##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  [X]
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Year Ended December 31, 2009
 or
 [    ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 
to
 Commission File Number:  001-33466
 PATRIOT COAL CORPORATION
 
  Delaware
    
    20-5622045(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 12312 Olive Boulevard, Suite 400St. Louis, Missouri
    
    63141(Address of principal executive offices)
    
    (Zip Code)
 (314) 275-3600
 
  
 Securities Registered Pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share
    
    New York Stock ExchangePreferred Share Purchase Rights
    
    New York Stock Exchange
 Securities Registered Pursuant to Section 12(g) of the Act:
None
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
    
    Yes þ      No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
    
    Yes
o      No þ
 þ o
 o o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
    
    Yes
o      No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Consolidated Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESEX-10.63EX-10.64EX-10.65EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
   
    
    price volatility and demand, particularly in higher margin products;
    
    geologic, equipment and operational risks associated with mining;
    
    changes in general economic conditions, including coal, power and steel market
conditions;
    
    availability and costs of competing energy resources;
    
    regulatory and court decisions including, but not limited to, those impacting
permits issued pursuant to the Clean
Water Act;
    
    environmental laws and regulations including those affecting our operations and
those affecting our customers
coal usage;
    
    developments in greenhouse gas emission regulation and treatment, including any
development of commercially
successful carbon capture and storage techniques or market-based mechanisms, such as a
cap-and-trade system, for regulating greenhouse gas emissions;
    
    coal mining laws and regulations;
    
    labor availability and relations;
    
    changes in postretirement benefit obligations;
    
    changes to contribution requirements to multi-employer retiree healthcare and pension plans;
    
    reductions of purchases or
deferral of shipments by major customers;
    
    availability and costs of credit, surety bonds and letters of credit;
    
    customer performance and credit risks;
    
    inflationary trends, including those impacting materials used in our business;
    
    worldwide economic and political conditions;
    
    downturns in consumer and company spending;
    
    supplier and contract miner performance, and the availability and cost of key equipment
and commodities;
    
    availability and costs of transportation;
    
    difficulty in implementing our business strategy;
    
    our ability to replace proven and probable coal reserves;
    
    the outcome of commercial negotiations involving sales contracts or other transactions;
    
    our ability to respond to changing customer preferences;
    
    our dependence on Peabody Energy for a significant portion of our revenues;
    
    failure to comply with debt covenants;
    
    the outcome of pending or future litigation;
    
    the effects of mergers, acquisitions and divestitures, including our ability to
successfully integrate mergers and acquisitions;
    
    weather patterns affecting energy demand;
    
    competition in our industry;
    
    interest rate fluctuation;
    
    wars and acts of terrorism or sabotage;
    
    impact of pandemic illness; and
    
    other factors, including those discussed in Legal Proceedings, set forth in Item 3 of
this report.
 2




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##### Table of Contents



PART I
 Unless the context indicates otherwise, all references in this report to Patriot, the
Company, us, we, or our include Patriot Coal Corporation and our subsidiaries (Patriot).
 
 Item 1.
    
    Business.
 Overview
      Mining Operations
  
    
    Appalachia.In southern West
Virginia, we have ten mining
complexes located in Boone, Clay,
Lincoln, Logan and Kanawha counties,
and in northern West Virginia, we
have one complex located in
Monongalia County. As part of a
comprehensive strategic review of
operations upon the acquisition of
Magnum, we idled operations at our
Jupiter mining complex (December
2008) and our Remington mining
complex (March 2009). Additionally,
in response to the weakened coal
markets, we announced the idling of
our Black Oak mine (January 2009),
the deferral of the opening of our Blue
Creek mining complex, and the suspension of our
Samples surface mine (August 2009).
In Appalachia, we sold 25.8 million
tons of coal in the year ended
December 31, 2009. As of December
31, 2009, we controlled 1.2 billion
tons of proven and probable coal
reserves in Appalachia, of which 488
million tons were assigned to
current operations.
    
    Illinois Basin.In the Illinois
Basin, we have three complexes
located in Union and Henderson
counties in western Kentucky. In the
Illinois Basin, we sold 7.0 million
tons of coal in the year ended
December 31, 2009. As of December
31, 2009, we controlled 646 million
tons of proven and probable coal
reserves in the Illinois Basin, of
which 126 million tons were assigned
to current operations.
 3




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Mining
    
    
    
    2009 TonsLocation
    
    Complex
    
    Mine(s)
    
    Method(1)
    
    Met/Steam
    
    Sold(2)Appalachia
    
    Big Mountain
    
    Big Mountain No. 16, Contractor
    
    CM
    
    Steam
    
    
    2,072Blue Creek
    
    Blue Creek No. 1, Blue Creek No. 2
    
    CM
    
    Steam
    
    
    134Campbells Creek
    
    Campbells Creek No. 6, Campbells Creek No. 7
    
    CM
    
    Steam
    
    
    1,051Corridor G
    
    Job 21, Hill Fork
    
    TS, DL
    
    Steam
    
    
    3,565Kanawha Eagle
    
    Eagle, Coalburg No. 1, Coalburg No. 2
    
    CM
    
    Met/Steam
    
    
    1,881Logan County
    
    Guyan
    
    TS
    
    Steam
    
    
    2,500Paint Creek
    
    Samples, Winchester
    
    TS, HW, CM
    
    Met/Steam
    
    
    2,071Panther
    
    Panther
    
    LW, CM
    
    Met/Steam
    
    
    2,023Remington(3)
    
    Stockburg No. 2, Deskins, Wildcat
    
    CM, TS, HW
    
    Steam
    
    
    182Rocklick
    
    Harris No. 1, Black Oak, Contractor
    
    TS, CM
    
    Met/Steam
    
    
    1,658Wells
    
    Rivers Edge, Contractor
    
    CM
    
    Met
    
    
    3,315Federal
    
    Federal No. 2
    
    LW, CM
    
    Steam
    
    
    3,522Purchased coal
    
    N/A
    
    N/A
    
    N/A
    
    
    1,876Subtotal
    
    
    25,850Illinois Basin
    
    Bluegrass
    
    Patriot, Freedom
    
    TS, CM
    
    Steam
    
    
    2,433Dodge Hill
    
    Dodge Hill No. 1
    
    CM
    
    Steam
    
    
    888Highland
    
    Highland No. 9
    
    CM
    
    Steam
    
    
    3,665Subtotal
    
    
    6,986Total
    
    
    32,836
 
 (1)
    
    LW = Longwall, CM = Continuous Miner, TS = Truck-and-Shovel, DL = Dragline, HW = Highwall.(2)
    
    Tons sold, presented in thousands, for each plant were the same as actual annual plant
 production in 2009, subject to stockpile variations.(3)
    
    The Remington mining complex was idled in March 2009. Longwall mining.
 Continuous miner mining.
 Truck-and-shovel/loader mining
 Dragline mining.
 Highwall mining.
 4




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Appalachian Mining Operations
  
 Appalachia
 Big Mountain
  Blue Creek
  Campbells Creek
  Corridor G
  Kanawha Eagle
  5




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Logan County
  Paint Creek
  Panther
  Remington
  Rocklick
  Wells
  6




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Federal
  Illinois Basin Mining Operations
  
 Illinois Basin
 Bluegrass
  Dodge Hill
  Highland
  7




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Customers and Backlog
  Commitments as of December 31, 20092013 and2010
    
    2011
    
    2012
    
    Later
    
    TotalTons (in millions)
    
    
    29.5
    
    
    
    19.9
    
    
    
    11.3
    
    
    
    11.9
    
    
    
    72.6
         8




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Sales and Marketing
  Transportation
   Suppliers
  Competition
   Employees & Labor Relations
   9




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Certain Liabilities
  Asset Retirement Obligations
  Remediation Obligations
  Workers Compensation
  Retiree Healthcare and Pension
     10




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Regulatory Matters
  11




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Mine Safety and Health
      Black Lung
  Mining Control and Reclamation Regulations
  12




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Mine Closure Costs
   Environmental Laws
    13




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Clean Water Act
    Section 404
       14




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National Pollutant Discharge Elimination System
    Clean Air Regulations
  15




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Sulfur Dioxide and Nitrogen Oxide Emissions
  Mercury Emissions
  Particulate Matter
    16




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Ozone
  New Source Review Regulations
 Environmental Defense et
al. v. Duke Energy Corp. et al.
 Regional Haze
  Acid Rain
  State Laws
  Global Climate Change
   17




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Massachusetts v. EPA
      Hazardous Waste
  18




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Toxic Release Reporting
  Federal and State Superfund Statutes
  Additional Information
   New York Stock Exchange Certifications
  19




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Item 1A.
    
    Risk Factors.
 RISK FACTORS
 You should carefully consider the risks described below, together with all of the other
information included in this report, in evaluating our company and our common stock. If any of
the risks described below actually occurs, our business, financial results, financial condition
and stock price could be materially adversely affected.
 Risk Factors Relating to Our Business
 A decline in coal prices could reduce our revenues and the value of our coal reserves.
  Any change in coal consumption patterns, in particular by U.S. electric power generators or
global steel producers, could result in a decrease in the use of coal by those consumers, which
could result in lower prices for our coal, a reduction in our revenues and an adverse impact on
our earnings and the value of our coal reserves.
     20




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Increased competition both within the coal industry, and outside of it, such as competition
from alternative fuel providers, may adversely affect our ability to sell coal, and any excess
production capacity in the industry could put downward pressure on coal prices.
     Our operations are subject to geologic, equipment and operational risks, including events
beyond our control, which could result in higher operating expenses and/or decreased production
and sales and adversely affect our operating results.
     21




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A prolonged shortage of skilled labor and qualified managers in our operating regions could
pose a risk to labor productivity and competitive costs and could adversely affect our
profitability.
  We could be negatively affected if we fail to maintain satisfactory labor relations.
   Our ability to operate our company effectively could be impaired if we lose key personnel
or fail to attract qualified personnel.
  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, and the amount of our
indebtedness could affect our ability to grow and compete.
   Our operations may depend on the availability of additional financing and access to funds
under our credit facility.
  22




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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.
   We could be adversely affected by a decline in the creditworthiness or financial condition
of our customers.
     Prolonged global recessionary conditions could adversely affect our financial condition and
results of operations
    A decrease in the availability or increase in costs of key supplies, capital equipment or
commodities used in our mining operations could decrease our profitability.
  23




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Failures of contractor-operated sources to fulfill the delivery terms of their contracts
with us could reduce our profitability.
  Fluctuations in transportation costs, the availability or reliability of transportation
facilities and our dependence on a single rail carrier for transport from certain of our mining
complexes could affect the demand for our coal or temporarily impair our ability to supply coal
to our customers.
     Our future success depends upon our ability to develop our existing coal reserves and to
acquire additional reserves that are economically recoverable.
   24




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Inaccuracies in our estimates of economically recoverable coal reserves could result in
lower than expected revenues, higher than expected costs or decreased profitability.
   As our coal supply agreements expire, our revenues and operating profits could be
negatively impacted if we are unable to extend existing agreements or enter new long-term supply
agreements due to competition, changing coal purchasing patterns or other variables.
     25




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Any defects in title of leasehold interests in our properties could limit our ability to
mine these properties or could result in significant unanticipated costs.
  The covenants in our credit facility and other debt indentures impose restrictions that
could limit our operational and financial flexibility.
  The ownership and voting interest of Patriot stockholders could be diluted as a result of
the issuance of shares of our common stock to the holders of convertible notes upon conversion.
  The net share settlement feature of our convertible notes may have adverse consequences on
our liquidity.
  Peabody and its shareholders who received Patriot shares at the time of the spin-off could
be subject to material amounts of taxes if the spin-off is determined to be a taxable
transaction.
   26




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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.
   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
 Recent increased focus by regulatory authorities on the effects of surface coal mining on
the environment, the disposal of mining spoil material and surface coal mining permitting may
materially adversely affect us.
   27




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Like many of our competitors, we cannot always completely comply with permit restrictions
relating to the discharge of selenium into surface water, which has led to court challenges and
related orders and settlements, has required us to pay fines and penalties, and may require us
to incur other significant costs and may be difficult to resolve on a timely basis given current
technology.
    New developments in the regulation of greenhouse gas emissions and coal ash could
materially adversely affect our customers demand for coal and our results of operations, cash
flows and financial condition.
     28




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Our mining operations are extensively regulated, which imposes significant costs on us, and
future regulations or violations of regulations could increase those costs or limit our ability
to produce coal.
   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.
    We are involved in legal proceedings that if determined adversely to us, could
significantly impact our profitability, financial position or liquidity.
  29




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If our assumptions regarding our likely future expenses related to employee benefit plans
are incorrect, then expenditures for these benefits could be materially higher than we have
assumed.
  Due to our participation in multi-employer pension plans and statutory retiree healthcare
plans, we may have exposure that extends beyond what our obligations would be with respect to
our employees.
   We could be liable for certain retiree healthcare obligations assumed by Peabody in
connection with the spin-off.
   We have significant reclamation and mine closure obligations. If the assumptions underlying
our accruals are inaccurate, we could be required to expend greater amounts than anticipated.
  
 Item 1B.
    
    Unresolved Staff Comments.
  30




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Item 2.
    
    Properties.
 Coal Reserves
   Proven and ProbableReserves as ofDecember 31, 2009(1)Owned
    
    
    Leased
    
    
    TotalGeographic Region
    
    Tons

    
    Tons

    
    Tons(In millions)Appalachia
    
    
    280
    
    
    
    916
    
    
    
    1,196Illinois Basin
    
    
    380
    
    
    
    266
    
    
    
    646Total proven and probable coal reserves
    
    
    660
    
    
    
    1,182
    
    
    
    1,842
 
 (1)
    
    Reserves have been adjusted to take into account recoverability factors in
producing a saleable product.
  
    
    Proven (Measured) Reserves.Reserves for which (a) quantity is computed from
dimensions defined by outcrops, trenches, workings or drill holes; grade and/or
quality are computed from the results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so close and the geologic character
is so well defined that size, shape, depth and mineral content of coal reserves are
well-established.
    
    Probable (Indicated) Reserves.Reserves for which quantity and grade and/or
quality are computed from information similar to that used for proven (measured)
reserves, but the sites for inspection, sampling and measurement are farther apart
or are otherwise less adequately spaced. The degree of assurance, although lower
than that for proven (measured) reserves, is high enough to assume continuity
between points of observation.
   31




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PRODUCTION AND ASSIGNED RESERVES (1)
 Production
    
    
    
    
    
    
    Sulfur Content(2)
    
    
    
    
    
    
    As of December 31, 2009>1.2 to 2.5≤1.2 lbs.
    
    
    lbs.
    
    
    >2.5 lbs.Year
    
    
    Year
    
    
    Year
    
    
    
    
    
    
    Sulfur
    
    
    Sulfur
    
    
    Sulfur
    
    
    As
    
    
    AssignedEnded
    
    
    Ended
    
    
    Ended
    
    
    
    
    
    
    Dioxide
    
    
    Dioxide
    
    
    Dioxide
    
    
    Received
    
    
    Proven andGeographic Region/
    
    Dec 31,
    
    
    Dec 31,
    
    
    Dec 31,
    
    
    Type of
    
    
    per
    
    
    per
    
    
    per
    
    
    Btu per
    
    
    Probable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Under-Mining Complex
    
    2009
    
    
    2008
    
    
    2007
    
    
    Coal
    
    
    Million Btu
    
    
    Million Btu
    
    
    Million Btu
    
    
    Pound(3)
    
    
    Reserves
    
    
    Owned
    
    
    Leased
    
    
    Surface
    
    
    ground(Tons in millions)Appalachia:Big Mountain
    
    
    2.0
    
    
    
    1.9
    
    
    
    1.6
    
    
    Steam
    
    
    9
    
    
    
    17
    
    
    
    
    
    
    
    12,200
    
    
    
    26
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    26Blue Creek
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    Steam
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    12,000
    
    
    
    15
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Campbells Creek
    
    
    1.0
    
    
    
    0.6
    
    
    
    
    
    
    Steam
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    12,200
    
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Corridor G
    
    
    3.6
    
    
    
    1.6
    
    
    
    
    
    
    Steam
    
    
    5
    
    
    
    71
    
    
    
    1
    
    
    
    12,500
    
    
    
    77
    
    
    
    3
    
    
    
    74
    
    
    
    53
    
    
    
    24Jupiter
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    Steam
    
    
    2
    
    
    
    17
    
    
    
    
    
    
    
    12,500
    
    
    
    19
    
    
    
    
    
    
    
    19
    
    
    
    4
    
    
    
    15Kanawha Eagle
    
    
    1.9
    
    
    
    2.1
    
    
    
    2.1
    
    
    Met/Steam
    
    
    46
    
    
    
    5
    
    
    
    39
    
    
    
    13,100
    
    
    
    90
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    90Logan County
    
    
    2.6
    
    
    
    1.0
    
    
    
    
    
    
    Met/Steam
    
    
    21
    
    
    
    4
    
    
    
    
    
    
    
    12,900
    
    
    
    25
    
    
    
    8
    
    
    
    17
    
    
    
    15
    
    
    
    10Paint Creek
    
    
    2.1
    
    
    
    1.1
    
    
    
    
    
    
    Met/Steam
    
    
    8
    
    
    
    23
    
    
    
    
    
    
    
    13,300
    
    
    
    31
    
    
    
    
    
    
    
    31
    
    
    
    4
    
    
    
    27Panther
    
    
    2.1
    
    
    
    0.6
    
    
    
    
    
    
    Met/Steam
    
    
    44
    
    
    
    24
    
    
    
    
    
    
    
    13,500
    
    
    
    68
    
    
    
    1
    
    
    
    67
    
    
    
    
    
    
    
    68Remington
    
    
    0.2
    
    
    
    0.3
    
    
    
    
    
    
    Steam
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    12,200
    
    
    
    6
    
    
    
    
    
    
    
    6
    
    
    
    1
    
    
    
    5Rocklick
    
    
    1.5
    
    
    
    2.6
    
    
    
    3.1
    
    
    Met/Steam
    
    
    6
    
    
    
    21
    
    
    
    
    
    
    
    12,800
    
    
    
    27
    
    
    
    
    
    
    
    27
    
    
    
    5
    
    
    
    22Wells
    
    
    3.4
    
    
    
    3.4
    
    
    
    3.2
    
    
    Met/Steam
    
    
    24
    
    
    
    23
    
    
    
    
    
    
    
    13,400
    
    
    
    47
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    47Federal
    
    
    3.8
    
    
    
    3.1
    
    
    
    4.0
    
    
    Steam
    
    
    
    
    
    
    12
    
    
    
    42
    
    
    
    13,300
    
    
    
    54
    
    
    
    48
    
    
    
    6
    
    
    
    
    
    
    
    54Total
    
    
    24.3
    
    
    
    18.5
    
    
    
    14.0
    
    
    
    
    
    
    
    169
    
    
    
    237
    
    
    
    82
    
    
    
    
    
    
    
    488
    
    
    
    60
    
    
    
    428
    
    
    
    82
    
    
    
    406Illinois Basin:Bluegrass
    
    
    2.5
    
    
    
    2.8
    
    
    
    2.5
    
    
    Steam
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    11,100
    
    
    
    24
    
    
    
    
    
    
    
    24
    
    
    
    3
    
    
    
    21Dodge Hill
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.1
    
    
    Steam
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    12,700
    
    
    
    19
    
    
    
    4
    
    
    
    15
    
    
    
    
    
    
    
    19Highland
    
    
    3.7
    
    
    
    3.9
    
    
    
    3.9
    
    
    Steam
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    11,300
    
    
    
    83
    
    
    
    28
    
    
    
    55
    
    
    
    
    
    
    
    83Total
    
    
    7.1
    
    
    
    7.7
    
    
    
    7.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126
    
    
    
    
    
    
    
    126
    
    
    
    32
    
    
    
    94
    
    
    
    3
    
    
    
    123Total
    
    
    31.4
    
    
    
    26.2
    
    
    
    21.5
    
    
    
    
    
    
    
    169
    
    
    
    237
    
    
    
    208
    
    
    
    
    
    
    
    614
    
    
    
    92
    
    
    
    522
    
    
    
    85
    
    
    
    529
 The following chart provides a summary of the amount of our proven and probable coal
reserves in each U.S. state, the predominant type of coal mined in the applicable location, our
property interest in the reserves and other characteristics of the facilities.
 ASSIGNED AND UNASSIGNED PROVEN AND PROBABLE COAL RESERVES (1)  AS OF DECEMBER 31, 2009
 Sulfur Content(2)>1.2 to 2.5
    
    
    >2.5 lbs.≤1.2 lbs.
    
    
    lbs.
    
    
    SulfurSulfur
    
    
    Sulfur
    
    
    DioxideProven
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dioxide
    
    
    Dioxide
    
    
    per
    
    
    Asand
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per
    
    
    per
    
    
    Million Btu
    
    
    ReceivedTotal
    
    
    Tons
    
    
    Probable
    
    
    Proven
    
    
    Probable
    
    
    Type of
    
    
    Million Btu
    
    
    Million Btu
    
    
    (Non-
    
    
    Btu per
    
    
    Reserve Control
    
    
    Mining MethodCoal Seam Location
    
    Assigned(1)
    
    
    Unassigned(1)
    
    
    Reserves
    
    
    (Measured)
    
    
    (Indicated)
    
    
    Coal
    
    
    (Phase II)
    
    
    (Phase I)
    
    
    Compliance)
    
    
    Pound(3)
    
    
    Owned
    
    
    Leased
    
    
    Surface
    
    
    Underground(Tons in millions)Appalachia:Ohio
    
    
    
    
    
    
    26
    
    
    
    26
    
    
    
    19
    
    
    
    7
    
    
    Steam
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    10,900
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    26West Virginia
    
    
    488
    
    
    
    682
    
    
    
    1,170
    
    
    
    793
    
    
    
    377
    
    
    Met/Steam
    
    
    243
    
    
    
    671
    
    
    
    256
    
    
    
    13,000
    
    
    
    254
    
    
    
    916
    
    
    
    189
    
    
    
    981Total
    
    
    488
    
    
    
    708
    
    
    
    1,196
    
    
    
    812
    
    
    
    384
    
    
    
    
    
    
    
    243
    
    
    
    671
    
    
    
    282
    
    
    
    
    
    
    
    280
    
    
    
    916
    
    
    
    189
    
    
    
    1,007Illinois Basin:Illinois
    
    
    
    
    
    
    237
    
    
    
    237
    
    
    
    94
    
    
    
    143
    
    
    Steam
    
    
    4
    
    
    
    38
    
    
    
    195
    
    
    
    10,800
    
    
    
    235
    
    
    
    2
    
    
    
    1
    
    
    
    236Kentucky
    
    
    126
    
    
    
    283
    
    
    
    409
    
    
    
    212
    
    
    
    197
    
    
    Steam
    
    
    
    
    
    
    
    
    
    
    409
    
    
    
    11,400
    
    
    
    145
    
    
    
    264
    
    
    
    34
    
    
    
    375Total
    
    
    126
    
    
    
    520
    
    
    
    646
    
    
    
    306
    
    
    
    340
    
    
    
    
    
    
    
    4
    
    
    
    38
    
    
    
    604
    
    
    
    
    
    
    
    380
    
    
    
    266
    
    
    
    35
    
    
    
    611Total proven and
probable
    
    
    614
    
    
    
    1,228
    
    
    
    1,842
    
    
    
    1,118
    
    
    
    724
    
    
    
    
    
    
    
    247
    
    
    
    709
    
    
    
    886
    
    
    
    
    
    
    
    660
    
    
    
    1,182
    
    
    
    224
    
    
    
    1,618
 
 1)
    
    Assigned reserves
represent recoverable coal
reserves that we have
committed to mine at
locations operating as of
December 31, 2009.
Unassigned reserves
represent coal at suspended
locations and coal that has
not been committed. These
reserves would require new
mine development, mining
equipment or plant
facilities before
operations could begin on the property.2)
    
    Compliance coal is
coal which, when burned,
emits 1.2 pounds or less of
sulfur dioxide per million
Btu and complies with the
Clean Air Act. Electricity
generators are able to use
coal that exceeds these
specifications by using
emissions reduction
technology, using emissions
allowance credits or
blending higher sulfur coal with lower sulfur coal.3)
    
    As-received Btu per
pound includes the weight
of moisture in the coal on
an as-sold basis. The
average moisture content
used in the determination
of as-received Btu in
Appalachia was 7%. The
moisture content used in
the determination of
as-received Btu in Illinois
Basin ranged from 9% to 14%. 33




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##### Table of Contents



Item 3.
    
    Legal Proceedings.
  Environmental Claims and Litigation
  Clean Water Act Permit Issues
   EPA Consent Decree
   Apogee Coal Company, LLC (Apogee)
   34




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##### Table of Contents



Hobet Mining, LLC (Hobet)
     35




---



##### Table of Contents



Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
   Flood Litigation
 2001 Flood Litigation
   2004 Flood Litigation
    36




---



##### Table of Contents



Other Litigation and Investigations
       37




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  Executive Officers
  Name
    
    Age
    
    PositionsRichard M. Whiting
    
    
    55
    
    
    Chief Executive Officer & DirectorIrl F. Engelhardt
    
    
    63
    
    
    Chairman of the Board of Directors, Executive
Advisor and DirectorPaul H. Vining
    
    
    55
    
    
    President & Chief Operating OfficerMark N. Schroeder
    
    
    53
    
    
    Senior Vice President & Chief Financial OfficerCharles A. Ebetino, Jr.
    
    
    57
    
    
    Senior Vice President  Corporate DevelopmentJoseph W. Bean
    
    
    47
    
    
    Senior Vice President  Law & Administration,
General Counsel & Corporate SecretaryRobert W. Bennett
    
    
    47
    
    
    Senior Vice President & Chief Marketing Officer
 Richard M. Whiting
 Chief Executive Officer & Director
   Irl F. Engelhardt
 Chairman of the Board of Directors, Executive Advisor & Director
  Paul H. Vining
 President & Chief Operating Officer
  38




---



##### Table of Contents



Mark N. Schroeder
 Senior Vice President & Chief Financial Officer
   Charles A. Ebetino, Jr.
 Senior Vice President  Corporate Development
   Joseph W. Bean
 Senior Vice President  Law & Administration, General Counsel & Corporate Secretary
   Robert W. Bennett
 Senior Vice President & Chief Marketing Officer
  39




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##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
    High
    
    Low2007Fourth Quarter
    
    $
    21.50
    
    
    $
    13.542008First Quarter
    
    $
    28.89
    
    
    $
    16.14Second Quarter
    
    
    82.23
    
    
    
    23.13Third Quarter
    
    
    77.74
    
    
    
    24.09Fourth Quarter
    
    
    28.45
    
    
    
    5.242009First Quarter
    
    $
    9.00
    
    
    $
    2.76Second Quarter
    
    
    10.90
    
    
    
    3.51Third Quarter
    
    
    14.12
    
    
    
    4.97Fourth Quarter
    
    
    17.24
    
    
    
    10.21
 Dividend Policy
  40




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##### Table of Contents



Stock Performance Graph
  COMPARISON OF 26 MONTH CUMULATIVE TOTAL RETURN*
 
 
  11/07
    
    
    
    12/07
    
    
    
    3/08
    
    
    
    6/08
    
    
    
    9/08
    
    
    
    12/08
    
    
    
    3/09
    
    
    
    6/09
    
    
    
    9/09
    
    
    
    12/09Patriot Coal
Corporation
    
    
    
    100.00
    
    
    
    
    111.31
    
    
    
    
    125.25
    
    
    
    
    408.77
    
    
    
    
    154.93
    
    
    
    
    33.33
    
    
    
    
    19.79
    
    
    
    
    34.03
    
    
    
    
    62.72
    
    
    
    
    82.45S&P Smallcap 600
    
    
    
    100.00
    
    
    
    
    91.84
    
    
    
    
    84.99
    
    
    
    
    85.33
    
    
    
    
    84.60
    
    
    
    
    63.30
    
    
    
    
    52.64
    
    
    
    
    63.73
    
    
    
    
    75.62
    
    
    
    
    79.49Custom Composite
    
    
    
    100.00
    
    
    
    
    127.81
    
    
    
    
    120.67
    
    
    
    
    220.88
    
    
    
    
    100.33
    
    
    
    
    50.58
    
    
    
    
    48.19
    
    
    
    
    63.21
    
    
    
    
    83.08
    
    
    
    
    97.81
  41




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##### Table of Contents



Item 6. Selected Consolidated Financial Data .
   42




---



##### Table of Contents



Year Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands, except for share and per share data)Results of Operations Data:RevenuesSales
    
    $
    1,995,667
    
    
    $
    1,630,873
    
    
    $
    1,069,316
    
    
    $
    1,142,521
    
    
    $
    960,901Other revenues
    
    
    49,616
    
    
    
    23,749
    
    
    
    4,046
    
    
    
    5,398
    
    
    
    17,376Total revenues
    
    
    2,045,283
    
    
    
    1,654,622
    
    
    
    1,073,362
    
    
    
    1,147,919
    
    
    
    978,277Costs and expensesOperating costs and expenses
    
    
    1,893,419
    
    
    
    1,607,746
    
    
    
    1,109,315
    
    
    
    1,051,932
    
    
    
    869,163Depreciation, depletion and
amortization
    
    
    205,339
    
    
    
    125,356
    
    
    
    85,640
    
    
    
    86,458
    
    
    
    65,972Reclamation and remediation
obligation expense
    
    
    35,116
    
    
    
    19,260
    
    
    
    20,144
    
    
    
    24,282
    
    
    
    15,572Sales contract accretion
    
    
    (298,572
    )
    
    
    (279,402
    )
    
    
    -
    
    
    
    -
    
    
    
    -Restructuring and impairment charge
    
    
    20,157
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Selling and administrative expenses
    
    
    48,732
    
    
    
    38,607
    
    
    
    45,137
    
    
    
    47,909
    
    
    
    57,123Other operating (income) expense:Net gain on disposal or exchange
of assets(1)
    
    
    (7,215
    )
    
    
    (7,004
    )
    
    
    (81,458
    )
    
    
    (78,631
    )
    
    
    (57,042
    )Loss (income) from equity affiliates(2)
    
    
    (398
    )
    
    
    915
    
    
    
    (63
    )
    
    
    (60
    )
    
    
    (15,578
    )Operating profit (loss)
    
    
    148,705
    
    
    
    149,144
    
    
    
    (105,353
    )
    
    
    16,029
    
    
    
    43,067Interest expense
    
    
    38,108
    
    
    
    23,648
    
    
    
    8,337
    
    
    
    11,419
    
    
    
    9,833Interest income
    
    
    (16,646
    )
    
    
    (17,232
    )
    
    
    (11,543
    )
    
    
    (1,417
    )
    
    
    (1,553
    )Income (loss) before income taxes
    
    
    127,243
    
    
    
    142,728
    
    
    
    (102,147
    )
    
    
    6,027
    
    
    
    34,787Income tax provision
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    8,350
    
    
    
    -Net income (loss)
    
    
    127,243
    
    
    
    142,728
    
    
    
    (102,147
    )
    
    
    (2,323
    )
    
    
    34,787Net income attributable to
noncontrolling interest(2)
    
    
    -
    
    
    
    -
    
    
    
    4,721
    
    
    
    11,169
    
    
    
    -Net income (loss) attributable to Patriot
    
    
    127,243
    
    
    
    142,728
    
    
    
    (106,868
    )
    
    
    (13,492
    )
    
    
    34,787Effect of noncontrolling interest
purchase arrangement
    
    
    -
    
    
    
    -
    
    
    
    (15,667
    )
    
    
    -
    
    
    
    -Net income (loss) attributable to
common stockholders
    
    $
    127,243
    
    
    $
    142,728
    
    
    $
    (122,535
    )
    
    $
    (13,492
    )
    
    $
    34,787Earnings (loss) per share, basic
    
    $
    1.50
    
    
    $
    2.23
    
    
    $
    (2.29
    )
    
    
    N/A
    
    
    
    N/AEarnings (loss) per share, diluted
    
    $
    1.49
    
    
    $
    2.21
    
    
    $
    (2.29
    )
    
    
    N/A
    
    
    
    N/AWeighted average shares
outstanding - basic
    
    
    84,660,998
    
    
    
    64,080,998
    
    
    
    53,511,478
    
    
    
    N/A
    
    
    
    N/AWeighted average shares
outstanding - diluted
    
    
    85,424,502
    
    
    
    64,625,911
    
    
    
    53,546,116
    
    
    
    N/A
    
    
    
    N/ABalance Sheet Data (at period end):Total assets
    
    $
    3,618,163
    
    
    $
    3,622,320
    
    
    $
    1,199,837
    
    
    $
    1,178,181
    
    
    $
    1,113,058Total liabilities(3)
    
    
    2,682,669
    
    
    
    2,782,139
    
    
    
    1,117,521
    
    
    
    1,851,855
    
    
    
    1,511,810Total long-term debt, less current maturities
    
    
    197,951
    
    
    
    176,123
    
    
    
    11,438
    
    
    
    20,722
    
    
    
    11,459Total stockholders equity (deficit)
    
    
    935,494
    
    
    
    840,181
    
    
    
    82,316
    
    
    
    (673,674
    )
    
    
    (398,752
    )
 43




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##### Table of Contents



Year Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands, except for share and per share data)Other Data:Tons sold (in millions and unaudited)
    
    
    32.8
    
    
    
    28.5
    
    
    
    22.1
    
    
    
    24.3
    
    
    
    23.8Net cash provided by (used in):Operating activities
    
    $
    39,611
    
    
    $
    63,426
    
    
    $
    (79,699
    )
    
    $
    (20,741
    )
    
    $
    17,823Investing activities
    
    
    (77,593
    )
    
    
    (138,665
    )
    
    
    54,721
    
    
    
    1,993
    
    
    
    (29,529
    )Financing activities
    
    
    62,208
    
    
    
    72,128
    
    
    
    30,563
    
    
    
    18,627
    
    
    
    11,459Adjusted EBITDA(4) (unaudited)
    
    
    110,745
    
    
    
    44,238
    
    
    
    431
    
    
    
    126,769
    
    
    
    124,611Past mining obligation payments(5) (unaudited)
    
    
    129,060
    
    
    
    101,746
    
    
    
    144,811
    
    
    
    150,672
    
    
    
    154,479Additions to property, plant, equipment
and mine development
    
    
    78,263
    
    
    
    121,388
    
    
    
    55,594
    
    
    
    80,224
    
    
    
    75,151Acquisitions, net
    
    
    -
    
    
    
    9,566
    
    
    
    47,733
    
    
    
    44,538
    
    
    
    -
 
 (1)
    
    Net gain on disposal or
exchange of assets included
a $37.4 million gain from an
exchange of coal reserves as
part of a dispute settlement
with a third-party supplier
in 2005, gains of
$66.6 million from sales of
coal reserves and surface
land in 2006 and gains of
$78.5 million from the sales
of coal reserves and surface
land in 2007.(2)
    
    In March 2006, we increased our 49% interest in KE
Ventures, LLC to an effective 73.9% interest and began
combining KE Ventures, LLCs results with ours effective
January 1, 2006. In 2007, we purchased the remaining interest.
Prior to 2006, KE Ventures, LLC was accounted for on an equity
basis and included in income from equity affiliates in our
consolidated statements of operations.(3)
    
    On December 31, 2006, we increased noncurrent liabilities
and decreased total invested capital (accumulated other
comprehensive loss) by $322.1 million as a result of a then
newly adopted authoritative guidance related to employers
accounting for postretirement benefit plans.(4)
    
    Adjusted EBITDA is defined as net income (loss) before
deducting net interest income and expense; income taxes;
reclamation and remediation obligation expense; depreciation,
depletion and amortization; restructuring and impairment
charge; and net sales contract accretion. Net sales contract
accretion represents contract accretion excluding back-to-back
coal purchase and sales contracts. The contract accretion on
the back-to-back coal purchase and sales contracts reflects the
accretion related to certain coal purchase and sales contracts
existing prior to July 23, 2008, whereby Magnum purchased coal
from third parties to fulfill tonnage commitments on sales
contracts. Adjusted EBITDA is used by management to measure
operating performance, and management also believes it is a
useful indicator of our ability to meet debt service and
capital expenditure requirements. The term Adjusted EBITDA does
not purport to be an alternative to operating income, net
income or cash flows from operating activities as determined in
accordance with generally accepted accounting principles as a
measure of profitability or liquidity. Because Adjusted EBITDA
is not calculated identically by all companies, our calculation
may not be comparable to similarly titled measures of other
companies.(5)
    
    Past mining obligation payments represents cash payments
relating to our postretirement benefit plans, work-related
injuries and illnesses obligations and multi-employer retiree
healthcare and pension plans. 44




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##### Table of Contents



Year Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands)Net income (loss)
    
    $
    127,243
    
    
    $
    142,728
    
    
    $
    (102,147
    )
    
    $
    (2,323
    )
    
    $
    34,787Depreciation, depletion and
amortization
    
    
    205,339
    
    
    
    125,356
    
    
    
    85,640
    
    
    
    86,458
    
    
    
    65,972Sales contract accretion, net(1)
    
    
    (298,572
    )
    
    
    (249,522
    )
    
    
    -
    
    
    
    -
    
    
    
    -Asset retirement obligation expense
    
    
    35,116
    
    
    
    19,260
    
    
    
    20,144
    
    
    
    24,282
    
    
    
    15,572Restructuring and impairment
    
    
    20,157
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Interest expense
    
    
    38,108
    
    
    
    23,648
    
    
    
    8,337
    
    
    
    11,419
    
    
    
    9,833Interest income
    
    
    (16,646
    )
    
    
    (17,232
    )
    
    
    (11,543
    )
    
    
    (1,417
    )
    
    
    (1,553
    )Income tax provision
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    8,350
    
    
    
    -Adjusted EBITDA
    
    $
    110,745
    
    
    $
    44,238
    
    
    $
    431
    
    
    $
    126,769
    
    
    $
    124,611
 
 (1)
    
    Net sales contract accretion resulted
from the below market coal sales and purchase
contracts acquired in the Magnum acquisition
that were recorded at fair value in purchase
accounting. The net liability generated
from applying fair value to these contracts
is being accreted over the life of the
contracts as the coal is shipped. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
      45




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##### Table of Contents



Results of Operations
 Segment Adjusted EBITDA
  Geologic Conditions
  Year ended December 31, 2009 compared to year ended December 31, 2008
 Summary
     46




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##### Table of Contents



Segment Results of Operations
 Year Ended December 31,
    
    Increase (Decrease)2009
    
    2008
    
    Tons/$
    
    %(Dollars and tons in thousands, except per ton amounts)Tons SoldAppalachia
    
    
    25,850
    
    
    
    20,654
    
    
    
    5,196
    
    
    
    25.2
    %Illinois Basin
    
    
    6,986
    
    
    
    7,866
    
    
    
    (880
    )
    
    
    (11.2
    )%Total Tons Sold
    
    
    32,836
    
    
    
    28,520
    
    
    
    4,316
    
    
    
    15.1
    %Average sales price per ton soldAppalachia
    
    $
    66.79
    
    
    $
    65.23
    
    
    $
    1.56
    
    
    
    2.4
    %Illinois Basin
    
    
    38.52
    
    
    
    36.06
    
    
    
    2.46
    
    
    
    6.8
    %RevenueAppalachia Mining Operations
    
    $
    1,726,588
    
    
    $
    1,347,230
    
    
    $
    379,358
    
    
    
    28.2
    %Illinois Basin Mining Operations
    
    
    269,079
    
    
    
    283,643
    
    
    
    (14,564
    )
    
    
    (5.1
    )%Appalachia Other
    
    
    49,616
    
    
    
    23,749
    
    
    
    25,867
    
    
    
    108.9
    %Total Revenues
    
    $
    2,045,283
    
    
    $
    1,654,622
    
    
    $
    390,661
    
    
    
    23.6
    %Segment Operating Costs and Expenses(1)Appalachia Mining Operations and Other
    
    $
    1,481,831
    
    
    $
    1,197,985
    
    
    $
    283,846
    
    
    
    23.7
    %Illinois Basin Mining Operations
    
    
    260,529
    
    
    
    270,488
    
    
    
    (9,959
    )
    
    
    (3.7
    )%Total Segment Operating Costs and Expenses
    
    $
    1,742,360
    
    
    $
    1,468,473
    
    
    $
    273,887
    
    
    
    18.7
    %Segment Adjusted EBITDAAppalachia Mining Operations and Other
    
    $
    294,373
    
    
    $
    172,994
    
    
    $
    121,379
    
    
    
    70.2
    %Illinois Basin Mining Operations
    
    
    8,550
    
    
    
    13,155
    
    
    
    (4,605
    )
    
    
    (35.0
    )%Total Segment Adjusted EBITDA
    
    $
    302,923
    
    
    $
    186,149
    
    
    $
    116,774
    
    
    
    62.7
    %
 
 (1) Segment Operating Costs and Expenses represent consolidated operating costs and
expenses of $1,893.0 million and $1,608.7 million less past mining obligation expense of $150.7 million and $110.3 million for the years
ended December 31, 2009 and 2008, respectively, as described below, and less back-to-back
contract accretion of $29.9 million for the year ended December 31, 2008. Tons Sold and Revenues
     47




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Segment Operating Costs and Expenses
    Segment Adjusted EBITDA
   Net Income
 Increase (Decrease) toYear Ended December 31,
    
    Income2009
    
    2008
    
    $
    
    %(Dollars in thousands)Segment Adjusted EBITDA
    
    $
    302,923
    
    
    $
    186,149
    
    
    $
    116,774
    
    
    
    62.7
    %Corporate and Other:Past mining obligation expense
    
    
    (150,661
    )
    
    
    (110,308
    )
    
    
    (40,353
    )
    
    
    (36.6
    )%Net gain on disposal or exchange of assets
    
    
    7,215
    
    
    
    7,004
    
    
    
    211
    
    
    
    3.0
    %Selling and administrative expenses
    
    
    (48,732
    )
    
    
    (38,607
    )
    
    
    (10,125
    )
    
    
    (26.2
    )%Total Corporate and Other
    
    
    (192,178
    )
    
    
    (141,911
    )
    
    
    (50,267
    )
    
    
    (35.4
    )%Depreciation, depletion and amortization
    
    
    (205,339
    )
    
    
    (125,356
    )
    
    
    (79,983
    )
    
    
    (63.8
    )%Reclamation and remediation obligation expense
    
    
    (35,116
    )
    
    
    (19,260
    )
    
    
    (15,856
    )
    
    
    (82.3
    )%Sales contract accretion, net
    
    
    298,572
    
    
    
    249,522
    
    
    
    49,050
    
    
    
    19.7
    %Restructuring and impairment charge
    
    
    (20,157
    )
    
    
    -
    
    
    
    (20,157
    )
    
    
    N/AInterest expense
    
    
    (38,108
    )
    
    
    (23,648
    )
    
    
    (14,460
    )
    
    
    (61.1
    )%Interest income
    
    
    16,646
    
    
    
    17,232
    
    
    
    (586
    )
    
    
    (3.4
    )%Net income
    
    $
    127,243
    
    
    $
    142,728
    
    
    $
    (15,485
    )
    
    
    (10.8
    )%
 Past Mining Obligation Expense
  Selling and Administrative Expenses
  48




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Depreciation, Depletion and Amortization
  Reclamation and Remediation Obligation Expense
  Sales Contract Accretion
  Restructuring and Impairment Charge
  Interest Expense
  Income Tax Provision
  Basis of Presentation Related to Periods Prior to the Spin-Off from Peabody
  Selling and Administrative Expenses
  Interest Expense
  Income Tax Provision
  49




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Year ended December 31, 2008 compared to year ended December 31, 2007
 Summary
   Segment Results of Operations
 Year Ended December 31,
    
    Increase (Decrease)2008
    
    2007
    
    Tons/$
    
    %(Dollars and tons in thousands, except per ton amounts)Tons SoldAppalachia
    
    
    20,654
    
    
    
    14,432
    
    
    
    6,222
    
    
    
    43.1
    %Illinois Basin
    
    
    7,866
    
    
    
    7,711
    
    
    
    155
    
    
    
    2.0
    %Total Tons Sold
    
    
    28,520
    
    
    
    22,143
    
    
    
    6,377
    
    
    
    28.8
    %Average sales price per ton soldAppalachia
    
    $
    65.23
    
    
    $
    56.62
    
    
    $
    8.61
    
    
    
    15.2
    %Illinois Basin
    
    
    36.06
    
    
    
    32.71
    
    
    
    3.35
    
    
    
    10.2
    %RevenueAppalachia Mining Operations
    
    $
    1,347,230
    
    
    $
    817,070
    
    
    $
    530,160
    
    
    
    64.9
    %Illinois Basin Mining Operations
    
    
    283,643
    
    
    
    252,246
    
    
    
    31,397
    
    
    
    12.4
    %Appalachia Other
    
    
    23,749
    
    
    
    4,046
    
    
    
    19,703
    
    
    
    487.0
    %Total Revenues
    
    $
    1,654,622
    
    
    $
    1,073,362
    
    
    $
    581,260
    
    
    
    54.2
    %Segment Operating Costs and Expenses(1)Appalachia Mining Operations and Other
    
    $
    1,197,985
    
    
    $
    731,266
    
    
    $
    466,719
    
    
    
    63.8
    %Illinois Basin Mining Operations
    
    
    270,488
    
    
    
    240,384
    
    
    
    30,104
    
    
    
    12.5
    %Total Segment Operating Costs and Expenses
    
    $
    1,468,473
    
    
    $
    971,650
    
    
    $
    496,823
    
    
    
    51.1
    %Segment Adjusted EBITDAAppalachia Mining Operations and Other
    
    $
    172,994
    
    
    $
    89,850
    
    
    $
    83,144
    
    
    
    92.5
    %Illinois Basin Mining Operations
    
    
    13,155
    
    
    
    11,862
    
    
    
    1,293
    
    
    
    10.9
    %Total Segment Adjusted EBITDA
    
    $
    186,149
    
    
    $
    101,712
    
    
    $
    84,437
    
    
    
    83.0
    %
 
 (1) Segment Operating Costs and Expenses represent consolidated operating costs and
expenses of $1,608.7 million and $1,109.3 million less past mining obligation expense of $110.3 million and $137.6 million for the years
ended December 31, 2008 and 2007, respectively, as described below, and less back-to-back
contract accretion of $29.9 million for the year ended December 31, 2008. 50




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Tons Sold and Revenues
      Segment Operating Costs and Expenses
    Segment Adjusted EBITDA
   51




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Net Income (Loss)
 Increase (Decrease) toYear Ended December 31,
    
    Income2008
    
    2007
    
    $
    
    %(Dollars in thousands)Segment Adjusted EBITDA
    
    $
    186,149
    
    
    $
    101,712
    
    
    $
    84,437
    
    
    
    83.0
    %Corporate and Other:Past mining obligation expense
    
    
    (110,308
    )
    
    
    (137,602
    )
    
    
    27,294
    
    
    
    19.8
    %Net gain on disposal or exchange of assets
    
    
    7,004
    
    
    
    81,458
    
    
    
    (74,454
    )
    
    
    (91.4
    )%Selling and administrative expenses
    
    
    (38,607
    )
    
    
    (45,137
    )
    
    
    6,530
    
    
    
    14.5
    %Total corporate and Other
    
    
    (141,911
    )
    
    
    (101,281
    )
    
    
    (40,630
    )
    
    
    (40.1
    )%Depreciation, depletion and amortization
    
    
    (125,356
    )
    
    
    (85,640
    )
    
    
    (39,716
    )
    
    
    (46.4
    )%Sales contract accretion, net
    
    
    249,522
    
    
    
    -
    
    
    
    249,522
    
    
    
    N/AReclamation and remediation obligation expense
    
    
    (19,260
    )
    
    
    (20,144
    )
    
    
    884
    
    
    
    4.4
    %Interest expense:Peabody
    
    
    -
    
    
    
    (4,969
    )
    
    
    4,969
    
    
    
    N/AThird-party
    
    
    (23,648
    )
    
    
    (3,368
    )
    
    
    (20,280
    )
    
    
    (602.1
    )%Interest income
    
    
    17,232
    
    
    
    11,543
    
    
    
    5,689
    
    
    
    49.3
    %Net income (loss)
    
    
    142,728
    
    
    
    (102,147
    )
    
    
    244,875
    
    
    
    239.7
    %Net income attributable to noncontrolling interest
    
    
    -
    
    
    
    (4,721
    )
    
    
    4,721
    
    
    
    N/ANet income (loss) attributable to Patriot
    
    
    142,728
    
    
    
    (106,868
    )
    
    
    249,596
    
    
    
    233.6
    %Effect of
noncontrolling interest purchase arrangement
    
    
    -
    
    
    
    15,667
    
    
    
    (15,667
    )
    
    
    N/ANet income (loss) attributable to common stockholders
    
    $
    142,728
    
    
    $
    (122,535
    )
    
    $
    265,263
    
    
    
    216.5
    %
 Past Mining Obligation Expense
  Net Gain on Disposal or Exchange of Assets
  Selling and Administrative Expenses
  Depreciation, Depletion and Amortization
  Sales Contract Accretion
  Reclamation and Remediation Obligation Expense
  52




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Interest Expense (Income)
   Income Tax Provision
  Noncontrolling Interest
  Effect of Noncontrolling Interest Purchase Arrangement
  Outlook
 Market
   53




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Patriot Operations
          Critical Accounting Policies and Estimates
  54




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##### Table of Contents



Employee-Related Liabilities
     +1.0%
    
    -1.0%(Dollars in thousands)Effect on total service and interest cost components
    
    $
    9,306
    
    
    $
    (7,758
    )Effect on (gain)/loss amortization component
    
    
    30,011
    
    
    
    (25,951
    )Effect on total postretirement benefit obligation
    
    
    160,756
    
    
    
    (138,189
    )
  +0.5%
    
    -0.5%(Dollars in thousands)Effect on total service and interest cost components
    
    $
    898
    
    
    $
    (1,193
    )Effect on (gain)/loss amortization component
    
    
    (7,672
    )
    
    
    7,829Effect on total postretirement benefit obligation
    
    
    (76,052
    )
    
    
    81,034
 Asset Retirement Obligations
  Remediation Obligations
  55




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##### Table of Contents



Income Taxes
    Revenue Recognition
   Derivatives
  Share-Based Compensation
  56




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##### Table of Contents



Impairment of Long-Lived Assets
  Business Combinations
  Liquidity and Capital Resources
      Credit Facility
  57




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##### Table of Contents



Private Convertible Notes Issuance
      58




---



##### Table of Contents



Bridge Loan Facility
  Promissory Notes
  Other
  59




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##### Table of Contents



Contractual Obligations
 Payments Due by Year as of December 31, 2009Within 1
    
    
    
    
    
    
    
    
    
    
    After 5Year
    
    2-3 Years
    
    4-5 Years
    
    Years(Dollars in thousands)Long-term debt obligations (principal and cash interest)
    
    $
    17,468
    
    
    $
    24,159
    
    
    $
    213,850
    
    
    $
    20,700Operating lease obligations
    
    
    40,443
    
    
    
    59,218
    
    
    
    18,630
    
    
    
    419Coal reserve lease and royalty obligations
    
    
    28,191
    
    
    
    43,612
    
    
    
    36,984
    
    
    
    145,283Other long-term liabilities (1)
    
    
    122,467
    
    
    
    294,201
    
    
    
    277,839
    
    
    
    1,392,335Total contractual cash obligations
    
    $
    208,569
    
    
    $
    421,190
    
    
    $
    547,303
    
    
    $
    1,558,737
 
 (1) Represents long-term liabilities relating to our postretirement benefit
plans, work-related injuries and illnesses and mine reclamation and remediation and end-of-mine
closure costs.  Off-Balance Sheet Arrangements and Guarantees
   Workers
    
    
    RetireeReclamation
    
    
    Lease
    
    
    Compensation
    
    
    HealthObligations
    
    Obligations
    
    Obligations
    
    Obligations
    
    Other(1)
    
    Total(Dollars in thousands)Surety bonds
    
    $
    135,986
    
    
    $
    -
    
    
    $
    44
    
    
    $
    -
    
    
    $
    16,786
    
    
    $
    152,816Letters of credit
    
    
    85,184
    
    
    
    10,287
    
    
    
    201,034
    
    
    
    50,487
    
    
    
    5,142
    
    
    
    352,134Third-party
guarantees
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,819
    
    
    
    1,819$
    221,170
    
    
    $
    10,287
    
    
    $
    201,078
    
    
    $
    50,487
    
    
    $
    23,747
    
    
    $
    506,769
 
 (1)
    Includes collateral for surety companies and bank guarantees, road maintenance and performance guarantees.     60




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##### Table of Contents



Newly Adopted Accounting Pronouncements
 FASB Accounting Standards Codification
 TM
 Debt
  Earnings Per Share
  Business Combinations
  Consolidation
  61




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##### Table of Contents



Fair Value Measurements and Disclosures
  Subsequent Events
  Pending Adoption of Recent Accounting Pronouncements
 Transfers of Financial Assets
  Consolidation
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 Commodity Price Risk
    Credit Risk
  62




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
   63




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##### Table of Contents



Managements Report on Internal Control Over Financial Reporting
   Internal Control  Integrated Framework
  /s/  Richard M. WhitingRichard M. WhitingChief Executive Officer  64




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##### Table of Contents



Managements Report on Internal Control Over Financial Reporting
   Internal Control  Integrated Framework
  /s/  Mark N. SchroederMark N. SchroederChief Financial Officer  65




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Managements Report on Internal Control Over
Financial Reporting
    .
   
 66




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##### Table of Contents



Item 9B. Other Information.
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
   Equity Compensation Plan Information
 (a)
    
    
    
    
    
    
    Number of SecuritiesNumber of Securities
    
    
    
    
    
    
    Remaining Availableto be Issued
    
    
    Weighted-Average
    
    
    for Future IssuanceUpon Exercise of
    
    
    Exercise Price of
    
    
    Under Equity CompensationOutstanding Options,
    
    
    Outstanding Options,
    
    
    Plans (Excluding SecuritiesPlan
Category
    
    Warrants and Rights
    
    Warrants and Rights
    
    Reflected in Column (a))Equity compensation plans
approved by security
holders
    
    
    4,411,783
    
    
    $
    15.92
    
    
    
    788,217Equity compensation
plans not
approved by security
holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    4,411,783
    
    
    $
    15.92
    
    
    
    788,217
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accounting Fees and Services.
  67




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
  Financial Statements.
  PageReports of Independent Registered Public Accounting Firms
    
    
    F-1Consolidated Statements of Operations - Years Ended December 31, 2009, 2008 and 2007
    
    
    F-2Consolidated Balance Sheets - December 31, 2009 and December 31, 2008
    
    
    F-3Consolidated Statements of Cash Flows - Years Ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statements of Changes in Stockholders Equity - Years Ended December 31, 2009, 2008 and 2007
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6
 Financial Statement Schedule.
  PageValuation and Qualifying Accounts
    
    
    F-47
  Exhibits.
  68




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SIGNATURES
  PATRIOT COAL CORPORATION/s/ RICHARD M. WHITINGRichard M. WhitingChief Executive Officer and Director   Signature
    
    Title
    
    Date/s/ RICHARD M. WHITING
Richard M. Whiting
    
    Chief Executive Officer and
Director (principal executive officer)
    
    February 24, 2010/s/ MARK N. SCHROEDER
Mark N. Schroeder
    
    Senior Vice President and Chief
Financial Officer (principal
financial and accounting officer)
    
    February 24, 2010/s/ IRL F. ENGELHARDT
    
    Chairman of the Board and Director
    
    February 24, 2010Irl F. Engelhardt/s/ J. JOE ADORJAN
    
    Director
    
    February 24, 2010J. Joe Adorjan/s/ B. R. BROWN
    
    Director
    
    February 24, 2010B. R. Brown/s/ JOHN F. ERHARD
    
    Director
    
    February 24, 2010John F. Erhard/s/ MICHAEL P. JOHNSON
    
    Director
    
    February 24, 2010Michael P. Johnson/s/ JOHN E. LUSHEFSKI
    
    Director
    
    February 24, 2010John E. Lushefski/s/ MICHAEL M. SCHARF
    
    Director
    
    February 24, 2010Michael M. Scharf/s/ ROBB E. TURNER
    
    Director
    
    February 24, 2010Robb E. Turner/s/ ROBERT O. VIETS
    
    Director
    
    February 24, 2010Robert O. Viets
 69




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit2.1
    
    Separation Agreement, Plan of Reorganization and Distribution, dated October 22, 2007,
between Peabody Energy Corporation and Patriot Coal Corporation (Incorporated by reference to
Exhibit 2.1 of the Registrants Current Report on Form 8-K, filed on October 25, 2007).2.2
    
    Agreement and Plan of Merger, dated as of April 2, 2008, by and among Magnum Coal Company,
Patriot Coal Corporation, Colt Merger Corporation, and ArcLight Energy Partners Fund I, L.P. and
ArcLight Energy Partners Fund II, L.P., acting jointly, as Stockholder Representative (Incorporated
by reference to Exhibit 2.1 of the Registrants Current Report on Form 8-K, filed on April 8, 2008).3.1
    
    Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit
3.1 of the Registrants Current Report on Form 8-K, filed on October 25, 2007).3.2
    
    Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.2 of the
Registrants Current Report on Form 8-K, filed on October 25, 2007).4.1
    
    Rights Agreement, dated October 22, 2007, between Patriot Coal Corporation and
American Stock Transfer & Trust Company (Incorporated by reference to Exhibit 4.1 of the
Registrants Current Report on Form 8-K, filed on October 25, 2007).4.2
    
    Certificate of Designations of Series A Junior Participating Preferred Stock (Incorporated by
reference to Exhibit 4.1 of the Registrants Current Report on Form 8-K, filed on November 6, 2007).4.3
    
    First Amendment to Rights Agreement, dated as of April 2, 2008, to the Rights Agreement, dated
as of October 22, 2007 between Patriot Coal Corporation and American Stock Transfer & Trust
Company, as Rights Agent (Incorporated by reference to Exhibit 4.1 of the Registrants Current
Report on Form 8-K, filed on April 8, 2008).4.4
    
    Indenture dated as of May 28, 2008, by and between Patriot Coal Corporation, as Issuer, and U.S.
Bank National Association, as trustee (including form of 3.25% Convertible Senior Notes due 2013)
(Incorporated by reference to the Registrants Current Report on Form 8-K, dated May 29, 2008).10.1
    
    Tax Separation Agreement, dated October 22, 2007, between Peabody Energy Corporation and
Patriot Coal Corporation (Incorporated by reference to Exhibit 10.2 of the Registrants Current Report
on Form 8-K, filed on October 25, 2007).10.2
    
    Employee Matters Agreement, dated October 22, 2007, between Peabody Energy Corporation and
Patriot Coal Corporation (Incorporated by reference to Exhibit 10.3 of the Registrants Current Report
on Form 8-K, filed on October 25, 2007).10.3
    
    Coal Act Liabilities Assumption Agreement, dated October 22, 2007, among Patriot Coal Corporation,
Peabody Holding Company, LLC and Peabody Energy Corporation (Incorporated by reference to
Exhibit 10.9 of the Registrants Current Report on Form 8-K, filed on October 25, 2007).10.4
    
    NBCWA Liabilities Assumption Agreement, dated October 22, 2007, among Patriot Coal Corporation,
Peabody Holding Company, LLC, Peabody Coal Company, LLC and Peabody Energy Corporation
(Incorporated by reference to Exhibit 10.10 of the Registrants Current Report on Form 8-K, filed on
October 25, 2007).10.5
    
    Salaried Employee Liabilities Assumption Agreement, dated October 22, 2007, among Patriot Coal
Corporation, Peabody Holding Company, LLC, Peabody Coal Company, LLC and Peabody Energy
Corporation (Incorporated by reference to Exhibit 10.11 of the Registrants Current Report on Form 8-K,
filed on October 25, 2007).10.6
    
    Administrative Services Agreement, dated October 22, 2007, between Patriot Coal Corporation, Peabody
Holding Company, LLC and Peabody Energy Corporation (Incorporated by reference to Exhibit 10.12
of the Registrants Current Report on Form 8-K, filed on October 25, 2007).10.7
    
    Master Equipment Sublease Agreement, dated October 22, 2007, between Patriot Leasing Company LLC
and PEC Equipment Company, LLC (Incorporated by reference to Exhibit 10.13 of the Registrants
Current Report on Form 8-K, filed on October 25, 2007).10.8
    
    Software License Agreement, dated October 22, 2007, between Patriot Coal Corporation and Peabody
Energy Corporation (Incorporated by reference to Exhibit 10.14 of the Registrants Current Report on
Form 8-K, filed on October 25, 2007).
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.9
    
    Throughput and Storage Agreement, dated October 22, 2007, among Peabody Terminals, LLC, James
River Coal Terminal, LLC and Patriot Coal Sales LLC (Incorporated by reference to Exhibit 10.15 of the
Registrants Current Report on Form 8-K, filed on October 25, 2007).10.10
    
    Conveyance and Assumption Agreement, dated October 22, 2007, among PEC Equipment Company,
LLC, Central States Coal Reserves of Indiana, LLC, Central States Coal Reserves of Illinois, LLC, Cyprus
Creek Land Company and Peabody Coal Company, LLC (Incorporated by reference to Exhibit 10.16 of
the Registrants Current Report on Form 8-K, filed on October 25, 2007).10.11
    
    Amendment No. 1 to the Separation Agreement, Plan of Reorganization and Distribution, dated
November 1, 2007, between Peabody Energy Corporation and Patriot Coal Corporation. (Incorporated
by reference to Exhibit 10.42 of the Registrants Current Report on Form 10-K, filed on March 14, 2008).10.12
    
    Coal Supply Agreement, dated October 22, 2007, between Patriot Coal Sales LLC and COALSALES II,
LLC (Incorporated by reference to Exhibit 10.4 of the Registrants Current Report on Form 8-K, filed
on October 25, 2007).10.13
    
    Amendment 1 to Coal Supply Agreement between Patriot Coal LLC and COALSALES II LLC, dated
March 28, 2008. (Incorporated by reference to Exhibit 10.1 of the Registrants Current Report on Form
10-Q, filed on May 14, 2008).10.14
    
    Coal Supply Agreement, dated October 22, 2007, between Patriot Coal Sales LLC and COALSALES
LLC (Incorporated by reference to Exhibit 10.5 of the Registrants Current Report on Form 8-K, filed
on October 25, 2007).10.15
    
    Master Coal Supply Agreement, dated October 22, 2007, between Patriot Coal Sales LLC and
COALSALES LLC (Incorporated by reference to Exhibit 10.6 of the Registrants Current Report on
Form 8-K, filed on October 25, 2007).10.16
    
    Amendment 1 to Master Coal Supply Agreement between Patriot Coal Sales LLC and COALSALES LLC,
dated February 26, 2008. (Incorporated by reference to Exhibit 10.43 of the Registrants Current Report
on Form 10-K, filed on March 14, 2008).10.17
    
    Master Coal Supply Agreement, dated October 22, 2007, between Patriot Coal Sales LLC and
COALSALES II LLC (Incorporated by reference to Exhibit 10.7 of the Registrants Current Report on
Form 8-K, filed on October 25, 2007).10.18
    
    Amendment 1 to Master Coal Supply Agreement between Patriot Coal Sales LLC and COALSALES II
LLC, dated February 26, 2008. (Incorporated by reference to Exhibit 10.44 of the Registrants Current
Report on Form 10-K, filed on March 14, 2008).10.19
    
    Master Coal Supply Agreement, dated October 22, 2007, between Patriot Coal Sales LLC and
COALTRADE INTERNATIONAL, LLC (Incorporated by reference to Exhibit 10.8 of the Registrants
Current Report on Form 8-K, filed on October 25, 2007).10.20
    
    Amendment 1 to Master Coal Supply Agreement between Patriot Coal Sales LLC and COALTRADE
International LLC, dated February 26, 2008. (Incorporated by reference to Exhibit 10.45 of the Registrants
Current Report on Form 10-K, filed on March 14, 2008).10.21
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and J. Joe
Adorjan (Incorporated by reference to Exhibit 10.3 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.22
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and B. R. Brown
(Incorporated by reference to Exhibit 10.4 of the Registrants Current Report on Form 8-K, filed on
November 6, 2007).10.23
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and John E.
Lushefski (Incorporated by reference to Exhibit 10.5 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.24
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and Michael M.
Scharf (Incorporated by reference to Exhibit 10.6 of the Registrants Current Report on Form 8-K, filed
on November 6, 2007).
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.25
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and Robert O.
Viets (Incorporated by reference to Exhibit 10.7 of the Registrants Current Report on Form 8-K, filed
on November 6, 2007).10.26
    
    Indemnification Agreement, dated July 24, 2008, between Patriot Coal Corporation and Robb E. Turner
(Incorporated by reference to the Registrants Current Report on Form 8-K, filed on July 28, 2008).10.27
    
    Indemnification Agreement, dated July 24, 2008, between Patriot Coal Corporation and John E. Erhard
(Incorporated by reference to the Registrants Current Report on Form 8-K, filed on July 28, 2008).10.28
    
    Indemnification Agreement, dated July 24, 2008, between Patriot Coal Corporation and Michael P.
Johnson (Incorporated by reference to the Registrants Current Report on Form 8-K, filed on
July 28, 2008).10.29
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and Irl F.
Engelhardt (Incorporated by reference to Exhibit 10.2 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.30
    
    Employment Agreement, dated October 31, 2007, between Patriot Coal Corporation and Irl F. Engelhardt
(Incorporated by reference to Exhibit 10.14 of the Registrants Current Report on Form 8-K, filed on
November 6, 2007).10.31
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and Richard M.
Whiting (Incorporated by reference to Exhibit 10.1 of the Registrants Current Report on Form 8-K, filed
on November 6, 2007).10.32
    
    Employment Agreement, dated October 31, 2007, between Patriot Coal Corporation and Richard M.
Whiting (Incorporated by reference to Exhibit 10.9 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.33
    
    Indemnification Agreement, dated November 1, 2007, between Patriot Coal Corporation and Mark N.
Schroeder (Incorporated by reference to Exhibit 10.8 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.34
    
    Employment Agreement, dated October 31, 2007, between Patriot Coal Corporation and Mark N.
Schroeder (Incorporated by reference to Exhibit 10.10 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.35
    
    Employment Agreement, dated October 31, 2007, between Patriot Coal Corporation and Charles A.
Ebetino, Jr. (Incorporated by reference to Exhibit 10.12 of the Registrants Current Report on Form 8-K,
filed on November 6, 2007).10.36
    
    Amendment to Employment Agreement between Patriot Coal Corporation and Charles A. Ebetino, Jr.
(Incorporated by reference to the Registrants Current Report on Form 8-K, filed on February 6, 2009).10.37
    
    Employment Agreement, dated October 31, 2007, between Patriot Coal Corporation and Joseph W.
Bean (Incorporated by reference to Exhibit 10.13 of the Registrants Current Report on Form 8-K, filed
on November 6, 2007).10.38
    
    Amendment to Employment Agreement between Patriot Coal Corporation and Joseph W. Bean
(Incorporated by reference to the Registrants Current Report on Form 8-K, filed on February 6, 2009).10.39
    
    Employment Agreement, made and entered into as of May 8, 2008, by and between Paul H. Vining and
Patriot Coal Corporation (Incorporated by reference to the Registrants Current Report on Form 8-K,
filed on May 13, 2008).10.40
    
    Letter Agreement between Arclight Energy Partners Fund I, L.P., Arclight Energy Partners
Fund II, L.P. and Paul Vining dated August 7, 2009. (Incorporated by reference to Exhibit 10.1 of
the Registrants Current Report on Form 10-Q, filed on August 7, 2009).10.41
    
    Patriot Coal Corporation Credit Agreement, dated October 31, 2007, among Patriot Coal Corporation,
Bank of America, N.A., as administrative agent, L/C Issuer and Swing Line Lender and the lenders from
time to time party thereto (Incorporated by reference to Exhibit 10.1 of the Registrants Current Report
on Form 8-K, filed on October 31, 2007).
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.42
    
    Patriot Coal Corporation Pledge and Security Agreement, dated October 31, 2007, among Patriot Coal
Corporation, certain subsidiaries of Patriot Coal Corporation and Bank of America, N.A. (Incorporated
by reference to Exhibit 10.2 of the Registrants Current Report on Form 8-K, filed on October 31, 2007).10.43
    
    Amendment No. 1, dated as of April 2, 2008, to the Credit Agreement dated as of October 31, 2007, among
Patriot Coal Corporation, Bank of America, N.A., as administrative agent, L/C Issuer and Swing Line
Lender, and the lenders party thereto (Incorporated by reference to the Registrants Current Report on
Form 8-K, filed on April 8, 2008).10.44
    
    Amendment No. 2, dated as of May 19, 2008, to the Credit Agreement dated as of October 31, 2007,
among Patriot Coal Corporation, Bank of America, N.A., as administrative agent, L/C Issuer and Swing
Line Lender, and the lenders party thereto. (Incorporated by reference to the Registrants Current
Report on Form 8-K, filed on May 23, 2008).10.45
    
    Amendment No. 3, dated as of September 25, 2008, to the Credit Agreement dated as of October 31, 2007,
among Patriot Coal Corporation, Bank of America, N.A., as administrative agent, L/C Issuer and Swing
Line Lender, and the lenders party thereto. (Incorporated by reference to the Registrants Current
Report on Form 10-Q, filed on November 13, 2008)10.46
    
    Form of Registration Rights Agreement among Patriot Coal Corporation, ArcLight Energy Partners
Fund I, L.P. and ArcLight Energy Partners Fund II, L.P. (Incorporated by reference to Exhibit 10.1 of the
Registrants Current Report on Form 8-K, filed on April 8, 2008).10.47
    
    Bridge Facility Commitment Letter dated April 2, 2008, among Patriot Coal Corporation, ArcLight Energy
Partners Fund I, L.P. and ArcLight Energy Partners Fund II, L.P. (Incorporated by reference to Exhibit
10.2 of the Registrants Current Report on Form 8-K, filed on April 8, 2008).10.48
    
    Form of Support Agreement, dated as of April 2, 2008, between Patriot Coal Corporation and certain
stockholders of Magnum Coal Company (Incorporated by reference to the Registrants Current Report
on Form 8-K, filed on April 8, 2008).10.49
    
    Voting and Standstill Agreement, dated as of April 2, 2008, among Patriot Coal Corporation, the
stockholders whose names appear on the signature page thereto, ArcLight Energy Partners Fund I, L.P.
and ArcLight Energy Partners Fund II, L.P., acting jointly, as stockholder representative (Incorporated
by reference to the Registrants Current Report on Form 8-K, dated April 8, 2008).10.50
    
    Purchase Agreement, dated May 21, 2008 by and among Patriot Coal Corporation and Citigroup Global
Markets Inc. and Lehman Brothers Inc. (Incorporated by reference to the Registrants Current Report
on Form 8-K, filed on May 23, 2008).10.51
    
    Patriot Coal Corporation 2007 Long-Term Equity Incentive Plan (Incorporated by reference to Exhibit
10.17 of the Registrants Current Report on Form 8-K, filed on October 25, 2007).10.52
    
    Patriot Coal Corporation Management Annual Incentive Compensation Plan (Incorporated by reference
to Exhibit 10.19 of the Registrants Current Report on Form 8-K, filed on October 25, 2007).10.53
    
    Form of Non-Qualified Stock Option Agreement under the Patriot Coal Corporation 2007 Long-Term
Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 of the Registrants Current Report on
Form 8-K, filed on October 29, 2007).10.54
    
    Form of Restricted Stock Unit Agreement under the Patriot Coal Corporation 2007 Long-Term Equity
Incentive Plan (Incorporated by reference to Exhibit 10.1 of the Registrants Current Report on Form 8-K,
filed on October 29, 2007).10.55
    
    Form of Restricted Stock Award Agreement under the Patriot Coal Corporation 2007 Long-Term Equity
Incentive Plan (Incorporated by reference to Exhibit 10.3 of the Registrants Current Report on Form 8-K,
filed on October 29, 2007).10.56
    
    Form of Restricted Stock Award Agreement for use in connection with awards under the
Patriot Coal Corporation 2007 Long-Term Equity Incentive Plan. (Incorporated by reference to
Exhibit 10.1 of the Registrants Current Report on Form 8-K, filed on January 4, 2010).10.57
    
    Form of Deferred Stock Unit Award Agreement under the Patriot Coal Corporation 2007 Long-Term
Equity Incentive Plan (Incorporated by reference to Exhibit 10.4 of the Registrants Current Report on
Form 8-K, filed on October 29, 2007).
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.58
    
    Form of Performance-Based Restricted Stock Units Award Agreement for use in connection with awards
under the Patriot Coal Corporation 2007 Long-Term Equity Incentive Plan (Incorporated by reference to
the Registrants Current Report on Form 8-K, filed on January 30, 2009).10.59
    
    Form of Non-Qualified Stock Option Agreement for use in connection with awards under the Patriot Coal
Corporation 2007 Long-Term Equity Incentive Plan (Incorporated by reference to the Registrants Current
Report on Form 8-K, filed on January 30, 2009).10.60
    
    Patriot Coal Corporation 401(k) Retirement Plan (Incorporated by reference to Exhibit 10.15 of the
Registrants Current Report on Form 8-K, filed on November 6, 2007).10.61
    
    Patriot Coal Corporation Supplemental 401(k) Retirement Plan (Incorporated by reference to Exhibit 10.16
of the Registrants Current Report on Form 8-K, filed on November 6, 2007).10.62
    
    Patriot Coal Corporation Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.18 of
the Registrants Current Report on Form 8-K, filed on October 25, 2007).10.63*
    
    First Amendment to the Patriot Coal Corporation Employee Stock Purchase Plan.10.64*
    
    Second Amendment to the Patriot Coal Corporation Employee Stock Purchase Plan.10.65*
    
    Third Amendment to the Patriot Coal Corporation Employee Stock Purchase Plan.21.1*
    
    List of Subsidiaries23.1*
    
    Consent of Independent Registered Accounting Firm31.1*
    
    Certification of periodic financial report by Patriot Coal Corporations Chief Executive Officer
pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of periodic financial report by Patriot Coal Corporations Chief Financial Officer
pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by Patriot Coal Corporations Chief Executive
Officer.32.2*
    
    Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by Patriot Coal Corporations Chief Financial
Officer.99.1
    
    Patriot Coal Corporation Rights Adjustment Certificate dated July 28, 2008 (Incorporated by
reference to Exhibit 99.4 of the Registrants Current Report on Form 8-K, filed on July 28, 2008).
 
 *
    
    Filed herewith. 5




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Report of Independent Registered Public Accounting Firm
 
       
 F-1




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##### Table of Contents



PATRIOT COAL CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,2009
    
    2008
    
    2007(Dollars in thousands, except share and per share data)RevenuesSales
    
    $
    1,995,667
    
    
    $
    1,630,873
    
    
    $
    1,069,316Other revenues
    
    
    49,616
    
    
    
    23,749
    
    
    
    4,046Total revenues
    
    
    2,045,283
    
    
    
    1,654,622
    
    
    
    1,073,362Costs and expensesOperating costs and expenses
    
    
    1,893,021
    
    
    
    1,608,661
    
    
    
    1,109,252Depreciation, depletion and amortization
    
    
    205,339
    
    
    
    125,356
    
    
    
    85,640Reclamation and remediation obligation expense
    
    
    35,116
    
    
    
    19,260
    
    
    
    20,144Sales contract accretion
    
    
    (298,572
    )
    
    
    (279,402
    )
    
    
    -Restructuring and impairment charge
    
    
    20,157
    
    
    
    -
    
    
    
    -Selling and administrative expenses
    
    
    48,732
    
    
    
    38,607
    
    
    
    45,137Net gain on disposal or exchange of assets
    
    
    (7,215
    )
    
    
    (7,004
    )
    
    
    (81,458
    )Operating profit (loss)
    
    
    148,705
    
    
    
    149,144
    
    
    
    (105,353
    )Interest expense
    
    
    38,108
    
    
    
    23,648
    
    
    
    8,337Interest income
    
    
    (16,646
    )
    
    
    (17,232
    )
    
    
    (11,543
    )Net income (loss)
    
    
    127,243
    
    
    
    142,728
    
    
    
    (102,147
    )Net income attributable to noncontrolling interest
    
    
    -
    
    
    
    -
    
    
    
    4,721Net income (loss) attributable to Patriot
    
    
    127,243
    
    
    
    142,728
    
    
    
    (106,868
    )Effect of noncontrolling interest purchase arrangement
    
    
    -
    
    
    
    -
    
    
    
    (15,667
    )Net income (loss) attributable to common stockholders
    
    $
    127,243
    
    
    $
    142,728
    
    
    $
    (122,535
    )Weighted average shares outstanding:Basic
    
    
    84,660,998
    
    
    
    64,080,998
    
    
    
    53,511,478Effect of dilutive securities
    
    
    763,504
    
    
    
    544,913
    
    
    
    34,638Diluted
    
    
    85,424,502
    
    
    
    64,625,911
    
    
    
    53,546,116Basic earnings per share:Net income (loss) attributable to Patriot
    
    $
    1.50
    
    
    $
    2.23
    
    
    $
    (2.00
    )Effect of noncontrolling interest purchase arrangement
    
    
    -
    
    
    
    -
    
    
    
    (0.29
    )Net income (loss) attributable to common stockholders
    
    $
    1.50
    
    
    $
    2.23
    
    
    $
    (2.29
    )Diluted earnings per share:Net income (loss) attributable to Patriot
    
    $
    1.49
    
    
    $
    2.21
    
    
    $
    (2.00
    )Effect of noncontrolling interest purchase arrangement
    
    
    -
    
    
    
    -
    
    
    
    (0.29
    )Net income (loss) attributable to common stockholders
    
    $
    1.49
    
    
    $
    2.21
    
    
    $
    (2.29
    )
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##### Table of Contents



PATRIOT COAL CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    2008(Dollars in thousands, except share data)ASSETSCurrent assetsCash and cash equivalents
    
    $
    27,098
    
    
    $
    2,872Accounts receivable and other, net of allowance for doubtful accounts of
$141 and $540 at December 31, 2009 and 2008, respectively
    
    
    188,897
    
    
    
    163,556Inventories
    
    
    81,188
    
    
    
    80,953Below market purchase contracts acquired
    
    
    694
    
    
    
    8,543Prepaid expenses and other current assets
    
    
    13,672
    
    
    
    12,529Total current assets
    
    
    311,549
    
    
    
    268,453Property, plant, equipment and mine developmentLand and coal interests
    
    
    2,864,225
    
    
    
    2,652,224Buildings and improvements
    
    
    396,449
    
    
    
    390,119Machinery and equipment
    
    
    631,615
    
    
    
    658,699Less accumulated depreciation, depletion and amortization
    
    
    (731,035
    )
    
    
    (540,366
    )Property, plant, equipment and mine development, net
    
    
    3,161,254
    
    
    
    3,160,676Notes receivable
    
    
    109,137
    
    
    
    131,066Investments and other assets
    
    
    36,223
    
    
    
    62,125Total assets
    
    $
    3,618,163
    
    
    $
    3,622,320LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of debt
    
    $
    8,042
    
    
    $
    28,170Trade accounts payable and accrued expenses
    
    
    406,351
    
    
    
    413,790Below market sales contracts acquired
    
    
    150,441
    
    
    
    324,407Total current liabilities
    
    
    564,834
    
    
    
    766,367Long-term debt, less current maturities
    
    
    197,951
    
    
    
    176,123Asset retirement obligations
    
    
    244,518
    
    
    
    224,180Workers compensation obligations
    
    
    193,719
    
    
    
    188,180Accrued postretirement benefit costs
    
    
    1,169,981
    
    
    
    1,003,254Obligation to industry fund
    
    
    42,197
    
    
    
    42,571Below market sales contracts acquired, noncurrent
    
    
    156,120
    
    
    
    316,707Other noncurrent liabilities
    
    
    113,349
    
    
    
    64,757Total liabilities
    
    
    2,682,669
    
    
    
    2,782,139Stockholders equityCommon stock ($0.01 par value; 100,000,000 shares authorized; 90,319,939
and 77,383,199 shares issued and outstanding at December 31, 2009 and
2008, respectively)
    
    
    903
    
    
    
    774Preferred stock ($0.01 par value; 10,000,000 shares authorized; no shares
outstanding at December 31, 2009 and December 31, 2008)
    
    
    -
    
    
    
    -Series A Junior Participating Preferred Stock ($0.01 par value; 1,000,000
shares
authorized; no shares issued and outstanding at December 31, 2009 and 2008)
    
    
    -
    
    
    
    -Additional paid-in capital
    
    
    947,159
    
    
    
    842,323Retained earnings
    
    
    236,608
    
    
    
    109,365Accumulated other comprehensive loss
    
    
    (249,176
    )
    
    
    (112,281
    )Total stockholders equity
    
    
    935,494
    
    
    
    840,181Total liabilities and stockholders equity
    
    $
    3,618,163
    
    
    $
    3,622,320
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##### Table of Contents



PATRIOT COAL CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2009
    
    2008
    
    2007(Dollars in thousands)Cash Flows From Operating ActivitiesNet income (loss)
    
    $
    127,243
    
    
    $
    142,728
    
    
    $
    (102,147
    )Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation, depletion and amortization
    
    
    205,339
    
    
    
    125,356
    
    
    
    85,640Sales contract accretion
    
    
    (298,572
    )
    
    
    (279,402
    )
    
    
    -Impairment charge
    
    
    12,949
    
    
    
    -
    
    
    
    -Net gain on disposal or exchange of assets
    
    
    (7,215
    )
    
    
    (7,004
    )
    
    
    (81,458
    )Stock-based compensation expense
    
    
    13,852
    
    
    
    8,778
    
    
    
    1,299Changes in current assets and liabilities:Accounts receivable
    
    
    (3,565
    )
    
    
    60,699
    
    
    
    (19,058
    )Inventories
    
    
    (6,530
    )
    
    
    3,693
    
    
    
    3,655Other current assets
    
    
    903
    
    
    
    (1,498
    )
    
    
    790Accounts payable and accrued expenses
    
    
    (38,867
    )
    
    
    (5,697
    )
    
    
    10,828Interest on notes receivable
    
    
    (14,030
    )
    
    
    (13,113
    )
    
    
    (10,013
    )Reclamation and remediation obligations
    
    
    14,988
    
    
    
    12,719
    
    
    
    4,473Workers compensation obligations
    
    
    4,470
    
    
    
    (5,953
    )
    
    
    6,654Accrued postretirement benefit costs
    
    
    26,248
    
    
    
    15,577
    
    
    
    22,264Obligation to industry fund
    
    
    (3,019
    )
    
    
    (3,412
    )
    
    
    7,286Other, net
    
    
    5,417
    
    
    
    9,955
    
    
    
    (9,912
    )Net cash provided by (used in) operating activities
    
    
    39,611
    
    
    
    63,426
    
    
    
    (79,699
    )Cash Flows From Investing ActivitiesAdditions to property, plant, equipment and mine development
    
    
    (78,263
    )
    
    
    (121,388
    )
    
    
    (55,594
    )Additions to advance mining royalties
    
    
    (16,997
    )
    
    
    (11,981
    )
    
    
    (3,964
    )Investment in joint ventures
    
    
    -
    
    
    
    (16,365
    )
    
    
    -Cash acquired in business combination
    
    
    -
    
    
    
    21,015
    
    
    
    -Acquisitions
    
    
    -
    
    
    
    (9,566
    )
    
    
    (47,733
    )Proceeds from notes receivable
    
    
    11,000
    
    
    
    -
    
    
    
    -Proceeds from disposal or exchange of assets
    
    
    5,513
    
    
    
    2,077
    
    
    
    29,426Net change in receivables from former affiliates
    
    
    -
    
    
    
    -
    
    
    
    132,586Other
    
    
    1,154
    
    
    
    (2,457
    )
    
    
    -Net cash provided by (used in) investing activities
    
    
    (77,593
    )
    
    
    (138,665
    )
    
    
    54,721Cash Flows From Financing ActivitiesProceeds from equity offering, net of costs
    
    
    89,077
    
    
    
    -
    
    
    
    -Short-term debt borrowings (payments)
    
    
    (23,000
    )
    
    
    23,000
    
    
    
    -Long-term debt payments
    
    
    (5,905
    )
    
    
    (2,684
    )
    
    
    (8,358
    )Convertible notes proceeds
    
    
    -
    
    
    
    200,000
    
    
    
    -Termination of Magnum debt facility
    
    
    -
    
    
    
    (136,816
    )
    
    
    -Contribution from former Parent
    
    
    -
    
    
    
    -
    
    
    
    43,647Deferred financing costs
    
    
    -
    
    
    
    (10,906
    )
    
    
    (4,726
    )Common stock issuance fees
    
    
    -
    
    
    
    (1,468
    )
    
    
    -Proceeds from employee stock purchases
    
    
    2,036
    
    
    
    1,002
    
    
    
    -Net cash provided by financing activities
    
    
    62,208
    
    
    
    72,128
    
    
    
    30,563Net increase (decrease) in cash and cash equivalents
    
    
    24,226
    
    
    
    (3,111
    )
    
    
    5,585Cash and cash equivalents at beginning of period
    
    
    2,872
    
    
    
    5,983
    
    
    
    398Cash and cash equivalents at end of period
    
    $
    27,098
    
    
    $
    2,872
    
    
    $
    5,983
 F-4




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##### Table of Contents



PATRIOT COAL CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 AccumulatedAdditional
    
    
    Retained
    
    
    Other
    
    
    FormerCommon
    
    
    Paid-in
    
    
    Earnings
    
    
    Comprehensive
    
    
    Parents
    
    
    NoncontrollingStock
    
    Capital
    
    (Deficit)
    
    Loss
    
    Equity
    
    Interest
    
    Total(Dollars in thousands)December 31, 2006
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    (322,121
    )
    
    $
    (367,706
    )
    
    $
    16,153
    
    
    $
    (673,674
    )Net loss
    
    
    -
    
    
    
    -
    
    
    
    (33,363
    )
    
    
    -
    
    
    
    (73,505
    )
    
    
    4,721
    
    
    
    (102,147
    )Increase in investment in KE
Ventures, LLC from 
74% to 100%
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (19,825
    )
    
    
    (19,825
    )Dividends paid to noncontrolling
interest in KE 
Ventures, LLC
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,049
    )
    
    
    (1,049
    )Postretirement plans and workers
compensation obligations (net of
taxes of $0):Changes in accumulated actuarial
loss
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    91,709
    
    
    
    -
    
    
    
    -
    
    
    
    91,709Changes in prior service cost
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (8,962
    )
    
    
    -
    
    
    
    -
    
    
    
    (8,962
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,274
    )Contributions from former Parent
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    13,647
    
    
    
    -
    
    
    
    13,647Consummation of spin-off transaction
on 
October 31, 2007
    
    
    532
    
    
    
    187,884
    
    
    
    -
    
    
    
    165,334
    
    
    
    427,564
    
    
    
    -
    
    
    
    781,314Stock-based compensation
    
    
    -
    
    
    
    1,299
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,299Stock grants to employees
    
    
    4
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    4December 31, 2007
    
    
    536
    
    
    
    189,183
    
    
    
    (33,363
    )
    
    
    (74,040
    )
    
    
    -
    
    
    
    -
    
    
    
    82,316Net income
    
    
    -
    
    
    
    -
    
    
    
    142,728
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    142,728Postretirement plans and workers
compensation obligations (net of
taxes of $0):Changes in accumulated actuarial
loss
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (27,866
    )
    
    
    -
    
    
    
    -
    
    
    
    (27,866
    )Changes in prior service cost
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (680
    )
    
    
    -
    
    
    
    -
    
    
    
    (680
    )Unrealized loss on diesel fuel hedge
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (9,695
    )
    
    
    -
    
    
    
    -
    
    
    
    (9,695
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,487Retrospective accounting adjustment:Convertible note discount
    
    
    -
    
    
    
    44,656
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    44,656Equity issuance costs
    
    
    -
    
    
    
    (1,462
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,462
    )Issuance of 23,803,312 shares of
common stock upon
acquisition, net of issuance fees
    
    
    238
    
    
    
    600,166
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    600,404Stock-based compensation
    
    
    -
    
    
    
    8,778
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    8,778Employee stock purchases
    
    
    -
    
    
    
    1,002
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,002December 31, 2008
    
    
    774
    
    
    
    842,323
    
    
    
    109,365
    
    
    
    (112,281
    )
    
    
    -
    
    
    
    -
    
    
    
    840,181Net income
    
    
    -
    
    
    
    -
    
    
    
    127,243
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    127,243Postretirement plans and workers
compensation obligations (net of
taxes of $0):Changes in accumulated actuarial
loss
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (147,074
    )
    
    
    -
    
    
    
    -
    
    
    
    (147,074
    )Changes in prior service cost
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (551
    )
    
    
    -
    
    
    
    -
    
    
    
    (551
    )Changes in diesel fuel hedge
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    10,730
    
    
    
    -
    
    
    
    -
    
    
    
    10,730Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,652
    )Issuance of 12,000,000 shares of
common stock from
equity offering
    
    
    120
    
    
    
    88,957
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    89,077Stock-based compensation
    
    
    -
    
    
    
    13,852
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    13,852Employee stock purchases
    
    
    3
    
    
    
    2,033
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,036Stock grants to employees
    
    
    6
    
    
    
    (6
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -December 31, 2009
    
    $
    903
    
    
    $
    947,159
    
    
    $
    236,608
    
    
    $
    (249,176
    )
    
    $
    -
    
    
    $
    -
    
    
    $
    935,494
 F-5




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##### Table of Contents



PATRIOT COAL CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1)
    
    Basis of Presentation
 Description of Business
    Basis of Presentation
    (2)
    
    Summary of Significant Accounting Policies
 Sales
  Other Revenues
  F-6




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Cash and Cash Equivalents
  Accounts Receivable
  Inventories
  Property, Plant, Equipment and Mine Development
       YearsBuildings and improvements
    
    10 to 20Machinery and equipment
    
    3 to 30Leasehold improvements
    
    Shorter of life of asset, mine or  lease
  F-7




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Purchased Contract Rights
  Joint Ventures
  Sales Contract Liability
  Asset Retirement Obligations
   F-8




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Remediation Obligations
  Income Taxes
    Postretirement Healthcare Benefits
  Multi-Employer Benefit Plans
  Pension Plans
  F-9




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Postemployment Benefits
  Use of Estimates in the Preparation of the Consolidated Financial Statements
    Share-Based Compensation
  Derivatives
  Impairment of Long-Lived Assets
  F-10




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Business Combinations
  Deferred Financing Costs
  Reclassifications
  (3)
    
    New Accounting Pronouncements
 FASB Accounting Standards Codification
 TM
 Debt
  Earnings Per Share
  F-11




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Business Combinations
  Consolidation
  Fair Value Measurements and Disclosures
   Subsequent Events
  Pending Adoption of Recent Accounting Pronouncements
 Transfers of Financial Assets
  Consolidation
  F-12




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (4)
    
    Common Stock Offering
  (5)
    
    Restructuring and Impairment Charge
  (6)
    
    Business Combinations
 Magnum Coal Company
       Cash
    
    $
    21,015Accounts receivable, net
    
    
    88,471Inventories
    
    
    49,294Other current assets
    
    
    39,073Property, plant, equipment and mine development, net
    
    
    2,360,072Other noncurrent assets
    
    
    5,193Total assets acquired
    
    
    2,563,118Trade accounts payable and accrued expenses
    
    
    235,505Below market sales contracts acquired, current
    
    
    497,882Long-term debt
    
    
    144,606Below market sales contracts acquired, noncurrent
    
    
    447,804Accrued postretirement benefit costs
    
    
    430,837Other noncurrent liabilities
    
    
    195,051Total liabilities assumed
    
    
    1,951,685Total purchase price
    
    $
    611,433
    F-13




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        F-14




---



##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2008
    
    2007Revenues:As reported
    
    $
    1,654,622
    
    
    $
    1,073,362Pro forma
    
    
    2,207,353
    
    
    
    2,194,432Net income:As reported
    
    $
    142,728
    
    
    $
    (102,147
    )Pro forma
    
    
    253,626
    
    
    
    299,725Basic earnings per share:As reported
    
    $
    2.23
    
    
    $
    (2.00
    )Pro forma
    
    $
    3.96
    
    
    $
    5.60Diluted earnings per share:As reported
    
    $
    2.21
    
    
    $
    (2.00
    )Pro forma
    
    $
    3.92
    
    
    $
    5.60
  KE Ventures, LLC
   F-15




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (7)
    
    Risk Management and Financial Instruments
  Credit Risk
   Commodity Price Risk
  Employees
  Fair Value of Financial Instruments
   F-16




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31,2009
    
    2008(Dollars in thousands)Assets:Fuel contracts, cash flow hedges
    
    $
    2,021
    
    
    $
    -Liabilities:Fuel contracts, cash flow hedges
    
    
    986
    
    
    
    9,695$200 million of 3.25% Convertible Senior Notes due 2013
    
    
    163,617
    
    
    
    99,863
  (8)
    
    Net Gain on Disposal or Exchange of Assets and Other Commercial Transactions
       F-17




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (9)
    
    Earnings per Share
   (10)
    
    Inventories
    December 31,2009
    
    
    2008(Dollars in thousands)Materials and supplies
    
    $
    39,285
    
    
    $
    52,023Saleable coal
    
    
    28,255
    
    
    
    15,107Raw coal
    
    
    13,648
    
    
    
    13,823Total
    
    $
    81,188
    
    
    $
    80,953
    F-18




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (11)
    
    Accumulated Other Comprehensive Loss
  NetActuarial LossAssociated withPostretirement
    
    
    Prior Service
    
    
    
    
    
    
    TotalPlans and
    
    
    Cost Associated
    
    
    
    
    
    
    AccumulatedWorkers
    
    
    with
    
    
    Diesel
    
    
    OtherCompensation
    
    
    Postretirement
    
    
    Fuel
    
    
    ComprehensiveObligations
    
    Plans
    
    Hedge
    
    Loss(Dollars in thousands)December 31, 2006
    
    $
    (318,614
    )
    
    $
    (3,507
    )
    
    $
    -
    
    
    $
    (322,121
    )Unrealized gains (losses)
    
    
    56,624
    
    
    
    (7,656
    )
    
    
    -
    
    
    
    48,968Reclassification from other
comprehensive income to
earnings
    
    
    35,085
    
    
    
    (1,306
    )
    
    
    -
    
    
    
    33,779Retention by Peabody of certain
liabilities at spin-off
    
    
    165,334
    
    
    
    -
    
    
    
    -
    
    
    
    165,334December 31, 2007
    
    
    (61,571
    )
    
    
    (12,469
    )
    
    
    -
    
    
    
    (74,040
    )Unrealized losses
    
    
    (39,263
    )
    
    
    -
    
    
    
    (9,695
    )
    
    
    (48,958
    )Reclassification from other
comprehensive income to
earnings
    
    
    11,397
    
    
    
    (680
    )
    
    
    -
    
    
    
    10,717December 31, 2008
    
    
    (89,437
    )
    
    
    (13,149
    )
    
    
    (9,695
    )
    
    
    (112,281
    )Unrealized gains (losses)
    
    
    (163,339
    )
    
    
    -
    
    
    
    5,450
    
    
    
    (157,889
    )Reclassification from other
comprehensive income to
earnings
    
    
    16,265
    
    
    
    (551
    )
    
    
    5,280
    
    
    
    20,994December 31, 2009
    
    $
    (236,511
    )
    
    $
    (13,700
    )
    
    $
    1,035
    
    
    $
    (249,176
    )
  (12)
    
    Leases
   F-19




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Capital
    
    
    Operating
    
    
    CoalLeases
    
    Leases
    
    Reserves(Dollars in thousands)2010
    
    $
    9,268
    
    
    $
    40,443
    
    
    $
    28,1912011
    
    
    4,159
    
    
    
    33,411
    
    
    
    22,6162012
    
    
    3,600
    
    
    
    25,807
    
    
    
    20,9962013
    
    
    3,600
    
    
    
    14,825
    
    
    
    19,5192014
    
    
    3,600
    
    
    
    3,805
    
    
    
    17,4652015 and thereafter
    
    
    15,600
    
    
    
    419
    
    
    
    145,283Total minimum lease and royalty payments
    
    $
    39,827
    
    
    $
    118,710
    
    
    $
    254,070Less interest
    
    
    (11,788
    )Present value of minimum capital lease payments
    
    $
    28,039
   (13) Trade Accounts Payable and Accrued Expenses
  December 31,2009
    
    2008(Dollars in thousands)Trade accounts payable
    
    $
    147,254
    
    
    $
    201,046Accrued healthcare, including postretirement
    
    
    70,993
    
    
    
    66,509Accrued taxes other than income
    
    
    47,540
    
    
    
    27,646Accrued payroll and related benefits
    
    
    35,923
    
    
    
    40,719Workers compensation obligations
    
    
    26,609
    
    
    
    28,225Environmental obligations
    
    
    13,730
    
    
    
    -Other accrued benefits
    
    
    10,901
    
    
    
    11,029Accrued royalties
    
    
    10,011
    
    
    
    9,532Accrued lease payments
    
    
    9,910
    
    
    
    4,330Diesel fuel hedge
    
    
    986
    
    
    
    5,915Other accrued expenses
    
    
    32,494
    
    
    
    18,839Total trade accounts payable and accrued expenses
    
    $
    406,351
    
    
    $
    413,790
 F-20




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (14)
    
    Income Taxes
   Year Ended December 31,2009
    
    2008
    
    2007(Dollars in thousands)Federal statutory rate
    
    $
    44,535
    
    
    $
    49,955
    
    
    $
    (35,751
    )Depletion
    
    
    (22,588
    )
    
    
    (16,597
    )
    
    
    (11,281
    )State income taxes, net of U.S. federal tax benefit
    
    
    3,520
    
    
    
    5,692
    
    
    
    (6,911
    )Noncontrolling interest
    
    
    -
    
    
    
    -
    
    
    
    (1,652
    )Changes in valuation allowance
    
    
    (27,225
    )
    
    
    (42,871
    )
    
    
    55,183Changes in tax reserves
    
    
    1,307
    
    
    
    960
    
    
    
    107Other, net
    
    
    451
    
    
    
    2,861
    
    
    
    305Total
    
    $
    -
    
    
    $
    -
    
    
    $
    -
  December 31,2009
    
    2008(Dollars in thousands)Deferred tax assets:Postretirement benefit obligations
    
    $
    372,335
    
    
    $
    425,087Tax credits and loss carryforwards
    
    
    240,471
    
    
    
    133,860Accrued workers compensation liabilities
    
    
    98,051
    
    
    
    92,199Accrued reclamation and mine closing liabilities
    
    
    89,406
    
    
    
    98,084Obligation to industry fund
    
    
    16,357
    
    
    
    12,672Sales contract liabilities
    
    
    124,157
    
    
    
    274,704Other
    
    
    81,556
    
    
    
    43,986Total gross deferred tax assets
    
    
    1,022,333
    
    
    
    1,080,592Deferred tax liabilities:Property, plant, equipment and mine development, leased coal interests
and advance royalties, principally due to differences in depreciation,
depletion and asset writedowns
    
    
    878,874
    
    
    
    878,144Long-term debt
    
    
    12,758
    
    
    
    15,824Total gross deferred tax liabilities
    
    
    891,632
    
    
    
    893,968Valuation allowance
    
    
    (130,701
    )
    
    
    (186,624
    )Net deferred tax liability
    
    $
    -
    
    
    $
    -Deferred taxes consisted of the following:Current deferred income taxes
    
    $
    -
    
    
    $
    -Noncurrent deferred income taxes
    
    
    -
    
    
    
    -Net deferred tax liability
    
    $
    -
    
    
    $
    -
 F-21




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
       (15) Long-Term Debt
  December 31,2009
    
    2008(Dollars in thousands)3.25% Convertible Senior Notes due 2013
    
    $
    167,501
    
    
    $
    159,637Capital leases
    
    
    28,039
    
    
    
    10,218Promissory notes
    
    
    10,453
    
    
    
    11,438Short-term borrowings
    
    
    -
    
    
    
    23,000Total
    
    $
    205,993
    
    
    $
    204,293Less current portion of debt
    
    
    (8,042
    )
    
    
    (28,170
    )Long-term debt, less current maturities
    
    $
    197,951
    
    
    $
    176,123
 F-22




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Credit Facility
    Private Convertible Notes Issuance
   F-23




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
          F-24




---



##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Bridge Loan Facility
  Capital Lease Obligations and Other
   (Dollars inYear of Maturity
    

thousands)2010
    
    $
    8,0422011
    
    
    3,3292012
    
    
    3,0332013
    
    
    203,2942014
    
    
    3,5812015 and thereafter
    
    
    17,213Total cash payments on debt
    
    
    238,492Debt discount on convertible notes
    
    
    (32,499
    )Total long-term debt
    
    $
    205,993
  Promissory Notes
  F-25




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (16) Derivatives
    December 31,2009

    
    2008(Dollars in thousands)Fair value of current fuel contracts (Prepaid expenses and
other current assets)
    
    $
    2,021
    
    
    $
    -Fair value of current fuel contracts (Trade accounts payable and
accrued expenses)
    
    
    986
    
    
    
    5,915Fair value of noncurrent fuel contracts (Other noncurrent liabilities)
    
    
    -
    
    
    
    3,780Net
unrealized gains (losses) from fuel hedges, net of tax
(Accumulated other comprehensive loss)
    
    
    1,035
    
    
    
    (9,695
    )
  F-26




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (17) Asset Retirement Obligations
  December 31,2009
    
    2008(Dollars in thousands)Balance at beginning of year
    
    $
    224,180
    
    
    $
    134,364Liabilities incurred
    
    
    4,113
    
    
    
    203Liabilities settled or disposed
    
    
    (16,248
    )
    
    
    (6,540
    )Accretion expense
    
    
    25,395
    
    
    
    19,116Revisions to estimate
    
    
    1,780
    
    
    
    1,057Liabilities acquired through acquisition
    
    
    5,298
    
    
    
    75,980Balance at end of year
    
    $
    244,518
    
    
    $
    224,180
    (18) Workers Compensation Obligations
    Year Ended December 31,2009

    
    2008

    
    2007(Dollars in thousands)Service cost
    
    $
    5,462
    
    
    $
    3,382
    
    
    $
    2,971Interest cost
    
    
    9,042
    
    
    
    9,876
    
    
    
    9,124Net amortization of actuarial gains
    
    
    (4,504
    )
    
    
    (4,009
    )
    
    
    (1,607
    )Total occupational disease
    
    
    10,000
    
    
    
    9,249
    
    
    
    10,488Traumatic injury claims
    
    
    18,798
    
    
    
    13,261
    
    
    
    13,160State assessment taxes
    
    
    2,503
    
    
    
    2,546
    
    
    
    4,373Total provision
    
    $
    31,301
    
    
    $
    25,056
    
    
    $
    28,021
 F-27




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Year Ended December 31,2009

    
    2008
    
    2007Discount rate:Occupational disease
    
    
    6.00
    %
    
    
    6.40
    %
    
    
    6.00
    %Traumatic injury
    
    
    6.06
    %
    
    
    5.80
    %
    
    
    6.00
    %Inflation rate
    
    
    3.50
    %
    
    
    3.50
    %
    
    
    3.50
    %
   December 31,2009

    
    2008(Dollars in thousands)Occupational disease costs
    
    $
    152,079
    
    
    $
    154,527Traumatic injury claims
    
    
    68,249
    
    
    
    61,878Total obligations
    
    
    220,328
    
    
    
    216,405Less current portion (included in Accrued expenses)
    
    
    (26,609
    )
    
    
    (28,225
    )Noncurrent obligations (included in Workers compensation obligations)
    
    $
    193,719
    
    
    $
    188,180
    F-28




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31,2009

    
    2008(Dollars in thousands)Change in benefit obligation:Beginning of year obligation
    
    $
    154,527
    
    
    $
    155,829Service cost
    
    
    5,462
    
    
    
    3,382Interest cost
    
    
    9,042
    
    
    
    9,876Acquisitions/divestitures
    
    
-
    
    
    
    3,176Net change in actuarial gain
    
    
    (6,508
    )
    
    
    (6,876
    )Benefit and administrative payments
    
    
    (10,444
    )
    
    
    (10,860
    )Net obligation at end of year
    
    
    152,079
    
    
    
    154,527Change in plan assets:Fair value of plan assets at beginning of period
    
    
-
    
    
    
-Employer contributions
    
    
    10,444
    
    
    
    10,860Benefits paid
    
    
    (10,444
    )
    
    
    (10,860
    )Fair value of plan assets at end of period
    
    
-
    
    
    
-Obligation at end of period
    
    $
    152,079
    
    
    $
    154,527
  Federal Black Lung Excise Tax Refunds
  F-29




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (19) Pension and Savings Plans
 Multi-Employer Pension Plans
  Defined Contribution Plans
   (20) Postretirement Healthcare Benefits
   Year Ended December 31,2009

    
    2008
   

    2007(Dollars in thousands)Service cost for benefits earned
    
    $
    3,715
    
    
    $
    1,731
    
    
    $
    981Interest cost on accumulated postretirement benefit obligation
    
    
    70,509
    
    
    
    51,472
    
    
    
    65,964Amortization of prior service cost
    
    
    (551
    )
    
    
    (680
    )
    
    
    (1,306
    )Amortization of actuarial losses
    
    
    18,813
    
    
    
    13,516
    
    
    
    34,260Net periodic postretirement benefit costs
    
    $
    92,486
    
    
    $
    66,039
    
    
    $
    99,899
 F-30




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31,2009

    
    2008(Dollars in thousands)Change in benefit obligation:Accumulated postretirement benefit obligation at beginning of
period
    
    $
    1,064,928
    
    
    $
    554,748Service cost
    
    
    3,715
    
    
    
    1,731Interest cost
    
    
    70,509
    
    
    
    51,472Participant contributions
    
    
    969
    
    
    
    412Plan amendments
    
    
    (19,391
    )
    
    
-Acquisitions/divestitures
    
    
-
    
    
    
    456,396Benefits paid
    
    
    (65,203
    )
    
    
    (42,491
    )Change in actuarial loss
    
    
    181,523
    
    
    
    42,660Accumulated postretirement benefit obligation at end of period
    
    
    1,237,050
    
    
    
    1,064,928Change in plan assets:Fair value of plan assets at beginning of period
    
    
-
    
    
    
-Employer contributions
    
    
    64,234
    
    
    
    42,079Participant contributions
    
    
    969
    
    
    
    412Benefits paid and administrative fees (net of Medicare Part D
reimbursements)
    
    
    (65,203
    )
    
    
    (42,491
    )Fair value of plan assets at end of period
    
    
-
    
    
    
-Accrued postretirement benefit obligation
    
    
    1,237,050
    
    
    
    1,064,928Less current portion (included in Accrued expenses)
    
    
    (67,069
    )
    
    
    (61,674
    )Noncurrent obligation (included in Accrued postretirement benefit costs)
    
    $
    1,169,981
    
    
    $
    1,003,254
     Year Ended December 31,2009
    
    2008Discount rate
    
    6.30%
    
    6.80%Rate of compensation increase
    
    3.50%
    
    3.50%Measurement date
    
    December 31, 2009
    
    December 31, 2008
 F-31




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2009
    
    2008
    
    2007Discount rate
    
    6.80%
    
    6.80%
    
    6.00%Rate of compensation increase
    
    3.50%
    
    3.50%
    
    3.50%Measurement date
    
    December 31, 2008
    
    December 31, 2007
    
    December 31, 2006
   Year Ended December 31,2009
    
    2008Healthcare cost trend rate assumed for next year
    
    7.00%
    
    9.25%Rate to which the cost trend is assumed to decline (the ultimate trend rate)
    
    5.00%
    
    4.75%Year that the rate reaches that ultimate trend rate
    
    2016
    
    2014
  +1.0%
    
    -1.0%(Dollars in thousands)Effect on total service and interest cost components
    
    $
    9,306
    
    
    $
    (7,758
    )Effect on year-end postretirement benefit obligation
    
    
    160,756
    
    
    
    (138,189
    )
 Plan Assets
  Estimated Future Benefits Payments
  PostretirementBenefits(Dollars in thousands)2010
    
    $
    67,0692011
    
    
    72,3372012
    
    
    76,8482013
    
    
    81,5322014
    
    
    85,119Years 2015-2018
    
    
    457,581
 Plan Changes
  F-32




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Assumption of Certain Patriot Liabilities
  Multi-Employer Benefit Plans
     .
  F-33




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (21) Related Party Transactions
         (22) Guarantees
  F-34




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##### Table of Contents



PATRIOT COAL CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Letters of Credit and Bonding
  Workers

    
    RetireeReclamation

    
    Lease

    
    Compensation

    
    HealthObligations

    
    Obligations

    
    Obligations

    
    Obligations

    
    Other(1)

    
    Total(Dollars in thousands)Surety bonds
    
    $
    135,986
    
    
    $
-
    
    
    $
    44
    
    
    $
-
    
    
    $
    16,786
    
    
    $
    152,816Letters of credit
    
    
    85,184
    
    
    
    10,287
    
    
    
    201,034
    
    
    
    50,487
    
    
    
    5,142
    
    
    
    352,134Third-party
guarantees
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,819
    
    
    
    1,819$
    221,170
    
    
    $
    10,287
    
    
    $
    201,078
    
    
    $
    50,487
    
    
    $
    23,747
    
    
    $
    506,769
 (1)
    Other Guarantees
  (23) Commitments and Contingencies
 Commitments
  Other
  F-35




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Clean Water Act Permit Issues
   EPA Consent Decree
   Apogee Coal Company, LLC (Apogee)
   F-36




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Hobet
Mining, LLC (Hobet)
    F-37




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
   Flood Litigation
 2001 Flood Litigation
   2004 Flood Litigation
    F-38




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Litigation and Investigations
       F-39




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (24) Segment Information
    Illinois
    
    CorporateAppalachia
    
    Basin
    
    and Other(1)
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    1,776,204
    
    
    $
    269,079
    
    
    $
-
    
    
    $
    2,045,283Adjusted EBITDA
    
    
    294,373
    
    
    
    8,550
    
    
    
    (192,178
    )
    
    
    110,745Additions to property, plant,
equipment and mine development
    
    
    69,931
    
    
    
    7,437
    
    
    
    895
    
    
    
    78,263Income from equity affiliates
    
    
    398
    
    
    
-
    
    
    
-
    
    
    
    398
  Illinois
    
    CorporateAppalachia
    
    Basin
    
    and Other(1)
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    1,370,979
    
    
    $
    283,643
    
    
    $
-
    
    
    $
    1,654,622Adjusted EBITDA
    
    
    172,994
    
    
    
    13,155
    
    
    
    (141,911
    )
    
    
    44,238Additions to property, plant,
equipment and mine development
    
    
    109,428
    
    
    
    8,823
    
    
    
    3,137
    
    
    
    121,388Loss from equity affiliates
    
    
    (915
    )
    
    
-
    
    
    
-
    
    
    
    (915
    )
 F-40




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Illinois
    
    CorporateAppalachia
    
    Basin
    
    and Other(1)
    
    Consolidated(Dollars in thousands)Revenues
    
    $
    821,116
    
    
    $
    252,246
    
    
    $
-
    
    
    $
    1,073,362Adjusted EBITDA
    
    
    89,850
    
    
    
    11,862
    
    
    
    (101,281
    )
    
    
    431Additions to property, plant,equipment and mine development
    
    
    48,955
    
    
    
    6,639
    
    
    
-
    
    
    
    55,594Income from equity affiliates
    
    
    63
    
    
    
-
    
    
    
-
    
    
    
    63
 (1)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Consolidated Adjusted EBITDA
    
    $
    110,745
    
    
    $
    44,238
    
    
    $
    431Depreciation, depletion and amortization
    
    
    (205,339
    )
    
    
    (125,356
    )
    
    
    (85,640
    )Sales contract accretion, net
    
    
    298,572
    
    
    
    249,522
    
    
    
-Reclamation and remediation obligation expense
    
    
    (35,116
    )
    
    
    (19,260
    )
    
    
    (20,144
    )Restructuring and impairment
    
    
    (20,157
    )
    
    
-
    
    
    
-Interest expense
    
    
    (38,108
    )
    
    
    (23,648
    )
    
    
    (8,337
    )Interest income
    
    
    16,646
    
    
    
    17,232
    
    
    
    11,543Net income (loss)
    
    $
    127,243
    
    
    $
    142,728
    
    
    $
    (102,147
    )
 (25) Stockholders Equity
 Common Stock
     F-41




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  SharesOutstandingOctober 31, 2007
    
    
    53,141,880Stock grants to employees
    
    
    375,656December 31, 2007
    
    
    53,517,536Stock grants to employees
    
    
    5,697Employee stock purchases
    
    
    56,654Shares issued to Magnum shareholders
    
    
    23,803,312December 31, 2008
    
    
    77,383,199Stock grants to employees
    
    
    553,428Employee stock purchases
    
    
    370,583Shares issued in equity offering
    
    
    12,000,000Stock options exercised
    
    
    12,729December 31, 2009
    
    
    90,319,939
 Preferred Stock
  Preferred Share Purchase Rights Plan and Series A Junior Participating Preferred Stock
    F-42




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (26) Stock-Based Compensation
   Restricted Stock
   WeightedYear Ended

    
    AverageDecember 31,

    
    Grant-Date2009

    
    Fair ValueNonvested at January 1, 2009
    
    
    381,353
    
    
    $
    23.73Granted
    
    
    663,740
    
    
    
    5.14Forfeited
    
    
    (109,889
    )
    
    
    12.13Vested
    
    
    (1,092
    )
    
    
    22.91Nonvested at December 31, 2009
    
    
    934,112
    
    
    
    11.88
 Restricted Stock Units
   F-43




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##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   WeightedYear Ended

    
    AverageDecember 31,

    
    Grant-Date2009

    
    Fair ValueNonvested at January 1, 2009
    
    
    506,375
    
    
    $
    21.88Granted
    
    
    59,568
    
    
    
    5.13Forfeited
    
    
    (50,756
    )
    
    
    23.48Vested
    
    
    (1,894
    )
    
    
    56.77Nonvested at December 31, 2009
    
    
    513,293
    
    
    
    19.65
     WeightedYear Ended

    
    AverageDecember 31,

    
    Grant-Date2009

    
    Fair ValueNonvested at January 1, 2009
    
    
    679,352
    
    
    $
    23.47Granted
    
    
    378,800
    
    
    
    7.48Forfeited
    
    
    (111,477
    )
    
    
    18.49Nonvested at December 31, 2009
    
    
    946,675
    
    
    
    18.01
 Long-Term Incentive Non-Qualified Stock Option
  F-44




---



##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   WeightedWeighted
    
    Aggregate

    
    AverageYear Ended

    
    Average

    
    Intrinsic

    
    RemainingDecember 31,

    
    Grant-Date

    
    Value

    
    Contractual2009

    
    Fair Value

    

(in
millions)

    
    LifeNonvested at January 1, 2009
    
    
    1,069,730
    
    
    $
    23.66Granted
    
    
    757,600
    
    
    
    5.13Forfeited
    
    
    (182,507
    )
    
    
    17.24Exercised
    
    
    (12,729
    )
    
    
    5.13
    
    
    $
    0.1Nonvested at December 31, 2009
    
    
    1,632,094
    
    
    
    15.92
    
    
    $
    6.9
    
    
    7.8
  Year Ended December 31,2009
    
    2008
    
    2007Weighted-average fair value
    
    $2.49
    
    $30.10
    
    $7.67Risk-free interest rate
    
    1.31%
    
    3.55%
    
    4.22%Expected option life
    
    2.87 years
    
    6.69 years
    
    6.69 yearsExpected volatility
    
    78.41%
    
    47.61%
    
    30.64%Dividend yield
    
    0%
    
    0%
    
    0%
 Employee Stock Purchase Plan
  F-45




---



##### Table of Contents



PATRIOT COAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (27) Summary Quarterly Financial Information (Unaudited)
  Year Ended December 31, 2009First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter(Dollars in thousands, except per share and stock price data)Revenues
    
    $
    528,936
    
    
    $
    506,996
    
    
    $
    506,189
    
    
    $
    503,162Operating profit
    
    
    37,249
    
    
    
    34,691
    
    
    
    59,775
    
    
    
    16,990Net income
    
    
    32,143
    
    
    
    31,390
    
    
    
    52,842
    
    
    
    10,868Basic earnings per share
    
    $
    0.41
    
    
    $
    0.39
    
    
    $
    0.59
    
    
    $
    0.12Diluted earnings per share
    
    $
    0.41
    
    
    $
    0.39
    
    
    $
    0.58
    
    
    $
    0.12Weighted average shares used in
calculating basic earnings per share
    
    
    77,906,152
    
    
    
    79,940,308
    
    
    
    90,277,301
    
    
    
    90,322,074Stock price - high and low prices
    
    $
    9.00-$2.76
    
    
    $
    10.90-$3.51
    
    
    $
    14.12-$4.97
    
    
    $
    17.24-$10.21
 Year Ended December 31, 2008First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter(Dollars in thousands, except per share and stock price data)Revenues
    
    $
    284,334
    
    
    $
    339,680
    
    
    $
    489,583
    
    
    $
    541,025Operating profit (loss)
    
    
    (4,905
    )
    
    
    16,917
    
    
    
    72,394
    
    
    
    64,738Net income (loss)(1)
    
    
    (3,066
    )
    
    
    11,236
    
    
    
    71,199
    
    
    
    63,359Basic earnings per share(1)
    
    $
    (0.06
    )
    
    $
    0.21
    
    
    $
    0.99
    
    
    $
    0.82Diluted earnings per share(1)
    
    $
    (0.06
    )
    
    $
    0.21
    
    
    $
    0.99
    
    
    $
    0.82Weighted average shares used in
calculating basic earnings per share(1)
    
    
    53,518,744
    
    
    
    53,512,286
    
    
    
    71,681,084
    
    
    
    77,382,195Stock price - high and low prices
    
    $
    28.89-$16.14
    
    
    $
    82.23-$23.13
    
    
    $
    77.74-$24.09
    
    
    $
    28.45-$5.24
 (1)
 (28) Subsequent Events
   F-46




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##### Table of Contents



PATRIOT COAL CORPORATION
 
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 DECEMBER 31, 2009
 Balance at
    
    Charged to
    
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    Costs and
    
    
    
    
    
    
    
    
    
    End ofDescription
    
    of Period
    
    Expenses
    
    Deductions(1)
    
    Other
    
    Period(Dollars in thousands)Year Ended December 31, 2007Reserves deducted from asset accounts:Advance royalty recoupment reserve
    
    $
    4,716
    
    
    $
-
    
    
    $
-
    
    
    $
    (1,985
    )(2)
    
    $
    2,731Reserve for materials and supplies
    
    
    1,458
    
    
    
    74
    
    
    
-
    
    
    
    (1,252
    )(2)
    
    
    280Allowance for doubtful accounts
    
    
    252
    
    
    
-
    
    
    
    (1
    )
    
    
-
    
    
    
    251Year Ended December 31, 2008Reserves deducted from asset accounts:Advance royalty recoupment reserve
    
    
    2,731
    
    
    
12
    
    
    
-
    
    
    
    40,821
    (3)
    
    
    43,564Reserve for materials and supplies
    
    
    280
    
    
    
    288
    
    
    
-
    
    
    
    9,375
    (3)
    
    
    9,943Allowance for doubtful accounts
    
    
    251
    
    
    
    399
    
    
    
    (110
    )
    
    
-
    
    
    
    540Year Ended December 31, 2009Reserves deducted from asset accounts:Advance royalty recoupment reserve
    
    
    43,564
    
    
    
    252
    
    
    
-
    
    
    
    927
    (4)
    
    
    44,743Reserve for materials and supplies
    
    
    9,943
    
    
    
    (11
    )
    
    
(19
    )
    
    
    2,619
    (4)
    
    
    12,532Allowance for doubtful accounts
    
    
    540
    
    
    
    115
    
    
    
    (514
    )
    
    
-
    
    
    
    141
 (1)
 (2)
 (3)
 (4)
 F-47