Delaware | 1-16463 | 13-4004153 | ||
(State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
incorporation or organization) |
701 Market Street, St. Louis, Missouri | 63101 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01. Other Events | ||||||||
SIGNATURE |
2
Peabody | Excel Coal | |||||||||||||||
Energy | Limited | Pro Forma | Pro Forma | |||||||||||||
Historical | Historical | Adjustments | as Adjusted | |||||||||||||
REVENUES |
||||||||||||||||
Sales |
$ | 4,545,323 | $ | 326,208 | $ | 4,871,531 | ||||||||||
Other revenues |
99,130 | 2,130 | 101,260 | |||||||||||||
Total revenues |
4,644,453 | 328,338 | | 4,972,791 | ||||||||||||
COSTS AND EXPENSES |
||||||||||||||||
Operating costs and expenses |
3,715,836 | 221,509 | 7,000 | (a) | 3,944,345 | |||||||||||
Depreciation, depletion and amortization |
316,114 | 17,864 | 19,800 | (b) | 353,778 | |||||||||||
Asset retirement obligation expense |
35,901 | 4,279 | 40,180 | |||||||||||||
Selling and administrative expenses |
189,802 | 16,914 | 206,716 | |||||||||||||
Net (gain) loss on disposal or exchange of assets |
(101,487 | ) | 1 | (101,486 | ) | |||||||||||
Income from equity affiliates |
(30,096 | ) | (3,445 | ) | (33,541 | ) | ||||||||||
OPERATING PROFIT |
518,383 | 71,216 | (26,800 | ) | 562,799 | |||||||||||
Interest expense |
102,939 | 7,997 | (7,997 | )(c) | 102,939 | |||||||||||
121,020 | (d) | 121,020 | ||||||||||||||
Interest income |
(10,641 | ) | (4,261 | ) | 4,261 | (c) | (10,641 | ) | ||||||||
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS |
426,085 | 67,480 | (144,084 | ) | 349,481 | |||||||||||
Income tax provision (benefit) |
960 | 18,695 | (40,285 | )(e) | (20,630 | ) | ||||||||||
Minority interests |
2,472 | 4,755 | 7,227 | |||||||||||||
NET INCOME |
$ | 422,653 | $ | 44,030 | $ | (103,799 | ) | $ | 362,884 | |||||||
Basic earnings per share |
$ | 1.62 | $ | 0.17 | $ | (0.40 | ) | $ | 1.39 | |||||||
Diluted earnings per share |
$ | 1.58 | $ | 0.16 | $ | (0.39 | ) | $ | 1.35 | |||||||
Weighted average shares outstanding basic |
261,519,424 | 261,519,424 | 261,519,424 | 261,519,424 | ||||||||||||
Weighted average shares outstanding diluted |
268,013,476 | 268,013,476 | 268,013,476 | 268,013,476 |
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Peabody | Excel Coal | |||||||||||||||
Energy | Limited | Pro Forma | Pro Forma | |||||||||||||
Historical | Historical | Adjustments | as Adjusted | |||||||||||||
REVENUES |
||||||||||||||||
Sales |
$ | 3,805,838 | $ | 292,227 | $ | 4,098,065 | ||||||||||
Other revenues |
87,348 | 2,805 | 90,153 | |||||||||||||
Total revenues |
3,893,186 | 295,032 | | 4,188,218 | ||||||||||||
COSTS AND EXPENSES |
||||||||||||||||
Operating costs and expenses |
3,078,880 | 183,110 | 7,000 | (a) | 3,268,990 | |||||||||||
Depreciation, depletion and amortization |
263,103 | 17,503 | 14,430 | (b) | 295,036 | |||||||||||
Asset retirement obligation expense |
25,911 | 1,933 | 27,844 | |||||||||||||
Selling and administrative expenses |
118,793 | 17,404 | 136,197 | |||||||||||||
Net gain on disposal or exchange of assets |
(94,309 | ) | (453 | ) | (94,762 | ) | ||||||||||
(Income) loss from equity affiliates |
(19,132 | ) | 129 | (19,003 | ) | |||||||||||
OPERATING PROFIT |
519,940 | 75,406 | (21,430 | ) | 573,916 | |||||||||||
Interest expense |
79,130 | 6,703 | (6,703 | )(c) | 79,130 | |||||||||||
90,758 | (d) | 90,758 | ||||||||||||||
Interest income |
(6,026 | ) | (1,758 | ) | 1,758 | (c) | (6,026 | ) | ||||||||
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS |
446,836 | 70,461 | (107,243 | ) | 410,054 | |||||||||||
Income tax provision |
10,905 | 21,052 | (29,593 | )(e) | 2,364 | |||||||||||
Minority interests |
10,267 | 3,874 | 14,141 | |||||||||||||
NET INCOME |
$ | 425,664 | $ | 45,535 | $ | (77,650 | ) | $ | 393,549 | |||||||
Basic earnings per share |
$ | 1.61 | $ | 0.17 | $ | (0.29 | ) | $ | 1.49 | |||||||
Diluted earnings per share |
$ | 1.58 | $ | 0.17 | $ | (0.29 | ) | $ | 1.46 | |||||||
Weighted average shares outstanding basic |
263,631,134 | 263,631,134 | 263,631,134 | 263,631,134 | ||||||||||||
Weighted average shares outstanding diluted |
269,320,801 | 269,320,801 | 269,320,801 | 269,320,801 |
4
Peabody | Excel Coal | |||||||||||||||
Energy | Limited | Pro forma | ||||||||||||||
Historical | Historical | Adjustments | Total | |||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | 317,405 | $ | 30,052 | $ | 11,094 | $ | 358,551 | ||||||||
Accounts receivable, less allowance |
244,730 | 18,735 | | 263,465 | ||||||||||||
Inventories |
181,444 | 35,321 | 7,000 | (g) | 223,765 | |||||||||||
Assets from coal trading activities |
96,087 | | | 96,087 | ||||||||||||
Deferred income taxes |
94,124 | | | 94,124 | ||||||||||||
Other current assets |
84,409 | 5,346 | | 89,755 | ||||||||||||
Total current assets |
1,018,199 | 89,454 | 18.094 | 1,125,747 | ||||||||||||
Property, plant, equipment and mine development, net |
5,565,540 | 540,405 | 1,475,000 | (g) | 7,580,945 | |||||||||||
Deferred income taxes |
| 19,185 | | 19,185 | ||||||||||||
Goodwill |
| | 99,457 | (g) | 99,457 | |||||||||||
Investments and other assets |
644,798 | (f) | 167,761 | (276,841 | )(f) | 535,718 | ||||||||||
Total assets |
$ | 7,228,537 | $ | 816,805 | $ | 1,315,710 | $ | 9,361,052 | ||||||||
Liabilities and Stockholders Equity |
||||||||||||||||
Current liabilities |
||||||||||||||||
Current maturities of long-term debt |
$ | 77,691 | $ | 17,122 | (h) | $ | (17,122 | )(h) | $ | 77,691 | ||||||
Liabilities from coal trading activities |
80,695 | | | 80,695 | ||||||||||||
Accounts payable and accrued expenses |
853,003 | 135,317 | | 988,320 | ||||||||||||
Total current liabilities |
1,011,389 | 152,439 | (17,122 | ) | 1,146,706 | |||||||||||
Long-term debt, less current maturities |
1,624,912 | 271,941 | (h) | 1,325,144 | (h) | 3,221,997 | ||||||||||
Deferred income taxes |
254,387 | 24,220 | | 278,607 | ||||||||||||
Asset retirement obligations |
407,365 | 7,171 | | 414,536 | ||||||||||||
Workers compensation obligations |
240,312 | | | 240,312 | ||||||||||||
Accrued postretirement benefit costs |
975,413 | 3,357 | | 978,770 | ||||||||||||
Other noncurrent liabilities |
329,621 | 23,056 | 323,000 | (g) | 675,677 | |||||||||||
Total liabilities |
4,843,399 | 482,184 | 1,631,022 | 6,956,605 | ||||||||||||
Minority interests |
15,506 | 18,298 | | 33,804 | ||||||||||||
Stockholders equity |
||||||||||||||||
Common stock |
2,667 | 215,368 | (215,368 | )(g) | 2,667 | |||||||||||
Additional paid-in capital |
1,562,113 | | | 1,562,113 | ||||||||||||
Retained earnings |
956,790 | 99,944 | (99,944 | )(g) | 956,790 | |||||||||||
Accumulated other comprehensive income (loss) |
(48,245 | ) | 1,011 | | (47,234 | ) | ||||||||||
Treasury stock |
(103,693 | ) | | | (103,693 | ) | ||||||||||
Total stockholders equity |
2,369,632 | 316,323 | (315,312 | ) | 2,370,643 | |||||||||||
Total liabilities and stockholders equity |
$ | 7,228,537 | $ | 816,805 | $ | 1,315,710 | $ | 9,361,052 | ||||||||
5
(a) | To adjust operating costs and expenses based on our estimated fair value adjustment to coal inventory. | |
(b) | To adjust depreciation, depletion and amortization based on the portion of the acquisition cost allocated to long-lived assets. | |
(c) | To reverse historical interest expense incurred by Excel, as well as historical interest income earned by Excel. | |
(d) | Represents pro forma interest expense, including the amortization of debt issuance costs where applicable, resulting from our new capital structure (dollars in thousands): |
Nine Months | ||||||||
Year Ended | Ended | |||||||
December 31, | September 30, | |||||||
2005 | 2006 | |||||||
Revolving
credit facility (1) |
1,126 | 1,408 | ||||||
Term loan
facility (2) |
30,711 | 27,689 | ||||||
7 7/8%
Senior notes (3) |
20,150 | 15,113 | ||||||
7 3/8%
Senior notes (4) |
48,718 | 36,538 | ||||||
6 7/8%
Senior notes (5) |
47,746 | 36,012 | ||||||
5 7/8%
Senior notes (6) |
14,879 | 10,894 | ||||||
Subordinated
note (7) |
6,656 | 4,445 | ||||||
Convertible
junior subordinated debentures (8) |
32,639 | 24,479 | ||||||
Surety bond expense (9) |
11,095 | 6,043 | ||||||
Other long-term debt (10) |
10,239 | 7,267 | ||||||
Total pro forma interest expense |
223,959 | 169,888 | ||||||
Less historical interest expense |
102,939 | 79,130 | ||||||
Net adjustment to interest expense |
121,020 | 90,758 | ||||||
(1) |
Reflects pro forma amortization of debt issuance costs. Borrowings outstanding under this facility were limited to $312.0 million at September 30, 2006, which is assumed to be replaced by the convertible junior subordinated debentures. | |
(2) |
Reflects pro forma interest expense on our term loan facility at an assumed LIBOR plus 1% interest rate of 6.3%. | |
(3) |
Reflects pro forma interest expense on the 2026 senior notes at an interest rate of 7.88%. | |
(4) |
Reflects pro forma interest expense on the 2016 senior notes at an interest rate of 7.38%. | |
(5) |
Reflects historical interest expense on our 6 7/8% senior notes. | |
(6) |
Reflects historical interest expense on our 5 7/8% senior notes. | |
(7) |
Reflects historical interest expense on our 5% subordinated note. | |
(8) |
Reflects pro forma interest expense on our convertible junior subordinated debentures at an interest rate of 4.75%. The underwriters have been granted the right to purchase up to an additional $75 million aggregate principal amount of convertible junior subordinated debentures to cover overallotments, which would result in proceeds, net of issuance costs, of up to $73.2 million. Assuming the full purchase right is exercised, interest expense would increase by $3.6 million for the additional convertible junior subordinated debentures based on a 4.75% interest rate. Peabody intends to utilize the net proceeds to further pay down the term loan facility, which would result in a reduction to interest expense of $4.6 million, based on a 6.3% interest rate. | |
(9) |
Reflects historical fees for surety bonds outstanding. | |
(10) |
Reflects historical letter of credit fees, interest on capital leases, the effect of interest rate swaps and interest on Excel debt assumed in the acquisition. | |
(e) | To record income tax expense (benefit) on the pro forma adjustments to results of operations using an assumed Australian effective tax rate of 28%. | |
(f) | The September 30, 2006 historical Peabody balance sheet includes an investment of $307.8 million for a 19.99% interest in Excel. The pro forma adjustment reversed this investment and assumes capitalization of $20.2 million of debt issue costs incurred in connection with the convertible junior subordinated debentures and $10.8 million of debt issue costs incurred related to Peabodys issuance of $900 million aggregate principal amount of senior notes in October 2006. |
6
(g) | To record the purchase transaction and allocate the $1,525 million purchase price (and $49 million of transaction costs) to the assets acquired and the liabilities assumed based on the estimated fair values of each item as follows (dollars in thousands): |
Estimated | ||||
Fair Value | ||||
Current assets |
$ | 96,454 | ||
Property, plant, equipment and mine development, net |
2,015,405 | |||
Goodwill |
99,457 | |||
Investments and other assets |
186,946 | |||
Current liabilities |
(135,317 | ) | ||
Long-term debt, including current maturities |
(289,063 | ) | ||
Asset retirement obligations |
(11,530 | ) | ||
Accrued postretirement benefit costs |
(3,357 | ) | ||
Other noncurrent liabilities |
(365,917 | ) | ||
Minority interest |
(18,298 | ) | ||
Accumulated other comprehensive income |
(1,011 | ) | ||
Total |
$ | 1,573,769 | ||
(h) | Reflects the issuance of additional debt to acquire Excel, the assumption of Excels outstanding debt, and the repayment of previously outstanding debt obligations. As of September 30, 2006, Peabody borrowed $312 million on the revolving credit facility to acquire the initial 19.99% interest in Excel. To finance the remaining portion of the Excel acquisition on October 25, 2006, Peabody borrowed $510 million under the term loan facility and issued $900 million aggregate principal amount of senior notes ($896.9 million net of issue discount). Peabody expects to issue $675 million aggregate principal amount of convertible junior subordinated debentures, subject to the right of underwriters to purchase up to an additional $75 million aggregate principal amount to cover overallotments, and utilize the proceeds to repay the outstanding balance under the revolving credit facility and additional amounts related to the term loan facility. A summary of these transactions are as follows: |
Term loan facility |
$ | 510.0 | ||
Senior notes issued |
896.9 | |||
Convertible junior subordinated
debentures |
675.0 | |||
Excel debt assumed |
289.0 | |||
2,370.9 | ||||
Repayment of debt under revolving credit
facility and term loan facility |
(773.8 | ) | ||
Additional debt to acquire Excel |
$ | 1,597.1 | ||
7
PEABODY ENERGY CORPORATION | ||||
Date: December 15, 2006 |
||||
/s/ RICHARD A. NAVARRE | ||||
Richard A. Navarre | ||||
Chief Financial Officer and | ||||
Executive Vice President of Corporate Development |
8