PERIOD ENDED DECEMBER 31, 2005 Annual ... - Peabody Energy

Tons SoldThe following table presents tons sold by operating segment for the years endedDecember 31, 2004 and 2003:Year Ended Year Ended IncreaseDecember 31, December 31,(Tons in millions) 2004 2003 Tons %Western U.S. Mining Operations 142.2 129.6 12.6 9.7%Eastern U.S. Mining Operations 51.7 46.3 5.4 11.7%Australian Mining Operations 6.1 1.3 4.8 369.2%Trading and Brokerage Operations 27.2 26.0 1.2 4.6%Total 227.2 203.2 24.0 11.8%RevenuesThe table below presents revenues for the years ended December 31, 2004 and 2003:Year Ended Year Ended Increase to RevenuesDecember 31, December 31,(Dollars in thousands) 2004 2003 $ %Sales $3,545,027 $2,729,323 $815,704 29.9%Other revenues 86,555 85,973 582 0.7%Total revenues $3,631,582 $2,815,296 $816,286 29.0%Revenues increased by 29.0%, or $816.3 million, over 2003. The acquisition of threemines in April 2004 contributed $335.0 million of total revenue and 11.0 million tons duringthe year. Excluding revenues from acquisitions during 2004, U.S. Mining revenues increased$375.4 million, and revenues from our brokerage operations increased $110.9 million onhigher pricing and volume worldwide. Our average sales price per ton increased 14.6%during 2004 due to increased overall demand, which has driven pricing higher, most notablyin Appalachia, and a change in sales mix. The sales mix has benefited from the increase insales from the Australian segment, where per ton prices are higher than in domestic markets.In addition to geographic mix changes, our 2004 revenues included a greater proportion ofhigher priced metallurgical coal sales. Pricing of metallurgical coal responded to increasedinternational demand for the product. We sell metallurgical coal from our Eastern U.S. andAustralian Mining operations. Other revenues were relatively unchanged from 2003.In our Eastern U.S. Mining operations, revenues increased $302.8 million, or 25.3%, asa result of higher pricing and volumes from strong steam and metallurgical coal demand.Production increases at most eastern mines more than offset lower than expected productionat certain of our mines and from contract sources as a result of geologic difficulties and fromcongestion-related shipping delays and hurricane-related production disruptions and delays torail and export shipments. Appalachian revenues led the Eastern U.S. increase, benefiting themost from price increases while also increasing production and sales volumes. Revenues inAppalachia increased $188.1 million, or 37.0%, while in the Midwest, revenues increasedby $114.7 million, or 16.6%. Revenues in our Western U.S. Mining operations increased$171.6 million, or 14.0%, on both increased volumes and prices. However, the primary driverof increased revenues in the West was a 12.6 million ton increase in sales volume. Growthin volumes were primarily in the Powder River Basin operations, where revenues were up$58.6 million, or 7.5%, and from the addition of the Twentymile Mine in April 2004, whichadded $99.0 million to sales. Powder River Basin production and sales volumes were up as aresult of stronger demand for the mines’ low-sulfur product, which overcame difficulties withrail service, downtime at the North Antelope Rochelle Mine to upgrade the loading facility andpoor weather, which impaired production early in the year. Revenues in our Australian Miningoperations increased $241.5 million compared to 2003 due primarily to the acquisition of twooperating mines during 2004 and benefiting from higher overall pricing for our products there.34 Peabody Energy