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Peabody Group Announces Results For The Quarter Ended December 31, 2000
 
ST. LOUIS, Mo., Feb. 14 — Peabody Group today reported EBITDA* of $112.7 million and $314.3 million for the third quarter and nine months ended December 31, 2000, respectively, compared with EBITDA of $115.7 million and $332.1 million in the prior-year periods. Losses of $1.0 million and $8.9 million for the third quarter and nine months reflected improvement over losses of $9.7 million and $30.7 million for the respective prior-year periods.
 
“Our third quarter performance was solid, given the adverse effects of higher energy costs and unfavorable currency translation,” said Peabody Group Chairman and Chief Executive Officer Irl F. Engelhardt. “And our financial flexibility has greatly improved following the sale of our Australian operations in January.”
 
Peabody completed the sale of its Australian operations on January 29, 2001, for US$575 million. The transaction resulted in cash proceeds of $455 million and removal of $120 million in balance-sheet debt. After using the proceeds for debt reduction in the fourth quarter, the company expects that it will have eliminated more than $1.1 billion of debt in less than three years. The sale is expected to result in a fourth-quarter gain in excess of $150 million.
 
Quarterly revenues totaled $634.1 million, compared with prior-year revenues of $709.5 million, as lower volumes and pricing in the Midwest related to the prior-year suspension and closure of three Illinois Basin mines offset improved Powder River Basin pricing and increased Appalachian sales. Revenues through nine months totaled $1.98 billion, compared with prior-year totals of $2.05 billion. Sales volume for the quarter and first nine months totaled 46.8 million tons and 143.7 million tons, compared with 49.1 million tons and 144.2 million tons for the respective prior-year periods.
 
Favorable EBITDA variances for the quarter and nine months reflected strong operations and markets at Powder River Basin and Australian mines and lower reclamation and projected post-mining costs. These results were offset by lower Midwestern revenues, higher energy costs, unfavorable Australian currency translation and operating difficulties at several Appalachian and Black Beauty mines.
 
During the past several months, Peabody also:
  • Continued to improved productivity at U.S. operations, while reducing the average year-to-date accident rate to a record low of 3.81 incidents per 200,000 hours worked.
  • Invested $48 million in capital expenditures to improve costs and expand capacity to serve long-term customers. Year-to-date capital expenditures of $145 million compare with $138 million for the prior-year period. Investments continued in several Black Beauty and Appalachian development projects to lower costs and serve long-term sales contracts.
  • Announced that the company would file an air permit application relating to the Thoroughbred Energy Campus, a proposed 1,500 megawatt generating plant and 6 million ton-per-year coal mine sited on Peabody-controlled property in Western Kentucky.
  • Purchased, for approximately $10 million, coalbed methane assets near the company's Caballo Mine in Wyoming.
  • Was honored as the world's best coal company at the 2000 Financial Times Global Energy Awards. Peabody was recognized by an international panel of judges using the criteria of safety, environmental concern, productivity, market/technology innovation and shareholder value.
 
“Adjusting for the sale of our Australian operations, our fourth quarter performance remains in line with management's prior expectations,” said Engelhardt. “The U.S. coal markets continue to show signs of improvement, with calendar 2001 demand projected to improve upon the record demand in calendar 2000. Growing electricity consumption, high natural gas prices and a return to more-normal winter weather are resulting in high coal demand, low stockpiles and record capacity utilization by coal-based plants.”
 
Market prices for Powder River Basin and Appalachian coal have increased significantly over the past year. Due to industry sales contracting patterns, Peabody only has 6 million tons that are subject to improved pricing for the current calendar year. Uncommitted production grows to an estimated 68 million tons for the next calendar year.
 
Peabody Group is the world's largest private-sector coal company. Its coal products fuel more than 9 percent of all U.S. electricity generation and 2.5 percent of worldwide electricity generation.
 
* EBITDA is defined as income from continuing operations before deducting net interest expense, income taxes, minority interests and provisions for depreciation, depletion and amortization. EBITDA is not a substitute for operating income, net income and cash flow from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. It is presented as additional information because management believes it a useful indicator of our ability to meet debt service and capital expenditure requirements. Because EBITDA is not calculated identically by all companies, the presentation herein may not be comparable to similarly titled measures of other companies. EBITDA excludes interest income of $1.2 million for the quarter and $7.0 million for the nine months ended December 31, 2000, compared with $0.7 million in the prior-year quarter and $2.8 million for the prior-year nine month period.
 
U.S. coal demand estimates come from the National Mining Association.
 
Certain statements in this press release are forward looking as defined in the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks include, but are not limited to, changes in coal and power markets, economic conditions and weather; railroad performance; the ability to successfully implement operating strategies; foreign currency translation; fuel costs; regulatory and court decisions; future legislation and other risks detailed from time to time in the company's reports filed with the Securities and Exchange Commission. These factors are difficult to accurately predict and may be beyond the control of the company.
 
 
 
 
Condensed Income Statement For the Period Ended December 31, 2000 and 1999
 
 
This information is intended to be reviewed in conjunction with the company's quarterly report filed on Form 10-Q.
 
(a) Represents results of operations of Citizens Power LLC, an Unrestricted Subsidiary.
 
 
EBITDA Analysis As of December 31, 2000 and 1999
 
This information is intended to be reviewed in conjunction with the company's quarterly report filed on Form 10-Q.
 
 
Condensed Balance Sheet As of December 31, 2000, March 31, 2000 and December 31, 1999
 
This information is intended to be reviewed in conjunction with the company's quarterly report filed on Form 10-Q.
 
(a) The Company's Australian operations have been classified as an asset held for sale as of December 31, 2000.
(b) Includes $40.4 million of cash held by Citizens Power LLC at December 31, 1999.
(c) Includes Citizens Power LLC's current maturities of long-term debt of $13.6 million at December 31, 1999.
(d) Includes Citizens Power LLC's long-term debt of $309.8 million at December 31, 1999.
 
Debt Analysis As of December 31, 2000
 
NOTE: Information above reflects the classification of the Company's Australian operations as an asset held for sale. Total Australian borrowings as of December 31, 2000 were $119.4 million.
 
This information is intended to be reviewed in conjunction with the company's quarterly report filed on Form 10-Q.
 
 
CONTACT:
Vic Svec 314-342-7768vsvec@peabodyenergy.com
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