Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies Note 2 - Segment Information Note 3 - Earnings Per Share Note 4 - Employee and Retiree Benefits Note 5 - Investments Held by VEBA Trust Note 6 - Former Natural Resource Operations Note 7 - Costs Associated With Exit Activities Note 8 - Property and Equipment Note 9 - Impairment of Long-Lived Assets Note 10 - Other Assets Note 11 - Accrued Liabilities Note 12 - Other Liabilities Note 13 - Long-Term Debt Note 14 - Accounts Receivable and Asset Securitization Note 15 - Operating Leases Note 16 - Equity-Based Compensation Plans Note 17 - Capital Stock Note 18 - Income Taxes Note 19 - Supplemental Cash Flow Information Note 20 - Other Operating Income, Net Note 21 - Other Nonoperating Income (Expense), Net Note 22 - Risk Management Note 23 - Other Commitments and Contingencies Note 24 - Selected Quarterly Financial Data (unaudited)

Note 23 - Other Commitments and Contingencies

Purchase Obligations

ACMI Agreements

At December 31, 2003, the Company had aircraft, crew, maintenance and insurance (“ACMI”) agreements with third parties to provide aircraft usage and services to BAX Global, which expire in 2004. The fixed and determinable portion of the obligations under ACMI agreements aggregate approximately $13.0 million in 2004. Amounts purchased under these arrangements, including any variable component based on hours of usage, were $49.5 million in 2003, $49.4 million in 2002 and $63.4 million in 2001.

Other

At December 31, 2003, the Company had noncancelable commitments to purchase $12.5 million of equipment and $6.5 million of computer processing and consulting services.

Former Coal Operations

At December 31, 2003, the Company had obligations of $24.4 million under mineral lease agreements that give it the right to access and mine coal properties in exchange for required minimum annual payments. Because the Company does not intend to produce coal in the future, the Company has recorded a $13.4 million liability based on the present value of these obligations.

Future advance minimum royalty payments due under the mineral lease agreements at December 31, 2003 were as follows:

Amounts paid by the Company’s former coal operations under arrangements that were charged to expense were $0.5 million in 2003, $6.6 million in 2002 and $9.8 million in 2001.

Federal Black Lung Excise Tax

In 1999, the U.S. District Court of the Eastern District of Virginia entered a final judgment in favor of certain of the Company’s subsidiaries, ruling that the Federal Black Lung Excise Tax (“FBLET”) is unconstitutional as applied to export coal sales. Through December 31, 2003, the Company had received refunds including interest of $27.2 million, including $2.8 million received in 2003. The Company continues to pursue the refund of other FBLET payments. Due to uncertainty as to the ultimate receipt of additional amounts, if any, which could amount to as much as $18 million (before income taxes), the Company has not recorded receivables for additional FBLET refunds.

Litigation

The Company is defending potentially significant civil suits. Although the Company is defending these cases vigorously and believes that its defenses have merit, it is possible that one or more of these suits ultimately may be decided in favor of the plaintiffs. If so, the Company expects that the ultimate amount of unaccrued losses could range from $0 to $40 million.

Surety Bonds

The Company is required by various state and federal laws to provide security with regard to its obligations to pay workers’ compensation, to reclaim lands used for mining by the Company’s former coal operations and to satisfy other benefits. As of December 31, 2003, the Company had outstanding surety bonds with third parties totaling approximately $178 million that it has arranged in order to satisfy the various security requirements. Most of these bonds provide financial security for previously recorded liabilities. Because some of the Company’s reclamation obligations have been assumed by purchasers of the Company’s former coal operations, $13 million of the Company’s surety bonds are expected to be replaced by purchasers’ surety bonds after the mining permits with the state are transferred. Surety bonds are typically renewable on a yearly basis; however, there can be no assurance the bonds will be renewed or that premiums in the future will not increase. If the surety bonds are not renewed, the Company believes that it has adequate available borrowing capacity under its U.S. credit facility to provide letters of credit or other collateral to secure its obligations.

The Company is in the process of transferring mining permits to buyers of its former coal interests. Until the permits are transferred, the Company is contingently liable for the reclamation of these mining sites.

Environmental Remediation

The Company has agreed to pay a portion of the remediation costs arising from hydrocarbon contamination at a formerly owned petroleum terminal facility (“Tankport”) in Jersey City, New Jersey, which was sold in 1983. The Company is in the process of completing remediation of the site under an approved plan. In the fourth quarter of 2003, the Company and a third party reached an agreement that establishes the allocation of past costs related to the recovery of environmental costs, and as a result, the Company recognized a $5.3 million pretax gain in discontinued operations. The Company estimates its portion of the remaining clean-up and operational and maintenance costs to be $2.5 million.