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	Wilbur L. Ross, Jr.
	Chairman of the Board

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		Page
EXPLANATORY NOTE		ii
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION AND ACQUISITIONS		iii
SUMMARY		1
RISK FACTORS		7
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		28
INDUSTRY DATA		29
CAPITALIZATION		30
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL DATA OF ICG		31
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ICG		38
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF INTERNATIONAL COAL GROUP		40
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ANKER AND COALQUEST		41
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ICG		42
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF INTERNATIONAL COAL GROUP		62
INFORMATION ABOUT THE COMPANIES		63
ENVIRONMENTAL AND OTHER REGULATORY MATTERS		103
THE REORGANIZATION		111
THE BUSINESS COMBINATION AGREEMENT		116
DESCRIPTION OF INTERNATIONAL COAL GROUP CAPITAL STOCK		120
COMPARISON OF SHAREHOLDERS’ RIGHTS		126
COMPARATIVE MARKET PRICES		128
PRICE RANGE OF ICG, INC. COMMON STOCK		128
DIVIDEND POLICY		128
MANAGEMENT		129
PRINCIPAL SHAREHOLDERS		140
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		143
DESCRIPTION OF INDEBTEDNESS		143
LEGAL MATTERS		145
EXPERTS		145
EXPERTS — COAL RESERVES		146
WHERE YOU CAN FIND MORE INFORMATION		146
GLOSSARY OF SELECTED TERMS		147
INDEX TO FINANCIAL STATEMENTS		F-1
ANNEX A: SECTION 262 OF THE DGCL		A-1

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In this prospectus, we sometimes refer to:		as:
Acquisitions of each of Anker and CoalQuest		Anker and CoalQuest acquisitions
Anker Coal Group, Inc. and its consolidated subsidiaries		Anker
Proven and probable coal reserves, consisting of the part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination		coal reserves
Coal bearing bodies that have been sufficiently sampled and analyzed, but do not qualify as a commercially viable coal reserve as prescribed by SEC rules until a final comprehensive SEC prescribed evaluation is performed		non-reserve coal deposits
CoalQuest Development LLC		CoalQuest
Horizon NR, LLC (the entity holding the operating subsidiaries of Horizon Natural Resources Company) and its consolidated subsidiaries		Horizon
ICG, Inc.		ICG
International Coal Group, Inc.		International Coal Group, we, our, us and similar terms
WL Ross & Co. LLC		WLR

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Q:		Who are ICG and International Coal Group?
A:		ICG, Inc. is the current name of the entity formerly known as International Coal Group, Inc. when it acquired certain assets of Horizon Natural Resources Company in September 2004. In anticipation of the acquisitions of Anker and CoalQuest, International Coal Group, Inc. (now called ICG, Inc.) formed ICG Holdco, Inc. to act as the holding company for Anker, CoalQuest and itself. The name of ICG Holdco was changed to International Coal Group, Inc. After the reorganization, International Coal Group will own ICG and all former ICG shareholders will become International Coal Group shareholders.
Q:		What is the purpose of the reorganization?
A:		The reorganization is being completed to facilitate the acquisitions of Anker and CoalQuest on a tax-deferred basis. The reorganization will be on a tax-free basis for ICG shareholders. After the reorganization, former ICG shareholders, as well as former Anker shareholders and CoalQuest members will become shareholders of the new parent holding company, International Coal Group.
Q:		What will I receive in the reorganization?
A:		ICG shareholders will receive one International Coal Group common share for each ICG common share owned immediately prior to the reorganization. Existing stock certificates representing ICG common shares will represent International Coal Group common shares following the reorganization. You need not send your stock certificates to us.
Q:		How do the reorganization and the Anker and CoalQuest acquisitions relate to the proposed public offering?
A:		Neither the reorganization nor the acquisitions are conditioned on the proposed public offering. However, the value of the shares to be issued in the Anker and CoalQuest acquisitions will be based on the public offering price if such offering is consummated prior to March 2006. If the proposed public offering does not occur, the number of shares issuable in the acquisition to Anker shareholders is 19,498,581 and to CoalQuest members is 11,451,548. See “The Reorganization” for more information on the calculation of the number of shares to be issued in connection with the acquisitions. The public offering will have no affect on the number of shares to be issued in the reorganization.
Q:		Will the shares I receive in the reorganization be freely tradeable?
A:		The shares being issued in this reorganization have been authorized for listing on the New York Stock Exchange under the symbol “ICO.” Unless you are an affiliate of International Coal Group, your International Coal Group common shares will not be subject to any restrictions on transfer under the federal securities laws.
Q:		What are the tax consequences of the reorganization?
A:		The reorganization and exchange of shares are intended to qualify as transactions in which no gain or loss is recognized by ICG shareholders for U.S. federal income tax purposes. In general, you will not be subject to U.S. federal income tax solely as a result of the receipt of shares of International Coal Group in exchange for your ICG common shares if you are a citizen or resident of the United States. However, you should consult your own tax advisor as to your particular U.S. federal, state, local and other tax consequences.
Q:		What shareholder or other approvals are needed to approve the reorganization?
A:		ICG has received irrevocable proxies from holders of a majority of all issued and outstanding common shares authorizing ICG to vote those shares in favor of the reorganization. No further board or shareholder action is required for the reorganization to be completed and, therefore, we are not soliciting your vote. Additionally, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, or HSR, has been terminated, and all other conditions to the closing of the acquisitions

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		and reorganization, have occurred, other than the absence of material litigation and similar technical conditions such as the delivery of required closing documents.
Q:		What do I need to do now?
A:		No further action by any shareholder is required to effect the reorganization. You do not need to send in your stock certificates. Your current ICG stock certificates will represent shares in International Coal Group following the reorganization.
Q:		When do you expect the reorganization to be completed?
A:		We expect to complete the reorganization on or about the same time that we complete the Anker and CoalQuest acquisitions. We intend to complete the reorganization and the acquisitions as soon as possible after the effectiveness of the registration statement of which this prospectus forms a part.
Q:		What rights do I have if I oppose the reorganization?
A:		Any holder of ICG common stock who otherwise complies with the requirements and procedures of Section 262 of the Delaware General Corporation Law, or DGCL, is entitled to exercise rights of appraisal, which generally entitle shareholders to receive a cash payment equal to the judicially determined fair value of the ICG common stock in connection with the reorganization. A detailed description of the appraisal rights and procedures available to ICG shareholders is included in “The Reorganization — Appraisal Rights.”
Q:		What is the purpose of this document?
A:		This prospectus is part of a registration statement that registers the shares of International Coal Group that you will receive in connection with the reorganization under the federal securities laws. If you are not an affiliate of International Coal Group, the common shares you receive in the reorganization will not be subject to any transfer restrictions under the federal securities laws.
Q:		Will my ownership interest be diluted?
A:		Not by the reorganization — in the reorganization, shares are being converted on a one-to-one basis, regardless of whether the proposed public offering is consummated. However, the issuance of shares in the acquisitions and the proposed public offering will result in increasing the number of International Coal Group common shares outstanding. This will have the effect of proportionately decreasing the percentage share ownership held by the existing ICG common shareholders who do not also have ownership interests in Anker and CoalQuest. As of September 30, 2005, there were 107,230,999 ICG common shares outstanding. The maximum number of ICG shares to be issued in connection with the Anker and CoalQuest acquisitions is 30,950,129, assuming the proposed public offering does not occur or the offering price is $8.885 per share or less, subject to possible adjustments. As the following chart illustrates, the higher the offering price per share of International Coal Group common stock in the proposed public offering, the less International Coal Group common shares will be issued in connection with the Anker and CoalQuest acquisitions. The number of shares to be issued will continue to decrease if the proposed public offering price is greater than the $16.00 shown below. The table does not reflect the impact of the proposed public offering — the shares to be issued in the proposed public offering, which we currently estimate to be 20,000,000 shares assuming the over-allotment option is not exercised, will further dilute existing shareholders proportionately.

International Coal Group common stock offering price			$	8.885 or less				$10.00				$11.00				$12.00				$13.00				$13.70				$14.00				$15.00				$16.00
ICG common shares issued in Anker and CoalQuest acquisitions:
	Without adjustments			30,950,129				27,500,000				25,000,000				22,916,667				21,153,846				20,072,992				19,642,857				18,333,333				17,187,500
	With adjustments			29,824,670				26,500,000				24,090,909				22,083,333				20,384,615				19,343,065				18,928,571				17,666,667				16,562,501

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Q:		How will the adjustment to the number of shares to be issued in the acquisition work?
A:		The shares being issued in the Anker and CoalQuest acquisitions will be deposited with an escrow agent for the benefit of the holders of shares of Anker common stock and CoalQuest membership interests, until the final determination of the number of shares issuable on account of the acquisitions. These escrowed shares will be deemed outstanding from and after the effective time of the Anker and CoalQuest acquisitions; any dividends or distributions or other rights in respect of these shares will be added to and also held in escrow; and these escrowed shares will be voted in accordance with the instructions of the beneficial owners of those shares in accordance with their relative interest. If the shares deposited exceeds the finally determined number of shares to be issued in the Anker and CoalQuest acquisitions, the excess shares will be returned to International Coal Group.
Q:		Who can help answer my questions about the reorganization?
A:		If you would like additional copies of this document, or if you would like to ask any additional questions about the reorganization and the acquisitions, you should contact:

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	Because of our limited operating history, historical information regarding our company prior to October 1, 2004 is of little relevance in understanding our business as currently conducted.

	•	the supply of and demand for domestic and foreign coal;
	•	the demand for electricity;
	•	domestic and foreign demand for steel and the continued financial viability of the domestic and/or foreign steel industry;
	•	the proximity to, capacity of and cost of transportation facilities;
	•	domestic and foreign governmental regulations and taxes;
	•	air emission standards for coal-fired power plants;
	•	regulatory, administrative and judicial decisions;

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	•	the price and availability of alternative fuels, including the effects of technological developments; and
	•	the effect of worldwide energy conservation measures.

	Our coal mining operations are subject to operating risks that could result in decreased coal production thereby reducing our revenues.

	•	the unavailability of qualified labor;
	•	our inability to acquire, maintain or renew necessary permits or mining or surface rights in a timely manner, if at all;
	•	unfavorable geologic conditions, such as the thickness of the coal deposits and the amount of rock embedded in or overlying the coal deposit;
	•	failure of reserve estimates to prove correct;
	•	changes in governmental regulation of the coal industry, including the imposition of additional taxes, fees or actions to suspend or revoke our permits or changes in the manner of enforcement of existing regulations;
	•	mining and processing equipment failures and unexpected maintenance problems;
	•	adverse weather and natural disasters, such as heavy rains and flooding;
	•	increased water entering mining areas and increased or accidental mine water discharges;
	•	increased or unexpected reclamation costs;
	•	interruptions due to transportation delays;
	•	the unavailability of required equipment of the type and size needed to meet production expectations; and
	•	unexpected mine safety accidents, including fires and explosions from methane.

	Reduced coal consumption by North American electric power generators could result in lower prices for our coal, which could reduce our revenues and adversely impact our earnings and the value of our coal reserves.

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	Our profitability may be adversely affected by the status of our long-term coal supply agreements, changes in purchasing patterns in the coal industry and the loss of certain brokered coal contracts set to expire at the end of 2006, which could adversely affect the capability and profitability of our operations.

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	Certain provisions in our long-term supply agreements may provide limited protection during adverse economic conditions or may result in economic penalties upon the failure to meet specifications.

	A decline in demand for metallurgical coal would limit our ability to sell our high quality steam coal as higher-priced metallurgical coal.

	Inaccuracies in our estimates of economically recoverable coal reserves could result in lower than expected revenues, higher than expected costs or decreased profitability.

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	•	geological and mining conditions which may not be fully identified by available exploration data or which may differ from experience in current operations;
	•	historical production from the area compared with production from other similar producing areas; and
	•	the assumed effects of regulation and taxes by governmental agencies and assumptions concerning coal prices, operating costs, mining technology improvements, severance and excise tax, development costs and reclamation costs.

	We depend heavily on a small number of large customers, the loss of any of which would adversely affect our operating results.

	Disruptions in transportation services could limit our ability to deliver coal to our customers, which could cause revenues to decline.

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	Fluctuations in transportation costs could impair our ability to supply coal to our customers.

	Disruption in supplies of coal produced by third parties could temporarily impair our ability to fill our customers’ orders or increase our costs.

	The unavailability of an adequate supply of coal reserves that can be mined at competitive costs could cause our profitability to decline.

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	Unexpected increases in raw material costs could significantly impair our operating profitability.

	A shortage of skilled labor in the mining industry could pose a risk to achieving optimal labor productivity and competitive costs, which could adversely affect our profitability.

	We have a new management team, and if they are unable to work effectively together, our business may be harmed.

	Our ability to operate our company effectively could be impaired if we fail to attract and retain key personnel.

	Acquisitions that we may undertake involve a number of inherent risks, any of which could cause us not to realize the anticipated benefits.

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	•	uncertainties in assessing the value, strengths, and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and other liabilities (including environmental or mine safety liabilities) of, acquisition candidates;
	•	the potential loss of key customers, management and employees of an acquired business;
	•	the ability to achieve identified operating and financial synergies anticipated to result from an acquisition;
	•	problems that could arise from the integration of the acquired business; and
	•	unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying our rationale for pursuing the acquisition.

	We may not be able to effectively integrate Anker and CoalQuest into our operations or realize the expected benefits of those acquisitions.

	•	the loss of key employees or customers;
	•	the challenge of maintaining the quality of customer service;
	•	the need to coordinate geographically diverse operations;
	•	retooling and reprogramming of equipment and information technology systems; and
	•	the resulting diversion of management’s attention from our day-to-day business and the need to hire and integrate additional management personnel to manage our expanded operations.

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	If the value of our goodwill becomes impaired, the write-off of the impaired portion could materially reduce the value of our assets and reduce our net income for the year in which the write-off occurs.

	Failure to obtain or renew surety bonds in a timely manner and on acceptable terms could affect our ability to secure reclamation and coal lease obligations, which could adversely affect our ability to mine or lease coal.

	•	lack of availability, higher expense or unfavorable market terms of new bonds;
	•	restrictions on availability of collateral for current and future third-party surety bond issuers under the terms of our credit facility; and
	•	the exercise by third-party surety bond issuers of their right to refuse to renew the surety.

	Failure to maintain capacity for required letters of credit could limit our ability to obtain or renew surety bonds.

	Our business requires substantial capital investment and maintenance expenditures, which we may be unable to provide.

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	Our level of indebtedness and other demands on our cash resources could materially adversely affect our ability to execute our business strategy and make us more vulnerable to economic downturns.

	Our variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

	Increased consolidation and competition in the U.S. coal industry may adversely affect our ability to retain or attract customers and may reduce domestic coal prices.

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	Our ability to collect payments from our customers could be impaired if their creditworthiness deteriorates.

	Defects in title or loss of any leasehold interests in our properties could limit our ability to conduct mining operations on these properties or result in significant unanticipated costs.

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	Our work force could become unionized in the future, which could adversely affect the stability of our production and reduce our profitability.

	Our ability and the ability of some of our subsidiaries to engage in some business transactions or to pursue our business strategy may be limited by the terms of our debt.

	•	incur additional debt;
	•	pay dividends on, redeem or repurchase capital stock;
	•	allow our subsidiaries to issue new stock to any person other than us or any of our other subsidiaries;
	•	make investments;
	•	make acquisitions;
	•	incur or permit to exist liens;
	•	enter into transactions with affiliates;
	•	guarantee the debt of other entities, including joint ventures;
	•	merge or consolidate or otherwise combine with another company; and
	•	transfer or sell a material amount of our assets outside the ordinary course of business.

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		Prior to a				After a
Period		“Successful IPO”(1)				“Successful IPO”(1)
January 1, 2005 - December 31, 2005		$	155,000,000			$	175,000,000
January 1, 2006 - December 31, 2006		$	180,000,000			$	200,000,000
January 1, 2007 - December 31, 2007		$	255,000,000			$	350,000,000
January 1, 2008 - December 31, 2008		$	125,000,000			$	315,000,000
January 1, 2009 - December 31, 2009		$	75,000,000			$	125,000,000
January 1, 2010 - Final Maturity Date		$	85,000,000			$	125,000,000

(1)	A “Successful IPO” is defined to mean a public offering with at least $250 million in gross proceeds.

	If our business does not generate sufficient cash for operations, we may not be able to repay our indebtedness.

	Extensive government regulations impose significant costs on our mining operations, and future regulations could increase those costs or limit our ability to produce and sell coal.

	•	limitations on land use;
	•	employee health and safety;
	•	mandated benefits for retired coal miners;
	•	mine permitting and licensing requirements;
	•	reclamation and restoration of mining properties after mining is completed;
	•	air quality standards;
	•	water pollution;
	•	protection of human health, plantlife and wildlife;
	•	the discharge of materials into the environment;

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	•	surface subsidence from underground mining; and
	•	the effects of mining on groundwater quality and availability.

	Mining in Northern and Central Appalachia is more complex and involves more regulatory constraints than mining in the other areas, which could affect the mining operations and cost structures of these areas.

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	Judicial rulings that restrict disposal of mining wastes could significantly increase our operating costs, discourage customers from purchasing our coal and materially harm our financial condition and operating results.

	We may be unable to obtain and renew permits necessary for our operations, which would reduce our production, cash flow and profitability.

	If the assumptions underlying our reclamation and mine closure obligations are materially inaccurate, we could be required to expend greater amounts than anticipated.

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	Our operations may substantially impact the environment or cause exposure to hazardous materials, and our properties may have significant environmental contamination, any of which could result in material liabilities to us.

	Extensive environmental regulations affect our customers and could reduce the demand for coal as a fuel source and cause our sales to decline.

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	We may be unable to provide the required financial information in a timely and reliable manner.

	Anti-takeover provisions in our charter documents and Delaware corporate law may make it difficult for our stockholders to replace or remove our current board of directors and could deter or delay third-parties from acquiring us, which may adversely affect the marketability and market price of our common stock.

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	There may be circumstances in which the interests of our major stockholders could be in conflict with your interests as a stockholder.

	If our stockholders sell substantial amounts of our common stock following the reorganization and proposed public offering, the market price of our common stock may decline.

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	The requirements of being a public company may strain our resources and distract management.

	We may not pay dividends for the foreseeable future.

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	•	actual or anticipated fluctuations in our operating results or future prospects;
	•	the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
	•	strategic actions by us or our competitors, such as acquisitions or restructurings;
	•	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
	•	changes in accounting standards, policies, guidance, interpretations or principles;
	•	conditions of the coal industry as a result of changes in financial markets or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events;
	•	sales of common stock by us or members of our management team; and
	•	changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies or the coal industry generally.

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	•	market demand for coal, electricity and steel;
	•	availability of qualified workers;
	•	future economic or capital market conditions;
	•	weather conditions or catastrophic weather-related damage;
	•	our production capabilities;
	•	our proposed public offering;
	•	our consummation of the Anker and CoalQuest acquisitions and the integration of these businesses;
	•	the consummation of financing, acquisition or disposition transactions and the effect thereof on our business;
	•	our plans and objectives for future operations and expansion or consolidation;
	•	our relationships with, and other conditions affecting, our customers;
	•	timing of reductions or increases in customer coal inventories;
	•	long-term coal supply arrangements;
	•	risks in coal mining;
	•	unexpected maintenance and equipment failure;
	•	environmental laws and regulations, including those directly affecting our coal mining and production, and those affecting our customers’ coal usage;
	•	competition;
	•	railroad, barge, trucking and other transportation performance and costs;
	•	employee benefits costs and labor relations issues;
	•	our assumptions concerning economically recoverable coal reserve estimates;
	•	regulatory and court decisions;
	•	future legislation and changes in regulations or governmental policies or changes in interpretations thereof;
	•	the impairment of the value of our goodwill; and
	•	our liquidity, results of operations and financial condition.

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	•	for ICG on an actual basis;
	•	for ICG on a pro forma basis to give effect to the Anker and CoalQuest acquisitions; and
	•	ICG on a pro forma, as adjusted basis, to give effect to the Anker and CoalQuest acquisitions and the sale by International Coal Group of approximately 20,000,000 shares of its common stock in the proposed public offering at an assumed public offering price of $13.70, the last sale price of ICG on November 7, 2005, as quoted on the Pink Sheets Electronic Quotation Service, after deducting underwriting discounts and estimated offering expenses and the application of the estimated net proceeds.

				As of September 30, 2005
												Pro Forma, As
												Adjusted for
												the Proposed
				Actual				Pro Forma				Public Offering
				(In thousands)
				(Unaudited)
Cash and cash equivalents				$	15,534			$	18,174			$	42,385
Long-term debt, including current portion:
	Term loan facility(1)				173,688				208,688				—
	Revolving credit facility(1)				15,000				22,697				—
	Other long-term debt, including capital leases				247				4,824				4,824
		Total debt		$	188,935			$	236,209			$	4,824
Stockholders’ equity:
	Common stock, par value $0.0001 per share, 1,800,000,000 shares authorized, 107,230,999 shares issued and outstanding, actual, and 127,303,991 shares issued and outstanding, pro forma and 147,303,991 shares issued and outstanding, pro forma as adjusted for the proposed public offering(2)				11				1,382				1,582
	Preferred stock, par value $0.0001 per share, 200,000,000 shares authorized, no shares issued and outstanding(2)				—				—				—
	Paid-in-capital				158,850				448,729				701,589
	Unearned compensation-restricted stock				(5,132	)			(5,132	)			(5,132	)
	Retained earnings				32,797				32,797				32,797
	Total stockholders’ equity				186,526				477,776				730,836
Total capitalization				$	375,461			$	713,985			$	735,660

(1)	Our current credit facility provides for a $110.0 million revolving credit facility, of which up to $75.0 million may be used for letters of credit. Upon consummation of the proposed public offering, we intend to use a portion of the net proceeds to fully repay our term loan of $208.7 million and to use the remaining net proceeds for general corporate purposes. Further, we intend to increase our revolving credit facility to $300.0 million. As of September 30, 2005, $52.9 million of letters of credit were outstanding.
(2)	Represents stock of our predecessor, ICG and assumes 20,072,992 shares are issued in connection with the Anker and CoalQuest acquisitions based upon a public offering price of $13.70 per share. The par value of International Coal Group common stock is $0.01 per share and the par value of International Coal Group preferred stock is $0.01 per share.

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	•	ICG’s corporate reorganization, reflecting the exchange of International Coal Group common stock for existing shares of ICG common stock at a 1-for-1 exchange ratio;
	•	ICG’s acquisition of the Horizon assets (including the preliminary application of purchase accounting) (for purposes of the December 31, 2004 unaudited pro forma statement of operations data only);
	•	borrowings under ICG’s credit facilities, in part, to finance the Horizon asset acquisition and the Anker and CoalQuest acquisitions;
	•	the Anker and CoalQuest acquisitions; and
	•	the proposed public offering.

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																ICG, Inc.				Anker				CoalQuest
				ICG, Inc.				Anker				CoalQuest				Reorganization				Acquisition				Acquisition				Offering				Pro
				Historical				Historical				Historical				Adjustments				Adjustments				Adjustments				Adjustments				Forma
				(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents			$	15,534			$	695			$	1,945			$	2,597	(1)		$	(2,597	) (1)		$	—			$	24,211	(6)		$	42,385
	Accounts receivable				56,886				10,595				1,262				(2,597	)(3)			—				—				—				66,146
	Inventories				20,472				3,431				—				—				—				—				—				23,903
	Deferred income taxes				2,113				—				—				—				—				—				—				2,113
	Prepaid insurance				240				—				13				—				—				—				—				253
	Prepaid expenses and other				10,094				923				—				—				—				—				(2,536	) (6)			8,481
		Total current assets			105,339				15,644				3,220				—				(2,597	)			—				21,675				143,281
Property, plant and equipment, at cost including coal reserves, mine development and contract costs					241,185				155,513				19,000				—				23,183	(3)			55,091	(3)			—				493,972
	Less accumulated depreciation, depletion and amortization				(37,654	)			(87,756	)			(118	)			—				—				—				—				(125,528	)
		Net property, plant and equipment			203,531				67,757				18,882				—				23,183				55,091				—				368,444
Debt issuance costs, net					7,284				—				—								—				—				—				7,284
Advance royalties					5,691				3,593				—				—				—				—				—				9,284
Goodwill					190,861				—				—				1,819	(2)			163,170	(3)			43,011	(3)			—				398,861
Deferred tax asset non-current					5,637				—				—				—				—				—				—				5,637
Other non-current assets					4,677				8,504				—				—				—				—				—				13,181
	Total assets			$	523,020			$	95,498			$	22,102			$	1,819			$	183,756			$	98,102			$	21,675			$	945,972
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
Current liabilities:
	Trade accounts payable			$	36,130			$	15,987			$	183			$	—			$	(2,597	) (1)		$	—			$	—			$	49,703
	Current portion of long-term debt and capital leases				1,997				35,186				—				(33,528	)(2)			—				—				(2,100	) (6)			1,555
	Current portion of reclamation and mine closure costs				2,682				1,889				—				—				—				—				—				4,571
	Accrued expenses and other				41,663				8,381				982				—				—				—				—				51,026
		Total current liabilities			82,472				61,443				1,165				(33,528	)			(2,597	)			—				(2,100	)			106,855
Non-current liabilities, less current portion
	Long-term debt and capital leases				186,938				10,269				16,250				35,347	(2)			—				(16,250	) (4)			(229,285	) (6)			3,269
	Reclamation and mine closure costs				39,432				23,899				—				—				—				—				—				63,331
	Long-term employee benefits				20,759				4,314				—				—				—				—				—				25,073
	Other non-current liabilities				6,893				8,676				1,039				—				—				—				—				16,608
		Total non-current liabilities			254,022				47,158				17,289				35,347				—				(16,250	)			(229,285	)			108,281
	Total liabilities				336,494				108,601				18,454				1,819				(2,597	)			(16,250	)			(231,385	)			215,136
STOCKHOLDERS’ EQUITY (DEFICIT):
	Preferred stock-par value $0.0001, 200,000,000 shares authorized, none issued				—				—				—				—				—				—				—				—
	Common stock-par value $0.0001, 1,800,000,000 shares authorized, 107,230,999 issued and outstanding (147,303,991 issued and outstanding at a par value of $0.01 on a pro forma basis)				11				—				—				1,061	(5)			195	(5)			115	(5)			200	(6)			1,582
	Paid-in Capital				158,850				145,588				3,250				(1,061	)(5)			27,467	(3,5)			114,635	(3,4,5)			252,860	(6)			701,589
	Unearned compensation-restricted stock				(5,132	)																											(5,132	)
	Retained earnings (accumulated deficit)				32,797				(158,691	)			398				—				158,691	(3)			(398	)(3)			—				32,797
		Total stockholders’ equity (accumulated deficit)			186,526				(13,103	)			3,648				—				186,353				114,352				253,060				730,836
		Total liabilities and stockholders’ equity (accumulated deficit)		$	523,020			$	95,498			$	22,102			$	1,819			$	183,756			$	98,102			$	21,675			$	945,972

	(1)	Reflects the payment of $2.6 million in accounts receivables and accounts payables between ICG, Inc. and Anker Coal Group, Inc. upon consummation of the Anker and CoalQuest acquisitions.
	(2)	Reflects an increase of $35.0 million to ICG’s term loan to repay Anker’s existing debt of $40.9 million (not including equipment leases of $4.6 million), to record the related acquisition costs of $1.8 million, and to properly classify the balances of long-term debt and capital leases.
	(3)	Reflects the issuance of 20,072,992 additional common shares, which assumes a public offering price of $13.70 per share, for the acquisitions of Anker ($173.25 million) and CoalQuest ($101.75 million) for a total of $275.0 million.
	(4)	Reflects the conversion of CoalQuest’s notes payable ($16.3 million) to equity upon consummation of the Anker and CoalQuest acquisitions.
	(5)	Reflects the change in par value from $0.0001 per share to $0.01 per share upon the effective date of this offering.
	(6)	Reflects the issuance of 20,000,000 shares of common stock in this offering at $13.70 per share, net of underwriting and offering expenses of $20.9 million, used to fully repay total debt of $231.4 million and the remainder for general corporate purposes.

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																	ICG, Inc.				Anker				CoalQuest
					ICG, Inc.				Anker				CoalQuest				Reorganization				Acquisition				Acquisition				Offering
					Historical				Historical				Historical				Adjustments				Adjustments				Adjustments				Adjustments				Pro Forma
					(In thousands, except share and per share data)
Revenues:
	Coal sales revenues				$	441,662			$	106,662			$	—			$	(5,580	)(3)		$	—			$	—			$	—			$	542,744
	Freight and handling revenues					6,236				9,071																								15,307
	Other revenues					17,757				4,375				—				—				—				—				—				22,132
			Total revenues			465,655				120,108				—				(5,580	)			—				—				—				580,183
Costs and expenses:
	Freight and handling costs					6,236				9,071				—				—				—				—				—				15,307
	Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization shown separately below)					357,076				114,541				303				—				(6,505	) (1,3)			—				—				465,415
	Depreciation, depletion and amortization					29,489				9,218				39				—				356	(2)			164	(2)			—				39,266
	Selling, general and administrative (exclusive of depreciation, depletion and amortization shown separately above)					23,592				4,664				—				—				—				—				—				28,256
	Gain on sale of assets					(518	)			—				—				—				—				—				—				(518	)
		Total costs and expenses				415,875				137,494				342				—				(6,149	)			164				—				547,726
Income (loss) from operations						49,780				(17,386	)			(342	)			(5,580	)			6,149				(164	)			—				32,457
	Interest and other income (expense):
	Interest expense					(10,453	)			(2,208	)			(446	)			1,706	(4)			—				—				7,668	(4)			(3,733	)
	Reorganization items
	Other, net					4,007				5,123				925				—				—				(925	)(1)			—				9,130
		Total interest and other income (expense)				(6,446	)			2,915				479				1,706				—				(925	)			7,668				5,397
Income (loss) before income taxes						43,334				(14,471	)			137				(3,874	)			6,149				(1,089	)			7,668				37,854
Income tax (expense) benefit						(14,786	)			(29	)			—				1,322	(5)			2,839	(5)			325	(5)			(2,616	) (5)			(12,945	)
	Net income (loss)				$	28,548			$	(14,500	)		$	137			$	(2,552	)		$	8,988			$	(764	)		$	5,052			$	24,909
Basic earnings per share:
	Net income (loss)				$	28,548																											$	24,909
	Average shares of common stock outstanding					107,230,999																												147,303,991	(5)
		Basic earnings per share			$	0.27																											$	0.17	(5)
Diluted earnings per share:
	Net income (loss)				$	28,548																											$	24,909
	Average shares of common stock outstanding					107,280,820																												147,353,812	(5)
		Diluted earnings per share			$	0.27																											$	0.17	(5)

(1)	To eliminate intercompany royalty revenue and expense ($0.925 million) between CoalQuest and Anker.
(2)	To record depletion expense on the purchase price allocation to coal reserves of $23.2 million to Anker and $55.0 million to CoalQuest.
(3)	To eliminate intercompany coal sales and expense of $5.58 million between ICG, Inc. and Anker Coal Group, Inc.
(4)	Represents pro forma interest expense to reflect the acquisition of Horizon’s assets and the related debt required to finance the purchase as shown in the tables below:

			Historical Interest Expense
Description			ICG, Inc.				Anker				CoalQuest				Total
							(In thousands)
Revolver letter of credit fees			$	1,037			$	—			$	—			$	1,037
Revolver unutilized portion				218				—				—				218
Term note				7,668				—				—				7,668
Revolver				88				—				—				88
Amortization of finance costs				838				—				—				838
Annual administration fee				75				—				—				75
Interest rate cap				(21	)			—				—				(21	)
Anker related party term loan				—				1,064				—				1,064
Anker related party revolving line of credit				—				269				—				269
Anker senior notes				—				613				—				613
Miscellaneous other (capital lease, black lung, etc.)				550				262				446				1,258
	Total historical interest expense		$	10,453			$	2,208			$	446			$	13,107

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			Pro Forma Interest Expense
Description			ICG, Inc.				Anker				CoalQuest				Total
							(In thousands)
Revolver letter of credit fees(a)			$	1,071			$	—			$	—			$	1,071
Revolver unutilized portion(b)				870				—				—				870
Term note(c)				—				—				—				—
Revolver(d)				88												88
Amortization of finance costs(e)				838				—				—				838
Annual administration fee(f)				75				—				—				75
Interest rate cap(g)				(21	)			—				—				(21	)
Miscellaneous other (capital lease, black lung, etc.)				550				262				—				812
	Total pro forma interest expense			3,471				262				—				3,733
Less: historical interest expense				10,453				2,208				446				13,107
Pro forma interest expense adjustment			$	6,982			$	1,946			$	446			$	9,374

(a)		Reflects pro forma interest expense at the fixed rate of 2.7% on $52.9 million estimated letters of credit outstanding under ICG’s revolving letter of credit facility.
(b)		Reflects pro forma interest expense at the fixed rate of 0.5% on an estimated unutilized balance of $232.1 million on ICG’s revolving facility.
(c)		Reflects the use of a portion of the proceeds of the proposed public offering to fully repay the term loan of $208.7 million.
(d)		Reflects pro forma interest expense at an average rate of 6.28% on the $15.0 million in borrowings on ICG’s revolving facility.
(e)		Reflects amortization of finance costs of $8.1 million at a nominal rate of 8.118% for 72 months.
(f)		Reflects the quarterly administration fee of $25 thousand per quarter to the administration agent.
(g)		Reflects the estimated reduction in interest expense as a result of ICG’s two year Interest Rate Cap agreement of $88 million at a maximum rate of 4.5% per year.

(5)	To reflect the federal and state tax effects on the combined historical net income and pro forma adjustments assuming an estimated average tax rate at September 30, 2005 of 34.12%.
(6)	Represents pro forma earnings per share information based on 147,303,991 outstanding shares of ICG common stock consisting of 107,230,999 shares of ICG common stock outstanding as of September 30, 2005 (which includes 600,000 shares of restricted stock), 20,072,992 shares of International Coal Group common stock issuable in the Anker and CoalQuest acquisitions, assuming a public offering price of $13.70 per share, and 20,000,000 shares of International Coal Group common stock expected to be issued in the proposed public offering, assuming the over-allotment option is not exercised. The number of shares of ICG common stock to be issued to former Anker shareholders and CoalQuest members in connection with the merger is subject to possible adjustments. As the following chart illustrates, the higher the offering price per share of International Coal Group common stock in the proposed public offering, the less shares of International Coal Group common stock will be issued in connection with the Anker and CoalQuest acquisitions. See “Information About the Companies — Business — ICG’s History — The Anker and CoalQuest acquisitions” for more information on acquisition adjustments.

Per share offering price of ICG common stock				$8.885 or less				$10.00				$11.00				$12.00				$13.00				$13.70				$14.00				$15.00				$16.00
Aggregate shares of ICG common stock to be issued to holders of Anker and CoalQuest:
	Without adjustments			30,950,129				27,500,000				25,000,000				22,916,667				21,153,846				20,072,992				19,642,857				18,333,333				17,187,500
	Basic and diluted earnings per share			$0.18				$0.19				$0.19				$0.19				$0.19				$0.20				$0.20				$0.20				$0.20
	With adjustments			29,824,670				26,500,000				24,090,909				22,083,333				20,384,615				19,343,065				18,928,571				17,666,667				16,562,501
	Basic and diluted earnings per share			$0.18				$0.19				$0.19				$0.19				$0.20				$0.20				$0.20				$0.20				$0.20

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																				Horizon				Anker				CoalQuest
				ICG, Inc.				Horizon				Anker				CoalQuest				Acquisition				Acquisition				Acquisition				Offering
				Historical				Historical				Historical				Historical				Adjustments				Adjustments				Adjustments				Adjustments				Pro Forma(1)
				(In thousands, except share and per share data)
Revenues:
	Coal sales revenues			$	130,463			$	346,981			$	146,676			$	—			$	—			$	—			$	—			$	—			$	624,120
	Freight and handling revenues				880				3,700				11,416				—				—				—				—				—				15,996
	Other revenues				4,766				22,702				6,228				—				—				—				—				—				33,696
		Total revenues			136,109				373,383				164,320				—				—				—				—				—				673,812
Costs and expenses:
	Freight and handling costs				880				3,700				11,416				—				—				—				—				—				15,996
	Cost of coal sales and other revenues				113,707				306,429				145,985				371				—				(1,769	) (2)			—				—				564,723
	Depreciation, depletion and amortization				7,943				27,547				9,754				79				—				400	(3)			331	(3)			—				46,054
	Selling, general and administrative				4,194				8,477				4,586				—				—				—				—				—				17,257
	Gain on sale of assets				(10	)			(226	)			—				—				—				—				—				—				(236	)
	Writedowns and other items				—				10,018	(1)			—				—				—				—				—				—				10,018
		Total costs and expenses			126,714				355,945				171,741				450				—				(1,369	)			331				—				653,812
Income (loss) from operations					9,395				17,438				(7,421	)			(450	)			—				1,369				(331	)			—				20,000
Interest and other income (expense):
	Interest expense				(3,453	)			(114,211	)			(1,485	)			(535	)			111,332	(4)			—				—				2,463	(4)			(5,889	)
	Reorganization items				—				(12,471	) (1)			—				—				—				—				—				—				(12,471	)
	Other, net				898				1,581				5,709				1,910				—				—				(1,769	) (2)			—				8,329
		Total interest and other income (expense)			(2,555	)			(125,101	)			4,224				1,375				111,332				—				(1,769	)			2,463				(10,031	)
Income (loss) before income taxes					6,840				(107,663	)			(3,197	)			925				111,332				1,369				(2,100	)			2,463				9,969
Income tax (expense) benefit					(2,591	)			—				—				—				(1,390	) (5)			692	(5)			445	(5)			(933	)  (5)			(3,777	)
	Net income (loss)			$	4,249			$	(107,663	)		$	(3,197	)		$	925			$	109,942			$	2,061			$	(1,655	)		$	1,530			$	6,192
Basic earnings per share:
	Net income (loss) available to common stockholders			$	4,249																															$	6,192
	Average shares of common stock outstanding				106,605,999																																146,678,991
		Basic earning per share		$	0.04																																0.04	(6)
Diluted earnings per share:
	Net income (loss) available to common stockholders			$	4,249																																6,192
	Average shares of common stock outstanding				106,605,999																																146,728,812
		Diluted earnings per share		$	0.04																															$	0.04	(6)

(1)	The above pro forma income statement does not reflect the removal of non-recurring charges for writedowns and other items of $10.0 million and reorganization items of $12.5 million incurred in connection with Horizon’s Chapter 11 bankruptcy proceedings.
(2)	To eliminate intercompany royalty revenue and expense ($1.8 million) between CoalQuest and Anker.
(3)	To record depletion expense on the purchase price allocation to coal reserves of $23.2 million to Anker and $55.0 million to CoalQuest.

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(4)	Represents pro forma interest expense to reflect the acquisition of Horizon’s assets and the related debt required to finance the purchase as shown in the tables below:

			Historical Interest Expense
Description			ICG, Inc.				Horizon				Anker				CoalQuest				Total
			(In thousands)
Amortization of financing fee			$	—			$	1,437			$	—			$	—			$	1,437
DIP facility				—				11,115				—				—				11,115
Term loan				—				42,757				—				—				42,757
Wells Fargo loan				—				57,200				—				—				57,200
Funded letter of credit fees				130				—				—				—				130
Revolver letter of credit fees				248				—				—				—				248
Revolver unutilized portion				64				—				—				—				64
Term note				2,463				—				—				—				2,463
Amortization of finance costs				266				—				—				—				266
Annual administration fee				25				—				—				—				25
Interest rate cap				21				—				—				—				21
Revolver base rate interest				25				—				—				—				25
Anker related party term loan				—				—				293				—				293
Anker related party revolving line of credit				—				—				110				—				110
Anker senior notes				—				—				752				—				752
Miscellaneous other (capital lease, black lung, etc.)				211				1,702				330				535				2,778
	Total historical interest expense		$	3,453			$	114,211			$	1,485			$	535			$	119,684

			Pro Forma Interest Expense
Description			ICG, Inc.				Horizon				Anker				CoalQuest				Total
			(In thousands)
Revolver letter of credit fees(a)			$	1,469			$	—			$	—			$	—			$	1,469
Revolver unutilized portion(b)				1,228				—				—				—				1,228
Term note(c)				—				—				—				—				—
Amortization of finance costs(d)				1,097				—				—				—				1,097
Annual administration fee(e)				100				—				—				—				100
Interest rate cap(f)				82				—				—				—				82
Miscellaneous other (capital lease, black lung, etc.)				211				1,702				—				—				1,913
	Total pro forma interest expense		$	4,187			$	1,702			$	—			$	—			$	5,889
Less: historical interest expense			$	3,453			$	114,211			$	1,485			$	535			$	119,684
Pro forma interest expense adjustment			$	(734	)		$	112,509			$	1,485			$	535			$	113,795

(a)		Reflects pro forma interest expense at the fixed rate of 2.7% on $54.4 million estimated letters of credit outstanding under ICG’s revolving letter of credit facility.
(b)		Reflects pro forma interest expense at the fixed rate of 0.5% on an estimated unutilized balance of $245.6 million on ICG’s revolving facility.
(c)		Reflects the use of a portion of the proceeds of the proposed public offering to fully repay the term loan of $208.7 million.
(d)		Reflects amortization of finance costs of $8.1 million at a nominal rate of 8.118% for 72 months.
(e)		Reflects the quarterly administration fee of $25 thousand per quarter to the administrative agent.
(f)		Reflects the estimated expense incurred as a result of ICG’s two year Interest Rate Cap agreement of $88 million at a maximum rate of 4.5% per year.

(5)	To reflect the federal and state tax effects on the combined historical net income and pro forma adjustments assuming an estimated average tax rate at December 31, 2004 of 37.88%.

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(6)

Represents pro forma earnings per share information based on 146,678,991 outstanding shares of ICG common stock consisting of 106,605,999 shares of ICG common stock outstanding as of December 31, 2004, 20,072,992 shares of ICG common stock issuable in the Anker and CoalQuest acquisitions, assuming a public offering price of $13.70 per share, and 20,000,000 shares of International Coal Group common stock expected to be issued in the proposed public offering, assuming the over-allotment option is not exercised. The number of shares of ICG common stock to be issued to former Anker shareholders and CoalQuest members in connection with the merger is subject to possible adjustments. As the following chart illustrates, the higher the offering price per share of ICG common stock in the proposed public offering, the less shares of ICG common stock will be issued in connection with the Anker and CoalQuest acquisitions. See “Information About the Companies — Business — ICG’s History — The Anker and CoalQuest Acquisitions” for more information on acquisition adjustments.

Per share offering price of ICG common stock				$8.885 or less				$10.00				$11.00				$12.00				$13.00				$13.70				$14.00				$15.00				$16.00
Aggregate shares of ICG common stock to be issued to holders of Anker and CoalQuest:
	Without adjustments			30,950,129				27,500,000				25,000,000				22,916,667				21,153,846				20,072,992				19,642,857				18,333,333				17,187,500
	Basic and diluted earnings per share			$0.05				$0.05				$0.05				$0.05				$0.05				$0.05				$0.05				$0.05				$0.05
	With adjustments			29,824,670				26,500,000				24,090,909				22,083,333				20,384,615				19,343,065				18,928,571				17,666,667				16,562,501
	Basic and diluted earnings per share			$0.05				$0.05				$0.05				$0.05				$0.05				$0.05				$0.05				$0.05				$0.05

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				AEI Resources													Horizon
				Predecessor to Horizon													Predecessor to ICG, Inc.													ICG, Inc.
												Period from					Period from								Period
												January 1,					May 10,								January 1,										Nine Months
				Year Ended				Year Ended				2002 to					2002 to				Year Ended				2004 to					Period May 13,					Ended
				December 31,				December 31,				May 9,					December 31,				December 31,				September 30,					2004 to					September 30,
				2000*				2001*				2002(2)					2002(2)				2003(2)				2004(2)					December 31,2004					2005
				(In thousands, except share and
				per share data)
Statement of Operations Data:
Revenues:
	Coal sales revenues			$	486,848			$	500,829			$	136,040				$	264,235			$	441,291			$	346,981				$	130,463				$	441,662
	Freight and handling revenues				11,050				14,728				2,947					6,032				8,008				3,700					880					6,236
	Other revenues				23,491				34,835				21,183					27,397				31,771				22,702					4,766					17,757
		Total revenues			521,389				550,392				160,170					297,664				481,070				373,383					136,109					465,655
Cost and expenses:
	Freight and handling costs				11,050				14,728				2,947					6,032				8,008				3,700					880					6,236
	Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization shown separately below)				409,536				379,333				114,767					251,361				400,652				306,429					113,707					357,076
	Depreciation, depletion and amortization				94,183				92,602				32,316					40,033				52,254				27,547					7,943					29,489
	Selling, general and administrative (exclusive of depreciation, depletion and amortization shown separately above)				20,364				19,324				9,677					16,695				23,350				8,477					4,194					23,592
	(Gain)/loss on sale of assets				(594	)			189				(93	)				(39	)			(4,320	)			(226	)				(10	)				(518	)
	Writedowns and special items				12,306				20,218				8,323					729,953				9,100				10,018					—					—
		Total costs and expenses			546,845				526,394				167,937					1,044,035				489,044				355,945					126,714					415,875
Income (loss) from operations					(25,456	)			23,998				(7,767	)				(746,371	)			(7,974	)			17,438					9,395					49,780
Other income (expense)
Interest expense					(116,319	)			(138,655	)			(36,666	)				(80,405	)			(145,892	)			(114,211	)				(3,453	)				(10,453	)
Reorganization items					—				—				787,900					(4,075	)			(23,064	)			(12,471	)									—
Other, net					(1,523	)			(2,941	)			499					1,256				187				1,581					898					4,007
		Total interest and other income (expense)			(117,842	)			(141,596	)			751,733					(83,224	)			(168,769	)			(125,101	)				(2,555	)				(6,446	)
Income (loss) before income taxes					(143,298	)			(117,598	)			743,966					(829,525	)			(176,743	)			(107,663	)				6,840					43,334
Income tax (expense) benefit					48,290				(4,155	)			—					—				—				—					(2,591	)				(14,786	)
		Net income (loss)		$	(95,008	)		$	(121,753	)		$	743,966				$	(829,525	)		$	(176,743	)		$	(107,663	)			$	4,249				$	28,548
Earnings (loss) per share(1):
		Basic			—				—				—					—				—				—					0.04					0.27
		Diluted			—				—				—					—				—				—					0.04					0.27
Average common shares outstanding(1) :
		Basic			—				—				—					—				—				—					106,605,999					107,230,999
		Diluted			—				—				—					—				—				—					106,605,999					107,280,820
Balance sheet data (at period end):
Cash and cash equivalents				$	55,513			$	64,592			$	87,278				$	114			$	859			$	—				$	23,967				$	15,534
Total assets					1,311,600				881,924				1,521,318					623,800				576,372				539,606					459,975					523,020
Long-term debt and capital leases					14				—				933,106					1,157				315				29					173,446					186,938
Total liabilities					1,451,796				1,581,346				1,286,318					1,222,219				1,351,393				1,422,290					305,575					336,494
Total stockholders’ equity (members deficit)				$	(140,198	)		$	(699,422	)		$	235,000				$	(598,419	)		$	(775,021	)		$	(882,684	)			$	154,400				$	186,526
Total liabilities and stockholders’ equity (members deficit)				$	1,311,600			$	881,924			$	1,521,318				$	623,800			$	576,372			$	539,606				$	459,975				$	523,020
Statement of cash flows data:
Net cash provided by (used in):
		Operating activities		$	—			$	106,060			$	(353,592	)			$	76,378			$	20,030			$	28,085				$	30,211				$	57,545
		Investing activities		$	—			$	(88,434	)		$	44,555				$	(12,805	)		$	(3,826	)		$	3,437				$	(329,168	)			$	(75,389	)
		Financing activities		$	—			$	(8,547	)		$	259,011				$	(78,025	)		$	(15,459	)		$	(32,381	)			$	322,924				$	9,411
Capital expenditures				$	24,143			$	34,254			$	10,963				$	13,435			$	16,937			$	6,624				$	5,583				$	75,941

(1)	Earnings per share data and average shares outstanding are not presented for the period from January 1, 2002 to May 9, 2002, the period from May 10, 2002 to December 31, 2002, the year ended December 31, 2003 and the period from January 1, 2004 to September 30, 2004 because they were prepared on a carve-out basis. The financial statements prepared for predecessor periods are carve-out financial statements reflecting the operations and financial condition of the Horizon assets acquired by ICG as of September 30, 2004 (collectively, the “combined companies”). The predecessor financial statements were prepared from the separate accounts and records maintained by the combined companies. In addition, certain assets and expense items represent allocations from Horizon. The accounts allocated include vendor advances, reclamation deposits and selling, general and administrative expenses.
(2)	As restated. See Note 19 to the combined financial statements of Horizon NR, LLC included elsewhere in this prospectus.

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			Anker									CoalQuest
			Year Ended					Nine Months				Year Ended					Nine Months
			December 31,					Ended				December 31,					Ended
			2004					September 30, 2005				2004					September 30, 2005
Statement of operations data:
Net income (loss)			$	(3,196,973	)			$	(14,499,954	)		$	925,553				$	137,023
Balance sheet data (at period end):
Cash and cash equivalents			$	1,165,559				$	694,782			$	1,818,833				$	1,944,691
Total assets				83,370,701					95,497,168				21,993,658					22,102,302
Total liabilities				81,973,367					108,599,788				18,370,242					18,453,997
Total stockholders’ equity (members’ deficit)			$	1,397,334				$	(13,102,620	)		$	3,623,416				$	3,648,305
Total liabilities and stockholders’ equity/members’ deficit			$	83,370,701				$	95,497,168			$	21,993,658				$	22,102,302
Statement of cash flows data:
Net cash provided by (used in)
	Operating activities		$	9,972,694				$	1,921,761			$	1,318,103				$	237,942
	Investing activities		$	(26,121,875	)			$	(23,298,789	)		$	—				$	—
	Financing activities		$	14,137,990				$	20,906,251			$	—				$	(112,134	)
Capital expenditures			$	27,238,311				$	23,044,221			$	—				$	—

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	Reclamation

	•	Discount rate. SFAS No. 143 requires that asset retirement obligations be recorded at fair value. In accordance with the provisions of SFAS No. 143, ICG utilizes discounted cash flow techniques

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		to estimate the fair value of our obligations. ICG bases its discount rate on the rates of treasury bonds with maturities similar to expected mine lives, adjusted for our credit standing.
	•	Third-party margin. SFAS No. 143 requires the measurement of an obligation to be based upon the amount a third-party would demand to assume the obligation. Because ICG plans to perform a significant amount of the reclamation activities with internal resources, a third-party margin was added to the estimated costs of these activities. This margin was estimated based upon ICG’s historical experience with contractors performing certain types of reclamation activities. The inclusion of this margin will result in a recorded obligation that is greater than ICG’s estimates of our cost to perform the reclamation activities. If ICG’s cost estimates are accurate, the excess of the recorded obligation over the cost incurred to perform the work will be recorded as a gain at the time that reclamation work is completed.

	Depreciation, Depletion and Amortization

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	Asset Impairments

	Post-retirement Medical Benefits

	Workers’ Compensation

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	Coal Workers’ Pneumoconiosis

	Income Taxes

	Basis of Presentation

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	Nine months ended September 30, 2005 of ICG, Inc. compared to the nine months ended September 30, 2004 of Predecessor

	Revenues

			Horizon				ICG, Inc.				Actual
			Nine Months Ended								Increase
			September 30,								(Decrease)
			2004				2005				$				%
			(in thousands, except percentages and per ton data)
Coal revenue			$	346,981			$	441,662			$	94,681				27%
Freight and handling revenues				3,700				6,236				2,536				69%
Other revenue				22,702				17,757				(4,945	)			(22%	)
	Total revenue		$	373,383			$	465,655			$	92,272				25%
Tons sold				10,421				10,590				169				2%
Coal revenue per ton			$	33.30			$	41.71			$	8.41				25%

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	Costs and expenses

		Horizon				ICG, Inc.				Actual
		Nine Months Ended								Increase
		September 30,								(Decrease)
		2004				2005				$				%
		(in thousands, except percentages and per ton data)
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization)		$	306,429			$	357,076			$	50,647				17%
Cost of coal sales and other revenues as % of revenues			82	%			77	%
Freight and handling costs			3,700				6,236				2,536				69%
Freight and handling costs as % of revenues			1	%			1	%
Depreciation, depletion and amortization			27,547				29,489				1,942				7%
Depreciation, depletion and amortization as % of revenues			7	%			6	%
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization)			8,477				23,592				15,115				178%
Selling, general and administrative expenses as % of revenues			2	%			5	%
Gain on sale of assets			(226	)			(518	)			(292	)			*
Writedowns and other items			10,018				—				(10,018	)			*
Total costs and expenses		$	355,945			$	415,875			$	59,930				17%
Total costs and expenses as % of revenues			95	%			89	%
Total costs and expenses per ton sold		$	34.16			$	39.27			$	5.11				15%

*	Not meaningful

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	Twelve Months Ended December 31, 2004 of ICG, Inc. and Predecessor (Combined) Compared to Twelve Months Ended December 31, 2003 of Predecessor.

							ICG, Inc.
			Horizon				(Combined)				Actual
			Twelve Months Ended								Increase
			December 31,								(Decrease)
			2003				2004				$				%
			(in thousands, except percentages
			and per ton data)
Coal revenues			$	441,291			$	477,444			$	36,153				8	%
Freight and handling revenues				8,008				4,580				(3,428	)			(43	%)
Other revenues				31,771				27,468				(4,303	)			(14	%)
	Total revenues		$	481,070			$	509,492			$	28,422				6	%
Tons sold				16,656				14,003				(2,653	)			(16	%)
Coal revenue per ton			$	26.49			$	34.09			$	7.60				29	%

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						ICG, Inc.
		Horizon				(Combined)				Actual
		Twelve Months Ended								Increase
		December 31,								(Decrease)
		2003				2004				$				%
		(in thousands, except percentages
		and per ton data)
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization)		$	400,652			$	420,136			$	19,484				5	%
Cost of coal sales and other revenues as % of revenues			83	%			82	%
Freight and handling costs			8,008				4,580				(3,428	)			(43	)%
Freight and handling costs as % of revenues			2	%			1	%
Depreciation, depletion and amortization			52,254				35,490				(16,764	)			(32	)%
Depreciation, depletion and amortization as % of revenues			11	%			7	%
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization)			23,350				12,671				(10,679	)			(46	)%
Selling, general and administrative expenses as % of revenues			5	%			3	%
Gain on sale of assets			(4,320	)			(236	)			4,084				(95	)%
Writedowns and other items			9,100				10,018				918				*
Total costs and expenses		$	489,044			$	482,659			$	(6,385	)			(1	)%
Total costs and expenses as % of revenues			102	%			95	%
Total costs and expenses per ton sold		$	29.36			$	34.47			$	5.11				17	%

*	Not meaningful

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											Actual
			Year Ended								Increase
			December 31,								(Decrease)
			2002(1)				2003				$				%
			(In thousands, except percentages and per ton data)
Coal revenues			$	400,275			$	441,291			$	41,016				10%
Freight and handling revenues				8,979				8,008				(971	)			(11%	)
Other revenues				48,580				31,771				(16,809	)			(35%	)
	Total revenues		$	457,834			$	481,070			$	23,236				5%
Tons sold				16,540				16,655				115				1%
Coal sales realization per ton sold			$	24.20			$	26.50			$	2.30				10%

(1)	Represents the combination of amounts for the period January 1, 2002 to May 9, 2002 with the amounts for the period May 10, 2002 to December 31, 2002.

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											Actual
			Year Ended								Increase
			December 31,								(Decrease)
			2002				2003				$				%
			(In thousands, except percentages and per ton data)
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization)			$	366,128			$	400,652			$	34,524				9%
	Cost of coal sales and other revenues as % of revenues			80	%			83	%
Freight and handling costs			$	8,979			$	8,008			$	(971	)			(11%	)
	Freight and handling costs as % of revenues			2	%			2	%
Depreciation, depletion and amortization			$	72,350			$	52,254			$	(20,096	)			(28%	)
	Depreciation, depletion and amortization as % of revenues			16	%			11	%
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization)			$	26,372			$	23,350			$	(3,022	)			(11%	)
	Selling, general and administrative expenses as % of revenues			6	%			5	%
Gain on sale of assets			$	(132	)		$	(4,320	)		$	(4,188	)			*
Writedowns and other items			$	738,275			$	9,100			$	(729,175	)			(99%	)
	Total costs and expenses		$	1,211,972			$	489,044			$	(722,928	)			(60%	)
	Total costs and expenses as % of revenues			265	%			102	%
Total costs and expenses per ton sold			$	73.28			$	29.36			$	(43.92	)			(60%	)

*	Not meaningful

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			As of
			December 31, 2004
			(In thousands)
Term loan due 2010			$	175,000	(1)
Revolving credit facility				—
Capital lease obligations				681
Other				3,787
	Total long-term debt		$	179,468
Less current portion				(6,022	)
	Long-term debt, net of current portion		$	173,446

(1)	We are required to use 50% of the net proceeds of the proposed public offering to repay amounts outstanding under the term loan.

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		Payments Due by Period
														More
		Less than												Than
		1 Year				1-3 Years				3-5 Years				5 Years				Total
		(In thousands)
Long-term debt obligations		$	215,317			$	1,539			$	1,053			$	23			$	217,932
Capital leases obligations			513				168				—				—				681
Operating leases			13,506				12,058				—				—				25,564
Coal purchase obligation			114,620				134,389				57,644				25,186				331,839
Advisory services agreement(1)			2,000				4,000				4,000				3,500				13,500
Minimum royalties			8,567				15,688				14,016				30,158				68,429
Total(2)		$	354,523			$	167,842			$	76,713			$	58,867			$	657,945

(1)	See “Certain Relationships and Related Party Transactions.”
(2)	Our contractual obligations exclude interest amounts due for the years shown above because it is at a variable rate. ICG is also a party to an employment agreement with each of its President and Chief Executive Officer and its Senior Vice President and General Counsel. See “Management — Employment Agreements” regarding the terms and conditions of this employment agreement.

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	Room-and-Pillar Mining

	Longwall Mining

	Truck-and-Shovel/Loader Mining

	Dragline Mining

	Highwall Mining

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																								Owned				Leased				Steam
																Mining								Proven				Proven				Proven				Metallurgical
																Method				Total				and				and				and				Proven and
																Surface (S)				Proven				Probable				Probable				Probable				Probable
								Operating (O)								or				and				Reserves				Reserves				Reserves				Reserves
				Assigned or				or Development								Underground				Probable				(In million				(In million				(In million				(In million
Mining Complex				Unassigned(1)				(D)				State				(UG)				Reserves(2)				tons)				tons)				tons)				tons)
Central Appalachia
	ICG-Eastern				Assigned				O				WV				S				23.69				7.27				16.42				23.69				0.00
		Total ICG-Eastern																			23.69				7.27				16.42				23.69				0.00
	ICG-Hazard				Assigned				O				KY				S/UG				51.27				0.23				51.04				51.27				0.00
					Unassigned				D				KY				S/UG				20.11				0.00				20.11				20.11				0.00
		Total ICG-Hazard																			71.38				0.23				71.15				71.38				0.00
	ICG-Knott County				Assigned				O				KY				UG				6.73				5.81				0.92				6.73				0.00
		Total ICG-Knott County																			6.73				5.81				0.92				6.73				0.00
	ICG-East Kentucky				Assigned				O				KY				S				2.62				0.00				2.62				2.62				0.00
		Total ICG-East Kentucky																			2.62				0.00				2.62				2.62				0.00
	ICG-Natural Resources			Unassigned (Mt.  Sterling)					D				KY				S				5.91				4.36				1.55				5.91				0.00
	ICG-Natural Resources			Unassigned (Jennie Creek)					D				WV				S/UG				44.90				2.20				42.69				44.90				0.00
Central Appalachia Total																					155.23				19.87				135.35				155.23				0.00
Other
	ICG-Illinois				Assigned				O				IL				UG				29.63				11.38				18.25				29.63				0.00
					(Viper)
	ICG-Natural Resources				Unassigned				D				IL				UG				325.21				305.06				20.15				325.21				0.00
Total Other																					354.84				316.44				38.39				354.84				0.00
Total Proven and Probable Reserves																					510.07				336.31				173.74				510.07				0.00

(1)	The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin.
(2)	The proven and probable reserves are reported as recoverable reserves, which is that part of a coal deposit which could be economically and legally extracted or produced at the time of the reserve determination, taking into account mining recovery and preparation plant yield.

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																												Total Reserves
								As Received Quality
																												<1.2 lbs.
				Assigned or				%				%				%								Lbs. SO2				SO2				>1.2 lbs SO2
Mining Complex				Unassigned(1)				Moisture				Ash				Sulfur				Btu/lb.				Million Btu’s				Compliance				Non-Compliance
Central Appalachia
	ICG-Eastern				Assigned				6.00				14.42				1.24				11,964				2.07				0.00				23.69
		Total ICG-Eastern							6.00				14.42				1.24				11,964				2.07				0.00				23.69
	ICG-Hazard				Assigned				6.00				9.23				1.44				12,438				2.32				0.00				51.27
					Unassigned				6.00				12.98				1.63				12,047				2.72				0.00				20.11
		Total ICG-Hazard							6.00				10.33				1.49				12,316				2.43				0.00				71.38
	ICG-Knott County				Assigned				6.00				4.47				1.22				13,463				1.87				3.50				3.23
		Total ICG-Knott County							6.00				4.47				1.22				13,463				1.87				3.50				3.23
	ICG-East Kentucky				Assigned				4.50				11.59				1.36				12,680				2.14				0.00				2.62
		Total ICG-East Kentucky							4.50				11.59				1.36				12,680				2.14				0.00				2.62
	ICG-Natural Resources			Unassigned (Mt. Sterling)					6.00				9.18				0.83				12,430				1.33				0.00				5.91
	ICG-Natural Resources				Unassigned				7.00				6.47				1.10				12,935				1.69				0.00				44.90
					(Jennie Creek)
Central Appalachia Total																													3.50				151.73
Other
	ICG-Illinois				Assigned				16.00				8.80				2.86				10,692				5.35				0.00				29.63
					(Viper)
	ICG-Natural Resources				Unassigned				10.00				8.99				3.24				11,377				5.70				0.00				325.21
Total Other									10.50				8.98				3.21				11,320				5.67				0.00				354.84
Total Proven and Probable Reserves																													3.50				506.57

(1)

The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin.

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Mining

Method

Surface (S)

or

Total

Steam

Metallurgical

Assigned or

Underground

Non-Reserve

Non-Reserve

Non-Reserve

Mining Complex

Unassigned(1)

Operating (O)

State

(UG)

Coal Deposits

Coal Deposits

Coal Deposits

(In million

(In million

(In million

tons)

tons)

tons)

Central Appalachia

ICG-Eastern

Assigned

O

WV

S

0.02

0.02

0.00

ICG-Hazard

Assigned

O

KY

S/UG

3.00

3.00

0.00

ICG-Knott County

Assigned

O

KY

UG

0.00

0.00

0.00

ICG-East Kentucky

Assigned (Blackberry)

O

KY

S

0.00

0.00

0.00

ICG-Natural Resources

Unassigned (Mt. Sterling)

KY

S/UG

35.60

35.60

0.00

ICG-Natural Resources

Unassigned (Jennie Creek)

WV

UG

20.64

20.64

0.00

Central Appalachia Total

59.26

59.26

0.00

Other

ICG-Illinois

Assigned (Viper)

O

IL

UG

38.47

38.47

0.00

ICG-Natural Resources

Unassigned (Illinois)

IL

UG

263.07

263.07

0.00

ICG-Natural Resources

Unassigned (Arkansas)

AR

S

39.15

39.15

0.00

Unassigned (California)

CA

UG

10.00

10.00

0.00

Unassigned (Ohio)

OH

UG

98.00

98.00

0.00

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Mining

Method

Surface (S)

or

Total

Steam

Metallurgical

Assigned or

Underground

Non-Reserve

Non-Reserve

Non-Reserve

Mining Complex

Unassigned(1)

Operating (O)

State

(UG)

Coal Deposits

Coal Deposits

Coal Deposits

(In million

(In million

(In million

tons)

tons)

tons)

Unassigned (Montana)

MT

S

12.00

12.00

0.00

Unassigned (Washington)

WA

S

43.08

43.08

0.00

Total Other

503.77

503.77

0.00

Total Non-Reserve Coal Deposits

563.03

563.03

0.00

(1)

“Assigned non-reserve coal deposits” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned non-reserve coal deposits” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property.

							As Received Quality
			Assigned or				%				%				%								Lbs. SO2/
Mining Complex			Unassigned(1)				Moisture				Ash				Sulfur				Btu/lb.				Million Btu’s
Central Appalachia
	ICG-Eastern			Assigned				6.00				12.20				1.20				12,400				1.94
	ICG-Hazard			Assigned				6.00				8.26				1.41				12,732				2.22
	ICG-Knott County			Assigned				N/A				N/A				N/A				N/A				N/A
	ICG-East Kentucky		Assigned (Blackberry)					N/A				N/A				N/A				N/A				N/A
	ICG-Natural Resources		Unassigned (Mt. Sterling)					6.00				11.63				1.93				11,774				3.28
	ICG-Natural Resources		Unassigned (Jennie Creek)					6.00				12.50				1.10				12,000				1.83
Other
	ICG-Illinois			Assigned (Viper)				16.00				9.50				3.50				10,500				6.67
	ICG-Natural Resources			Unassigned				13.00				9.00				3.00				11,000				5.45
				(Illinois)
	ICG-Natural Resources			Unassigned				N/A				8.00				0.40				5,650				1.42
				(Arkansas)
				Unassigned				6.00				13.00				3.50				11,700				5.98
				(California)
				Unassigned				6.00				8.40				2.50				12,650				3.95
				(Ohio)
				Unassigned				N/A				8.00				0.30				8,900				0.67
				(Montana)
				Unassigned				N/A				8.00				0.50				7,025				1.42
				(Washington)

(1)

“Assigned non-reserve coal deposits” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned non-reserve coal deposits” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property.

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										Number and Type of Mines
																														Tons
						Preparation																								Produced
Mining Complex		Location				Plant(s)				Underground				Surface				Total				Mining Method(1)				Transportation				in 2004
ICG — Eastern, LLC			Cowen, WV				1				0				1				1				MTR-DL-TSL				Rail				2,712.1
ICG — Hazard, LLC			Hazard, KY				1				1				6				7				R&P, HW, MTR, TSL				Rail				3,978.0
ICG — Knott County, LLC			Kite, KY				1				4				0				4				R&P				Rail				1,386.6
ICG — East Kentucky, LLC			Pike Co., KY				0				0				1				1				MTR-TSL				Rail				1,576.3
ICG — Illinois, LLC			Williamsville, IL				1				1				0				1				R&P				Truck				2,117.6

(1)	R&P = Room and Pillar; MTR = Mountain Top Removal; DL = Dragline; HW = Highwall; TSL = Truck and Shovel/ Loader

		2002								2003								2004
		Tons				Sales				Tons				Sales				Tons				Sales
Mining Complex		Produced				Realizations				Produced				Realizations				Produced				Realizations
ICG Eastern, LLC			2,998,654			$	28.59				2,657,537			$	26.23				2,712,067			$	34.12
ICG Hazard, LLC			3,592,719			$	26.72				4,116,115			$	27.82				3,978,038			$	33.22
ICG Knott County, LLC			986,552			$	27.39				1,333,603			$	28.60				1,386,554			$	39.45
ICG East Kentucky, LLC			2,033,372			$	27.30				1,799,740			$	29.00				1,576,345			$	40.42
ICG Illinois, LLC			1,759,215			$	23.36				2,134,096			$	22.98				2,117,567			$	23.54
			11,370,512								12,041,091								11,770,571

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	ICG Eastern, LLC

	ICG Hazard, LLC

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	ICG Knott County, LLC

	ICG East Kentucky, LLC

76

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																				Total				Owned				Leased				Steam
																				Proven				Proven				Proven				Proven				Metallurgical(3)(4)
																Mining				and				and				and				and				Proven and
																Method				Probable				Probable				Probable				Probable				Probable
																Surface (S)				Reserves(2)				Reserves				Reserves				Reserves				Reserves
				Assigned or				Operating (O)								or Underground				(In million				(In million				(In million				(In million				(In million
Mining Complex				Unassigned(1)				or Development (D)				State				(UG)				tons)				tons)				tons)				tons)				tons)
Northern Appalachia
	Vindex Energy Corp.				Assigned				O				MD				S				10.44				0.00				10.44				7.83				2.61
					Unassigned				D				MD				S/UG				6.21				0.47				5.74				0.15				6.06
		Total Vindex Energy Corp.																			16.66				0.47				16.19				7.98				8.67
	Patriot Mining Co.				Assigned				O				PA/WV				S				0.66				0.52				0.14				0.66				0.00
					Unassigned				D				WV				S				0.39				0.19				0.20				0.39				0.00
		Total Patriot Mining Co.																			1.05				0.71				0.34				1.05				0.00
	Spruce Fork Division				Assigned				O				WV				UG				8.02				7.95				0.07				0.00				8.02
					Unassigned				D				WV				UG				40.55				38.75				1.80				1.30				39.25
		Total Spruce Fork Division																			48.57				46.70				1.87				1.30				47.27
	Sycamore Group				Assigned				O				WV				UG				18.72				0.40				18.32				18.72				0.00
		Total Sycamore Group																			18.72				0.40				18.32				18.72				0.00
	Philippi Development Division				Assigned				O				WV				UG				36.03				32.34				3.69				0.00				36.03
					Unassigned				D				WV				UG				4.94				0.00				4.94				0.00				4.94
		Total Phillipi Development Division																			40.97				32.34				8.63				0.00				40.97
	CoalQuest Development LLC			Unassigned (Hillman)					D				WV				UG				194.30				194.30				0.00				32.71				161.59
		Total CoalQuest Development LLC																			194.3				194.30				0.00				32.71				161.59
Northern Appalachia Total																					320.27				274.92				45.35				61.76				258.51
Central Appalachia
	ICG-Eastern				Assigned				O				WV				S				23.69				7.27				16.42				23.69				0.00
		Total ICG-Eastern																			23.69				7.27				16.42				23.69				0.00
	ICG-Hazard				Assigned				O				KY				S/UG				51.27				0.23				51.04				51.27				0.00
					Unassigned				D				KY				S/UG				20.11				0.00				20.11				20.11				0.00
		Total ICG-Hazard																			71.38				0.23				71.15				71.38				0.00
ICG-Knott County					Assigned				O				KY				UG				6.73				5.81				0.92				6.73				0.00
		Total ICG-Knott County																			6.73				5.81				0.92				6.73				0.00
ICG-East Kentucky					Assigned				O				KY				S				2.62				0.00				2.62				2.62				0.00
		Total ICG-East Kentucky																			2.62				0.00				2.62				2.62				0.00
	ICG-Natural Resources			Unassigned (Mt. Sterling)					D				KY				S				5.91				4.36				1.55				5.91				0.00
	ICG-Natural Resources			Unassigned (Jennie Creek)					D				WV				S/UG				44.90				2.20				42.69				44.90				0.00
	Beckley-Smokeless Division(3)			Unassigned (Bay Hill )					D				WV				UG				28.97				1.28				27.69				0.00				28.97
	Anker Virginia Mining Company (3)			Unassigned (Big Creek)					D				V				UG				27.50				0.00				27.50				0.00				27.50
Central Appalachia Total																					211.70				21.16				190.55				155.23				56.47
Other
	ICG-Illinois				Assigned (Viper)				O				IL				UG				29.63				11.38				18.25				29.63				0.00
	ICG-Natural Resources				Unassigned				D				IL				UG				325.21				305.06				20.15				325.21				0.00
Total Other																					354.84				316.44				38.39				354.84				0.00
Total Proven and Probable Reserves																					886.81				612.52				274.29				571.82				314.99

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(1)	The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin.
(2)	The proven and probable reserves are reported as recoverable reserves, which is that part of a coal deposit which could be economically and legally extracted or produced at the time of the reserve determination, taking into account mining recovery and preparation plant yield.
(3)	Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications.
(4)	Currently, ICG reports selling coal with ash and sulfur contents as high as 10% and 1.5%, respectively into the current metallurgical market from the Vindex Energy, Spruce Fork and Phillipi Divisions. Similarly, we believe all production from Mount Storm and portions of Hillman could be sold on this metallurgical market when production begins.

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								As Received Quality																				Total Reserves
				Assigned or				%				%				%								Lbs. SO2				<1.2 lbs. SO2				>1.2 lbs SO2
Mining Complex				Unassigned(1)				Moisture				Ash				Sulfur				Btu/lb.				million Btu’s				compliance				non-compliance
Northern Appalachia
	Vindex Energy Corp.				Assigned				6.00				14.01				1.74				12,407				2.81				0.00				10.44
					Unassigned				6.00				9.47				0.86				13,193				1.31				0.00				6.21
		Total Vindex Energy Corp.							6.00				12.32				1.42				12,700				2.25				0.00				16.66
	Patriot Mining Co.				Assigned				6.00				14.55				2.01				11,975				3.36				0.00				0.66
					Unassigned				6.00				19.06				2.13				11,240				3.85				0.00				0.39
		Total Patriot Mining Co.							6.00				16.22				2.05				11,704				3.54				0.00				1.05
	Spruce Fork Division				Assigned				6.00				9.13				1.05				13,000				1.62				0.00				8.02
					Unassigned				6.00				8.87				1.11				13,076				1.70				0.00				40.55
		Total Spruce Fork Division							6.00				8.92				1.10				13,063				1.69				0.00				48.57
	Sycamore Group				Assigned				6.00				7.19				3.05				13,099				4.65				0.00				18.72
		Total Sycamore Group							6.00				7.19				3.05				13,099				4.65				0.00				18.72
	Philippi Development Division				Assigned				6.00				8.17				1.32				13,299				1.98				0.00				36.03
					Unassigned				6.00				8.04				1.44				13,353				2.15				0.00				4.94
		Total Phillipi Development Division							6.00				8.15				1.33				13,306				2.00				0.00				40.97
	CoalQuest Development LLC				Unassigned (Hillman)				6.00				9.21				1.15				13,179				1.74				0.00				194.30
Northern Appalachia Total																													0.00				320.27
Central Appalachia
	ICG-Eastern				Assigned				6.00				14.42				1.24				11,964				2.07				0.00				23.69
		Total ICG-Eastern							6.00				14.42				1.24				11,964				2.07				0.00				23.69
	ICG-Hazard				Assigned				6.00				9.23				1.44				12,438				2.32				0.00				51.27
					Unassigned				6.00				12.98				1.63				12,047				2.72				0.00				20.11
		Total ICG-Hazard							6.00				10.33				1.49				12,316				2.43				0.00				71.38
	ICG-Knott County				Assigned				6.00				4.47				1.22				13,463				1.87				3.50				3.23
		Total ICG-Knott County							6.00				4.47				1.22				13,463				1.87				3.50				3.23
	ICG-East Kentucky				Assigned				4.50				11.59				1.36				12,680				2.14				0.00				2.62
		Total ICG-East Kentucky							4.50				11.59				1.36				12,680				2.14				0.00				2.62
	ICG-Natural Resources				Unassigned (Mt. Sterling)				6.00				9.18				0.83				12,430				1.33				0.00				5.91
	ICG-Natural Resources				Unassigned (Jennie Creek)				7.00				6.47				1.10				12,935				1.69				0.00				44.90
	Beckley-Smokeless Division(2)				Unassigned (Bay Hill)				6.00				4.87				0.70				13,913				1.01				28.97				0.00
	Anker Virginia Mining Company(2)				Unassigned (Big Creek)				6.00				4.00				0.65				14,073				0.92				27.50				0.00
Central Appalachia Total																													59.98				151.73
Other
	ICG-Illinois				Assigned (Viper)				16.00				8.80				2.86				10,692				5.35				0.00				29.63
	ICG-Natural Resources				Unassigned				10.00				8.99				3.24				11,377				5.70				0.00				325.21
Total Other									10.50				8.98				3.21				11,320				5.67				0.00				354.84
Total Proven and Probable Reserves																													59.98				826.83

(1)	The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin.
(2)	Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications.

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	NON-RESERVE COAL DEPOSITS

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																Mining
																Method				Total				Steam				Metallurgical(2)
																Surface (S)				Non-reserve				Non-reserve				Non-reserve
								Operating (O)								or				Coal Deposits				Coal Deposits				Coal Deposits
				Assigned or				or								Underground				(In million				(In million				(In million
Mining Complex				Unassigned(1)				Development (D)				State				(UG)				tons)				tons)				tons)
Northern Appalachia
	Patriot Mining Co.				Assigned				O				WV				S				0.13				0.13				0.00
					Unassigned				D								S				1.77				1.77				0.00
		Total Patriot Mining																			1.89				1.89				0.00
	Spruce Fork Division				Assigned				O				WV				UG				0.18				0.18				0.00
					Unassigned				D				WV				UG				2.24				2.24				0.00
		Total Spruce Fork Division																			2.42				2.42				0.00
	Sycamore Group				Assigned				O				WV				UG				1.28				1.28				0.00
					Unassigned				D				WV				UG				0.00				0.00				0.00
		Total Sycamore Group																			1.28				1.28				0.00
	Philippi Development Division				Assigned				O				WV				UG				1.64				1.64				0.00
					Unassigned				D				WV				UG				0.76				0.76				0.00
		Total Phillipi Development Division																			2.40				2.40				0.00
	CoalQuest Development LLC			Unassigned (Hillman)					D				WV				UG				37.04				37.04				0.00
	Upshur Property			Unassigned (Upshur)									WV				S				92.96				92.96				0.00
Northern Appalachia Total																					137.99				137.99				0.00
Central Appalachia
	ICG-Eastern				Assigned				O				WV				S				0.02				0.02				0.00
	ICG-Hazard				Assigned				O				KY				S/UG				3.00				3.00				0.00
	ICG-Knott County				Assigned				O				KY				UG				0.00				0.00				0.00
	ICG-East Kentucky			Assigned (Blackberry)					O				KY				S				0.00				0.00				0.00
	ICG-Natural Resources			Unassigned (Mt. Sterling)									KY				S/UG				35.60				35.60				0.00
	ICG-Natural Resources			Unassigned (Jennie Creek)									WV				UG				20.64				20.64				0.00
	Anker West Virginia Mining Co.			Unassigned (Juliana)					D				WV				S/UG				1.20				1.20				0.00
	Beckley-Smokeless Division(3)			Unassigned (Bay Hill)					D				WV				UG				1.88				0.00				1.88
	Anker Virginia Mining Co.(3)			Unassigned (Big Creek)					D				V				UG				2.57				2.57				0.00
Central Appalachia Total																					64.91				63.02				1.88
Other
	ICG-Illinois				Assigned (Viper)				O				IL				UG				38.47				38.47				0.00
	ICG-Natural Resources			Unassigned (Illinois)									IL				UG				263.07				263.07				0.00
	ICG-Natural Resources			Unassigned (Arkansas)									AR				S				39.15				39.15				0.00
				Unassigned (California)									CA				UG				10.00				10.00				0.00
					Unassigned (Ohio)								OH				UG				98.00				98.00				0.00
				Unassigned (Montana)									MT				S				12.00				12.00				0.00
				Unassigned (Washington)									WA				S				43.08				43.08				0.00
Total Other																					503.77				503.77				0.00
Total Non-Reserve Coal Deposits																					706.68				704.79				1.88

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(1)	“Assigned non-reserve coal deposits” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned non-reserve coal deposits” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property.
(2)	Currently, ICG reports selling coal with ash and sulfur contents as high as 10% and 1.5%, respectively into the current metallurgical market from the Vindex Energy, Spruce Fork and Philippi Divisions. Similarly, we believe all production from Mount Storm and portions of Hillman can be sold on this metallurgical market.
(3)	Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications.

							As received quality
			Assigned or				%				%				%								Lbs. SO2/
Mining complex			Unassigned(1)				Moisture				Ash				Sulfur				Btu/lb.				Million Btu’s
Northern Appalachia
	Patriot Mining Co.			Assigned				N/A				N/A				N/A				N/A				N/A
				Unassigned				N/A				N/A				N/A				N/A				N/A
	Spruce Fork Division			Assigned				6.00				9.00				1.20				13,000				1.85
				Unassigned				6.00				9.00				1.20				13,000				1.85
	Sycamore Group			Assigned				6.00				7.21				3.05				13,097				4.66
				Unassigned				N/A				N/A				N/A				N/A				N/A
	Philippi Development Division			Assigned				6.00				8.30				1.40				13,100				2.14
				Unassigned				6.00				8.30				1.40				13,100				2.14
	CoalQuest Development LLC			Unassigned				N/A				N/A				N/A				N/A				N/A
				(Hillman)
	Upshur Property			Unassigned				6.00				43.00				2.00				8,000				5.00
				(Upshur)
Central Appalachia
	ICG-Eastern			Assigned				6.00				12.20				1.20				12,400				1.94
	ICG-Hazard			Assigned				6.00				8.26				1.41				12,732				2.22
	ICG-Knott County			Assigned				N/A				N/A				N/A				N/A				N/A
	ICG-East Kentucky		Assigned (Blackberry)					N/A				N/A				N/A				N/A				N/A
	ICG-Natural Resources			Unassigned				6.00				11.63				1.93				11,774				3.28
				(Mt. Sterling)
	ICG-Natural Resources			Unassigned				6.00				12.50				1.10				12,000				1.83
				(Jennie Creek)
	Anker West Virginia Mining Co.			Unassigned				6.00				7.50				0.82				13,100				1.25
				(Juliana)
	Beckley-Smokeless Division(2)			Unassigned				6.00				4.80				0.70				13,800				1.01
				(Bay Hill)
	Anker Virginia Mining Co.(2)			Unassigned				6.00				7.40				0.60				13,500				0.89
				(Big Creek)
Other
	ICG-Illinois			Assigned (Viper)				16.00				9.50				3.50				10,500				6.67
	ICG-Natural Resources			Unassigned				13.00				9.00				3.00				11,000				5.45
				(Illinois)
	ICG-Natural Resources			Unassigned				N/A				8.00				0.40				5,650				1.42
				(Arkansas)
				Unassigned				6.00				13.00				3.50				11,700				5.98
				(California)
				Unassigned				6.00				8.40				2.50				12,650				3.95
				(Ohio)
				(Unassigned)				N/A				8.00				0.30				8,900				0.67
				(Montana)
				(Unassigned)				N/A				8.00				0.50				7,025				1.42
				(Washington)

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(1)	The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors, which coal reserves will require substantial capital investments before production can begin.
(2)	Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications.

								Number and
								Type of Mines
				Preparation				Under-												Mining								Tons Produced
Mining Complex		Location		Plant(s)				ground				Surface				Total				Method(1)				Transportation				in 2004
																												(In thousands)
ICG Eastern, LLC		Cowen, WV			1				0				1				1				MTR-DL-TSL				Rail				2,712.1
ICG Hazard, LLC		Hazard, KY			1				1				6				7			R&P, HW, MTR, TSL					Rail				3,978.0
ICG Knott County, LLC		Kite, KY			1				4				0				4				R&P				Rail				1,386.6
ICG East Kentucky, LLC		Pike Co., KY			0				0				1				1				MTR-TSL				Rail				1,576.3
ICG Illinois, LLC		Williamsville, IL			1				1				0				1				R&P				Truck				2,117.6
Vindex Energy Corporation		Garrett Co., MD			1				0				2				2				CRM, CTR, R&P				Truck, Rail (2)				170.7
Patriot Mining Company		Monongalia Co., WV			0				0				3				3				CTR				Barge, Rail				921.3	(3)
Spruce Fork Division		Upshur Co., WV			1				2				0				2				R&P				Rail				1,213.9
Philippi Development Division		Barbour Co., WV			1	(4)			1				0				1				R&P				Rail				255.4
Beckley-Smokeless Division		Raleigh Co., WV			1				0				0				0				R&P				Rail				0.0	(2)
Sycamore Group		Harrison Co., WV			0				2				0				2				R&P				Truck				259.3	(5)(6)
CoalQuest Development LLC		Taylor Co., WV			0				0				0				0				R&P & LW				Rail				0.0	(7)
Juliana Complex		Webster Co., WV			1				0				0				0				R&P & CTR				Rail				0.0

(1)	CRM = Cross Ridge Mining; CTR = Contour Mining; R&P = Room and Pillar; LW = Longwall; MTR = Mountain Top Removal; DL = Dragline; HW = Highwall; TSL = Truck and Shovel/ Loader
(2)	Utilizing third-party loadout
(3)	Including waste-fuel
(4)	Currently utilizing one circuit
(5)	Mine permitted but undeveloped

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(6)	Represents Anker’s 50% share in The Sycamore Group LLC joint venture plus the Sycamore No. 2 mine, expected to begin production in 2005
(7)	Undeveloped, permit in progress

		2002								2003								2004
		Tons				Sales				Tons				Sales				Tons				Sales
Mining Complex		Produced				Realizations				Produced				Realizations				Produced				Realizations
ICG Eastern, LLC			2,998,654			$	28.59				2,657,537			$	26.23				2,712,067			$	34.12
ICG Hazard, LLC			3,592,719			$	26.72				4,116,115			$	27.82				3,978,038			$	33.22
ICG Knott County, LLC			986,552			$	27.39				1,333,603			$	28.60				1,386,554			$	39.45
ICG East Kentucky, LLC			2,033,372			$	27.30				1,799,740			$	29.00				1,576,345			$	40.42
ICG Illinois, LLC			1,759,215			$	23.36				2,134,096			$	22.98				2,117,567			$	23.54
Vindex Energy Corporation			123,394			$	25.74				96,335			$	31.65				170,745			$	32.13
Patriot Mining Company			487,654	(1)		$	20.25				425,638	(1)		$	19.41				423,448	(1)		$	20.25
Sycamore Group, LLC			284,040			$	24.13				269,801			$	24.75				259,270			$	24.84
Spruce Fork Division			1,203,212			$	30.58				1,353,896			$	31.11				1,213,851			$	34.16
Philippi Development Division			354,948			$	32.75				299,167			$	26.54				255,439			$	44.47
Beckley Smokeless Division			136,999			$	45.50				—				—				—				—
Mount Storm Division			494,731			$	20.40				8,520			$	26.55				—				—
			14,455,490								14,494,448								14,093,324

(1)	Does not include Patriot’s waste fuel.

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	ICG Knott County, LLC

	ICG East Kentucky, LLC

	Vindex Energy Corporation

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	Patriot Mining Company

	Spruce Fork Division — Anker West Virginia Mining Company

	Sycamore Group

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	Philippi Development Division — Anker West Virginia Mining Company

	New Appalachian Mine Developments

	Hillman Property

	Upshur Property

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	Big Creek Property

	Bay Hill Property

	Juliana Complex

	Jennie Creek Property

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	Clean Air Mercury Rule

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	Carbon Dioxide

	Regional Haze

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	•	non-United States persons;
	•	holders who may be subject to special tax treatment, such as dealers in securities or currencies, financial institutions, tax-exempt entities, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings or insurance companies;
	•	holders who acquired their ICG common shares pursuant to the exercise of employee stock options or warrants or otherwise as compensation;
	•	persons holding ICG common shares as part of a hedge, constructive sale, integrated or conversion transaction or a straddle;
	•	holders of outstanding warrants or options to acquire ICG common shares; or
	•	holders whose “functional currency” is not the United States dollar.

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	•	a citizen or resident of the United States;
	•	a corporation, or a partnership or other entity that is treated as a corporation, created or organized under the laws of the United States or any political subdivision of the United States;
	•	an estate the income of which is subject to United States federal income taxation regardless of its source; or
	•	a trust if (1) it is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

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	•	NOT have voted in favor of the Anker business combination agreement or have voted AGAINST the Anker business combination agreement or ABSTAINED if voting by proxy;
	•	file written notice with ICG of an intention to exercise rights of appraisal of its shares within 20 days of the date of mailing of a notice of the written consent approving the Anker business combination agreement; and
	•	follow the procedures set forth in Section 262.

	•	the reorganization is abandoned;
	•	the dissenting shareholder fails to make a timely written demand for appraisal;

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	•	neither International Coal Group, nor the shareholder files a complaint or petition in the Delaware Court of Chancery demanding a determination of the value of the stock within 120 days after the effective date of the reorganization; or
	•	the shareholder delivers to International Coal Group, within 60 days of the effective date of the reorganization, or thereafter with the approval of International Coal Group, a written withdrawal of the shareholder’s demand for appraisal of the dissenting shares, although no appraisal proceeding in the Delaware Court of Chancery may be dismissed as to any shareholder without the approval of the court.

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	•	corporate organization and similar corporate matters;
	•	capitalization;
	•	authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of governmental entities relating to, the Anker business combination agreement and related matters;
	•	compliance with applicable laws;
	•	legal proceedings;
	•	title, ownership and use of personal, including intellectual property, and real property;
	•	certain material contracts;
	•	operational and non-operational permits and licenses with governmental authorities;
	•	matters relating to labor relations and employee benefits;
	•	payment of brokerage and finders fees or commissions;
	•	environmental matters;
	•	financial statements and absence of material liabilities since December 31, 2004;
	•	insurance;
	•	affiliate transactions;

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	•	filing of tax returns, payment of taxes and other tax matters; and
	•	indebtedness and distributions.

	•	adopt or propose any change in its certificate of incorporation, bylaws or other constituent documents;
	•	merge or consolidate with any other person or acquire a material amount of assets from any other person;
	•	sell, lease, license or otherwise dispose of any assets or property with a value in excess of $25,000 except (i) pursuant to existing contracts or commitments or (ii) otherwise in the ordinary course consistent with past practice;
	•	pay or undertake to pay any increase in salaries or other compensation of, or to pay any bonuses to, any director or officer, or, except in the ordinary course of business consistent with past practice, any employee, or enter into any employment, severance or similar agreement with any director, officer or employee;
	•	adopt or increase any benefits under any profit sharing, bonus or deferred compensation, savings, insurance, pension, retirement or other employee plan for or with any of its employees;
	•	incur, assume or guarantee any indebtedness, except for indebtedness incurred, assumed or guaranteed in the ordinary course of business consistent (with respect to amount and other terms) with past practice;
	•	cancel any material debt or claim owed to it or its subsidiaries or waive any right of material value owned by it or its subsidiaries;
	•	repurchase, redeem or otherwise acquire directly or indirectly, any of the outstanding common shares of it or other securities of, or other ownership interests in, it or its subsidiaries;
	•	make any change in accounting methods or practices, except as required by law or generally accepted accounting principles;
	•	issue or sell any additional shares or other equity interests or make any other changes in its capital structure, except (i) grants or issuances of options or stock pursuant to agreements in effect on the date of the agreement or (ii) pursuant to the exercise of options or stock-based awards of that party or its subsidiaries, in each case, outstanding as of the date of the agreement or issued thereafter in compliance with the agreement;
	•	write off as uncollectible any notes or accounts receivable, except write-offs in the ordinary course of business charged to applicable reserves, none of which individually or in the aggregate is material, or alter customary time periods for collection of accounts receivable or payments of accounts payable;
	•	permit to be incurred any lien (other than a permitted lien) on any of its real property or real property interests or, except in the ordinary course of business consistent with past practice, on any of its personal property;

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	•	make any loan, advance or capital contributions to or investment in any person other than a wholly owned subsidiary in an aggregate amount in excess of $25,000;
	•	enter into any warranty, guaranty or other similar undertaking with respect to a contractual performance extended by that party or any of its subsidiaries other than in the ordinary course of business consistent with past practice;
	•	modify, terminate or enter into any contracts or commitments with respect to which the aggregate amount that could reasonably be expected to be paid or received thereunder exceeds $25,000 individually or $100,000 in the aggregate, except contracts and commitments (for capital expenditures or otherwise) in the ordinary course of business and not knowingly inconsistent with that party’s business and operating plan and budget as in effect on the date hereof;
	•	take any action that could reasonably be expected to have a material adverse effect on that party;
	•	modify or amend any lease or cause or permit any lien to exist on any real property owned, leased or occupied by it that is not a permitted lien; or
	•	agree or commit to do any of the foregoing.

	•	take all actions necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by the Anker business combination agreement;
	•	obtain any consents, approvals or waivers under any contracts of those parties; and
	•	take actions or make filings to obtain, and cooperate with the other party to obtain, the consent, approval or waiver of any governmental authority required to consummate the transactions contemplated by the Anker business combination agreement.

	•	no order, injunction or decree preventing the completion of the mergers being in effect, and no laws having been enacted or promulgated by any governmental authority having the effect of prohibiting the mergers or making them illegal; and
	•	delivery of certificates of merger and other customary closing documents.

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	•	By mutual written consent of ICG and Anker;
	•	By Anker or ICG after April 15, 2006, if the mergers have not been completed by that date, as long as the party terminating the agreement is not in default under the agreement;
	•	As long as the terminating party is not otherwise in default or breach of the agreement, and has not failed or refused to close without justification, by ICG or Anker, without prejudice to other rights and remedies that the terminating party may have, if any other party (i) has materially failed to perform its covenants or agreements required to be performed on or prior to the completion of the mergers or (ii) has materially breached any of its representations or warranties in the agreement; except that the defaulting party will have 20 business days following written notice from a non-defaulting party to cure any breach, if it is curable;
	•	By ICG or Anker, if (A) any competent governmental authority has issued an order that has become final and nonappealable or (B) any law is in effect, in either case restricting, restraining or altering in a material manner or enjoining or otherwise prohibiting or making illegal the effectuation of the transactions contemplated by the agreement; or
	•	By ICG or Anker, if the CoalQuest business combination agreement is terminated.

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	•	prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
	•	upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding specified shares; or
	•	at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder.

	•	any merger or consolidation involving the corporation and the interested stockholder;
	•	any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation to or with the interested stockholder;
	•	subject to certain exceptions, any transaction which results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
	•	any transaction involving the corporation which has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
	•	the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

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	•	the owner of 15% or more of the outstanding voting stock of the corporation;
	•	an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date; and
	•	the affiliates and associates of the above.

	Stockholder Action; Special Meetings

	Stockholder Proposals

	•	be a stockholder of record at the time of the giving of the notice for the meeting;
	•	be entitled to vote at the meeting; and
	•	have given timely written notice of the business to our secretary.

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	•	a description in reasonable detail of the business proposed to be brought before the meeting and the reasons for conducting such business at the meeting;
	•	the name and address of the stockholder proposing such business and of the beneficial owner, if any, on whose behalf the proposal is made;
	•	the class and series and number of shares that are owned of record and beneficially by the stockholder proposing the business and by the beneficial owner, if any, on whose behalf the proposal is made;
	•	a description of all arrangements or understandings among the stockholder, the beneficial owner on whose behalf the proposal is made, if any, and any other person or persons (including their names) in connection with the proposal of such business by the stockholders and any material interest of the stockholder in such business;
	•	whether such stockholder or beneficial owner intends to deliver a proxy statement and forms of proxy to holders of at least the percentage of shares of our voting stock required to approve such proposal; and
	•	a representation that the stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

	Nomination of Candidates for Election to Our Board

	•	the name and address of the stockholder giving the notice and of the beneficial owner, if any, on whose behalf the nomination is made;

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	•	a representation that the stockholder giving the notice is a holder of record of shares of our voting stock entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified in the notice;
	•	the class and series and number of shares of stock owned beneficially and of record by the stockholder giving the notice and by the beneficial owner, if any, on whose behalf the nomination in made;
	•	a description of all arrangements or understandings between or among any of:

	•	the stockholder giving the notice;
	•	the beneficial owner on whose behalf the notice is given;
	•	each nominee; and
	•	any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder giving the notice;

	•	the name, age, business address, residence address and occupation of the nominee proposed by the stockholder;
	•	such other information regarding each nominee proposed by the stockholder giving the notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had the nominee been nominated, or intended to be nominated, by our board;
	•	the signed consent of each nominee to serve as a director on our board if so elected; and
	•	whether such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares of our voting stock required to elect such nominee or nominees. In addition, a stockholder must also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters relating to nomination of candidates for directors.

	Amendment to Our Bylaws

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ICG						International Coal Group
Article/				Summary Comparison		Article/				Summary Comparison
Section						Section
Nos.						Nos.
Authorized Capital Stock
Art. IV Sec. 1-				2.0 billion shares authorized; 1.8 billion of common stock; 200 million of preferred stock		Art. IV, Sec. 1				2.2 billion shares authorized; 2.0 billion of common stock; 200 million of preferred stock
Preemptive Rights
Art. IV, Sec. 4				Grants preemptive rights to founding shareholders						No comparable provision
Transfer Restriction
Art. IV, Sec. 5				Creates restrictions on transfer based on the number of record holders of common stock						No comparable provision
Drag-Along Rights
	Art. IV Sec. 6			Grants drag-along rights to shareholders holding no less than2/3 of the stock to force other shareholders to sell shares in a transaction						No comparable provision
Super Majority Voting Provisions
Art. VI, Sec. 1				Grants veto right to WLR and a Majority in Interest with regard to certain corporate actions						No comparable provision
	Art. VI Sec. 2			Grants veto right to the Board and the Founding Shareholders with regard to certain corporate actions						No comparable provision
	Art. VI Sec. 3			Grants veto right to the Board, a Majority in Interest and WLR with respect to certain corporate actions						No comparable provision
Amendment to Bylaws
				No comparable provision			Art. V			Provides that the Board may amend bylaws; holders of at least 80% of voting stock may also amend the bylaws

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ICG						International Coal Group
Article/				Summary Comparison		Article/				Summary Comparison
Section						Section
Nos.						Nos.
Classified Board
				No comparable provision		Art. VII, Sec. 1				Provides for the creation of a classified Board consisting of three classes of directors divided as equally as possible with the first class to come up for election at the annual meeting in 2006, the second in 2007 and the third in 2008
Shareholder Director Nominations
				No comparable provision		Art. VII, Sec. 2				Requires advance notice to International Coal Group of director nominations by shareholders
Removal of Directors
				No comparable provision			Art. VI, Sec. 3			Provides for removal of directors for cause
Certain Amendments
				No comparable provision		Art. VII, Sec. 4				Provides that 80% of voting stock must approve any amendment to Article VII
Amendment to Charter
	Art. IX			Allows amendments to charter only with consent of WLR and a Majority in Interest plus the affirmative vote of a majority of capital stock			Art. XII			International Coal Group has the right to amend the Charter pursuant to the DGCL
Information Rights
Art. XI, Sec. 1				Grants information rights to shareholders						No comparable provision
Confidentiality
Art. XI, Sec. 2				Provides confidentiality agreement between founding shareholders and ICG						No comparable provision

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		Stock Price								Average
										Daily
		High				Low				Volume(1)
November 15, 2004 through December 31, 2004(2)		$	14.50			$	7.63				673,493
January 1, 2005 through March 31, 2005		$	15.00			$	12.13				224,952
April 1, 2005 through June 30, 2005		$	15.00			$	12.00				99,629
July 1, 2005 through September 30, 2005		$	15.00			$	12.50				213,756
October 1, 2005 to November 7, 2005		$	15.00			$	13.50				127,772

(1)	Does not include days on which there were no quotes for the shares of the ICG common stock.
(2)	Quotes for the shares of ICG common stock were not reported prior to November 15, 2004.

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Name		Age		Position(s)
Wilbur L. Ross, Jr.		67		Non-Executive Chairman and Director
Bennett K. Hatfield		49		President, Chief Executive Officer and Director
William D. Campbell		58		Vice President, Treasurer and Secretary
Roger L. Nicholson		45		Senior Vice President and General Counsel
Samuel R. Kitts		44		Senior Vice President, West Virginia and Maryland Operations
William Scott Perkins		50		Senior Vice President, Kentucky and Illinois Operations
Phillip Michael Hardesty		43		Senior Vice President, Sales and Marketing
Oren Eugene Kitts		51		Senior Vice President, Mining Services
Charles G. Snavely		49		Vice President, Planning and Acquisitions
Jon R. Bauer		49		Director
Cynthia B. Bezik		52		Director
William J. Catacosinos		75		Director
Marcia L. Page		45		Director
Wendy L. Teramoto		31		Director

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	Cynthia B. Bezik — Director

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	William J. Catacosinos — Director

	Marcia L. Page — Director

	Wendy L. Teramoto — Director

	Classified Board of Directors

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	Number of Directors; Removal; Vacancies

	Audit Committee

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	Compensation Committee

	Nominating and Corporate Governance Committee

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		Annual Compensation
														Other Annual				All Other
						Salary				Bonus				Compensation(1)				Compensation
Name and Principal Position		Year				($)				($)				($)				($)
Bennett K. Hatfield, President and Chief Executive Officer(2)			2004				—				—				—				—	(3)
George R. Desko, Chief Executive Officer(4)			2004				450,000				—				—				—
Coy K. Lane, Senior Vice President of Operations(5)			2004				300,000				—				—				—
William D. Campbell, Vice President and Treasurer(6)			2004				265,000				—				—				—	(3)
William Scott Perkins, President— ICG Eastern(7)			2004				200,000				—				—				—	(3)
James Ketron, Vice President and General Counsel(8)			2004				190,000				—				—				—
Roger L. Nicholson, Senior Vice President and General Counsel(9)			2004				—				—				—				—	(3)
Samuel R. Kitts, Senior Vice President, West Virginia and Maryland Operations(10)			2004				—				—				—				—	(3)

	(1)	Other annual compensation for fiscal 2005 has not been disclosed when the total value is less than the lesser of 10% of individual’s annual salary or $50,000.
	(2)	Mr. Hatfield became our President and Chief Executive Officer in March 2005. For 2005, Mr. Hatfield will receive an annual salary of $500,000, and is entitled to certain other perquisites. For other information about his compensation, see “— Employment agreements” below.
	(3)	Executives are entitled to the use of a company-owned vehicle.
	(4)	Mr. Desko was ICG, Inc.’s Interim President and Chief Executive Officer from October 2004 until March 2005.
	(5)	Mr. Lane was ICG, Inc.’s Senior Vice President of Operations until January 2005.
	(6)	Mr. Campbell also became our Secretary in April 2005.
	(7)	Mr. Perkins was ICG, Inc.’s Vice President, ICG Eastern until January 2005, when he became our Senior Vice President, Kentucky and Illinois.
	(8)	Mr. Ketron was ICG, Inc.’s Vice President and General Counsel until February 2005.
	(9)	Mr. Nicholson became our Senior Vice President and General Counsel in April 2005. For 2005, Mr. Nicholson will receive an annual salary of $260,000 and certain other perquisites, see “— Employment agreements” below.

(10)	Mr. Kitts became our Senior Vice President, West Virginia and Maryland Operations in April 2005. For 2005, Mr. Kitts will receive an annual salary of $250,000.

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	2005 Equity and Performance Incentive Plan

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		Number of
		Securities
		Underlying				Restricted				Exercise Price
Name		Options Granted(1)				Stock(1)				Per Share
William D. Campbell			45,000				45,000					(2)
Phillip Michael Hardesty			40,000				40,000					(2)
Bennett K. Hatfield			319,052				206,250			$	10.97
Oren Eugene Kitts			50,000				50,000					(2)
Samuel R. Kitts			50,000				50,000					(2)
Roger L. Nicholson			50,000				37,500					(2)
William Scott Perkins			50,000				50,000					(2)
Charles G. Snavely			40,000				40,000					(2)

(1)	All option and restricted share grants will be 25% vested upon grant, with the remaining vesting ratably over three years.
(2)	To be priced at the price of the shares of common stock sold in the proposed public offering.

	Employment Agreements

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	•	each person who is known by ICG to own beneficially more than 5% its common shares;
	•	each member of ICG’s board of directors and each of ICG’s named executive officers; and
	•	all members of ICG’s board of directors and ICG’s executive officers as a group.

								International Coal Group
								Shares Beneficially
								Owned After the
		ICG Shares Beneficially						Reorganization and the
		Owned Prior to the						Anker and CoalQuest
		Reorganization						Acquisitions
Name and Address of Beneficial Owner		Number		Percent				Number		Percent
Värde Partners, Inc.(1)		6,373,755			5.94	%		6,373,755			5.01	%
Värde Management, Inc.
Värde Management International, Inc.
Attn: Kathy Ricke 8500 Normandale Lake Boulevard Suite 1570 Minneapolis, MN 55347
Contrarian Funds LLC(2)		10,822,865			10.09	%		10,822,865			8.50	%
Attn: Michael J. Restifo 411 West Putnam Avenue, Suite 225 Greenwich, CT 06830
WLR Recovery Fund II, L.P.(3)		9,804,172			9.14	%		19,073,193			14.98	%
Attn: Wendy Teramoto 101 East 52nd Street, 19th Floor New York, NY 10022
Shepherd International Coal Holdings, Ltd.(4)		5,325,349			4.97	%		5,325,349			4.18	%
Attn: Colin M. Lancaster 3600 S. Lake Drive St. Francis, WI 53235
Stark Trading(5)		5,325,350			4.97	%		5,325,350			4.18	%
Attn: Colin M. Lancaster 3600 S. Lake Drive St. Francis, WI 53235

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								International Coal Group
								Shares Beneficially
								Owned After the
		ICG Shares Beneficially						Reorganization and the
		Owned Prior to the						Anker and CoalQuest
		Reorganization						Acquisitions
Name and Address of Beneficial Owner		Number		Percent				Number		Percent
Third Point LLC(6)		10,001,045			9.33	%		10,001,045			7.86	%
Attn: Lloyd Blumberg 390 Park Avenue New York, NY 10022
Wholesale Realtors Supply(7)		—			—			4,815,777			3.78	%
Attn: Gabriel Elias 509 Spring Avenue Elkins Park, PA 19027
Wilbur L. Ross, Jr.(3)		9,804,172			9.14	%		19,073,193			14.98	%
Bennett K. Hatfield(8)		379,763			*			379,763			*
William D. Campbell(8)		56,250			*			56,250			*
Philip Michael Hardesty(8)		50,000			*			50,000			*
Oren Eugene Kitts(8)		62,500			*			62,500			*
Samuel R. Kitts(8)		62,500			*			62,500			*
Roger L. Nicholson(8)		62,500			*			62,500			*
William Scott Perkins(8)		62,500			*			62,500			*
Charles G. Snavely		50,000			*			50,000			*
Jon R. Bauer(2)		10,822,865			10.09	%		10,822,865			8.50	%
George R. Desko(9)		—			—			1,856,752			1.46	%
Marcia L. Page(1)		6,373,755			5.94	%		6,373,755			5.01	%
All directors and executive officers as a group (1)(2)(3)(8) (15 persons)		27,786,805			25.91	%		38,912,578			30.57	%

	*	Less than 1%

(1)	Represents 6,373,755 shares of common stock of which 384,850 shares are held of record by The Värde Fund, L.P., 529,450 shares are held of record by The Värde Fund V, L.P., 672,109 shares are held of record by The Värde Fund VI, L.P., 14,017 shares are held of record by The Värde Fund VI-A, L.P., 257,932 shares are held of record by The Värde Fund VII, L.P., 128,561 shares are held of record by The Värde Fund VII-A, L.P., 2,659,502 shares are held of record by The Värde Fund (Cayman) Limited, 1,086,385 shares are held of record by Värde Investment Partners, L.P., 285,184 shares are held of record by Sphinx Distressed Fund SPC and 355,765 shares are held of record by Zurich Institutional Benchmarks Master Fund Limited. All of these shares are controlled by Värde Partners, Inc., Värde Management, Inc. or Värde Management International, Inc., which are controlled by Ms. Page, Gregory S. McMillan and George G. Hicks. Ms. Page and Messrs. McMillan and Hicks are (i) the principals, directors and managing partners of Värde Partners, Inc. and (ii) the principals, directors and vice president of Värde Management, Inc. and Värde Management International, Inc. To the extent Ms. Page is deemed to beneficially own these shares as a result of her position as a principal director or managing partner or vice president of Värde Partners, Inc. Värde Management
(2)	Represents 10,822,865 shares of common stock held of record by investment management clients of Contrarian Capital Management LLC. Mr. Bauer serves as the Managing Member of Contrarian Capital Management LLC. To the extent Mr. Bauer is deemed to beneficially own these shares as a result of his position as the Managing Member of Contrarian Capital Management LLC, Mr. Bauer disclaims beneficial ownership of these shares.
(3)	Represents 9,804,172 common shares held of record by WLR Recovery Fund II, L.P. WL Ross & Co. LLC manages WLR Recovery Fund, II, L.P. Mr. Ross serves as a principal of WL Ross & Co. LLC, which manages WLR Recovery Fund II, L.P. To the extent Mr. Ross is deemed to beneficially own these shares as a result of his position as a principal of WL Ross & Co. LLC, Mr. Ross disclaims beneficial ownership of these shares. Also represents 9,804,172 common shares held by WLR Recovery Fund II, L.P., 8,450,276 shares to be received as merger consideration for Anker common shares owned by WLR Recovery Fund, L.P. and WLR Recovery Fund II, L.P. and 5,841,435 shares to be received as merger consideration for membership interests in CoalQuest owned by WLR CoalQuest Holding Corp, which is wholly owned by WLR Recovery Fund II, L.P. WL Ross & Co.

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	LLC manages WLR Recovery Fund II, L.P. and WLR Recovery Fund, L.P. Mr. Ross serves as a principal of WL Ross & Co. LLC, which manages WLR Recovery Fund II, L.P. To the extent Mr. Ross is deemed to beneficially own these shares as a result of his position as a principal of WL Ross & Co. LLC, Mr. Ross disclaims beneficial ownership of these shares.
(4)	Michael A. Roth and Brian J. Stark are the Managing Members of Stark Onshore Management, LLC which acts as the Managing General Partner and has the sole dispositive power to direct the management of Stark Trading.
(5)	Michael A. Roth and Brian J. Stark are the Managing Members of Stark Offshore Management, LLC, which acts as the Investment Manager of Shepherd Investments International, Ltd., the sole Shareholder of Shepherd International Coal Holdings, Ltd. The Investment Manager has the sole dispositive power to direct the management of Shepherd International Coal Holdings, Ltd.
(6)	Represents 540,000 shares of common stock beneficially owned or held of record by Third Point Partners Qualified L.P., 1,271,705 shares of common stock beneficially owned or held of record by Third Point Partners L.P., 6,045,206 shares of common stock beneficially owned or held of record by Third Point Offshore Fund, Ltd., 844,604 shares of common stock held of record by Third Point Ultra Ltd., 267,257 shares of common stock beneficially owned or held of record by Third Point Resources LP, 439,373 shares of common stock beneficially owned or held of record by Third Point Resources Ltd. and 592,900 shares of common stock beneficially owned or held of record by Lyxor/ Third Point Fund Ltd. All of these shares are controlled by Third Point LLC, which serves as investment manager or advisor to these accounts, which in turn is controlled by Daniel S. Loeb. Mr. Loeb is the managing member of Third Point LLC. To the extent Mr. Loeb is deemed to beneficially own these shares as a result of his position as the managing member of Third Point LLC, Mr. Loeb disclaims beneficial ownership of these shares.
(7)	Represents 4,678,119 common shares to be received as merger consideration for shares held in Anker and 2,747,226 common shares to be received as merger consideration for membership interests in CoalQuest.
(8)	Represents options to purchase shares of our common stock which are currently exercisable and all restricted shares granted to management. See “Management — Employee Benefit Plans” regarding vesting of the shares of restricted stock.
(9)	Represents merger consideration for membership interests in CoalQuest owned by George and Janet Desko.

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	•	a maximum leverage ratio, set at 2.75 to 1.00 from the closing date of the credit facility through December 31, 2005 and decreasing to 2.50 to 1.00 for the 2006 fiscal year, and 2.25 to 1.00 from January 1, 2007 through the final maturity date of the credit facility;
	•	a minimum interest coverage ratio set at 4.00 to 1.00 for each of the four consecutive quarters then last ended; and
	•	a limit on capital expenditures for the 2005 fiscal year of $155.0 million (or $175.0 million upon a Successful IPO), for the 2006 fiscal year of $180.0 million (or $200.0 million upon a Successful IPO), for the 2007 fiscal year of $255.0 million (or $350.0 million upon a Successful IPO), for the 2008 fiscal year of $125.0 million (or $315.0 million upon a Successful IPO), for the 2009 fiscal year of $75.0 million (or $125.0 million upon a Successful IPO) and from January 1, 2010 through the final maturity date of the credit facility of $85.0 million (or $125.0 million upon a Successful IPO). A “Successful IPO” is defined to mean a public offering with at least $250 million in gross proceeds.

	•	provided for the consent by our lenders under the credit facility to the consummation of the Anker and CoalQuest acquisitions and to the corporate reorganization of ICG and certain of its subsidiaries;
	•	increased the amount of our term loan facility by an additional $35.0 million which, upon consummation of the Anker and CoalQuest acquisitions, will bring the total outstanding amount of this term loan facility to $210.0 million;
	•	increased the sublimit of our revolving credit facility that is available for the issuance of letters of credit from $60.0 million to $75.0 million;
	•	permits us to make certain cash dividends, upon the completion of the proposed public offering in an amount not to exceed $40.0 million in any fiscal year;
	•	eliminated the minimum fixed charge coverage ratio;
	•	modify the limit on capital expenditures as detailed above;
	•	allow us to increase the amount of our revolving credit facility at a later date by an additional $190.0 million to $300.0 million, without lender approval at the time of the requested increase; and
	•	allow us to increase the amount of our term loans at a later date by an additional $50.0 million, without lender approval at the time of the requested increase.

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		Page
ICG, Inc. and Subsidiaries
Interim Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheet as of September 30, 2005 (unaudited)			F-3
Condensed Consolidated Statements of Operations for nine months ended September 30, 2005 (unaudited)			F-4
Condensed Consolidated Statement of Stockholders’ Equity for nine months ended September 30, 2005 (unaudited)			F-5
Condensed Consolidated Statements of Cash Flows for nine months ended September 30, 2005 (unaudited)			F-6
Notes to Unaudited Condensed Consolidated Financial Statements as of September 30, 2005 and for nine months ended September 30, 2005			F-7
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			F-15
Consolidated Balance Sheet as of December 31, 2004			F-16
Consolidated Statement of Operations for the period May 13, 2004 (inception) to December 31, 2004			F-17
Consolidated Statement of Stockholders’ Equity for the period May 13, 2004 (inception) to December 31, 2004			F-18
Consolidated Statement of Cash Flows for the period May 13, 2004 (inception) to December 31, 2004			F-19
Notes to Consolidated Financial Statements as of December 31, 2004 and for the period May 13, 2004 to December 31, 2004			F-20
Horizon NR, LLC and Certain Subsidiaries (Predecessor to ICG, Inc.)
Report of Independent Registered Public Accounting Firm			F-37
Combined Balance Sheets as of September 30, 2004 and December 31, 2003			F-39
Combined Statements of Operations for the period January 1, 2004 to September 30, 2004, the year ended December 31, 2003, the period May 10, 2002 to December 31, 2002 (reorganized companies) and the period January 1, 2002 to May 9, 2002 (predecessor companies)			F-40
Combined Statements of Members’ Deficit for the period January 1, 2004 to September 30, 2004, the year ended December 31, 2003, the period May 10, 2002 to December 31, 2002 (reorganized companies) and the period January 1, 2002 to May 9, 2002 (predecessor companies)			F-41
Combined Statements of Cash Flows for the period January 1, 2004 to September 30, 2004, the year ended December 31, 2003, the period May 10, 2002 to December 31, 2002 (reorganized companies) and the period January 1, 2002 to May 9, 2002 (predecessor companies)			F-42
Notes to Combined Financial Statements as of September 30, 2004, for the period January 1, 2004 to September 30, 2004, the year ended December 31, 2003, the period May 10, 2002 to December 31, 2002 (reorganized companies) and the period January 1, 2002 to May 9, 2002 (predecessor companies)			F-43

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		Page
Anker Coal Group, Inc.
Independent Auditors’ Report			F-72
Consolidated Balance Sheets as of September 30, 2005 (unaudited) and December 31, 2004			F-73
Consolidated Statements of Operations for the nine months ended September 30, 2005 and 2004 (unaudited) and for the year ended December 31, 2004			F-74
Consolidated Statements of Changes in Stockholders’ Deficit for the nine months ended September 30, 2005 (unaudited) and for the year ended December 31, 2004			F-75
Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004 (unaudited) and for the year ended December 31, 2004			F-76
Notes to Consolidated Financial Statements for the nine months ended September 30, 2005 and 2004 (unaudited) and for the year ended December 31, 2004			F-77
CoalQuest Development, LLC
Independent Auditors’ Report			F-86
Balance Sheets as of September 30, 2005 (unaudited) and December 31, 2004			F-87
Statements of Income for the nine months ended September 30, 2005 and 2004 (unaudited) and for the year ended December 31, 2004			F-88
Statements of Members’ Equity for the nine months ended September 30, 2005 (unaudited) and for the year ended December 31, 2004			F-89
Statements of Cash Flows for the nine months ended September 30, 2005 and 2004 (unaudited) and for the year ended December 31, 2004			F-90
Notes to Financial Statements for the nine months ended September 30, 2005 and 2004 (unaudited) and for the year ended December 31, 2004			F-91

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				September 30, 2005
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	15,534
	Trade accounts receivable				48,915
	Accounts receivable — Anker Coal Group Inc.				2,597
	Accounts receivable — Other				5,374
	Inventories				20,472
	Deferred income taxes				2,113
	Prepaid insurance				240
	Prepaid expenses and other				10,094
		Total current assets			105,339
PROPERTY, PLANT AND EQUIPMENT, net					203,531
DEBT ISSUANCE COSTS, net					7,284
ADVANCE ROYALTIES					5,637
GOODWILL					187,680
DEFERRED INCOME TAXES, NON-CURRENT					8,222
OTHER NON-CURRENT ASSETS					7,858
		Total assets		$	523,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Trade accounts payable			$	36,130
	Current portion of long-term debt and capital leases				1,997
	Current portion of reclamation and mine closure costs				2,682
	Accrued expenses and other				41,663
		Total current liabilities			82,472
NON-CURRENT LIABILITIES, Less current portion
	Long-term debt and capital leases				186,938
	Reclamation and mine closure costs				39,432
	Long-term employee benefits				20,759
	Other non-current liabilities				6,893
		Total non-current liabilities			254,022
		Total liabilities			336,494
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
	Preferred stock — par value $0.0001, 200,000,000 shares authorized, none issued				—
	Common stock — par value $0.0001, 1,800,000,000 shares authorized, 107,230,999 issued and outstanding				11
	Additional paid-in capital				158,850
	Unearned compensation — restricted stock				(5,132	)
	Retained Earnings				32,797
		Total stockholders’ equity			186,526
		Total liabilities and stockholders’ equity		$	523,020

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				Nine Months
				Ended
				September 30,
				2005
REVENUES
	Coal sales revenues (including $5,580 to Anker Coal Group, Inc.)			$	441,662
	Freight and handling revenues				6,236
	Other revenues				17,757
		Total revenues			465,655
COSTS AND EXPENSES:
	Freight and handling costs				6,236
	Cost of coal sales and other revenues (exclusive of items shown separately below)				357,076
	Depreciation, depletion and amortization				29,489
	Selling, general and administrative (exclusive of depreciation and amortization shown separately above)				23,592
	Gain on sale of assets				(518	)
		Total costs and expenses			415,875
	Income from operations				49,780
INTEREST AND OTHER INCOME (EXPENSE):
	Interest expense				(10,453	)
	Other, net				2,847
		Total interest and other income (expense)			(6,446	)
Income before income tax expense					43,334
INCOME TAX EXPENSE					(14,786	)
	Net income			$	28,548
Earnings per share:
	Basic				0.27
	Diluted				0.27
Average common shares outstanding:
	Basic				107,230,999
	Diluted				107,280,820

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			For the Period January 1, 2005 to September 30, 2005
											Unearned
							Additional				Compensation-
			Common				Paid-in				restricted				Retained
			Stock				Capital				stock				Earnings				Total
Balance — December 31, 2004			$	11			$	150,140				—			$	4,249			$	154,400
	Net income for the period			—				—				—				28,548				28,548
	Issuance of restricted stock and stock awards			—				8,090				(8,090	)			—				—
	Issuance of 25,000 shares of common stock pursuant to compensation agreement			—				372				—				—				372
	Compensation expense-restricted stock			—				—				2,958				—				2,958
	Compensation expense-stock options			—				248												248
Balance — September 30, 2005 expense			$	11			$	158,850			$	(5,132	)		$	32,797			$	186,526

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					Period from
					January 1, 2005 to
					September 30,
					2005
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	28,548
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation, depletion and amortization				29,489
		Stock compensation				3,378
		Amortization of finance costs included in interest expense				838
		Gain on sale of assets				(518	)
		Deferred income taxes				2,180
	Changes in assets and liabilities:
	(Increase) decrease in:
		Receivables				(16,469	)
		Inventories				(6,529	)
		Prepaid expenses				2,707
		Other assets				(7,529	)
	Increase (decrease) in:
		Accounts payable				14,878
		Accrued expenses				7,808
		Accrued income tax				(2,232	)
		Reclamation and mine closure costs				(1,184	)
		Other liabilities				2,180
			Total adjustments			28,997
			Net cash provided by operating activities			57,545
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from the sale of assets					575
	Additions to property, plant and equipment and mine development					(75,941	)
	Withdrawals from restricted cash					(23	)
	Net cash used in investing activities					(75,389	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayments on long-term debt					(5,099	)
	Borrowings on revolving line of credit					15,000
	Proceeds from issuance of common stock					200
	Deferred finance costs					(257	)
	Repayments on capital leases					(433	)
		Net cash provided by financing activities				9,411
		Net decrease in cash and cash equivalents				(8,433	)
	Cash and cash equivalents, beginning of period					23,967
	Cash and cash equivalents, end of period				$	15,534
Supplemental information:
	Cash paid for interest				$	9,522
	Cash paid for income taxes				$	17,277

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1.	Basis of Presentation

2.	Goodwill

3.	Inventories

Coal		$	9,323
Parts and supplies, net of a reserve for obsolescence of $378			11,149
		$	20,472

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4.	Property, Plant and Equipment

Land and land improvements		$	18,276
Mining and other equipment and related facilities			127,347
Mine development and contract costs			16,772
Coal lands			53,031
Coal rights			2,019
Mine development in process			1,808
Construction work in process			21,693
			240,946
Less-accumulated depreciation, depletion and amortization			(37,415	)
Net property, plant and equipment		$	203,531

5.	Accrued Expenses and Other

Payroll, bonus and vacation expense		$	25,718
Sales and use tax			253
Severance tax			1,880
Federal reclamation tax			889
Excise/black lung tax			158
Personal property tax			4,829
Franchise tax			178
Other			7,758
Total		$	41,663

6.	Debt

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7.	Income Taxes

Current:
	Federal		$	10,688
	State			1,918
				12,606
Deferred				2,180
Total			$	14,786

8.	Employee Benefits

			September 30, 2005
Postretirement benefits			$	9,058
Black lung benefits				11,701
	Total			20,759
Less—current portion				—
Long-term portion			$	20,759

		Nine Months Ended
		September 30, 2005
Service cost		$	677
Interest cost			351
Benefit cost		$	1,028

		Nine Months Ended
		September 30, 2005
Service cost		$	1,265
Interest cost			467
Benefit cost		$	1,732

9.	Employee Stock Plans

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			September 30, 2005
	Net earnings, as reported		$	28,548
Add back compensation related to stock awards included in earnings net of tax effects				2,094
	Deduct effect of stock-based employee compensation, net of tax effects:
	Stock option awards			(473	)
	Restricted stock awards			(1,169	)
	Stock awards			(771	)
	Pro forma net earnings		$	28,229
	Earnings per share, as reported:
	Basic		$	0.26
	Diluted		$	0.26
	Pro forma net earnings per share:
	Basic		$	0.26
	Diluted		$	0.26

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10.	Commitments and Contingencies

F-11

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						Operating				Capital
		Royalties				Leases				Leases
Year ended December 31,
2005 (October 1 to December 31, 2005)		$	474			$	2,975			$	84
2006			3,841				8,984				170
2007			5,257				3,090				—
2008			5,132				20				—
2009			5,163				2				—
Thereafter			23,342				1				—
Total minimum lease payments		$	43,209			$	15,072				254
Less—amount representing interest											7
Present value of minimum lease payments											247
Less—current portion											247
Total Long Term Portion of Capital Leases										$	—

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		Central				Illinois
		Appalachian				Basin				Ancillary				Eliminations				Consolidated
Revenue		$	328,334			$	43,487			$	95,103			$	(1,270	)		$	465,655
EBITDA			76,030				4,921				2,325				—				83,276
Depreciation, depletion and amortization			18,578				3,252				7,659				—				29,489
Capital expenditures			64,023				5,285				6,633				—				75,941
Total assets			332,433				59,863				534,898				(404,174	)			523,020
Goodwill			124,203				29,030				34,447				—				187,680

		Nine months
		ended
		September 30,
		2005
EBITDA		$	83,276
Depreciation, depletion and amortization			(29,489	)
Interest expense			(10,453	)
Income before income tax expense		$	43,334

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F-15

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				December 31,
				2004
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	23,967
	Trade accounts receivable				40,417
	Inventories, net				13,943
	Deferred income taxes				2,188
	Prepaid insurance				7,142
	Prepaid expenses and other				5,899
		Total current assets			93,556
PROPERTY, PLANT AND EQUIPMENT, net					157,136
DEBT ISSUANCE COSTS, Net					7,865
ADVANCE ROYALTIES					5,424
GOODWILL					183,946
DEFERRED INCOME TAXES, NON-CURRENT					7,741
OTHER NON-CURRENT ASSETS					4,307
		Total assets		$	459,975
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Trade accounts payable			$	21,250
	Current portion of long-term debt and capital leases				6,022
	Current portion of reclamation and mine closure costs				2,682
	Accrued income tax				2,232
	Accrued expenses and other				33,854
		Total current liabilities			66,040
NON-CURRENT LIABILITIES, less current portion
	Long-term debt and capital leases				173,446
	Reclamation and mine closure costs				40,616
	Long-term employee benefits				18,007
	Other non-current liabilities				7,466
		Total non-current liabilities			239,535
		Total liabilities			305,575
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
	Preferred stock-par value $0.0001, 200,000,000 shares authorized, none issued				—
	Common stock-par value $0.0001, 1,800,000,000 shares authorized, 106,605,999 shares issued and outstanding				11
	Additional paid-in capital				150,140
	Retained earnings				4,249
		Total stockholders’ equity			154,400
		Total liabilities and stockholders’ equity		$	459,975

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					Period from
					May 13, 2004
					inception to
					December 31, 2004
REVENUES
	Coal sales revenues				$	130,463
	Freight and handling revenues					880
	Other revenues					4,766
			Total revenues			136,109
COSTS AND EXPENSES:
	Freight and handling costs					880
	Cost of coal sales and other revenues					113,707
		(exclusive of items shown separately below)
	Depreciation, depletion and amortization					7,943
	Selling, general and administrative					4,194
		(exclusive of depreciation and amortization shown separately above)
	Gain on sale of assets					(10	)
			Total costs and expenses			126,714
	Income from operations					9,395
INTEREST AND OTHER INCOME (EXPENSE):
	Interest expense					(3,453	)
	Other, net					898
			Total interest and other income (expense)			(2,555	)
Income before income tax expense						6,840
INCOME TAX EXPENSE						(2,591	)
	Net income				$	4,249
Earnings per share:
		Basic				0.04
		Diluted				0.04
Average common shares outstanding:
		Basic				106,605,999
		Diluted				106,605,999

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			For the Period May 13, 2004 (inception) to
			December 31, 2004
							Additional
			Common				Paid-in				Retained
			Stock				Capital				Earnings				Total
Capital Contribution			$	11			$	150,140							$	150,151
	Net income for the period			—				—			$	4,249				4,249
Balance — December 31, 2004			$	11			$	150,140			$	4,249			$	154,400

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					Period from
					May 13, 2004
					(inception)
					to December 31,
					2004
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	4,249
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation, depletion and amortization				7,943
		Amortization of finance costs included in interest expense				266
		(Gain) on sale of assets				(10	)
		Deferred income taxes				359
	Changes in Assets and Liabilities:
	(Increase) decrease in:
		Receivables				19,713
		Inventories				6,140
		Prepaid expenses				(2,030	)
		Other assets				(1,306	)
		Deferred finance costs				(53	)
	Increase (decrease) in:
		Accounts payable				(3,815	)
		Accrued expenses				(1,527	)
		Reclamation and mine closure costs				(591	)
		Other liabilities				873
			Total adjustments			25,962
			Net cash provided by operating activities			30,211
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from the sale of assets					10
	Additions to property, plant and equipment and mine development					(5,583	)
	Acquisition of Horizon Natural Resources					(323,593	)
	Withdraw of restricted cash					(2	)
			Net cash (used in) investing activities			(329,168	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Capital contribution					150,151
	Repayments on long-term debt					(2,969	)
	Repayments on capital leases					(235	)
	Long-term borrowings					175,977
			Net cash provided by financing activities			322,924
			Net increase in cash and cash equivalents, and cash and cash equivalents, end of period		$	23,967
Supplemental information:
Cash paid for interest					$	536
Supplemental disclosure of non-cash items:
	Acquisition of Horizon Natural Resources included in accrued expenses				$	2,191

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			At
			September 30,
			2004
Accounts receivable			$	60,130
Inventory				20,083
Prepaids and other				6,508
Property, plant, and equipment				159,496
Advance royalties				4,314
Debt issuance costs				8,078
Other assets				12,256
Goodwill				183,896
Accounts payable				(25,065)
Accrued expenses				(35,422)
Employee benefits				(17,127)
Accrued reclamation				(43,889)
Other long-term liabilities				(7,474)
Net assets acquired			$	325,784
Funded by:
	Capital contribution		$	150,151
	Long-term debt			175,633
Total			$	325,784

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						Horizon
		ICG, Inc.				Predecessor to ICG, Inc.
		Three Months				Nine Months				Twelve Months
		Ended				Ended				Ended
		December 31,				September 30,				December 31,
		2004				2004				2003
Revenues		$	136,109			$	373,383			$	481,070
Net Income (Loss)		$	4,249			$	(6,292	)		$	(45,442	)
Basic and diluted earnings per share		$	0.04			$	0.06			$	(0.43	)

2.	Summary of Significant Accounting Policies and General

F-21

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F-22

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		Years
Buildings			10 to 45
Mining and other equipment and related facilities			1 to 20
Land improvements			15
Transportation equipment			2 to  7
Furniture and fixtures			3 to 10

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F-24

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F-25

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Coal		$	4,443
Parts and supplies, net of a reserve for obsolescence of $74			9,500
Total		$	13,943

Land and land improvements		$	16,798
Mining and other equipment and related facilities			72,590
Mine development and contract costs			16,012
Coal lands			53,031
Mine development in process			1,373
Construction work in process			5,275
			165,079
Less-accumulated depreciation, depletion and amortization			(7,943	)
Net property, plant and equipment		$	157,136

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Payroll, bonus and vacation expense		$	16,163
Sales and use tax			143
Severance tax			1,355
Federal reclamation tax			918
Excise/black lung tax			344
Personal property tax			5,080
Franchise tax			58
Other			9,793
Total		$	33,854

Term Notes			$	175,000
Capital leases (Note 10)				681
Insurance financing and other				3,787
	Total			179,468
Less — current portion				6,022
Long-term debt and capital leases			$	173,446

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Year Ending December 31:
2005		$	1,750
2006			1,750
2007			1,750
2008			1,750
2009			1,750
Thereafter			166,250
Total		$	175,000

		May 13, 2004 to
		December 31, 2004
Liabilities assumed in the acquisition		$	43,889
Expenditures			(1,349	)
Accretion			758
Balance		$	43,298

		December 31, 2004
Current portion of reclamation and mine closure costs		$	2,682
Non-current reclamation and mine closure costs			40,616
Total		$	43,298

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			May 13, 2004 to
			December 31, 2004
Current:
	Federal		$	1,901
	State			331
				2,232
Deferred:
	Federal			306
	State			53
				359
Total			$	2,591

		May 13, 2004 to
		December 31, 2004
Federal provision computed at statutory rate		$	2,394
State income tax provision (net of federal tax benefits and apportionment factors) computed at statutory rate			219
Other			(22	)
Total		$	2,591

Deferred Tax Assets:
	Accrued employee benefits			$	6,932
	Accrued reclamation and closure				16,670
	Other				3,720
					27,322
Deferred Tax Liabilities:
	Property, coal lands and mine development costs				16,514
	Other				879
					17,393
		Net deferred tax asset		$	9,929
Classified in balance sheet:
	Deferred income taxes — current			$	2,188
	Deferred income taxes — non-current				7,741
		Total		$	9,929

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Postretirement benefits			$	8,013
Black lung benefits				9,994
	Total			18,007
Less — current portion				—
Long-term portion			$	18,007

			Other Postretirement
			Benefits
			December 31, 2004
Changes in Benefit Obligations:
	Benefit obligations assumed in the acquisition		$	7,683
	Service costs			219
	Interest cost			111
	Actuarial loss			121
	Benefit obligation at end of period		$	8,134
Fair value of plan assets at end of period			$	—
Funded Status of the Plan:
	Accumulated obligations less plan assets		$	(8,134	)
	Unrecognized actuarial loss			121
	Net liability recognized		$	(8,013	)

Discount rate		5.75%

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			May 13, 2004 to
			December 31, 2004
Net periodic benefit cost:
	Service cost		$	219
	Interest cost			111
	Benefit cost		$	330

		1-Percentage-				1-Percentage-
		Point				Point
		Increase				Decrease
Effect on total of service and interest cost components		$	174			$	(156	)
Effect on postretirement benefit obligation			987				(889	)

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F-32

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						Operating				Capital
		Royalties				Leases				Leases
Year ended December 31,
2005		$	7,348			$	13,506			$	540
2006			7,348				9,004				172
2007			6,339				3,059				—
2008			6,189				2
2009			6,195				—
Thereafter			29,345				—
Total minimum lease payments		$	62,764			$	25,571				712
Less — amount representing interest											31
Present value of minimum lease payments (Note 6)											681
Less — current portion											485
Total Long Term Portion of Capital Leases										$	196

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		December 31,				May 13, 2004 to
		2004				December 31,
		Total				2004
		Receivable				Total
		Balance				Revenues
Customer A		$	2,563			$	17,720
Customer B			6,581				19,151
Customer C			5,751				19,759

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F-35

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		Central				Illinois
		Appalachian				Basin				Ancillary				Eliminations				Consolidated
Revenue		$	98,555			$	12,744			$	24,982			$	(172	)		$	136,109
EBITDA			14,581				1,383				2,272				—				18,236
Depreciation, depletion and amortization			4,468				1,048				2,427				—				7,943
Capital expenditures			4,858				732				(7	)			—				5,583
Total assets			269,387				56,232				560,411				(426,055	)			459,975
Goodwill			121,055				28,806				34,085				—				183,946

		Period from
		May 13, 2004
		to December 31,
		2004
EBITDA		$	18,236
Depreciation, depletion and amortization			(7,943)
Interest expense			(3,453)
Income before income tax expense		$	6,840

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F-37

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F-38

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				Reorganized Companies
				September 30,				December 31,
				2004(1)				2003(1)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	—			$	859
	Trade accounts receivable (net of allowance for doubtful accounts of $5,441 and $7,798, respectively)				46,117				35,658
	Inventories, net				17,721				13,479
	Deferred income taxes				5,931				6,020
	Prepaid insurance				4,668				6,707
	Prepaid expenses and other				4,399				10,333
	Due from other Horizon subsidiaries				169,308				169,308
		Total current assets			248,144				242,364
PROPERTY, PLANT AND EQUIPMENT, net					276,157				318,552
DEBT ISSUANCE COSTS, Net									1,437
ADVANCE ROYALTIES					10,501				9,976
OTHER NON-CURRENT ASSETS					4,804				4,043
		Total assets		$	539,606			$	576,372
LIABILITIES AND MEMBERS’ DEFICIT
LIABILITIES NOT SUBJECT TO COMPROMISE:
CURRENT LIABILITIES:
	Trade accounts payable			$	29,975			$	36,670
	Current portion of long-term debt and capital leases				30,603				62,698
	Current portion of reclamation and mine closure costs				1,206				1,206
	Accrued expenses and other				27,977				27,872
	Due to other Horizon subsidiaries				13,198
		Total current liabilities			102,959				128,446
NON-CURRENT LIABILITIES, Less current portion
	Long-term debt and capital leases				29				315
	Reclamation and mine closure costs				22,436				27,443
	Deferred income taxes				5,931				6,020
	Other non-current liabilities				18,326				18,422
		Total non-current liabilities			46,722				52,200
		Total liabilities not subject to compromise			149,681				180,646
LIABILITIES SUBJECT TO COMPROMISE					1,272,609				1,170,747
		Total liabilities			1,422,290				1,351,393
COMMITMENTS AND CONTINGENCIES
MEMBERS’ DEFICIT:
	Additional paid-in capital				234,800				234,800
	Members’ investment (52,802 units authorized)				200				200
	Accumulated other comprehensive loss				(3,683	)			(3,683	)
	Accumulated deficit				(1,114,001	)			(1,006,338	)
		Total members’ deficit			(882,684	)			(775,021	)
		Total liabilities and members’ deficit		$	539,606			$	576,372

(1)	As restated. See Note 19.

F-39

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				Reorganized													Predecessor
				Companies													Companies
				Period from								Period from					Period from
				January 1, 2004 to				Year Ended				May 10, 2002 to					January 1, 2002
				September 30,				December 31,				December 31,					to
				2004(1)				2003(1)				2002(1)					May 9, 2002(1)
REVENUES (including amounts to related parties of $3,061 in the Predecessor period)
	Coal Sales revenues			$	346,981			$	441,291			$	264,235				$	136,040
	Freight and handling revenues				3,700				8,008				6,032					2,947
	Other revenues				22,702				31,771				27,397					21,183
		Total revenues			373,383				481,070				297,664					160,170
COSTS AND EXPENSES:
	Freight and handling costs				3,700				8,008				6,032					2,947
	Cost of coal sales and other revenues (including amounts to related parties of $9,116 in the Predecessor period) (exclusive of items shown separately below)				306,429				400,652				251,361					114,767
	Depreciation, depletion and amortization				27,547				52,254				40,033					32,316
	Selling, general and administrative (including amounts to related parties of $3 in the Predecessor period) (exclusive of depreciation and amortization shown separately above)				8,477				23,350				16,695					9,677
	Gain on sale of assets				(226	)			(4,320	)			(39	)				(93	)
	Writedowns and special items				10,018				9,100				729,953					8,323
		Total costs and expenses			355,945				489,044				1,044,035					167,937
	Income (Loss) from operations				17,438				(7,974	)			(746,371	)				(7,767	)
INTEREST AND OTHER INCOME (EXPENSE):
	Interest expense				(114,211	)			(145,892	)			(80,405	)				(36,666	)
	Reorganization items				(12,471	)			(23,064	)			(4,075	)				787,900
	Other, net (including amounts to related parties of $93 in the Predecessor period)				1,581				187				1,256					499
		Total interest and other income (expense)			(125,101	)			(168,769	)			(83,224	)				751,733
NET INCOME (LOSS)				$	(107,663	)		$	(176,743	)		$	(829,595	)			$	743,966

(1)	As restated. See Note 19.

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											Accumulated
							Additional				Other
			Members’				Paid-in				Comprehensive				Accumulated
			Investment				Capital				Loss				Deficit				Total
PREDECESSOR COMPANIES:
	Balance — January 1, 2002		$	53			$	163,913			$	(7,720	)			$(900,212	)		$	(743,966	)
	January 1, 2002 to May 9, 2002, net income(1)			—				—				—				743,966				743,966
	Fresh-start accounting adjustments (1)			(53	)			71,087				7,720				156,246				235,000
	Balance — May 9, 2002 after fresh start adjustments			—				235,000				—				—				235,000
REORGANIZED COMPANIES:
	Balance-May 10, 2002			200				234,800				—				—				235,000
Comprehensive Loss:
	May 10, 2002 to December 31, 2002, net loss(1)			—				—				—				(829,595	)			(829,595	)
	Minimum Pension Liability Adjustment											(3,824	)							(3,824	)
	Total comprehensive loss																			(833,419	)
	BALANCE — December 31, 2002(1)			200				234,800				(3,824	)			(829,595	)			(598,419	)
Comprehensive Loss:
	January 1, 2003 to December 31, 2003, net loss(1)			—				—				—				(176,743	)			(176,743	)
	Minimum pension liability adjustment			—				—				141				—				141
	Total comprehensive loss																			(176,602	)
	Balance — December 31, 2003(1)			200				234,800				(3,683	)			(1,006,338	)			(775,021	)
January 1, 2004 to September 30, 2004, net loss(1)				—				—				—				(107,663	)			(107,663	)
BALANCE — September 30, 2004(1)			$	200			$	234,800			$	(3,683	)			$(1,114,001	)		$	(882,684	)

(1)	As restated. See Note 19.

F-41

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					Reorganized Companies													Predecessor Companies
					Period from				For the				Period from
					January 1, 2004				Year Ended				May 10, 2002 to					Period from
					to September 30,				December 31,				December 31,					January 1, 2002 to
					2004(1)				2003(1)				2002(1)					May 9, 2002(1)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)				$	(107,663	)		$	176,743			$	(829,595	)			$	743,966
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation, depletion and amortization				27,547				52,254				40,033					32,316
		Depreciation — Allocation from Affiliates				127				4,118				4,930					5,723
		Amortization of finance costs included in interest expense				1,437				3,698				5,644					5,676
		Gain on sale of assets				(226	)			(4,320	)			(39	)				(93	)
		Gain on lease buyout				(7,736	)
		Fresh start revaluation																	(645,824	)
		Fresh start adjustments																	(801,495	)
		Gain on debt extinguishment																	(161,584	)
		Writedowns and special items				17,754				9,100				729,953					8,323
		Provision for doubtful accounts				247				1,656				1,535					6,594
		Provision for asset write-downs																	91,185
Changes in Assets and Liabilities:
	(Increase) decrease in:
		Receivables				(10,706	)			(11,104	)			40,356					25,864
		Inventories				(4,242	)			(273	)			2,806					(37,197	)
		Prepaid expenses				7,971				19,374				64,809					(17,032	)
		Other assets				477				(36	)			2,817					(44,730	)
	Increase (decrease) in:
		Accounts payable				21,680				(10,344	)			21,622					386,387
		Accrued expenses				85,520				150,144				32,388					87,079
		Reclamation and mine closure costs				(4,007	)			(11,942	)			(31,957	)				(23,060	)
		Other liabilities				(95	)			(5,552	)			(8,924	)				(15,690	)
			Total adjustments			135,748				196,773				905,973					(1,097,558	)
			Net cash provided by (used in) operating activities			28,085				20,030				76,378					(353,592	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from the sale of assets					4,089				15,388				636					122
	Proceeds from lease buyout					7,736
	Additions to property, plant and equipment and mine development					(6,624	)			(16,937	)			(13,435	)				(10,963	)
	(Deposits) withdrawals of/from restricted cash					(1,764	)			(2,277	)			(6	)				55,396
		Net cash provided by (used in) investing activities				3,437				(3,826	)			(12,805	)				44,555
CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayments on long-term debt					(4,698	)			(13,729	)			(183,162	)				(304,449	)
	Borrowings on long-term debt													50,003					574,700
	Net borrowings/(repayments) on debtor-in-possession financing					(27,080	)			(737	)			56,027
	Financing costs																		(11,238	)
	Repayments on capital leases					(603	)			(993	)			(893	)				(2	)
		Net cash provided by (used in) financing activities				(32,381	)			(15,459	)			(78,025	)				259,011
		Net increase (decrease) in cash and cash equivalents				(859	)			745				(14,452	)				(50,026	)
	Cash and cash equivalents, beginning of period					859				114				14,566					64,592
	Cash and cash equivalents, end of period				$	0			$	859			$	114				$	14,566

(1)	As restated. See Note 19.

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1.	Organization and Basis of Presentation

F-43

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		Horizon Amounts
Account		September 30, 2004				December 31, 2003
Vendor Advances		$	169			$	691
Reclamation Deposits			52,706				54,743

		Amounts Allocated to
		Combined Companies
		September 30, 2004				December 31, 2003				Basis of Allocation
Vendor Advances		$	93			$	373				Coal Production Tons
Reclamation Deposits			—				1,343				Premiums Paid

		Horizon Amounts
		January 1, 2004-				January 1, 2003-				May 10, 2002-					January 1, 2002-
		September 30, 2004				December 31, 2003				December 31, 2002					May 9, 2002
Selling, general, and administrative expenses		$	17,100			$	25,000			$	12,541				$	20,285

Amounts Allocated to

Combined Companies

January 1, 2004-

January 1, 2003-

May 10, 2002-

January 1, 2002-

September 30, 2004

December 31, 2003

December 31, 2002

May 9, 2002

Basis of Allocation

Selling, general, and administrative expenses

$

9,081

$

9,860

$

4,974

$

8,305

Estimated Hours Worked

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2.	Liquidity and Bankruptcy Proceedings

		September 30,				December 31,
		2004				2003
Long-term debt		$	915,304			$	915,304
Accrued postretirement medical benefits			59,578				56,633
Accounts payable and accrued expenses			22,652				23,872
Accrued interest			275,075				174,938
		$	1,272,609			$	1,170,747

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3.	Summary of Significant Accounting Policies and General

F-46

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		Years
Buildings		10 to 45
Mining and other equipment and related facilities		1 to 20
Land improvements		15
Transportation equipment		2 to 7
Furniture and fixtures		3 to 10

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F-48

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		Reorganized Companies
		January 1, 2004 to				Year Ended
		September 30, 2004				December 31, 2003
Cash paid for interest		$	9,268			$	7,797
Income taxes paid (refunded)			(69	)			38

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		Reorganized Companies				Predecessor Companies
		May 10, 2002 to				January 1, 2002 to
		December 31, 2002				May 9, 2002
Cash paid for interest		$	20,405			$	150,502
Income taxes paid (refunded)			45				106

4.	Fresh-Start Accounting

Post-petition liabilities		$	1,281,218
Liabilities subject to compromise			436,255
Total post-petition liabilities and allowed claims			1,717,473
Reorganization value			1,521,320
Excess of liabilities over reorganization value		$	196,153

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						Accrued
		Debt				Interest				Total
10.5% Senior Notes		$	200,000			$	48,177			$	248,177
11.5% Senior Subordinated Notes			150,000				38,078				188,078
Liabilities Subject to Compromise		$	350,000			$	86,255			$	436,255

Liabilities subject to compromise		$	436,255
Unamortized financing costs associated with retired debt			(39,671	)
			396,584
New equity			235,000
Gain on debt extinguishment		$	161,584

Gain on fresh-start revaluation		$	645,824
Gain on debt extinguishment			161,584
Professional fees incurred during bankruptcy proceedings			(19,508	)
Reorganization items		$	787,900

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				Balance Sheet at May 9, 2002 (Unaudited)
								Fresh Start
				AEI												Horizon
				Predecessor				Debt								Predecessor
				Companies				Restructuring				Adjustments				Companies
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	14,566			$	—			$	—			$	14,566
	Restricted cash				72,712				—				—				72,712
	Accounts receivable — net				47,697				—				—				47,697
	Inventories				53,109				—				(29,020	)			24,089
	Deferred income taxes				25,270				—				17,241				42,511
	Prepaid expenses and other				12,949				—				(171	)			12,778
		Total current assets			226,303				—				(11,950	)			214,353
	PROPERTY, PLANT, AND EQUIPMENT, INCLUDING COAL LANDS, MINE DEVELOPMENT AND CONTRACT COSTS — net				427,433				—				(34,187	)			393,246
	GOODWILL				—				—				697,063				697,063
NET RECEIVABLE FROM OTHER HORIZON SUBSIDIARIES					191,360				—				—				191,360
DEBT ISSUANCE COSTS — net					50,450				(39,671	)			—				10,779
OTHER NON-CURRENT ASSETS					14,519				—				—				14,519
		Total assets		$	910,065			$	(39,671	)		$	650,926			$	1,521,320
LIABILITIES AND MEMBERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Accounts payable			$	16,876			$	—			$	—			$	16,876
	Current portion of long-term debt and capital leases				875,565				(755,933	)							119,632
	Accrued expenses and other				194,414				(157,250	)			4,553				41,717
		Total current liabilities			1,086,855				(913,183	)			4,553				178,225
NON-CURRENT LIABILITIES, less current portion
	Long-term debt and capital leases				19,923				913,183				—				933,106
	Employee benefits				57,035				—				—				57,035
	Reclamation and mine closure costs				64,703				—				(22,157	)			42,546
	Deferred non-current liabilities				25,270				—				17,241				42,511
	Other non-current liabilities				27,432				—				5,465				32,897
	Liabilities subject to compromise				436,255				(436,255	)
		Total liabilities			1,717,473				(436,255	)			5,102				1,286,320
MEMBERS’ EQUITY
	Accumulated earnings (deficit)				(963,655	)			161,584				802,071				—
	Other members’ equity (deficit)				156,247				235,000				(156,247	)			235,000
		Total liabilities and members’ equity (deficit)		$	910,065			$	(39,671	)		$	650,926			$	1,521,320

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	•	$1,453 write-up of stockpile inventory to market.
	•	Reclassification to development costs of deferred overburden ($29,229), where it will be amortized based on the units-of-production method.
	•	Adjustment to decrease parts and supplies ($1,244) to estimated market value.

	•	The property, plant and equipment were valued at net book value, which approximates the fair market value.
	•	Coal lands were decreased $65,178 to reflect an independent valuation assessment. The interests were valued on a discounted royalty approach, which considered the current net royalty value of both leased and owned interest. The relevant royalty revenue streams were projected into the future based on budgeted production and discounted back to generate the coal land value.
	•	Development cost was increased $29,229 to reflect the reclassification of deferred overburden (see inventory section above).
	•	Contract costs were decreased $30,105 to reflect the current market value of existing sales contracts.
	•	Asset retirement costs of $31,867 were recorded to reflect adoption of SFAS No. 143 (Note 3).

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5.	Inventories

		September 30,				December 31,
		2004				2003
Coal		$	8,717			$	5,478
Parts and supplies, net of allowance of $2,797 and $2,803			9,004				8,001
		$	17,721			$	13,479

		September 30,				December 31,
		2004				2003
Land and land improvements		$	17,084			$	17,420
Mining and other equipment and related facilities			137,720				144,601
Mine development and contract costs			50,151				44,907
Coal lands			186,420				202,240
Mine development in process			2,081				4,139
Construction work in process			2,243				2,116
			395,699				415,423
Less-accumulated depreciation, depletion and amortization			(119,542	)			(96,871	)
Net property, plant and equipment		$	276,157			$	318,552

7.	Accrued Expenses and Other

		September 30,				December 31,
		2004				2003
Payroll, bonus and vacation expense		$	15,247			$	13,742
Non-income taxes			7,065				7,369
Deferred revenues			—				747
Other			5,665				6,014
		$	27,977			$	27,872

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			September 30,				December 31,
			2004				2003
DIP Facility			$	30,016			$	57,096
Senior Secured Term Notes				465,000				465,000
Senior Secured Notes				450,000				450,000
Capital leases (Note 12)				859				1,463
Other				61				4,758
	Total			945,936				978,317
Less — long-term debt subject to compromise				915,304				915,304
Less — current portion of long-term debt and capital leases not subject to compromise				30,603				62,698
Long-term debt and capital leases			$	29			$	315

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				September 30,				December 31,
				2004				2003
Letters of Credit:
	Insurance/Workers’ compensation/Reclamation bonds			$	159,851			$	155,238
	Coal lands/Royalties				—				450
		Total		$	159,851			$	155,688

	•	Incur additional indebtedness, pay dividends and make other restricted payments and investments;
	•	Acquire or dispose of assets;
	•	Engage in transactions with affiliates;
	•	Merge, consolidate, or transfer substantially all of its assets.

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		Reorganized Companies
		January 1, 2004 to September 30, 2004
Beginning Balance		1/1/2004			28,649
Expenditures		1/1/2004 - 9/30/2004			(9,092	)
Accretion		1/1/2004 - 9/30/2004			3,399
Allocation from other Horizon Subsidiaries		1/1/2004 - 9/30/2004			686
Ending Balance				$	23,642

		Reorganized Companies
		Year Ended December 31, 2003								May 10, 2002 to December 31, 2002
Beginning Balance			1/1/2003			$	35,765			5/9/2002		$	90,973
SFAS No. 143 adoption													(48,071	)
Liability for new mining locations			1/1/2003 - 12/31/2003				228
Expenditures			1/1/2003 - 12/31/2003				(9,478	)		5/10/2002 - 12/31/2002			(11,033	)
Accretion			1/1/2003 - 12/31/2003				4,986			5/10/2002 - 12/31/2002			3,232
Allocation (to)/from other Horizon Subsidiaries			1/1/2003 - 12/31/2003				(2,852	)		5/10/2002 - 12/31/2002			664
Ending Balance						$	28,649					$	35,765

		September 30,				December 31,
		2004				2003
Current portion of reclamation and mine closure costs		$	1,206			$	1,206
Non-current reclamation and mine closure costs			22,436				27,443
		$	23,642			$	28,649

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		Reorganized Companies (1)
		January 1, 2004 to				January 1, 2003 to
		September 30, 2004				December 31, 2003
Federal provision (benefit) computed at statutory rate		$	(37,682	)		$	(61,860	)
State income tax provision (benefit) (net of federal tax benefits and apportionment factors) computed at statutory rate			(4,630	)			(7,600	)
Valuation allowance			43,099				70,509
Other			(787	)			(1,049	)
		$	—			$	—

		Reorganized				Predecessor
		Companies (1)				Companies (1)
		May 10, 2002 to				January 1, 2002 to
		December 31, 2002				May 9, 2002
Federal provision (benefit) computed at statutory rate		$	(290,358	)		$	260,388
State income tax provision (benefit) (net of federal tax benefits and apportionment factors) computed at statutory rate			(35,673	)			31,991
Valuation allowance			(196,596	)			312,568
Goodwill			524,533				(524,533	)
Gain on extinguishment of debt							(79,053	)
Other			(1,906	)			(1,361	)
		$	—			$	—

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				September 30,				December 31,
				2004				2003
Deferred Tax Assets:
	Accrued employee benefits			$	23,361			$	30,677
	Accrued reclamation and closure				9,270				11,194
	Reserve for losses				10,534				11,437
	Net operating loss carryforwards				160,855				135,317
	Other				6,241				6,972
					210,261				195,597
	Valuation allowance				(145,628	)			(116,436	)
					64,633				79,161
Deferred Tax Liabilities:
	Property, coal lands and mine development costs				64,538				78,943
	Other				95				218
					64,633				79,161
		Net deferred tax liability		$	—			$	—
Classified in balance sheet:
	Other current assets			$	5,931			$	6,020
	Non-current liabilities			$	5,931			$	6,020

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			September 30,				December 31,
			2004				2003
Postretirement benefits			$	11,083			$	10,104
Workers’ compensation benefits				10,315				9,666
Black lung benefits				21,540				20,618
Pension benefits				16,640				16,245
	Total			59,578				56,633
Less — current portion				—				—
Less — liabilities subject to compromise (Note 2)				59,578				56,633
Long-term portion			$	—			$	—

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				Pension
				Benefits
				December 31,
				2003
Changes in Benefit Obligations:
	Benefit obligations at beginning of period			$	92,594
	Service costs				2,999
	Interest cost				6,098
	Actuarial loss				4,708
	Benefits paid				(18,511	)
		Benefit obligation at end of period		$	87,888
Change in Plan Assets:
	Fair value of plan assets at beginning of period			$	49,693
	Actual return on plan assets				7,537
	Employer contributions				3,272
	Benefits paid				(18,511	)
		Fair value of plan assets at end of period		$	41,991
Funded Status of the Plan:
	Accumulated obligations less plan assets			$	(45,897	)
	Unrecognized actuarial loss				15,247
	Unrecognized prior service cost				(508	)
	Additional minimum pension liability				(10,660	)
		Net liability recognized		$	(41,818	)
Weighted Average Assumptions:
	Discount rate				6.25	%
	Expected return on plan assets				8.50	%
	Rate of compensation increase				4.00	%

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				Other
				Postretirement
				Benefits
				December 31,
				2003
Changes in Benefit Obligations:
	Benefit obligations at beginning of period			$	501,061
	Service costs				6,251
	Interest cost				42,278
	Actuarial loss				79,142
	Benefits paid				(33,975	)
		Benefit obligation at end of period		$	594,757
Change in Plan Assets:
	Fair value of plan assets at beginning of period			$	—
	Actual return on plan assets				—
	Employer contributions				33,975
	Benefits paid				(33,975	)
		Fair value of plan assets at end of period		$	—
Funded Status of the Plan:
	Accumulated obligations less plan assets			$	(594,757	)
	Unrecognized actuarial loss				142,494
	Unrecognized prior service cost				—
	Additional minimum pension liability				—
		Net liability recognized		$	(452,263	)
Weighted Average Assumptions:
	Discount rate				6.50	%
	Expected return on plan assets				N/A
	Rate of compensation increase				N/A

						Other
		Pension				Postretirement
		Benefits				Benefits
		December 31,				December 31,
		2003				2003
Accrued benefit cost included in liabilities subject to compromise		$	(16,245	)		$	(10,104	)
Intangible assets			5				—
Accumulated other comprehensive income			3,683				—
Net amount recognized		$	(12,557	)		$	(10,104	)

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				Pension Benefits
				Reorganized									Predecessor
				Companies									Companies
				January 1, 2003				May 10, 2002 to					January 1, 2002
				December 31, 2003				December 31, 2002					to May 9, 2002
Net periodic benefit cost:
	Service cost			$	2,999			$	2,145				$	1,173
	Interest cost				6,098				4,213					2,303
	Settlement charge				2,184				3,821					0
	Expected return on assets				(5,468	)			(4,812	)				(2,631	)
	Amortization of:
		Prior service cost			(72	)			(47	)				(26	)
		Actuarial loss			21				222					122
	Benefit cost			$	5,762			$	5,542				$	941

			Other Postretirement Benefits
			Reorganized									Predecessor
			Companies									Companies
			January 1, 2003				May 10, 2002 to					January 1, 2002
			December 31, 2003				December 31, 2002					to May 9, 2002
Net periodic benefit cost:
	Service cost		$	6,251			$	4,253				$	1,758
	Interest cost			42,278				20,132					11,004
	Amortization of — Actuarial (gain) loss			897				(566	)				(310	)
	Benefit cost		$	49,426			$	23,819				$	12,452

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		1-Percentage-				1-Percentage-
		Point				Point
		Increase				Decrease
Effect on total of service and interest cost components		$	6,300			$	(5,200	)
Effect on postretirement benefit obligation			81,300				(67,300	)

Asset Category			2003
Mutual funds				49	%
Cash Equivalents				51
	Total			100	%

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		2004								2003
		September 30,				January 1, 2004 to				December 31,				January 1, 2003 to
		2004				September 30,				2003				December 31,
		Total				2004				Total				2003
		Receivable				Total				Receivable				Total
		Balance				Revenues				Balance				Revenues
Customer A		$	4,105			$	44,788			$	1,342			$	119,817
Customer B			8,187				58,712				224				89,459
Customer C			11,499				36,244				3,233				42,317

		2002
		May 10, 2002 to					January 1, 2002 to
		December 31,					May 9,
		2002					2002
		Total					Total
		Revenues					Revenues
Customer A		$	58,566				$	34,209
Customer B			48,033					24,584
Customer C			18,235					5,543

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			Reorganized Companies
			January 1, 2004 to				Year Ended				May 10, 2002 to
			September 30, 2004				December 31, 2003				December 31, 2002
Goodwill impairment			$	—			$	—			$	697,063
Sale of mineral rights, equipment and impairment of operating assets				10,018				6,416				32,890
Inventory writedown and other				—				2,684				—
	Total		$	10,018			$	9,100			$	729,953

			Predecessor
			Companies
			January 1, 2002 to
			May 9, 2002
Impairment of operating assets			$	8,323
	Total		$	8,323

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			Reorganized Companies
			January 1, 2004 to				Year Ended				May 10, 2002 to
			September 30, 2004				December 31, 2003				December 31, 2002
Bankruptcy related reorganization expenses, including professional services fees and labor costs			$	(12,471	)		$	(23,064	)		$	(4,075	)
	Total		$	(12,471	)		$	(23,064	)		$	(4,075	)

			Predecessor Companies
			January 1, 2002 to
			May 9, 2002
Gain on Fresh Start Valuation			$	645,824
Gain on Debt Extinguishment				161,584
Bankruptcy related reorganization expenses, including professional services fees and labor costs				(19,508	)
	Total		$	787,900

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			January 1, 2002
			through
			May 9, 2002
Revenues, costs and expenses:
	Coal sales		$	2,537
	Equipment rental and repair income			524
	Administrative and miscellaneous income			93
	Trucking expense			885
	Repair, maintenance & other mining costs			6,818
	Equipment rental cost			1,413
	Administrative and miscellaneous expense			3

		Central				Illinois
		Appalachian				Basin				Ancillary				Eliminations				Consolidated
Revenue		$	252,669			$	38,306			$	83,693			$	(1,285	)		$	373,383
EBITDA			28,376				5,243				476				—				34,095
Depreciation, depletion and amortization			20,348				2,568				4,631				—				27,547
Capital expenditures			4,309				1,263				1,052				—				6,624
Total assets			308,193				89,782				(230,301	)			371,932				539,606

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		Central				Illinois
		Appalachian				Basin				Ancillary				Eliminations				Consolidated
Revenue		$	281,488			$	49,904			$	151,419			$	(1,741	)		$	481,070
EBITDA			2,915				7,438				11,050				—				21,403
Depreciation, depletion and amortization			29,239				3,954				19,061				—				52,254
Capital expenditures			11,252				784				4,901				—				16,937
Total assets			304,472				92,555				(192,587	)			371,932				576,372

		Central				Illinois
		Appalachian				Basin				Ancillary				Eliminations				Consolidated
Revenue		$	176,318			$	30,471			$	94,125			$	(3,250	)		$	297,664
EBITDA			237,549				(16,796	)			(929,910	)			—				(709,157	)
Depreciation, depletion and amortization			25,781				3,099				11,153				—				40,033
Capital expenditures			9,964				2,458				1,013				—				13,435
Total assets			332,579				88,832				(169,543	)			371,932				623,800

		Central				Illinois
		Appalachian				Basin				Ancillary				Eliminations				Consolidated
Revenue		$	99,139			$	12,617			$	49,739			$	(1,325	)		$	160,170
EBITDA			12,050				1,221				799,677				—				812,948
Depreciation, depletion and amortization			19,598				2,586				10,132				—				32,316
Capital expenditures			6,965				361				3,637				—				10,963
Total assets			182,352				53,253				1,321,881				(36,168	)			1,521,318
Goodwill			—				—				697,063				—				697,063

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		Nine months				Twelve months				Period from				Period from
		ended				ended				May 10, 2002 to				January 1, 2002 to
		September 30,				December 31,				December 31,				May 9,
		2004				2003				2002				2002
EBITDA			$ 34,095				$ 21,403				$(709,157	)			$812,948
Depreciation, depletion and amortization			(27,547	)			(52,254	)			(40,033	)			(32,316	)
Interest expense			(114,211	)			(145,892	)			(80,405	)			(36,666	)
Income (loss) before income tax expense (benefit)			$(107,663	)			$(176,743	)			$(829,595	)			$743,966

			Period from								Period from
			January 1,								May 10, 2002
			2004 to				Year Ended				to				Period from
			September 30,				December 31,				December 31,				January 1, 2002 to
			2004				2003				2002				May 9, 2002
Reorganization items:
	As reported		$	727			$	(52,784	)		$	(143,663	)		$	1,567,689
	Adjustment			(13,198	)			29,720				139,588				(779,789	)
	As restated		$	(12,471	)		$	(23,064	)		$	(4,075	)		$	787,900
Accumulated deficit — January 1, 2002:
	As reported														$	(878,508	)
	Adjustment															(21,704	)
	As restated														$	(900,212	)
Fresh start accounting adjustments:
	As reported														$	(645,247	)
	Adjustment															801,493
	As restated														$	156,246

			September 30,				December 31,
			2004				2003
(Due to) from other Horizon subsidiaries:
	As reported		$	—			$	—
	Adjustment			(13,198	)			169,308
	As restated		$	(13,198	)		$	169,308

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					September 30,				December 31,
					2005				2004
					(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents				$	694,782			$	1,165,559
	Accounts receivable — trade, net of allowance of $1,612,903 and $1,194,895 at September 30, 2005 and December 31, 2004, respectively					5,981,216				9,050,468
	Accounts receivable — other					4,614,437				2,311,255
	Coal and supply inventory					3,430,504				4,026,612
	Prepaid expenses and other					922,661				1,457,087
			Total current assets			15,643,600				18,010,981
PROPERTY, PLANT AND EQUIPMENT, net						67,757,359				54,122,751
NOTES RECEIVABLE, net of allowance of $759,797 at December 31, 2004										500,000
ADVANCE ROYALTIES						3,592,581				3,439,379
OTHER NON-CURRENT ASSETS:
	Bonds and deposits					3,345,150				2,583,082
	Investment in joint venture					1,048,108				434,322
	Other					4,110,370				4,280,186
		Total other non-current assets				8,503,628				7,297,590
TOTAL					$	95,497,168			$	83,370,701
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Accounts payable				$	13,389,330			$	10,281,124
	Accounts payable — ICG, Inc.					2,597,318				—
	Accrued expenses					8,381,069				8,253,453
	Reclamation — current portion					1,888,687				105,413
	Notes payable — current portion					35,185,851				14,848,690
		Total current liabilities				61,442,255				33,488,680
NOTES PAYABLE						10,268,842				9,699,753
OTHER NON-CURRENT LIABILITIES:
	Reclamation					23,898,681				25,168,633
	Deferred gain on sale-leaseback					8,676,425				8,832,792
	Other					4,313,585				4,783,509
		Total other non-current liabilities				36,888,691				38,784,934
			Total liabilities			108,599,788				81,973,367
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY (DEFICIT):
	Common stock, no par value, 1,000,000 shares authorized and issued
	Paid-in capital					145,588,000				145,588,000
	Accumulated deficit					(158,690,620	)			(144,190,666	)
			Total stockholders’ equity (deficit)			(13,102,620	)			1,397,334
			Total liabilities and stockholders’ equity (deficit)		$	95,497,168			$	83,370,701

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				Nine Months Ended September 30,								Year Ended
												December 31,
				2005				2004				2004
				(Unaudited)				(Unaudited)
REVENUES:
	Coal revenue			$	106,662,380			$	109,749,091			$	146,675,714
	Freight and handling				9,071,098				8,110,366				11,415,952
	Waste and blended fuel revenue				4,374,867				4,741,743				6,228,786
		Total revenues			120,108,345				122,601,200				164,320,452
COSTS AND EXPENSES:
	Cost of coal sold (including $5,579,796 from ICG, Inc.)				114,541,637				109,309,563				145,985,163
	Freight and handling costs				9,071,098				8,110,366				11,415,952
	Depreciation, depletion and amortization				9,217,708				6,938,146				9,754,467
	Selling, general and administrative				4,663,593				2,993,104				4,585,793
		Total costs and expenses			137,494,036				127,351,179				171,741,375
OPERATING LOSS					(17,385,691	)			(4,749,979	)			(7,420,923	)
OTHER INCOME (EXPENSE):
	Interest income				231,668				131,397				181,164
	Interest expense				(2,207,852	)			(979,190	)			(1,485,481	)
	Other, net				4,248,135				2,898,742				5,555,196
		Total other income (expense)			2,271,951				2,050,949				4,250,879
EQUITY IN EARNINGS (LOSS) OF JOINT VENTURE					613,786				(160,922	)			(26,929	)
	Net loss			$	(14,499,954	)		$	(2,859,952	)		$	(3,196,973	)

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							Accumulated
			Paid-in Capital				Deficit				Total
Balances at December 31, 2003, as previously reported			$	145,588,000			$	(141,925,000	)		$	3,663,000
	Prior period adjustment — see Note 13							931,307				931,307
	As restated			145,588,000				(140,993,693	)			4,594,307
	Net loss							(3,196,973	)			(3,196,973	)
Balances at December 31, 2004				145,588,000				(144,190,666	)			1,397,334
	Net loss — September 30, 2005 (unaudited)			—				(14,499,954	)			(14,499,954	)
Balances at September 30, 2005 (unaudited)			$	145,588,000			$	(158,690,620	)		$	(13,102,620	)

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						Nine Months Ended
						September 30,								Year Ended
														December 31,
						2005				2004				2004
						(Unaudited)				(Unaudited)
OPERATING ACTIVITIES:
	Net loss					$	(14,499,954	)		$	(2,859,952	)		$	(3,196,973	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation, depletion and amortization					9,217,708				6,938,146				9,754,467
		Loss on sales of property, plant and equipment					7,751				11,250				105,805
		Equity in loss (income) of joint venture					(613,786	)			160,922				26,929
		Changes in assets and liabilities:
			Accounts receivable — trade				3,069,252				(3,227,103	)			(1,608,549	)
			Accounts receivable — other				(2,011,711	)			(71,050	)			(1,299,892	)
			Coal and supply inventory				596,108				409,447				(2,023,272	)
			Other current assets and other assets				589,425				1,032,138				(745,043	)
			Advance royalties				(153,202	)			(699,931	)			(1,616,922	)
			Accounts payable				5,705,524				2,002,986				5,339,644
			Accrued expenses				(497,607	)			1,051,818				2,086,921
			Other current and non-current liabilities				512,253				(601,448	)			3,149,579
				Net cash provided by operating activities			1,921,761				4,177,223				9,972,694
INVESTING ACTIVITIES:
	Expenditures for purchases of property, plant and equipment						(23,044,221	)			(14,563,794	)			(27,238,311	)
	Proceeds from sales of property, plant and equipment						7,500				151,750				151,750
	Proceeds from notes receivable						500,000				—				787,979
	(Deposits) withdrawals of/from bonds and deposits						(762,068	)			(488,037	)			176,707
				Net cash used in investing activities			(23,298,789	)			(14,900,081	)			(26,121,875	)
FINANCING ACTIVITIES:
	Principal payments on debt						(4,007,449	)			(1,971,330	)			(4,840,717	)
	Proceeds from debt						24,913,700				10,522,877				18,978,707
				Net cash provided by financing activities			20,906,251				8,751,528				14,137,990
Net decrease in cash and cash equivalents							(470,777	)			(1,971,330	)			(2,011,191	)
Cash and cash equivalents, beginning of period							1,165,559				3,176,750				3,176,750
Cash and cash equivalents, end of period						$	694,782			$	1,205,420			$	1,165,559
Cash paid during the period for interest						$	756,330			$	423,929			$	703,417

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1.	Description of Business and Significant Accounting Policies

		September 30,				December 31,
		2005				2004
		(Unaudited)
Coal			$3,023,376			$	3,673,080
Parts and supplies, net of allowance of $26,015 and $142,996			407,128				353,532
			$3,430,504			$	4,026,612

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		Years
Buildings and improvements		10 to 30
Machinery and equipment		3 to 15
Vehicles		3 to  5
Furniture and fixtures		3 to 10

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2.	Property, Plant and Equipment

		September 30,				December 31,
		2005				2004
		(Unaudited)
Land		$	4,630,028			$	4,127,202
Buildings and improvements			20,976,883				19,233,942
Mine development			49,760,057				37,623,860
Machinery and equipment			62,881,873				56,830,387
Vehicles			598,978				579,096
Furniture and fixtures			3,669,350				3,451,851
Construction in progress			3,427,686				2,631,545
Mineral rights			9,567,906				9,567,906
Total property, plant and equipment			155,512,761				134,045,789
Less accumulated depreciation, depletion and amortization			87,755,402				79,923,038
Property, plant and equipment, net		$	67,757,359			$	54,122,751

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3.	Notes Payable

		September 30,				December 31,
		2005				2004
		(Unaudited)
Senior notes, interest at 10%		$	7,000,000			$	7,000,000
Note payable, interest at 8%			585,890				1,592,622
Related party note payable, interest at 8%			28,792,045				7,580,834
Related party revolving credit line, interest at 8%			4,500,000				4,500,000
Equipment notes (fixed rates ranging from 4% to 7.643%)			4,576,758				3,874,987
Total			45,454,693				24,548,443
Less: current portion			35,185,851				14,848,690
Notes payable — long-term portion		$	10,268,842			$	9,699,753

Year Ending December 31
2005		$	14,848,690
2006			1,034,428
2007			596,862
2008			981,121
2009			1,822,478
Thereafter			5,264,864
Total		$	24,548,443

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4.	Deferred Gain on Sale-Leaseback

5.	Other Income, Net

		Nine Months Ended
		September 30,
										Year Ended
		2005				2004				December 31, 2004
		(Unaudited)				(Unaudited)
Ash revenue		$	1,609,646			$	1,283,611			$	1,637,798
Commissions revenue			636,946				526,236				1,434,934
Miscellaneous revenue			1,370,218				537,656				1,703,069
Royalty revenue			631,325				551,239				779,395
Total		$	4,248,135			$	2,898,742			$	5,555,196

6.	Leases

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		Total
2005		$	1,218,620
2006			1,176,476
2007			824,583
2008			818,567
2009			813,534
Thereafter			813,118
Total		$	5,664,898

	7.     Income Taxes

		Nine Months Ended
										Year Ended
		September 30,				September 30,				December 31,
		2005				2004				2004
		(Unaudited)				(Unaudited)
Current		$				$				$
Deferred			(6,099,230	)			(1,145,158	)			(1,038,328	)
Valuation allowance			6,099,230				1,145,158				1,038,328
Total		$				$				$

		December 31,
		2004
Federal provision (benefit) computed at statutory rate		$	(1,118,941	)
State income tax provision (benefit) (net of federal tax benefits and apportionment factors) computed at statutory rate			(159,849	)
Valuation allowance			1,038,328
Restructuring charges			141,456
Other			99,006
		$	—

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				December 31,
				2004
Deferred Tax Assets:
	Accrued employee benefits			$	2,347,632
	Accrued reclamation and closure				9,725,829
	Deferred income				3,365,676
	Other				451,984
					15,891,121
	Valuation allowance				(2,622,294	)
					13,268,827
Deferred Tax Liabilities:
	Property, mineral reserves and mine development costs				13,268,827
	Other				—
					13,268,827
		Net deferred tax asset/liability		$	—
Classified in balance sheet:
	Other current assets			$	241,052
	Non-current liabilities			$	241,052

8.	Benefit Plan

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9.	Related Party

		For the				As of and for the				As of and for the
		Nine Months				Nine Months				Year Ended
		Ended				Ended				December 31,
		September 30, 2004				September 30, 2005				2004
						(Unaudited)
Advance royalties		$	1,038,960			$	1,038,960			$	1,038,960
Accounts payable							97,787				70,345
Accrued expenses			1,214,617				1,196,316				1,168,384
Royalty expense			1,355,637				894,925				1,769,324

10.	Commitments and Contingencies

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11.	Major Customers

		Nine Months Ended				Nine Months Ended
		September 30, 2004				September 30, 2005								Year Ended December 31, 2004
						Total								Total
		Total				Receivable				Total				Receivable				Total
		Revenues				Balance				Revenues				Balance				Revenues
		(Unaudited)
						(Unaudited)
Customer A		$	22,158,527			$	826,691			$	22,189,447			$	3,253,195			$	31,377,653
Customer B			20,283,707				1,699,734				16,633,422				488,537				25,146,998
Customer C			17,747,053				1,613,806				15,542,226				3,037,820				24,324,298
Customer D			13,183,868				1,273,959				13,728,160				563,485				17,734,949

12.	Business Combination Agreement

13.	Prior Period Adjustment

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				September 30,				December 31,
				2005				2004
				(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	1,944,691			$	1,818,883
	Royalties receivable				1,262,619				1,238,729
	Prepaid expense				13,130				15,150
		Total current assets			3,220,440				3,072,762
Coal lands, net					18,881,862				18,920,896
TOTAL				$	22,102,302			$	21,993,658
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES:
	Accounts payable and accrued expenses			$	183,397			$	546,082
	Interest payable				981,640				535,200
		Total current liabilities			1,165,037				1,081,282
NOTES PAYABLE					16,250,000				16,250,000
DEFERRED ROYALTY INCOME					1,038,960				1,038,960
		Total liabilities			18,453,997				18,370,242
MEMBERS’ EQUITY:
	Paid-in capital				3,250,000				3,250,000
	Retained earnings				398,305				373,416
		Total members’ equity			3,648,305				3,623,416
TOTAL LIABILITIES AND MEMBERS’ EQUITY				$	22,102,302			$	21,993,658

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				Nine Months Ended								Year Ended
				September 30,								December 31,
				2005				2004				2004
				(Unaudited)				(Unaudited)
ROYALTY INCOME				$	894,925			$	1,355,637			$	1,769,324
OPERATING EXPENSES					342,086				456,444				449,112
OPERATING INCOME					552,839				899,193				1,320,212
OTHER INCOME (EXPENSE):
	Interest income				30,623				3,355				7,934
	Interest expense				(446,439	)			(387,711	)			(535,200	)
	Other income				—				—				132,607
		Total other income (expense)			(415,816	)			(384,356	)			(394,659	)
Net income				$	137,023			$	514,837			$	925,553

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							Retained
			Paid-in				Earnings
			Capital				(Deficit)				Total
Balance at January 1, 2004			$	8,450,890			$	(174,491	)		$	8,276,399
	Capital contribution			1,592,243								1,592,243
	Net income							925,553				925,553
	Distributions			(6,793,133	)			(377,646	)			(7,170,779	)
Balance at December 31, 2004				3,250,000				373,416				3,623,416
	Net income (unaudited)							137,023				137,023
	Distributions (unaudited)			—				(112,134	)			(112,134	)
Balance at September 30, 2005 (unaudited)			$	3,250,000			$	398,305			$	3,648,305

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						Nine Months Ended								Year Ended
						September 30,								December 31,
						2005				2004				2004
						(Unaudited)				(Unaudited)
OPERATING ACTIVITIES:
	Net income					$	137,023			$	514,837			$	925,553
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depletion					39,034				62,358				79,104
		Changes in assets and liabilities:
			Royalties receivable				(23,890	)			(299,781	)			(199,769	)
			Prepaid expense				2,020				—				(15,150	)
			Accounts payable and accrued expenses				(362,685	)			24,909				(6,835	)
			Interest payable				446,440				387,711				535,200
				Net cash provided by operating activities			237,942				690,034				1,318,103
FINANCING ACTIVITIES:
	Principal payments on debt										(11,049,110	)			(11,049,110	)
	Proceeds from debt										16,250,000				16,250,000
	Capital contributions										1,592,243				1,592,243
	Distributions						(112,134	)			(6,793,133	)			(6,793,133	)
				Net cash used in financing activities			(112,134	)			—				—
Net increase in cash and cash equivalents							125,808				690,034				1,318,103
Cash and cash equivalents, beginning of period							1,818,883				500,780				500,780
Cash and cash equivalents, end of period						$	1,944,691			$	1,190,814			$	1,818,883
Supplemental disclosure of non-cash items:
Dividends declared included in accounts payable and accrued expenses						$	—			$	—			$	377,646
Deferred royalty income included in royalties receivable						$	—			$	—			$	1,038,960

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1.	Description of Business and Significant Accounting Policies

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2.	Coal Lands

		September 30,				December 31,
		2005				2004
		(Unaudited)
Coal lands		$	19,000,000			$	19,000,000
Less accumulated depletion			(118,138	)			(79,104	)
Coal lands, net		$	18,881,862			$	18,920,896

3.	Notes Payable

4.	Business Combination Agreement

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	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of §251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under §253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

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	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to §228 or §253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

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