Peabody Energy Corp – ‘10-Q’ for 3/31/03 – EX-18.1

On:  Tuesday, 5/13/03, at 4:18pm ET   ·   For:  3/31/03   ·   Accession #:  950134-3-7757   ·   File #:  1-16463

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      31    178K 
 2: EX-4.26     Exchange and Registration Rights Agreement            32    121K 
 3: EX-4.27     6 7/8% Senior Notes Due 2013 Indenture               146    588K 
 4: EX-10.43    Second Amended and Restated Credit Agreement         100    492K 
 5: EX-10.44    Employment Agreement - Fredrick D. Palmer             15     44K 
 6: EX-10.45    First Amendment to Employment Agreement-F. Palmer      4     23K 
 7: EX-18.1     Letter Re: Change in Accounting Principle              1      9K 
 8: EX-99.1     Certification Pursuant to Section 906                  1      7K 
 9: EX-99.2     Certification Pursuant to Section 906                  1      7K 

EX-18.1   —   Letter Re: Change in Accounting Principle

EX-18.1
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                                                                    EXHIBIT 18.1

April 14, 2003                                                                  

Richard A. Navarre                                                              
Executive Vice President and                                                    
Chief Financial Officer                                                   
Peabody Energy Corporation                                                      
701 Market Street                                                               
St. Louis, Missouri 63101                                                       

Dear Mr. Navarre:                                                               

As discussed in Note 3 of the Notes to unaudited condensed consolidated         
financial statements of Peabody Energy Corporation, included in its Form 10-Q   
for the quarter ended March 31, 2003, the Company changed its method of         
accounting for unrecognized net gains and losses for postretirement benefits    
other than pensions from a method that amortized such amounts in excess of a 5% 
corridor over a three-year period to a method that amortizes all unrecognized   
net gains and losses over the average remaining service period of active plan   
participants. Management has advised us that it believes the change is to a     
preferable method in the Company's circumstances for the following reasons. The 
elimination of the corridor will allow the Company to recognize over time all   
differences (versus only those outside the corridor) between the fair value of  
its postretirement benefit obligations and the amount reflected in the balance  
sheet. In addition, the use of an amortization period equal to the average      
remaining service period of active plan participants more closely matches the   
long-term expected costs of the Company's unfunded plans with the benefits      
provided by the Company's continuing employee workforce.                        

There are no authoritative criteria for determining a "preferable" amortization 
method based on the particular circumstances. However, we conclude that the     
change in the method of accounting for postretirement benefits other than       
pensions by the elimination of the corridor and the change in the amortization  
period to the average remaining service life of plan participants is a change to
an acceptable alternative method which, based on management's business judgment 
to make this change, is preferable in the Company's circumstances. We have not  
conducted an audit in accordance with auditing standards generally accepted in  
the United States of any financial statements of the Company as of any date or  
for any period subsequent to December 31, 2002, and therefore, we do not express
any opinion on any financial statements of the Company subsequent to that date. 

                           Very truly yours,

                               /s/ Ernst & Young LLP

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing		Date		Other Filings
Filed on:		5/13/03
		4/14/03
For Period End:		3/31/03
		12/31/02		10-K,  11-K
				List all Filings