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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWASHINGTON, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    001-33466
      PATRIOT COAL
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-5622045(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)12312 Olive Boulevard, Suite 400
    St. Louis, Missouri

63141(Zip Code)(Address of principal executive
    offices)   (314) 275-3600
    (Registrants telephone number, including area code)
    (Former name, former address and former fiscal year, if changed
    since last report)
  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
    Preferred Share Purchase Rights

New York Stock Exchange
    New York Stock Exchange   Securities
    Registered Pursuant to Section 12(g) of the Act:
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting
    company)   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K.




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CAUTIONARY
    NOTICE REGARDING FORWARD-LOOKING STATEMENTS
      
    difficulty in implementing our business strategy;
    geologic, equipment and operational risks associated with mining;
    changes in general economic conditions, including coal and power
    market conditions;
    availability and costs of credit, surety bonds and letters of
    credit;
    the outcome of commercial negotiations involving sales contracts
    or other transactions;
    economic strength and political stability of countries in which
    we serve customers;
    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;
    worldwide economic and political conditions;
    labor availability and relations;
    our ability to replace proven and probable coal reserves;
    the effects of mergers, acquisitions and divestitures, including
    our ability to successfully integrate mergers and acquisitions;
    our ability to respond to changing customer preferences;
    our dependence on Peabody Energy for a significant portion of
    our revenues;
    price volatility and demand, particularly in higher margin
    products;
    reductions of purchases by major customers;
    failure to comply with debt covenants;
    customer performance and credit risks;
    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; 2




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
    developments in greenhouse gas emission regulation and
    treatment, including any development of commercially successful
    carbon capture and storage techniques;
    coal mining laws and regulations;
    the outcome of pending or future litigation;
    weather patterns affecting energy demand;
    competition in our industry;
    changes in postretirement benefit obligations;
    changes to contribution requirements to multi-employer benefit
    funds;
    availability and costs of competing energy resources;
    interest rate fluctuation;
    inflationary trends, including those impacting materials used in
    our business;
    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.   3




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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 its subsidiaries (Patriot).
  Item 1.
    Business.  Overview
    high-Btu
  Form 10-K
    Mining
    Operations
    
    Appalachia.  In southern West Virginia, we have
    twelve active mining complexes located in Boone, Clay, Lincoln,
    Logan and Kanawha counties. In northern West Virginia, we have
    one complex located in Monongalia County. As part of a
    comprehensive strategic review of operations upon acquisition of
    Magnum, we announced plans to idle operations at our Jupiter
    mining complex (December 2008) and our Remington mining
    complex (currently planned for March 2009). In Appalachia, we
    sold 20.6 million tons of coal in the year ended
    December 31, 2008. As of December 31, 2008, we
    controlled 1.18 billion tons of proven and probable coal
    reserves in Appalachia, of which 468 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
    7.9 million tons of coal in the year ended
    December 31, 2008. As of December 31, 2008, we
    controlled 655 million tons of proven and probable coal
    reserves in the Illinois Basin, of which 136 million tons
    were assigned to current operations. 4




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##### Table of Contents



Mining



2008 TonsLocation

Complex

Mine(s)

Method (1)

Met/Steam

Sold (2)Appalachia

Big Mountain

Big Mountain No. 16, Contract

CM

Steam


1,880Campbells Creek

Campbells Creek No. 6, Campbells Creek
    No. 7

CM

Steam


639Corridor G

Job 21, Hill Fork

TS, DL

Steam


1,663Jupiter (3)

IO, Thunderhill

CM, TS

Steam


191Kanawha Eagle

Eagle, Coalburg No. 1, Coalburg No. 2

CM

Met/Steam


2,290Logan County

Guyan

TS

Steam


1,037Paint Creek

Samples, Winchester

TS, HW

Met/Steam


1,166Panther

Panther

LW, CM

Met/Steam


606Remington (4)

Stockburg No. 2, Deskins, Wildcat

CM, TS, HW

Steam


370Rocklick

Harris No. 1, Black Oak, Contract

TS, LW, CM

Met/Steam


2,540Wells

Rivers Edge, Contract

CM

Met


3,464Blue Creek (5)

Stockton No. 1, Stockton No. 2

CM

Steam


Federal

Federal No. 2

LW, CM

Steam


3,083Purchased coal

N/A

N/A

N/A


1,725Subtotal


20,654IllinoisBasin

Bluegrass

Patriot, Freedom

TS, CM

Steam


2,767Dodge Hill

Dodge Hill No. 1

CM

Steam


1,196Highland

Highland No. 9

CM

Steam


3,903Subtotal


7,866Total


28,520     (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 2008, subject to stockpile variations.(3)
    
    The Jupiter complex was idled
    December 31, 2008.(4)
    
    The Remington complex will be idled
    in March 2009.(5)
    
    We expect the Blue Creek complex
    will be operational in 2009.  Longwall mining.
  Continuous miner mining.
  Truck-and-shovel
    mining. Truck-and-shovel
  Dragline mining.
  Highwall mining. truck-and-shovel/loader truck-and-shovel/loader
 5




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Appalachian
    Mining Operations
    
  Appalachia
  Big
    Mountain
    Campbells
    Creek
  room-and-pillar
  Corridor
    G
  truck-and-shovel/loader on-site
 6




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Jupiter
  room-and-pillar truck-and-shovel/loader on-site
  Kanawha
    Eagle
    Logan
    County
  truck-and-shovel/loader on-site
  Paint
    Creek
  truck-and-shovel/loader room-and-pillar on-site
  Panther
  room-and-pillar on-site
 7




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Remington
  room-and-pillar truck-and-shovel/loader on-site
  Rocklick
  truck-and-shovel/loader
  Wells
   8




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Blue
    Creek
  room-and-pillar on-site
  Federal
  high-Btu
  Illinois
    Basin Mining Operations
    
  Illinois
    Basin
  Bluegrass
  truck-and-shovel
  Dodge
    Hill
    Highland
   9




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Customers
    and Backlog
  and/or
  Commitments as of December 31, 20082012 and2009


2010


2011


Later


TotalTons (in millions)


35.9



24.0



15.4



19.8



95.1           and/or
       10




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Sales and
    Marketing
    Transportation
      Suppliers
    Technical
    Innovation
    state-of-the-art
 11




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Competition
      Employees &
    Labor Relations
      Certain
    Liabilities
    Asset
    Retirement Obligations
   12




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Workers
    Compensation
    Retiree
    Healthcare
           13




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Regulatory
    Matters
      Mine
    Safety and Health
   14




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one-hour
    Black
    Lung
   15




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Environmental
    Laws
        Surface
    Mining Control and Reclamation Act
          right-to-know
 16




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Mine
    Closure Costs
      Clean
    Air Act
  and/or
    Acid
    Rain
    Clean Air
    Interstate Rule (CAIR)
   17




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Clean Air
    Mercury Rule (CAMR)
  cap-and-trade case-by-case
  Particulate
    Matter
       18




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Ozone
  eight-hour
  New
    Source Review Regulations
  Environmental Defense et al. v. Duke Energy Corp. et
    al. and/or
  Regional
    Haze
  cap-and-trade
  Carbon
    Dioxide Emissions
  Massachusetts v. EPA
  State
    Laws
   19




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Global
    Climate Change
               20




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Clean
    Water Act
          National
    Pollutant Discharge Elimination System (NPDES)
        Section 404
   21




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Resource
    Conservation and Recovery Act (RCRA)
        Federal
    and State Superfund Statutes
  clean-up
  Toxic
    Release Reporting
   22




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Additional
    Information
  1-800-SEC-0330
  (314) 275-3680
  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
  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.
         23




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A decline in coal prices could reduce our revenues and the
    value of our coal reserves.
    The recent downturn in the domestic and international
    financial markets, and the risk of prolonged global recessionary
    conditions, could adversely affect our financial condition and
    results of operations.
    Our operations may depend on the availability of
    additional financing and access to funds under our credit
    facility.
        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.
   24




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Any change in coal consumption patterns, in particular by
    United States electric power generators or 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.
       25




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Failures of contractor-operated sources to fulfill the
    delivery terms of their contracts with us could reduce our
    profitability.
  and/or
  A 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.
    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.
  room-and-pillar
 26




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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.
          We could be negatively affected if we fail to maintain
    satisfactory labor relations.
      Our future success depends upon our ability to develop our
    existing coal reserves and to acquire additional reserves that
    are economically recoverable.
   27




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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.
      ton-mile
    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.
   28




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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.
      The acquisition of Magnum presents integration challenges
    and incremental costs.
    The covenants in our credit facility and other debt
    indentures impose restrictions that could limit our operational
    and financial flexibility.
   29




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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.
      Our ability to operate our company effectively could be
    impaired if we lose key personnel or fail to attract qualified
    personnel.
    We could be adversely affected by a decline in the
    creditworthiness or financial condition of our customers.
        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.
   30




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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.
      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.
   31




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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
  Concerns about the environmental impacts of air emissions
    relating to coal mining and coal combustion, particularly the
    impact of greenhouse gas emissions on global climate change, are
    resulting in increased regulation of our industry and could
    significantly affect demand for our products and adversely
    affect our results of operations, cash flows and financial
    condition.
     32




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We may be unable to obtain, renew or comply with permits
    necessary for our operation, which could reduce our production,
    cash flows and profitability.
     33




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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, is requiring us to incur other significant costs
    and may be difficult to resolve in a timely basis given current
    technology.
      Any restrictions on the disposal of mining spoil material
    could significantly increase our operating costs and materially
    harm our financial condition and operating results.
     34




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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.
  and/or
      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.
     35




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We are involved in legal proceedings that if determined
    adversely to us, could significantly impact our profitability,
    financial position or liquidity.
    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.
    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.
     36




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We could be liable for certain retiree healthcare
    obligations to be assumed by Peabody in connection with the
    spin-off.
      Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.  Coal
    Reserves
      Proven and ProbableReserves as ofDecember 31, 2008(1)Owned


Leased


TotalGeographic Region

Tons


Tons


Tons(In millions)Appalachia


275



909



1,184Illinois Basin


381



274



655Total proven and probable coal reserves


656



1,183



1,839     (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 37




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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.  sub-economic
           38




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PRODUCTION
    AND ASSIGNED
    RESERVES(1)
  Sulfur Content(2)>1.2 to1.2 lbs.


2.5 lbs.


>2.5 lbs.





As of December 31, 2008Production





Sulfur


Sulfur


Sulfur





AssignedYear


Year


Year





Dioxide


Dioxide


Dioxide


As


ProvenEnded


Ended


Ended





per


per


per


Received


andGeographic Region/

Dec 31,


Dec 31,


Dec 31,


Type of


Million


Million


Million


Btu per


Probable











Under-Mining Complex

2008


2007


2006


Coal


Btu


Btu


Btu


Pound(3)


Reserves


Owned


Leased


Surface


ground(Tons in millions)Appalachia:Big Mountain


1.9



1.6



2.0



Steam



1



30







12,300



31







31







31Campbells Creek


0.6











Steam



1



3







12,200



4







4







4Corridor G


1.6











Steam







29



40



12,500



69



1



68



29



40Jupiter


0.2











Steam







11







12,500



11







11



1



10Kanawha Eagle


2.1



2.1



1.9



Met/Steam



56



5



36



12,900



97







97







97Logan County


1.0











Met/Steam



23



3







12,900



26



7



19



16



10Paint Creek


1.1











Met/Steam



3



16







13,300



19







19



4



15Panther


0.6











Met/Steam



41











13,500



41



1



40







41Remington


0.3











Steam



3



3







12,200



6







6



1



5Rocklick


2.6



3.1



3.8



Met/Steam



5



27



1



12,800



33







33



4



29Wells


3.4



3.2



2.3



Met/Steam



15



38







13,500



53







53







53Blue Creek














Steam







20







11,800



20







20







20Federal


3.1



4.0



4.6



Steam











58



13,300



58



45



13







58Total


18.5



14.0



14.6







148



185



135







468



54



414



55



413Illinois Basin:Bluegrass


2.8



2.5



3.9



Steam











33



11,100



33







33



1



32Dodge Hill


1.0



1.1



1.1



Steam











20



12,700



20



4



16







20Highland


3.9



3.9



3.7



Steam











83



11,300



83



29



54







83Total


7.7



7.5



8.7















136







136



33



103



1



135Total


26.2



21.5



23.3







148



185



271







604



87



517



56



548    39




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ASSIGNED
    AND UNASSIGNED PROVEN AND PROBABLE COAL
    RESERVES(1)
    AS OF DECEMBER 31, 2008
  Sulfur Content(2)>2.5 lbs.1.2 lbs.


>1.2 to


SulfurSulfur


2.5 lbs.


DioxideDioxide


Sulfur


perProven











per


Dioxide


Million


Asand











Million


per


Btu


ReceivedTotal


Tons


Probable


Proven


Probable


Type of


Btu


Million Btu


(Non-


Btu per


Reserve Control


Mining MethodCoal Seam Location

Assigned


Unassigned


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


468



690



1,158



757



401



Met/Steam



275



591



292



12,900



249



909



141



1,017Total


468



716



1,184



776



408







275



591



318







275



909



141



1,043Illinois Basin:Illinois






237



237



94



143



Steam



4



37



196



10,800



235



2



1



236Kentucky


136



282



418



218



200



Steam











418



10,800



146



272



31



387Total


136



519



655



312



343







4



37



614







381



274



32



623Total proven and probable


604



1,235



1,839



1,088



751







279



628



932







656



1,183



173



1,666     (1)
    
    Assigned reserves represent recoverable coal reserves that we
    have committed to mine at locations operating as of
    December 31, 2008. 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%.  Item 3.
    Legal
    Proceedings.    Environmental
    Claims and Litigation
    Clean
    Water Act Permit Issues
   40




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EPA
    Consent Decree
        Apogee
       41




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Hobet
          CERCLA
     42




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Flood
    Litigation
  2001
    Flood Litigation
    and/or
      2004
    Flood Litigation
    and/or and/or
   43




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Other
    Environmental Litigation
  1949-1969.
        Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Executive
    Officers
    Name

Age

PositionsRichard M. Whiting


54


Chief Executive Officer & DirectorIrl F. Engelhardt


62


Chairman of the Board of Directors, Executive Advisor and
    DirectorPaul H. Vining


54


President & Chief Operating OfficerMark N. Schroeder


52


Senior Vice President & Chief Financial OfficerCharles A. Ebetino, Jr.


56


Senior Vice President  Corporate DevelopmentJoseph W. Bean


46


Senior Vice President  Law & Administration,
    General Counsel & Corporate SecretaryMichael V. Altrudo


61


Senior Vice President & Chief Marketing Officer  44




---



##### Table of Contents



Richard
    M. Whiting
  Chief
    Executive Officer and Director
      Irl F.
    Engelhardt
  Chairman
    of the Board of Directors, Executive Advisor and
    Director
    Paul H.
    Vining
  President &
    Chief Operating Officer
     45




---



##### Table of Contents



Mark N.
    Schroeder
  Senior
    Vice President & Chief Financial Officer
      Charles
    A. Ebetino, Jr.
  Senior
    Vice President  Corporate Development
  spin-off,
    Joseph W.
    Bean
  Senior
    Vice President  Law & Administration, General
    Counsel & Corporate Secretary
     46




---



##### Table of Contents



Michael
    V. Altrudo
  Senior
    Vice President & Chief Marketing Officer
    PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    2-for-1 Form 10-K
    High


Low2007Fourth Quarter

$
21.50


$
13.582008First Quarter

$
28.49


$
16.77Second Quarter


80.69



23.48Third Quarter


76.22



26.92Fourth Quarter


26.85



5.26   Dividend
    Policy
   47




---



##### Table of Contents



Stock
    Performance Graph
    COMPARISON
    OF 14 MONTH CUMULATIVE TOTAL RETURN*
    
  
  ©
  1-Nov-07


31-Dec-07


31-Mar-08


30-Jun-08


30-Sep-08


31-Dec-08Patriot Coal Corporation



100.00




111.31




125.25




408.77




154.93




33.33S&P Smallcap 600



100.00




91.84




84.99




85.33




84.60




63.30Custom Composite



100.00




118.63




112.10




204.78




92.46




46.15   Regulation S-K,
 48




---



##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data.     49




---



##### Table of Contents



Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except for share and per share data)Results of Operations Data:RevenuesSales

$
1,630,873


$
1,069,316


$
1,142,521


$
960,901


$
812,055Other revenues


23,749



4,046



5,398



17,376



4,369Total revenues


1,654,622



1,073,362



1,147,919



978,277



816,424Costs and expensesOperating costs and expenses


1,328,344



1,109,315



1,051,932



869,163



740,816Depreciation, depletion and amortization


125,356



85,640



86,458



65,972



62,580Asset retirement obligation expense


19,260



20,144



24,282



15,572



27,262Selling and administrative expenses


38,607



45,137



47,909



57,123



58,491Other operating (income) expense:Net gain on disposal or exchange of assets(1)


(7,004
)


(81,458
)


(78,631
)


(57,042
)


(5,764
)Loss (income) from equity affiliates(2)


915



(63
)


(60
)


(15,578
)


(12,335
)Operating profit (loss)


149,144



(105,353
)


16,029



43,067



(54,626
)Interest expense


19,526



8,337



11,419



9,833



12,701Interest income


(17,232
)


(11,543
)


(1,417
)


(1,553
)


(918
)Income (loss) before income taxes and minority interests


146,850



(102,147
)


6,027



34,787



(66,409
)Income tax provision










8,350







Minority interests(2)






4,721



11,169







275Net income (loss)


146,850



(106,868
)


(13,492
)


34,787



(66,684
)Effect of minority purchase arrangement






(15,667
)










Net income (loss) attributable to common stockholders

$
146,850


$
(122,535
)

$
(13,492
)

$
34,787


$
(66,684
)Earnings per share, basic

$
2.31


$
(2.31
)


N/A



N/A



N/AEarnings per share, diluted

$
2.28


$
(2.31
)


N/A



N/A



N/AWeighted average shares outstanding  basic(3)


63,703,777



53,141,880



N/A



N/A



N/AWeighted average shares outstanding  diluted


64,448,323



53,141,880



N/A



N/A



N/ABalance Sheet Data (at period end) (2004 unaudited):Total assets

$
3,623,611


$
1,199,837


$
1,178,181


$
1,113,058


$
836,608Total liabilities(4)


2,822,502



1,117,521



1,851,855



1,511,810



2,036,892Total long-term debt, less current maturities


216,486



11,438



20,722



11,459



Minority interests










16,153







Total stockholders equity (deficit)


801,109



82,316



(689,827
)


(398,752
)


(1,200,284
)  50




---



##### Table of Contents



Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except for share and per share data)Other Data:Tons sold (in millions and unaudited)


28.5



22.1



24.3



23.8



24.6Net cash provided by (used in):Operating activities

$
63,426


$
(79,699
)

$
(20,741
)

$
17,823


$
(62,205
)Investing activities


(138,665
)


54,721



1,993



(29,529
)


55,850Financing activities


72,128



30,563



18,627



11,459



6,985Adjusted EBITDA(5) (unaudited)


44,238



431



126,769



124,611



35,216Past mining obligation payments (unaudited)


101,746



144,811



150,672



154,479



179,299Additions to property, plant, equipmentand mine development


121,388



55,594



80,224



75,151



36,780Acquisitions, net


9,566



47,733



44,538







2,490     (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 lands 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)
    
    All share and per share amounts reflect the
    2-for-1
    stock split effected in the form of a 100% stock dividend
    effective August 11, 2008.(4)
    
    We adopted SFAS No. 158, Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans on December 31, 2006, and as a result,
    increased noncurrent liabilities and decreased total invested
    capital (accumulated other comprehensive loss) by
    $322.1 million.(5)
    
    Adjusted EBITDA is defined as net income (loss) before deducting
    net interest income and expense; income taxes; minority
    interests; asset retirement obligation expense; depreciation,
    depletion and amortization; and net sales contract accretion
    excluding
    back-to-back
    coal purchase and sales contracts. The net contract accretion on
    the
    back-to-back
    coal purchase and sale contracts reflects the net 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 GAAP 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. 51




---



##### Table of Contents



Year Ended December 31,2008


2007


2006


2005


2004(In thousands)Net income (loss)

$
146,850


$
(106,868
)

$
(13,492
)

$
34,787


$
(66,684
)Depreciation, depletion and amortization


125,356



85,640



86,458



65,972



62,580Sales contract accretion, net(1)


(249,522
)














Asset retirement obligation expense


19,260



20,144



24,282



15,572



27,262Interest expense


19,526



8,337



11,419



9,833



12,701Interest income


(17,232
)


(11,543
)


(1,417
)


(1,553
)


(918
)Income tax provision










8,350







Minority interests






4,721



11,169







275Adjusted EBITDA

$
44,238


$
431


$
126,769


$
124,611


$
35,216     (1)
    
    Net sales contract accretion resulted from the below market coal
    sale and purchase contracts acquired in the Magnum acquisition
    and was recorded at preliminarily-determined fair values 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
          2-for-1 Form 10-K
 52




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##### Table of Contents



Basis of
    Presentation Related to Periods Prior to the Spin-Off from
    Peabody
    Selling
    and Administrative Expenses
    Interest
    Expense
    Income
    Tax Provision
        Results
    of Operations
  Segment
    Adjusted EBITDA
  back-to-back back-to-back
 53




---



##### Table of Contents



Geologic
    Conditions
    Year
    ended December 31, 2008 compared to year ended
    December 31, 2007
  Summary
     54




---



##### Table of Contents



Tons
    Sold and Revenues
  Year Ended December 31,


Increase (Decrease)2008


2007


Tons/$


%(Dollars and tons in thousands, except per ton amounts)Tons Sold:Appalachia


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
%Revenue:Appalachia 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
%Average sales price per ton sold:Appalachia

$
65.23


$
56.62


$
8.61



15.2
%Illinois Basin


36.06



32.71



3.35



10.2
%             Segment
    Adjusted EBITDA
  Year Ended December 31,


Increase (Decrease)2008


2007


$


%(Dollars in thousands)Appalachia

$
172,994


$
89,850


$
83,144



92.5
%Illinois Basin


13,155



11,862



1,293



10.9
%Segment Adjusted EBITDA

$
186,149


$
101,712


$
84,437



83.0
%   start-up
 55




---



##### Table of Contents



Net
    Income (Loss)
  Year Ended


Increase (Decrease) toDecember 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/aAsset retirement obligation expense


(19,260
)


(20,144
)


884



4.4
%Interest expense:Peabody






(4,969
)


4,969



n/aThird-party


(19,526
)


(3,368
)


(16,158
)


(479.8
)%Interest income


17,232



11,543



5,689



49.3
%Income (loss) before income taxes and minority interest


146,850



(102,147
)


248,997



243.8
%Minority interests






(4,721
)


4,721



n/aNet income (loss)


146,850



(106,868
)


253,718



237.4
%Effect of minority purchase arrangement






(15,667
)


15,667



n/aNet income (loss) attributable to common stockholders

$
146,850


$
(122,535
)

$
269,385



219.8
%   Past
    Mining Obligation Expense
    Net
    Gain on Disposal or Exchange of Assets
    Selling
    and Administrative Expenses
   56




---



##### Table of Contents



Depreciation,
    Depletion and Amortization
    Sales
    Contract Accretion
    Asset
    Retirement Obligation Expense
    Interest
    Expense (Income)
      Income
    Tax Provision
    Minority
    Interests
    Effect
    of Minority Purchase Arrangement
   57




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##### Table of Contents



Year
    ended December 31, 2007 compared to year ended
    December 31, 2006
  Summary
    Tons
    Sold and Revenues
  Year Ended December 31,


Increase (Decrease)2007


2006


Tons/$


%(Dollars and tons in thousands, except per ton amounts)Tons Sold:Appalachia


14,432



15,292



(860
)


(5.6
)%Illinois Basin


7,711



8,998



(1,287
)


(14.3
)%Total Tons Sold


22,143



24,290



(2,147
)


(8.8
)%Revenue:Appalachia

$
821,116


$
890,198


$
(69,082
)


(7.8
)%Illinois Basin


252,246



257,721



(5,475
)


(2.1
)%Total Revenues

$
1,073,362


$
1,147,919


$
(74,557
)


(6.5
)%Average sales price per ton sold:Appalachia

$
56.89


$
58.21


$
(1.32
)


(2.3
)%Illinois Basin


32.71



28.64



4.07



14.2
%       Segment
    Adjusted EBITDA
  Year Ended December 31,


Increase (Decrease)2007


2006


$


%(Dollars in thousands)Appalachia

$
89,850


$
204,827


$
(114,977
)


(56.1
)%Illinois Basin


11,862



(1,900
)


13,762



n/aSegment Adjusted EBITDA

$
101,712


$
202,927


$
(101,215
)


(49.9
)%  58




---



##### Table of Contents



Net
    Income (Loss)
  Year Ended December 31,


Increase (Decrease) to Income2007


2006


$


%(Dollars in thousands)Segment Adjusted EBITDA

$
101,712


$
202,927


$
(101,215
)


(49.9
)%Corporate and Other:Past mining obligation expense


(137,602
)


(106,880
)


(30,722
)


(28.7
)%Net gain on disposal of assets


81,458



78,631



2,827



3.6
%Selling and administrative expenses


(45,137
)


(47,909
)


2,772



5.8
%Total corporate and other


(101,281
)


(76,158
)


(25,123
)


(33.0
)%Depreciation, depletion and amortization


(85,640
)


(86,458
)


818



0.9
%Asset retirement obligation expense


(20,144
)


(24,282
)


4,138



17.0
%Interest expense:Peabody


(4,969
)


(5,778
)


809



14.0
%Third-Party


(3,368
)


(5,641
)


2,273



40.3
%Interest income


11,543



1,417



10,126



n/aIncome (loss) before income taxes and minority interest


(102,147
)


6,027



(108,174
)


n/aIncome tax provision






(8,350
)


8,350



n/aMinority interests


(4,721
)


(11,169
)


6,448



57.7
%Net income (loss)


(106,868
)


(13,492
)


(93,376
)


n/aEffect of minority purchase arrangement


(15,667
)






(15,667
)


n/aNet income (loss) attributable to common stockholders

$
(122,535
)

$
(13,492
)

$
(109,043
)


n/a   Past
    Mining Obligation Expense
    Net
    Gain on Disposal of Assets
   59




---



##### Table of Contents



Selling
    and Administrative Expenses
    Depreciation,
    Depletion and Amortization
    Asset
    Retirement Obligation Expense
    Interest
    Expense (Income)
      Income
    Tax Provision
    Minority
    Interests
    Effect
    of Minority Purchase Arrangement
   60




---



##### Table of Contents



Outlook
  Market
            Patriot
    Operations
   61




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    Employee-Related
    Liabilities
     62




---



##### Table of Contents



+1.0%


-1.0%(Dollars in thousands)Effect on total service and interest cost components

$
10,058


$
(8,220
)Effect on (gain)/loss amortization component


20,651



(17,148
)Effect on total postretirement benefit obligation


127,213



(105,631
)     +0.5%


-0.5%(Dollars in thousands)Effect on total service and interest cost components

$
460


$
(568
)Effect on (gain)/loss amortization component


(8,548
)


8,998Effect on total postretirement benefit obligation


(52,655
)


55,429   Asset
    Retirement Obligations
    Income
    Taxes
     63




---



##### Table of Contents



Revenue
    Recognition
      Share-Based
    Compensation
    Impairment
    of Long-Lived Assets
    Business
    Combinations
    Liquidity
    and Capital Resources
   64




---



##### Table of Contents



Promissory
    Notes
    Credit
    Facility
  sub-facility
     65




---



##### Table of Contents



Private
    Convertible Notes Issuance
                 66




---



##### Table of Contents



Form 8-K),
      Bridge
    Loan Facility
    Other
    Contractual
    Obligations
  Payments Due by Year as of December 31, 2008Within


2-3


4-5


After1 Year


Years


Years


5 Years(Dollars in thousands)Long-term debt obligations (principal and interest)

$
12,975


$
22,661


$
213,150


$
6,800Operating lease obligations


41,853



60,736



27,938



2,755Coal reserve lease and royalty obligations


25,056



43,666



36,918



86,692Other long-term liabilities(1)


106,156



238,293



258,039



903,026Total contractual cash obligations

$
186,040


$
365,356


$
536,045


$
999,273     (1)
    
    Represents long-term liabilities relating to our postretirement
    benefit plans, work-related injuries and illnesses and mine
    reclamation and
    end-of-mine
    closure costs.   67




---



##### Table of Contents



Off-Balance
    Sheet Arrangements and Guarantees
      Workers


RetireeReclamation


Lease


Compensation


HealthObligations


Obligations


Obligations


Obligations


Other(1)


Total(Dollars in thousands)Surety bonds

$
135,506


$



$



$



$
19,487


$
154,993Letters of credit


92,239



13,399



189,488



49,849



5,841



350,816$
227,745


$
13,399


$
189,488


$
49,849


$
25,328


$
505,809     (1)
    
    Includes collateral for surety companies and bank guarantees,
    road maintenance and performance guarantees.          Newly
    Adopted Accounting Pronouncements
  FASB
    Statement No. 157
   68




---



##### Table of Contents



No. 157-3, SFAS 157-3), SFAS 157-3 SFAS 157-3
  FASB
    Statement No. 159
    Pending
    Adoption of Recent Accounting Pronouncements
  FASB
    Statement No. 141(R)
  Business Combinations
  FASB
    Statement No. 161
    FASB
    Staff Position APB
    14-1
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1 14-1
 69




---



##### Table of Contents



14-1
  14-1
  FASB
    Staff Position EITF
    03-6-1
  No. EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
  EITF
    08-6
  08-6, EITF 08-6), EITF 08-06 EITF 08-6
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Commodity
    Price Risk
       70




---



##### Table of Contents



Credit
    Risk
       71




---



##### 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.  Form 10-K,
   72




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
      Internal Control  Integrated
    Framework
      
      73




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
      Internal Control  Integrated
    Framework
      
      74




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
     Managements Report on Internal Control Over Financial
    Reporting
        Managements Report on Internal Control
    Over Financial Reporting
      St. Louis,
    Missouri
    /s/ Ernst
    & Young LLP  75




---



##### Table of Contents



Item 9B.
    Other
    Information.    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Regulation S-K Regulation S-K
  Item 11.
    Executive
    Compensation.  Regulation S-K
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Regulation S-K
  Regulation S-K,
  Equity
    Compensation Plan Information
  Number of SecuritiesRemaining Available(a)





for Future IssuanceNumber of Securities





Under Equityto be Issued


Weighted-Average


CompensationUpon Exercise of


Exercise Price of


Plans (ExcludingOutstanding Options,


Outstanding Options,


SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in Column (a))Equity compensation plans approved by security holders


2,674,150


$
23.66



2,525,850Equity compensation plans not approved by security holders


N/A



N/A



N/ATotal


2,674,150


$
23.66



2,525,850   Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.  Regulation S-K Regulation S-K
  Item 14.
    Principal
    Accounting Fees and Services.   76




---



##### 



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, 2008, 2007 and 2006


F-3Consolidated Balance Sheets 
    December 31, 2008 and December 31, 2007


F-4Consolidated Statements of Cash Flows 
    Years Ended December 31, 2008, 2007 and 2006


F-5Consolidated Statements of Changes in
    Stockholders Equity  Years Ended
    December 31, 2008, 2007 and 2006


F-6Notes to Consolidated Financial Statements


F-7EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2    Financial Statement Schedule.
    PageValuation and Qualifying Accounts


F-49      Exhibits.
   77




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##### Table of Contents



SIGNATURES
      /s/  RICHARD
    M. WHITING   Chief Executive Officer and Director
      Signature

Title

Date/s/  RICHARD
    M. WHITINGRichard
    M. Whiting

Chief Executive Officer and Director
    (principal executive officer)

February 27, 2009/s/  MARK
    N. SCHROEDERMark
    N. Schroeder

Senior Vice President and
    Chief Financial Officer
    (principal financial and accounting officer)

February 27, 2009/s/  IRL
    F. ENGELHARDTIrl
    F. Engelhardt

Chairman of the Board and Director

February 27, 2009/s/  J.
    JOE ADORJANJ.
    Joe Adorjan

Director

February 27, 2009/s/  B.
    R. BROWNB.
    R. Brown

Director

February 27, 2009/s/  JOHN
    F. ERHARDJohn
    F. Erhard

Director

February 27, 2009/s/  MICHAEL
    P. JOHNSONMichael
    P. Johnson

Director

February 27, 2009/s/  JOHN
    E. LUSHEFSKIJohn
    E. Lushefski

Director

February 27, 2009 78




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##### Table of Contents



Signature

Title

Date/s/  MICHAEL
    M. SCHARFMichael
    M. Scharf

Director

February 27, 2009/s/  ROBB
    E. TURNERRobb
    E. Turner

Director

February 27, 2009/s/  ROBERT
    O. VIETSRobert
    O. Viets

Director

February 27, 2009  79




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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

Transition Services Agreement, dated October 22, 2007,
    between Peabody Energy Corporation and Patriot Coal Corporation
    (Incorporated by reference to Exhibit 10.1 of the
    Registrants Current Report on
    Form 8-K,
    filed on October 25, 2007).10
.2

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
.3

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
.4

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
.5

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
.6

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
.7

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
.8

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
.9

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
.10

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).




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##### Table of Contents



Exhibit No.

Description of Exhibit10
.11

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
.12

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
.13

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
.14

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).10
.15

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
.16

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
.17

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
.18

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
.19

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
.20

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
.21

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
.22

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
.23

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
.24

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
.25

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).10
.26

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
.27

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
.28

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).




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##### Table of Contents



Exhibit No.

Description of Exhibit10
.29

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
.30

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
.31

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
.32

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
.33

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
.34

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
.35

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
.36

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).10
.37

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
.38

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
.39

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).10
.40

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
.41

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
.42

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
.43

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
.44

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
.45

Amendment I 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).




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##### Table of Contents



Exhibit No.

Description of Exhibit10
.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

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
.51

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
.52

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
.53

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
.54

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
.55

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
.56

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
.57

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
.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

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
.61

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).21
.1*

List of Subsidiaries23
.1*

Consent of Independent Registered Accounting Firm23
.2*

Consent of Independent Registered Accounting Firm




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##### Table of Contents



Exhibit No.

Description of Exhibit31
.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.




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                 F-1




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
           F-2




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2008


2007


2006(Dollars in thousands, exceptshare and per share data)RevenuesSales

$
1,630,873


$
1,069,316


$
1,142,521Other revenues


23,749



4,046



5,398Total revenues


1,654,622



1,073,362



1,147,919Costs and expensesOperating costs and expenses


1,329,259



1,109,252



1,051,872Depreciation, depletion and amortization


125,356



85,640



86,458Asset retirement obligation expense


19,260



20,144



24,282Selling and administrative expenses


38,607



45,137



47,909Net gain on disposal or exchange of assets


(7,004
)


(81,458
)


(78,631
)Operating profit (loss)


149,144



(105,353
)


16,029Interest expense


19,526



8,337



11,419Interest income


(17,232
)


(11,543
)


(1,417
)Income (loss) before income taxes and minority interests


146,850



(102,147
)


6,027Income tax provision










8,350Minority interests






4,721



11,169Net income (loss)


146,850



(106,868
)


(13,492
)Effect of minority purchase arrangement






(15,667
)


Net income (loss) attributable to common stockholders

$
146,850


$
(122,535
)

$
(13,492
)Weighted average shares outstandingBasic


63,703,777



53,141,880



N/AEffect of dilutive securities


744,546







N/ADiluted


64,448,323



53,141,880



N/ABasic earnings per share:Net income (loss)

$
2.31


$
(2.01
)Effect of minority purchase arrangement






(0.30
)Net income (loss) attributable to common stockholders

$
2.31


$
(2.31
)


N/ADiluted earnings per share:Net income (loss)

$
2.28


$
(2.01
)Effect of minority purchase arrangement






(0.30
)Net income (loss) attributable to common stockholders

$
2.28


$
(2.31
)


N/A    F-3




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(Dollars in thousands, except share data)ASSETSCurrent assetsCash and cash equivalents

$
2,872


$
5,983Accounts receivable and other, net of allowance for doubtful
    accounts of $540 and $251 as of December 31, 2008 and 2007,
    respectively


163,556



125,985Inventories


80,953



31,037Below market purchase contracts acquired


8,543



Prepaid expenses and other current assets


12,529



6,214Total current assets


268,453



169,219Property, plant, equipment and mine developmentLand and coal interests


2,652,224



689,338Buildings and improvements


390,119



282,703Machinery and equipment


658,699



330,338Less accumulated depreciation, depletion and amortization


(540,366
)


(426,090
)Property, plant, equipment and mine development, net


3,160,676



876,289Notes receivable


131,066



126,381Investments and other assets


63,416



27,948Total assets

$
3,623,611


$
1,199,837LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of debt

$
28,170


$
927Trade accounts payable and accrued expenses


413,790



183,592Below market sales contracts acquired


324,407



Total current liabilities


766,367



184,519Long-term debt, less current maturities


216,486



11,438Asset retirement obligations


224,180



134,364Workers compensation obligations


188,180



192,730Accrued postretirement benefit costs


1,003,254



527,315Obligation to industry fund


42,571



31,064Below market sales contracts acquired, noncurrent


316,707



Other noncurrent liabilities


64,757



36,091Total liabilities


2,822,502



1,117,521Stockholders equity:Common stock ($0.01 par value; 100,000,000 shares
    authorized; 77,383,199 and 53,517,536 shares issued and
    outstanding at December 31, 2008 and 2007, respectively)


774



536Preferred stock ($0.01 par value; 10,000,000 shares
    authorized; no shares issued or outstanding at December 31,
    2008 and 2007, respectively)






Series A Junior Participating preferred stock
    ($0.01 par value; 1,000,000 shares authorized; no
    shares issued and outstanding at December 31, 2008 and
    2007, respectively)






Additional paid-in capital


799,129



189,183Retained earnings (deficit)


113,487



(33,363
)Accumulated other comprehensive loss


(112,281
)


(74,040
)Total stockholders equity


801,109



82,316Total liabilities and stockholders equity

$
3,623,611


$
1,199,837    F-4




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2008


2007


2006(Dollars in thousands)Cash Flows From Operating ActivitiesNet income (loss)

$
146,850


$
(106,868
)

$
(13,492
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation, depletion and amortization


125,356



85,640



86,458Accretion of below market contracts


(279,402
)






Net gain on disposal or exchange of assets


(7,004
)


(81,458
)


(78,631
)Stock-based compensation expense


8,778



1,299



Dividends received from equity investments










9,935Minority interest






4,721



11,169Changes in current assets and liabilities, net of acquisitions:Accounts receivable


60,699



(19,058
)


2,043Inventories


3,693



3,655



(7,998
)Other current assets


(1,498
)


790



(3,769
)Accounts payable and accrued expenses


(5,697
)


10,828



(10,932
)Interest on notes receivable


(13,113
)


(10,013
)


(876
)Asset retirement obligations


12,719



4,473



3,006Workers compensation obligations


(5,953
)


6,654



(3,163
)Accrued postretirement benefit costs


15,577



22,264



4,677Obligation to industry fund


(3,412
)


7,286



(2,253
)Other, net


5,833



(9,912
)


(16,915
)Net cash provided by (used in) operating activities


63,426



(79,699
)


(20,741
)Cash Flows From Investing ActivitiesAdditions to property, plant, equipment and mine development


(121,388
)


(55,594
)


(80,224
)Additions to advance mining royalties


(11,981
)


(3,964
)


(6,065
)Investment in joint ventures


(16,365
)






Cash acquired in business combination


21,015







Acquisitions


(9,566
)


(47,733
)


(44,538
)Proceeds from disposal or exchange of assets, net of notes
    receivable


2,077



29,426



48,168Contractor advances, net of payments


(2,457
)






Net change in receivables from/payables to former affiliates






132,586



84,652Net cash provided by (used in) investing activities


(138,665
)


54,721



1,993Cash Flows From Financing ActivitiesConvertible note proceeds


200,000







Termination of Magnum debt facility


(136,816
)






Contribution from former Parent






43,647



44,538Short-term borrowing


23,000







Deferred financing costs


(10,906
)


(4,726
)


Long-term debt payments


(2,684
)


(8,358
)


(23,792
)Proceeds from employee stock purchases


1,002







Common stock issuance fees


(1,468
)






Distribution to minority interests










(2,119
)Net cash provided by financing activities


72,128



30,563



18,627Net increase (decrease) in cash and cash equivalents


(3,111
)


5,585



(121
)Cash and cash equivalents at beginning of year


5,983



398



519Cash and cash equivalents at end of year

$
2,872


$
5,983


$
398    F-5




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
  AccumulatedAdditional


Retained


Other


FormerCommon


Paid-in


Earnings


Comprehensive


ParentsStock


Capital


(Deficit)


Loss


Equity


Total(Dollars in thousands)December 31, 2005

$



$



$



$



$
(398,752
)

$
(398,752
)Net loss


















(13,492
)


(13,492
)SFAS No. 158 adoption impact of postretirement plans
    and workers compensation obligations (net of taxes of $0):Accumulated actuarial loss














(318,614
)






(318,614
)Prior service cost














(3,507
)






(3,507
)Contribution from former Parent


















44,538



44,538December 31, 2006














(322,121
)


(367,706
)


(689,827
)Net loss










(33,363
)






(73,505
)


(106,868
)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






















(24,121
)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










146,850











146,850Postretirement 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






















108,609Issuance 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


$
799,129


$
113,487


$
(112,281
)

$



$
801,109    F-6




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
    31, 2008
  (1)
    Basis of
    Presentation  Description
    of Business
        Basis
    of Presentation
      2-for-1
  (2)
    Summary
    of Significant Accounting Policies  Sales
   F-7




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Revenues
    Cash
    and Cash Equivalents
    Inventories
    Property,
    Plant, Equipment and Mine Development
    and/or
     F-8




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    YearsBuilding and improvements

10 to 29Machinery and equipment

1 to 20Leasehold improvements

Shorter of life of asset, mine     Purchased
    Contract Rights
    Joint
    Ventures
    Sales
    Contract Liability
   F-9




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Asset
    Retirement Obligations
      Environmental
    Liabilities
    Income
    Taxes
       F-10




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Postretirement
    Healthcare Benefits
    Multi-Employer
    Benefit Plans
  No. 92-13,
  Pension
    Plans
      Postemployment
    Benefits
   F-11




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of
    Estimates in the Preparation of the Consolidated Financial
    Statements
        Share-Based
    Compensation
    Derivatives
    Impairment
    of Long-Lived Assets
   F-12




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Business
    Combinations
    Deferred
    Financing Costs
    Reclassifications
    (3)
    New
    Accounting Pronouncements  Newly
    Adopted Accounting Pronouncements
  FASB
    Statement No. 157
  FAS 157-2 SFAS 157-2)
  No. 157-3, SFAS 157-3), 157-3 SFAS 157-3
  FASB
    Statement No. 159
   F-13




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pending
    Adoption of Recent Accounting Pronouncements
  FASB
    Statement No. 141(R)
  Business Combinations
  FASB
    Statement No. 161
    FASB
    Staff Position APB
    14-1
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1 14-1 14-1
  14-1
 F-14




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FASB
    Staff Position EITF
    03-6-1
  No. EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
  EITF
    08-6
  08-6, (EITF 08-6), EITF 08-06 EITF 08-6
  (4)
    Business
    Combinations  Magnum
    Coal Company
     F-15




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)Cash

$
21,015Accounts receivable, net


88,636Inventories


53,609Other current assets


43,008Property, plant, equipment and mine development, net


2,261,199Other non-current assets


11,719Total assets acquired


2,479,186Accounts payable and accrued expenses


240,483Below market sales contracts acquired, current


497,882Long-term debt


144,606Below market sales contracts acquired, noncurrent


459,802Accrued postretirement benefit costs


445,675Other non-current liabilities


88,871Total liabilities assumed


1,877,319Net assets acquired

$
601,867          F-16




---



##### 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 (loss):As reported

$
146,850


$
(106,868
)Pro forma


285,671



299,725Basic earnings per share:As reported

$
2.31


$
(2.01
)Pro forma


4.48



5.64Diluted earnings per share:As reported

$
2.28


$
(2.01
)Pro forma


4.43



5.64     KE
    Ventures, LLC
     F-17




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Redeemable Preferred
    Stock
  (5)
    Risk
    Management and Financial Instruments    Credit
    Risk
      Commodity
    Price Risk
    Employees
   F-18




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair
    Value of Financial Instruments
      (6)
    Net Gain
    on Disposal or Exchange of Assets and Other Commercial
    Transactions          (7)
    Earnings
    per Share   F-19




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (8)
    Inventories    December 31,2008


2007(Dollars in thousands)Saleable coal

$
15,107


$
13,519Materials and supplies


52,023



13,385Raw coal


13,823



4,133Total

$
80,953


$
31,037    F-20




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (9)
    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, 2005

$



$



$



$
SFAS No. 158 adoption impact of postretirement plans
    and workers compensation obligations


(318,614
)


(3,507
)






(322,121
)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
)     (10)
    Leases     F-21




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Capital


Operating


CoalLeases


Leases


Reserves(Dollars in thousands)2009

$
4,775


$
41,853


$
25,0562010


5,668



34,789



22,9942011


593



25,947



20,6722012






17,882



18,8272013






10,056



18,0912014 and thereafter






2,755



86,692Total minimum lease and royalty payments

$
11,036


$
133,282


$
192,332Less interest


(818
)Present value of minimum capital lease payments

$
10,218       (11)
    Trade
    Accounts Payable and Accrued Expenses    December 31,2008


2007(Dollars in thousands)Trade accounts payable

$
201,046


$
66,811Accrued healthcare, including post-retirement


66,509



30,120Workers compensation obligations


28,225



23,778Accrued payroll and related benefits


40,719



21,565Accrued taxes other than income


27,646



13,339Other accrued benefits


11,029



9,487Accrued royalties


9,532



5,281Accrued lease payments


4,330



1,692Diesel fuel hedge


5,915



Other accrued expenses


18,839



11,519Total trade accounts payable and accrued expenses

$
413,790


$
183,592  F-22




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (12)
    Income
    Taxes      Year Ended December 31,2008


2007


2006(Dollars in thousands)Federal statutory rate

$
51,398


$
(35,751
)

$
2,110Depletion


(16,597
)


(11,281
)


(15,006
)State income taxes, net of U.S. federal tax benefit


5,918



(6,911
)


(2,183
)Minority interest






(1,652
)


(3,909
)Changes in valuation allowance


(44,540
)


55,183



26,864Changes in tax reserves


960



107



172Other, net


2,861



305



302Total

$



$



$
8,350     December 31,2008


2007(Dollars in thousands)Deferred tax assets:Postretirement benefit obligations

$
425,087


$
233,881Tax credits and loss carryforwards


133,860



20,346Accrued workers compensation liabilities


92,199



91,925Accrued reclamation and mine closing liabilities


98,084



53,483Obligation to industry fund


12,672



12,672Sales contract liabilities


274,704



Other


43,986



20,387Total gross deferred tax assets


1,080,592



432,694Deferred tax liabilities:Property, plant, equipment and mine development, leased coal
    interests and advance royalties, principally due to differences
    in depreciation, depletion and asset writedowns


878,144



162,092Total gross deferred tax liabilities


878,144



162,092Valuation allowance


(202,448
)


(270,602
)Net deferred tax liability

$



$
Deferred taxes consisted of the following:Current deferred income taxes

$



$
Noncurrent deferred income taxes






Net deferred tax liability

$



$
  F-23




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            2005-2008
   F-24




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (13)
    Long-Term
    Debt    December 31,2008


2007(Dollars in thousands)Promissory Notes

$
11,438


$
12,365Short-term borrowings


23,000



3.25% Convertible Senior Notes due 2013


200,000



Capital Leases


10,218



Total

$
244,656


$
12,365   Promissory
    Notes
    Credit
    Facility
  sub-facility
     F-25




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Private
    Convertible Notes Issuance
             F-26




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Form 8-K),
      Bridge
    Loan Facility
    Capital
    Lease Obligations and Other
   F-27




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (DollarsYear of Maturity

in thousands)2009

$
5,0712010


6,5962011


1,6952012


1,1822013


201,2552014 and thereafter


5,857Total

$
221,656     (14)
    Asset
    Retirement Obligations    December 31,2008


2007(Dollars in thousands)Balance at beginning of year

$
134,364


$
139,703Liabilities incurred


203



224Liabilities settled or disposed


(6,540
)


(17,228
)Accretion expense


19,116



13,291Revisions to estimate


1,057



7,089Liabilities conveyed to Peabody (upon spin-off)






(8,715
)Liabilities acquired through acquisition


75,980



Balance at end of year

$
224,180


$
134,364          F-28




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (15)
    Workers
    Compensation Obligations        Year Ended December 31,2008


2007


2006(Dollars in thousands)Service cost

$
3,382


$
2,971


$
2,807Interest cost


9,876



9,124



9,568Net amortization of actuarial gains


(4,009
)


(1,607
)


(1,369
)Total occupational disease


9,249



10,488



11,006Traumatic injury claims


13,261



13,160



10,984State assessment taxes


2,546



4,373



10,388Total provision

$
25,056


$
28,021


$
32,378       Year Ended December 31,2008


2007


2006Discount rate:Occupational disease


6.40
%


6.00
%


5.90
%Traumatic injury


5.80
%


6.00
%


5.90
%Inflation rate


3.50
%


3.50
%


3.50
%    F-29




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007(Dollars in thousands)Occupational disease costs

$
154,527


$
155,829Traumatic injury claims


61,878



60,679Total obligations


216,405



216,508Less current portion (included in Accrued expenses)


(28,225
)


(23,778
)Noncurrent obligations (included in Workers compensation
    obligations)

$
188,180


$
192,730         December 31,2008


2007(Dollars in thousands)Change in benefit obligation:Beginning of year obligation

$
155,829


$
173,924Service cost


3,382



2,971Interest cost


9,876



9,124Acquisitions/divestitures


3,176



Net change in actuarial gain


(6,876
)


(21,653
)Benefit and administrative payments


(10,860
)


(8,537
)Net obligation at end of year


154,527



155,829Change in plan assets:Fair value of plan assets at beginning of period






Employer contributions


10,860



8,537Benefits paid


(10,860
)


(8,537
)Fair value of plan assets at end of period






Obligation at end of period

$
154,527


$
155,829    F-30




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Federal
    Black Lung Excise Tax Refund Claims
    (16)
    Pension
    and Savings Plans  Multi-Employer
    Pension Plans
  per-hour
  Defined
    Contribution Plans
      (17)
    Postretirement
    Healthcare Benefits   F-31




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Service cost for benefits earned

$
1,731


$
981


$
599Interest cost on accumulated postretirement benefit obligation


51,472



65,964



62,385Amortization of prior service cost


(680
)


(1,306
)


(2,545
)Amortization of actuarial losses


13,516



34,260



26,866Net periodic postretirement benefit costs

$
66,039


$
99,899


$
87,305     December 31,2008


2007(Dollars in thousands)Change in benefit obligation:Accumulated postretirement benefit obligation at beginning of
    period

$
554,748


$
1,214,032Service cost


1,731



981Interest cost


51,472



65,964Participant contributions


412



840Plan amendments






11,687Acquisitions/divestitures


456,396



Retention by Peabody of certain liabilities






(615,837
)Benefits paid


(42,491
)


(74,948
)Change in actuarial (gain) or loss


42,660



(47,971
)Accumulated postretirement benefit obligation at end of period


1,064,928



554,748Change in plan assets:Fair value of plan assets at beginning of period






Employer contributions


42,079



74,108Participant contributions


412



840Benefits paid and administrative fees (net of Medicare
    Part D reimbursements)


(42,491
)


(74,948
)Fair value of plan assets at end of period






Accrued postretirement benefit obligation


1,064,928



554,748Less current portion (included in Accrued expenses)


(61,674
)


(27,433
)Noncurrent obligation (included in Accrued postretirement
    benefit costs)

$
1,003,254


$
527,315    F-32




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Year Ended December 31,2008

2007Discount rate

6.80%

6.80%Rate of compensation increase

3.50%

3.50%Measurement date

December 31, 2008

December 31, 2007     Year Ended December 31,2008

2007

2006Discount rate

6.80%

6.00%

5.90%Rate of compensation increase

3.50%

3.50%

3.50%Measurement date

December 31, 2007

December 31, 2006

December 31, 2005       Year Ended December 31,2008


2007Healthcare cost trend rate assumed for next year


9.25
%


7.50
%Rate to which the cost trend is assumed to decline (the ultimate
    trend rate)


4.75
%


4.75
%Year that the rate reaches that ultimate trend rate


2014



2013     +1.0%

-1.0%(Dollars in thousands)Effect on total service and interest cost components

$
10,058


$
(8,220
)Effect on year-end postretirement benefit obligation


127,213



(105,631
)   Plan
    Assets
   F-33




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Estimated
    Future Benefits Payments
    PostretirementBenefits(Dollars in thousands)2009

$
61,6742010


67,2052011


75,6002012


79,9362013


84,488Years
    2014-2018


454,930   Medicare
    and Other Plan Changes
    Multi-Employer
    Benefit Plans
       F-34




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          (18)
    Related
    Party Transactions       F-35




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            (19)
    Guarantees    Letters
    of Credit and Bonding
    Workers


RetireeReclamation


Lease


Compensation


HealthObligations


Obligations


Obligations


Obligations


Other(1)


Total(Dollars in thousands)Surety Bonds

$
135,506


$



$



$



$
19,487


$
154,993Letters of Credit


92,239



13,399



189,488



49,849



5,841



350,816$
227,745


$
13,399


$
189,488


$
49,849


$
25,328


$
505,809     (1)
    
    Other includes letters of credit and surety bonds related to
    collateral for surety companies and bank guarantees, road
    maintenance and performance guarantees.     F-36




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other
    Guarantees
    (20)
    Commitments
    and Contingencies  Commitments
    Other
    Flood
    Litigation
  2001
    Flood Litigation
    and/or
 F-37




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2004
    Flood Litigation
    and/or and/or
      Clean
    Water Act Permit Issues
   F-38




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    EPA
    Consent Decree
        Apogee
    Coal Company, LLC (Apogee)
       F-39




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Hobet
         F-40




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Comprehensive
    Enviromental Response, Compensation and Liability Act
    (CERCLA)
      Other
    Environmental Litigation
  1949-1969.
     F-41




---



##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (21)
    Segment
    Information        CorporateAppalachia


Illinois 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


107,358



10,893



3,137



121,388Loss from equity affiliates


(915
)










(915
)     CorporateAppalachia


Illinois 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  F-42




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    CorporateAppalachia


Illinois Basin


and Other(1)


Consolidated(Dollars in thousands)Revenues

$
890,198


$
257,721


$



$
1,147,919Adjusted EBITDA


204,827



(1,900
)


(76,158
)


126,769Additions to property, plant, equipment and mine development


72,236



7,988







80,224Income from equity affiliates


60











60     (1)
    
    Corporate and Other results include the gains on disposal of
    assets discussed in Note 6.    Year Ended December 31,2008


2007


2006(Dollars in thousands)Consolidated Adjusted EBITDA

$
44,238


$
431


$
126,769Depreciation, depletion and amortization


(125,356
)


(85,640
)


(86,458
)Sales contract accretion


249,522







Asset retirement obligation expense


(19,260
)


(20,144
)


(24,282
)Interest expense


(19,526
)


(8,337
)


(11,419
)Interest income


17,232



11,543



1,417Income tax provision










(8,350
)Minority interests






(4,721
)


(11,169
)Net income (loss)

$
146,850


$
(106,868
)

$
(13,492
)   (22)
    Stockholders
    Equity  Common
    Stock
       F-43




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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


77,383,199   Preferred
    Stock
    Preferred
    Share Purchase Rights Plan and Series A Junior
    Participating Preferred Stock
       F-44




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (23)
    Stock-Based
    Compensation      Restricted
    Stock
      WeightedYear Ended


AverageDecember 31,


Grant-Date2008


Fair ValueNonvested at January 1, 2008


375,656


$
18.75Granted


54,681



54.60Forfeited


(48,984
)


20.01Nonvested at December 31, 2008


381,353



23.73   Extended
    Long-Term Incentive Restricted Stock Units
   F-45




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##### Table of Contents



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


AverageDecember 31,


Grant-Date2008


Fair ValueNonvested at January 1, 2008


509,438


$
18.75Granted


105,835



34.01Forfeited


(71,558
)


19.18Vested


(37,340
)


18.75Nonvested at December 31, 2008


506,375



21.88       WeightedYear Ended


AverageDecember 31,


Grant-Date2008


Fair ValueNonvested at January 1, 2008


708,164


$
18.75Granted


78,524



60.20Forfeited


(107,336
)


19.18Nonvested at December 31, 2008


679,352



23.47   Extended
    Long-Term Incentive Non-Qualified Stock Option
   F-46




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##### Table of Contents



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


AverageYear Ended


Average


RemainingDecember 31,


Exercise


Contractual2008


Price


LifeOutstanding at January 1, 2008


1,109,346


$
18.75Granted


128,618



60.20Forfeited


(168,234
)


19.20Outstanding at December 31, 2008


1,069,730



23.66



8.835   Share-Based
  Year Ended December 31,2008

2007Weighted-average fair value

$10.33

$15.34Risk-free interest rate

3.55%

4.22%Expected option life

6.69 years

6.69 yearsExpected volatility

47.61%

30.64%Dividend yield

0%

0%   Employee
    Stock Purchase Plan
   F-47




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (24)
    Summary
    Quarterly Financial Information (Unaudited)    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)


(3,066
)


11,815



72,951



65,150Basic earnings per share

$
(0.06
)

$
0.22


$
1.02


$
0.85Diluted earnings per share

$
(0.06
)

$
0.22


$
1.01


$
0.85Weighted average shares used in calculating basic earnings per
    share


53,141,880



53,141,880



71,299,897



77,001,846Stock price  high and low prices

$
28.49-$16.77


$
80.69-$23.48


$
76.22-$26.92


$
26.85-$5.26   Year Ended December 31, 2007First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(Dollars in thousands except per share and stock price
    data)Revenues

$
269,663


$
256,221


$
293,301


$
254,177Operating loss


(10,698
)


(4,392
)


(39,823
)


(50,440
)Net loss


(11,951
)


(5,814
)


(39,451
)


(49,652
)Basic and diluted loss attributable to common stockholders per
    share


N/A



N/A



N/A


$
(1.09
)Weighted average shares used in calculating basic earnings per
    share


N/A



N/A



N/A



53,141,880Stock price  high and low prices


N/A



N/A



N/A


$
21.50-$13.58  F-48




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##### Table of Contents



PATRIOT
    COAL CORPORATION
  SCHEDULE II  VALUATION AND
    QUALIFYING ACCOUNTS
 DECEMBER 31, 2008
  Balance


Charged to








BalanceBeginning


Costs and








at End ofDescription

of Period


Expenses


Deductions(1)


Other


Period(Dollars in thousands)Year Ended December 31, 2006Reserves deducted from asset accounts:Advance royalty recoupment reserve

$
4,836


$



$



$
(120
)(2)

$
4,716Reserve for materials and supplies


1,519







(61
)






1,458Allowance for doubtful accounts


92



160











252Year Ended December 31, 2007Reserves deducted from asset accounts:Advance royalty recoupment reserve


4,716











(1,985
)(3)


2,731Reserve for materials and supplies


1,458



74







(1,252
)(3)


280Allowance for doubtful accounts


252







(1
)






251Year Ended December 31, 2008Reserves deducted from asset accounts:Advance royalty recoupment reserve


2,731











12
(4)


2,743Reserve for materials and supplies


280



288







843
(4)


1,411Allowance for doubtful accounts


251



399



(110
)






540     (1)
    
    Reserves utilized, unless otherwise indicated.(2)
    
    Peabody restructured entities which resulted in the
    reclassification of advances and related reserves.(3)
    
    Balance transferred to Peabody as part of Patriot spin-off.(4)
    
    Balance reflects Magnum activity since acquisition on
    July 23, 2008. F-49