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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

þ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For The Fiscal Year Ended December 31, 2004

OR

o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-13105

Title of the Plan –

ARCH COAL, INC. EMPLOYEE THRIFT PLAN

Name and Address of the issuer of the Securities
Held Pursuant to the Plan –

Arch Coal, Inc.

One CityPlace Drive, Suite 300
St. Louis, Missouri 63141
 
 

 

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FINANCIAL STATEMENTS AND EXHIBIT

Financial Statements And Schedule

Report Of Independent Registered Public Accounting Firm

Statement Of Net Assets Available For Benefits

Statement Of Changes In Net Assets Available For Benefits

Notes To Financial Statements

Schedule Of Assets Held At End Of Year

Exhibit:

     
23.1
  Consent Of Rubin, Brown, Gornstein & Co. LLP Independent Registered Public Accounting Firm

 

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ARCH COAL, INC.
EMPLOYEE THRIFT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2004

 

 

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Contents

         
    Page  
    1  
Financial Statements
        
    2  
    3  
    4-9  
Supplementary Information
        
    10  
    11-12  
       
 Consent of Independent Registered Public Accouting Firm

 

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Report Of Independent Registered Public Accounting Firm

To the Pension Committee
Arch Coal, Inc. Employee Thrift Plan

We have audited the accompanying statement of net assets available for benefits of the Arch Coal, Inc. Employee Thrift Plan as of December 31, 2004 and 2003 and the related statement of changes in net assets available for benefits for the years then ended. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 at December 31, 2004 and 2003, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Rubin, Brown, Gornstein & Co. LLP

St. Louis, Missouri
June 20, 2005

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
                 
    December 31,  
    2004     2003  
Assets
                
Investments, At Fair Value (Note 3)
                
Money market
   $ 2,078,221     $ 1,985,664  
Mutual funds and common/collective fund
     164,696,914       142,291,793  
Guaranteed investment account
     61,236,705       59,292,820  
Company stock
     15,133,166       15,679,214  
Participant loans (Note 4)
     11,880,873       10,618,988  
Brokerage securities
     16,637,272       12,041,905  
 
            
Total Investments
     271,663,151       241,910,384  
 
            
 
Receivables
                
Employee contributions
     —       513,678  
Employer contributions
     —       371,371  
 
            
Total Receivables
     —       885,049  
     
 
Net Assets Available For Benefits
   $ 271,663,151     $ 242,795,433  
 
            

 
See the accompanying notes to financial statements.   Page 4

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
                 
    For The Years  
    Ended December 31,  
    2004     2003  
Additions To Net Assets Attributed To:
                
Investment Income (Note 3)
                
Dividends and interest
   $ 6,290,664     $ 5,040,693  
Net appreciation in fair value of investments
     19,449,026       33,730,404  
             
Net Investment Income
     25,739,690       38,771,097  
             
 
Contributions
                
Salary deferral contributions
     12,890,588       12,578,170  
Employer contribution
     9,681,067       9,835,130  
Employee after-tax contribution
     1,122,335       1,107,542  
Rollover contribution
     413,592       248,317  
             
Total Contributions
     24,107,582       23,769,159  
             
 
Total Additions
     49,847,272       62,540,256  
             
 
Deductions From Net Assets Attributed To:
                
Benefits paid directly to participants
     20,979,554       16,178,356  
             
 
Net Increase
     28,867,718       46,361,900  
 
Net Assets Available For Benefits - Beginning Of Year
     242,795,433       196,433,533  
             
 
Net Assets Available For Benefits - End Of Year
   $ 271,663,151     $ 242,795,433  
 
            

 
See the accompanying notes to financial statements.   Page 3

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 And 2003

1.   Description Of The Plan
 
    The Arch Coal, Inc. Employee Thrift Plan (Plan) was established by Arch Coal, Inc. (Company) for the benefit of the eligible employees of the Company, its subsidiaries and controlled affiliates.
 
    The following description of the Plan provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan’s provisions.
 
    Certain provisions of the Plan as described below do not apply to or have been modified for certain subsidiaries and affiliates of the Company.
 
    General
 
    The Plan, which has been adopted by Arch Coal, Inc., is a defined contribution plan, which includes a 401(k) provision. The Plan covers all full-time salaried employees, all full-time nonunion hourly employees, and certain union employees where specified by applicable collective bargaining agreements of the Company, its subsidiaries, and any controlled affiliates that elect to participate in the Plan. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
 
    Contributions
 
    Participants may elect to defer between 1 percent and 50% of compensation. Highly compensated employees may contribute up to 16%, with the exception of the highly compensated hourly employees at Mingo Logan who may contribute up to 17%. The percentage of employer match or nondiscretionary contribution depends upon the location.
 
    Participant Accounts
 
    Each participant’s account is credited with the participant’s contributions, the employer’s matching contribution, if applicable, or employer non-discretionary contribution, if applicable, and an allocation of Plan earnings. The allocation of earnings is determined by the earnings of the participant’s investment selection based on each participant’s account balance, as defined in the Plan agreement. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.

 
Page 4

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
Notes To Financial Statements (Continued)

    Vesting
 
    Participants are fully vested in their contributions plus actual earnings. All eligible employees of the Company at December 31, 1997 became fully vested in the Plan. Eligible employees hired subsequent to December 31, 1997 vest in Company contributions and earnings upon the completion of three full and consecutive years of service. The hourly employees at Mingo Logan are fully vested after the completion of two full and consecutive years of service.
 
    All participants become fully vested upon death while employed, total disability, or normal retirement age, regardless of the number of months of participation.
 
    Participant Loans
 
    Active participants, with some exceptions, may borrow from their fund accounts a minimum of $500 or up to a maximum equal to the lesser of $50,000 or 50 percent of their vested account balances. Loan terms range from one to five years or longer for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest at the prime rate listed in the Wall Street Journal on the first day of the month the loan is processed. Principal and interest is paid ratably through payroll deductions.
 
    Payment Of Benefits
 
    Upon death, termination of service, or attainment of age 70-1/2, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in his or her account, a single annuity, a joint and survivorship annuity with various survivor options or a series of installment payments.
 
    Forfeited Accounts
 
    Forfeited amounts of employer contributions are used to offset future Company matching contributions of the Plan. At December 31, 2004 and 2003, forfeited amounts available to reduce future Company contributions were $39,409 and $32,660, respectively.

 
Page 5

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
Notes To Financial Statements (Continued)

2.   Summary Of Significant Accounting Policies
 
    Estimates And Assumptions
 
    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
    Basis Of Accounting
 
    The financial statements of the Plan are prepared under the accrual method of accounting.
 
    Investment Valuation And Income Recognition
 
    Investments in mutual funds are valued at reported net asset value at December 31 as determined by the fund manager.
 
    Investment income is recorded as earned on the accrual basis.
 
    Payment Of Benefits
 
    Benefits are recorded when paid.
 
3.   Investments
 
    The Company has established a Pension Committee to oversee the activities of the Plan and has appointed the Vice President — Human Resources as the Plan Administrator. Putnam Fiduciary Trust Company is the trustee for the Plan and Putnam Investments is the Plan recordkeeper.

 
Page 6

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
Notes To Financial Statements (Continued)

     Investments at fair value as of December 31, 2004 and 2003 consist of the following:

                 
    December 31,  
    2004     2003  
Putnam Money Market Fund
   $ 2,078,221     $ 1,985,664  
             
 
Mutual Funds And Common/Collective Fund
                
American Century Income and Growth Fund
     33,023,173 *     31,939,049 *
Barclay’s Lifepath 2010
     —       1,231,653  
Barclay’s Lifepath 2020
     —       659,003  
Barclay’s Lifepath 2030
     —       460,762  
Barclay’s Lifepath 2040
     —       513,702  
Dodge & Cox Balanced Fund
     22,148,939 *     17,197,822 *
Fidelity Diversified International Equity Fund
     12,285,398 *     —  
Fidelity Small Cap Fund
     2,747,420       —  
Franklin Templeton Balance Sheet Fund
     20,582,889 *     14,344,200 *
Investment Company of America
     1,414,736       807,633  
PIMCO Total Return Fund
     15,641,715 *     14,780,880 *
Putnam Asset Allocation: Balanced Fund
     1,733,323       623,708  
Growth Fund of America
     18,556,267 *     —  
Putnam Growth Opportunities Fund
     —     18,255,101 *
Putnam International Equity Fund
     —       10,363,034 *
Putnam OTC Emerging Growth Fund
     —       2,642,801  
Putnam S&P 500 Index
     22,702,828 *     20,739,632 *
Putnam Vista Fund
     9,704,941       7,732,813  
Wells Fargo 2010
     1,882,094       —  
Wells Fargo 2020
     1,004,852       —  
Wells Fargo 2030
     564,358       —  
Wells Fargo 2040
     703,981       —  
             
Total Mutual Funds And Common/Collective Fund
     164,696,914       142,291,793  
             
 
Arch Coal, Inc. Common Stock
     15,133,166 *     15,679,214 *
             
 
Putnam Direct Personal Choice Retirement Account
     16,637,272       12,041,905  
             
 
Invesco Stable Value Fund
     61,236,705 *     59,292,820 *
             
 
Participant Loans
     11,880,873       10,618,988 *
             
 
 
   $ 271,663,151     $ 241,910,384  
 
            
 
*Investment represents 5% or more of net assets at the beginning of the respective Plan year.

 
Page 7

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
Notes To Financial Statements (Continued)

     Changes In Net Assets Available For Benefits:

                 
    For The Years  
    Ended December 31,  
    2004     2003  
Investment Income
                
Dividends and interest
   $ 6,290,664     $ 5,040,693  
Net appreciation in fair value of investments
     19,449,026       33,730,404  
 
            
 
Net Investment Income
   $ 25,739,690     $ 38,771,097  
 
            

    Interest income on the Invesco Stable Value Fund is calculated and credited daily based on the aggregate contract yield of the underlying investments. The investment contracts included in this fund had an average yield of 4.56% and 4.32% for the years ended December 31, 2004 and 2003, respectively. The average crediting interest rate was 4.59% and 4.58% at December 31, 2004 and 2003, respectively. The fair value of the investment contract was $61,236,705 and $59,292,820 at December 31, 2004 and 2003, respectively.
 
4.   Participants Loans
 
    Notes receivable are secured by participants’ vested balances. The notes are due in bi-weekly payments including principal and interest at varying rates reflective of the prime rate as of the time of issue. The final installments are due at various dates.
 
5.   Plan Termination
 
    Although it has not expressed 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 of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.

 
Page 8

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
Notes To Financial Statements (Continued)

6.   Tax Status
 
    The Plan obtained its latest determination letter on September 26, 2002 in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. The Plan Administrator and the Plan’s tax counsel believe the Plan is correctly designed and operated with the applicable requirements of the Internal Revenue Code. Therefore, the Plan Administrator believes the Plan was qualified and the related trust tax exempt.
 
7.   Plan Amendments
 
    Effective May 5, 2004, the Plan was amended to provide the hourly employees at Coal Mac (a division of Arch Coal, Inc.) 100% matching contributions on their salary deferrals, up to the first 6% of compensation. Prior to the amendment, these participants received a 50% match.
 
    Effective August 20, 2004, the Plan was amended to exclude the former Triton employees from participation in the Plan. The former Triton employees continued to participate in the Triton Coal Company, LLC 401(k) Plan until its merger into the Arch Coal, Inc. Employee Thrift Plan on January 1, 2005.
 
8.   Subsequent Events
 
    On August 20, 2004, the Company purchased the equity of Vulcan Coal Holdings, L.L.C. of which Triton Coal Company, LLC (Triton) and Buckskin Coal Company, LLC (Buckskin) were subsidiaries. Subsequently, the assets of Buckskin were sold and the majority of the assets of Triton were transferred to an existing subsidiary of the Company. Triton maintained a defined contribution plan for all employees. Effective January 1, 2005, the Triton Coal Company, LLC 401(k) Plan was merged into the Arch Coal, Inc. Employee Thrift Plan. The former Triton employees continued to participate in the Triton Coal Company, LLC 401(k) Plan until December 31, 2004.

 
Page 9

 

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Report Of Independent Registered Public
Accounting Firm On Supplementary Information

    Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held at end of year is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 
    /s/ Rubin, Brown, Gornstein & Co. LLP
 
    June 20, 2005

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
E.I.N. 43-0921172 PLAN 006
SCHEDULE OF ASSETS HELD AT END OF YEAR
December 31, 2004
Page 1 Of 2
           
        Current
Identity Of Issuer   Description Of Investment   Value
Money Market
          
Putnam Investments
   Putnam Money Market Fund   $ 2,078,221
 
        
 
Mutual Funds And Common/Collective Fund
          
American Century
   American Century Income and Growth Fund     33,023,173
American Fund Corporation
   Investment Company of America     1,414,736
Wells Fargo
   Wells Fargo Outlook 2010     1,882,094
Wells Fargo
   Wells Fargo Outlook 2020     1,004,852
Wells Fargo
   Wells Fargo Outlook 2030     564,358
Wells Fargo
   Wells Fargo Outlook 2040     703,981
Dodge & Cox Funds
   Dodge & Cox Balanced Fund     22,148,939
Franklin Investments
   Franklin Templeton Balance Sheet Fund     20,582,889
PIMCO Investments
   PIMCO Total Return Fund     15,641,715
Putnam Investments*
   Putnam Asset Allocation: Balanced Fund     1,733,323
American Fund Corporation
   Growth Fund of America     18,556,267
Fidelity Investments
   Fidelity Small Cap Fund     2,747,420
Fidelity Investments
   Fidelity Diversified International Equity Fund     12,285,398
Putnam Investments*
   Putnam S&P 500 Index     22,702,828
Putnam Investments*
   Putnam Vista Fund     9,704,941
 
        
Total Mutual Funds And Common/Collective Fund
     164,696,914
 
        
 
Common Stock
          
Arch Coal, Inc. *
   Common stock     15,133,166
 
        
 
Participant Directed Brokerage Accounts
          
Putnam*
  
Putnam Direct Personal Choice Retirement Account (Participants Directed Brokerage Accounts)
     16,637,272
 
        
 
Balance Carried Forward
         198,545,573
 
        
 
*   Represents party-in-interest

The above information is a required disclosure for IRS Form 5500, Schedule H, Part IV, line 4i.

 

Page 11

 

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ARCH COAL, INC. EMPLOYEE THRIFT PLAN

 
E.I.N. 43-0921172 PLAN 006
SCHEDULE OF ASSETS HELD AT END OF YEAR
December 31, 2004
Page 2 Of 2
           
        Current
Identity Of Issuer   Description Of Investment   Value
Balance Brought Forward
       $ 198,545,573
 
        
 
Guaranteed Investment Account - Invesco Stable Value Fund
          
Bank of America NT & SA
   01-257     11,014,004
Bank of America NT & SA Wrapper
   01-257      
ING Life & Annuity
   60034     7,881,569
ING Life & Annuity Wrapper
   60034      
JP Morgan Chase Bank
   433119-MGC     10,800,418
JP Morgan Chase Bank Wrapper
   433119-MGC      
John Hancock Mutual Life Insurance Co.
   9601-GAC     1,477,657
John Hancock Mutual Life Insurance Co. Wrapper
   9601-GAC      
Mellon Bank STIF Account
   6070002     1,468,054
Monumental Life Insurance Co.
   MDA-00589TR     9,156,867
Monumental Life Insurance Co. Wrapper
   MDA-00589TR      
State Street Bank & Trust Co.
   103077     10,500,935
State Street Bank & Trust Co. Wrapper
   103077      
Union Bank of Switzerland
   5043     1,027,017
Union Bank of Switzerland
   5155     7,910,184
 
        
Total Guaranteed Investment Account
         61,236,705
 
        
Participant Loans
  
Bearing interest at 4% - 10%, due at various dates through October 2019
     11,880,873
 
        
 
 
       $ 271,663,151
 
        

The above information is a required disclosure for IRS Form 5500, Schedule H, Part IV, line 4i.

 
Page 12

 

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SIGNATURE PAGE

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    
 
                
Date:
  July 29, 2005   By:   /s/ Sheila Feldman    
 
               
 
          Sheila Feldman    
 
          Plan Administrator    

 

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INDEX TO EXHIBIT

     
Exhibit 23.1
  Consent of Rubin, Brown, Gornstein & Co. LLP Independent Registered Public Accounting Firm