SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):March 18, 2002 (March 18, 2002)
Arch Coal, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-13105 43-0921172
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
One CityPlace Drive, Suite 300, St. Louis, Missouri 63141
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (314) 994-2700
Page 1 of 4 pages.
Exhibit Index begins on page 4.
Item 5. Other Events.
On March 18, 2002, Arch Coal, Inc. (the "Company"), announced via press
release that coal production at its eastern and western operations will be
reduced by approximately 7% and that its earnings would subsequently fall short
of expectations. A copy of the Company's press release is attached hereto and
incorporated herein by reference in its entirety.
Item 7. Financial Statements and Exhibits.
(c) The following Exhibit is filed with this Current Report on Form 8-K:
Exhibit No. Description
99 Press Release dated as of March 18, 2002
Page 2 of 4 pages.
Exhibit Index begins on page 4.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: March 18, 2002 ARCH COAL, INC.
By: /s/ Robert G. Jones
Robert G. Jones
Vice President - Law, General Counsel
and Secretary
Page 3 of 4 pages.
Exhibit Index begins on page 4.
EXHIBIT INDEX
Exhibit No. Description
99 Press Release dated as of March 18, 2002
Page 4 of 4 pages.
Exhibit 99
Arch Coal, Inc.
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FOR FURTHER INFORMATION:
Deck S. Slone
Vice President,
Investor and Public Relations
(314) 994-2717
FOR IMMEDIATE RELEASE
March 18, 2002
Arch Coal announces production cuts
St. Louis - Arch Coal, Inc. (NYSE:ACI) announced today that it has
reduced the rate of coal production at its eastern and western operations by
approximately 7% in recent weeks. In addition, the company is cutting its 2002
capital expenditure budget from its previous estimate of between $180 million
and $200 million, to an expected $150 million.
"U.S. coal markets are currently in a state of oversupply following the
mildest winter on record and very weak power demand by the industrial sector,"
said Steven F. Leer, Arch Coal's president and chief executive officer. "While
we are seeing the initial signs of an economic recovery, and forward pricing for
2003 has begun to increase, we believe that the best course for Arch is to act
aggressively to bring production in line with demand."
With utility stockpiles at higher-than-normal levels, spot coal prices
have fallen over the winter. Arch plans to meet its contractual obligations in
2002, but does not plan to sell any of its uncommitted coal at current prices.
"We are committed to being a market-driven producer," Leer said. "We believe it
would be a mistake to sell coal into an oversupplied market, at prices that will
not provide an adequate return."
"We have not taken these steps lightly," he added. "The reductions will
have an adverse impact on earnings, particularly in the first and second
quarters, given the relatively fixed nature of our cost structure in the near
term. However, we believe this is the right business decision and will prove
beneficial in the future, as we make commitments for future periods."
With these moves, Leer said the company expects to lose $3 million to
$8 million, or approximately $.05 to $.15 per share, in the first quarter of
2002. He indicated that the second quarter is likely to be affected as well if
the market does not improve. "It is difficult to be more precise since many
customers are seeking to delay contracted shipments due to full stockpiles,"
Leer said. "We expect this situation to persist through the spring months."
The industry's intermediate and long-term prospects are very sound,
according to Leer. "The steps that we are taking now should enhance our ability
to provide low-cost coal to the market as electricity demand rebounds," he said.
"It has become increasingly clear that coal must continue to play the
dominant role in U.S. power markets," Leer added. "Nuclear power plants are
operating at close to full capacity and U.S. gas reserves are becoming
increasingly expensive to develop. Ongoing efforts to bolster America's energy
security should also favor coal, which is easily our most abundant energy
resource. In short, the fundamentals for coal remain very strong. Arch Coal is
in an excellent position to compete aggressively and successfully in this
dynamic market environment."
Arch Coal is the nation's second largest coal producer, with subsidiary
operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah.
Through these operations, Arch provides the fuel for approximately 6% of the
electricity generated in the United States.
Forward-Looking Statements: Statements in this press release which are not
statements of historical fact are forward-looking statements within the "safe
harbor" provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on information currently available to, and
expectations and assumptions deemed reasonable by, the company. Because these
forward-looking statements are subject to various risks and uncertainties,
actual results may differ materially from those projected in the statements.
These expectations, assumptions and uncertainties include: the company's
expectation of continued growth in the demand for electricity; belief that
legislation and regulations relating to the Clean Air Act and the relatively
higher costs of competing fuels will increase demand for its compliance and
low-sulfur coal; expectation of improved market conditions for the price of
coal; expectation that the company will continue to have adequate liquidity from
its cash flow from operations, together with available borrowings under its
credit facilities, to finance the company's working capital needs; a variety of
operational, geologic, permitting, labor and weather related factors; and the
other risks and uncertainties which are described from time to time in the
company's reports filed with the Securities and Exchange Commission.