1376812--3/14/2008--Patriot_Coal

related topics

{gas, price, oil}

{cost, contract, operation}

{customer, product, revenue}

{investment, property, distribution}

{cost, regulation, environmental}

{cost, operation, labor}

{debt, indebtedness, cash}

{operation, natural, condition}

{loss, insurance, financial}

{personnel, key, retain}

{capital, credit, financial}

Peabody shareholders who received Patriot shares at the time of the spin-off and Peabody could be subject to material amounts of taxes if the spin-off is determined to be a taxable transaction. Patriot could be liable to Peabody for adverse tax consequences resulting from certain change in control transactions and therefore could be prevented from engaging in strategic or capital raising transactions. The agreements that we have entered into with Peabody involve conflicts of interest. We did not operate as an independent company prior to the spin-off, and we may experience increased costs which could decrease our overall profitability. Risk Factors Relating to Our Business A decline in coal prices could reduce our revenues and the value of our coal reserves. As our coal supply agreements expire, our revenues and operating profits could suffer if we are unable to renew our agreements or find alternate buyers willing to purchase our coal on comparable terms to those in our contracts. We derive a substantial portion of our revenues from Peabody subsidiaries, and any material failure by these subsidiaries to make payments for coal sales or receive payments from their ultimate customers for coal supplied by us would adversely affect our revenues. The loss of, or significant reduction in, purchases by parties to existing coal supply agreements sourced from our operations could adversely affect our revenues. Any change in coal consumption patterns by steel producers or North American electric power generators resulting in a decrease in the use of coal by those consumers could result in lower prices for our coal, which would reduce our revenues and adversely impact our earnings and the value of our coal reserves. A decrease in the price of metallurgical coal or our production of metallurgical coal could decrease our anticipated profitability. Failures of contractor-operated sources to fulfill the delivery terms of their contracts with us could reduce our profitability. Inaccuracies in our estimates of economically recoverable coal reserves could result in lower than expected revenues, higher than expected costs or decreased profitability. If the coal industry experiences overcapacity in the future, our profitability could be impaired. We could be negatively affected if we fail to maintain satisfactory labor relations. A shortage of skilled labor and qualified managers in our operating regions could pose a risk to achieving improved labor productivity and competitive costs and could adversely affect our profitability. A decrease in the availability or increase in costs of key supplies, capital equipment or commodities could decrease our anticipated profitability. Our coal mining production and delivery are subject to conditions and events beyond our control, which could result in higher operating expenses and/or decreased production and sales and adversely affect our operating results. Defects in title of any leasehold interests in our properties could limit our ability to mine these properties or result in significant unanticipated costs. Our future success depends upon our ability to develop our existing coal reserves and to acquire additional reserves that are economically recoverable. If transportation for our coal becomes unavailable or uneconomic for our customers, our ability to sell coal could suffer. Our operations may depend on the availability of additional financing and access to funds under our credit facility. Failure to obtain or renew surety bonds in a timely manner and on acceptable terms could affect our ability to secure reclamation and employee-related obligations, which could adversely affect our ability to mine coal. If our business does not generate sufficient cash for operations, we may not be able to repay borrowings under our credit facility or fund other liquidity needs. The covenants in our credit facility impose restrictions that could limit our operational and financial flexibility. Our ability to operate our company effectively could be impaired if we lose key personnel or fail to attract qualified personnel. Terrorist attacks and threats, escalation of military activity in response to such attacks or acts of war may negatively affect our business, financial condition and results of operations. Risks Related to Environmental and Other Regulation Our mining operations are extensively regulated, which imposes significant costs on us, and future regulations and developments could increase those costs or limit our ability to produce coal. Our expenditures for postretirement benefit obligations could be materially higher than we have predicted if our actual experience differs from the underlying assumptions. We could be liable for certain retiree healthcare obligations to be assumed by Peabody in connection with the spin-off. Due to our participation in multi-employer pension plans, we may have exposure that extends beyond what our obligations would be with respect to our employees. Our exposure to statutory retiree healthcare costs could be significantly higher than we have estimated. Concerns about the environmental impacts of coal combustion, such as impacts on global climate change, are resulting in increased regulation of coal combustion and could significantly affect demand for our products. We may be unable to obtain and renew permits necessary for our operations, which would reduce our production, cash flows and profitability. Our operations may impact the environment or cause exposure to hazardous substances, and our properties may have environmental contamination, which could result in material liabilities to us.

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1376812--3/14/2008--Patriot_Coal_CORP