Edgar Filing: MASSEY ENERGY CO

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

(Mark One)

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

For the fiscal year ended October 31, 2001

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

For the transition period from to

Commission File No. 1-7775

MASSEY ENERGY COMPANY
(Exact name of registrant as specified in its charter)

Delaware 95-0740960
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)

4 North 4th Street, 23219
Richmond, Virginia
(Address of principal (Zip Code)
executive offices)

Registrant/'/s telephone number, including area code: (804) 788-1800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common stock, $0.625 par value

Name of each exchange on which registered

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

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, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant/'/s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the registrant/'/s voting stock held by
non-affiliates was $1,550,160,567.70 on December 31, 2001 based upon the volume
weighted average sales price of the registrant/'/s Common Stock.

Common Stock, $0.625 par value, outstanding as of December 31, 2001 -
74,773,920 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates certain information by reference from the
registrant/'/s definitive proxy statement for the 2002 annual meeting of
shareholders, which proxy statement will be filed no later than 120 days after
the close of the registrant/'/s fiscal year ended October 31, 2001.

From time to time, Massey Energy Company ("Massey" or the "Company") makes
certain comments and disclosures in reports and statements, including this
report, or statements made by its officers which may be forward-looking in
nature. Examples include statements related to Company growth, the adequacy of
funds to service debt and the Company's opinions about trends and factors which
may impact future operating results. These forward-looking statements could
also involve, among other things, statements regarding the Company's intent,
belief or expectation with respect to (i) the Company's results of operations
and financial condition, (ii) the consummation of acquisition, disposition or
financing transactions and the effect thereof on the Company's business, and
(iii) the Company's plans and objectives for future operations and expansion or
consolidation.

Any forward-looking statements are subject to the risks and uncertainties
that could cause actual results of operations, financial condition, cost
reductions, acquisitions, dispositions, financing transactions, operations,
expansion, consolidation and other events to differ materially from those
expressed or implied in such forward-looking statements. Any forward-looking
statements are also subject to a number of assumptions regarding, among other
things, future economic, competitive and market conditions generally. These
assumptions would be based on facts and conditions as they exist at the time
such statements are made as well as predictions as to future facts and
conditions, the accurate prediction of which may be difficult and involve the
assessment of events beyond the Company's control. As a result, the reader is
cautioned not to rely on these forward-looking statements.

The Company wishes to caution readers that forward-looking statements,
including disclosures which use words such as the Company "believes,"
"anticipates," "expects," "estimates" and similar statements, are subject to
certain risks and uncertainties which could cause actual results to differ
materially from expectations. Any forward-looking statements should be
considered in context with the various disclosures made by the Company about
its businesses, including without limitation the risk factors more specifically
described below in Item 1. Business, under the heading "Business Risks."

Part I

Item 1. Business

On November 30, 2000, the Company completed a reverse spin-off (the
"Spin-Off"), which divided it into the spun-off corporation, "new" Fluor
Corporation ("New Fluor"), and Fluor Corporation, subsequently renamed Massey
Energy Company, which retained the Company's coal-related businesses. Except as
the context otherwise requires, the terms "Massey" or the "Company" as used
herein shall include Massey Energy Company, its wholly owned subsidiary, A. T.
Massey Coal Company, Inc. ("A. T. Massey"), and A. T. Massey's subsidiaries.

In the Energy Ventures Analysis ranking of coal companies by 2001 revenues,
Massey is the fifth largest coal company in the United States, and the largest
in the Central Appalachian region. Massey produces, processes and sells
bituminous, low sulfur coal of steam and metallurgical grades through its
eighteen processing and shipping centers, called "resource groups," many of
which receive coal from multiple coal mines. Massey currently operates 37
underground mines (four of which employ both room and pillar and longwall
mining) and 14 surface mines (with six highwall miners in operation) in West
Virginia, Kentucky and Virginia. Its steam coal is primarily purchased by
utilities and industrial clients as fuel for power plants. Its metallurgical
coal is used primarily to make coke for use in the manufacture of steel.

A. T. Massey was originally incorporated in Richmond, Virginia in 1920 as a
coal brokering business. In the late 1940s, A. T. Massey expanded its business
to include coal mining and processing. In 1974, St. Joe Minerals acquired a
majority interest in A. T. Massey. St. Joe Minerals was then acquired by Fluor
in 1981. A. T. Massey has been wholly owned by Fluor (now Massey) since 1987.

Massey has changed its fiscal year end from October 31 to December 31 to
enhance the financial community's ability to analyze and compare Massey to
others in the coal industry. This annual report on Form 10-K will cover the
former fiscal year ending October 31, 2001. Massey will file on Form 10-Q a
report covering the transition period between the fiscal year ended October 31,
2001 and the new fiscal year beginning January 1, 2002.

Industry Overview

A major contributor to the world energy supply, coal represents
approximately 22% of the world's primary energy consumption. The primary use
for coal is to fuel electrical power generation. In calendar year 2000, coal
was used to generate 52% of the electricity produced in the United States.

The United States is the second largest coal producer in the world, exceeded
only by China. Other leading coal producers include India, South Africa, and
Australia. The United States is the largest holder of coal reserves in the
world, with over 250 years supply at current production rates. U.S. coal
reserves are more plentiful than oil or natural gas, with coal representing
approximately 76% of the nation's fossil fuel reserves.

U.S. coal production has more than doubled during the last 30 years. In
2001, total coal production as estimated by the United States Department of
Energy ("DOE") was 1.1 billion tons. The primary producing regions were the
Powder River Basin (36%), Central Appalachia (23%), Midwest (14%), Northern
Appalachia (13%), West (other than the Powder River Basin) (12%) and other
(2%). Approximately 65% of U.S. coal is produced by surface mining methods. The
remaining 35% is produced by underground mining methods that include room and
pillar mining and longwall mining.

Coal is used in the United States by utilities to generate electricity, by
steel companies to make products with blast furnaces, and by a variety of
industrial users to heat and power foundries, cement plants, paper mills,
chemical plants and other manufacturing and processing facilities. Significant
quantities of coal are also exported from both east and west coast terminals.
The breakdown of 2001 U.S. coal demand, as estimated by Resource Data
International, Inc. ("RDI"), is as follows:

End Use Tons (millions) % of Total
------- --------------- ----------

Electrical generation... 1,007 86%
Industrial users........ 66 6%
Exports................. 64 6%
Steel making............ 27 2%
Residential & commercial 5 -- %
----- ---
Total................... 1,169 100%
===== ===

Coal has long been favored as an electrical generating fuel because of its
basic economic advantage. The largest cost component in electrical generation
is fuel. This fuel cost is typically lower for coal than competing fuels such
as oil and natural gas. RDI estimated the average total production costs of
electricity-using coal and competing generation alternatives in 2001 as follows:

Cost per million
Electrical Generation Type Kilowatt Hours
-------------------------- ----------------

Natural Gas.............. $6.103
Oil...................... $5.480
Other (solar, wind, etc.) $3.503
Nuclear.................. $1.749
Coal..................... $1.690
Hydroelectric............ $0.464

According to RDI, 15 of the 25 lowest operating cost electrical generation
power plants in the United States during 2000 were fueled by coal. Coal used as
fuel to generate electricity is commonly referred to as "steam coal."

There are factors other than fuel cost that influence each utility's choice
of electrical generation mode, including facility construction cost, access to
fuel transportation infrastructure, environmental restrictions, and other
factors. The breakdown of U.S. electrical generation by fuel source in 2001, as
estimated by RDI, is as follows:

Electrical Generation Source % of Total Electrical Generation
---------------------------- --------------------------------

Coal............ 54%
Nuclear........... 20%
Natural Gas......... 15%
Hydro............ 8%
Oil............. 2%
Other............ 1%
---
Total............ 100%
===

RDI projects that generators of electricity will increase their demand for
coal as demand for electricity increases. Because coal-fired generation is used
in most cases to meet base load requirements, coal consumption has generally
grown at the pace of electricity demand growth. Demand for electricity has
historically grown in proportion to U.S. economic growth.

The United States ranks second among worldwide exporters of coal. Australia
is the largest exporter, with other major exporters including South Africa,
Indonesia, Canada, Taiwan, and Colombia. U.S. exports have decreased by over
46% since 1991 as a result of increased international competition and the U.S.
dollar's strength in comparison to foreign currencies. According to DOE, the
usage breakdown for 2000 U.S. exports of 59 million tons was 44% for electrical
generation and 56% for steel making. U.S. coal exports were shipped to more
than 40 countries. The largest purchaser of exported steam coal was Canada,
which took 15 million tons or 58% of total steam coal exports. The largest
purchaser of exported metallurgical coal was Europe, which represented 20
million tons or 61% of total metallurgical coal exports.

The type of coal used in steel making is referred to as metallurgical coal,
and is distinguished by special quality characteristics that include high
carbon content, low expansion pressure, low sulfur content, and various coal
chemistry attributes. Metallurgical coal is also high in heat content (as
measured in British thermal units ("Btus")), and therefore is desirable to
utilities as fuel for electrical generation. Consequently, metallurgical coal
producers have the ongoing opportunity to select the market that provides
maximum revenue. The premium price offered by steel makers for the
metallurgical quality attributes is typically higher than the price offered by
utility coal buyers that value only the heat content. The primary concentration
of U.S. metallurgical coal reserves is located in the Central Appalachian
region. RDI estimates that the Central Appalachian region supplied 87% of
domestic metallurgical coal and 97% of U.S. exported metallurgical coal during
2000.

Industrial users of coal typically purchase high Btu products with the same
type of quality focus as utility coal buyers. The primary goal is to maximize
heat content, with other specifications like ash content, sulfur content, and
size varying considerably among different customers. Because most industrial
coal consumers use considerably less tonnage than electric generating stations,
they typically prefer to purchase coal that is screened and sized to
specifications that streamline coal handling processes. Due to the more
stringent size and quality specifications, industrial customers often pay a 10%
to 15% premium above utility coal pricing (on comparable quality). The largest
regional supplier to the industrial market sector has historically been Central
Appalachia, which supplied approximately 35% of all U.S. industrial coal demand
in 2001.

Coal shipped for North American consumption is typically sold at the mine
loading facility with transportation costs being borne by the purchaser.
Offshore export shipments are normally sold at the ship-loading terminal, with
the purchaser paying the ocean freight. According to the National Mining
Association, approximately two-thirds of U.S. coal production is shipped via
railroads. Final delivery to consumers often involves more than one
transportation mode. A significant portion of U.S. production is delivered to
customers via barges on the inland waterway system and ships loaded at Great
Lakes ports.

Mining Methods

Massey produces coal using four distinct mining methods: underground room
and pillar, underground longwall, surface and highwall mining.

Use of continuous miner machines in the room and pillar method of
underground mining represented approximately 46% of Massey's 2001 coal
production.

Production from underground longwall mining operations constituted about 18%
of Massey's 2001 production. Massey now operates four longwall units.

Surface mining represented approximately 29% of Massey's 2001 coal
production. Massey has established large-scale surface mines in Boone and
Nicholas counties of West Virginia. Other Massey surface mines are smaller in
scale. Massey surface mines also use highwall mining systems to produce coal
from high overburden areas. Highwall mining represented approximately 7% of
Massey's 2001 coal production.

Mining Operations

Massey currently has eighteen distinct resource groups or mining complexes,
including thirteen in West Virginia, four in Kentucky and one in Virginia.
These complexes receive, blend, process and ship coal that is produced from one
or more mines, with a single complex handling the coal production of as many as
eight distinct underground or surface mines. These mines have been developed at
strategic locations in close proximity to the Massey preparation plants and
rail shipping facilities. Coal is transported from Massey's mining complexes to
customers by means of railroad cars or trucks, with rail shipments representing
approximately 89% of 2001 coal shipments.

The following table provides key summary information on all Massey mining
complexes (Resource Groups) that were active in 2001.

Massey Resource Groups

2001 2001 Year Established
Resource Group Name Location Production(1) Shipments Coal Quality Reserves or Acquired
------------------- ------------------- ------------- --------- --------------------- --------- ----------------
(000's of (000's of (000's of
Tons) Tons) Tons)(2)

Delbarton......... Mingo County, WV 3,274 2,179 Low Sulfur Utility 278,000 1999
Low Sulfur Industrial
Eagle Energy...... Boone County, WV 0 192 High Vol Met 0 1996
Elk Run........... Boone County, WV 5,057 6,775 High Vol Met 129,000 1978
Low Sulfur Utility
Low Sulfur Industrial
Green Valley...... Nicholas County, WV 728 736 High Vol Met 10,000 1996
Low Sulfur Utility
Low Sulfur Industrial
Independence...... Boone County, WV 5,530 3,422 High Vol Met 55,000 1994
Low Sulfur Utility
Low Sulfur Industrial
Knox Creek........ Tazewell County, VA 525 528 High Vol Met 55,000 1997
Low Sulfur Utility
Low Sulfur Industrial
Logan County...... Logan County, WV 3,319 3,412 Low Sulfur Utility 88,000 1998
Low Sulfur Industrial
Long Fork......... Pike County, KY 0 1,779 Low Sulfur Utility 5,000 1991
Low Sulfur Industrial
Marfork........... Raleigh County, WV 3,817 6,015 High Vol Met 73,000 1993
Low Sulfur Utility
Low Sulfur Industrial
Martin County..... Martin County, KY 3,061 2,420 Low Sulfur Utility 48,000 1969
Low Sulfur Industrial
New Ridge......... Pike County, KY 0 1,608 Low Sulfur Utility 0 1992
Low Sulfur Industrial
Nicholas Energy... Nicholas County, WV 4,696 4,581 High Vol Met 67,000 1997
Low Sulfur Utility
Low Sulfur Industrial
Omar.............. Boone County, WV 0 1,567 Low Sulfur Utility 34,000 1954
Low Sulfur Industrial
Performance....... Raleigh County, WV 3,382 1,649 High Vol Met 41,000 1994
Progress.......... Boone County, WV 3,549 1,320 Low Sulfur Utility 89,000 1998
Low Sulfur Industrial
Rawl.............. Mingo County, WV 1,995 2,170 High Vol Met 109,000 1974
Low Sulfur Utility
Low Sulfur Industrial
Sidney............ Pike County, KY 6,117 2,856 Low Sulfur Utility 162,000 1984
Low Sulfur Industrial
Stirrat........... Logan County, WV 0 371 High Vol Met 5,000 1993
Low Sulfur Utility
Low Sulfur Industrial
Other/Unassigned.. N/A N/A 167 N/A 886,000 N/A
------ ------ ---------
Total........... 45,050 43,747 2,134,000
====== ====== =========

(1) For purposes of this table, coal production has been allocated to the
Resource Group where the coal is mined, rather than the Resource Group
where the coal is processed and shipped. Several Massey Resource Groups
provide processing and rail shipping services for coal mined at other
nearby Massey operations.
(2) Reserves allocated to individual mining complexes include both assigned
reserves and unassigned reserves that are accessible from the established
operations.

West Virginia Resource Groups

Delbarton. The Delbarton complex processes coal produced by a two-section,
underground room and pillar mine in the Lower Cedar Grove seam. Production from
this mine, located adjacent to the Delbarton complex, is transported to the
Delbarton preparation plant via overland conveyor. The Delbarton complex also
processes coal from the North Surface mine, a complex of four surface mines
that has highwall mining operations. The North Surface mine completed a direct
ship coal (i.e., coal that is shipped without processing) loadout on the CSX in
January 2002 that will load up to 150-car unit trains. The Delbarton
preparation plant can process 600 tons per hour of raw coal. The clean coal
product is shipped to customers via the Norfolk Southern railway in unit trains
of up to 110 railcars.

Eagle Energy. The Eagle Energy complex is currently inactive but has
historically processed coal production from the adjacent underground longwall
mine in the Eagle seam. The economically accessible Eagle seam reserves were
depleted in January 2000 and the operation was idled. The Eagle Energy
preparation plant is a modern facility with a rated feed capacity of 750 tons
per hour. Customers can be served via CSX railway shipments loaded in unit
trains of up to 90 railcars. Plans are now under review to re-activate this
complex using production from new mines in seams above the Eagle seam.

Elk Run. The Elk Run complex is one of Massey's largest shippers of coal.
Elk Run produces coal from six underground room and pillar mines that deliver
coal to the preparation plant by belt and truck. Elk Run also has three surface
mines that direct ship to customers via the Kanawha River docks. Additionally,
the Elk Run complex processes coal for shipment that is produced from another
Massey resource group. The Twilight surface mine in the Progress resource group
transports all of its production to the Elk Run facilities via underground
conveyor system. The Elk Run preparation plant has a processing capacity of
2200 tons per hour. Elk Run also has a 200 ton per hour stoker facility that
processes direct ship coal from the Twilight surface mine. Customer shipments
are loaded utilizing a flood load system on the CSX rail system in unit trains
of up to 150 railcars.

Green Valley. The Green Valley complex specializes in premium quality coals
servicing industrial customers in a variety of industries. The Green Valley
preparation plant receives coal via truck that is produced from two underground
room and pillar mines in the Sewell seam. The Green Valley preparation plant
has a processing capacity of 600 tons per hour. The rail loading facility
services customers on the CSX rail system with unit train shipments of up to 75
railcars.

Independence. The Independence complex processes coal from one large
underground longwall mine and one room and pillar mine. Production from both
mines is transported via underground conveyor system directly to the
Independence preparation plant. Independence has five additional underground
mining operations that produce coal for processing and shipment by other Massey
resource groups. The Independence plant has a processing capacity of 1400 tons
per hour. Customers are served via rail shipments on the CSX rail system in
unit trains of up to 150 railcars.

Logan County. The Logan County complex operates three surface mines, one
highwall miner and two underground mines that process coal through the Bandmill
preparation plant. All three surface mines and the highwall miner deliver coal
to the Bandmill plant via truck, while both underground mines belt coal
directly to this plant. One underground mine is a room and pillar operation,
while the other is a longwall mine which started production in November 2001.
The Bandmill preparation plant, which recently has been upgraded, has a
processing capacity of 1600 tons per hour. The rail loading facility services
customers via the CSX rail system with unit train shipments of up to 150 cars.

Marfork. The Marfork complex is Massey's leading shipper of premium
metallurgical coal. The largest production source for the Marfork complex is
the Upper Big Branch underground longwall mine of Massey's Performance resource
group. Other production sources for the Marfork complex include four
underground room and pillar mines. All Marfork production sources are belted
directly to the preparation plant via conveyor systems. The Marfork preparation
plant is a high capacity processing facility that processes 2400 tons per hour.
All customers are serviced via the CSX rail system with unit trains of up to
150 railcars.

Nicholas Energy. The Nicholas Energy complex processes coal from two large
surface mines, a highwall miner and one underground room and pillar mine. All
coal from the underground mine, highwall miner, as well as the portion of
surface mined coal requiring processing, is transported to the Power Mountain
preparation plant via overland conveyor system. The Power Mountain plant has a
processing capacity of 1400 tons per hour. All coal shipments are loaded into
rail cars for delivery via the Norfolk Southern railway in unit trains of up to
140 railcars.

Omar. The Omar mining complex processes coal from adjacent mining
operations of Massey's Independence and Elk Run resource groups. All production
sources are transported via underground conveyor system to the Omar preparation
plant. The Omar plant can process 800 tons per hour. A new rail loading
facility was completed in May 2000. Omar can now service its CSX rail system
customers with unit train shipments of up to 110 railcars.

Performance. The Performance mining complex includes the Upper Big Branch
underground mine and the Goals preparation plant. The Upper Big Branch mine is
a longwall operation in the Eagle seam, with most production being processed
and shipped from Massey's Marfork resource group. The Goals preparation plant
processes the balance of the Upper Big Branch mine's production, as well as
production from adjacent underground mines of Massey's Independence resource
group. The Goals preparation plant can process 800 tons per hour. The rail
loading facility services CSX railway customers with unit trains of up to 90
railcars.

Progress. The Progress mining complex includes the Twilight MTR surface
mine and the adjacent Upper Big Branch surface mine, coal handling system and
stoker plant. All production from these two mines is processed through a coal
handling system and transported via underground conveyor to Massey's Elk Run
resource group for rail shipment. Progress also has two satellite operations:
West Cazy surface mine with its CSX rail loadout and the Brushy Fork contour
surface mine. West Cazy's direct ship coal is loaded onto rail at the loadout
and the coal requiring processing is transported to the Omar resource group.
The Brushy Fork coal is transported to either the Marfork or Elk Run resource
group for processing and shipping.

Rawl. The Rawl complex includes five underground room and pillar mines and
the Sprouse Creek Processing plant. Four mines transport coal to the Sprouse
Creek plant--three via trucks and one via short-tagged rail cars. The other
mine produces coal that is processed for shipment by Massey's Stirrat resource
group. The Sprouse Creek preparation plant has a throughput capacity of 1450
tons per hour. Customers are serviced via the Norfolk Southern railway with
unit trains of up to 150 railcars.

Stirrat. The Stirrat complex processes coal produced by the Diamond Energy
mine of Massey's Rawl resource group. All production is transported via belt
line to the Stirrat preparation plant. The plant has a rated capacity of 600
tons per hour. Customers are serviced via the CSX rail system with unit trains
of up to 100 railcars.

Kentucky Resource Groups

Long Fork. The Long Fork complex processes coal produced by the adjacent
Rockhouse and Solid Energy mines of Massey's Sidney resource group. All
production is transported via overland conveyor system to the Long Fork
preparation plant. The Long Fork plant has a rated capacity of 1500 tons per
hour. The rail loading facility services customers on the Norfolk Southern
railway with unit trains of up to 150 railcars.

Martin County. Production at the Martin County complex comes from two
underground mines, a four-unit surface mine and one highwall miner unit.
Approximately 70% of the production from the surface mine is saleable without
processing and is shipped to customers at the Ohio/Big Sandy river docks via
truck. The balance of the surface mined coal and all of the coal from the
highwall miner and the underground mines is processed before going to market.
Martin County's preparation plant, with a throughput capacity of 1500 tons per
hour, was restarted in April 2001 after having been idled because of the
failure of the coal waste impoundment on October 11, 2000. All coal processed
through the preparation plant is shipped via the Norfolk Southern railway in
unit trains of up to 125 railcars.

New Ridge. The New Ridge complex processes coal that is transported via
truck from mining operations of Massey's Sidney resource group. The New Ridge
preparation plant has a throughput capacity of 800 tons per hour. All coal is
loaded for shipment to customers via the CSX rail system in unit trains of up
to 100 railcars.

Sidney. The Sidney complex includes six underground room and pillar mines,
the Rockhouse longwall mine, a surface mine and the Big Creek preparation
plant. Two of the mines truck coal to Massey's New Ridge complex, two transport
coal via underground conveyor to Massey's Long Fork resource group for
processing and shipment, and the remainder of the mines transport production
via underground conveyor or truck to the Big Creek plant. The Big Creek
preparation plant has a throughput capacity of 1500 tons per hour. The Sidney
rail loading facility services customers on the Norfolk Southern rail system
with unit trains of up to 140 railcars.

Virginia Resource Group

Knox Creek. The Knox Creek complex processes coal from one underground room
and pillar mine. Production from the Tiller No. 1 mine is belted directly to
the Knox Creek preparation plant. The Knox Creek plant has a feed capacity of
650 tons per hour. The rail loading facility services customers on the Norfolk
Southern rail system with unit trains of up to 100 railcars.

Other Related Operations

Massey has other related operations and activities in addition to its normal
coal production and sales business. The following business activities are
included in this category:

Appalachian Synfuel Plant: On March 15, 2001, Massey sold a substantial
interest in Appalachian Synfuel, LLC ("Appalachian Synfuel"). Appalachian
Synfuel owns a synthetic fuel manufacturing facility operated by Massey's
Marfork resource group and located adjacent to the Marfork complex in Boone
County, West Virginia. This facility converts coal products to synthetic fuel
and has operated since June 1998. Appalachian Synfuel has obtained a private
letter ruling from the IRS that provides that production from this synfuel
facility qualifies the owner for tax credits pursuant to Section 29 of the
Code. Synthetic fuel sales by Appalachian Synfuel during fiscal year 2001 were
434,056 tons.

Westvaco Coal Handling Facility: Massey subsidiaries own and operate the
coal unloading, storage and conveying facilities at Westvaco Corporation's
paper manufacturing facility in Covington, Virginia ("Westvaco CHF"). The
Westvaco CHF was constructed by Massey in 1992 as a means of reducing coal
transportation and handling costs for Westvaco Corporation, a long term
industrial coal customer. The Westvaco CHF operating agreement extends through
2007, and provides for Massey to be paid a per ton fee (annually adjusted) for
coal handling services and allows Massey to supply 100% of the coal required by
Westvaco's facility.

Eastman Chemical Company Coal Handling System: Massey subsidiaries are
constructing and will own and operate coal unloading, storage and conveying
facilities at Eastman Chemical Company's facility in Kingsport, Tennessee (the
"Eastman CHS"). The Eastman CHS operating agreement will extend for fifteen
years after completion of construction and provides that Massey will be paid
certain fixed and/or per ton fees for leasing equipment, coal handling services
and for operating and maintaining the Eastman CHS. Massey estimates that the
Eastman CHS will be completed in September 2002.

Other: Massey also engages in the sale of certain non-strategic assets such
as timber, gas & oil rights as well as the sale of non-strategic surface
properties and reserves.

Marketing and Sales

The Massey marketing and sales force, based in the corporate office in
Richmond, Virginia, includes sales managers, distribution/traffic managers,
technical support and administrative personnel.

During the fiscal year ended October 31, 2001, Massey sold 43.7 million tons
of produced coal for total revenues of $1.2 billion. The breakdown of produced
tons sold by market served was 60% utility, 30% metallurgical and 10%
industrial. Sales were concluded with over 125 customers. Export shipments
(including Canada) represented approximately 20% of 2001 tonnage sold. Massey's
2001 export shipments serviced customers in 10 countries across North America,
South America, Europe and Asia. Almost all sales are made in U.S. dollars,
which eliminates foreign currency risk.

The Company has established several partnering arrangements with customers
wherein services other than coal supply are provided on an ongoing basis.
Examples of such partnership arrangements include:

. The Westvaco CHF and the Eastman CHS (described above).

. At two large steel companies, one synthetic fiber manufacturer and one
tobacco processing plant, a Massey subsidiary coordinates shipment of
coal to the customer's stockpile, maintains ownership of the coal
inventory on site and sells tonnage to the customer as it is consumed.

Other such partnering services are provided periodically in response to the
current needs of each individual customer.

Distribution

Massey employs transportation specialists who negotiate freight and terminal
agreements with various providers, including railroads, barge lines, steamship
lines, bulk motor carriers and terminal facilities. Transportation specialists
also coordinate with customers, mining facilities and transportation providers
to establish shipping schedules that meet the customer's needs.

Massey's 2001 shipments of 43.7 million tons were loaded from 18 mining
complexes. Rail shipments constituted 89% of total shipments, with 32% loaded
on Norfolk Southern trains and 57% loaded on CSX trains. The 11% balance was
shipped from Massey mining complexes via truck.

Approximately 16% of Massey's production is ultimately delivered via the
inland waterway system. Coal is transported by rail or truck to docks on the
Ohio, Big Sandy and Kanawha Rivers and then ultimately transported by barge to
electric utilities, integrated steel producers and industrial consumers served
by the inland waterway system. Massey also moves approximately 13% of its
production to Great Lakes Ports for transport beyond to various U.S. and
Canadian customers.

Customers and Coal Contracts

Massey has coal supply commitments with a wide range of electric utilities,
steel manufacturers, industrial customers and energy traders and brokers. The
majority of Massey's customers purchase coal for terms of one year or longer,
but Massey also supplies coal on a spot basis for some of its customers.
Massey's biggest customer, Duke Energy, accounted for 11% of Massey's total
fiscal year 2001 revenues. Massey has been serving this customer for over
thirty years and has agreements in place to continue to supply coal through
June 2003.

Massey has contracts to supply coal to energy trading and brokering
companies under which those companies sell such coal to the ultimate users. One
of Massey's energy trading and brokering customers, Enron Corp., filed for
bankruptcy protection in December 2001 and Massey has reserved $7.5 million in
connection with that bankruptcy.

As the largest supplier of metallurgical coal to the American steel
industry, Massey is subject to being adversely affected by any decline in the
financial condition or production volume of American steel producers. Recently,
American steel producers have experienced a substantial decline in the prices
received for their products, due at least in part to a heavy volume of foreign
steel imported into this country. As a result, several large American producers
filed for bankruptcy protection, including two substantial customers of Massey:
Wheeling-Pittsburgh Steel Corporation, which filed for bankruptcy protection in
late 2000, and Bethlehem Steel Corporation, which filed for bankruptcy
protection in mid-2001. In addition, Algoma Steel, Inc., a Canadian steel
producer and a customer of Massey, filed for bankruptcy protection under
Canadian law. Further deterioration in conditions in the steel industry could
reduce the demand for Massey's metallurgical coal and impact the

collectibility of Massey's accounts receivable from steel industry customers.
Since Massey's metallurgical grade coal can also be marketed as a high-Btu
steam coal for use by utilities, a decline in the metallurgical market could
result in coal being switched from the metallurgical market to the utility
market.

As is customary in the coal industry, Massey has entered into long-term
contracts (exceeding one year in duration) with many of its customers. These
arrangements allow customers to secure a supply for their future needs and
provide Massey with greater predictability of sales volume and sales prices.
During fiscal year 2002, Massey's sales pursuant to long-term sales
arrangements are projected to be at or above 75%.

By offering coal of both metallurgical and steam grades, Massey is able to
serve a diverse customer base. This market diversity allows Massey to adjust to
changing market conditions and sustain high sales volumes.

The terms of Massey's long-term contracts are a result of extensive
negotiations with the customer. As a result, the terms of these contracts vary
with respect to price adjustment mechanisms, pricing terms, permitted sources
of supply, force majeure provisions, quality adjustments and other parameters.
Most of the contracts contain price adjustment mechanisms that allow for
changes to prices based on statistics from the U.S. Department of Labor.
Contracts contain specifications for coal quality, which may be especially
stringent for steel customers. Many of these contracts also specify the
approved locations from which the coal is to be mined.

Competition

The coal industry in the United States is highly competitive. Massey
competes with other large producers and many small coal producers. Massey
competes with other producers primarily on the basis of price, coal quality,
transportation cost and reliability of supply. Continued demand for coal is
also dependent on factors outside Massey's control, including demand for
electricity, environmental and governmental regulations, weather, technological
developments and the availability of alternative fuel sources.

The price at which the Company's production can be sold is dependent upon a
variety of factors, many of which are beyond the Company's control. The Company
sells coal under long-term contracts and on the spot market. See the "Customers
and Coal Contracts" section above. Generally, the relative competitiveness of
coal vis-a-vis other fuels or other coals is evaluated on a delivered cost per
heating value unit basis. In addition to competition from other fuels, coal
quality, the marginal cost of producing coal in various regions of the country
and transportation costs are major determinants of the price for which the
Company's production can be sold. Factors that directly influence production
cost include geological characteristics (including seam thickness), overburden
ratios, depth of underground reserves, transportation costs and labor
availability and cost. The Company's central Appalachian coal is more expensive
to mine than western coal because there is a high percentage of underground
coal in the east and eastern surface coal tends to have thinner coal seams.
Additionally, underground mining has higher labor (including reserves for
future costs associated with labor benefits and health care) and capital
(including modern mining equipment and construction of extensive ventilation
systems) costs than those of surface mining. In recent years, increased
development of large surface mining operations, particularly in the western
United States, and more efficient mining equipment and techniques, have
contributed to excess coal production capacity in the United States.
Competition resulting from excess capacity has encouraged producers to reduce
prices and to pass productivity gains through to customers. The lower
production cost in the western mines is offset somewhat by the higher quality
of many eastern coals and higher transportation cost from these western mines
to many coal-fired power plants in the country. Demand for the Company's low
sulfur coal and the prices that the Company will be able to obtain for it will
also be affected by the price and availability of high sulfur coal, which can
be marketed in tandem with emissions allowances. Intraregional and
interregional competition is keen as producers seek to position themselves as
the low-cost producer and supplier of high-demand product to the electricity
generating industry.

Transportation costs are another fundamental factor affecting coal industry
competition. Coordination of the many eastern loadouts, the large number of
small shipments, terrain and labor issues all combine to make

shipments originating in the eastern United States inherently more expensive on
a per-mile basis than shipments originating in the western United States.
Historically, coal transportation rates from the western coal producing areas
into central Appalachian markets limited the use of western coal in those
markets. More recently, however, lower rail rates from the western coal
producing areas to markets served by eastern producers have created major
competitive challenges for eastern producers. Barge transportation is the
lowest cost method of transporting coal long distances in the eastern United
States, and the large numbers of eastern producers with river access keep coal
prices competitive. The Company believes that many utilities with plants
located on the Ohio River system are well positioned for deregulation as
competition for river shipments should remain high for central Appalachian
coal. The Company believes that with close proximity to competitively-priced
central Appalachian coal and the ability to receive western coals, utilities
with plants located on the Ohio River system will become price setters in a
deregulated environment. The ability of these utilities to blend western and
eastern coal will also create a new, dynamic fuel procurement environment that
could place western and eastern coals in even greater competition and limit
rail price premiums. River transport is an important transportation option not
available to Powder River Basin producers between Wyoming and midwestern river
terminals.

Although undergoing significant consolidation, the coal industry in the
United States remains highly fragmented. There can be no assurance that the
Company's costs will permit it to compete effectively with other producers
seeking to provide coal to a customer; however, the Company expects to be able
to maintain low production costs, offer a variety of products and have access
to multiple transportation systems that will enable it to compete effectively
with other producers.

Employees and Labor Relations

As of October 31, 2001, Massey had 5,004 employees, including 165 employees
affiliated with the United Mine Workers of America. Relations with employees
are generally good, and there have been no material work stoppages in the past
ten years.

Environmental, Safety and Health Matters

Massey is subject to federal, state and local laws and regulations relating
to environmental protection and plant and mine safety and health, including but
not limited to the federal Surface Mining Control and Reclamation Act of 1977;
Occupational Safety and Health Act; Mine Safety and Health Act of 1977; Water
Pollution Control Act, as amended by the Clean Water Act; the Clean Air Act;
Black Lung Benefits Revenue Act of 1977; and Black Lung Benefits Reform Act of
1977.

On October 20, 1999, the United States District Court for the Southern
District of West Virginia ("District Court") issued an injunction against the
West Virginia Division of Environmental Protection ("WVDEP") prohibiting it
from issuing permits for the construction of valley fills over both
intermittent and perennial stream segments as part of mining operations. While
Massey is not a party to this litigation, virtually all mining operations
(including those of Massey) utilize valley fills to dispose of excess materials
mined during coal production. On April 24, 2001, the Fourth Circuit Court of
Appeals overruled the district court, finding that the 11/th/ Amendment to the
U.S. Constitution barred the suit against WVDEP in Federal Court. On July 13,
2001, the Fourth Circuit Court of Appeals denied the plaintiffs' petition for
rehearing. In October 2001, the plaintiffs appealed the Fourth Circuit decision
to the U.S. Supreme Court. On January 22, 2002, the U.S. Supreme Court refused
to hear the appeal. Accordingly, challenges to WVDEP's enforcement of its
mining program cannot be maintained in federal court. However, challenges may
be raised in state court against WVDEP or in federal court against the federal
Office of Surface Mining ("OSM"), the agency that oversees state regulation of
surface mining. If and to the extent state courts rule that the WVDEP is
prohibited from issuing permits for the construction of valley fills or federal
courts rule that OSM is compelled to impose such a prohibition on WVDEP, all or
a portion of Massey's mining operations could be affected if legislation is not
passed which limits the impact of such a ruling.

On June 27, 2000, the WVDEP issued an administrative order to one of
Massey's subsidiaries, Elk Run Coal Company, in connection with alleged
violations of the surface mining laws relating to dust. WVDEP has also issued
orders to various Massey subsidiaries ordering them to show cause why permits
for those subsidiaries should not be suspended or revoked because of alleged
patterns of violations relating to water quality. Further information on these
orders is set forth below in Item 3, Legal Proceedings.

The U.S. Department of Labor has issued a final rule amending the
regulations implementing the federal black lung laws which, among other things,
establish a presumption in favor of a claimant's treating physician and limit a
coal operator's ability to introduce medical evidence regarding the claimant's
medical condition. The amendments could have an adverse impact on Massey, the
extent of which cannot be accurately predicted. Further discussion is set forth
below in Business Risks--Government regulations increase Massey's costs and may
discourage customers from buying Massey's coal.

The Clean Air Act and corresponding state laws extensively regulate
emissions into the air of particulate matter and other substances, including
sulfur dioxide, nitrogen oxides and mercury. Although these regulations apply
directly to impose certain requirements for the permitting and operation of
Massey's mining facilities, by far their greatest impact on Massey and the coal
industry generally is the effect of emission limitations on utilities and other
Massey customers. The Environmental Protection Agency has imposed or attempted
to impose tighter emission restrictions in a number of areas, some of which are
currently subject to litigation. The general effect of such tighter
restrictions could be to reduce demand for coal.

The United States has not implemented the 1992 Framework Convention on
Global Climate Change (the "Kyoto Protocol") which is intended to limit or
reduce emissions of greenhouse gases, such as carbon dioxide. Under the terms
of the Kyoto Protocol, the United States would be required to reduce emissions
to 93% of 1990 levels over a five-year period from 2008 through 2012. Were the
United States to implement comprehensive regulations focusing on greenhouse gas
emissions, it would have the effect of restricting the use of coal. Other
efforts to reduce emissions of greenhouse gases and federal initiatives to
encourage the use of coalbed methane gas also may affect the use of coal as an
energy source.

It is impossible to predict the full impact of future judicial, legislative
or regulatory developments on Massey's operations because the standards to be
met, as well as the technology and length of time available to meet those
standards, continue to develop and change.

In fiscal year 2001, Massey spent approximately $8.7 million to comply with
environmental, health and safety laws and regulations, none of which
expenditures were capitalized. Massey anticipates making $5.3 million and $6.4
in such non-capital expenditures in fiscal 2002 and 2003, respectively. Of
these expenditures, $8.4 million, $4.4 million and $5.4 million for fiscal
2001, 2002 and 2003, respectively, were or are anticipated to be for surface
reclamation.

The Company believes, based upon present information available to it, that
its accruals with respect to future environmental costs are adequate. For
further discussion on costs, see Note 5 to Notes to Consolidated Financial
Statements. However, the imposition of more stringent requirements under
environmental laws or regulations, new developments or changes regarding site
cleanup costs or the allocation of such costs among potentially responsible
parties, or a determination that the Company is potentially responsible for the
release of hazardous substances at sites other than those currently identified,
could result in additional expenditures or the provision of additional accruals
in expectation of such expenditures.

Business Risks

Coal markets are highly competitive and affected by factors beyond Massey's
control

Massey competes with coal producers in various regions of the United States
for domestic sales and with both domestic and overseas producers for sales to
international markets. Continued demand for Massey's coal and the prices that
it will be able to obtain primarily will depend upon coal consumption patterns
of the domestic

electric utility industry and the domestic steel industry. Consumption by the
domestic utility industry is affected by the demand for electricity,
environmental and other governmental regulations, technological developments
and the price of competing coal and alternative fuel supplies including
nuclear, natural gas, oil and renewable energy sources, including hydroelectric
power. Consumption by the domestic steel industry is primarily affected by the
demand for U.S. steel. Massey's sales of metallurgical coal are dependent on
the continued financial viability of domestic steel companies and their ability
to compete with steel producers abroad.

Massey depends on continued demand from its customers

Reduced demand from Massey's largest customers could have an adverse impact
on Massey's ability to achieve its projected revenues. When Massey's contracts
with its customers reach expiration, there can be no assurance that the
customers either will extend or enter into new long-term contracts or, in the
absence of long-term contracts, that they will continue to purchase the same
amount of coal as they have in the past or on terms, including pricing terms,
as favorable as under existing agreements.

Union represented labor creates an increased risk of work stoppages and
higher labor costs

At October 31, 2001, less than 5% of Massey's total workforce was
represented by the United Mine Workers of America. Eight of Massey's coal
processing plants and one of its smaller surface mines have a workforce that is
represented by a union. In fiscal 2001, these eight processing plants handled
approximately 33% of Massey's coal production. There may be an increased risk
of strikes and other related work actions, in addition to higher labor costs,
associated with these operations. Massey has experienced some union organizing
campaigns at some of its open shop facilities within the past five years. If
some or all of Massey's current open shop operations were to become union
represented, Massey could incur additional risk of work stoppages and higher
labor costs.

Transportation disruptions could impair Massey's ability to sell coal

Massey's transportation providers are important in order to provide access
to markets. Disruption of transportation services because of weather-related
problems, strikes, lockouts or other events could temporarily impair Massey's
ability to supply coal to customers.

The State of West Virginia has recently increased enforcement of weight
limits on coal trucks on its public roads. Although Massey has historically
avoided public road trucking of coal when possible by transporting coal by
rail, barge and conveyor systems, such stepped up enforcement actions could
result in shipment delays and increased costs.

Fluctuations in transportation costs could affect the demand for Massey's coal

Transportation costs represent a significant portion of the delivered cost
of coal and, as a result, the cost of delivery is a critical factor in a
customer's purchasing decision. Increases in transportation costs could make
coal a less competitive source of energy. Such increases could have a material
adverse effect on Massey's ability to compete with other energy sources and on
its business, financial condition and results of operations. On the other hand,
significant decreases in transportation costs could result in increased
competition from coal producers in other parts of the country. For instance,
coal mines in the western United States could become an attractive source of
coal to consumers in the eastern part of the country if the costs of
transporting coal from the west were significantly reduced.

Foreign currency fluctuations could adversely affect the competitiveness of
Massey's coal abroad

Massey relies on customers in other countries for a portion of its sales,
with shipments to countries in Europe, North America, South America and Asia.
Massey competes in these international markets against coal produced in other
countries. Coal is sold internationally in U.S. dollars. As a result, mining
costs in competing producing countries may be reduced in U.S. dollar terms
based on currency exchange rates, providing an advantage to foreign coal
producers. Currency fluctuations in producing countries could adversely affect
the competitiveness of U.S. coal in international markets.

Coal mining is subject to inherent risks

Massey's operations are subject to certain events and conditions which could
disrupt operations, including fires and explosions from methane, accidental
minewater discharges, natural disasters, equipment failures and

maintenance problems, flooding, changes in geologic conditions, failure of
reserve estimates to prove correct and inability to acquire mining rights or
permits. Massey maintains business interruption insurance and property and
general liability insurance policies that provide limited coverage for some,
but not all, of these risks. Even where insurance coverage applies, there can
be no assurance that these risks would be fully covered by Massey's insurance
policies.

Government regulations increase Massey's costs and may discourage customers
from buying Massey's coal

Numerous governmental permits and approvals are required for coal mining
operations. Massey may be required to prepare and present to federal, state and
local authorities more extensive data describing the effect or impact that any
proposed mining operations may have upon the environment. For example, the West
Virginia Division of Environmental Protection is involved in litigation
regarding its alleged failure to consider the hydrologic effects of mining
operations in issuing mining permits. This suit could lead to additional
requirements that Massey and other mining companies assess potential hydrologic
risks. These and any other increased requirements may be costly and
time-consuming and may delay commencement or continuation of mining operations.

New legislation and new regulations may be adopted which could materially
adversely affect Massey's mining operations, cost structure or its customers'
ability to use coal. New legislation and new regulations may also require
Massey or its customers to change operations significantly or incur increased
costs. The U.S. Environmental Protection Agency (the "EPA") has undertaken
broad initiatives aimed at increasing compliance with emissions standards and
to provide incentives to customers for decreasing emissions, often by switching
to an alternative fuel source.

Under federal black lung benefits legislation, each coal mine operator is
required to make payments of black lung benefits or contributions to: (i)
current and former coal miners totally disabled from black lung disease; (ii)
certain survivors of a miner who dies from black lung disease; and (iii) a
trust fund for the payment of medical expenses to claimants whose last mine
employment was before January 1, 1970, where no responsible coal mine operator
has been identified for claims (where a miner's last coal employment was after
December 31, 1969), or where the responsible coal mine operator has defaulted
on the payment of such benefits. In recent years, legislation on black lung
reform has been introduced but not enacted in Congress. It is possible that
this legislation will be reintroduced for consideration by Congress. If any of
the proposals included in this or similar legislation is passed, the number of
claimants who are awarded benefits could significantly increase. Any such
changes in black lung legislation, if approved, could adversely affect Massey's
business, financial condition and results of operations.

In addition, the United States Department of Labor issued a final rule,
effective January 19, 2001, amending the regulations implementing federal black
lung laws. The amendments give greater weight to the opinion of the claimant's
treating physician, expand the definition of black lung disease and limit the
amount of medical evidence that can be submitted by claimants and respondents.
The amendments also alter administrative procedures for the adjudication of
claims, which, according to the Department of Labor, result in streamlined
procedures that are less formal, less adversarial and easier for participants
to understand. These and other changes to the black lung regulations could
significantly increase Massey's exposure to black lung benefits liabilities.
The National Mining Association challenged the amendments in the United States
District Court for the District of Columbia. On August 9, 2001, the Court
lifted a temporary injunction blocking the Labor Department's processing of
black lung benefit claims after dismissing the National Mining Association's
challenge to the amendments and upheld the new regulations. The National Mining
Association has appealed this decision to the United States Court of Appeals
for the District of Columbia Circuit.

The Clean Air Act affects Massey's customers and could influence their
purchasing decisions

The Clean Air Act affects coal mining operations by requiring utilities that
currently are major sources of nitrogen oxides in moderate or higher ozone
nonattainment areas to install reasonably available control

technology. In July 1997, the EPA adopted new, more stringent National Ambient
Air Quality Standards for particulate matter and ozone. The adoption and
implementation of these more stringent standards have been challenged in
litigation and the outcome of that challenge is uncertain at this time. The
specific provisions of these standards could be revised by the EPA.

In October 1998, the EPA issued its final rule entitled "Finding of
Significant Contribution and Rulemaking for Certain States in the Ozone
Transport Assessment Group Region for Purposes of Reducing Regional Transport
of Ozone" (the NOx SIP Call rule). In the final rule, the EPA found that
sources in 22 states and the District of Columbia emit NOx in amounts that
significantly contribute to nonattainment of National Ambient Air Quality
Standards, or will interfere with maintenance of those standards, in one or
more downwind states. The rule requires the 22 upwind states and the District
of Columbia to submit state implementation plan revisions to prohibit specified
amounts of emissions of oxides of nitrogen (NOx)--one of the precursors to
ozone (smog) pollution--for the purpose of reducing NOx and ozone transport
across state boundaries in the eastern half of the United States. Although
states may choose any mix of pollution reduction measures that will achieve the
required reductions, it is widely anticipated that states will target large
utility and industrial boilers, which could materially reduce the demand for
coal by these users.

Additionally, the EPA has granted petitions filed by four northeast states
under section 126 of the Clean Air Act. The granting of these petitions means
that stationary sources located in upwind states--mostly coal-fired
utilities--must reduce their emissions of NOx. The deadline for compliance
under the section 126 petitions is May 2003.

The EPA has filed suit against a number of leading electric utilities
(including Massey customers) in U.S. District Court, asserting that these
utilities must install new emission controls at plants previously
"grandfathered" from the more stringent requirements now applicable under the
New Source Review program of the Clean Air Act. The EPA is also pursuing an
administrative proceeding against the Tennessee Valley Authority on the same
basis. Installation of these controls would require very significant capital
investment, and some utilities might choose to switch to non-coal generation
rather than make such investment. This could materially decrease the demand for
coal.

The passage of legislation responsive to the Framework Convention on Global
Climate Change could have an adverse effect on Massey's business

The United States has not implemented the 1992 Framework Convention on
Global Climate Change ("Kyoto Protocol") which is intended to limit emissions
of greenhouse gases, such as carbon dioxide. However, continuing international
and federal efforts to control greenhouse gas emissions could result in reduced
use of coal if electric power generators switch to lower carbon sources of fuel.

Massey is subject to the Clean Water Act which imposes monitoring and
reporting obligations

The federal Clean Water Act affects coal mining operations by imposing
restrictions on discharge of pollutants into waters and dredging and filling of
wetlands. Regular monitoring, as well as compliance with reporting requirements
and performance standards, are preconditions for the issuance and renewal of
permits governing the discharge of pollutants into water.

On October 20, 1999, the U.S. District Court for the Southern District of
West Virginia issued an injunction which prohibits the construction of valley
fills over both intermittent and perennial stream segments as part of mining
operations. See discussion above under Item 1, Environmental, Safety and Health
Matters.

Deregulation of the electric utility industry could lead to efforts to reduce
coal prices

Deregulation of the electric utility industry, when implemented, will enable
industrial, commercial and residential customers to shop for the lowest cost
supply of electricity. This fundamental change in the power industry may result
in efforts to reduce coal prices.

Severe weather may affect Massey's ability to mine and deliver coal

Severe weather, including flooding and excessive ice or snowfall, when it
occurs, can adversely affect Massey's ability to produce, load and transport
coal.

A Shortage of skilled labor in the Central Appalachian and industry poses a
risk to achieving high labor productivity and competitive costs.

Coal mining continues to be a labor intensive industry. In 2001, a shortage
of trained coal miners developed in the Central Appalachian region. The lack of
skilled miners could have an adverse impact on Massey's labor productivity and
cost and its ability to expand production.

Item 2. Properties

Operations of Massey and its subsidiaries are conducted in both owned and
leased properties totaling approximately 900,000 acres in West Virginia,
Kentucky, Virginia and Tennessee. In addition, certain owned or leased
properties of Massey and its subsidiaries are leased or subleased to third
party tenants. Massey and its subsidiaries currently own or lease the equipment
that is utilized in their mining operations. The following table describes the
location and general character of the major existing facilities, exclusive of
mines, coal preparation plants and their adjoining offices.

Coal Offices:

Richmond, Virginia Owned Massey Corporate Headquarters
Charleston, West Virginia Leased Massey Coal Services Headquarters

Coal Reserves

Massey estimates that, as of October 31, 2001, it had total recoverable
reserves of approximately 2.1 billion tons consisting of both proven and
probable reserves. Reserves are coal deposits that could be economically and
legally extracted or produced. "Recoverable" reserves means coal that is
recoverable using existing equipment and methods under federal and state laws
currently in effect. Approximately 1.4 billion tons of Massey's reserves are
classified as proven reserves. This means that these deposits have been
substantiated by adequate information, including information derived from
exploration, current and previous mining operations, outcrop data and knowledge
of mining conditions. The remaining 700 million tons of Massey's reserves are
classified as probable reserves. These are deposits of coal which are based on
information of a more preliminary or limited extent or character, but which are
considered likely.

Reserve estimates are updated annually using geologic data taken from drill
holes, adjacent mine workings, outcrop prospect openings and other sources.
Coal tonnages are categorized according to coal quality, seam thickness,
mineability and location relative to existing mines and infrastructure. In
accordance with applicable industry standards, proven reserves are those for
which reliable data points are spaced no more than 2,700 feet apart. Probable
reserves are those for which reliable data points are spaced 2,700 feet to
7,900 feet apart. Further scrutiny is applied using geological criteria and
other factors related to profitable extraction of the coal. These criteria
include seam height, roof and floor conditions, yield and marketability.

The following table provides proven and probable reserve data by state as of
October 31, 2001, as follows:

Tons % of Total
---------- ----------
(millions)

Southern West Virginia 1,742 82%
Eastern Kentucky...... 306 14
Southwestern Virginia. 60 3
Southeastern Tennessee 26 1
----- ---
Total................. 2,134 100%
===== ===

When categorized by sulfur content, the reserve breakdown is as follows:

Tons % of Total
---------- ----------
(millions)
Sulfur Content

Compliance sulfur or less............... 958 45%
Greater than compliance and less than 1% 450 21
Greater than 1% sulfur and less than 2%. 716 34
Greater than 2% sulfur.................. 10 --
----- ---
Total................................... 2,134 100%
===== ===

Massey's reserve holdings include high volatile metallurgical coal reserves.
Although these metallurgical coal reserves receive the highest selling price in
the current coal market when marketed to steel-making customers, they can also
be marketed as an ultra high Btu, low sulfur steam coal for electrical
generation. The categorization of Massey's coal reserves as utility/industrial
or metallurgical quality is as follows:

Tons % of Total
---------- ----------
(millions)
Coal Type

High volatile metallurgical.. 863 40%
Low volatile metallurgical... 98 5
Utility or industrial markets 1,173 55
----- ---
Total........................ 2,134 100%
===== ===

As with most coal-producing companies in Central Appalachia, the majority of
Massey's coal reserves are controlled pursuant to leases from third party
landowners. These leases convey mining rights to the coal producer in exchange
for a per ton or percentage of gross sales price royalty payment to the lessor.
However, a significant portion of Massey's reserve holdings are owned and
require no royalty or per ton payment to other parties. The following table
summarizes the portion of Massey reserves controlled by ownership versus lease:

Tons % of Total
---------- ----------
(millions)
Method of Reserve Control

Owned reserves...... 298 14%
Leased reserves..... 1,836 86
----- ---
Total............... 2,134 100%
===== ===

See Item 1. Business, of this report for additional information regarding
the coal operations and properties of Massey.

Item 3. Legal Proceedings

Harman Litigation

Harman Mining Corporation and certain of its affiliates (collectively
"Harman") instituted two civil actions against Massey or its present or former
subsidiaries. In June 1998, Harman filed a breach of contract action against
Wellmore Coal Corporation ("Wellmore"), a former Massey subsidiary, in Buchanan
County, Virginia Circuit Court. Harman claims that Wellmore breached a coal
supply agreement, pursuant to which Harman sold coal to Wellmore, by declaring
a force majeure event and reducing the amount of coal to be purchased from
Harman as a result thereof. Wellmore claimed force majeure when its major
customer was forced to close its Pittsburgh coke plant due to regulatory
action. Harman received a jury verdict that Wellmore breached the contract and
assessing $6 million in damages against Wellmore. Massey's subsidiary, Knox
Creek Coal Corporation, has assumed the defense of this action under the terms
of the stock purchase agreement by which it sold the stock of Wellmore and, on
August 6, 2001, filed a petition for appeal of the adverse determination on
liability and damages to the Supreme Court of Virginia.

Additionally, Harman and its sole shareholder, Hugh Caperton, filed a
separate action against Massey and certain subsidiaries in Boone County, West
Virginia Circuit Court, alleging that Massey and its subsidiaries tortiously
interfered with Harman's contract with Wellmore and, as a result, caused Harman
to go out of business. The plaintiffs seek unspecified compensatory and
punitive damages. Massey believes that compensatory damages, if any, are
duplicative of any damages that may be awarded in the contract action, and are
limited by the same factors as in the contract action. Massey is defending this
action vigorously and believes that it has numerous valid defenses to the
claims. This action is set for trial beginning May 28, 2002.

Environmental Protection Orders

On June 27, 2000, the WVDEP issued an administrative order to one of
Massey's subsidiaries, Elk Run Coal Company, requiring Elk Run either to
suspend operations for three days beginning July 17, 2000 or expend $100,000 on
local community improvement projects. The order was based on alleged violations
of the surface mining laws relating to dust, and Elk Run appealed the order to
the West Virginia Surface Mining Board. On October 25, 2000 the West Virginia
Surface Mining Board upheld the order. Elk Run has appealed the Surface Mining
Board's order to the Kanawha Circuit Court, Charleston, West Virginia. Elk Run
believes that it has good defenses to the alleged violations.

On April 3, 2001, Marfork Coal Company and the WVDEP entered into a consent
agreement to resolve two show cause orders issued to Marfork on April 28, 2000
and a third show cause order issued to Marfork on December 20, 2000. Under the
consent agreement, Marfork agreed to implement plans pertaining to dust control
and to sediment and drainage control and further agreed to contribute $100,000
to various community projects.

On August 27, 2001, Marfork Coal Company and the WVDEP entered into an
agreed order to resolve a number of alleged effluent violations occurring prior
to January 19, 2001. Pursuant to the agreement, Marfork was assessed an
administrative penalty of $148,500.

WVDEP has also issued orders to various Massey subsidiaries ordering them to
show cause why permits for those subsidiaries should not be suspended or
revoked because of alleged patterns of violations relating to water quality. In
particular, WVDEP has issued such orders to: (1) Green Valley Coal Company, for
two refuse area permits, on March 6, 2001 and August 21, 2001; (2) Marfork Coal
Company, for its refuse impoundment permit, on June 7, 2001; (3) Independence
Coal Company, for its preparation plant permit, on August 24, 2001, for its
refuse impoundment permit, on August 29, 2001, and for its Justice Mine permit,
on September 19, 2001; and (4) Omar Mining Company, for its joint refuse area
and preparation plant permit, on October 5, 2001. Hearings for these
subsidiaries to show cause why the permits should not be suspended or revoked
were held for Marfork on October 25, 2001; Green Valley on June 14, 2001 and
November 6, 2001; Independence on December 5-6, 2001; and Omar on January 22,
2002. In the event of an adverse determination, the affected permits could be
suspended or revoked. If a permit is revoked, Massey and its subsidiaries could
be prohibited from receiving additional permits. On January 2, 2002, WVDEP
entered an order finding a pattern of violations and suspending Green Valley's
above-referenced refuse area permits for three days. Green Valley obtained a
stay of enforcement of the order pending appeal and filed an appeal of the
order. On January 14, 2002, WVDEP entered an order finding a pattern of
violations and suspending operations on Marfork's refuse impoundment permit for
fourteen days. Marfork obtained a stay of enforcement of the order pending
appeal and filed an appeal of the order. The companies are vigorously defending
these enforcement actions.

If the affected Massey subsidiaries are unsuccessful in defending or
reaching an acceptable resolution of these orders with the WVDEP, there is a
possibility that a suspension of operations could have a significant affect on
Massey's overall operations.

Martin County Impoundment Discharge

On October 11, 2000, a partial failure of Martin County Coal Corporation's
coal refuse impoundment released approximately 230 million gallons of coal
slurry into adjacent underground mine workings. The slurry then discharged into
two tributary streams of the Big Sandy River in eastern Kentucky. No one was
injured in the discharge. Clean up efforts began immediately and are largely
complete. The States of Kentucky and West Virginia have issued various notices
of violation related to the discharge and ordered remedial measures. Fines and
penalties, which may not be covered by insurance, have not yet been assessed.
The Company has begun informal discussions with various agencies with respect
to the resolution of the notices of violation, including potential fines and
penalties. On October 19, 2001, the Company agreed to pay $225,000 to the
Kentucky Fish and Wildlife Service to settle statutory fish replacement claims.

Several lawsuits have been brought by downstream residents and other
individual plaintiffs claiming to be damaged by the spill. These suits assert
trespass, property damage, nuisance and other claims, and seek compensatory and
punitive damages. Certain of these suits seek to be certified as class action
lawsuits. These lawsuits remain in their initial stages.

Martin County Coal began processing coal again on April 2, 2001. The Company
is continuing to seek approval from the applicable agencies for alternate
refuse disposal options related to operations of Martin County Coal's
preparation plant.

As of October 31, 2001, cleanup costs of approximately $41.5 million have
been incurred, $32.5 million of which have been paid or reimbursed by insurance
companies. Massey continues to seek insurance reimbursement of any and all
covered costs, the majority of which are recorded as a receivable in the
Company's financial statements.

On June 26, 2001, the WVDEP filed a civil action against Martin County Coal
in the Wayne County, West Virginia Circuit Court to redress alleged injury to,
destruction or loss of natural resources in the State of West Virginia and
alleged violations of law resulting from the impoundment discharge. Massey is
defending this action vigorously and believes that it has numerous valid
defenses to the claims.

West Virginia Workers Compensation Settlement

The West Virginia Workers Compensation Division filed suits in April 1998
against several coal companies, including several subsidiaries of Massey, for
delinquent workers' compensation premiums from the 1980s and early 1990s owed
by former contractors and licensees of such coal companies. In late 1999, the
West Virginia Workers Compensation Division agreed to dismiss these lawsuits.
In early 2001, the Affiliated Construction Trades Council filed a complaint in
the Circuit Court of McDowell County, West Virginia seeking to reinstate these
lawsuits. By opinion issued October 23, 2001, the court held that the cases
could be reinstated. In December 2001, in lieu of potentially reinstating the
lawsuits, the state of West Virginia and several coal operators, including
Massey, began discussions regarding settlement of potential claims. In January
2002, Massey agreed to settle such claims for $6.9 million payable over a
period of ten years in exchange for a release of all such claims.

Kentuckians for the Commonwealth

On August 21, 2001, the Kentuckians for the Commonwealth, an environmental
group, sued the U.S. Corps of Engineers (the "Corps") for issuing a Nationwide
Permit (i.e., a general permit issued for a class of activities that does not
require a permit applicant to undergo individual review) to Martin County Coal
allowing construction of valley fills in waters of the United States. The
lawsuit, filed in the United States District Court for the Southern District of
West Virginia, alleges that the Corps lacks the authority under the Clean Water
Act to issue permits for valley fills in the waters of the United States.
Alternatively, the plaintiffs argue that fills cannot be approved: (i) pursuant
to a Nationwide Permit rather than an individual permit; (ii) without an
environmental impact statement; (iii) without analyzing measures for avoiding
and minimizing impacts on streams; and (iv) without waiting for the U.S.
Environmental Protection Agency to complete proceedings under the Clean Water
Act to veto Martin County Coal's permit. Prior to the lawsuit being filed,
Martin County Coal sold the property subject to the permit to an unrelated
company and the Corps is in the process of transferring the permit to that
company. While neither Martin County Coal nor Massey is a party to this
litigation, virtually all mining operations (including those of Massey) utilize
valley fills to dispose of excess materials mined during coal production.

Other Legal Proceedings

Disputes have arisen between Fluor Australia, a former subsidiary of the
Company, and its client, Anaconda Nickel, over the A$800 million Murrin Murrin
Nickel Cobalt project located in Western Australia. Anaconda's primary
contention is that the process design is defective and incapable of proper
operation. Anaconda also contends that it has suffered consequential losses,
such as loss of profit for which it seeks payment from New Fluor. Anaconda
contends that New Fluor is liable to Anaconda in the total amount of A$1.8
billion, A$1.2 billion of which is alleged consequential damages. New Fluor
vigorously disputes and rejects Anaconda's claims. The dispute is in
arbitration in Australia and an arbitration hearing is scheduled to commence in
late January 2002. If and to the extent that these problems are ultimately
determined to be the responsibility of New Fluor, it anticipates recovering a
substantial portion of any award to Anaconda from available insurance. Prior to

the Spin-Off, the Company had guaranteed the subsidiary's obligations under the
subsidiary's construction agreement with Anaconda. Pursuant to an agreement
between the Company and New Fluor, New Fluor has assumed all liability and
costs arising in connection with this litigation.

Due to the Martin County impoundment discharge, flooding in July 2001 and
other events that caused significant disruptions in coal production for which
force majeure notices have been issued to customers, certain customers have
complained about short falls in coal shipments. In one instance, a customer has
demanded arbitration of its claim for damages allegedly caused by delayed coal
shipments. Several customers have agreed to defer tonnage into calendar year
2002. The Company continues to seek to resolve customer complaints through
similar arrangements.

In addition, Massey and its subsidiaries, incident to their normal business
activities, are parties to a number of other legal proceedings. While Massey
cannot predict the outcome of these proceedings, in the opinion of Massey and
based on reports of counsel, any liability arising from these matters
individually and in the aggregate should not have a material adverse effect
upon the consolidated financial position, cash flows or results of operations
of Massey. The Company also is party to numerous lawsuits and other legal
proceedings related to the non-coal businesses previously conducted by the
Company but now conducted by New Fluor. Under the terms of the Distribution
Agreement entered into by the Company and New Fluor as of November 30, 2000, in
connection with the Spin-Off of New Fluor by the Company, New Fluor has agreed
to indemnify the Company with respect to all such legal proceedings and has
assumed their defense.

Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted to a vote of security holders of the Company
through a solicitation of proxies or otherwise during the fourth quarter of the
Company's fiscal year ended October 31, 2001.

The current executive officers of Massey are:

Don L. Blankenship, Age 51

Mr. Blankenship has been a Director since 1996 and the Chairman, President
and Chief Executive Officer of Massey since November 30, 2000. He has been
Chairman, President and Chief Executive Officer of A.T. Massey Coal Company,
Inc./(1)/ since 1992. He was formerly the President and Chief Operating Officer
of A.T. Massey from 1990 and President of Massey Coal Services, Inc./(2)/ from
1989. He joined Rawl Sales & Processing Co./(3)/ in 1982. He is also Director
of the National Mining Association, the Governor's Mission West Virginia Board
and the Norfolk Southern Advisory Board.

H. Drexel Short, Age 45

Mr. Short has been Senior Vice President, Group Operations of Massey since
November 30, 2000. He also has been Senior Vice President, Group Operations of
A.T. Massey since May 1995. Mr. Short was formerly Chairman of the Board and
Chief Coordinating Officer of Massey Coal Services from April 1991 to April
1995. Mr. Short joined A.T. Massey in 1981.

Dr. Stanley C. Suboleski, Age 60

Dr. Suboleski has been Vice President of Massey since January 22, 2002. He
also has been Director, Executive Vice President and Chief Operating Officer of
A.T. Massey since December 15, 2001. He joined Massey in 1981 and served until
1988 as Vice President of Planning and Development and Treasurer. From December
1993 to December 1997, he served as Vice President, Planning and Vice
President, Operations Strategy, for A.T. Massey. During times he was not
serving, Dr. Suboleski was a professor and Chairman of the Mining Engineering
program at Penn State University and professor and Department Head of Mining
and Minerals Engineering at Virginia Polytechnic Institute and State University.

Roger L. Nicholson, Age 41

Mr. Nicholson has been Vice President, Secretary and General Counsel of
Massey since November 30, 2000. He also has been Vice President and General
Counsel of A.T. Massey since February 2000. Mr. Nicholson joined A.T. Massey in
1995 as Assistant General Counsel. Prior to joining A.T. Massey, Mr. Nicholson
was associated with the law firm of Robinson & McElwee in Lexington, Kentucky.
Prior to that, Mr. Nicholson served as chief real estate counsel for Arch
Mineral Corporation and as vice president, secretary and general counsel of its
land-holding subsidiary, Ark Land Company.

Jeffrey M. Jarosinski, Age 41

Mr. Jarosinski has been Vice President, Finance and Chief Financial Officer
of Massey since November 30, 2000. He also has been Vice President, Finance and
Chief Financial Officer of A.T. Massey since September 1998. Mr. Jarosinski was
formerly Vice President, Taxation of A.T. Massey from 1997 to August 1998 and
Assistant Vice President, Taxation of A.T. Massey from 1993 to 1997. Mr.
Jarosinski joined A.T. Massey in 1988. Prior to joining A.T. Massey, Mr.
Jarosinski held various positions in accounting, most recently as Manager at
Womack, Burke & Associates, CPAs in Richmond, Virginia.

Baxter F. Phillips, Jr., Age 55

Mr. Phillips has been Vice President and Treasurer of Massey since November
30, 2000. He also has been Vice President and Treasurer of A.T. Massey since
October 2000. Mr. Phillips joined A.T. Massey in 1981 and has served in various
capacities with A.T. Massey, including Corporate Treasurer, Manager of Export
Sales, Corporate Human Resources Manager, Vice President of Benefits and Vice
President, Purchasing and Administration. Prior to joining A.T. Massey, Mr.
Phillips held various positions in banking and investments.

Madeleine M. Curle, Age 42

Ms. Curle has been Vice President, Human Resources of Massey since November
30, 2000. She also has been Vice President, Human Resources of A.T. Massey
since May 2000. Ms. Curle was formerly Vice President, Benefits from December
1995 to April 2000, Assistant Vice President, Benefits Planning and
Administration from May 1995 to November 1995, and Director, Medical and
Retirement Programs from January 1995 to April 1995. Ms. Curle joined A.T.
Massey in October 1993. Prior to joining A.T. Massey, Ms. Curle served as an
employee benefits consultant at Foster Higgins, a national consulting firm
(recently merged with William M. Mercer, Inc.).

(1) A.T. Massey Coal Company, Inc., or A.T. Massey, is a wholly-owned
subsidiary of Massey Energy Company.
(2) Massey Coal Services, Inc. is a wholly-owned subsidiary of Massey Coal
Sales Company, Inc., a wholly-owned subsidiary of A.T. Massey.
(3) Rawl Sales & Processing Co. is a wholly-owned subsidiary of A.T. Massey.

Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

The Company's stock is listed on the New York Stock Exchange. The Company's
Common Stock trading symbol is MEE.

At December 31, 2001, there were 74,773,920 shares outstanding and
approximately 10,503 shareholders of record of Massey's common stock.

As discussed above, on November 30, 2000, Fluor completed the spin-off of
New Fluor, which is conducting all of the businesses previously conducted by
Fluor, other than the coal business. New Fluor is treated as the accounting
successor of Fluor. As a result, information regarding dividends previously
paid by, or prices paid for the common stock of, Fluor prior to November 30,
2000 is not indicative of the past or future performance of Massey. The
dividends paid and the stock prices of Massey stock since November 30, 2000 is
set forth below. The dividends paid and the stock prices of Fluor stock prior
to November 30, 2000 can be found in Fluor's Annual Report on Form 10-K for the
fiscal year ended October 31, 2000.

The following table sets forth the high and low sales prices per share of
Common Stock on the New York Stock Exchange, based upon published financial
sources, and the dividends declared on each share of Common Stock for the
quarter indicated.

High Low Dividends
------ ------ ---------

Fiscal Year 2001
Quarter ended January 31, 2001. $18.10 $ 9.94 $0.08
Quarter ended April 30, 2001... $28.23 $17.20 $0.04
Quarter ended July 31, 2001.... $22.95 $15.66 $0.04
Quarter ended October 31, 2001. $20.56 $12.25 $0.04

Due to the timing of the Spin-Off transaction, in December 2000, the Company
declared a first quarter dividend of $0.04 per share, payable in January 2001.
Additionally, in January 2001, the Company declared a second quarter dividend
of $0.04 per share, payable in April 2001.

The Company's current dividend policy anticipates the payment of quarterly
dividends in the future. The declaration and payment of dividends to holders of
Common Stock will be at the discretion of the Board of Directors and will be
dependent upon the future earnings, financial condition, and capital
requirements of the Company.

Transfer Agent and Registrar

Mellon Investor Services LLC acts as transfer agent and registrar for the
Massey Common Stock.

Item 6. Selected Financial Data.

SELECTED FINANCIAL DATA (1)

For the Year Ended October 31,
--------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
(in millions, except per share, per ton and
number of employees amounts)

CONSOLIDATED STATEMENT OF EARNINGS
DATA:
Net Sales...................................... $1,203.3 $1,081.0 $1,076.1 $1,121.1 $1,077.9
Other Revenue.................................. 50.5 59.6 38.4 32.8 31.9
Income from Operations......................... 16.7 96.9 139.4 170.1 154.8
Net (Loss) Earnings............................ (1.1) 78.8 103.4 128.3 119.0
(Loss) earnings per share (2)Basic and diluted. (0.01) 1.07 1.41 1.75 1.62
Dividends declared per share................... 0.20 N/A N/A N/A N/A

CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)...................... $ (85.1) $ 135.1 $ 43.9 $ 4.0 $ (2.4)
Total assets................................... 2,268.7 2,154.0 1,980.0 1,836.9 1,641.6
Long-term debt................................. 300.0 N/A N/A N/A N/A
Shareholders' equity........................... 866.4 1,374.6 1,277.4 1,181.2 1,054.8

OTHER DATA:
EBIT........................................... $ 16.7 $ 96.9 $ 139.4 $ 170.1 $ 154.8
EBITDA (3)..................................... 198.0 268.2 306.9 320.6 286.1
Tons Sold...................................... 43.7 40.2 37.9 37.6 35.6
Tons Produced.................................. 45.1 41.5 38.4 38.0 36.6
Average cash cost per ton (4).................. $ 24.14 $ 21.68 $ 21.33 $ 22.16 $ 22.47
Average sales price per ton.................... 27.51 26.86 28.40 29.83 30.24
Capital expenditures........................... $ 247.5 $ 204.8 $ 230.0 $ 307.9 $ 305.2
Number of employees............................ 5,004 3,610 3,190 3,094 2,968

(1) On November 30, 2000, the Company completed a reverse spin-off (the
"Spin-Off"), which divided it into the spun-off corporation, "new" Fluor
Corporation ("New Fluor"), and Fluor, subsequently renamed Massey Energy
Company, which retained the Company's coal-related businesses. Further
discussion of the Spin-Off may be found in the Notes to the Consolidated
Financial Statements. As New Fluor is the accounting successor to Fluor
Corporation, Massey's equity structure was impacted as a result of the
Spin-Off. Massey retained $300 million of 6.95 percent Senior Notes, $278.5
million of Fluor commercial paper, other equity contributions from Fluor,
and assumed Fluor's common stock equity structure. Therefore, the Selected
Financial Data for years prior to 2001 are not necessarily indicative of
the results of operations, financial position and cash flows of Massey in
the future or had it operated as a separate independent company during the
periods prior to November 30, 2000.
(2) Shares used to calculate basic earnings per share for the periods ended
October 31, 2000 and prior is based on the number of shares outstanding
immediately following the Spin-Off (73,468,707). Shares used to calculate
diluted earnings per share for the periods ended October 31, 2000 and prior
is based on the number of shares outstanding immediately following the
Spin-Off and the dilutive effect of stock options and other stock-based
instruments of Fluor Corporation, held by Massey employees, that were
converted to equivalent instruments in Massey Energy Company in connection
with the Spin-Off. In accordance with accounting principles generally
accepted in the United States, the effect of dilutive securities was
excluded from the calculation of the diluted loss per common share for the
period ended October 31, 2001 as such inclusion would result in
antidilution.

(3) EBITDA is defined as earnings before deducting net interest expense
(interest expense less interest income), income taxes and depreciation,
depletion and amortization. Although EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles,
management believes that it is useful to an investor in evaluating Massey
because it is widely used in the coal industry as a measure to evaluate a
company's operating performance before debt expense and its cash flow.
EBITDA does not purport to represent cash generated by operating activities
and should not be considered in isolation or as a substitute for measures
of performance in accordance with generally accepted accounting principles.
In addition, because EBITDA is not calculated identically by all companies,
the presentation here may not be comparable to other similarly titled
measures of other companies. Management's discretionary use of funds
depicted by EBITDA may be limited by working capital, debt service and
capital expenditure requirements and by restrictions related to legal
requirements, commitments and uncertainties.
(4) Average cash cost per ton is calculated as the sum of Cost of sales and
Selling, general and administrative expense, divided by the number of tons
sold.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

2001 Compared with 2000

Net sales increased 11% to $1,203.3 million in 2001 as compared to $1,081.0
million for the previous year. Two factors that impacted revenues during 2001
were:

. The volume of tons sold increased by 9 percent from 40.2 million tons in
2000 to 43.7 million tons in 2001. This increase consisted of a 17
percent increase in utility tons sold and a 19 percent increase in
industrial tons sold, offset in part by a decrease of 8 percent in
metallurgical tons sold.

. The average per ton realized price for coal sold increased by 2 percent
from $26.86 in 2000 to $27.51 in 2001.

The market for utility coal continued to improve during the fiscal year 2001
as spot market prices of Central Appalachian coal increased to 20-year highs.
Unfortunately, most of the Massey tonnage sold in 2001 was committed prior to
the upturn in the market.

Other revenue, which consists of royalties, rentals, miscellaneous income
and gains on the sale of non-strategic assets, decreased 15 percent to $50.5
million for 2001 compared with $59.6 million for 2000. The decrease was
primarily due to a decrease in income from dispositions of non-strategic
mineral reserves, which generated $26.5 million in 2000 compared to $1.1
million in 2001. As part of its management of coal reserves, Massey regularly
sells non-strategic reserves or exchanges them for reserves located in more
synergistic locations.

Cost of sales increased 22 percent to $1,024.1 million for 2001 from $837.1
million in 2000. This was partially due to the increase in tons sold. Cost of
sales on a per ton sold basis increased by 13 percent to $23.43 for the fiscal
year 2001 compared to $20.82 in fiscal 2000. This increase in cost was related
to both the direct cost of labor and the decreases in productivity resulting
from a greater percentage of inexperienced miners. This was due, in part, to
the Company's efforts to increase production. In addition, heavy rains in
southern West Virginia in July increased employee absenteeism and disrupted
loading operations and rail service, slowing coal shipping. Other operational
problems impacted production and costs throughout the fiscal year. Operating
difficulties and problematic geologic conditions were encountered at several
longwall mines and during the expansion of Massey's two large surface mines,
where we experienced higher than expected overburden ratios in the first half
of the year. The Ellis Eagle longwall mine experienced flooding that caused
significant disruption to coal production during April and May. The flooding
caused reduced shipments from both the Marfork and Goals preparation plants.
Increases in operating costs related to the Martin County Coal slurry spill and
the idling of the Martin County Coal preparation plant from October 11, 2000,
to April 2, 2001, also negatively impacted cost of sales.

Cost of sales for 2001 and 2000 includes credits of $9.5 million and $15.0
million, respectively, related to refunds of black lung excise taxes paid on
coal export sales tonnage. Black lung excise taxes on exported coal were
determined to be unconstitutional by a 1998 federal district court decision.
During 2001, the Internal Revenue Service substantially completed its audit of
the Company's requested refund of black lung excise tax payments. Cost of sales
in 2001 also includes a $4.1 million benefit arising from the settlement of
insurance claims from the August 2000 Upper Cedar Grove longwall failure.

Depreciation, depletion and amortization slightly increased to $181.3
million for 2001 from $171.3 million in 2000. The increase of $10 million was
primarily due to the level of capital expenditures in recent years.

Selling, general and administrative expenses decreased 10 percent to $31.7
million for 2001 compared with $35.4 million for 2000. This was due in part to
a $7.1 million bad debt expense in 2000 associated with the bankruptcy of a
major steel industry customer as well as a reduction in accruals related to
long-term executive compensation plans, partially offset by additions to the
administrative workforce associated with running a stand-alone publicly traded
company.

Interest income decreased to $8.7 million for 2001 compared to $25.7 million
for 2000. This decrease was primarily due to the elimination of the Company's
loans with Fluor Corporation in connection with the Spin-Off transaction on
November 30, 2000. Additionally, in the second quarter of 2001, $3.2 million
was accrued for interest due on the black lung excise tax refund as noted
above, while in the third fiscal quarter of 2000, $5.3 million was accrued for
interest on the black lung excise tax refund.

Interest expense increased to $34.2 million for 2001. The increase was due
to the addition of the 6.95 percent Senior Notes and commercial paper
borrowings subsequent to the Spin-Off.

Income tax benefit was $7.7 million for 2001 compared to an income tax
expense of $43.4 million for 2000. This primarily reflects the loss before
taxes for 2001 compared to income before taxes for 2000, as well as a depletion
accounting income tax benefit of $4.5 million in 2001.

2000 Compared with 1999

Net sales remained essentially unchanged in 2000 compared with 1999. Net
sales were $1,081.0 million in 2000 compared with $1,076.1 million for 1999.
Three factors that impacted revenues during 2000 were:

. The volume of steam coal sold increased by 14 percent in 2000 compared
to 1999.

. The volume of the higher priced metallurgical coal declined by 6 percent
in 2000 compared to 1999.

. The average realized prices for both steam and metallurgical coal
declined by 5 percent in 2000 compared with 1999.

The metallurgical coal market continued to be adversely affected by a weak
coal export market and the slow recovery of the domestic steel market. Demand
was weak for United States coal exported to foreign markets as the U.S. dollar
remained strong. The market for steam coal continued to be adversely impacted
by two factors: (1) mild weather and (2) competition from western coals, which
increased its penetration of traditional eastern coal market areas.

Other revenue, which consists of royalties, rentals, miscellaneous income
and gains on the sale of non-strategic assets, increased 55 percent to $59.6
million for 2000 compared with $38.4 million for 1999. The increase was
primarily due to an increase in income from dispositions of non-strategic
mineral reserves which generated $26.5 million in 2000 compared with $10.2
million in 1999. As part of its management of coal reserves, Massey regularly
sells non-strategic reserves or exchanges them for reserves located in more
synergistic locations.

Cost of sales increased 8 percent to $837.1 million for 2000 from $774.8
million in 1999. This was primarily due to the increase in tons sold by 6
percent from 37.9 million tons in 1999 to 40.2 million tons in 2000. Cost of
sales for 2000 includes a $15.0 million credit related to refunds of black lung
excise taxes paid on coal export sales tonnage. The payment of black lung
excise taxes on exported coal was determined to be unconstitutional by a 1998
federal district court decision. During 2000, the Internal Revenue Service
issued procedures for obtaining refunds related to such excise taxes. Cost of
sales also included charges of $9 million related to a geological impairment
related to the longwall development at the Upper Cedar Grove mine and a $3
million charge related to a slurry spill from the impoundment breach at Martin
County Coal Corporation.Cost of sales on a per ton of coal sold basis,
excluding the aforementioned items, increased by approximately 2 percent in
2000 compared with 1999 as operational problems and adverse geologic conditions
encountered during the third and fourth quarters of 2000 more than offset cost
reductions that had been achieved in the first two quarters of 2000.

Depreciation, depletion and amortization slightly increased to $171.3
million for 2000 from $167.6 million in 1999. The increase of $3.7 million was
primarily due to capital expenditures made in recent years.

Selling, general and administrative expenses increased 8 percent to $35.4
million for 2000 compared with $32.7 million for 1999, due in part to a $5.8
million bad debt expense associated with the bankruptcy of a major steel
industry customer offset some by a reduction in accruals related to long-term
executive compensation plans.

Interest income increased to $25.7 million for 2000 compared with $14.4
million for 1999. This increase of $11.3 million was primarily due to the
additional interest income of $5.3 million related to the black lung excise tax
refunds discussed above and a general increase in the floating interest rate on
a note receivable from Fluor Corporation.

Income taxes decreased 13 percent to $43.4 million for 2000 compared with
$49.6 million in 1999. The decrease primarily reflects the decreased earnings
in 2000 compared with 1999, partially offset by a rise in the effective tax
rate to 35.5 percent for 2000 compared with 32.4 percent for 1999.

Liquidity and Capital Resources

At October 31, 2001, the Company's available liquidity was $147.5 million,
including cash and cash equivalents of $5.7 million and $141.8 million
remaining on the Company's commercial paper program. At October 31, 2001,
Massey had $240.4 million of consolidated commercial paper (outstanding
commercial paper of $257.9 million net of discount offset by $17.5 million of
Massey commercial paper purchased by various Massey subsidiaries) included in
short-term debt. In order to participate in the commercial paper market, the
Company must maintain an investment grade rating as determined by both Moody's
and Standard & Poor's, national rating agencies. Failure to maintain this
rating would most likely result in increased interest expense, as the Company
would be required to draw on its available liquidity backstop. On the date of
the Spin-Off, Massey entered into $150 million 364-day and $250 million 3-year
revolving credit facilities, which have been guaranteed by A. T. Massey, that
serve to provide liquidity backstop to Massey's commercial paper program and
are also available to meet the Company's ongoing liquidity needs. The $150
million 364-day facility has been renewed through November 26, 2002. Borrowings
under these facilities bear interest based on (i) the London Interbank Offer
Rate (LIBOR) plus a margin, which is based on the Company's credit rating as
determined by Moody's and Standard & Poor's, (ii) the Base Rate (as defined in
the facility agreements), and (iii) the Competitive Bid rate (as defined in the
facility agreements). There were no borrowings outstanding under the credit
facilities at October 31, 2001.

The revolving credit facilities contain financial covenants requiring the
Company to maintain various financial ratios. Failure by the Company to comply
with these covenants could result in an event of default, which if not cured or
waived could have a material adverse effect on the Company. The financial
covenants consist of a maximum leverage ratio, a minimum interest coverage
ratio, and a minimum net worth test. The leverage ratio requires that the
Company not permit the ratio of total indebtedness at the end of any quarter to
adjusted EBITDA for the four quarters then ended to exceed a specific amount.
The interest coverage ratio requires that the Company not permit the ratio of
the Company's adjusted EBITDA to interest expense for the four quarters then
ended to be less than a specified amount. The net worth test requires that the
Company not permit its net worth to be less than a specified amount. The
Company was in compliance with these covenants at October 31, 2001. The Company
expects that it was not in compliance with the covenant related to the leverage
ratio at December 31, 2001, however, the participant banks have granted a
temporary waiver of this financial covenant. The waiver expires on February 22,
2002. The Company is seeking to obtain an amendment to the covenant level prior
to the expiration of the waiver and expects approval by the participant banks.
If the Company is unable to obtain an amendment to the covenant level, it would
most likely result in the Company seeking alternate sources of short-term
financing, or issuing longer term debt, which the Company has available a $500
million debt shelf registration originally filed with the Securities and
Exchange Commission by Fluor Corporation in March 1999.

The total debt-to-book capitalization ratio was 38.8 percent at October 31,
2001. The cash flow provided by operating activities was $202.6 million in 2001
and $154.3 million for the same period in 2000. Cash provided by operating
activities reflects net earnings adjusted for non-cash charges and changes in
working capital requirements.Net cash utilized in investing activities was
$242.4 million in 2001, and $173.4 million in 2000. The cash used in investing
activities reflects capital expenditures in the amount of $247.5 million and
$204.8 million for the years ended October 31, 2001 and 2000, respectively.
These capital expenditures are for replacement of mining equipment, the
expansion of mining capacity and projects to improve the efficiency of mining
operations. Financing activities primarily reflect changes in amounts due from
Fluor Corporation and other capital accounts associated with the Spin-Off
transaction and being a publicly traded company. In addition to the cash spent
on capital expenditures during the year of 2001, the Company leased, through
operating leases, $109.0 million and $69.0 million of mining equipment in 2001
and 2000, respectively.

Massey believes that cash generated from operations and its borrowing
capacity will be sufficient to meet its working capital requirements,
anticipated capital expenditures (other than major acquisitions), scheduled
debt payments and anticipated dividend payments for at least the next several
years. Nevertheless, the ability of Massey to satisfy its debt service
obligations, to fund planned capital expenditures or pay dividends will depend
upon its future operating performance, which will be affected by prevailing
economic conditions in the coal industry and financial, business and other
factors, some of which are beyond Massey's control. Massey frequently evaluates
potential acquisitions. In the past, Massey has funded acquisitions primarily
with cash generated from operations, but Massey may consider a variety of other
sources, depending on the size of any transaction, including debt or equity
financing. There can be no assurance that such additional capital resources
will be available to Massey on terms which Massey finds acceptable, or at all.

Inflation

Inflation in the United States has been relatively low in recent years and
did not have a material impact on Massey's results of operations for the years
presented.

New Accounting Standards

Effective November 1, 2000, the Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133") as amended by SFAS No. 138, "Accounting for
Certain Derivative Instruments and Hedging Activities". The Statements require
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
The adoption of these accounting standards and subsequent implementation
guidance did not have a significant impact on the Company's financial
statements. As part of ongoing accounting operations, management will continue
to assess its financial instruments and activities for identification of
transactions subject to the treatment of SFAS 133 and all related guidance.

On August 15, 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations". The standard will require that retirement obligations
be recorded as a liability based on the present value of the estimated cash
flows. This SFAS is effective for fiscal years beginning after June 15, 2002
and transition is by cumulative catch-up adjustment. The Company is currently
evaluating the impact that the standard will have on its financial statements.

Outlook

Massey expects a loss in the two-month stub period between October 31, 2001
fiscal year end and the January 1, 2002 beginning of its first calendar fiscal
year due to a number of operational and non-operational issues. Mild weather,
softening steel demand and the general economic recession have also caused
Massey to lower its earlier estimate of 2002 Central Appalachian coal demand.
Notwithstanding, production and profitability are expected to improve
significantly over fiscal year 2001.

Item 7A. Quantitative and Qualitative Discussions about Market Risk

Massey's interest expense is sensitive to changes in the general level of
interest rates in the United States. At October 31, 2001, Massey had
outstanding $300 million aggregate principal amount of debt under fixed-rate
instruments; however, the Company's primary exposure to market risk for changes
in interest rates relates to its commercial paper program. At October 31, 2001,
Massey had $258.2 million of aggregate principal amount of commercial paper
outstanding ($257.9 million net of discount). At October 31, 2001 Massey's
commercial paper bore interest at an average rate of 3.03 percent. Based on the
commercial paper balance outstanding at October 31, 2001, a 100 basis point
increase in the average issuance rate for Massey's commercial paper would
increase Massey's annual interest expense by approximately $2.6 million.

Almost all of Massey's transactions are denominated in U.S. dollars, and, as
a result, it does not have material exposure to currency exchange-rate risks.

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of Massey Energy Company

We have audited the accompanying consolidated balance sheets of Massey
Energy Company as of October 31, 2001 and 2000, and the related consolidated
statements of earnings, cash flows, and shareholders' equity for each of the
three years in the period ended October 31, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Massey Energy
Company at October 31, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
October 31, 2001, in conformity with accounting principles generally accepted
in the United States.

/s/ Ernst & Young LLP

Richmond, Virginia
January 25, 2002

MASSEY ENERGY COMPANY

CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Per Share Amounts)

Year Ended October 31,
--------------------------------
2001 2000 1999
---------- ---------- ----------

Net sales......................................... $1,203,285 $1,081,027 $1,076,059
Other revenue..................................... 50,471 59,645 38,393
---------- ---------- ----------
Total revenue.............................. 1,253,756 1,140,672 1,114,452
---------- ---------- ----------
Costs and expenses................................
Cost of sales.................................. 1,024,075 837,072 774,820
Depreciation, depletion and
amortization................................. 181,269 171,336 167,558
Selling, general and administrative............ 31,702 35,364 32,696
---------- ---------- ----------
Total costs and expenses................... 1,237,046 1,043,772 975,074
---------- ---------- ----------

Income from operations............................ 16,710 96,900 139,378
Interest income................................... 8,747 25,661 14,426
Interest expense.................................. (34,214) (347) (803)
---------- ---------- ----------
(Loss) Earnings before taxes...................... (8,757) 122,214 153,001
Income tax (benefit) expense...................... (7,707) 43,410 49,561
---------- ---------- ----------

Net (loss) earnings........................ $ (1,050) $ 78,804 $ 103,440
========== ========== ==========
(Loss) Earnings per share
Basic.......................................... $ (0.01) $ 1.07 $ 1.41
========== ========== ==========
Diluted........................................ $ (0.01) $ 1.07 $ 1.41
========== ========== ==========
Shares used to calculate (loss) earnings per share
Basic.......................................... 73,858 73,469 73,469
========== ========== ==========
Diluted........................................ 73,858 73,472 73,476
========== ========== ==========

See Notes to Consolidated Financial Statements.

MASSEY ENERGY COMPANY

CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)

At October 31,
---------------------
2001 2000
---------- ----------
ASSETS
------

Current Assets
Cash and cash equivalents............................................ $ 5,664 $ 6,929
Trade and other accounts receivable.................................. 198,885 215,574
Inventories.......................................................... 141,483 104,132
Deferred taxes....................................................... 13,572 8,398
Income taxes receivable.............................................. 1,880 --
Prepaid expenses and other........................................... 93,620 67,813
---------- ----------

Total current assets............................................. 455,104 402,846
Net Property, Plant and Equipment....................................... 1,613,133 1,559,426
Other Noncurrent Assets
Pension assets....................................................... 80,400 67,740
Other................................................................ 120,029 124,018
---------- ----------
Total other noncurrent assets.................................... 200,429 191,758
---------- ----------

Total assets..................................................... $2,268,666 $2,154,030
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable, principally trade and bank overdrafts.............. $ 185,903 $ 153,457
Short-term debt...................................................... 248,231 --
Payroll and employee benefits........................................ 37,878 30,784
Income taxes payable................................................. -- 5,122
Other current liabilities............................................ 68,159 78,420
---------- ----------
Total current liabilities........................................ 540,171 267,783
Long-term debt.......................................................... 300,000 --
Noncurrent Liabilities
Deferred taxes....................................................... 254,115 254,022
Other................................................................ 308,030 257,607
---------- ----------

Total noncurrent liabilities..................................... 562,145 511,629
Shareholders' Equity
Capital Stock........................................................
Preferred stock - authorized 20,000,000 shares; no par; none issued -- --
Common stock - authorized 150,000,000 shares; $0.625 par; issued and
outstanding - 74,543,670 shares.................................... 46,590 --
Additional Capital................................................... 15,541 --
Retained earnings.................................................... 810,925 --
Unamortized executive stock plan expense............................. (6,706) --
Net investment by Fluor Corporation.................................. -- 1,653,682
Due from Fluor Corporation........................................... -- (279,064)
---------- ----------
Total shareholders' equity....................................... 866,350 1,374,618
---------- ----------

Total liabilities and shareholders' equity....................... $2,268,666 $2,154,030
========== ==========

See Notes to Consolidated Financial Statements.

MASSEY ENERGY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)

Year Ended October 31,
--------------------------------
2001 2000 1999
---------- ---------- ----------

Cash Flows From Operating Activities
Net (loss) earnings................................................ $ (1,050) $ 78,804 $ 103,440
Adjustments to reconcile net earnings to cash provided by operating
activities:
Depreciation, depletion and amortization........................ 181,269 171,336 167,558
Deferred taxes.................................................. (1,466) 28,228 42,409
Loss (gain) on disposal of assets............................... 1,698 (26,330) (8,982)
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable...................... 4,603 (42,801) (6,653)
Increase in inventories......................................... (40,350) (12,349) (20,089)
Increase in prepaid expenses and other current assets........... (25,461) (13,983) (7,578)
Increase in pension and other assets............................ (25,237) (30,013) (36,733)
Increase (decrease) in accounts payable and bank overdrafts..... 32,446 (6,729) 19,850
(Decrease) increase in accrued income taxes..................... (7,002) 2,197 (11,340)
Decrease in other accrued liabilities........................... (4,068) (5,204) (10,007)
Increase in other non-current liabilities....................... 36,735 11,135 4,609
---------- ---------- ----------
Cash provided by operating activities....................... 202,591 154,291 236,484
---------- ---------- ----------
Cash Flows From Investing Activities
Capital expenditures............................................ (247,517) (204,835) (230,001)
Proceeds from sale of assets.................................... 5,071 31,468 6,437
---------- ---------- ----------
Cash utilized by investing activities....................... (242,446) (173,367) (223,564)
---------- ---------- ----------
Cash Flows From Financing Activities
Decrease in short-term debt, net................................ (29,998) -- --
Decrease (increase) in amount due from Fluor Corporation........ 67,554 1,352 (15,012)
Equity contributions from Fluor Corporation..................... 2,476 17,069 7,739
Cash dividends paid............................................. (11,811) -- --
Stock options exercised......................................... 9,369 -- --
Other, net.................................................. 1,000 (467) (1,247)
---------- ---------- ----------
Cash provided (utilized) by financing activities......... 38,590 17,954 (8,520)
---------- ---------- ----------
(Decrease) increase in cash and cash equivalents................... (1,265) (1,122) 4,400
Cash and cash equivalents at beginning of period................... 6,929 8,051 3,651
---------- ---------- ----------
Cash and cash equivalents at end of period......................... $ 5,664 $ 6,929 $ 8,051
========== ========== ==========
Supplemental disclosure of cash flow information
Cash paid during the fiscal year for income taxes............... $ 1,656 $ 12,834 $ 18,492
========== ========== ==========

See Notes to Consolidated Financial Statements.

MASSEY ENERGY COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In Thousands of Dollars except share amounts)

Common Stock
--------------
Unamortized Net
Executive Investment by Due From Total
Additional Stock Plan Fluor Fluor Retained Shareholders'
Shares Amount Capital Expense Corporation Corporation Earnings Equity
------ ------- ---------- ----------- ------------- ----------- --------- -------------

Balance at October 31, 1998... $ 1,446,630 $(265,404) $1,181,226
Net earnings.................. 103,440 103,440
Capital contributions......... 7,739 7,739
Net change in amount due
from Fluor Corporation...... (15,012) (15,012)
------ ------- ------- -------- ------------ ---------- --------- ----------
Balance at October 31, 1999... $ 1,557,809 $(280,416) $1,277,393
------ ------- ------- -------- ------------ ---------- --------- ----------
Net earnings.................. 78,804 78,804
Capital contributions......... 17,069 17,069
Net change in amount due
from Fluor Corporation...... 1,352 1,352
------ ------- ------- -------- ------------ ---------- --------- ----------
Balance at October 31, 2000... $ 1,653,682 $(279,064) $1,374,618
------ ------- ------- -------- ------------ ---------- --------- ----------
Net loss...................... (1,050) (1,050)
Capital contributions......... 2,476 2,476
Net change in amount due
from Fluor Corporation...... 67,554 67,554
Spin-Off transaction.......... 73,469 45,918 (3,840) (1,656,158) 211,510 826,748 (575,822)
Dividends declared
($0.20 per share)........... (14,773) (14,773)
Exercise of stock options, net 817 511 8,858 9,369
Stock option tax benefit...... 2,611 2,611
Amortization of executive
stock plan expense.......... 1,367 1,367
Issuance of restricted stock,
net......................... 258 161 4,072 (4,233) --
------ ------- ------- -------- ------------ ---------- --------- ----------
Balance at October 31, 2001... 74,544 $46,590 $15,541 $(6,706) -- -- $ 810,925 $ 866,350
====== ======= ======= ======== ============ ========== ========= ==========

See Notes to Consolidated Financial Statements.

MASSEY ENERGY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Major Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
Massey Energy Company ("Massey" or the "Company"), its wholly owned subsidiary
A. T. Massey Coal Company, Inc. ("A. T. Massey") and its subsidiaries. A. T.
Massey now represents the sole operating subsidiary of Massey, as Massey has no
separate independent operations. Until the spin-off transaction on November 30,
2000 (the "Spin-Off") (See Note 9), A. T. Massey was 100% controlled by Fluor
Corporation ("Fluor"). Therefore, these financial statements for all periods
prior to 2001 may not necessarily be indicative of the results of operations,
financial position and cash flows of Massey in the future or had it operated as
a separate independent company. All significant intercompany transactions and
accounts have been eliminated.

Use of Estimates

The preparation of the financial statements of the Company in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect reported amounts.
These estimates are based on information available as of the date of the
financial statements. Therefore, actual results could differ from those
estimates.

Cash and Cash Equivalents

Securities with maturities of 90 days or less at the date of purchase are
classified as cash equivalents.

Revenue Recognition

Coal sales are generally recognized when title passes to the customers. For
domestic sales, this generally occurs when coal is loaded at the mine or at
off-site storage locations. For export sales, this generally occurs when coal
is loaded onto marine vessels at terminal locations.

Other revenue generally consists of royalties, rentals, miscellaneous income
and gains on the sale of non-strategic assets. For the years ended October 31,
2001, 2000, and 1999, the Company recorded gains on the sale of non-strategic
reserves of $1.1 million, $26.5 million, and $10.2 million, respectively.

Property, Plant and Equipment

Property, plant and equipment is carried at cost and comprises:

At October 31,
-----------------------
2001 2000
------------ ----------
(in thousands)

Land, buildings and equipment............................ $ 1,652,017 $1,561,122
Mining properties and mineral rights..................... 596,280 582,512
Mine development......................................... 466,777 373,418
------------ ----------
Total property, plant and equipment...................... 2,715,074 2,517,052
Less accumulated depreciation, depletion and amortization (1,101,941) (957,626)
------------ ----------
Net property, plant and equipment..................... $ 1,613,133 $1,559,426
============ ==========

Expenditures that extend the useful lives of existing buildings and
equipment are capitalized. Maintenance, repairs and minor renewals are expensed
as incurred. Coal exploration costs are expensed as incurred. Development costs
applicable to the opening of new coal mines and certain mine expansion projects
are capitalized. When properties are retired or otherwise disposed, the related
cost and accumulated depreciation are removed from the respective accounts and
any profit or loss on disposition is credited or charged to income.

Depreciation of buildings, plant and equipment is calculated on the
straight-line method over their estimated useful lives, which generally range
from 15 to 30 years for building and plant, and 3 to 20 years for equipment.

Depletion of mining properties and mineral rights and amortization of mine
development costs are computed using the units-of-production method over the
estimated recoverable tons.

Reclamation

The Company accrues for post-mining reclamation costs, as coal is mined, on
a unit-of-production basis over the estimated recoverable tons. Accrued
reclamation costs are regularly reviewed by management and are revised for
changes in future estimated costs and regulatory requirements. Reclamation of
disturbed acreage is performed as a normal part of the mining process.

Impairment of Long-Lived Assets

Impairment of long-lived assets is recorded when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying value. The carrying value of the
assets is then reduced to their estimated fair value which is usually measured
based on an estimate of future discounted cash flows.

During the third quarter of 2001, management decided to move a longwall to
better mining conditions in another mining location. As a result, unamortized
longwall panel development costs of $7.6 million were considered to be impaired
and were written off. These charges are included in cost of sales. During the
fourth quarter of 2000, due to poor and unsafe mining conditions, the Company
abandoned certain longwall mining equipment and related longwall panel
development costs. This resulted in a write-off of approximately $9 million,
which is included in cost of sales.

Advance Mining Royalties

Leases which require minimum annual or advance payments and are recoverable
from future production are generally deferred and charged to expense as the
coal is subsequently produced. At October 31, 2001 and 2000, advance mining
royalties included in other noncurrent assets totaled $29.8 and $27.5 million,
respectively.

Black Lung Benefits

Coal mining subsidiaries are obligated to pay coal workers' pneumoconiosis
(black lung) benefits to eligible recipients with respect to claims awarded on
or after July 1, 1973. Charges are being made to operations based on annual
evaluations prepared by the Company's independent actuaries.

Income Taxes

Deferred income taxes result from temporary differences between the tax
bases of assets and liabilities and their financial reporting amounts.

Earnings per Share

Shares used to calculate basic earnings per share for the periods ended
October 31, 2000 and 1999 is based on the number of shares outstanding
immediately following the Spin-Off (see Note 9). The number of shares used to
calculate basic loss per share for the period ended October 31, 2001 is based
on the number of weighted average outstanding shares of Massey Energy during
the period. Shares used to calculate diluted earnings per share for the periods
ended October 31, 2000 and 1999 is based on the number of shares outstanding
immediately following the Spin-Off and the dilutive effect of stock options and
other stock-based instruments of Fluor Corporation, held by Massey employees,
that were converted to equivalent instruments in Massey Energy Company in
connection with the Spin-Off. In accordance with accounting principles
generally accepted in the United States, the effect of dilutive securities was
excluded from the calculation of the diluted loss per common share for the
period ended October 31, 2001 as such inclusion would result in antidilution.

The computations for basic and diluted (loss) earnings per share are based
on the following per share information:

At October 31,
--------------------
2001 2000 1999
------ ------ ------
(in thousands)

Weighted average shares of common stock
outstanding:..............................
Basic.................................... 73,858 73,469 73,469
Effect of stock options/restricted stock. -- 3 7
------ ------ ------
Diluted.................................. 73,858 73,472 73,476
====== ====== ======

Inventories

Purchased coal inventories are stated at the lower of cost, computed on the
first-in, first-out method, or market value. Produced coal and supplies
generally are stated at the lower of average cost or net realizable value.

Inventories are comprised of the following:

At October 31,
-----------------
2001 2000
-------- --------
(in thousands)

Coal. $117,915 $ 82,636
Other 23,568 21,496
-------- --------
$141,483 $104,132
======== ========

Longwall Panel Costs

The Company defers certain costs related to the development of longwall
panels within a deep mine. These costs are amortized over the life of the panel
once it is placed in service. Longwall panel lives range from approximately
eight to twelve months. At October 31, 2001 and 2000, deferred longwall panel
costs included in other current assets totaled $52.0 million and $24.6 million,
respectively.

Internal Use Software

The Company capitalizes certain costs incurred in the development of
internal-use software, including external direct material and service costs,
and employee payroll and payroll-related costs in accordance with the American
Institute of Certified Public Accountants' Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed for or Obtained for
Internal Use." All costs capitalized are amortized using the straight-line
method over the estimated useful life not to exceed 7 years.

Concentrations of Credit Risk and Major Customers

The Company is engaged in the production of high-quality low sulfur steam
coal for the electric generating industry, as well as industrial customers and
metallurgical coal for the steel industry. Steam coal sales accounted for
approximately 54%, 50%, and 46% of consolidated net sales during 2001, 2000,
and 1999, respectively. Metallurgical coal sales accounted for approximately
34%, 40%, and 45% of consolidated net sales during 2001, 2000, and 1999,
respectively. Industrial coal sales during 2001, 2000, and 1999 were 12%, 10%,
and 9% of consolidated net sales, respectively.

Massey's mining operations are conducted in eastern Kentucky, West Virginia
and Virginia and the coal is marketed primarily in the United States.

For the years ended October 31, 2001, 2000, and 1999, approximately 11%,
14%,and 12%, respectively, of net sales were made to one utility customer. At
October 31, 2001, approximately 25%, 63% and 12% of consolidated trade
receivables represent amounts due from metallurgical customers, utility
customers and industrial customers, respectively, compared with 51%, 40% and
9%, respectively, as of October 31, 2000. Credit is extended based on an
evaluation of the customer's financial condition and generally collateral is
not required.

Derivatives

Effective November 1, 2000, the Company adopted Statement of Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133") as amended by SFAS No. 138, "Accounting for Certain
Derivative Instruments and Hedging Activities". The Statements require that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
The adoption of these accounting standards and subsequent implementation
guidance did not have a significant impact on the Company's financial position,
results of operations, or liquidity.

Stock Plans

The Company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost for stock options granted to employees is
measured as the excess, if any, of the quoted market price of the stock at the
date of grant over the amount an employee must pay to acquire the stock.
Compensation cost for stock appreciation rights and performance equity units is
recorded based on the quoted market price of the Company's stock at the end of
the period.

Accounting Pronouncements

On August 15, 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations". The standard will require that retirement obligations be recorded
as a liability based on the present value of the estimated cash flows. This
SFAS is effective for fiscal years beginning after June 15, 2002, and
transition is by cumulative catch-up adjustment. The adoption of this
accounting standard will take place during the Company's fiscal year 2003. The
Company is currently evaluating the impact that the standard will have on its
financial statements.

Reclassifications

Certain prior year amounts have been reclassified to conform to current year
presentation.

2. Income Taxes

Income tax (benefit) expense included in the consolidated statement of
earnings is as follows:

Year Ended October 31,
-------------------------
2001 2000 1999
-------- ------- --------
(in thousands)

Current:
Federal............................ $(6,389) $13,735 $ 9,048
State and local.................... 148 1,447 (1,896)
-------- ------- --------
Total current.................. (6,241) 15,182 7,152
-------- ------- --------
Deferred:
Federal............................ (1,132) 24,719 36,912
State and local.................... (334) 3,509 5,497
-------- ------- --------
Total deferred................. (1,466) 28,228 42,409
-------- ------- --------
Total income tax (benefit)
expense...................... $(7,707) $43,410 $ 49,561
======== ======= ========

For the tax year ended October 31, 2001, Massey's consolidated federal
income tax return includes the operations of A.T. Massey and Fluor until the
date of the Spin-Off.

A reconciliation of income tax (benefit) expense calculated at the federal
statutory rate of 35% to the Company's income tax (benefit) expense on (loss)
earnings is as follows:

Year Ended October 31,
--------------------------
2001 2000 1999
-------- -------- --------
(in thousands)

U.S. statutory federal tax expense.......... $(3,065) $ 42,775 $ 53,550
Increase (decrease) in taxes resulting from:
State taxes.............................. 117 3,799 2,341
Items without tax effect................. 700 5,235 3,729
Depletion................................ (4,496) (7,657) (9,625)
FSC exempt income........................ (963) (952) (1,242)
Other, net............................... -- 210 808
-------- -------- --------
Total income tax (benefit) expense..... $(7,707) $ 43,410 $ 49,561
======== ======== ========

Deferred taxes reflect the tax effects of differences between the amounts
recorded as assets and liabilities for financial reporting purposes and the
amounts recorded for income tax purposes. The tax effects of significant
temporary differences giving rise to deferred tax assets and liabilities are as
follows:

October 31,
--------------------
2001 2000
--------- ---------
(in thousands)

Deferred tax assets:
Postretirement benefit obligations............. $ 28,422 $ 27,566
Worker's compensation.......................... 13,284 12,611
Reclamation and mine closure................... 32,416 34,123
Alternative minimum tax credit carryforwards... 59,549 59,549
Other.......................................... 35,246 30,339
--------- ---------
168,917 164,188
Valuation allowance for deferred tax assets......... (66,508) (65,085)
--------- ---------
Deferred tax assets, net............................ 102,409 99,103
--------- ---------
Deferred tax liabilities:
Plant, equipment and mine development.......... (187,136) (185,385)
Mining property and mineral rights............. (110,748) (112,574)
Other.......................................... (45,068) (46,768)
--------- ---------
Total deferred tax liabilities............... (342,952) (344,727)
--------- ---------
Net deferred tax liabilities........................ $(240,543) $(245,624)
========= =========

The Company's deferred tax assets include alternative minimum tax ("AMT")
credits of $59.5 million each at October 31, 2001 and 2000. The AMT credits
have no expiration date. Subsequent to the Spin-Off, the Company completed an
assessment of its deferred tax balances and the liklihood of realizing AMT
credit carryforwards as a stand-alone company. Management determined, more
likely than not, that these credits will not be realized. Accordingly, the
Company reclassified tax reserves at October 31, 2000 to reflect the full
valuation allowance related to these credits.

Massey's federal income tax returns have been examined by the Internal
Revenue Service, or Statutes of Limitations have expired through 1997.
Management believes that the Company has adequately provided for any income
taxes and interest that may ultimately be paid with respect to all open tax
years.

3. Retirement Benefits

Prior to October 1, 2001, Massey sponsored two non-contributory defined
benefit pension plans which covered substantially all administrative and
non-union employees hired prior to September 1, 1994. As of October 1, 2001,
these plans were merged together with each participant group retaining its
benefit formula. These formulas provide pension benefits based on the
employee's years of service and average annual compensation during the highest
five consecutive years of service. In addition, the new merged plan covers
substantially all administrative and non-union employees of the Company who
were previously covered under a non-contributory defined contributory pension
plan. These participants will accrue benefits under a third cash balance
formula with contribution credits based on hours worked. Funding for the plan
is generally at the minimum annual contribution level required by applicable
regulations.

The plans assets are held by an independent trustee and, in certain
circumstances, by insurance carriers. The plans assets include cash and cash
equivalents, corporate and government bonds, preferred and common stocks,
investments in mutual funds and annuity contracts. The fair market value of the
plans assets was $196 million at October 31, 2001.

Net periodic pension income for the defined benefit pension plan includes
the following components:

Year Ended October 31,
----------------------------
2001 2000 1999
-------- -------- --------
(in thousands)

Service cost............................. $ 2,657 $ 2,509 $ 3,451
Interest cost............................ 9,498 9,114 8,987
Expected return on plan assets........... (22,245) (20,732) (18,281)
Amortization of unrecognized net asset... (1,800) (2,116) (872)
Amortization of prior service cost....... 57 56 56
-------- -------- --------
Net periodic pension income.............. $(11,833) $(11,169) $ (6,659)
======== ======== ========

The weighted average assumptions used in determining pension obligations are
as follows:

At October 31,
-------------
2001 2000
---- ----

Discount rate...................................... 7.25% 7.75%
Rate of increase in compensation levels............ 4.00% 4.00%
Expected long-term rate of return on plan assets... 9.50% 9.50%

The following table sets forth the change in benefit obligation, plan assets
and funded status of the Company's defined benefit pension plan:

At October 31,
-------------------
2001 2000
--------- ---------
(in thousands)

Change in benefit obligation
Benefit obligation at beginning of year........ $ 126,687 $ 123,865
Service cost................................... 2,657 2,509
Interest cost.................................. 9,498 9,114
Actuarial loss (gain).......................... 7,626 (3,262)
Benefits paid.................................. (6,274) (5,539)
--------- ---------
Benefit obligation at end of year.......... $ 140,194 $ 126,687
========= =========
Change in plan assets
Fair value at beginning of year................ $ 237,551 $ 221,223
Actual return on assets........................ (35,156) 21,840
Company contributions.......................... 10 27
Benefits paid.................................. (6,274) (5,539)
--------- ---------
Fair value at end of year.................. $ 196,131 $ 237,551
========= =========
Funded status..................................... $ 55,937 $ 110,864
Unrecognized net actuarial loss (gain)............ 20,743 (46,083)
Unrecognized prior service cost................... 461 518
--------- ---------
Pension assets.................................... 77,141 65,299
Amount included in current liabilities............ 3,259 2,441
--------- ---------
Noncurrent asset.................................. $ 80,400 $ 67,740
========= =========

Under labor contracts with the United Mine Workers of America Benefit Funds,
certain operations make payments into two multi-employer defined benefit
pension plan trusts established for the benefit of certain union employees. The
contributions are based on tons of coal produced and hours worked. Such
payments aggregated approximately $0.1 million each in 2001, 2000 and 1999.

Under the Coal Industry Retiree Health Benefits Act of 1992, coal producers
are required to fund medical and death benefits of certain retired union coal
workers based on premiums assessed by the United Mine Workers of America. Based
on available information at October 31, 2001, the Company's obligation
(discounted at 7.25%) under the Act is estimated at approximately $52.3
million. The cost of the Company's obligation will be recognized as expense as
payments are assessed. The Company expense related to this obligation for the
years ended October 31, 2001, 2000, and 1999 totaled $5.0 million, $3.6
million, and $3.5 million, respectively.

Certain union employees are covered by a non-contributory defined
contribution pension plan. Contributions to the defined contribution retirement
plan are based on hours worked.

Until prior to October 1, 2001, the Company sponsored a separate
non-contributory defined contribution pension plan for substantially all
administrative and non-union employees, on September 30, 2001, the plan was
frozen and assets were merged into an existing salary deferral and profit
sharing plan. Employees covered under the frozen plan now participate in the
defined benefit pension plan under the third formula discussed in the first
paragraph of this Note.

For certain employees, the Company sponsors a contributory defined
contribution pension plan for eligible employees with Company contributions
based on hours worked. Effective October 1, 2001, the salary deferral rate was
increased from 10% to 15% of eligible compensation and the Company matches 30%
on the first 10% of employee deferrals.The Company may make an additional
discretionary contribution to the plan.

For the years ended October 31, 2001, 2000, and 1999, Company contributions
to these three plans aggregated approximately $7.5 million, $5.6 million, and
$5.4 million, respectively.

The Company also sponsors a salary deferral and profit sharing plan covering
substantially all administrative and non-union employees. Effective October 1,
2001, the salary deferral rate was increased from 10% to 15% of eligible
compensation and the Company matches 30% on the first 10% of employee
deferrals. The Company may make additional discretionary contributions to the
plan. Total Company contributions aggregated approximately $2.5 million, $2.2
million, and $2.6 million, in 2001, 2000, and 1999, respectively.

The Company also sponsors defined benefit health care plans that provide
post-retirement medical benefits to eligible union and non-union members. To be
eligible, retirees must meet certain age and service requirements. Depending on
year of retirement, benefits may be subject to annual deductibles, coinsurance
requirements, lifetime limits, and retiree contributions. Service costs are
accrued currently. The accumulated postretirement benefit obligation at October
31, 2001 was determined in accordance with the current terms of the Company's
health care plans, together with relevant actuarial assumptions and health care
cost trend rates projected at an annual rate of 8.0 percent ranging down to 5.0
percent in 2007 (5.7% ranging down to 5.0% in 2002 at October 31, 2000), and
remaining level thereafter.

Assumed health care cost trend rates have a significant effect on the
amounts reported for the medical plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:

1-Percentage 1-Percentage
-------------- --------------
Point Increase Point Decrease
-------------- --------------
(in thousands)

Effect on total of service and interest costs components..... $ 1,990 $ (1,591)
Effect on accumulated postretirement benefit obligation...... $15,435 $(12,498)

Net periodic postretirement benefit cost includes the following components:

Year Ended October 31,
----------------------
2001 2000 1999
------ ------ ------
(in thousands)

Service cost............................... $3,426 $3,543 $3,850
Interest cost.............................. 5,333 4,611 4,092
Amortization of prior service cost......... 140 140 140
------ ------ ------
Net periodic postretirement benefit cost... $8,899 $8,294 $8,082
====== ====== ======

The following table sets forth the change in benefit obligation of the
Company's postretirement benefit plans:

At October 31,
-------------------
2001 2000
--------- ---------
(in thousands)

Change in benefit obligation
Benefit obligation at beginning of year........ $ 66,355 $ 58,203
Service cost................................... 3,426 3,543
Interest cost.................................. 5,333 4,611
Actuarial loss................................. 16,857 2,397
Benefits paid.................................. (2,405) (2,399)
--------- ---------
Benefit obligation at end of year.......... $ 89,566 $ 66,355
========= =========
Funded status..................................... $(89,566) $(66,355)
Unrecognized net actuarial loss (gain)............ 12,965 (3,892)
Unrecognized prior service cost................... 1,496 1,636
--------- ---------
Accrued postretirement benefit obligation......... (75,105) (68,611)
Amount included in other current liabilities...... 3,044 2,659
--------- ---------
Noncurrent liability....................... $(72,061) $(65,952)
========= =========

The discount rate used in determining the postretirement benefit obligation
was 7.25 percent at October 31, 2001 and 7.75 percent at October 31, 2000.

4. Fair Value of Financial Instruments

Certain Company subsidiaries provide loans to West Virginia businesses at
prevailing interest rates as part of an economic development program that
provides tax credits as incentives. Outstanding loans at October 31, 2001 and
2000 amounted to $10.5 million and $11.3 million, respectively, of which $2.4
million and $3.0 million, respectively, are unsecured. These loans are
estimated to be at fair value, after recording an allowance for loan losses of
$2.1 million at October 31, 2001 and $2.9 million at October 31, 2000, based on
future cash flows and related credit risk. The current portion of these notes
is included in trade and other accounts receivable. The noncurrent portion is
included in other noncurrent assets.

Prior to the Spin-Off (see Note 9), the Company loaned funds in excess of
its operating and capital needs to Fluor and received interest on the average
daily balance at 130% of the federal short-term rate determined in accordance
with the Internal Revenue Code of 1986. Fluor repaid these loans to the Company
as the need arose. The Company believed these financial practices to be a fair
arrangement with its prior parent and concluded that any further assessment to
determine fair market value of amounts due from Fluor would not be cost
beneficial. Interest income for 2001, 2000, and 1999 related to these loans
amounted to $1.5 million, $16.6 million and $11.7 million, respectively. These
loans were classified as a reduction to shareholders' equity in the
consolidated balance sheet as of October 31, 2000, and were settled as part of
the Spin-Off transaction.

Included in other noncurrent assets as of October 31, 2000, is $21.8 million
of Fluor commercial paper acquired in the open market at prevailing interest
rates. As of the Spin-Off, Massey ceased to have any investment in Fluor
commercial paper. Interest income associated with the Fluor commercial paper
was not material for the year ended October 31, 2001, and amounted to $1.6
million for the year ended October 31, 2000 and $1.1 million for the year ended
October 31, 1999. The commercial paper is classified as an available-for-sale
security, and is carried at cost, which approximates fair value. Unrealized
gains or losses are insignificant. Due to restrictions on the use of the
commercial paper, it has been classified as a noncurrent asset.

In addition, the Company has outstanding $248.2 million of short-term debt
at October 31, 2001 (see Note 10). The carrying amount of this debt
approximates its fair value.

The Company's long-term debt consists entirely of 6.95 percent Senior Notes
due March 1, 2007 (see Note 10). The fair value of the Senior Notes at October
31, 2001, based on currently available market information, was $305.9 million.

5. Other Noncurrent Liabilities

Other noncurrent liabilities comprise the following:

At October 31,
-----------------
2001 2000
-------- --------
(in thousands)

Black lung obligation..................... $ 53,596 $ 24,033
Reclamation............................... 107,448 111,101
Other post-employment benefits (Note 3)... 72,061 65,952
Workers' compensation..................... 19,784 24,429
Other..................................... 55,141 32,092
-------- --------
$308,030 $257,607
======== ========

Coal mining companies are subject to the Federal Coal Mine Health and Safety
Act of 1969, as amended, and various states' statutes for the payment of
medical and disability benefits to eligible recipients related to coal worker's
pneumoconiosis (black lung). The Company provides for these claims principally
through a self-insurance program. Trusteed assets available for idled company
benefits of approximately $2.4 million and $29.8 million are applied to reduce
the balance sheet amount of black lung obligations at October 31, 2001 and
2000, respectively. Charges are made to operations based on annual evaluation
prepared by the Company's independent actuaries. The expense for 2001, 2000 and
1999, respectively, was determined using a discount rate of 7.75%.

Black lung expense includes the following components:

Year Ended October 31,
------------------------
2001 2000 1999
------ -------- --------
(in thousands)

Service cost..................... $(316) $ 950 $ 767
Interest cost.................... 2,137 2,344 1,960
Amortization of actuarial gain... -- (3,492) (1,163)
Interest on actuarial gain....... -- (270) (314)
------ -------- --------
Total black lung expense...... $1,821 $ (468) $ 1,250
====== ======== ========

Under the Federal Surface Mining Control and Reclamation Act of 1977 and
similar state statutes, mine property is required to be restored in accordance
with regulated standards. The Company performs a certain amount of required
reclamation of disturbed acreage as an integral part of its normal mining
process. All such costs are expensed as incurred.

Reclamation costs to be incurred upon final mine closure are estimated and
accrued as mining progresses over the estimated useful mining life of the
property. The costs relate to reclaiming the pit and support acreage of surface
mines and sealing portals of deep mines. Other costs common to both types of
mining are related to reclaiming refuse and slurry ponds. The establishment of
the reclamation liability is based on permit requirements and requires various
estimates and assumptions, principally associated with costs and
productivities. For the years ended October 31, 2001, 2000, and 1999, the
Company accrued approximately $7 million, $5 million, and $6 million,
respectively, towards final mine closure reclamation, excluding reclamation
recosting adjustments identified below. The Company reviews its entire
environmental liability annually and makes necessary adjustments, including
permit changes and revisions to costs and productivities to reflect current
experience. These recosting adjustments are recorded as a decrease in cost of
sales and totaled $7.0 million, $4.2 million and $0.8 million for the years
ended October 31, 2001, 2000, and 1999, respectively. The Company's management
believes it is making adequate provision for all expected future reclamation
costs. Final reclamation costs for all operations as of October 31, 2001 are
estimated to be approximately $153 million.

6. Stock Plans

Massey's executive stock plans provide for grants of non-qualified or
incentive stock options, restricted stock awards and stock appreciation rights
("SARS"). All executive stock plans are administered by the Compensation
Committee of the Board of Directors (the "Committee") comprised of outside
directors. Option grant prices are determined by the Committee and are
established at the fair value of the Company's common stock at the date of
grant. Options and SARS normally extend for 10 years and become exercisable
over a vesting period determined by the Committee, which can include
accelerated vesting for achievement of performance or stock price objectives.

Stock based grants (restricted shares, stock options and SARS as discussed
herein) awarded to employees of the Company prior to the Spin-Off, were
generally converted to equivalent instruments in Massey following its
separation from Fluor. In this regard, the outstanding number of grants were
increased by multiplying the applicable amount by 4.056 (the "Conversion
Ratio"). Similarly, where applicable, the exercise price was reduced by
dividing the exercise price prior to the Spin-Off by the Conversion Ratio.

During 2001 the Company issued 875,961 nonqualified stock options that vest
over four years and expire in ten years. During 2000 and 1999, prior to the
Spin-Off, 290,080 and 113,860 options (in Fluor stock), respectively, were
awarded to Massey employees. The 2000 awards cliff vest after four years and
expire in ten years, with accelerated vesting provisions based on the price of
Massey's stock. The accelerated vesting provisions were achieved during the
first quarter of 2001. The 1999 awards vest over four years and expire in ten
years.

No grants of SARS were made to Massey employees during the period 1999
through 2001.

Restricted stock awards issued under the plans provide that shares awarded
may not be sold or otherwise transferred until restrictions have lapsed or
performance objectives have been attained. Upon termination of employment,
shares upon which restrictions have not lapsed must be returned to the Company.
Restricted stock issued under the plans totaled 266,411 shares in 2001. Prior
to the Spin-Off, Fluor Corporation restricted stock issued to Massey employees
totaled 31,390 shares in 2000 (117,618 shares when applying the Spin-Off
conversion ratios at date of grant), and 42,647 shares in 1999 (98,946 shares
when applying the Spin-Off conversion ratios at date of grant).

As permitted by Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" (SFAS No. 123), the Company has
elected to continue following the guidance of APB Opinion No. 25, "Accounting
for Stock Issued to Employees," for measurement and recognition of stock-based
transactions with employees. For the fiscal years ended October 31, 2001, 2000
and 1999, expenses related to Massey's various stock compensation plans totaled
$5.8 million, $3.8 million and $6.3 million, respectively. Under APB Opinion
No. 25, no compensation cost is recognized for the option plans where vesting
provisions are based only on the passage of time. Had the Company recorded
compensation expense using the accounting method recommended by SFAS No. 123,
net earnings and diluted earnings per share would have been reduced to the pro
forma amounts as follows:

Year ended October 31, 2001 2000 1999
------------------------------------------------------------------
(in thousands, except per share amounts)

Net (loss) earnings
As reported......................... ($1,050) $78,804 $103,440
Pro forma........................... ($2,425) $77,204 $102,670
Diluted net (loss) earnings per share
As reported......................... ($ 0.01) $ 1.07 $ 1.41
Pro forma........................... ($ 0.03) $ 1.05 $ 1.40

The estimated fair value as of the date of grant for options granted to
Massey employees in 2001, 2000 and 1999 was determined using the Black-Scholes
option-pricing model based on the following weighted average assumptions
(assumptions applied in 2000 and 1999 were determined by Fluor):

2001 2000 1999
---- ---- ----

Expected option lives (years) 5 6 6
Risk-free interest rates..... 4.29% 6.03% 4.43%
Expected dividend yield...... 0.81% 1.74% 1.37%
Expected volatility.......... 37.1% 39.8% 33.4%

The weighted average fair value of options granted by the Company during
2001 was $7.22. The weighted average fair value of options granted by Fluor to
Massey employees during 2000 and 1999 was $18.00 and $15.06, respectively
(prior to conversion).

The following table summarizes stock option activity:

Weighted Average
------------------------
Stock Exercise Price
Options Per Share
--------------------------------------------------------------------

Outstanding at October 31, 1998............ 335,816 $ 49.24
--------------------------------------------------------------------
Granted.................................... 113,860 $ 42.88
Expired or Cancelled....................... (6,950) $ 56.77
Exercised.................................. (980) $ 35.09
--------------------------------------------------------------------
Outstanding at October 31, 1999............ 441,746 $ 47.51
--------------------------------------------------------------------
Granted.................................... 290,080 $ 44.31
Expired or Cancelled....................... (52,010) $ 48.61
Exercised.................................. (6,755) $ 35.09
--------------------------------------------------------------------
Outstanding at October 31, 2000............ 673,061 $ 47.16
--------------------------------------------------------------------
Conversion adjustment to shares at Spin-Off 1,960,581
Granted.................................... 875,961 $ 19.78
Expired or Cancelled....................... (375,486) $ 12.12
Exercised ................................. (817,110) $ 11.47
--------------------------------------------------------------------
Outstanding at October 31, 2001............ 2,317,007 $ 14.89

Exercisable at:
October 31, 1999 (pre-conversion shares)... 227,827
October 31, 2000 (pre-conversion shares)... 257,850
October 31, 2001........................... 1,243,903

Characteristics of outstanding stock options at October 31, 2001 are as
follows:

Outstanding Options Exercisable Options
---------------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Remaining Exercise Exercise
Range of Exercise Price Shares Life Price Shares Price
------------------------------------------------------------------------

$ 8.65 - 10.93..... 977,140 7.4 $10.52 846,336 $10.51
$12.50 - 13.03..... 178,814 5.6 $12.75 109,709 $12.68
$14.56 - 18.86..... 287,858 4.3 $16.17 287,858 $16.17
$19.42 - 20.11..... 873,195 9.9 $19.78 -- --
--------- ---------
$ 8.65 - 20.11..... 2,317,007 7.8 $14.89 1,243,903 $12.01
========= === ====== ========= ======

At October 31, 2001, there are 5,320,765 shares available for future grant
under the Company's stock plans. Available for grant includes shares which may
be granted as either stock options or restricted stock, as determined by the
Committee under the Company's various stock plans.

7. Lease Obligations

Certain mining and other equipment is leased under operating leases. Certain
of these leases provide options for the purchase of the property at the end of
the initial lease term, generally at its then fair market value, or to extend
the terms at its then fair rental value. Rental expense for the years ended
October 31, 2001, 2000, and 1999 was $54.3 million, $28.4 million, and $22.0
million, respectively.

The following presents future minimum rental payments, by year, required
under operating leases with initial terms greater than one year, in effect at
October 31, 2001:

Minimum
Rentals
(in thousands)
Year --------------

2002...... $ 51,922
2003...... 47,354
2004...... 43,849
2005...... 39,968
2006...... 26,546
Thereafter 7,748
--------
$217,387
========

8. Contingencies and Commitments

The Company is the subject of, or a party to, various suits and pending or
threatened litigation involving governmental agencies or private interests.
Also, the Company's operations are affected by federal, state and local laws
and regulations regarding environmental matters and other aspects of its
business. On October 20, 1999, the U.S. District Court for the Southern
District of West Virginia issued an injunction which prohibits the construction
of valley fills over both intermittent and perennial stream segments as part of
mining operations. While the Company is not a party to this litigation,
virtually all mining operations, including Massey, utilize valley fills to
dispose of excess materials. On April 24, 2001, the Fourth Circuit Court of
Appeals overruled the district court, finding that the 11/th/ Amendment to the
U.S. Constitution barred the suit against WVDEP in Federal Court. On July 13,
2001, the Fourth Circuit Court of Appeals denied the plaintiffs' petition for
rehearing. In October 2001, the plaintiffs appealed the Fourth Circuit decision
to the U.S. Supreme Court. On January 22, 2002, the U.S. Supreme Court refused
to hear the appeal. Accordingly, challenges to WVDEP's enforcement of its
mining program cannot be maintained in federal court. However, challenges may
be raised in state court against WVDEP or in federal court against the federal
Office of Surface Mining ("OSM"), the agency that oversees state regulation of
surface mining. If and to the extent state courts rule that the WVDEP is
prohibited from issuing permits for the construction of valley fills or federal
courts rule that OSM is compelled to impose such a prohibition on WVDEP, all or
a portion of Massey's mining operations could be affected if legislation is not
passed which limits the impact of such a ruling.

Harman Mining Corporation and certain of its affiliates (collectively
"Harman") filed a breach of contract actions against Wellmore Coal Corporation,
a former Massey subsidiary, in Buchanan County, Virginia Circuit Court. On
August 24, 2000, as part of the damages phase of the trial, a jury awarded
damages in the amount of $6 million. Massey's subsidiary, Knox Creek Coal
Corporation, has assumed the defense of this action under the terms of the
stock purchase agreement by which it sold the stock of Wellmore and, on August
6, 2001 filed a petition for appeal of the adverse determination on liability
and damages to the Supreme Court of Virginia.

Martin County Coal is continuing to seek approval from the applicable
agencies for alternate refuse disposal options related to operations of Martin
County Coal's preparation plant.

The Company recorded a $3 million charge in the fourth quarter of 2000
relating to the slurry spill. The charge represents an accrual of $46.5 million
in estimated spill-related clean-up costs and liabilities net of $43.5 million
in probable insurance recoveries. In the consolidated balance sheet as of
October 31, 2001 and 2000, the environmental accruals of $11.5 million and
$46.5 million, respectively, are included in other current liabilities and
probable insurance recoveries of $20.5 million and $43.5 million, respectively,
are included in trade and other accounts receivable. Massey continues to seek
insurance reimbursement of any and all covered costs. Although the remediation
efforts are largely complete, the degree of uncertainty with respect to
potential claims, fines and penalties make it reasonably possible that the
Company's estimates with respect to the slurry spill could change.

The outcome or timing of current legal or environmental matters or the
impact, if any, of pending legislation or regulatory developments (including
the matters noted above) on future operations is not currently estimable.
However, management does not currently anticipate that such activity will
result in amounts which in the aggregate would have a material effect on the
Company's consolidated financial position.

9. Spin-Off Transaction

On November 30, 2000, Fluor Corporation ("Fluor") completed a reverse
spin-off, which divided it into two separate publicly-traded corporations. As a
result of the reverse spin-off (the "Spin-Off"), Fluor separated into (i) the
spun-off corporation, "new" Fluor Corporation ("New Fluor"), which owns all of
Fluor's then existing businesses except for the coal-related business conducted
by A. T. Massey Coal Company, Inc. ("A.T. Massey"), and (ii) Fluor Corporation,
subsequently renamed Massey Energy Company, which owns the coal-related
business. Further discussion of the Spin-Off may be found in Massey's Annual
Report on Form 10-K for the fiscal year ended October 31, 2000 as filed with
the Securities and Exchange Commission.

Immediately after the Spin-Off, Massey had 73,468,707 shares of $0.625 par
value common stock outstanding. In connection with the Spin-Off, A. T. Massey
became the sole direct, and wholly owned subsidiary of Massey.

Due to the relative significance of the businesses transferred to New Fluor
following the Spin-Off, New Fluor has been treated as the "accounting
successor" for financial reporting purposes, and the Company has been treated
by New Fluor as a discontinued operation despite the legal form of separation
resulting from the Spin-Off.

As a result of the Spin-Off, the following occurred which affected Massey's
ongoing operations:

. Massey no longer invests in Fluor commercial paper;

. Massey no longer loans amounts in excess of operating and capital needs
to Fluor and the amounts due from Fluor were repaid as part of the
Spin-Off;

. Fluor's previously issued $300 million of 6.95 percent Senior Notes due
March 1, 2007, with interest payable semi-annually on March 1 and
September 1 of each year, became the obligation of Massey; and

. Massey issued $275 million of its own commercial paper and utilized $3.5
million of cash to refund the $278.5 million of Fluor commercial paper
assumed as a result of the Spin-Off.

Massey's equity structure was also impacted as a result of the Spin-Off. As
noted above, Massey assumed from Fluor $300 million of 6.95 percent Senior
Notes, $278.5 million of Fluor commercial paper, other equity contributions
from Fluor, and assumed Fluor's common stock equity structure.

10. Debt

The Company's outstanding short-term debt at October 31, 2001 consists of
$240.4 million of consolidated commercial paper and a note payable due November
1, 2001, of $7.8 million. The weighted average maturity of the commercial paper
was 14.7 days at October 31, 2001. The weighted average effective interest rate
of the outstanding commercial paper was 3.03 percent at October 31, 2001.
Massey has $150 million 364-day and $250 million 3-year revolving credit
facilities, which have been guaranteed by A. T. Massey, that serve to provide
liquidity backstop to Massey's commercial paper program and are also available
to meet the Company's ongoing liquidity needs. Borrowings under these
facilities bear interest based on (i) the London Interbank Offer Rate (LIBOR)
plus a margin, which is based on the Company's credit rating as determined by
Moody's and Standard & Poor's, (ii) the Base Rate (as defined in the facility
agreements) and (iii) the Competitive Bid Rate (as defined in the facility
agreements). There were no borrowings outstanding under these facilities at
October 31, 2001.

The revolving credit facilities contain financial covenants requiring the
Company to maintain various financial ratios. Failure by the Company to comply
with these covenants could result in an event of default, which if not cured or
waived could have a material adverse effect on the Company. The financial
covenants were amended as of October 31, 2001, for the periods ending October
31, 2001, through March 31, 2002. The Company was in compliance with these
amended covenants at October 31, 2001. The Company expects that it was not in
compliance with the amended covenant related to debt to EBITDA at December 31,
2001, however, the participant banks have granted a temporary waiver of this
financial covenant. The waiver expires on February 22, 2002. The Company is
seeking to obtain an amendment to the covenant level prior to the expiration of
the waiver and expects approval by the bank participants. If the Company is
unable to obtain an amendment to the covenant level, it would most likely
result in the Company seeking alternate sources of short-term financing, or
issuing longer term debt, which the Company has available through a $500
million debt shelf registration originally filed with the Securities and
Exchange Commission by Fluor Corporation in March 1999.

As a result of the Spin-Off (see Note 9), the Company assumed from Fluor
$300 million of previously issued 6.95 percent Senior Notes (the "Notes") due
March 1, 2007. The Notes were issued in March 1997 and were sold at a discount
for an aggregate price of $296.7 million. Interest is payable semiannually on
March 1 and September 1 of each year, commencing September 1, 1997. The Notes
are redeemable, in whole or in part, at the option of the Company at any time
at a redemption price equal to the greater of (i) 100 percent of the principal
amount of the Notes or (ii) as determined by a Quotation Agent as defined in
the offering prospectus.

Total interest paid for the period ended October 31, 2001, was $34.8 million
and was not material for the periods ended October 31, 2000 and 1999.

11. Appalachian Synfuel, LLC

On March 15, 2001, the Company sold a substantial interest in its synfuel
producing subsidiary, Appalachian Synfuel, LLC, contingent upon a favorable
Internal Revenue Service ruling, which was received in September 2001. The
Company received cash of $3.6 million, a recourse promissory note for $15.2
million that will be paid in quarterly installments of $765,000 including
interest, and a contingent promissory note that is paid on a cents per Section
29 credit dollar earned based on synfuel tonnage shipped. A deferred gain of
$11.9 million as of October 31, 2001, is included in other noncurrent
liabilities to be recognized ratably through 2007. The Company will continue to
manage the facility under an operating agreement.

12. Quarterly Information (Unaudited)

Three Months Ended
-------------------------------------------
January 31, April 30, July 31, October 31,
2001 2001(1) 2001(2) 2001
----------- --------- --------- -----------
(in thousands, except per share amounts)

Net sales.................... $273,112 $307,893 $ 301,792 $320,488
Income (loss) from operations 3,590 8,367 (5,738) 10,491
Earnings (loss) before taxes. (2,216) 3,249 (13,622) 3,832
Net earnings (loss).......... (1,352) 2,081 (9,394) 7,615
Earnings (loss) per share:
Basic and diluted......... $ (0.02) $ 0.03 $ (0.13) $ 0.10
======== ======== ========= ========

(1) On March 15, 2001, the Company sold a substantial interest in its synfuel
producing subsidiary, Appalachian Synfuel, LLC. See Note 11 for further
information. Additionally, earnings for the second quarter 2001 include a
reduction in cost of sales of $6.5 million pretax and interest income of
$3.2 million pretax related to the refund of black lung excise taxes.

(2) Loss for the third quarter 2001 includes a $7.5 million pretax adjustment
related to the write-off of unamortized longwall panel development costs.
The Company decided in the third quarter to move the longwall unit to
another mine to take advantage of better mining conditions. Additionally,
the loss includes a reduction of cost of sales of $3.0 million pretax
related to the refund of black lung excise taxes.

Three Months Ended
------------------
January 31, April 30, July 31, October 31,
2000 2000 2000 (3) 2000 (4)
----------- --------- -------- -----------
(in thousands, except per share amounts

Net sales................ $259,074 $260,540 $272,847 $288,566
Income from operations... 29,719 28,179 37,723 1,279
Earnings before taxes.... 34,421 32,377 48,399 7,017
Net earnings............. 23,853 20,857 32,365 1,729
Earnings per share:
Basic and diluted... $ 0.32 $ 0.28 $ 0.44 $ 0.02
======== ======== ======== ========

(3) Earnings for the third quarter 2000 include a $12.0 million pretax
reduction to cost of sales and $5.3 million pretax in interest income
related to the refund of black lung excise taxes.

(4) Earnings for the fourth quarter 2000 include a $3 million pretax reduction
to cost of sales related to the refund of black lung excise taxes.
Additionally, fourth quarter 2000 results include a bad debt expense charge
of $7.1 million pretax related to the bankruptcy of a major steel customer.

13. Subsequent Events

In December 2001, a substantial customer, Enron Corporation, filed for
bankruptcy protection. As a result, the Company increased its reserve to $7.5
million in December 2001 related to its exposure to this customer.

these lawsuits. By opinion dated October 23, 2001, the court held that the
cases could be reinstated. In December 2001, in lieu of potentially reinstating
the lawsuits, the State of West Virginia and several coal operators, including
Massey, began discussions regarding a settlement of potential claims. In
January 2002, Massey agreed to settle such claims for $6.9 million in exchange
for a release of all such claims.

On January 2, 2002, WVDEP entered an order finding a pattern of violations
and suspending Green Valley's above-referenced refuse area permits for three
days. Green Valley obtained a stay of enforcement of the order pending appeal
and filed an appeal of the order.

On January 14, 2002, WVDEP entered an order finding a pattern of violations
and suspending operations on Marfork's refuse impoundment permit for fourteen
days. Marfork obtained a stay of enforcement of the order pending appeal and
filed an appeal of the order.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

There have been no changes in, or disagreements with, accountants on
accounting and financial disclosure.

Part III

Item 10. Directors and Executive Officers of the Registrant.

Biographical information of Executive Officers is included in Item 4 of this
Form 10-K. Other information required by this item is included in the
Biographical section of the Election of Directors portion of the definitive
proxy statement pursuant to Regulation 14A, involving the election of
directors, which is incorporated herein by reference and will be filed with the
Securities and Exchange Commission (the "Commission") not later than 120 days
after the close of Massey's fiscal year ended October 31, 2001.

Item 11. Executive Compensation.

Information required by this item is included in the Organization and
Compensation Committee Report on Executive Compensation and Executive
Compensation and Other Information sections of the definitive proxy statement
pursuant to Regulation 14A, involving the election of directors, which is
incorporated herein by reference and will be filed not later than 120 days
after the close of Massey/'/s fiscal year ended October 31, 2001.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Information required by this item is included in the Stock Ownership section
of the Election of Directors portion of the definitive proxy statement pursuant
to Regulation 14A, involving the election of directors, which is incorporated
herein by reference and will be filed not later than 120 days after the close
of Massey/'/s fiscal year ended October 31, 2001.

Item 13. Certain Relationships and Related Transactions.

Information required by this item is included in the Other Matters section
of the Election of Directors portion of the definitive proxy statement pursuant
to Regulation 14A, involving the election of directors, which is incorporated
herein by reference and will be filed not later than 120 days after the close
of Massey/'/s fiscal year ended October 31, 2001.

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a) Documents filed as part of this report:

1. Financial Reports:

Consolidated Statement of Earnings for the Fiscal Year Ended October 31,
2001, 2000 and 1999

Consolidated Balance Sheet at October 31, 2001 and October 31, 2000

Consolidated Statement of Cash Flows for the Fiscal Year Ended October 31,
2001, 2000 and 1999

Consolidated Statement of Shareholders' Equity for the Fiscal Year Ended
October 31, 2001, 2000
and 1999

Notes to Consolidated Financial Statements

2. Financial Statement Schedules: All schedules have been omitted since the
required information is not present or not present in amounts sufficient to
require submission of the schedule, or because the information required is
included in the consolidated financial statements and notes thereto.

3. Exhibits:

Exhibit No. Description
----------- -----------

3.1..... Restated Certificate of Incorporation of Massey, as amended [filed as Exhibit 3.1 to Massey's
annual report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by
reference]
3.2..... Restated Bylaws (as amended effective January 22, 2002) of Massey Energy Company
4.1..... Fluor Corporation Dividend Reinvestment Plan (as amended and restated June 30, 1995) [filed as
Exhibit 4.2 to Fluor's annual report on Form 10-K for the fiscal year ended October 31, 1995 and
incorporated by reference]
4.2..... Indenture dated as of February 18, 1997 between Fluor Corporation and Banker's Trust Company,
trustee [filed as Exhibit 4.1 to Form 8-K filed March 7, 1997 and incorporated by this reference].
10.1.... Credit Agreement dated as of November 30, 2000, among Massey Energy Company, as Borrower,
A. T. Massey Coal Company, Inc., as Guarantor, Citibank, N. A., as Administrative Agent, PNC
Bank, National Association, as Syndication Agent, First Union National Bank, as Documentation
Agent, and the lenders party thereto, for a maximum principal amount at any one time outstanding
not to exceed $250,000,000.
10.2.... Amendment to Credit Agreement dated as of November 27, 2001, among Massey Energy
Company, as Borrower, A. T. Massey Coal Company, Inc., as Guarantor, Citibank, N. A., as
Administrative Agent, PNC Bank, National Association, as Syndication Agent, First Union
National Bank, as Documentation Agent, and the lenders party thereto, for a maximum principal
amount at any one time outstanding not to exceed $250,000,000.
10.3.... Massey Energy Company 1999 Executive Performance Incentive Plan (as amended and restated
effective November 30, 2000) [filed as Exhibit 10.1 to Massey's annual report on Form 10-K for
the fiscal year ended October 31, 2000 and incorporated by reference]
10.4.... Massey Executive Deferred Compensation Program (as amended and restated effective November
30, 2000) [filed as Exhibit 10.2 to Massey's annual report on Form 10-K for the fiscal year ended
October 31, 2000 and incorporated by reference]

Exhibit No. Description
----------- -----------

10.5 Massey Energy Company Executive Physical Program [filed as Exhibit 10.3 to Massey's annual
report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference]
10.6 Massey Energy Company Directors' Life Insurance Summary [filed as Exhibit 10.4 to Massey's
annual report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by
reference]
10.7 Massey Energy Split Dollar Life Insurance Program Summary [filed as Exhibit 10.5 to Massey's
annual report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by
reference]
10.8 Massey Energy Company 1988 Executive Stock Plan (as amended and restated effective
November 30, 2000) [filed as Exhibit 10.6 to Massey's annual report on Form 10-K for the fiscal
year ended October 31, 2000 and incorporated by reference]
10.9 Massey Energy Company Change of Control Compensation Plan (as amended and restated
effective November 30, 2000) [filed as Exhibit 10.7 to Massey's annual report on Form 10-K for
the fiscal year ended October 31, 2000 and incorporated by reference]
10.10 Massey Energy Company 1982 Shadow Stock Plan [filed as Exhibit 10.8 to Massey's annual
report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference]
10.11 Massey Energy Company 1997 Stock Appreciation Rights Plan [filed as Exhibit 10.9 to Massey's
annual report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by
reference]
10.12 A. T. Massey Coal Company, Inc. Supplemental Benefit Plan [filed as Exhibit 10.10 to Massey's
annual report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by
reference]
10.13 A. T. Massey Coal Company, Inc. Executive Deferred Compensation Plan [filed as Exhibit 10.11
to Massey's annual report on Form 10-K for the fiscal year ended October 31, 2000 and
incorporated by reference]
10.14 Massey Energy Company 1997 Restricted Stock Plan for Non-Employee Directors (as amended
and restated effective November 30, 2000) [filed as Exhibit 10.12 to Massey's annual report on
Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference]
10.15 Massey Energy Company 1996 Executive Stock Plan (as amended and restated effective
November 30, 2000) [filed as Exhibit 10.13 to Massey's annual report on Form 10-K for the fiscal
year ended October 31, 2000 and incorporated by reference]
10.16 Massey Energy Company Stock Plan for Non-Employee Directors (as amended and restated
effective November 30, 2000) [filed as Exhibit 10.14 to Massey's annual report on Form 10-K for
the fiscal year ended October 31, 2000 and incorporated by reference]
10.17 Massey Energy Company Deferred Directors' Fees Program [filed as Exhibit 10.15 to Massey's
annual report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by
reference]

Exhibit No. Description
----------- -----------

10.18 Employment Agreement between Massey Energy Company, A.T. Massey Coal Company, Inc.
and Don L. Blankenship dated as of November 1, 2001
10.19 Consulting Agreement between James L. Gardner and A. T. Massey Coal Company, Inc. dated as
of February 23, 2000 [filed as Exhibit 10.18 to Massey's annual report on Form 10-K for the fiscal
year ended October 31, 2000 and incorporated by reference]
10.20 Amendment to Consulting Agreement between James L. Gardner and A. T. Massey Coal
Company dated February 23, 2000 [filed as Exhibit 10.19 to Massey's annual report on Form 10-
K for the fiscal year ended October 31, 2000 and incorporated by reference]
10.21 Special Successor and Development Retention Program between Fluor Corporation and Don L.
Blankenship dated as of September 1998 [filed as Exhibit 10.21 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1998 and incorporated by this reference]
10.22 Distribution Agreement between Fluor Corporation and Massey Energy Company dated as of
November 30, 2000 [filed as Exhibit 10.1 to Massey's current report on Form 8-K filed December
15, 2000 and incorporated by this reference]
10.23 Tax Sharing Agreement between Fluor Corporation, Massey Energy Company and A. T. Massey
Coal Company, Inc. dated as of November 30, 2000 [filed as Exhibit 10.2 to Massey's current
report on Form 8-K filed December 15, 2000 and incorporated by this reference]
10.24 First Amendment to the A.T. Massey Coal Company, Inc. Executive Deferred Compensation Plan
[filed as Exhibit 10.23 to Massey's annual report on Form 10-K for the fiscal year ended October
31, 2000 and incorporated by reference]
21 Massey Energy Company Subsidiaries
23 Consent of Independent Auditors
24 Manually signed Powers of Attorney executed by Massey directors

(b) Reports on Form 8-K:

Current Report on Form 8-K filed November 5, 2001 announcing change
of Massey's fiscal year end from October 31 to December 31.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

MASSEY ENERGY COMPANY

January 29, 2002

By: /s/ J. M. JAROSINSKI
-----------------------------
J. M. Jarosinski,
Vice President--Finance
and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
Principal Executive Officer
and Director:

/s/ D. L. BLANKENSHIP Chairman, Chief Executive January 29, 2002
----------------------------- Officer and President
D. L. Blankenship

Principal Financial Officer:

/s/ J. M. JAROSINSKI Vice President--Finance and January 29, 2002
----------------------------- ChiefFinancial Officer
J. M. Jarosinski

Principal Accounting Officer

/s/ E. B. TOLBERT Controller January 29, 2002
-----------------------------
E. B. Tolbert

Other Directors:

* Director January 29, 2002
-----------------------------
J. L. Gardner

* Director January 29, 2002
-----------------------------
E. G. Gee

* Director January 29, 2002
-----------------------------
W. R. Grant

* Director January 29, 2002
-----------------------------
J. H. Harless

* Director January 29, 2002
-----------------------------
B. R. Inman

* Director January 29, 2002
-----------------------------
D. R. Moore

* Director January 29, 2002
-----------------------------
M. R. Seger

By: /s/ R. L. NICHOLSON January 29, 2002
-----------------------------
R. L. Nicholson
Attorney-in-fact

* Manually signed Powers of Attorney authorizing R. L. Nicholson, Jeffrey M.
Jarosinski, Eric B. Tolbert and/or Bennett K. Hatfield, and each of them, to
sign the annual report on Form 10-K for the fiscal year ended October 31, 2001
and any amendments thereto as attorneys-in-fact for certain directors and
officers of the registrant are included herein as Exhibits 24.