the world and is far largerthan U.S. competitors in sales and reserves.Source: Industry reports and company estimates.1213

In the midst of the robust coal markets, Peabody begins2004 with an excellent sales position and portfolio ofproducts. Peabody also has strong financial upside tothe improving coal markets. This upside is an outcomeof our thorough market analysis capability, which allowsus to spot market trends and to properly position ournear- and long-term book of business.Peabody’s brokerage and trading operations continueto differentiate us from others in the coal industry andcreate additional value. We utilize a combination ofsourcing flexibility contained in our sales agreements,(Above) Peabody’s tradingoperations create valuefor customers and layer inadded profitability usingthe company’s 1 billionton sales backlog.(Right) Peabody servesnew coal units like theone under constructionat the SpringervilleGenerating Station inArizona. A new 15-yearcoal supply agreementwith Peabody mines inNew Mexico and Wyomingwill serve Springerville.Peabody’s extensivereserve position, financialstrength and history ofreliable supplies offer newplant developers securelong-term fuel sources.sourcing arrangements with other producers, and thefinancial markets to generate additional profits. Strongcredit and risk controls are used to manage Peabody’srisk exposure and trading activities.In 2004, Peabody intends to further expand its productline, strengthen its international coal trading capability, andincrease its third-party sourcing arrangements. The marketleader has maintained its position through a combinationof innovation, fair dealing and hard work. We aim tomaintain that leadership position for decades to come.BTU Has Strong Upside to Improving MarketsUnpriced Volume of Expected Production (Tons in Millions)110-120Peabody has strongupside to improvingmarkets, with 70 millionto 80 million tons ofcoal unpriced for 2005and 110 million to 120million tons unpricedfor 2006, based onexpected productionat Dec. 31, 2003.9-14200470-80200520061415

Peabody supports continuous environmental improvement in coal miningand coal use. Our environmental initiatives have been recognized by morethan 30 awards in the past five years, including four 2003 awards from theU.S. Department of the Interior.Peabody’s Senior Warehouse Clerk Fenae Tallman and Preparation Supervisor Stan Tallmanare third-generation residents on Arizona’s Black Mesa. Fenae and Stan have nearly 50 years ofcombined career experience at the Arizona operations and are raising three sons, including Marcus,(right). Here, they ride through reclaimed land at the Black Mesa Mine. Among Peabody’s 2003honors was the inaugural “Gold” Good Neighbor Award for the Black Mesa and Kayenta minespresented by the U.S. Department of the Interior.

Peabody, Energy & the EnvironmentPeabody is the world’s largest coal company. Coalis the fastest growing fuel in the world. And coalis affordable and environmentally friendly, throughDevelopment. He was a member of the Energy andTransportation Task Force for the President’s Councilon Sustainable Development for the Clinton/GoreSouthern Indiana farmer Monte Watts and his son, Bradon, inspect a field of corn on reclaimed lands at the Farmersburg Mine. Techniquesfor establishing premier crops are being studied in Indiana cornfields through cooperation with the Indiana Division of Natural Resourcesand Peabody’s Black Beauty operations. The five-year study is assessing techniques for soil handling that will ultimately improve crop yields.Peabody’s success in restoring farmland has been recognized by numerous excellence in reclamation awards.advancements in coal mining and coal use.Administration. He is Chairman of the Center for EnergyPeabody operations continue to be recognized fortribal initiatives on Native American lands in ArizonaPeabody’s long-standing mission is to be a worldwidesupplier of low-cost energy, which contributes to economicprosperity and a better quality of life. This missionis reflected both through our strategies and our largerpractices regarding energy and the environment.and Economic Development and Co-Chairman of theCoal-Based Generation Stakeholders Group. He is alsoCo-Chairman of the National Mining Association’sHealth Care Reform Committee.Peabody was pleased to be named “Coal Companyinnovative approaches to stewardship that restore superiorrangeland, magnificent wildlife preserves, sturdy hardwoodforests and pristine wetlands.Peabody continues to lead the nation in reclamationexcellence, earning more than 30 awards for environmen-and the Director’s Award for outstanding resultsreclaiming wetlands in Indiana. Peabody has earnedthe Director’s Award for four consecutive years.Peabody’s 2003 environmental awards include:Peabody operates with an approach that is consistentwith sustainable development, balancing the needs ofindividuals with the need for a strong economy, a cleanof the Year” at the Platts and Business Week 2003Global Energy Awards, rewarding the company’sleadership in the areas of advanced technologies,tal and community stewardship over the past five years.In 2003, Peabody earned four major awards forcommunity and environmental stewardship at the■ “Gold” Good Neighbor Award –U.S. Department of the Interior; Black Mesaand Kayenta Mines, Arizonaenvironment and a secure nation.productivity, innovative market/technology strategy,U.S. Department of the Interior’s 26th Excellence in■ Director’s Award – U.S. Department of theThese principles guide actions at the highest levelsof Peabody. Chairman and Chief Executive Officershareholder value and commercial success.Peabody’s mission statement says, “When the miningSurface Coal Mining Reclamation Awards ceremonyconducted in Washington, D.C.Interior; Deer Ridge Mine, Indiana■ National Award – Excellence in MiningIrl Engelhardt serves as the Co-Chairman of the Nationalis complete, we will leave the land in a condition equalHonors include the first “Gold” Good Neighbor Award& Reclamation, U.S. Department of the Interior;Mining Association’s Committee on Sustainableto or better than we found it.”for developing a host of environmental, economic andSquaw Creek Mine, Indiana2223

Peabody earned fourmajor awards from theU.S. Department ofthe Interior in 2003,including the prestigiousDirector’s Award for thefourth consecutive year.Reclamation SpecialistBill Gunn inspects awardwinningresults at theDeer Ridge Mine inIndiana, which earned thetop honor for establishingwetlands throughout1,800 acres of reclaimedwildlife habitat, hardwoodforest and prime farmland.■ National Award – Excellence in Mining& Reclamation, U.S. Department of the Interior;Caballo Mine, Wyoming■ Mined Land Reclamation Award –Illinois Department of Natural Resources;Marissa Mine, IllinoisIn 2003, Peabody reclaimed nearly 6,000 acresof land, planted nearly a half million trees, andprovided more than $50 million to a federal fundto reclaim abandoned mine lands.Peabody’s strong energy and environmental credentialsextend to coal use. Our coal products fuelapproximately 9.8 percent of electricity generationin the United States and nearly 2.5 percent in theworld, and our low sulfur coal sales have more thantripled since 1990.Peabody also provides leadership in developingtechnologies that offer a roadmap to a near-zeroemission coal-fueled power plant of the future,including state-of-the-art generation, coal gasification,hydrogen research and carbon sequestration.■ Peabody’s planned Thoroughbred Energy Campusand Prairie State Energy Campus will providelow-cost electricity to help satisfy America’s growingneeds for electricity while improving our energyindependence. The projects will be among thecleanest major coal-fueled plants in America,removing more than 98 percent of sulfur dioxideand more than 80 percent of nitrogen oxide emissions,while providing on-site facilities to advanceenergy and environmental research.■ Peabody is a long-term sponsor of the PowerSystems Development Facility, an advanced coalgasification development project supported by theU.S. Department of Energy and operated bySouthern Company.■ Peabody is a member of an industry alliance todevelop the FutureGen power plant of the future.Through the FutureGen project, the U.S. Departmentof Energy is seeking to develop a demonstrationplant with near-zero emissions that produceshydrogen to fuel cars and produce electricity whilesequestering the carbon dioxide in undergroundoil, gas and coal seams.Peabody’s Coal Reserves Compare Favorably With Other Vast Resource PositionsBillion Barrels of Oil EquivalentTOTAL OIL & GAS RESERVES IN TEXAS15.6NATURAL GAS RESERVES IN CONTINENTAL UNITED STATESPROVEN OIL & GAS RESERVES OF THE LARGEST ENERGY COMPANY26.928.0PEABODY‘S PROVEN & PROBABLE COAL RESERVES 30.5Peabody’s 9.2 billion tons of coal reserves equal 30.3 billion barrels of oil equivalent. This amount is greaterthan the natural gas reserves in the Continental United States, the coal reserves in Canada, the oil and gas reservesof the largest companies in the world, and the total oil and gas reserves in Texas.Source: Company filings, BP Statistical Review of World Energy; Oil & Gas Journal.2425

The Goal: Near-Zero EmissionsTechnologies provide a path toward continuous improvement in emissions fromcoal-fueled generation, toward a goal of near-zero emissions.Step 3Peabody is a foundingmember of a coalitionto develop FutureGen,an initiative to developa generating plant ofthe future with nearzeroemissions, carbonsequestration andhydrogen productioncapabilities.Rendering ofFutureGen plantPower SystemsDevelopmentFacility■ Coal from a Peabody operation supplies theWabash River integrated gas combined-cycle plantin Indiana. The U.S. Department of Energy recentlydedicated a small demonstration facility at theplant, whose capacity will come entirely from a2 megawatt fuel cell – the world’s largest fuel cellpowered by coal.■ Peabody is partnering with the University ofKentucky’s Department of Forestry in a researchproject involving more than 200,000 newly plantedtrees in the past two years. The study is analyzingthe higher growth rate for trees planted in looselycompacted soil, to enhance reclamation and naturalcarbon sinks.■ Peabody is a founding member of PowerTreeCarbon Company, LLC. PowerTree is a voluntaryenergy companies. Initial activities include sixhardwood restoration projects in Arkansas,Mississippi and Louisiana.Peabody supports continuous emission improvementsat coal-fueled electricity generating plants, usingadvanced technologies and reasonable timetables.We also endorse voluntary programs to improveefficiency and greenhouse gas emissions. Carbonmanagement programs should improve the scientificunderstanding of climate change, as well as initiativesthat would better utilize plant life and oceans ascarbon-absorbing sinks and technologies that wouldsequester carbon dioxide.Peabody continues to advocate balanced energy andenvironmental policies and sound sustainable developmentpractices through innovative programs at itsoperations, ongoing multi-industry leadership activitiesStep 2Peabody supports coalcarbon sequestration initiative involving majorand direct advocacy initiatives.gasification technologyStep 1Peabody’s ThoroughbredEnergy Campus usesadvanced pulverizedcoal technology andstate-of-the-art emissioncontrol equipment. It willbe among the cleanestcoal plants in the nation.for future generationand sponsors the demonstrationPower SystemsDevelopment Facility inWilsonville, Ala.Rendering of Peabody’sThoroughbred Energy CampusPounds Per Million BtuImproving Toward Near-Zero Emissions from Coal-Fueled Generating Plants4.371.08U.S. AVERAGE1970Emissions from U.S. Coal-Fueled Generating Plants0.97Sulfur DioxideNitrogen Oxides0.41U.S. AVERAGE20020.400.19”CLEAR SKIES“PROPOSAL2010 20080.250.14”CLEAR SKIES“PROPOSAL20180.1670.08THOROUGHBREDENERGY CAMPUSPROJECTIONNear-ZeroFUTUREGENGOALSCoal used for U.S. electricitygeneration has tripled since1970 while emissions have beendramatically reduced. Peabodysupports continuous environmentalimprovement throughdevelopment of the Thoroughbredand Prairie State Energy Campusesand through support of advancedtechnologies targeting near-zeroemissions as the ultimate goal.Thoroughbred and Prairie Statewould be among the cleanestmajor coal plants in the nation.Source: U.S. Environmental ProtectionAgency’s Clean Air Market Database;February 2002 “Clear Skies” proposal;and U.S. Department of Energy 2002Annual Energy Outlook.2627