Filed Pursuant to Rule 424(b)(3)
                                          File Nos.  333-59073
                                                     333-59073-01  to
                                                     333-59073-51

                          P&L COAL HOLDINGS CORPORATION

               SUPPLEMENT NO. 2 TO MARKET-MAKING PROSPECTUS DATED
                                AUGUST 2, 1999

                 THE DATE OF THIS SUPPLEMENT IS NOVEMBER 8, 1999

            ON NOVEMBER 4, 1999, P&L COAL HOLDINGS CORPORATION FILED THE
                 ATTACHED REPORT ON FORM 10-Q FOR THE QUARTER ENDED
                                  SEPTEMBER 30, 1999




                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended  September 30, 1999
                                ------------------------------------------------
                                       or

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from                        to
                                ----------------------   -----------------------

Commission File Number  333-59073
                        --------------------------------------------------------

                          P&L COAL HOLDINGS CORPORATION
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                 13-4004153
- -----------------------------------        -------------------------------------
  (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)                Identification No.)

    701 Market Street, St. Louis, Missouri                 63101-1826
- --------------------------------------------------------------------------------
   (Address of principal executive offices)                (Zip Code)

                                 (314) 342-3400
- --------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
- --------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

 X Yes             No
 -----           ------

                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements.

                          P&L COAL HOLDINGS CORPORATION
            UNAUDITED STATEMENTS OF CONDENSED CONSOLIDATED OPERATIONS
                                 (In thousands)

                                                                                                                       Predecessor
                                                                                                                         Company
                                                                                                                     ---------------
                                      Quarter Ended       Quarter Ended      Six Months Ended     Period Ended        Period Ended
                                      September 30,       September 30,       September 30,       September 30,          May 19,
                                          1999                1998                1999               1998 <F1>             1998
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
REVENUES

     Sales                           $     621,638       $     535,860       $   1,224,003       $     780,877       $     278,930

     Other revenues                         26,354              21,638              54,665              39,288              13,478

                                     ---------------     ---------------     ---------------     ---------------     ---------------
          Total revenues                   647,992             557,498           1,278,668             820,165             292,408

OPERATING COSTS AND EXPENSES

     Operating costs and expenses         (523,846)           (464,534)         (1,035,195)           (677,281)           (246,801)

     Depreciation, depletion and
       amortization                        (60,803)            (51,783)           (125,299)            (77,474)            (26,218)

     Selling and administrative
       expenses                            (20,679)            (16,790)            (41,167)            (25,748)            (12,017)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
OPERATING PROFIT                            42,664              24,391              77,007              39,662               7,372

     Interest expense                      (51,057)            (52,692)           (100,852)            (75,846)             (4,222)

     Interest income                         1,084               6,726               2,095               7,753               1,667
                                     ---------------     ---------------     ---------------     ---------------     ---------------
INCOME (LOSS) BEFORE INCOME TAXES           (7,309)            (21,575)            (21,750)            (28,431)              4,817

     Income tax (provision) benefit            196               6,903               2,480               8,472              (4,341)

     Minority interests                     (1,626)                -                (3,121)                -                   -
                                     ---------------     ---------------     ---------------     ---------------     ---------------
NET INCOME (LOSS)                    $      (8,739)      $     (14,672)      $     (22,391)      $     (19,959)      $         476
                                     ===============     ===============     ===============     ===============     ===============
<FN>
<F1> Includes results for the six months ended September 30, 1998; however,  P&L
     Coal Holdings  Corporation  had no activity for the period April 1, 1998 to
     May 19, 1998. See accompanying  notes to unaudited  condensed  consolidated
     financial statements.
</FN>

See accompanying notes to unaudited condensed consolidated financial statements.


                          P&L COAL HOLDINGS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                                                                   (Unaudited)
                                                                                                  September 30,        March 31,
                                                                                                      1999                1999
                                                                                                 ---------------     ---------------
                                                                                                               
ASSETS
Current assets
     Cash and cash equivalents                                                                   $     126,312       $     194,078
     Accounts receivable, less allowance for doubtful accounts of $177 for both periods                384,172             312,748
     Materials and supplies                                                                             52,791              53,978
     Coal inventory                                                                                    192,816             195,919
     Assets from power trading activities                                                              955,359           1,037,300
     Other current assets                                                                               78,073              38,438
                                                                                                 ---------------     ---------------
          Total current assets                                                                       1,789,523           1,832,461
Property, plant, equipment and mine development, net of accumulated depreciation,
  depletion and amortization of $307,090 and $193,492, respectively                                  4,800,458           4,797,945
Investments and other assets                                                                           391,544             393,525
                                                                                                 ---------------     ---------------
          Total assets                                                                           $   6,981,525       $   7,023,931
                                                                                                 ===============     ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Short-term borrowings and current maturities of long-term debt                              $      91,028       $      72,404
     Income taxes payable                                                                                6,054               7,308
     Liabilities from power trading activities                                                         547,623             638,062
     Accounts payable and accrued expenses                                                             701,178             627,734
                                                                                                 ---------------     ---------------
          Total current liabilities                                                                  1,345,883           1,345,508

Long-term debt, less current maturities                                                              2,433,182           2,469,975
Deferred income taxes                                                                                  770,768             780,175
Accrued reclamation and other environmental liabilities                                                506,584             498,032
Workers' compensation obligations                                                                      209,238             207,544
Accrued postretirement benefit costs                                                                   966,136             956,714
Obligation to industry fund                                                                             62,267              63,107
Other noncurrent liabilities                                                                           179,568             183,736
                                                                                                 ---------------     ---------------
          Total liabilities                                                                          6,473,626           6,504,791

Minority interests                                                                                      28,962              23,910

Stockholders' equity:
     Preferred Stock - $0.01 per share par value; 10,000,000 shares authorized,
          5,000,000 shares issued and outstanding                                                           50                  50
     Common Stock - Class A, $0.01 per share par value; 30,000,000 shares authorized,
          19,000,000 shares issued and outstanding                                                         190                 190
     Common Stock - Class B, $0.01 per share par value; 3,000,000 shares authorized,
          708,767 shares issued and outstanding                                                              7                   7
     Additional paid-in capital                                                                        484,772             484,772
     Employee stock loans                                                                               (2,965)             (2,331)
     Accumulated other comprehensive income                                                              9,083               2,333
     Retained earnings (accumulated deficit)                                                           (12,182)             10,209
     Treasury shares, at cost: 5,155 Class B shares as of September 30, 1999                               (18)                -
                                                                                                 ---------------     ---------------
          Total stockholders' equity                                                                   478,937             495,230
                                                                                                 ---------------     ---------------

               Total liabilities and stockholders' equity                                        $   6,981,525       $   7,023,931
                                                                                                 ===============     ===============




See accompanying notes to unaudited condensed consolidated financial statements.


                          P&L COAL HOLDINGS CORPORATION
            UNAUDITED STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
                                 (In thousands)

                                                                                                                       Predecessor
                                                                                                                         Company
                                                                                                                     ---------------
                                                                             Six Months Ended     Period Ended        Period Ended
                                                                              September 30,       September 30,          May 19,
                                                                                  1999                1998                1998
                                                                             ---------------     ---------------     ---------------
                                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                            $     (22,391)      $     (19,959)      $         476
Adjustments to reconcile net income (loss) to net cash provided by
  (used in) operating activities:
   Depreciation, depletion and amortization                                        125,299              77,474              26,218
   Deferred income taxes                                                           (11,908)            (13,652)              2,835
   Amortization of debt discount and debt issuance costs                             8,362               6,133               1,379
   Net (gain) loss on property and equipment disposals                              (2,914)                 32                (328)
   Net gain on coal contract restructuring                                            (750)               (592)                -
   Minority interests                                                                3,121                 -                   -
   Changes in current assets and liabilities, excluding effects
     of acquisitions:
     Accounts receivable                                                           (71,577)             96,398            (132,065)
     Materials and supplies                                                          1,234               2,155                 881
     Coal inventory                                                                 11,520              22,025              (2,807)
     Other current assets                                                          (39,336)             17,068             (10,701)
     Accounts payable and accrued expenses                                          72,145            (114,570)             87,814
     Income taxes payable                                                             (695)             15,428               1,234
   Net assets from power trading activities                                         (8,498)             (6,836)              5,289
   Accrued reclamation and related liabilities                                      (8,697)             (1,516)             (1,622)
   Workers' compensation obligations                                                 1,694                 676              (2,156)
   Accrued postretirement benefit costs                                              9,422               3,239               6,092
   Obligation to industry fund                                                        (840)             (1,004)             (2,379)
   Royalty prepayment                                                                  -               135,903                 -
   Other, net                                                                      (18,226)            (12,819)            (10,619)
                                                                             ---------------     ---------------     ---------------
Net cash provided by (used in) operating activities                                 46,965             205,583             (30,459)
                                                                             ---------------     ---------------     ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant, equipment and mine development                       (89,323)            (82,464)            (20,950)
Acquisitions, net                                                                  (30,239)         (1,994,635)                -
Contribution from minority interests                                                   704                 -                   -
Proceeds from coal contract restructuring                                              750               3,881                 328
Proceeds from property and equipment disposals                                       4,252                 -                 1,374
Proceeds from sale-leaseback transactions                                           24,245               5,170                 -
                                                                             ---------------     ---------------     ---------------
     Net cash used in investing activities                                         (89,611)         (2,068,048)            (19,248)
                                                                             ---------------     ---------------     ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in short-term borrowings                                                      7,165              29,743                 -
Proceeds from long-term debt                                                         8,291           1,833,755              53,597
Payments of long-term debt                                                         (39,655)           (154,542)            (19,423)
Capital contribution                                                                   -               480,000                 -
Dividends paid to stockholders                                                         -                   -              (173,330)
Dividends paid to minority interests                                                (1,093)                -                   -
Proceeds from affiliated loan                                                          -                    88             141,000
Advances from affiliates                                                               -                   -                21,693
                                                                             ---------------     ---------------     ---------------
     Net cash provided by (used in) financing activities                           (25,292)          2,189,044              23,537
Effect of exchange rate changes on cash and cash equivalents                           172                (329)               (292)
                                                                             ---------------     ---------------     ---------------
Net increase (decrease) in cash and cash equivalents                               (67,766)            326,250             (26,462)
Cash and cash equivalents at beginning of period                                   194,078                 -                96,821
                                                                             ---------------     ---------------     ---------------
Cash and cash equivalents at end of period                                   $     126,312       $     326,250       $      70,359
                                                                             ===============     ===============     ===============




See accompanying notes to unaudited condensed consolidated financial statements.

                          P&L COAL HOLDINGS CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)   Basis of Presentation

The  accompanying   condensed  consolidated  financial  statements  include  the
consolidated operations and balance sheets of P&L Coal Holdings Corporation (the
"Company"),  also known as Peabody Group. These financial statements include the
subsidiaries of Peabody Holding Company, Inc. ("Peabody Holding Company"),  Gold
Fields  Mining  Corporation  ("Gold  Fields")  which owns Lee Ranch Coal Company
("Lee  Ranch"),  Citizens  Power LLC  ("Citizens  Power") and Peabody  Resources
Holdings Pty. Ltd. ("Peabody  Resources"),  an Australian company (collectively,
the  "Predecessor  Company"  or "P&L Coal  Group").  Through May 19,  1998,  the
Predecessor  Company was a wholly owned indirect subsidiary of The Energy Group,
PLC ("The Energy Group").  Effective May 20, 1998, the  Predecessor  Company was
acquired by the Company. P&L Coal Holdings  Corporation,  a holding company with
no direct  operations  and  nominal  assets  other  than its  investment  in its
subsidiaries,  was formed by Lehman Brothers  Merchant Banking Partners II L. P.
on February 27, 1998 for the purpose of acquiring  the  Predecessor  Company and
had no significant activity until the acquisition.

The accompanying  condensed  consolidated financial statements as of and for the
quarter and six months ended  September  30, 1999 and for the quarter and period
ended September 30, 1998, and the notes thereto, are unaudited.  However, in the
opinion of  management,  these  financial  statements  reflect  all  adjustments
necessary for a fair presentation of the results of the periods  presented.  The
results of  operations  for the quarter and six months ended  September 30, 1999
are not necessarily indicative of the results to be expected for the full year.

(2)   Reclassifications

Certain amounts in the prior periods have been  reclassified to conform with the
report  classifications  for the six months ended  September  30, 1999,  with no
effect on previously reported operating results or stockholders' equity.

(3)   Comprehensive Income

The  following  table sets forth the  components of  comprehensive  loss for the
quarter and six months  ended  September  30,  1999,  and the quarter and period
ended September 30, 1998 (in thousands):

                                                          Quarter Ended       Quarter Ended     Six Months Ended      Period Ended
                                                          September 30,       September 30,       September 30,       September 30,
                                                              1999                1998                1999                1998
                                                         ---------------     ---------------     ---------------     ---------------
                                                                                                         
      Net loss                                           $      (8,739)      $     (14,672)      $     (22,391)      $     (19,959)
      Foreign currency translation adjustment                   (5,718)             (6,024)              6,750             (13,731)
                                                         ---------------     ---------------     ---------------     ---------------
      Comprehensive loss                                 $     (14,457)      $     (20,696)      $     (15,641)      $     (33,690)
                                                         ===============     ===============     ===============     ===============

(4)   Restructuring Liability

In conjunction with the acquisition of P&L Coal Group, the Company established a
$39.4 million liability for estimated costs associated with a restructuring plan
resulting  from the business  combination.  The estimate was  comprised of costs
associated with exiting certain  activities  ("exit plan") and consolidating and
restructuring  certain management and administrative  functions  ("restructuring
plan")  and  includes  costs  resulting  from a plan to  terminate  or  relocate
employees.  Costs  associated  with the  restructuring  and exit plans are being
charged  against the liability as incurred.  The total costs charged against the
liability  for the  quarter  and six months  ended  September  30, 1999 are $2.4
million and $5.3  million,  respectively.  The  cumulative  net cash outlays and
non-cash costs charged against the liability  through  September 30, 1999 are as
follows (in thousands):

                                                                              Cash Outlays       Non-cash Costs          Total
                                                                             ---------------     ---------------     ---------------
                                                                                                            
      Restructuring plan                                                     $      24,000       $         -         $      24,000
      Exit plan                                                                      6,519               3,648              10,167
                                                                             ---------------     ---------------     ---------------
                                                                             $      30,519       $       3,648       $      34,167
                                                                             ===============     ===============     ===============


If the ultimate amount of cost expended is less than the remaining  liability of
$5.2 million,  the excess will further reduce the cost of the  acquisition.  Any
amount of cost exceeding the amount  recorded as a liability will be included as
a charge to operations in the period in which the adjustment is determined.

(5)   Business Segments

The Company's  industry and  geographic  data for  continuing  operations are as
follows:

      (In thousands)
                                                          Quarter Ended       Quarter Ended     Six Months Ended      Period Ended
                                                          September 30,       September 30,       September 30,       September 30,
                                                              1999                1998                1999                1998
                                                         ---------------     ---------------     ---------------     ---------------
                                                                                                         
      Revenues:
           U.S. Mining                                   $     585,590       $     518,309       $   1,171,488       $     752,884
           Non U.S. Mining                                      56,671              36,867              98,271              56,071
           Other                                                 5,731               2,322               8,909              11,210
                                                         ---------------     ---------------     ---------------     ---------------
                                                         $     647,992       $     557,498       $   1,278,668       $     820,165
                                                         ===============     ===============     ===============     ===============
      Operating profit (loss):
           U.S. Mining                                   $      32,545       $      22,660       $      61,530       $      29,197
           Non U.S. Mining                                      11,846               7,429              22,184              10,806
           Other                                                (1,727)             (5,698)             (6,707)               (341)
                                                         ---------------     ---------------     ---------------     ---------------
                                                         $      42,664       $      24,391       $      77,007       $      39,662
                                                         ===============     ===============     ===============     ===============
      Revenues:
           United States                                 $     591,321       $     520,631       $   1,180,397       $     764,094
           Foreign                                              56,671              36,867              98,271              56,071
                                                         ---------------     ---------------     ---------------     ---------------
                                                         $     647,992       $     557,498       $   1,278,668       $     820,165
                                                         ===============     ===============     ===============     ===============
      Operating profit:
           United States                                 $      30,818       $      16,962       $      54,823       $      28,856
           Foreign                                              11,846               7,429              22,184              10,806
                                                         ---------------     ---------------     ---------------     ---------------
                                                         $      42,664       $      24,391       $      77,007       $      39,662
                                                         ===============     ===============     ===============     ===============


(6)   Commitments and Contingencies

Environmental Claims

Environmental  claims have been asserted  against a subsidiary of the Company at
18  sites  in  the  United  States.  Some  of  these  claims  are  based  on the
Comprehensive  Environmental Response Compensation and Liability Act of 1980, as
amended, and on similar state statutes.  The majority of these sites are related
to activities of former subsidiaries of the Company.

The  Company's  policy is to  accrue  environmental  cleanup-related  costs of a
noncapital  nature  when those  costs are  believed  to be  probable  and can be
reasonably estimated.  The quantification of environmental exposures requires an
assessment  of  many   factors,   including   changing  laws  and   regulations,
advancements in environmental technologies, the quality of information available
related to specific  sites,  the  assessment  stage of each site  investigation,
preliminary  findings  and  the  length  of  time  involved  in  remediation  or
settlement.   For  certain  sites,  the  Company  also  assesses  the  financial
capability of other potentially  responsible  parties and, where allegations are
based on tentative findings, the reasonableness of the Company's  apportionment.
The Company has not anticipated any recoveries from insurance  carriers or other
potentially  responsible third parties in its Consolidated  Balance Sheets.  The
liabilities for environmental cleanup-related costs recorded in the Consolidated
Balance Sheet at September 30, 1999 were $57.3 million.  This amount  represents
those costs that the Company believes are probable and reasonably estimable.  In
the event that future remediation expenditures are in excess of amounts accrued,
management does not anticipate that they will have a material  adverse effect on
the results of operations or financial position of the Company.

Other

In  addition,  the  Company  at  times  becomes  a party  to  claims,  lawsuits,
arbitration proceedings and administrative  procedures in the ordinary course of
business.  Management  believes  that the  ultimate  resolution  of  pending  or
threatened proceedings will not have a material adverse effect on the results of
operations or financial position of the Company.



(7)   Supplemental Guarantor/Non-guarantor Financial Information

In  accordance  with the  indentures  governing  the  Senior  Notes  and  Senior
Subordinated Notes, certain  wholly-owned U.S.  subsidiaries of the Company have
fully and unconditionally  guaranteed the debt associated with the purchase on a
joint and several basis.  Separate  financial  statements and other  disclosures
concerning  the  Guarantor  Subsidiaries  are not presented  because  management
believes  that such  information  is not material to  investors.  The  following
condensed  historical  financial  statement  information  is  provided  for such
Guarantor/Non-guarantor Subsidiaries.

                          P&L Coal Holdings Corporation
     Unaudited Supplemental Condensed Statements of Consolidated Operations
                    For the Quarter Ended September 30, 1999
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
Total revenues                       $         -               500,414       $     149,369       $      (1,791)      $     647,992
Costs and expenses:
  Operating costs and expenses                 -              (418,402)           (107,235)              1,791            (523,846)
  Depreciation, depletion and
    amortization                               -               (44,792)            (16,011)                -               (60,803)
  Selling and administrative
    expenses                                   -               (17,085)             (3,594)                -               (20,679)
  Interest expense                         (33,862)            (12,197)             (4,998)                -               (51,057)
  Interest income                              -                   976                 108                 -                 1,084
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Income (loss) before income taxes          (33,862)              8,914              17,639                 -                (7,309)
  Income tax (provision) benefit            10,130              (3,576)             (6,358)                -                   196
  Minority interests                           -                   -                (1,626)                -                (1,626)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net income (loss)                    $     (23,732)      $       5,338       $       9,655       $         -         $      (8,739)
                                     ===============     ===============     ===============     ===============     ===============


                          P&L Coal Holdings Corporation
     Unaudited Supplemental Condensed Statements of Consolidated Operations
                    For the Quarter Ended September 30, 1998
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
Total revenues                       $         -         $     519,104       $      38,394       $         -         $     557,498
Costs and expenses:
  Operating costs and expenses                 -              (435,611)            (28,923)                -              (464,534)
  Depreciation, depletion and
    amortization                               -               (44,290)             (7,493)                -               (51,783)
  Selling and administrative
    expenses                                   -               (16,392)               (398)                -               (16,790)
  Interest expense                         (49,560)             (2,368)               (764)                -               (52,692)
  Interest income                            1,193               5,443                  90                 -                 6,726
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Income (loss) before income taxes          (48,367)             25,886                 906                 -               (21,575)
  Income tax (provision) benefit            12,098              (3,962)             (1,233)                -                 6,903
                                     ---------------     ---------------     ---------------     ---------------     ---------------

Net income (loss)                    $     (36,269)      $      21,924       $        (327)      $         -         $     (14,672)
                                     ===============     ===============     ===============     ===============     ===============


                          P&L Coal Holdings Corporation
     Unaudited Supplemental Condensed Statements of Consolidated Operations
                   For the Six Months Ended September 30, 1999
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
Total revenues                       $         -         $   1,004,627       $     277,322       $      (3,297)      $   1,278,668
Costs and expenses:
  Operating costs and expenses                 -              (838,574)           (199,918)              3,297          (1,035,195)
  Depreciation, depletion and
    amortization                               -               (94,845)            (30,454)                -              (125,299)
  Selling and administrative
    expenses                                   -               (33,831)             (7,336)                -               (41,167)
  Interest expense                         (78,056)            (14,513)             (8,283)                -              (100,852)
  Interest income                              -                 1,905                 190                 -                 2,095
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Income (loss) before income taxes          (78,056)             24,785              31,521                 -               (21,750)
  Income tax (provision) benefit            21,107              (7,474)            (11,153)                -                 2,480
  Minority interests                           -                   -                (3,121)                -                (3,121)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net income (loss)                    $     (56,949)      $      17,311       $      17,247       $         -         $     (22,391)
                                     ===============     ===============     ===============     ===============     ===============


                          P&L Coal Holdings Corporation
     Unaudited Supplemental Condensed Statements of Consolidated Operations
                     For the Period Ended September 30, 1998
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
Total revenues                       $         -         $     753,837       $      66,328       $         -         $     820,165
Costs and expenses:
  Operating costs and expenses                 -              (633,040)            (44,241)                -              (677,281)
  Depreciation, depletion and
    amortization                               -               (66,339)            (11,135)                -               (77,474)
  Selling and administrative
    expenses                                   -               (25,105)               (643)                -               (25,748)
  Interest expense                         (69,261)             (5,525)             (1,060)                -               (75,846)
  Interest income                            1,836               5,817                 100                 -                 7,753
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Income (loss) before income taxes          (67,425)             29,645               9,349                 -               (28,431)
  Income tax (provision) benefit            17,108              (4,950)             (3,686)                -                 8,472
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net income (loss)                    $     (50,317)      $      24,695       $       5,663       $         -         $     (19,959)
                                     ===============     ===============     ===============     ===============     ===============


                          P&L Coal Holdings Corporation
           Unaudited Supplemental Condensed Consolidated Balance Sheet
                            As of September 30, 1999
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
ASSETS
Current assets
    Cash and cash equivalents        $          20       $      71,511       $      54,781       $         -         $     126,312
    Accounts receivable                        732             241,126             167,829             (25,515)            384,172
    Inventories                                -               184,799              60,808                 -               245,607
    Assets from power trading
      activities                               -                   -               955,359                 -               955,359
    Other current assets                       342              49,311              28,420                 -                78,073
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total current assets                1,094             546,747           1,267,197             (25,515)          1,789,523
Property, plant, equipment and mine
  development - at cost                        -             4,344,435             763,113                 -             5,107,548
Less accumulated depreciation, depletion
   and amortization                            -              (248,034)            (59,056)                -              (307,090)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                               -             4,096,401             704,057                 -             4,800,458
Investments and other assets             1,943,792           1,448,121             155,085          (3,155,454)            391,544
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total assets                $   1,944,886       $   6,091,269       $   2,126,339       $  (3,180,969)      $   6,981,525
                                     ===============     ===============     ===============     ===============     ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Short-term borrowings and current
       maturities of long-term debt  $      20,367       $      21,601       $      49,060       $         -         $      91,028
    Payable to affiliates, net            (329,407)            331,152              (1,745)                -                   -
    Income taxes payable                       -                   -                 6,054                 -                 6,054
    Liabilities from power trading
      activities                               -                   -               547,623                 -               547,623
    Accounts payable and accrued            67,364             427,527             231,802             (25,515)            701,178
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total current liabilities        (241,676)            780,280             832,794             (25,515)          1,345,883
Long-term debt, less current
  maturities                             1,707,625             177,551             548,006                 -             2,433,182
Deferred income taxes                          -               701,786              68,982                 -               770,768
Other noncurrent liabilities                   -             1,884,756              39,037                 -             1,923,793
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total liabilities               1,465,949           3,544,373           1,488,819             (25,515)          6,473,626
Minority interests                             -                   -                28,962                 -                28,962
Stockholders' equity                       478,937           2,546,896             608,558          (3,155,454)            478,937
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total liabilities and
           stockholders' equity      $   1,944,886       $   6,091,269       $   2,126,339       $  (3,180,969)      $   6,891,525
                                     ===============     ===============     ===============     ===============     ===============



                          P&L Coal Holdings Corporation
           Unaudited Supplemental Condensed Consolidated Balance Sheet
                              As of March 31, 1999
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
ASSETS
Current assets
    Cash and cash equivalents        $         -         $     130,861      $       63,217       $         -         $     194,078
    Accounts receivable                        -               220,287             107,770             (15,309)            312,748
    Inventories                                -               202,749              47,148                 -               249,897
    Assets from power trading
      activities                               -                   -             1,037,300                 -             1,037,300
    Other current assets                       -                24,293              14,145                 -                38,438
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total current assets                  -               578,190           1,269,580            (15,309)           1,832,461
Property, plant, equipment and mine
  development - at cost                        -             4,298,203             693,234                 -             4,991,437
Less accumulated depreciation,
   depletion and amortization                  -              (158,295)            (35,197)                -              (193,492)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                               -             4,139,908             658,037                 -             4,797,945
Investments and other assets             2,461,362           1,464,147             158,912          (3,690,896)            393,525
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total assets                $   2,461,362       $   6,182,245       $   2,086,529       $  (3,706,205)      $   7,023,931
                                     ===============     ===============     ===============     ===============     ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Short-term borrowings and current
       maturities of long-term debt  $      19,670       $      21,666       $      31,068       $         -         $      72,404
    Payable to affiliates, net             152,364            (151,199)             (1,165)                -                   -
    Income taxes payable                       -                   229               7,079                 -                 7,308
    Liabilities from power trading             -                   -               638,062                 -               638,062
    Accounts payable and accrued expenses   56,562             440,331             146,150             (15,309)            627,734
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total current liabilities         228,596             311,027             821,194             (15,309)          1,345,508
Long-term debt, less current
  maturities                             1,737,536             173,364             559,075                 -             2,469,975
Deferred income taxes                          -               711,932              68,243                 -               780,175
Other noncurrent liabilities                   -             1,886,337              22,796                 -             1,909,133
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total liabilities               1,966,132           3,082,660           1,471,308             (15,309)          6,504,791
Minority interests                             -                   -                23,910                 -                23,910
Stockholders' equity                       495,230           3,099,585             591,311          (3,690,896)            495,230
                                     ---------------     ---------------     ---------------     ---------------     ---------------
         Total liabilities and
           stockholders' equity        $ 2,461,362       $   6,182,245       $   2,086,529       $  (3,706,205)      $   7,023,931
                                     ===============     ===============     ===============     ===============     ===============



                          P&L Coal Holdings Corporation
     Unaudited Supplemental Condensed Statements of Consolidated Cash Flows
                   For the Six Months Ended September 30, 1999
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
Net cash provided by (used in)
  operating activities               $     (58,463)      $      70,474       $      34,954       $         -         $      46,965
                                     ---------------     ---------------     ---------------     ---------------     ---------------
   Additions to property, plant,
     equipment and mine development            -               (70,630)            (18,693)                -               (89,323)
   Acquisition, net                            -                   -               (30,239)                -               (30,239)
   Contribution from minority
     interests                                 -                   -                   704                 -                   704
   Proceeds from coal contract
     restructuring                             -                   750                 -                   -                   750
   Proceeds from property and
     equipment disposals                       -                 3,773                 479                 -                 4,252
   Proceeds from sale-leaseback
      transactions                             -                24,245                 -                   -                24,245
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net cash used in investing activities          -               (41,862)            (47,749)                -               (89,611)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
   Change in short-term borrowings             -                   -                 7,165                 -                 7,165
   Proceeds from long term debt                -                   -                 8,291                 -                 8,291
   Payments of long-term debt              (30,000)                (59)             (9,596)                -               (39,655)
   Dividends paid to minority interests         -                   -               (1,093)                -                (1,093)
   Net change in due to/from affiliates     88,483             (87,903)               (580)                -                   -
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net cash provided by (used in)
   financing activities                     58,483             (87,962)              4,187                 -               (25,292)
   Effect of exchange rate changes
     on cash and equivalents                   -                   -                   172                 -                   172
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net increase (decrease) in cash and
    equivalents                                 20             (59,350)             (8,436)                -               (67,766)
Cash and cash equivalents at
  beginning of period                          -                130,861              63,217                -               194,078
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Cash and cash equivalents at end
    of period                        $          20       $      71,511       $      54,781       $         -         $     126,312
                                     ===============     ===============     ===============     ===============     ===============


                          P&L Coal Holdings Corporation
     Unaudited Supplemental Condensed Statements of Consolidated Cash Flows
                     For the Period Ended September 30, 1998
                                 (In thousands)

                                         Parent            Guarantor          Non-guarantor
                                         Company          Subsidiaries        Subsidiaries        Eliminations        Consolidated
                                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                                                                      
Net cash provided by (used in)
  operating activities               $     (68,617)      $     271,259       $       2,941       $         -         4     205,583
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Additions to property, plant,
  equipment and mine development               -               (53,989)            (28,475)                -               (82,464)
Acquisitions, net                       (1,994,635)                -                   -                   -            (1,994,635)
Proceeds from coal contract
  restructuring                                -                 3,881                 -                   -                 3,881
Proceeds from sale-leaseback
  transactions                                 -                 5,002                 168                 -                 5,170
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net cash used in investing
  activities                            (1,994,635)            (45,106)            (28,307)                -            (2,068,048)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
   Change in short-term borrowings             -                   -                29,743                 -                29,743
   Proceeds from long-term debt          1,817,390                 -                16,365                 -             1,833,755
   Payments of long-term debt              (52,500)            (76,324)            (25,718)                -              (154,542)
   Capital contribution                    398,000                 -                82,000                 -               480,000
   Net change in due to/from               (22,489)             76,677             (54,100)                -                    88
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net cash provided by financing
  activities                             2,140,401                 353              48,290                 -             2,189,044
   Effect of exchange rate changes
     on cash and equivalents                   -                   -                  (329)                -                  (329)
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Net increase in cash and cash
  equivalents                               77,149             226,506              22,595                 -               326,250
Cash and cash equivalents at
  beginning of period                          -                   -                   -                   -                   -
                                     ---------------     ---------------     ---------------     ---------------     ---------------
Cash and cash equivalents at end
    of period                        $      77,149       $     226,506       $      22,595       $         -         $     326,250
                                     ===============     ===============     ===============     ===============     ===============


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

For  purposes of  comparison  to prior year  operating  results,  the results of
operations  and cash flows for the six months ended  September  30, 1998 reflect
the  results of the Company  from April 1 to  September  30,  1998 (the  Company
acquired the  Predecessor  Company on May 19, 1998 and prior to such date had no
separate  operations) and the results of the Predecessor Company from April 1 to
May 19, 1998.

The results of operations and cash flows for the period ended September 30, 1999
may not be directly comparable to the other periods indicated as a result of the
effects of restatement of assets and  liabilities to their estimated fair market
value in accordance  with the  application  of purchase  accounting  pursuant to
Accounting Principles Board Opinion No. 16.

                                                          Quarter Ended       Quarter Ended      Six Months Ended   Six Months Ended
                                                          September 30,       September 30,       September 30,       September 30,
                                                              1999                1998                1999               1998 <F1>
                                                         ---------------     ---------------     ---------------     ---------------
                                                                                                         
      (In thousands)
      Revenues:
           Sales                                         $     621,638       $     535,860       $   1,224,003       $   1,059,807
           Other revenues
                                                                26,354              21,638              54,665              52,766
                                                         ---------------     ---------------     ---------------     ---------------
                Total revenues
                                                               647,992             557,498           1,278,668           1,112,573
      Operating costs and expenses
                                                              (605,328)           (533,107)         (1,201,661)         (1,065,539)
                                                         ---------------     ---------------     ---------------     ---------------
           Operating profit
                                                                42,664              24,391              77,007              47,034
      Interest expense
                                                               (51,057)            (52,692)           (100,852)            (80,068)
      Interest income
                                                                 1,084               6,726               2,095               9,420
                                                         ---------------     ---------------     ---------------     ---------------
           Loss before income taxes
                                                                (7,309)            (21,575)            (21,750)            (23,614)
      Income tax benefit
                                                                   196               6,903               2,480               4,131
      Minority interests
                                                                (1,626)                -                (3,121)                -
                                                         ---------------     ---------------     ---------------     ---------------
           Net loss                                      $      (8,739)      $     (14,672)      $     (22,391)      $     (19,483)
                                                         ===============     ===============     ===============     ===============

      Other Data:
      EBITDA <F2>                                         $     103,467       $      76,174       $     202,306       $     150,726

      Cash provided by (used in):
           Operating activities                                                                  $      46,965       $     175,124
           Investing activities                                                                        (89,611)         (2,087,296)
           Financing activities                                                                        (25,292)          2,212,581

      Tons sold (In millions)                                    47.9                42.4                94.5                83.8
<FN>
<F1> Represents the combination of the results of operations for the period from
     May 20, 1998 to September  30, 1998 with those of the  Predecessor  Company
     for the period from April 1 to May 19, 1998.

<F2> EBITDA is defined as income before deducting net interest  expense,  income
     taxes,  minority  interests and  depreciation,  depletion and amortization.
     EBITDA  has been  reduced by costs  associated  with  reclamation,  retiree
     health  care and  workers'  compensation.  EBITDA is not a  substitute  for
     operating  income,  net income and cash flow from  operating  activities as
     determined in accordance with generally accepted accounting principles as a
     measure of  profitability  or liquidity.  EBITDA is presented as additional
     information  because management believes it to be a useful indicator of the
     Company's   ability  to  meet  debt   service   and   capital   expenditure
     requirements.   Because  EBITDA  is  not  calculated   identically  by  all
     companies, the presentation herein may not be comparable to other similarly
     titled measures of other companies.  The amounts  presented  include EBITDA
     for  Citizens  Power of a $4.4  million  loss, a $3.2 million loss and $0.4
     million  profit for the quarter ended  September  30, 1998,  the six months
     ended  September  30, 1999 and the six months  ended  September  30,  1998,
     respectively.  Citizens  Power  had  EBITDA of zero for the  quarter  ended
     September 30, 1999.
</FN>


Sales.  Sales  increased  $85.7 million for the three months ended September 30,
1999 to $621.6 million,  an increase of 16.0%.  The current year results include
sales from Black Beauty Coal Company (Black Beauty) of $84.3 million,  which was
accounted for under the equity method (and included as "Other  Revenues") in the
prior year.  The Company  increased  its  ownership  interest in Black Beauty to
81.7% effective January 1, 1999. In addition, sales in Australia increased $19.2
million based upon higher customer demand and the acquisition of the Moura Mine.
Overall sales volume  increased  13.0% to 47.9 million tons for the three months
ended  September  30,  1999,  primarily  as a result of the  inclusion  of Black
Beauty's 4.5 million  tons in the current year and higher coal sales  volumes in
Australia.  U.S. sales  excluding Black Beauty declined $4.6 million as compared
to the prior quarter,  with improved pricing in the Powder River Basin more than
offset by lower production due to operational difficulties,  and weak demand and
pricing in  Appalachia.  Sales from  brokerage and trading  activities  declined
$13.1 million, mainly due to the expiration of third party brokerage agreements.

For the six month period,  sales increased $164.2 million, or 15.5%, with $164.9
million  of the  increase  attributable  to Black  Beauty.  Sales  in  Australia
increased  $20.6  million as a result of 27.1% higher sales  volumes,  partially
offset  by a  decrease  of  $17.9  million  in the U.S.  due to the  operational
difficulties  and weak demand in  Appalachia  offsetting  higher  pricing in the
Powder  River Basin.  Sales  volumes  increased  12.8% to 94.5 million tons on a
year-to-date basis, including 8.7 million tons at Black Beauty.

Other  Revenues.  Other  revenues  increased  $4.8  million  for the three month
period,  due to the  completion of a power  contract  restructuring  by Citizens
Power during the second quarter and higher coal royalty income.

For the six months ended  September  30, 1999,  other  revenues  increased  $1.9
million as a result of higher coal royalty  income that was partially  offset by
lower revenues at Citizens Power on a year-to-date basis.

Operating  Profit.  Operating  profit for the  second  quarter  increased  $18.3
million  to  $42.7  million.  At the U.S.  mining  locations,  operating  profit
improved  $13.1 million,  which  includes an increase  related to Black Beauty's
consolidated  results of $6.9 million. The remainder of the increase in the U.S.
mining operations was due to higher  productivity and lower costs in the Midwest
and  improved  pricing  in the Powder  River  Basin,  partially  offset by lower
profitability   in  the  Southwest  due  to  lower  production  to  reduce  coal
inventories. In addition,  unfavorable operating difficulties in Appalachia were
partially  offset by the  recognition of $4.6 million as a credit for Black Lung
excise tax overpayments on export  shipments in prior periods.  Operating profit
in Australia increased $4.4 million, primarily as a result of higher volumes and
lower repair and maintenance  expenses,  while Citizens Power's operating profit
increased $4.3 million due to improved power contract restructuring results.

For the six months ended September 30, 1999,  operating  profit  increased $30.0
million over the prior year, or 63.8%.  Operating  profit in the U.S.  increased
$36.6 million,  including a $12.4 million increase associated with Black Beauty,
lower  costs and higher  productivity  in the Midwest  and  improved  pricing at
Powder  River,  partially  offset by lower  profitability  due to the  inventory
reductions in the Southwest discussed above. In addition, the Midwest operations
include a $5.1 million  reduction in reclamation  costs as a result of receiving
regulatory  approval for a less costly  reclamation  plan at a  Midwestern  mine
during the first  quarter of fiscal year 2000,  and the  Appalachian  operations
include $4.6 million of excise tax credits recognized as discussed above.

Operating  profit in  Australia  for the six months  ended  September  30,  1999
increased  $8.4  million  as a  result  of  higher  sales  volumes,  lower  than
anticipated repair and maintenance expenses, and the inclusion of the results of
operations  of the Moura  Mine that was  acquired  during  the  second  quarter.
Citizens Power experienced a decline of $3.6 million, due to lower trading gains
and power contract restructuring activity compared to the prior year.

Interest  Expense.  Interest expense  increased $20.9 million over the prior six
month period,  as the prior year period only includes  indebtedness from the May
20, 1998 acquisition date forward.

Income Taxes.  The Company's  effective book income tax rate for the quarter and
six  months  ended  September  30,  1999 was 2.7% and  11.4%,  respectively,  as
compared to 32.0% and 17.5% for the  corresponding  periods of fiscal year 1999.
The prior year income tax provision  reflects  higher  deferred tax expense as a
result  of  the  reduction  in  the  deferred  tax  asset  related  to  employee
liabilities  (without a  corresponding  current tax benefit).  The effective tax
rate is  primarily  impacted  by two  factors  - the  percentage  depletion  tax
deduction  utilized  by the Company and its U.S.  subsidiaries  that  creates an
alternative  minimum  tax  situation,  and  the  level  of  contribution  by the
Australian business to the consolidated results of operations, which is taxed at
a higher rate than the U.S.  Based upon these factors,  the Company  anticipates
that  adjustments  to the  effective  tax rate will be  necessary on a quarterly
basis.




Liquidity and Capital Resources

Net cash provided by operating  activities  was $47.0 million for the first half
of fiscal  year  2000,  a decrease  of $128.1  million.  The prior year  results
include the  monetization  of a royalty  stream that resulted in a prepayment of
$135.9 million.

Excluding  acquisitions,  net cash used in investing  activities  improved $33.3
million,   mainly  as  a  result  of  higher  proceeds  from  asset  sales,  and
sale-leaseback transactions. The prior year results also include the acquisition
of the Predecessor Company for approximately $2 billion,  while the current year
results  include  the  acquisition  of the  Moura  Mine in  Australia  for $30.2
million.  As of September 30, 1999,  the Company had $112.0 million of committed
capital  expenditures  that are  primarily  related to coal  reserves and mining
equipment.  It is anticipated these capital  expenditures will be funded through
available cash and credit facilities.

Net cash used in financing  activities  for the six months ended  September  30,
1999 was $25.3  million,  as  compared  to the  prior  year's  proceeds  of $2.2
billion.  The prior year results include the financing of the acquisition of the
Predecessor  Company of $1.8  billion and the  related  equity  contribution  of
$480.0 million,  while the current year results  include  borrowings to fund the
Moura acquisition.

As of  September  30,  1999,  the  Company  had total  indebtedness  of $2,524.2
million, consisting of the following:

      (In millions)

      Term loans under senior credit facilities          $      810.0
      9.625% Senior Subordinated Notes due 2008
        ("Senior Subordinated Notes")                           498.7
      8.875% Senior Notes due 2008 ("Senior Notes")             398.9
      Non-Recourse Debt (Citizens Power)                        325.9
      5.000% Subordinated Note (Peabody Holding Company)        195.2
      Senior unsecured notes under various agreements
        (Black Beauty Coal Company)                             107.1
      Project finance facility (Peabody Resources)               73.2
      Bank loan facility (Black Beauty Coal Company)             36.3
      Capital lease obligations                                  26.2
      Other                                                      52.7
                                                         ---------------
                                                         $     2,524.2
                                                         ===============


The Senior Credit  Facilities  include a Revolving Credit Facility that provides
for aggregate  borrowings of up to $150.0 million and letters of credit of up to
$330.0 million.  The Company had no borrowings  outstanding  under the Revolving
Credit  Facility  during either period.  Interest  rates on the revolving  loans
under the  Revolving  Credit  Facility are based on the Base Rate (as defined in
the  Senior  Credit  Facilities),  or LIBOR (as  defined  in the  Senior  Credit
Facilities) at the Company's  option.  On October 1, 1998,  the Company  entered
into  two  interest  rate  swaps to fix the  interest  cost on $500  million  of
long-term debt outstanding under the Term Loan Facility.  The Company will pay a
fixed rate of  approximately  7.0% on $300 million of such  long-term debt for a
period of three  years  ending  October  1,  2001,  and on $200  million of such
long-term  debt for two years  ending  October 1,  2000.  The  Revolving  Credit
Facility commitment matures in fiscal year 2005.

The  Revolving  Credit  Facility  and related  Term Loan  Facility  also contain
certain  restrictions and limitations  including,  but not limited to, financial
covenants  that will require the Company to maintain and achieve  certain levels
of financial  performance  and limit the payment of cash  dividends  and similar
restricted  payments.  In addition,  the Senior Credit  Facilities  prohibit the
Company from allowing its Restricted Subsidiaries (which include all Guarantors)
to create or otherwise  cause any  encumbrance  or restriction on the ability of
any such  Restricted  Subsidiary  to pay any  dividends  or make  certain  other
upstream payments subject to certain exceptions.



The following table sets forth the  amortization  schedule for the Senior Credit
Facilities:

      (In millions)
                                       Term Loan A       Term Loan B
                                     ---------------     ----------------
            Fiscal Year:
                2000                 $         -         $         -
                2001                           -                   -
                2002                         22.50                 -
                2003                         68.75                 -
                2004                         93.75                 -
                2005                         25.00               64.00
                2006                           -                408.25
                2007                           -                127.75
                                     ---------------     ---------------
                                     $      210.00       $      600.00
                                     ===============     ===============

The indentures  governing the Senior Notes and Senior  Subordinated Notes permit
the Company and its Restricted  Subsidiaries  (which include all subsidiaries of
the Company except  Citizens  Power and its  subsidiaries)  to incur  additional
indebtedness, including secured indebtedness, subject to certain limitations. In
addition,  among other customary restrictive covenants,  the indentures prohibit
the Company and its Restricted  Subsidiaries  from creating or otherwise causing
any encumbrance or restriction on the ability of any Restricted  Subsidiary that
is not a Guarantor to pay dividends or to make certain other  upstream  payments
to the  Company  or  any of its  Restricted  Subsidiaries  (subject  to  certain
exceptions). The Company was in compliance with all of the restrictive covenants
of its loan agreements as of September 30, 1999.

Other

Mine  Suspensions.  In July  1999,  the  Company  announced  the  suspension  of
operations at the Marissa Operating Unit in Illinois effective October 1999. The
Marissa  Operating  Unit,  which shipped 4.4 million tons of coal in fiscal year
1999, has been unsuccessful in attempts to secure additional  business after its
principal  customer  began  shifting  its supply to  lower-sulfur  coal from the
Company's  Powder  River  operations.  However,  the  Company is  attempting  to
identify  additional sources of revenue that would allow the mine to continue to
operate.  The  Company  does not  anticipate  a material  adverse  impact on its
results of operations or financial position from the mine suspension.

In addition,  in October 1999 the Company  provided  notices to employees at the
Lynnville  and Hawthorn  mines in Indiana  that each of the mines would  suspend
operations on or before December 31, 1999. The suspension of operations at these
locations is not anticipated to materially  affect the  consolidated  results of
operations  or  financial  position,  as the Company  anticipates  these  mines'
primary  customers  will purchase coal from Black Beauty Coal Company.  Finally,
the Company is evaluating  the  possibility of closing other mines due to market
conditions.  Such suspensions are not expected to have a material adverse impact
on the Company's results of operations or financial condition.

Status of West  Virginia  Mountaintop  Mining.  On October  20,  1999,  the U.S.
District  Court for the Southern  District of West  Virginia  issued a permanent
injunction against the West Virginia Department of Environmental Protection in a
mountaintop-mining  lawsuit. As interpreted by the Director of the Department of
Environmental Protection, the injunction prohibits the Department from approving
any  new  permits  that  would  authorize  the  placement  of  excess  spoil  in
intermittent  and perennial  streams for the primary  purpose of waste disposal.
The Department also  interpreted the injunction to affect certain  existing coal
refuse ponds, sediment ponds and mountaintop mining operations.

The Department has filed an appeal of the decision with the Fourth Circuit Court
of  Appeals.  On October  29,  1999,  the  District  Court  issued a stay of its
decision  pending a resolution of the appeal.  The Company does not believe this
court  order will have any  immediate  effect on its West  Virginia  mines.  The
Company  is  analyzing  the  potential  long-term  impact  on its mines and coal
reserves.

Recent  Accounting  Pronouncements.  In  June  1998,  the  Financial  Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative  Instruments and
Hedging Activities." SFAS No. 133 requires the recognition of all derivatives as
assets  or  liabilities   within  the  balance  sheet,  and  requires  both  the
derivatives and the underlying  exposure to be recorded at fair value.  Any gain
or loss  resulting  from  changes in fair value will be  recorded as part of the
results  of  operations,  or as a  component  of  comprehensive  income or loss,
depending  upon the intended use of the  derivative.  The  Financial  Accounting
Standards Board recently issued SFAS No. 137, which defers the effective date of
SFAS No. 133 to all fiscal  quarters of fiscal  years  beginning  after June 15,
2000  (effective  April 1, 2001 for the Company).  The Company is evaluating the
requirements  of this Statement and has not determined the impact of adoption on
the consolidated financial statements.

Year 2000 Issue.  The Company is preparing  for the impact of the arrival of the
Year  2000  on its  business,  as well as on the  businesses  of its  customers,
suppliers  and  business  partners.  The  "Year  2000  Issue"  is a term used to
describe the problems created by systems that are unable to accurately interpret
dates after December 31, 1999. These problems are derived predominantly from the
fact that many software programs have  historically  categorized the "year" in a
two-digit  format.  The Year 2000 Issue creates potential risks for the Company,
including  potential  problems  in the  Company's  products  as  well  as in the
Information  Technology  ("IT") and non-IT  systems that the Company uses in its
business operations. The Company may also be exposed to risks from third parties
with whom the Company  interacts who fail to  adequately  address their own Year
2000 Issues.

The  Company's  State of  Readiness  - The  Company  believes  it has  taken the
necessary steps,  including contingency planning, to be prepared for the arrival
of the Year 2000. The Company does not anticipate any material adverse financial
impacts to its business from the "Year 2000 Issue". However, while the Company's
Year  2000  efforts  have  included  communication  with its  critical  business
partners,  the Company cannot provide a representation  on behalf of these third
parties.

The Costs to  Address  the  Company's  Year 2000  Issues - The total cost of the
project  associated with the Year 2000 issue is estimated at approximately  $5.8
million,  which  includes  $2.4  million for the  purchase of new  software  and
hardware  that will be  capitalized  and $3.4  million  that will be expensed as
incurred. To date, the Company has incurred approximately $5.3 million primarily
for assessment of the Year 2000 issue,  development of a modification  plan, and
correcting  non-compliant  items.  The  Company  believes  that the total  costs
associated with these  modifications  will not have a material adverse effect on
its results of  operations  or  financial  position.  However,  the costs of the
project are based on management's  best estimates,  which were derived utilizing
numerous assumptions.

The Risks of the Company's Year 2000 Issues - There can be no assurance that the
Company  will be  completely  successful  in its  efforts to  address  Year 2000
Issues.  If some of the  Company's  systems  are not Year  2000  compliant,  the
Company  could suffer a disruption  of  operations  (including  delivery of coal
pursuant to sales contracts) or other negative consequences,  including, but not
limited to,  diversion of  resources,  damage to the  Company's  reputation  and
increased  litigation,  any of  which  could  materially  adversely  affect  the
Company's results of operations or financial position.

The Company is also dependent on third parties such as its customers, suppliers,
service providers and other business  partners.  If these or other third parties
with whom the Company  conducts  business fail to  adequately  address Year 2000
Issues,  the  Company  could  experience  a  negative  impact on its  results of
operations and financial position.  For example, the failure of carriers,  power
generators  and/or  telecommunications  companies  to have Year  2000  compliant
internal systems could impact the Company's production and/or shipment of coal.

The Company's Contingency Plans - The Company has developed and will continue to
refine comprehensive  contingency plans to address situations that may result if
the Company or any of the third  parties  upon which the Company is dependent is
unable to achieve Year 2000 readiness.  This effort is ongoing and will continue
to be evaluated as new information becomes available.

Forward Looking Statements. This quarterly report and certain press releases and
statements  the  Company  makes  from  time to time  include  statements  of the
Company's  and  management's  expectations,  intentions,  plans and beliefs that
constitute "forward looking statements" within the meaning of Section 27A of the
Securities  Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934
and are  intended to come within the safe  harbor  protection  provided by those
sections.  Forward looking  statements  involve risks and  uncertainties,  and a
variety of factors  could cause  actual  results to differ  materially  from the
Company's  current  expectations,  including  but not limited to: coal and power
market  conditions and  fluctuations in the demand for coal as an energy source,
weather  conditions,   the  continued  availability  of  long-term  coal  supply
contracts,  railroad performance,  foreign currency translation,  changes in the
government regulation of the mining industry,  risks inherent to mining, changes
in the  Company's  leverage  position,  the  ability to  successfully  implement
operating strategies, the impact of Year 2000 compliance by the Company or those
entities with which the Company does business and other factors discussed in the
Company's filings with the Securities and Exchange Commission.

Readers are  cautioned  not to place undue  reliance  on these  forward  looking
statements,  which speak only as of the date hereof.  The Company  undertakes no
obligation  to publicly  release the results of any  revisions  to such  forward
looking statements that may be made to reflect events or circumstances after the
date hereof,  or thereof,  as the case may be, or to reflect the  occurrence  of
anticipated events.


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

The Navajo Nation

On June 18, 1999, The Navajo Nation served the Company's  subsidiaries,  Peabody
Holding  Company,  Inc.,  Peabody Coal Company and Peabody Western Coal Company,
with a  complaint  that  had  been  filed in the U. S.  District  Court  for the
District of Columbia.  Other defendants in the litigation are two utilities, two
current employees and one former employee. The Navajo Nation has alleged sixteen
claims including civil Racketeer  Influenced and Corrupt  Organizations  Act, or
RICO, claims,  fraud and tortious  interference with contractual  relationships.
The plaintiff is seeking various  remedies  including actual damages of at least
$600 million which could be trebled under the RICO counts,  punitive  damages of
at least $1 billion,  a  determination  that Peabody  Western Coal Company's two
coal  leases for the  Kayenta  and Black Mesa mines have  terminated  due to the
failure of a condition  and a  reformation  of the two coal leases to adjust the
royalty  rate to  20%.  All  defendants  have  filed a  Motion  to  Dismiss  the
complaint.  The Company believes this matter will be resolved without a material
adverse effect on its financial condition or results of operations.

Minerals Management Service

The  Minerals  Management  Service  (MMS)  issued a  preliminary  administrative
decision  in  August  1992,  determining  that  a  subsidiary  of  the  Company,
subsequently merged into Powder River Coal Company, had underpaid royalties owed
to the federal government.  On October 15, 1999, the Company signed a settlement
agreement  with the  federal  government  on all  civil  claims  related  to the
dispute.  The Company agreed to pay $11 million in two installments,  which will
be charged against a previously established reserve.

Environmental Claims

Environmental  claims have been asserted  against a subsidiary of the Company at
18  sites  in  the  United  States.  Some  of  these  claims  are  based  on the
Comprehensive  Environmental Response Compensation and Liability Act of 1980, as
amended, and on similar state statutes.  The majority of these sites are related
to activities of former subsidiaries of the Company.

The  Company's  policy is to  accrue  environmental  cleanup-related  costs of a
noncapital  nature  when those  costs are  believed  to be  probable  and can be
reasonably estimated.  The quantification of environmental exposures requires an
assessment  of  many   factors,   including   changing  laws  and   regulations,
advancements in environmental technologies, the quality of information available
related to specific  sites,  the  assessment  stage of each site  investigation,
preliminary  findings  and  the  length  of  time  involved  in  remediation  or
settlement.   For  certain  sites,  the  Company  also  assesses  the  financial
capability of other potentially  responsible  parties and, where allegations are
based on tentative findings, the reasonableness of the Company's  apportionment.
The Company has not anticipated any recoveries from insurance  carriers or other
potentially  responsible third parties in its Consolidated  Balance Sheets.  The
liabilities for environmental cleanup-related costs recorded in the Consolidated
Balance Sheet at September 30, 1999 were $57.3 million.  This amount  represents
those costs that the Company believes are probable and reasonably estimable.  In
the event that future remediation expenditures are in excess of amounts accrued,
management does not anticipate that they will have a material  adverse effect on
the results of operations or financial position of the Company.

Other

In  addition,  the  Company  at  times  becomes  a party  to  claims,  lawsuits,
arbitration proceedings and administrative  procedures in the ordinary course of
business.  Management  believes  that the  ultimate  resolution  of  pending  or
threatened proceedings will not have a material adverse effect on the results of
operations or financial position of the Company.

Item 6.  Exhibits and Reports on Form 8-K.

(a)  Exhibits

     See the Exhibit Index at page 21 of this report.

(b)  Reports on Form 8-K

     None.








                                    SIGNATURE


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                              P&L COAL HOLDINGS CORPORATION

Date: November 4, 1999        By: /s/ RICHARD A. NAVARRE
                                  ----------------------------------------------
                                          Richard A. Navarre
                              Vice President and Chief Financial Officer
                                     (Principal Financial Officer)









                                  EXHIBIT INDEX


The exhibits below are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.


 Exhibit
   No.    Description of Exhibit

   3.1    Second Amended and Restated Certificate of Incorporation of
          P&L Coal Holdings Corporation (Incorporated by reference to
          Exhibit  3.1 of the  Company's  Form  10-Q  for  the  third
          quarter ended December 31, 1998).

   3.2    By-Laws of P&L Coal Holdings Corporation (Incorporated by reference to
          Exhibit  3.2 of the  Company's  Form S-4  Registration  Statement  No.
          333-59073).

   27     Financial Data Schedule (filed electronically with the SEC only).






[ARTICLE] 5
[LEGEND]
This schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statement of operations as of
September 30, 1999 and for the six months then ended, and is qualified in its
entirety by reference to such financial statements.
[/LEGEND]
[MULTIPLIER] 1000

                             
[PERIOD-TYPE]                   6-MOS
[FISCAL-YEAR-END]                          MAR-31-2000
[PERIOD-END]                               SEP-30-1999
[CASH]                                         126,312
[SECURITIES]                                         0
[RECEIVABLES]                                  384,349
[ALLOWANCES]                                       177
[INVENTORY]                                    245,607
[CURRENT-ASSETS]                             1,789,523
[PP&E]                                       5,107,548
[DEPRECIATION]                                 307,090
[TOTAL-ASSETS]                               6,981,525
[CURRENT-LIABILITIES]                        1,345,883
[BONDS]                                      2,433,182
[PREFERRED-MANDATORY]                                0
[PREFERRED]                                         50
[COMMON]                                           197
[OTHER-SE]                                     478,690
[TOTAL-LIABILITY-AND-EQUITY]                 6,981,525
[SALES]                                      1,224,003
[TOTAL-REVENUES]                             1,278,668
[CGS]                                        1,035,195
[TOTAL-COSTS]                                1,035,195
[OTHER-EXPENSES]                                     0
[LOSS-PROVISION]                                     0
[INTEREST-EXPENSE]                             100,852
[INCOME-PRETAX]                               (21,750)
[INCOME-TAX]                                   (2,480)
[INCOME-CONTINUING]                           (22,391)
[DISCONTINUED]                                       0
[EXTRAORDINARY]                                      0
[CHANGES]                                            0
[NET-INCOME]                                  (22,391)
[EPS-BASIC]                                          0
[EPS-DILUTED]                                        0