Alpha Metallurgical Resources, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Alpha Metallurgical Resources, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Alpha Metallurgical Resources, Inc. and subsidiaries (the Company) as of December 31, 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. As described in Notes 2 and 17 to the consolidated financial statements, the Company’s consolidated asset retirement obligation liability was $165.1 million at December 31, 2020. The Company records the asset retirement obligation liability at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. Changes to the liability at operations that are not currently being reclaimed are offset by increasing or decreasing the carrying amount of the related long-lived asset. Changes to the liability at operations that are currently being reclaimed are recorded to depreciation, depletion, and amortization. The Company annually reviews its estimated future cash flows for its asset retirement obligations. We identified the valuation of the asset retirement obligation as a critical audit matter because the estimate involves a high degree of subjectivity and auditing the significant assumptions utilized by management in estimating the amount of the liability requires judgment. In particular, the obligation is determined using a discounted cash flow technique and is based upon mining permit requirements and various assumptions including discount rates, inflation rate, estimates of disturbed acreage, timing of reclamation activities, and third-party reclamation costs. Our audit procedures related to the Company’s asset retirement obligation liability included the following, among others: 78 Table of Contents – We obtained an understanding of the relevant controls related to the Company’s accounting for the asset retirement obligation liability, and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions and data inputs described above. – We compared significant valuation assumptions including the discount rates and inflation rate to market data, and utilized a valuation specialist to assist in testing the Company’s discounted cash flow model. – We compared the estimates of disturbed acreage, timing of reclamation activities, and third-party reclamation costs to the prior year estimate, assessing consistency between timing of reclamation activities and projected mine life, evaluated the appropriateness of the estimated costs based on mine type, and compared anticipated costs to recent operating data. – We utilized an external specialist to perform observations of mine site operations, conducted interviews of engineering personnel, assessed the completeness of the mine reclamation estimate with respect to meeting mine closure and post closure plan regulatory requirements, and evaluated the reasonableness of the engineering estimates and assumptions. /s/ RSM US LLP We have served as the Company's auditor since 2020. Atlanta, Georgia March 15, 2021 79 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Alpha Metallurgical Resources, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Alpha Metallurgical Resources, Inc. (formerly Contura Energy, Inc.) and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for the year then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ KPMG LLP We served as the Company’s auditor from 2016 to 2020. Richmond, Virginia March 18, 2020, except for the seventh paragraph in Note 1 and Note 3, as to which the date is March 15, 2021 80 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) Year Ended December 31, 2020 2019 Revenues: Coal revenues $ 1,413,124 $ 1,995,934 Other revenues 3,063 5,346 Total revenues 1,416,187 2,001,280 Costs and expenses: Cost of coal sales (exclusive of items shown separately below) 1,281,011 1,667,768 Depreciation, depletion and amortization 139,885 215,757 Accretion on asset retirement obligations 26,504 23,865 Amortization of acquired intangibles, net 9,214 ( 3,189 ) Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above) 57,356 78,953 Merger-related costs — 1,090 Asset impairment and restructuring 83,878 66,324 Goodwill impairment — 124,353 Total other operating income: Mark-to-market adjustment for acquisition-related obligations ( 8,750 ) ( 3,564 ) Other income ( 2,223 ) ( 974 ) Total costs and expenses 1,586,875 2,170,383 Loss from operations ( 170,688 ) ( 169,103 ) Other (expense) income: Interest expense ( 74,528 ) ( 67,521 ) Interest income 7,027 7,247 Loss on modification and extinguishment of debt — ( 26,459 ) Equity loss in affiliates ( 3,473 ) ( 6,874 ) Miscellaneous loss, net ( 1,972 ) ( 10,195 ) Total other expense, net ( 72,946 ) ( 103,802 ) Loss from continuing operations before income taxes ( 243,634 ) ( 272,905 ) Income tax benefit 2,164 53,287 Net loss from continuing operations ( 241,470 ) ( 219,618 ) Discontinued operations: Loss from discontinued operations before income taxes ( 205,429 ) ( 105,185 ) Income tax benefit from discontinued operations — 8,484 Loss from discontinued operations ( 205,429 ) ( 96,701 ) Net loss $ ( 446,899 ) $ ( 316,319 ) Basic loss per common share: Loss from continuing operations $ ( 13.20 ) $ ( 11.68 ) Loss from discontinued operations ( 11.22 ) ( 5.14 ) Net loss $ ( 24.42 ) $ ( 16.82 ) Diluted loss per common share: Loss from continuing operations $ ( 13.20 ) $ ( 11.68 ) Loss from discontinued operations ( 11.22 ) ( 5.14 ) 81 Table of Contents Net loss $ ( 24.42 ) $ ( 16.82 ) Weighted average shares - basic 18,298,362 18,808,460 Weighted average shares - diluted 18,298,362 18,808,460 Refer to accompanying Notes to Consolidated Financial Statements. 82 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands) Year Ended December 31, 2020 2019 Net loss $ ( 446,899 ) $ ( 316,319 ) Other comprehensive loss, net of tax: Employee benefit plans: Current period actuarial loss $ ( 60,647 ) $ ( 42,891 ) Income tax — — $ ( 60,647 ) $ ( 42,891 ) Less: reclassification adjustments for amounts reclassified to earnings due to amortization of net actuarial loss and settlements 7,278 7,405 Income tax — — $ 7,278 $ 7,405 Total other comprehensive loss, net of tax $ ( 53,369 ) $ ( 35,486 ) Total comprehensive loss $ ( 500,268 ) $ ( 351,805 ) Refer to accompanying Notes to Consolidated Financial Statements. 83 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) December 31, 2020 December 31, 2019 Assets Current assets: Cash and cash equivalents $ 139,227 $ 212,803 Trade accounts receivable, net of allowance for doubtful accounts of $ 293 and $ 0 as of December 31, 2020 and 2019 145,670 224,173 Inventories, net 108,051 150,888 Prepaid expenses and other current assets 106,252 77,723 Current assets - discontinued operations 10,935 45,892 Total current assets 510,135 711,479 Property, plant, and equipment, net of accumulated depreciation and amortization of $ 382,423 and $ 256,378 as of December 31, 2020 and 2019 363,620 436,398 Owned and leased mineral rights, net of accumulated depletion and amortization of $ 35,143 and $ 27,548 as of December 31, 2020 and 2019 463,250 523,012 Other acquired intangibles, net of accumulated amortization of $ 25,700 and $ 26,806 as of December 31, 2020 and 2019 88,196 124,246 Long-term restricted cash 96,033 122,524 Deferred income taxes — 33,065 Other non-current assets 149,382 189,475 Non-current assets - discontinued operations 9,473 162,624 Total assets $ 1,680,089 $ 2,302,823 Liabilities and Stockholders’ Equity Current liabilities: Current portion of long-term debt $ 28,830 $ 28,476 Trade accounts payable 58,413 82,725 Acquisition-related obligations - current 19,099 33,639 Accrued expenses and other current liabilities 140,406 139,479 Current liabilities - discontinued operations 12,306 30,833 Total current liabilities 259,054 315,152 Long-term debt 553,697 564,458 Acquisition-related obligations - long-term 20,768 46,259 Workers’ compensation and black lung obligations 230,081 228,850 Pension obligations 218,671 204,086 Asset retirement obligations 140,074 164,406 Deferred income taxes 480 422 Other non-current liabilities 28,072 26,822 Non-current liabilities - discontinued operations 29,090 56,246 Total liabilities 1,479,987 1,606,701 Commitments and Contingencies (Note 23) Stockholders’ Equity Preferred stock - par value $ 0.01 , 5.0 million shares authorized, none issued — — Common stock - par value $ 0.01 , 50.0 million shares authorized, 20.6 million issued and 18.3 million outstanding at December 31, 2020 and 20.5 million issued and 18.2 million outstanding at December 31, 2019 206 205 Additional paid-in capital 779,424 775,707 Accumulated other comprehensive loss ( 111,985 ) ( 58,616 ) 84 Table of Contents Treasury stock, at cost: 2.3 million shares at December 31, 2020 and 2019 ( 107,014 ) ( 107,984 ) (Accumulated deficit) retained earnings ( 360,529 ) 86,810 Total stockholders’ equity 200,102 696,122 Total liabilities and stockholders’ equity $ 1,680,089 $ 2,302,823 Refer to accompanying Notes to Consolidated Financial Statements. 85 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year Ended December 31, 2020 2019 Operating activities: Net loss $ ( 446,899 ) $ ( 316,319 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion and amortization 151,455 315,162 Amortization of acquired intangibles, net 10,075 ( 88 ) Accretion of acquisition-related obligations discount 3,342 5,522 Amortization of debt issuance costs and accretion of debt discount 14,772 14,070 Mark-to-market adjustment for acquisition-related obligations ( 8,750 ) ( 3,564 ) Loss on sale of business 36,113 — (Gain) loss on disposal of assets ( 2,401 ) 8,142 Gain on assets acquired in an exchange transaction — ( 9,083 ) Accretion on asset retirement obligations 30,658 33,759 Employee benefit plans, net 14,439 20,846 Deferred income taxes 33,123 ( 12,098 ) Goodwill impairment — 124,353 Asset impairment and restructuring 256,518 83,485 Loss on modification and extinguishment of debt — 26,459 Stock-based compensation 4,896 12,397 Equity in loss of affiliates 3,473 6,874 Other, net ( 5,972 ) ( 5,204 ) Changes in operating assets and liabilities Trade accounts receivable, net 91,190 47,424 Inventories, net 48,689 ( 40,694 ) Prepaid expenses and other current assets 28,152 56,671 Deposits ( 17,926 ) 15,170 Other non-current assets ( 6,753 ) ( 24,460 ) Trade accounts payable ( 28,620 ) ( 28,148 ) Accrued expenses and other current liabilities 15,428 ( 25,495 ) Acquisition-related obligations ( 32,560 ) ( 28,128 ) Asset retirement obligations ( 19,375 ) ( 111,616 ) Other non-current liabilities ( 43,831 ) ( 33,557 ) Net cash provided by operating activities 129,236 131,880 Investing activities: Capital expenditures ( 153,990 ) ( 192,411 ) Proceeds on disposal of assets 4,023 2,780 Cash paid on sale of business ( 52,192 ) — Capital contributions to equity affiliates ( 3,443 ) ( 10,051 ) Purchase of investment securities ( 21,129 ) ( 92,855 ) Maturity of investment securities 16,685 100,250 Other, net 77 535 Net cash used in investing activities ( 209,969 ) ( 191,752 ) Financing activities: Proceeds from borrowings on debt 57,500 544,946 Principal repayments of debt ( 59,768 ) ( 552,809 ) 86 Table of Contents Principal repayments of financing lease obligations ( 3,176 ) ( 3,654 ) Debt issuance costs — ( 6,689 ) Common stock repurchases and related expenses ( 209 ) ( 37,622 ) Principal repayments of notes payable ( 16,723 ) ( 14,818 ) Other, net — 952 Net cash used in financing activities ( 22,376 ) ( 69,694 ) Net decrease in cash and cash equivalents and restricted cash ( 103,109 ) ( 129,566 ) Cash and cash equivalents and restricted cash at beginning of period 347,680 477,246 Cash and cash equivalents and restricted cash at end of period $ 244,571 $ 347,680 Supplemental cash flow information: Cash paid for interest $ 49,294 $ 51,877 Cash paid for income taxes $ 5 $ 3,039 Cash received for income tax refunds $ 68,801 $ 72,236 Supplemental disclosure of noncash investing and financing activities: Financing leases and capital financing - equipment $ 4,411 $ 5,324 Accrued capital expenditures $ 7,493 $ 4,110 The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. As of December 31, 2020 2019 Cash and cash equivalents $ 139,227 $ 212,793 Short-term restricted cash (included in Prepaid expenses and other current assets) 9,311 12,363 Long-term restricted cash 96,033 122,524 Total cash and cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 244,571 $ 347,680 Refer to accompanying Notes to Consolidated Financial Statements. 87 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Treasury Stock at Cost Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity Balances, December 31, 2018 $ 202 $ 761,301 $ ( 23,130 ) $ ( 70,362 ) $ 403,129 1,071,140 Net loss — — — — ( 316,319 ) ( 316,319 ) Other comprehensive loss, net — — ( 35,486 ) — — ( 35,486 ) Stock-based compensation and net issuance of common stock for share vesting 1 13,455 — — — 13,456 Exercise of stock options 2 932 — — — 934 Common stock repurchases and related expenses — — — ( 37,622 ) — ( 37,622 ) Warrant exercises — 19 — — — 19 Balances, December 31, 2019 $ 205 $ 775,707 $ ( 58,616 ) $ ( 107,984 ) $ 86,810 $ 696,122 Net loss — — — — ( 446,899 ) ( 446,899 ) Credit losses cumulative-effect adjustment — — — — ( 440 ) ( 440 ) Other comprehensive loss, net — — ( 53,369 ) — — ( 53,369 ) Stock-based compensation and net issuance of common stock for share vesting 1 3,717 — — — 3,718 Common stock repurchases and related expenses — — — 970 — 970 Balances, December 31, 2020 $ 206 $ 779,424 $ ( 111,985 ) $ ( 107,014 ) $ ( 360,529 ) $ 200,102 Refer to accompanying Notes to Consolidated Financial Statements. 88 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (1) Business and Basis of Presentation Business Alpha Metallurgical Resources, Inc. (“Alpha” or the “Company”), previously named Contura Energy, Inc., is a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Alpha is a leading U.S. supplier of metallurgical products for the steel industry. The Company was formed to acquire and operate certain of Alpha Natural Resources, Inc.’s core coal operations, as part of the Alpha Natural Resources, Inc. bankruptcy reorganization. The Company began operations on July 26, 2016 and currently operates mines in the Central Appalachia region. A merger with ANR, Inc. and Alpha Natural Resources Holdings, Inc. (together, the "Merger Companies”) was completed on November 9, 2018 (the “Merger”) pursuant to terms of the definitive merger agreement (the “Merger Agreement”). Upon the consummation of the transactions contemplated by the Merger Agreement, the Company began trading on the New York Stock Exchange under the ticker “CTRA.” Effective February 1, 2021, the Company changed its corporate name from Contura Energy, Inc. to Alpha Metallurgical Resources, Inc. to more accurately reflect its strategic focus on the production of metallurgical coal. Following the effectiveness of its name change, the Company’s ticker symbol on the New York Stock Exchange changed from “CTRA” to “AMR” effective on February 4, 2021. Basis of Presentation Together, the consolidated balance sheet and consolidated statements of operations, comprehensive loss, cash flows and stockholders’ equity for the Company are referred to as the “Financial Statements.” The Financial Statements are also referred to as “Consolidated” and references across periods are generally labeled “Balance Sheets,” “Statements of Operations,” and “Statements of Cash Flows.” The Consolidated Financial Statements include all wholly owned subsidiaries’ results of operations for the years ended December 31, 2020 and 2019. All significant intercompany transactions have been eliminated in consolidation. On December 10, 2020, the Company closed on a transaction with Iron Senergy Holdings, LLC, to sell its thermal coal mining operations located in Pennsylvania consisting primarily of our Cumberland mining complex and related property (the Company’s former Northern Appalachia (“NAPP”) operations). On December 8, 2017, the Company closed a transaction with Blackjewel L.L.C. to sell the Eagle Butte and Belle Ayr mines located in the Powder River Basin (“PRB”), Wyoming, along with related coal reserves, equipment, infrastructure and other real properties. Refer to Note 3 for information related to Blackjewel L.L.C.’s subsequent bankruptcy filing and the related ESM transaction. The Company’s former NAPP and PRB operations results of operations and financial position are reported as discontinued operations in the Consolidated Financial Statements. The historical information in the accompanying Notes 2, 3, 4, 6, 7, 9, 10, 11, 12, 14, 15, 17, 18, 19, 20, 23, 24, and 25 to the Consolidated Financial Statements has been restated to reflect the effects of the former NAPP and PRB operations being reported as discontinued operations in the Consolidated Financial Statements. Refer to Note 3 for further information on discontinued operations. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Liquidity Risks and Uncertainties Weak market conditions and depressed coal prices have resulted in operating losses. If market conditions do not improve, the Company may experience continued operating losses and cash outflows in the coming quarters, which would adversely affect its liquidity. The Company may need to raise additional funds more quickly if market conditions deteriorate and may not be able to do so in a timely fashion, or at all. The Company believes it will have sufficient liquidity to meet its working capital requirements, anticipated capital expenditures, debt service requirements, acquisition-related obligations, and reclamation obligations for the 12 months subsequent to the issuance of these financial statements. The Company relies 89 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) on a number of assumptions in budgeting for future activities. These include the costs for mine development to sustain capacity of its operating mines, cash flows from operations, effects of regulation and taxes by governmental agencies, mining technology improvements and reclamation costs. These assumptions are inherently subject to significant business, political, economic, regulatory, environmental and competitive uncertainties, contingencies and risks, all of which are difficult to predict and many of which are beyond the Company’s control. Therefore, the cash on hand and from future operations will be subject to any significant changes in these assumptions. COVID-19 Pandemic In the first quarter of 2020, the COVID-19 virus was declared a pandemic by the World Health Organization. The COVID-19 pandemic has had negative impacts on the Company’s business, results of operations, financial condition and cash flows. A continued period of reduced demand for the Company’s products could have significant adverse consequences. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on its customers and suppliers and the range of governmental and community reactions to the pandemic, which are still uncertain and cannot be fully predicted at this time. As further described in Note 15, on March 20, 2020, the Company borrowed funds under a senior secured asset-based revolving credit facility. The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the current spread of the COVID-19 virus and its potential effects. In the first quarter of 2021, the Company repaid the remaining $ 3,350 of borrowed funds as of December 31, 2020. In response to the COVID-19 pandemic, on March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES Act”) was enacted into law. As a result, the Company received $ 66,130 of accelerated refunds of previously generated alternative minimum tax (“AMT”) credits from the Internal Revenue Service (“IRS”) during the fourth quarter of 2020 as further described in Note 19 and deferred 2020 employer payroll taxes incurred after the date of enactment of $ 15,109 , including discontinued operations, with two future payments of $ 7,554 each due by December 31, 2021 and 2022. On April 3, 2020, the Company announced temporary operational changes in response to market conditions, existing coal inventory levels, and customer deferrals due to concern around the global economic impact of the COVID-19 pandemic. Beginning April 3, 2020, the majority of the Company’s operations were idled for a period of approximately 30 days, with some sites idling for shorter periods of time and a few continuing to operate at a near-normal rate of production. Location-specific schedules were implemented based on existing customer agreements, current inventory levels, and anticipated customer demand. Certain preparation plants, docks, and loadouts continued to operate to support business needs and customer shipments. As of May 4, 2020, all Company sites were back to nearly normal staffing levels and operating capacity with additional precautions in place to help reduce the risk of exposure to COVID-19. Refer to Note 8 for discussion of certain strategic actions announced during the second quarter of 2020 with respect to two thermal coal mining complexes in an effort to strengthen the Company’s financial performance. The Company will continue to evaluate market conditions amid the continuing uncertainty of the COVID-19 pandemic and expects to adjust its operations accordingly. (2) Summary of Significant Accounting Policies Use of Estimates The preparation of the Company’s Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include inventories; mineral reserves; asset impairments; goodwill impairment; reclamation obligations; post-employment and other employee benefit obligations; useful lives, depletion and amortization; reserves for workers’ compensation and black lung claims; deferred income taxes; income taxes refundable and receivable; reserves for contingencies and litigation; fair value of financial instruments; and fair value adjustments for acquisition accounting. Estimates are based on facts and circumstances believed to be reasonable at the time; however, actual results could differ from those estimates. 90 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Cash and Cash Equivalents Cash and cash equivalents consist of cash held with reputable depository institutions and highly liquid, short-term investments with original maturities of three months or less. Cash and cash equivalents are stated at cost, which approximates fair value. As of December 31, 2020 and December 31, 2019, the Company’s cash equivalents of $ 139,227 and $ 212,803 , respectively, consisted of highly-rated money market funds. Restricted Cash Amounts included in restricted cash represent cash deposits that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $ 69,725 , $ 8,445 , and $ 17,863 as of December 31, 2020 to secure workers’ compensation and black lung obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively, which have been written on the Company’s behalf. As of December 31, 2019, collateral was provided in the amounts of $ 51,650 , $ 67,868 , and $ 3,006 to secure workers’ compensation and black lung obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively, which have been written on the Company’s behalf. The Company’s restricted cash is primarily invested in interest-bearing accounts. This restricted cash is classified as long-term on the Company’s Consolidated Balance Sheets. Additionally, as of December 31, 2020 and 2019, the Company had $ 9,311 and $ 12,363 , respectively, of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation. Refer to Note 16 for further information regarding the contingent payment revenue obligation. Restricted Investments Restricted investments consist of Federal Deposit Insurance Company (“FDIC”) insured certificates of deposit, mutual funds, and U.S. treasury bills classified as either trading securities or held-to-maturity securities. Trading securities are recorded initially at cost and are adjusted to fair value at each reporting period with unrealized gains and recorded in current period earnings or loss. Held-to-maturity securities are recorded at amortized cost with interest income recorded in current period earnings. As of December 31, 2020, $ 22,498 and $ 1,270 were classified as trading and held-to-maturity securities, respectively. As of December 31, 2019, $ 11,021 and $ 8,378 were classified as trading and held-to-maturity securities, respectively. Given the nature of the underlying investments, the Company does not expect any credit losses and has not recorded any credit losses with respect to its held-to-maturity portfolio. Restricted investments are restricted as to withdrawal by certain agreements and provide collateral in the amounts of $ 51 , $ 22,233 , and $ 1,484 as of December 31, 2020 to secure workers’ compensation obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively. As of December 31, 2019, collateral was provided in the amounts of $ 613 and $ 18,786 to secure workers’ compensation obligations and reclamation-related obligations, respectively. These restricted investments are classified as long-term on the Company’s Consolidated Balance Sheets. Deposits Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral. The Company had cash collateral in the form of deposits in the amounts of $ 25,633 , $ 1,596 , and $ 1,018 as of December 31, 2020 to secure reclamation-related obligations, financial payments and other performance obligations, and various other operating agreements, respectively. The Company had cash collateral in the form of deposits in the amounts of $ 8,887 and $ 1,423 as of December 31, 2019 to secure the Company’s obligations under reclamation-related obligations and various other operating agreements, respectively. These deposits are classified as both short-term and long-term on the Company’s Consolidated Balance Sheets. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at their invoiced amounts and do not bear interest. The Company markets its coal primarily to domestic and international steel producers and electric utilities in the United States. Credit is extended based on an evaluation of a customer’s financial condition, including a review of third-party credit score information. Collateral is generally not required. Accounts receivable balances are monitored against approved credit limits. Credit limits are monitored and adjusted as considered necessary based on changes to a customer’s credit profile. If a customer’s credit deteriorates, the Company may reduce credit risk exposure by reducing credit limits, obtaining letters of credit, obtaining credit insurance, or requiring pre-payment for shipments. Credit losses have historically not been material. Account balances are written-off against 91 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Refer to Note 24 for further information. Inventories Coal is reported as inventory at the point in time the coal is extracted from the mine. Raw coal represents coal stockpiles that may be sold in current condition or may be further processed prior to shipment to a customer. Saleable coal represents coal stockpiles that require no further processing prior to shipment to a customer. Coal inventories are valued at the lower of average cost or net realizable value. The cost of coal inventories is determined based on the average cost of production, which includes labor, supplies, equipment costs, operating overhead, depreciation, and other related costs. Net realizable value considers the projected future sales price of the product, less estimated preparation and selling costs. Material and supplies inventories are valued at average cost, less an allowance for obsolete and surplus items. Discontinued Operations In accordance with Accounting Standards Codification (“ASC”) 205-20-45, the Company treats a disposal transaction as a discontinued operation when the disposal of a component or group of components represents a strategic shift that will have a major effect on the Company’s operations and financial results. In the period in which the discontinued operations criteria are met, the assets and liabilities of the discontinued operations are separately presented on the Company's Consolidated Balance Sheets and the results of operations, including any gain or loss recognized, is reclassified to discontinued operations on the Company’s Consolidated Statement of Operations. Refer to Note 3 for further information on discontinued operations. Deferred Longwall Move Expenses The Company deferred the direct costs, including labor and supplies, associated with moving longwall equipment, the related equipment refurbishment costs, costs to drill vent holes and plug existing gas wells in advance of the longwall panel associated with its former NAPP operations included in discontinued operations of the Consolidated Balance Sheets as of December 31, 2020 and 2019. Refer to Note 3. These deferred costs were amortized on a units-of-production basis into cost of coal sales over the life of the related panel of coal mined by the longwall equipment. Advanced Mining Royalties Lease rights to coal reserves are often acquired in exchange for royalty payments. Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production royalties. These advance payments are deferred and charged to operations as the coal reserves are mined. The Company regularly reviews recoverability of advance mining royalties and establishes or adjusts the allowance for advance mining royalties as necessary using the specific identification method. Advance royalty balances are generally charged off against the allowance when they are no longer recoupable. Property, Plant, and Equipment, Net Costs for mine development incurred to expand capacity of operating mines or to develop new mines are capitalized and charged to operations on the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures. Mine development costs include costs incurred for site preparation and development of the mines during the development stage less any incidental revenue generated during the development stage. Mining equipment, buildings and other fixed assets are stated at cost and depreciated on a straight-line basis over estimated useful lives ranging from one to 25 years. Leasehold improvements are amortized using the straight-line method, over the shorter of the estimated useful lives or term of the lease. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When equipment is retired or disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposal is recognized in other (income) expense in the Company’s Consolidated Statements of Operations. Costs to obtain owned and leased mineral rights are capitalized and amortized to operations as depletion expense using the units-of-production method. Only proven and probable reserves are included in the depletion base. Refer to Note 10 for further detail on 92 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) property, plant and equipment, net. Owned and Leased Mineral Rights Owned and leased mineral rights, net of accumulated depletion, for the years ended December 31, 2020 and 2019 were $ 463,250 and $ 523,012 , respectively, and are reported in assets in the Company’s Consolidated Balance Sheets. These amounts include $ 10,491 and $ 36,723 of asset retirement obligation assets, net of accumulated depletion, associated with active mining operations for the years ended December 31, 2020 and 2019, respectively. During the year ended December 31, 2020 and 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of owned and leased mineral rights, net, by $ 41,579 and $ 35,445 , respectively. Refer to the asset impairment disclosure included in Note 8. Costs to obtain owned and leased mineral rights are capitalized and amortized to operations as depletion expense using the units-of-production method. Only proven and probable reserves are included in the depletion base. Depletion expense is included in depreciation, depletion and amortization on the accompanying Consolidated Statements of Operations and was ($ 13,746 ) and $ 14,551 for the years ended December 31, 2020 and 2019, respectively. Depletion expense for the years ended December 31, 2020 and 2019 includes a credit of ($ 34,377 ) and ($ 7,162 ), respectively, related to revisions to asset retirement obligations. Refer to Note 17 for further disclosures related to asset retirement obligations. Leases In accordance with ASC 842, the Company recognizes right of use assets and lease liabilities on the balance sheet for all leases with a term longer than 12 months. Some of these leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to combine these components for all leases. The discount rates used to determine the present value of the lease assets and liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. As the rates implicit in most of the Company’s leases are not readily determinable, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments. The Company uses the portfolio approach and group leases by short-term and long-term categories, applying the corresponding incremental borrowing rates to these categories of leases. For leases with a term of 12 months or less, no right of use assets or liabilities are recognized on the balance sheet and the Company recognizes the lease expense on a straight-line basis over the lease term. Additionally, the Company recognizes variable lease payments as an expense in the period incurred. Refer to Note 12 for disclosures related to leases and the Recently Adopted Accounting Guidance section below for further detail related to the initial adoption of the leases accounting standards. Acquired Intangibles The Company has recognized assets for acquired above market-priced coal supply agreements and acquired mine permits and liabilities for acquired below market-priced coal supply agreements. The coal supply agreements were valued based on the present value of the difference between the expected net contractual cash flows based on the stated contract terms, and the estimated net contractual cash flows derived from applying forward market prices at the Merger or acquisition date for new contracts of similar terms and conditions. The acquired mine permits were valued based on the replacement cost and lost profits method as of the Merger date. The balances and respective balance sheet classifications of such assets and liabilities as of December 31, 2020 and 2019, net of accumulated amortization, are set forth in the following tables: December 31, 2020 Assets (1) Liabilities (2) Net Total Coal supply agreements, net $ — $ ( 327 ) $ ( 327 ) Acquired mine permits, net 88,196 — 88,196 Total $ 88,196 $ ( 327 ) $ 87,869 93 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2019 Assets (1) Liabilities (2) Net Total Coal supply agreements, net $ 18 $ ( 6,018 ) $ ( 6,000 ) Acquired mine permits, net 124,228 — 124,228 Total $ 124,246 $ ( 6,018 ) $ 118,228 (1) Included within other acquired intangibles, net of accumulated amortization, on the Company’s Consolidated Balance Sheets. (2) Included within other non-current liabilities on the Company’s Consolidated Balance Sheets. During the years ended December 31, 2020 and 2019, the Company recorded long-lived asset impairments which reduced the carrying value of acquired mine permits, net, by $ 21,144 and $ 5,997 . Refer to Note 8 for further information. The acquired mine permits are amortized over the estimated life of the associated mine. The coal supply agreement assets and liabilities are amortized over the actual number of tons shipped over the life of each contract. The following table details the amortization of mine permits acquired as a result of the Merger and the amortization of above-market and below-market coal supply agreements. December 31, 2020 2019 Amortization of mine permits (1) $ 14,887 $ 23,921 Amortization of above-market coal supply agreements $ 18 $ 783 Amortization of below-market coal supply agreements ( 5,691 ) ( 27,893 ) Net income (1) $ ( 5,673 ) $ ( 27,110 ) (1) Included within amortization of acquired intangibles, net in the Consolidated Statements of Operations. Future net amortization expense related to acquired intangibles is expected to be as follows: 2021 $ 9,712 2022 10,039 2023 10,028 2024 8,677 2025 8,672 Thereafter 40,741 Total net future amortization expense $ 87,869 Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets of acquired companies. In connection with the Merger in 2018, the Company recorded goodwill of $ 124,353 and allocated it to the Met reportable segment. Goodwill is not amortized; instead, it is tested for impairment annually as of October 31 of each year or more frequently if indicators of impairment exist. The Company performed an interim goodwill impairment test as of August 31, 2019 due to a decline in the Company’s market capitalization to amounts below book value combined with a decline in global metallurgical coal pricing which indicated that the fair value of the Met segment reporting unit may have been below its carrying value. Following the quantitative testing, the Company concluded that the fair value of the reporting unit exceeded its carrying value and no amount of goodwill was impaired. As of October 31, 2019, the Company performed its annual goodwill impairment test and concluded that more likely than not the fair value of its Met reporting unit to which the Company’s goodwill is allocated exceeded its carrying value. As a result, no amount of goodwill was considered impaired as a result of impairment testing at October 31, 2019. 94 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) However, due to the continued weakening in coal market pricing combined with a significant market price decline for the Company’s stock late in the fourth quarter of 2019, the Company performed an interim goodwill impairment test as of December 31, 2019. Following the quantitative testing, the Company concluded that the carrying value of the Met reporting unit exceeded its fair value and recorded a goodwill impairment of $ 124,353 to write down the full carrying amount of goodwill. The Company early adopted Accounting Standards Update (“ASU”) 2017-04 for the period ended December 31, 2017, which eliminated Step 2 of the quantitative goodwill impairment test. The Company first assesses goodwill for impairment on a qualitative basis. If the Company determines that more likely than not the fair value of a reporting unit containing goodwill exceeds its carrying amount, no further impairment testing is required. If the qualitative assessment indicates that an impairment potentially exists, then the Company quantitatively tests goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is lower than its carrying amount, its goodwill is written down by the lesser of the amount by which the reporting units carrying amount exceeded its fair value or its carrying amount of goodwill. The valuation methodology utilized to estimate the fair value of the reporting units is based on both a market and income approach and is within the range of fair values yielded under each approach. The income approach is based on a discounted cash flow methodology based on estimates of future sales volumes, coal prices, production costs, and a risk-adjusted cost of capital. These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy. The market approach is based on a guideline company and similar transaction methodology. Under the guideline company approach, certain metrics from a selected group of publicly traded guideline companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the reporting units. Under the similar transactions approach, recent merger and acquisition transactions for companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the Company’s reporting units. The following table summarizes the changes in goodwill for the year ended December 31, 2019: Balance as of December 31, 2018 Measurement-Period Adjustments (2) Impairments Balance as of December 31, 2019 Goodwill (1) $ 95,624 $ 28,729 $ ( 124,353 ) $ — (1) There was no goodwill activity during the year ended December 31, 2020. (2) Prior to the finalization of the Merger purchase price allocation, the Company recorded measurement-period adjustments to the provisional opening balance sheet primarily to property, plant, and equipment, owned and leased mineral rights, asset retirement obligations, and certain actuarial liabilities. Asset Impairment Long-lived assets, such as property, plant, and equipment, mineral rights, and acquired intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groups may not be recoverable. Recoverability of assets or asset groups to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. Long-lived assets located in a close geographic area are grouped together for purposes of impairment testing when, after considering revenue and cost interdependencies, circumstances indicate the assets are used together to produce future cash flows. The Company’s asset groups generally consist of the assets and applicable liabilities of one or more mines and preparation plants and associated coal reserves for which cash flows are largely independent of cash flows of other mines, preparation plants, and associated coal reserves. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, the potential impairment is equal to the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. The Company estimates the fair value of an asset group generally using discounted cash flow analysis based on estimates of future sales volumes, coal prices, production costs, and a risk-adjusted cost of capital. These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy. The amount of impairment, if any, is allocated to the long-lived assets on a pro-rata basis, except that the carrying value of the individual long-lived assets are not reduced below their estimated fair value. Refer to Note 8. 95 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Asset Retirement Obligations Minimum standards for mine reclamation have been established by various regulatory agencies and dictate the reclamation requirements at the Company’s operations. The Company’s asset retirement obligations consist principally of costs to reclaim acreage disturbed at surface operations and estimated costs to reclaim support acreage, treat mine water discharge, and perform other related functions at underground mines. The Company records these reclamation obligations at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. Changes to the liability at operations that are not currently being reclaimed are offset by increasing or decreasing the carrying amount of the related long-lived asset. Changes to the liability at operations that are currently being reclaimed are recorded to depreciation, depletion, and amortization. Over time, the liability is accreted and any capitalized cost is depreciated or depleted over the useful life of the related asset. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded. The Company annually reviews its estimated future cash flows for its asset retirement obligations. Refer to Note 17 for further disclosures related to asset retirement obligations. During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of long-lived assets related to asset retirement obligations by $ 1,671 . Refer to the asset impairment disclosure included in Note 8. Income Taxes The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of taxable temporary differences, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes that the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. Refer to Note 19 for further disclosures related to income taxes. Deferred Financing Costs The costs to obtain new debt financing or amend existing financing agreements are generally deferred and amortized to interest expense over the life of the related indebtedness or credit facility using the effective interest method. Unamortized deferred financing costs are presented in the Consolidated Balance Sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. Unamortized deferred financing costs associated with undrawn credit facilities are included in the Consolidated Balance Sheets within other non-current assets. Revenue Recognition In accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”), the Company measures revenue based on the consideration specified in a contract with a customer and recognizes revenue as a result of satisfying its promise to transfer goods or services in a contract with a customer using the following general revenue recognition five-step model: (1) identify the contract; (2) identify performance obligations; (3) determine transaction price; (4) allocate transaction price; and (5) recognize revenue. Freight and handling costs paid to third-party carriers and invoiced to coal customers are recorded as freight and handling costs and freight and handling fulfillment revenues within cost of coal sales and coal revenues, respectively. Refer to Note 4 for further disclosures related to revenue. Workers’ Compensation and Pneumoconiosis (Black Lung) Benefits Workers’ Compensation As of December 31, 2020, the Company’s subsidiaries generally utilize high-deductible insurance programs for workers’ compensation claims at its operations with the exception of certain subsidiaries in which the Company is a qualified self-insurer 96 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) for workers’ compensation obligations. The liabilities for workers’ compensation claims are estimates of the ultimate losses incurred based on the Company’s experience and include a provision for incurred but not reported losses. Adjustments to the probable ultimate liabilities are made annually based on an actuarial study and adjustments to the liability are recorded based on the results of this study. These short-term and long-term obligations are included in the Consolidated Balance Sheets within accrued expenses and other current liabilities and workers’ compensation and black lung obligations, respectively, with an offsetting insurance receivable within prepaid expenses and other current assets and other non-current assets. As of December 31, 2020 and 2019, the workers’ compensation liability was net of a discount of $ 24,061 and $ 24,680 , respectively, related to fair value adjustments associated with acquisition accounting. Refer to Note 20 for further disclosures related to workers’ compensation. Black Lung Benefits The Company is required by federal and state statutes to provide benefits to employees for awards related to black lung. As of December 31, 2020, certain of the Company’s subsidiaries are insured for black lung obligations by a third-party insurance provider and certain subsidiaries are self-insured for state black lung obligations. Certain other subsidiaries are self-insured for federal black lung benefits and may fund benefit payments through a Section 501(c)(21) tax-exempt trust fund. Charges are made to operations for black lung claims, as determined by an independent actuary at the present value of the actuarially computed liability for such benefits over the employee’s applicable term of service. The Company recognizes in its balance sheet the amount of the Company’s unfunded Accumulated Benefit Obligation (“ABO”) at the end of the year. Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost. These short-term and long-term obligations are included in the Consolidated Balance Sheets within accrued expenses and other current liabilities and workers’ compensation and black lung obligations, respectively. Refer to Note 20 for further disclosures related to black lung benefits. Pension The Company is required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in its Consolidated Balance Sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive (loss) income. The Company is required to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end Consolidated Balance Sheet and provide the required disclosures as of the end of each fiscal year. Refer to Note 20 for further disclosures related to pension. Postretirement Life Insurance Benefits As part of the Alpha Natural Resources, Inc. bankruptcy reorganization plan and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees. Provisions are made for estimated benefits based on annual evaluations prepared by independent actuaries. Adjustments to the probable ultimate liabilities are made annually based on an actuarial study and adjustments to the liability are recorded based on the results of this study. These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities. Refer to Note 20 for further disclosures related to postretirement life insurance benefits. Net (Loss) Income per Share Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of outstanding common shares for the period. Diluted (loss) earnings per share reflects the potential dilution that could occur if instruments that may require the issuance of common shares in the future were settled and the underlying common shares were issued. Diluted (loss) earnings per share is computed by increasing the weighted-average number of outstanding common shares computed in basic (loss) earnings per share to include the additional common shares that would be outstanding after issuance and adjusting net (loss) income for changes that would result from the issuance. Only those securities that are dilutive are included in the calculation. In periods of loss, the number of shares used to calculate diluted earnings is the same as basic earnings per share. Refer to Note 6 for further disclosures related to net (loss) income per share. Stock-Based Compensation The Company recognizes expense for stock-based compensation awards based on their grant-date fair value. The expense 97 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) is recorded over the respective service period of the underlying award. Liability classified stock-based compensation awards are remeasured each reporting period at fair value until the award is settled. The Company recognizes forfeitures of stock-based compensation awards as they occur. Refer to Note 21 for further disclosures related to stock-based compensation arrangements. Warrants On July 26, 2016 (the “Initial Issue Date”), the Company issued 810,811 warrants, which are classified as equity instruments, each with an initial exercise price, as defined in the Series A Warrants Agreement (the “Warrants Agreement”), of $ 55.93 per share of common stock and exercisable for one share of the Alpha’s common stock, par value $ 0.01 per share. Pursuant to the Warrants Agreement, the warrants are exercisable for cash or on a cashless basis at any time from the Initial Issue Date until July 26, 2023, and no fractional shares shall be issued upon warrant exercises. The exercise price and the warrant share number will be adjusted in respect of certain dilutive events with respect to the common stock (namely, dividends or distributions on the common stock, share splits and combinations, above-market tender offers for common stock by the Company or a subsidiary thereof, and discounted issuances of common stock or rights or options to purchase common stock or securities convertible or exchangeable into common stock). Additionally, in the case of any reorganization (i.e., a consolidation, merger, or sale of all or substantially all of the consolidated assets of Alpha) pursuant to which the common stock is converted into cash, securities or other property, the warrants would become exercisable for such property. As of December 31, 2020 and 2019, the exercise price was $ 46.911 per share and the warrant share number was equal to 1.15 , as adjusted in respect to certain diluted events with respect to the common stock during 2017 and 2018. As of December 31, 2020 and 2019, of the 810,811 warrants that were originally issued, 801,370 remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants. For the year ended December 31, 2020, there were no warrant exercises. For the year ended December 31, 2019, the Company issued 414 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld five of the issued shares in satisfaction of the warrant exercise price, which were subsequently reclassified as treasury stock. Equity Method Investments Investments in unconsolidated affiliates that the Company has the ability to exercise significant influence over, but not control, are accounted for under the equity method of accounting. Under the equity method of accounting, the Company records its proportionate share of the entity’s net income or loss at each reporting period in the Consolidated Statements of Operations in other (expense) income, with a corresponding entry to increase or decrease the carrying value of the investment. The carrying value of the Company’s equity method investments was $ 18,383 and $ 18,413 as of December 31, 2020 and 2019, respectively. Recently Adopted Accounting Guidance Leases : In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update and subsequent amendments related to ASC 842, Leases, (“ASC 842”). ASC 842 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet. The Company adopted ASC 842 effective January 1, 2019 and elected the option not to restate comparative periods in transition and also elected the hindsight practical expedient, which allows the Company to use hindsight when considering lessee options to extend or terminate leases when determining the lease term of lease arrangements for classification purposes, and the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification, and initial direct costs. Additionally, the Company elected the transition practical expedient to continue to account for existing and expired land easements at transition as executory contracts. Only land easements entered into or modified after the effective date of ASC 842 are accounted for as leases by the Company. As a result of the adoption, the Company recorded operating lease right-of-use assets and lease liabilities on our Consolidated Balance Sheet. The following table summarizes the impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet: 98 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Balance at December 31, 2018 Adjustments Balance at January 1, 2019 Assets Balance Sheet Classification Operating lease right-of-use assets Other non-current assets $ — $ 10,136 $ 10,136 Financing lease assets Property, plant, and equipment, net 9,786 — 9,786 Total lease assets $ 9,786 $ 10,136 $ 19,922 Liabilities Balance Sheet Classification Operating lease liabilities - current Accrued expenses and other current liabilities $ — $ 3,232 $ 3,232 Financing lease liabilities - current Current portion of long-term debt 2,110 — 2,110 Operating lease liabilities - long-term Other non-current liabilities — 6,904 6,904 Financing lease liabilities - long-term Long-term debt 4,313 — 4,313 Total lease liabilities $ 6,423 $ 10,136 $ 16,559 The adoption of ASC 842 did not have a material impact on our Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss, or Consolidated Statements of Cash Flows. Refer to Note 12 for further disclosure requirements under the new standard. Credit Losses: In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses (“ASU 2016-13”). ASU 2016-13, along with related amendments and improvements issued in 2018 and 2019, replaces the previous incurred loss impairment methodology in U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable supportable information to inform credit loss estimates for financial instruments that are in the scope of this update, including trade accounts receivable. The Company adopted ASU 2016-13 during the first quarter of 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures and resulted in a cumulative-effect adjustment to retained earnings of $ 440 in the Consolidated Balance Sheet as of January 1, 2020. Fair Value Measurement : In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The amendments in this update modify the disclosure requirements for fair value measurements. The Company adopted ASU 2018-13 during the first quarter of 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Income Taxes : In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted ASU 2019-12 during the first quarter of 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Reference Rate Reform : In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in this update provide optional expedients and exceptions, if certain criteria are met, for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company adopted ASU 2020-04, with respect to topics in Accounting Standards Codification (“ASC”) 310 Receivables , ASC 470 Debt , ASC 815 Derivatives and Hedging and ASC 842 Leases , during the first quarter of 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Defined Benefit Plans : In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined 99 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public business entities, the standard is effective for fiscal years ending after December 15, 2020. The Company adopted ASU 2018-14 during the fourth quarter of 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Recent Accounting Guidance Issued Not Yet Effective Convertible Debt and Contracts in Entity’s Own Equity : In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity, such as the Company’s outstanding Series A warrants. For public business entities, the standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements and related disclosures. (3) Discontinued Operations Discontinued operations consisted of activity related to the Company’s former NAPP and PRB operations. Former NAPP Operations On November 11, 2020, the Company entered into an unit purchase agreement (the “UPA”) to sell its thermal coal mining operations located in Pennsylvania consisting primarily of its Cumberland mining complex and related property (“Cumberland Transaction”) to a third party purchaser Iron Senergy Holdings, LLC (“Iron Senergy”). The Cumberland Transaction closed on December 10, 2020. In accordance with terms of the UPA, the Company transferred its equity interests in certain subsidiaries (Cumberland Contura, LLC, Contura Coal Resources, LLC, Contura Pennsylvania Land, LLC, Emerald Contura, LLC, and Contura Pennsylvania Terminal, LLC) along with total consideration of $ 49,987 to Iron Senergy. Pursuant to the terms of the UPA, the Company also retained certain assets and liabilities associated with its former NAPP operations. The mining permits associated with the Cumberland mining operations were obtained by Iron Senergy at closing. Due to the administrative process, the Company expects the release of the Company’s existing surety bonds and the acceptance of Iron Senergy’s replacement bonds to be completed by March 30, 2021. The following table presents the details of the Cumberland Transaction: Year Ended December 31, 2020 Cash $ 19,987 Surety bonding collateral 30,000 Total consideration 49,987 Transaction costs 2,205 Carrying value of assets and liabilities (1) $ ( 16,079 ) Loss on sale $ 36,113 (1) Assets and liabilities were primarily comprised of property, plant and equipment, net of $ 32,872 , deferred longwall move expenses of $ 15,173 , and coal and supplies inventory of $ 5,112 and asset retirement obligations of $ 39,573 , severance of $ 17,143 , black lung obligations of $ 8,290 , and subsidence liability of $ 3,559 . In connection with the UPA, the Company entered into certain agreements with Iron Senergy under which Iron Senergy will sell to the Company all of the coal that the Company is obligated to sell to customers under Cumberland coal supply agreements (“Cumberland CSAs”) which existed as of the transaction closing date but did not transfer to Iron Senergy at closing (each, a “Cumberland Back-to-Back Coal Supply Agreement”). Each Cumberland Back-to-Back Coal Supply Agreement has economic terms identical to, but offsetting, the related Cumberland CSA. If a Cumberland customer subsequently consents to assign a Cumberland CSA to Iron Senergy after closing, the related Cumberland CSA will immediately and automatically transfer to Iron Senergy and the related Cumberland Back-to-Back Coal Supply Agreements executed by the parties shall thereupon terminate as set forth therein. As the Company does not control the purchased coal prior to customer delivery, the Company will record coal purchases and sales under the related agreements on a net basis. Per terms 100 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) of the Cumberland Back-to-Back Coal Supply Agreements, the Company is required to purchase and sell 2,681 and 2,615 tons of coal in 2021 and 2022 totaling $ 104,051 and $ 101,990 , respectively. For the year ended December 31, 2020, the Company purchased and sold 104 tons, totaling $ 3,997 under the Cumberland Back-to-Back Coal Supply Agreements. Former PRB operations On December 8, 2017, the Company closed a transaction (“PRB Transaction”) with Blackjewel L.L.C. (“Blackjewel” or the “Buyer”) to sell its Eagle Butte and Belle Ayr mines located in Wyoming (the “Western Mines” or “Western Assets”). On July 1, 2019, prior to the transfer of the permits, Blackjewel announced that it and certain affiliated entities had filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of West Virginia (the “Bankruptcy Court”). As the mine permit transfer process relating to the Company’s sale of the Western Assets to Blackjewel had not been completed prior to Blackjewel’s filing for Chapter 11 bankruptcy protection, the Company remained the permit holder in good standing for both mines and maintained surety bonding to cover related reclamation and other obligations. The Company remeasured the asset retirement obligations based on the expectation that the mining permits would not transfer and that Blackjewel would not perform on its contractual obligation to reclaim the properties due to the bankruptcy filing. The increase in the asset retirement obligation of $ 145,913 was expensed within depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as the Company no longer owned the underlying mining assets. On October 4, 2019, the Bankruptcy Court entered an order approving the sale by Blackjewel of the Western Assets to Eagle Specialty Materials (“ESM”), an affiliate of FM Coal, LLC (“FM Coal”). The closing of the ESM acquisition occurred on October 18, 2019 (the “ESM Transaction”). In connection with the ESM Transaction, the Company and ESM finalized an agreement which provided, among other items, for the transfer of the Western Asset permits from the Company to ESM once certain approvals for their transfer have been obtained and for the assumption by ESM of the related reclamation obligations. Additionally, the surety bonding previously maintained by the Company for the benefit of the Wyoming Department of Environmental Quality (“DEQ”) was released and replaced with substitute surety bonds arranged for by ESM. Lastly, ESM agreed to indemnify the Company and its affiliates against all reclamation liabilities related to the Western Assets and against claims by the federal government, the State of Wyoming, or Campbell County, Wyoming for royalties, ad valorem taxes, and other amounts relating to the Western Assets for the period beginning on December 8, 2017. The following table presents the details of the ESM Transaction: Year Ended December 31, 2019 Cash $ 90,000 DIP obligation (1) 3,008 Other 331 Total consideration $ 93,339 ARO liabilities transferred ( 152,882 ) Gain on sale (2) $ ( 59,543 ) (1) The Company paid certain Blackjewel debtor-in-possession lenders $ 3,008 of principal and interest pursuant to an existing agreement between the Company and those lenders. (2) The Company recorded a $ 59,543 gain within depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as a result of the reduction of the reclamation obligation partially offset by the consideration paid. Additionally, in connection with the closing of the ESM Transaction, the Company paid $ 13,500 to Campbell County, Wyoming for accrued ad valorem back taxes for 2018 and was released from all claims related thereto. Pursuant to an agreement with ESM, the State of Wyoming Department of Revenue, and Blackjewel, the State of Wyoming Department of Revenue released the Company from any outstanding claims related to state tax obligations arising from or related to the Western Mines for any period through and including the closing date of the transaction. On May 29, 2020, certain subsidiaries of the Company (Contura Coal West, LLC and Contura Wyoming Land, LLC), one of which held the mining permits for the Western Mines, were merged with certain subsidiaries of ESM to become wholly-owned subsidiaries of ESM and to complete the permit transfer process in connection with the ESM Transaction. Pursuant to terms of the transaction, the Company received from ESM approximately $ 625 in consideration for assets owned by Contura 101 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Coal West, LLC but not previously conveyed. In connection with the PRB Transaction, the Company entered into certain agreements with Blackjewel under which Blackjewel would sell to the Company all of the coal that the Company was obligated to sell to customers under Western Mines coal supply agreements (“Western Mines CSAs”) which existed as of the transaction closing date but did not transfer to Blackjewel at closing (each, a “PRB Back-to-Back Coal Supply Agreement”). The original PRB Back-to-Back Coal Supply Agreements were not assumed in connection with the ESM Transaction. Instead, the Company entered into new back-to-back coal supply agreements with Bluegrass Commodities LP, the sales and marketing agent for ESM, whereby the Company agreed to purchase and pay for, all coal that the Company is obligated to supply, deliver and sell under the Company’s PRB coal supply agreements that were still in effect as of the closing date of the ESM Transaction. Each PRB Back-to-Back Coal Supply Agreement had economic terms identical to, but offsetting, the related Western Mines CSA. As the Company did not control the purchased coal prior to customer delivery, the Company recorded coal purchases and sales under the related agreements on a net basis. Per terms of the PRB Back-to-Back Coal Supply Agreements, the Company purchased and sold 1,149 tons of coal totaling $ 11,682 for the year ended December 31, 2020. For the year ended December 31, 2019, the Company purchased and sold 929 tons, totaling $ 9,941 under the PRB Back-to-Back Coal Supply Agreements. As of December 31, 2020, the PRB Back-to-Back Coal Supply Agreements were expired. Major Financial Statement Components of Discontinued Operations The major components of net loss from discontinued operations before income taxes in the Consolidated Statements of Operations are as follows: Year Ended December 31, 2020 (1) 2019 Revenues: Total revenues $ 235,509 $ 289,206 Costs and expenses: Cost of coal sales (exclusive of items shown separately below) 215,390 256,336 Depreciation, depletion and amortization (2) 11,570 99,405 Accretion on asset retirement obligations (3) 4,154 9,894 Asset impairment and restructuring (4) 172,640 17,161 Selling, general and administrative expenses (5) 1,623 4,349 Other (income) expenses ( 926 ) 4,742 Other non-major expense items, net 374 2,504 Loss on sale 36,113 — Loss from discontinued operations before income taxes $ ( 205,429 ) $ ( 105,185 ) (1) For the year ended December 31, 2020, discontinued operations consisted entirely of activity related to the former NAPP operations. (2) During the year ended December 31, 2019, depreciation, depletion and amortization includes $ 145,913 related to an increase in the Company’s estimate of its PRB asset retirement obligations which was partially offset by ($ 59,543 ) as a result of the ESM transaction. Refer to the disclosures above for details. (3) For the year ended December 31, 2019, the former PRB operations’ accretion on asset retirement obligations of $ 5,961 related to the asset retirement obligations recorded as a result of the Blackjewel bankruptcy filing. Refer to the disclosures above for details. (4) Refer to Note 8. (5) Represents professional and legal fees. Refer to Note 6 for net loss per share information related to discontinued operations. The major components of assets and liabilities that are classified as discontinued operations in the Consolidated Balance Sheets are as follows: 102 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 2019 Assets: Trade accounts receivable, net of allowance for doubtful accounts $ 7,504 $ 20,493 Inventory, net $ — $ 11,771 Prepaid expenses and other current assets $ 3,431 $ 13,628 Property, plant, and equipment, net of accumulated depreciation and amortization $ — $ 146,864 Other non-current assets $ 9,473 $ 15,760 Liabilities: Trade accounts payable, accrued expenses and other current liabilities $ 7,433 $ 24,769 Asset retirement obligations $ — $ 21,568 Workers’ compensation and black lung obligations $ 32,672 $ 36,149 Other non-current liabilities $ 1,291 $ 4,593 The major components of cash flows related to discontinued operations were as follows: Year Ended December 31, 2020 2019 Depreciation, depletion and amortization $ 11,570 $ 99,405 Capital expenditures $ 34,411 $ 31,964 Other significant operating non-cash items related to discontinued operations: Accretion on asset retirement obligations $ 4,154 $ 9,894 Asset impairment and restructuring $ 172,640 $ 17,161 (4) Revenue Disaggregation of Revenue from Contracts with Customers ASC 606 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. The Company earns revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties. The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities. The Company conducts mining operations only in the United States with mines in Central Appalachia. The Company has two reportable segments: Met and CAPP - Thermal. In addition to the two reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, the elimination of certain intercompany activity, and the Company’s discontinued operations. Refer to Note 25 for further segment information. The following tables disaggregate the Company’s coal revenues by product category and by market to depict how the nature, amount, timing, and uncertainty of the Company’s coal revenues and cash flows are affected by economic factors: 103 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 Met Coal Thermal Coal Total Export coal revenues $ 870,121 $ 27,904 $ 898,025 Domestic coal revenues 362,654 152,445 515,099 Total coal revenues $ 1,232,775 $ 180,349 $ 1,413,124 Year Ended December 31, 2019 Met Coal Thermal Coal Total Export coal revenues $ 1,174,942 $ 48,166 $ 1,223,108 Domestic coal revenues 551,806 221,020 772,826 Total coal revenues $ 1,726,748 $ 269,186 $ 1,995,934 Performance Obligations The Company considers each individual transfer of coal on a per shipment basis to the customer a performance obligation. The pricing terms of the Company’s contracts with customers include fixed pricing, variable pricing, or a combination of both fixed and variable pricing. All the Company’s revenue derived from contracts with customers is recognized at a point in time. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2020. 2021 2022 2023 2024 2025 Total Estimated coal revenues (1) $ 113,676 $ 28,000 $ — $ — $ — $ 141,676 (1) Amounts only include estimated coal revenues associated with contracts with customers with fixed pricing with original expected duration of more than one year. The Company has elected not to disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for performance obligations with either of the following conditions: 1) the remaining performance obligation is part of a contract that has an original expected duration of one year or less; or 2) the remaining performance obligation has variable consideration that is allocated entirely to a wholly unsatisfied performance obligation. (5) Accumulated Other Comprehensive Loss The following tables summarize the changes to accumulated other comprehensive loss during the years ended December 31, 2020 and 2019: Balance January 1, 2020 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2020 Employee benefit costs $ ( 58,616 ) $ ( 60,647 ) $ 7,278 $ ( 111,985 ) Balance January 1, 2019 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2019 Employee benefit costs $ ( 23,130 ) $ ( 42,891 ) $ 7,405 $ ( 58,616 ) The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the Consolidated Statements of Operations line items affected by the reclassification during the years ended December 31, 2020 and 2019: 104 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Details about accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in the Consolidated Statements of Operations Year Ended December 31, 2020 2019 Employee benefit costs: Amortization of actuarial loss (1) $ 3,929 $ 959 Miscellaneous loss, net Settlement (1) 3,349 6,446 Miscellaneous loss, net Total before income tax $ 7,278 $ 7,405 Income tax — — Income tax benefit Total, net of income tax $ 7,278 $ 7,405 (1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs for certain employee benefit plans. Refer to Note 20. (6) Net Loss per Share The number of shares used to calculate basic net loss per common share is based on the weighted average number of the Company’s outstanding common shares during the respective period. The number of shares used to calculate diluted net loss per common share is based on the number of common shares used to calculate basic net loss per common share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during the period, and the Company’s outstanding Series A warrants. The diluted effect of outstanding stock-based instruments is determined by application of the treasury stock method. The warrants become dilutive for diluted net loss per common share calculations when the market price of the Company’s common stock exceeds the exercise price. Dilutive securities are not included in the computation of diluted net loss per common share as the impact would be anti-dilutive. Refer to the Consolidated Statements of Operations for net loss per common share for the years ended December 31, 2020 and 2019. For the years ended December 31, 2020 and 2019, 1,317,351 and 537,918 warrants, stock options, and other stock-based instruments, respectively, were excluded from the computation of dilutive net loss per share because they would have been anti-dilutive. When applying the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share are higher than the Company’s average stock price during an applicable period. Anti-dilution also occurs in periods of a net loss, and the dilutive impact of all share-based compensation awards are excluded. For the years ended December 31, 2020 and 2019, the weighted average share impact of warrants, stock options, and other stock-based instruments that were excluded from the calculation of diluted shares due to the Company incurring a net loss for the period were 142,250 and 256,668 , respectively. (7) Inventories, net Inventories, net consisted of the following: December 31, 2020 2019 Raw coal $ 15,084 $ 26,584 Saleable coal 69,262 100,275 Materials, supplies and other, net (1) 23,705 24,029 Total inventories, net $ 108,051 $ 150,888 (1) Includes an increase in allowance for obsolete material and supplies inventory of $ 807 recorded as restructuring expense during the year ended December 31, 2020 (refer to Note 8). (8) Asset Impairment and Restructuring Long-lived Asset Impairment for the Year Ended December 31, 2020 105 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) During the year ended December 31, 2020, weakening coal market conditions due in part to the impact of the global COVID-19 Pandemic, as well as the following events resulted in quarterly impairment testing: • During the second quarter of 2020, the Company announced that it would take certain strategic actions with respect to two of its thermal coal mining complexes in an effort to strengthen its financial performance and improve forecasted liquidity. The Company announced that an underground mine and preparation plant located in West Virginia would be idled during the third quarter of 2020. In addition, the Company decided not to move forward with the construction of a new refuse impoundment at its Cumberland mine in Pennsylvania and would therefore no longer spend the significant capital required in connection with the project. As a result, the Cumberland mine was expected to cease production by the end of 2022. On December 10, 2020, the Company sold its Cumberland mining operations. Refer to Note 3 for further details. • During the fourth quarter of 2020, changes in mine plans and the determination that certain mineral reserves previously forecasted to be mined were no longer considered economic due to poor geologic conditions reduced forecasted cash flows for one Met and one CAPP - Thermal asset group to amounts below those required for full recoverability. The Company performed long-lived asset impairment tests as of November 30, 2020, August 31, 2020, May 31, 2020, and February 29, 2020. In total, the Company determined that indicators of impairment with respect to five long-lived asset groups within its Met reporting segment, three long-lived asset groups within its CAPP - Thermal reporting segment, and one long-lived asset group within discontinued operations existed during the year ended December 31, 2020. The following tables present the details of the long-lived asset impairments during the year ended December 31, 2020: Year Ended December 31, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Year Ended Continuing operations: Met $ 32,951 $ — $ — $ 13,366 $ 46,317 CAPP - Thermal 758 17,385 219 16,270 34,632 All Other — 5 — — 5 Total from continuing operations $ 33,709 $ 17,390 $ 219 $ 29,636 $ 80,954 Discontinued operations: $ — $ 144,348 $ 3,297 $ — $ 147,645 Total long-lived asset impairment: $ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599 106 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Year Ended Continuing operations: Mineral rights, net $ 21,825 $ 2,241 $ — $ 17,513 $ 41,579 Property, plant, and equipment, net 6,066 6,496 219 5,450 $ 18,231 Acquired mine permits, net 5,818 8,653 — 6,673 $ 21,144 Total from continuing operations $ 33,709 $ 17,390 $ 219 $ 29,636 $ 80,954 Discontinued operations: Mineral rights, net $ — $ 16,364 $ — $ — $ 16,364 Property, plant, and equipment, net — 127,984 3,297 — $ 131,281 Total from discontinued operations $ — $ 144,348 $ 3,297 $ — $ 147,645 Total long-lived asset impairment: Mineral rights, net $ 21,825 $ 18,605 $ — $ 17,513 $ 57,943 Property, plant, and equipment, net 6,066 134,480 3,516 5,450 149,512 Acquired mine permits, net 5,818 8,653 — 6,673 21,144 Total long-lived asset impairment $ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599 Long-lived Asset Impairment for the Year Ended December 31, 2019 During the year ended December 31, 2019, the Company determined that indicators of impairment were present for three long-lived asset groups within each of its Met and CAPP - Thermal reporting segments and performed impairment testing as of December 31, 2019. At December 31, 2019, the Company determined that the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values. As a result, after allocating the potential impairment to individual assets, the Company recorded a long-lived asset impairment of $ 60,169 , of which $ 9,176 was recorded within Met and $ 50,993 was recorded within CAPP - Thermal within continuing operations of the Consolidated Statements of Operations. The long-lived asset impairment reduced the carrying values of mineral rights by $ 35,445 , property, plant, and equipment, net, by $ 17,056 , acquired mine permits, net, by $ 5,997 , and long-lived assets related to asset retirement obligations by $ 1,671 . Additionally, during the year ended December 31, 2019, the Company recorded an asset impairment of $ 6,155 within continuing operations of the Consolidated Statements of Operations primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019. During the year ended December 31, 2019, the Company also recorded an asset impairment of $ 17,161 within discontinued operations of the Consolidated Statements of Operations which was primarily related to the write-off of tax related indemnification receivables within the former PRB operations. The Company was considered to be the primary obligor for certain taxes that Blackjewel was contractually obligated to pay. During the year ended December 31, 2019, the Company recorded an impairment charge for the offsetting receivable form Blackjewel as a result of the Blackjewel bankruptcy filing. Refer to Note 3 for further information. Restructuring As a result of the strategic actions discussed above, the Company recorded restructuring expense during the year ended December 31, 2020 as follows: Year Ended December 31, 2020 Total Restructuring Continuing Operations (3) Discontinued Operations Severance and employee-related benefits (1) $ 26,037 $ 2,117 $ 23,920 Other costs (2) 1,882 807 1,075 Total restructuring expense $ 27,919 $ 2,924 $ 24,995 107 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (1) Severance and employee-related benefits were considered probable and estimable based on provisions of contractual agreements and existing employee benefit plans. (2) The year ended December 31, 2020 includes accelerated amortization of deferred longwall move expenses of $ 668 , allowance for advanced mining royalties of $ 407 , and allowance for obsolete materials and supplies inventory of $ 807 . (3) During the year ended December 31, 2020, total restructuring expenses of $ 2,087 and $ 837 were recorded within the reportable segments CAPP - Thermal and All Other, respectively. The total restructuring expenses of $ 2,924 affected Accrued expenses and other current liabilities, Other non-current liabilities, inventories, net, and Other non-current assets. There were no restructuring expenses recorded during the year ended December 31, 2019. (9) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: December 31, 2020 2019 Prepaid freight $ 8,515 $ 8,268 Notes and other receivables 13,245 8,447 Short-term restricted cash 9,311 12,363 Short-term deposits 47 689 Prepaid insurance 6,510 9,591 Refundable income taxes 64,565 33,915 Prepaid bond premium 2,576 2,454 Other prepaid expenses 1,483 1,996 Total prepaid expenses and other current assets $ 106,252 $ 77,723 (10) Property, Plant, and Equipment, net Property, plant, and equipment, net, consisted of the following: December 31, 2020 2019 Plant and mining equipment $ 603,463 $ 600,495 Mine development 96,008 36,721 Land 26,606 30,506 Office equipment, software and other 1,379 1,396 Construction in progress 18,587 23,658 Total property, equipment and mine development costs 746,043 692,776 Less accumulated depreciation, depletion and amortization 382,423 256,378 Total property, plant, and equipment, net $ 363,620 $ 436,398 Included in plant and mining equipment are assets under financing leases totaling $ 7,907 and $ 14,328 with accumulated depreciation of $ 3,645 and $ 4,641 as of December 31, 2020 and December 31, 2019, respectively. Depreciation and amortization expense associated with property, plant, equipment, and non-mineral asset retirement obligation assets, net, was $ 153,631 and $ 201,206 for the years ended December 31, 2020 and 2019, respectively. Depreciation expense for the years ended December 31, 2020 and 2019 includes a credit of ($ 3,689 ) and ($ 1,522 ), respectively, related to revisions to asset retirement obligations. Refer to Note 17 for further disclosures related to asset retirement obligations. 108 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) During the years ended December 31, 2020 and 2019, the Company recorded long-lived asset impairments which reduced the carrying value of property, plant, and equipment, net, by $ 18,231 and $ 17,056 , respectively. Refer to Note 8 for further information. As of December 31, 2020, the Company had commitments to purchase approximately $ 5,008 and $ 170 of new equipment, expected to be acquired at various dates in 2021 and 2023, respectively. (11) Other Non-Current Assets Other non-current assets consisted of the following: December 31, 2020 2019 Operating lease right-of-use assets $ 5,671 $ 7,298 Long-term deposits 28,200 9,621 Long-term restricted investments 23,768 19,399 Equity method investments 18,383 18,413 Federal income tax receivable — 64,160 Workers’ compensation receivables 48,320 52,757 Other 25,040 17,827 Total other non-current assets $ 149,382 $ 189,475 (12) Leases The Company’s lease population consists primarily of vehicle and heavy equipment leases and leases for office equipment. The Company’s building and land leases relate to corporate office space and certain site offices. The Company determines whether a contract contains a lease based on whether the Company obtains the right to control the use of specifically identifiable property, plant, and equipment for a period of time in exchange for consideration. For the years ended December 31, 2020 and 2019, the Company identified no instances requiring significant judgment in determining whether any contracts entered into during the period were or were not leases. Additionally, the Company had no material sublease agreements within the scope of ASC 842 or lease agreements for which the Company was the lessor for the years ended December 31, 2020 and 2019. Renewal options in the Company’s lease population primarily relate to month-to-month extensions on vehicle leases and are immaterial both individually and in the aggregate. The Company includes renewal options that are reasonably certain to be exercised in the measurement of lease liabilities. As of December 31, 2020, the Company does not intend to exercise any termination options on existing leases. As of December 31, 2020 and 2019, the Company had the following right-of-use assets and lease liabilities within the Company’s Consolidated Balance Sheets: 109 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 December 31, 2019 Assets Balance Sheet Classification Financing lease assets Property, plant, and equipment, net $ 4,262 $ 9,687 Operating lease right-of-use assets Other non-current assets 5,671 7,298 Total lease assets $ 9,933 $ 16,985 Liabilities Balance Sheet Classification Financing lease liabilities - current Current portion of long-term debt $ 2,014 $ 3,266 Operating lease liabilities - current Accrued expenses and other current liabilities 595 1,402 Financing lease liabilities - long-term Long-term debt 1,996 4,651 Operating lease liabilities - long-term Other non-current liabilities 5,076 5,896 Total lease liabilities $ 9,681 $ 15,215 Total lease costs and other lease information for the years ended December 31, 2020 and 2019 included the following: Year Ended December 31, 2020 Year Ended December 31, 2019 Lease cost (1) Financing lease cost: Amortization of leased assets $ 3,238 $ 3,738 Interest on lease liabilities 358 477 Operating lease cost 2,105 2,389 Short-term lease cost 1,518 1,851 Total lease cost $ 7,219 $ 8,455 (1) The Company had no variable lease costs or sublease income for the years ended December 31, 2020 and 2019. Year Ended December 31, 2020 Year Ended December 31, 2019 Other information Cash paid for amounts included in the measurement of lease liabilities $ 7,157 $ 8,349 Operating cash flows from financing leases $ 358 $ 463 Operating cash flows from operating leases $ 3,623 $ 4,240 Financing cash flows from financing leases $ 3,176 $ 3,646 Right-of-use assets obtained in exchange for new financing lease liabilities $ 221 $ 1,429 Right-of-use assets obtained in exchange for new operating lease liabilities $ ( 12 ) $ 371 Lease Term and Discount Rate Weighted-average remaining lease term in months - financing leases 23.3 33.7 Weighted-average remaining lease term in months - operating leases 101.4 105.1 Weighted-average discount rate - financing leases 6.1 % 5.4 % Weighted-average discount rate - operating leases 11.5 % 11.4 % The Company has elected to show net instead of gross amounts for right-of-use assets and liabilities within its Consolidated Statements of Cash Flows. The following table summarizes the maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the lease liabilities recognized in the Company’s Consolidated Balance Sheet as of December 31, 2020: 110 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Financing Leases Operating Leases Lease cost 2021 $ 2,210 $ 1,210 2022 1,827 1,076 2023 269 1,101 2024 6 982 2025 — 897 Thereafter — 4,018 Total future minimum lease payments $ 4,312 $ 9,284 Imputed interest ( 302 ) ( 3,613 ) Present value of future minimum lease payments $ 4,010 $ 5,671 As of December 31, 2020, the Company had no leases with future commencement dates that will create significant rights or obligations for the Company. (13) Stock Repurchases In May 2019, the Company’s Board of Directors adopted a capital return program that permits the Company to return to stockholders up to an aggregate amount of $ 250,000 of capital. The capital return program does not have a fixed expiration date and returns of capital may take the form of share repurchases, dividends or a combination thereof. Any share repurchases may be made from time to time through open market transactions, block trades, privately negotiated transactions, tender offers, or otherwise. Any returns of capital under the program will be at the discretion of the Company’s Board of Directors and are subject to market and business conditions, levels of available liquidity, the Company’s cash needs, restrictions under agreements or obligations, legal or regulatory requirements or restrictions, and other relevant factors. On August 29, 2019, the Company announced that its Board of Directors had approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $ 100,000 in the aggregate of the Company’s common stock at prices as set forth in such plan over a specified period. Through September 30, 2019, the Company had repurchased an aggregate of 529,303 shares of common stock under the Company Repurchase Plan for an aggregate purchase price of $ 15,969 (comprised of $ 15,953 of share repurchases and $ 16 of related fees) for an average price paid per share of $ 30.17 . As of October 1, 2019, the Company suspended the Company Repurchase Plan. Additionally, on September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox Multi-Strategy Partners, L.P., Whitebox Asymmetric Partners, L.P., Whitebox Credit Partners, L.P. and Whitebox Institutional Partners, L.P. (together, “Whitebox”). Pursuant to terms of the common stock repurchase agreement, the Company repurchased an aggregate of 500,000 shares of common stock from Whitebox at $ 32.99 per share for an aggregate purchase price of $ 16,495 . 111 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (14) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, 2020 2019 Wages and benefits $ 40,330 $ 37,983 Workers’ compensation 10,355 11,317 Black lung 6,784 7,409 Taxes other than income taxes 21,540 24,662 Current portion of asset retirement obligations 24,990 38,731 Accrued interest and fees 15,902 4,362 Deferred revenue 13,197 — Freight accrual 2,610 5,851 Other 4,698 9,164 Total accrued expenses and other current liabilities $ 140,406 $ 139,479 (15) Long-Term Debt Long-term debt consisted of the following: December 31, 2020 2019 Term Loan Credit Facility - due June 2024 $ 553,373 $ 558,991 ABL Facility - due April 2022 3,350 — LCC Note Payable 27,500 45,000 LCC Water Treatment Obligation 6,875 9,375 Other (1) 8,475 9,263 Debt discount and issuance costs ( 17,046 ) ( 29,695 ) Total long-term debt 582,527 592,934 Less current portion ( 28,830 ) ( 28,476 ) Long-term debt, net of current portion $ 553,697 $ 564,458 (1) Includes financing leases, refer to Note 12 for additional information. Term Loan Credit Facility - due June 2024 On June 14, 2019, the Company entered into a Credit Agreement with Cantor Fitzgerald Securities, as administrative agent and collateral agent, and the other lenders party thereto (as defined therein) that provides for a senior secured term loan facility in the aggregate principal amount of $ 561,800 with a maturity date of June 14, 2024 (the “Term Loan Credit Facility”). Principal repayments equal to approximately $ 1,405 are due each March, June, September and December (commencing with September 30, 2019) with the final principal repayment installment repaid on the maturity date and in an amount equal to the aggregate principal amount outstanding on such date. The Term Loan Credit Facility bears an interest rate per annum based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”). Each loan type bears interest at a rate per annum comprised of a base rate (as defined) plus an applicable percentage ( 6.00 % for Base Rate Loans and 7.00 % for Eurocurrency Rate Loans on or prior to the second anniversary of the Closing Date and 7.00 % or 8.00 % thereafter (the “Applicable Rate”)). The Eurocurrency base rate is subject to a 2.00 % floor. Interest accrued on each Base Rate Loan is payable in arrears on the last business day of each March, June, September and December and the maturity date. Interest accrued on each Eurocurrency Rate Loan is payable in arrears on the last day of each interest period as defined therein. As of December 31, 2020, the borrowings made under the Term Loan Credit Facility were comprised of Eurocurrency Rate Loans with an interest rate of 9.00 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 7.00 %. As of December 31, 2020, the carrying value of the Term Loan Credit Facility was $ 540,643 , with $ 5,618 classified as current, within the Consolidated 112 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Balance Sheets. As of December 31, 2019, the carrying value of the term loan credit facility was $ 538,765 , with $ 5,618 classified as current, within the Consolidated Balance Sheets. The Term Loan Credit Facility was provided primarily by certain of the Company’s existing shareholders (related parties) as of the agreement date. As such, the Company analyzed various factors of the transaction and concluded the Term Loan Credit Facility was issued at a reasonable market rate and therefore considered to be an arm’s length transaction. The Company used the proceeds from the Term Loan Credit Facility to repay the outstanding principal balance of $ 543,125 under the Amended and Restated Credit Agreement dated November 9, 2018 and fees related to such refinancing. The Company recorded a loss on modification of debt of $ 255 , primarily related to modification fees paid under the refinance, and a loss on extinguishment of debt of $ 26,204 , primarily related to the write-off of outstanding debt discounts and unamortized debt issuance costs under the Amended and Restated Credit Agreement dated November 9, 2018, which are recorded in loss on modification and extinguishment of debt within the Consolidated Statements of Operations for the year ended December 31, 2019. All obligations under the Term Loan Credit Facility are guaranteed by substantially all of Alpha’s direct and indirect subsidiaries. Certain obligations under the Term Loan Facility are secured by a senior lien, subject to certain exceptions (including the ABL Priority Collateral described below), by substantially all of Alpha’s assets and the assets of Alpha’s subsidiary guarantors (“Term Loan Priority Collateral”), in each case subject to exceptions. The obligations under the Term Loan Credit Facility are also secured by a junior lien, again subject to certain exceptions, against the ABL Priority Collateral. The Term Loan Facility contains negative and affirmative covenants including certain financial covenants that are more flexible than the covenants on the Amended and Restated Credit Agreement dated November 9, 2018. The Company was in compliance with all covenants under this agreement as of December 31, 2020. Amended and Restated Asset-Based Revolving Credit Agreement On November 9, 2018, the Company entered into the Amended and Restated Asset-Based Revolving Credit Agreement with Citibank N.A. as administrative agent, collateral agent, and swingline lender and the other lenders party thereto (the “Lenders”), and Citibank N.A., Barclays Bank PLC, BMO Harris Bank N.A. and Credit Suisse AG as letter of credit issuers (“LC Lenders”). The Amended and Restated Asset-Based Revolving Credit Agreement amended and restated the Asset-Based Revolving Credit Agreement dated April 3, 2017, in its entirety, and includes a senior secured asset-based revolving credit facility (the “ABL Facility”). Under the ABL Facility, the Company may borrow cash from the Lenders (as defined therein) or cause the L/C Issuers (as defined therein) to issue letters of credit, on a revolving basis, in an aggregate amount of up to $ 225,000 , of which no more than $ 200,000 may be drawn through letters of credit. Any borrowings under the ABL Facility will have a maturity date of April 3, 2022 and will bear interest based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate ranging from 1.00 % to 1.50 % for Base Rate Loans and 2.00 % to 2.50 % for Eurocurrency Rate Loans, depending on the amount of credit available. Pursuant to terms of the Amended and Restated Asset-Based Revolving Credit Agreement at each notice period, the Company elects the character of the loan, the interest period, and may provide notice of continuation or conversion of the borrowed principal amount with the ability to repay the borrowed principal amount in advance of the maturity date without penalty. The Amended and Restated Asset-Based Revolving Credit Agreement provides that a specified percentage of billed, unbilled and approved foreign receivables and raw and clean inventory meeting certain criteria are eligible to be counted for purposes of collateralizing the amount of financing available, subject to certain terms and conditions. Availability under the ABL Facility is calculated on a monthly basis and fluctuates based on qualifying amounts of coal inventory and trade accounts receivable (the “Borrowing Base”) and the facility's covenant limitations related to the Fixed Charge Coverage Ratio (as defined in therein). In accordance with terms of the ABL Facility, the Company may be required to collateralize the ABL Facility to the extent outstanding borrowings and letters of credit under the ABL Facility exceed the Borrowing Base after considering covenant limitations. Due to fluctuations of the Borrowing Base, the Company was required to post $ 25,000 of collateral in January 2021 to remain in compliance with the terms of the ABL Facility as of December 31, 2020. On March 20, 2020, the Company borrowed $ 57,500 principal amount under the ABL Facility. The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the current spread of the COVID-19 virus and its potential effects (see further discussion in Note 1). As of December 31, 2020, the borrowings made under the ABL Facility were comprised of Eurocurrency Rate Loans with an interest rate of 2.73 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 2.50 %. The interest rate is subject to periodic adjustment and is subject to adjustment again on April 7, 2021. As of December 31, 2020, the carrying value of the ABL Facility was $ 3,350 , all 113 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) of which was classified as long-term within the Consolidated Balance Sheets. As of December 31, 2019, the Company had no borrowings under the ABL Facility. Any letters of credit issued under the ABL Facility will bear a commitment fee rate ranging from 0.25 % to 0.375 % depending on the amount of availability per terms of the agreement, and a fronting fee of 0.25 % of the face amount under each letter of credit, payable to the ABL Facility’s administrative agent. As of December 31, 2020 and December 31, 2019, the Company had $ 123,108 and $ 99,876 letters of credit outstanding under the ABL Facility, respectively. The ABL Facility is guaranteed by substantially all of Alpha’s direct and indirect subsidiaries (together with the Alpha, the “Loan Parties”) and secured by all or substantially all assets of the Loan Parties, including equity in its direct domestic subsidiaries and first-tier foreign subsidiaries, as collateral for the obligations under the ABL Facility. The ABL Facility has a first lien on ABL priority collateral and a second lien on term loan priority collateral. The Amended and Restated Asset-Based Revolving Credit Agreement, as amended, and related documents contain negative and affirmative covenants including certain financial covenants. The Company is in compliance with all covenants under these agreements as of December 31, 2020. LCC Note Payable As a result of the Merger, the Company assumed a note payable to Lexington Coal Company (“LCC”) in the aggregate amount of $ 62,500 (the “LCC Note Payable”) and with a maturity date of July 26, 2022. The LCC Note Payable has no stated interest rate and an imputed interest rate of 12.45 %. Principal repayments equal to $ 17,500 are due each July during 2019, 2020 and 2021, with the final principal payment of $ 10,000 due on the maturity date. The carrying value of the LCC Note Payable was $ 24,423 and $ 37,695 , with $ 17,500 and $ 17,500 reported within the current portion of long-term debt as of December 31, 2020 and 2019, respectively. LCC Water Treatment Stipulation As a result of the Merger, the Company assumed an obligation to contribute $ 12,500 into Lexington Coal Company’s water treatment restricted cash accounts (the “LCC Water Treatment Stipulation”). Contributions equal to $ 625 are due each January, April, July and October from 2019 through 2023. The LCC Water Treatment Stipulation has no stated interest rate and an imputed interest rate of 13.12 %. The carrying value of the LCC Water Treatment Stipulation was $ 5,636 and $ 7,211 , with $ 1,875 and $ 1,875 reported within the current portion of long-term debt as of December 31, 2020 and 2019, respectively. Future Maturities Future maturities of long-term debt as of December 31, 2020 are as follows: 2021 $ 28,830 2022 24,815 2023 9,300 2024 536,628 Total long-term debt $ 599,573 (16) Acquisition-Related Obligations Acquisition-related obligations consisted of the following: 114 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 2019 Contingent Revenue Obligation $ 28,967 $ 52,427 Environmental Settlement Obligations 10,391 16,305 Reclamation Funding Liability — 12,000 UMWA Funds Settlement Liability 2,000 4,000 Discount ( 1,491 ) ( 4,834 ) Total acquisition-related obligations 39,867 79,898 Less current portion ( 19,099 ) ( 33,639 ) Acquisition-related obligations, net of current portion $ 20,768 $ 46,259 The Company entered into various settlement agreements with Alpha Natural Resources, Inc. and/or the Alpha Natural Resources, Inc. bankruptcy successor ANR, Inc. and third parties as part of the Alpha Natural Resources, Inc. bankruptcy reorganization process. The Company assumed acquisition-related obligations through those settlement agreements which became effective on July 26, 2016, the effective date of Alpha Natural Resources, Inc.’s plan of reorganization. Additionally, as a result of the Merger, the Company assumed certain acquisition-related obligations pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies. Contingent Revenue Obligation As a result of the Merger, the Company assumed a contingent revenue payment obligation (the “Contingent Revenue Obligation”) to certain of the Merger Companies’ creditors pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies. Pursuant to terms of the obligation, the annual obligation will be limited to revenues derived from legacy operations for the Merger Companies and will not include revenues related to legacy Alpha Metallurgical Resources, Inc. operations. The Contingent Revenue Obligation consists of a contingent revenue payment of 1.5 % of annual gross revenues of the legacy operations for the Merger Companies up to $ 500,000 and 1.0 % of annual gross revenue of the legacy operations for the Merger Companies in excess of $ 500,000 through the period ended December 31, 2022. As of December 31, 2020 and 2019, the carrying value of the Contingent Revenue Obligation was $ 28,967 and $ 52,427 , with $ 11,393 and $ 14,646 classified as current, respectively, and classified as an acquisition-related obligation in the Consolidated Balance Sheets. Refer to Note 18 for further disclosures related to the fair value assignment and methods used. During the second quarter of 2020, the Company paid $ 15,084 , including $ 374 of unclaimed unsecured claims distributions, pursuant to terms of the Contingent Revenue Obligation. During the second quarter of 2019, the Company paid $ 9,627 pursuant to terms of the Contingent Revenue Obligation. Environmental Settlement Obligations As a result of the Merger, the Company assumed certain environmental settlement obligations (the “Environmental Settlement Obligations”) pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies. These obligations include payments to a third-party environmental agency and the funding of certain reclamation related projects through 2022. As of December 31, 2020 and 2019, the carrying value of the Environmental Settlement Obligations was $ 9,237 and $ 13,594 , net of discounts of $ 1,154 and $ 2,711 , with $ 6,044 and $ 6,185 classified as current, respectively, all of which was classified as an acquisition-related obligation in the Consolidated Balance Sheets. Reclamation Funding Agreement Pursuant to the Reclamation Funding Agreement dated July 12, 2016, the Company paid the aggregate amount of $ 50,000 into the various Restricted Cash Reclamation Accounts as follows: $ 8,000 immediately upon the effective date of the agreement; $ 10,000 on the anniversary of the effective date in each of 2017, 2018, and 2019; and $ 12,000 on the anniversary of the effective date in 2020. As of December 31, 2020, the Company has no remaining payments for the Funding of Restricted Cash Reclamation liability. As of December 31, 2019 the carrying value of the Funding of Restricted Cash Reclamation liability was $ 10,808 , net of discounts of $ 1,192 , all of which was classified as a current acquisition-related obligation in the Consolidated Balance Sheets. 115 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (17) Asset Retirement Obligations The following table summarizes the changes in asset retirement obligations for the years ended December 31, 2020 and 2019: Total asset retirement obligations at December 31, 2018 $ 192,038 Merger measurement-period adjustments 12,718 Accretion for the period (1) 23,852 Sites added during the period 5,112 Revisions in estimated cash flows (2) ( 7,162 ) Expenditures for the period ( 23,421 ) Total asset retirement obligations at December 31, 2019 $ 203,137 Accretion for the period 26,504 Sites added during the period 621 Revisions in estimated cash flows (2) ( 43,765 ) Expenditures for the period ( 21,433 ) Total asset retirement obligations at December 31, 2020 165,064 Less current portion (3) ( 24,990 ) Long-term portion $ 140,074 (1) Amount does not include the accretion related to asset retirement obligations classified as liabilities held for sale. (2) The revisions in estimated cash flows resulted primarily from discount rate adjustments and changes in mine plans. (3) Included within accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets. Refer to Note 14. (18) Fair Value of Financial Instruments and Fair Value Measurements The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision. The carrying amounts for cash and cash equivalents, trade accounts receivable, net, prepaid expenses and other current assets, short-term and long-term restricted cash, short-term and long-term deposits, trade accounts payable, and accrued expenses and other current liabilities approximate fair value as of December 31, 2020 and 2019 due to the short maturity of these instruments. The following tables set forth by level, within the fair value hierarchy, the Company’s long-term debt at fair value as of December 31, 2020 and 2019: December 31, 2020 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Term Loan Credit Facility - due June 2024 $ 540,643 $ 379,614 $ — $ 379,614 $ — ABL Facility - due April 2022 3,350 3,057 — — 3,057 LCC Note Payable 24,423 20,328 — — 20,328 LCC Water Treatment Obligation 5,636 4,281 — — 4,281 Total long-term debt $ 574,052 $ 407,280 $ — $ 379,614 $ 27,666 116 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2019 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Term Loan Credit Facility - due June 2024 $ 538,765 $ 461,402 $ 461,402 $ — $ — LCC Note Payable 37,695 33,884 — — 33,884 LCC Water Treatment Obligation 7,211 6,280 — — 6,280 Total long-term debt $ 583,671 $ 501,566 $ 461,402 $ — $ 40,164 (1) Net of debt discounts and debt issuance costs. The following tables set forth by level, within the fair value hierarchy, the Company’s acquisition-related obligations at fair value as of December 31, 2020 and 2019: December 31, 2020 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) UMWA Funds Settlement Liability $ 1,662 $ 1,426 $ — $ — $ 1,426 Environmental Settlement Obligations 9,237 7,760 — — 7,760 Total acquisition-related obligations $ 10,899 $ 9,186 $ — $ — $ 9,186 December 31, 2019 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) UMWA Funds Settlement Liability $ 3,069 $ 2,929 $ — $ — $ 2,929 Reclamation Funding Liability 10,808 10,658 — — 10,658 Environmental Settlement Obligations 13,594 12,197 — — 12,197 Total acquisition-related obligations $ 27,471 $ 25,784 $ — $ — $ 25,784 (1) Net of discounts. The following table sets forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2020 and 2019. Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the determination of fair value for assets and liabilities and their placement within the fair value hierarchy levels. December 31, 2020 Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Contingent Revenue Obligation $ 28,967 $ — $ — $ 28,967 Trading securities $ 22,498 $ 20,092 $ 2,406 $ — 117 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2019 Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Contingent Revenue Obligation $ 52,427 $ — $ — $ 52,427 Trading securities $ 11,021 $ 5,506 $ 5,515 $ — The following table is a reconciliation of the financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis and that were categorized within Level 3 of the fair value hierarchy: December 31, 2019 Payments Gain Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2020 Contingent Revenue Obligation $ 52,427 $ ( 14,710 ) $ ( 8,750 ) $ — $ 28,967 (1) The gain recognized in earnings resulted primarily from a change in the forecasted future revenue associated with this obligation and an increase in annualized volatility as of December 31, 2020. December 31, 2018 Payments Measurement-Period Adjustments Gain Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2019 Contingent Revenue Obligation $ 59,880 $ ( 9,627 ) $ 5,738 $ ( 3,564 ) $ — $ 52,427 (1) The measurement-period adjustments are related to Merger recorded during the year ended December 31, 2019. The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the tables above: Level 1 Fair Value Measurements Term Loan Credit Facility - due June 2024 - As of December 31, 2019, the fair value is based on observable market data. Trading Securities - Includes money market funds and other cash equivalents. The fair value is based on observable market data. Level 2 Fair Value Measurements Term Loan Credit Facility - due June 2024 - As of December 31, 2020, the fair value is based on the average between bid and ask prices provided by a third-party. As the fair value is based on observable market inputs, the Company has classified the fair value within Level 2 of the fair value hierarchy. Due to limited trading volume in the Term Loan Credit Facility, the Company reclassified the fair value from Level 1 within the fair value hierarchy during the year ended December 31, 2020. Trading Securities - Includes certificates of deposit, mutual funds, corporate debt securities and U.S. treasury and agency securities. The fair values of the Company’s trading securities are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The Company classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value. Level 3 Fair Value Measurements ABL Facility - due April 2022 - Observable transactions are not available to aid in determining the fair value of this item. Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for credit risk (discount rate of approximately 9 %) as of December 31, 2020. 118 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) LCC Note Payable, LCC Water Treatment Obligation, UMWA Funds Settlement Liability, Environmental Settlement Obligations and Reclamation Funding Liability - Observable transactions are not available to aid in determining the fair value of these items. Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for credit risk (discount rates of approximately 34 % and 21 % as of December 31, 2020 and December 31, 2019, respectively). Contingent Revenue Obligation - The fair value of the contingent revenue obligation was estimated using a Black-Scholes pricing model and is marked to market at each reporting period with changes in value reflected in earnings. The inputs included in the Black-Scholes pricing model are the Company's forecasted future revenue, the stated royalty rate, the remaining periods in the obligation; annual risk-free interest rate based on the U.S. Constant Maturity Treasury Curve and annualized volatility. The annualized volatility was calculated by observing volatilities for comparable companies with adjustments for the Company's size and leverage. The range of significant unobservable inputs used to value the contingent revenue obligation as of December 31, 2020 and December 31, 2019, are set forth in the following table: December 31, 2020 December 31, 2019 Forecasted future revenue $ 0.9 - $ 1.1 billion $ 1.1 - $ 1.2 billion Stated royalty rate 1.0 % - 1.5 % 1.0 % - 1.5 % Annualized volatility 19.4 % - 52.1 % ( 28.0 %) 9.4 % - 28.1 % ( 19.9 %) (19) Income Taxes Total income tax benefit provided on loss before income taxes was allocated as follows: Year Ended December 31, 2020 2019 Continuing operations $ ( 2,164 ) $ ( 53,287 ) Discontinued operations — ( 8,484 ) Total $ ( 2,164 ) $ ( 61,771 ) Significant components of income tax (benefit) expense from continuing operations were as follows: Year Ended December 31, 2020 2019 Current tax (benefit) expense: Federal $ ( 35,187 ) $ ( 45,356 ) State ( 99 ) 1,891 Total current $ ( 35,286 ) $ ( 43,465 ) Deferred tax (benefit) expense: Federal $ 33,348 $ ( 747 ) State ( 226 ) ( 9,075 ) Total deferred $ 33,122 $ ( 9,822 ) Total income tax benefit: Federal $ ( 1,839 ) $ ( 46,103 ) State ( 325 ) ( 7,184 ) Total $ ( 2,164 ) $ ( 53,287 ) A reconciliation of statutory federal income tax benefit on loss from continuing operations to the actual income tax benefit is as follows: 119 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 2019 Federal statutory income tax benefit $ ( 51,163 ) $ ( 57,310 ) Increase (reductions) in taxes due to: Percentage depletion allowance ( 2,039 ) ( 6,270 ) AMT sequestration refund ( 2,123 ) — State taxes, net of federal tax impact ( 9,640 ) ( 10,255 ) State tax rate and NOL change, net of federal tax impact ( 1,235 ) ( 4,172 ) Change in valuation allowances 59,929 10,936 Net operating loss carryback — ( 14,234 ) Amended return - capital loss impact — 919 Non-deductible goodwill impairment — 26,114 Stock-based compensation 1,739 ( 1,085 ) Other, net 2,368 2,070 Income tax benefit $ ( 2,164 ) $ ( 53,287 ) Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. The net deferred tax assets and liabilities included in the Consolidated Balance Sheets include the following amounts: Year Ended December 31, 2020 2019 Deferred tax assets: Asset retirement obligations $ 41,268 $ 51,114 Reserves and accruals not currently deductible 12,131 8,265 Workers’ compensation benefit obligations 59,478 54,128 Pension obligations 52,598 44,413 Equity method investments 2,050 2,509 Alternative minimum tax credit carryforwards — 33,065 Loss carryforwards, net of Section 382 limitation 255,772 142,510 Acquisition-related obligations 10,002 17,902 Other 10,976 12,299 Gross deferred tax assets 444,275 366,205 Less valuation allowance ( 263,387 ) ( 133,020 ) Deferred tax assets $ 180,888 $ 233,185 Deferred tax liabilities: Property, plant and mineral reserves $ ( 141,549 ) $ ( 145,487 ) Acquired intangibles, net ( 22,037 ) ( 27,140 ) Prepaid expenses ( 6,211 ) ( 6,780 ) Restricted cash ( 11,516 ) ( 20,313 ) Other ( 55 ) ( 822 ) Total deferred tax liabilities ( 181,368 ) ( 200,542 ) Net deferred tax assets $ ( 480 ) $ 32,643 Changes in the valuation allowance were as follows: 120 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 2019 Valuation allowance beginning of period $ 133,020 $ 94,802 Increase in valuation allowance recorded to income tax benefit 117,829 29,950 Increase in valuation allowance not affecting income tax expense 12,538 8,268 Valuation allowance end of period $ 263,387 $ 133,020 On December 22, 2017, President Trump signed into law legislation commonly referred to as the “Tax Cuts and Jobs Act” (“TCJA”). Among other provisions, the TCJA repealed the corporate AMT and provided a mechanism for corporations to monetize their alternative minimum tax credits (“AMT Credits”) as a refundable credit during the 2018 through 2021 tax years. On March 27, 2020, President Trump signed into law legislation referred to as the CARES Act. The CARES Act modified the AMT Credits provision such that a corporate taxpayer’s remaining AMT Credits would be refunded in the 2019 tax year rather than the 2019 through 2021 tax years. As of December 31, 2019, the Company recorded a current federal income tax receivable of $ 33,065 and a deferred tax asset of $ 33,065 in relation to its refundable AMT Credits. During the first quarter of 2020 and following enactment of the CARES Act, the Company reclassified the $ 33,065 deferred tax asset to a current federal income tax receivable. The Company received the $ 66,130 AMT Credit refund in the fourth quarter of 2020. In addition, the Company received $ 2,123 related to AMT Credits claimed in prior tax years under a different Internal Revenue Code section, which were previously and erroneously subjected to the budgetary sequestration provisions. As of December 31, 2020, the Company does not expect to receive any further benefits related to AMT Credits. The Company acquired the core assets of Alpha Natural Resources, Inc. as part of the Alpha Natural Resources, Inc. bankruptcy reorganization in transactions intended to be treated as a tax-free reorganization for U.S. federal income tax purposes. As a result of these transactions, the Company inherited the tax basis of the core assets and the net operating loss and other carryforwards of Alpha Natural Resources, Inc. On December 31, 2016, the net operating loss carryforwards and other carryforwards were reduced under Internal Revenue Code Section 108 due to the cancellation of indebtedness resulting from the Alpha Natural Resources, Inc. bankruptcy reorganization. Due to the change in ownership, the net operating loss and other carryforwards inherited in the Alpha Natural Resources, Inc. bankruptcy reorganization are subjected to significant limitations on their use in future years. Due to the Company’s formation through acquisition of certain core coal assets as part of the Alpha Natural Resources, Inc. bankruptcy reorganization, the Company does not have a long history of operating results. Additionally, significant ownership change limitations limit the ability of the Company to utilize its net operating loss and other carryforwards in future years. The Company currently is relying primarily on the reversal of taxable temporary differences, along with consideration of taxable income via carryback to prior years and tax planning strategies, to support the realization of deferred tax assets. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as temporary differences giving rise to the deferred tax assets that will be realized. The valuation allowance recorded represents the portion of deferred tax assets for which the Company is unable to support realization through the methods described above. The Company has concluded that it is more likely than not that the remaining deferred tax assets, net of valuation allowances, are realizable. At December 31, 2020, the Company has regular tax net operating loss carryforwards for federal income tax purposes of approximately $ 1,737,000 . This includes $ 1,011,000 that are available to offset regular federal taxable income subject to an annual Internal Revenue Code Section 382 limitation of approximately $ 1,000 , $ 56,000 that are subject to an annual Section 382 limitation of approximately $ 18,300 , and $ 324,000 that are subject to an annual Section 382 limitation of approximately $ 17,500 . These federal net operating loss carryforwards were generated before 2018 and will expire between years 2030 and 2037. The Company also has $ 346,000 of federal net operating loss carryforwards with an indefinite carryforward period that can be used to offset up to 80% of taxable income. The Company has capital loss carryforwards of approximately $ 339,000 , of which $ 65,000 are subject to an annual Section 382 limitation of approximately $ 1,000 and $ 51,000 are subject to an annual Section 382 limitation of approximately $ 17,500 . The capital loss carryforwards will expire between years 2021 and 2025. A full valuation allowance is recorded against the capital loss carryforwards. 121 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) During the third quarter of the year ended December 31, 2020, the Company recorded a decrease in unrecognized tax benefits of approximately $ 20,788 as a result of the issuance of final regulatory guidance from the IRS. The decrease in unrecognized tax benefits did not impact the Company’s effective tax rate for the year ended December 31, 2020. The Company’s policy is to classify interest and penalties related to uncertain tax positions as part of income tax expense. As of December 31, 2020 and 2019, the Company had no accrued interest and penalties. The following reconciliation illustrates the Company’s liability for uncertain tax positions: Year Ended December 31, 2020 2019 Unrecognized tax benefits - beginning of period $ 20,788 $ — Additions for tax positions of prior years — 5,740 Additions for tax positions of current year — 15,048 Reductions for tax positions of prior years ( 20,788 ) — Unrecognized tax benefits - end of period $ — $ 20,788 As of December 31, 2020, tax years 2016 - 2020, which include the impact of net operating loss and other carryforwards and tax basis acquired from Alpha Natural Resources, Inc., remain open to federal and state examination. The IRS initiated a corporate income tax examination during the third quarter of 2020 for the Company’s 2016 tax year and related net operating loss carryback. This examination was open and in progress as of December 31, 2020. (20) Employee Benefit Plans The Company provides several types of benefits for its employees, including defined benefit and defined contribution pension plans, workers’ compensation and black lung benefits, and postretirement life insurance. The Company does not participate in any multi-employer plans. The components of net periodic (benefit) expense other than the service cost component for pension, black lung, and postretirement life insurance benefits are included in the line item miscellaneous loss, net, in the Consolidated Statements of Operations. Company Administered Defined Benefit Pension Plans In connection with the Merger, the Company assumed three qualified non-contributory defined benefit pension plans, which cover certain salaried and non-union hourly employees. The qualified non-contributory defined benefit pension plans are collectively referred to as the “Pension Plans.” Benefits are frozen under these plans. Participants accrued benefits either based on certain formulas, the participant’s compensation prior to retirement, or plan specified amounts for each year of service with the Company. One of the Company’s frozen qualified non-contributory defined benefit pension plans utilizes a cash balance formula for certain of its participants. The cash balance formula provides guaranteed rates of interest on accumulated balances of either 6 % (for balances accumulated prior to 2004) and 4 % (on balances accumulated thereafter). Effective October 1, 2019, two of the qualified non-contributory defined benefit pension plans were amended to offer certain eligible participants the option to elect to receive lump sum benefits as of December 1, 2019, which resulted in a partial plan settlement and the accelerated recognition of a portion of the accumulated other comprehensive loss during the year ended December 31, 2020 and the three months ended December 31, 2019. Refer to the disclosures below for further information on the partial plan settlements. Annual funding contributions to the Pension Plans are made as recommended by consulting actuaries based upon the ERISA funding standards. Plan assets consist of equity securities, fixed income funds, commingled short-term funds, private equity funds, and a guaranteed insurance contract. The following tables set forth the plans’ accumulated benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019. 122 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 2019 Change in benefit obligations: Accumulated benefit obligation at beginning of period: $ 674,439 $ 675,482 Interest cost 18,730 26,564 Actuarial loss (1) 72,822 91,287 Benefits paid ( 30,916 ) ( 31,371 ) Acquisition — 1,910 Settlement ( 11,627 ) ( 89,433 ) Accumulated benefit obligation at end of period $ 723,448 $ 674,439 Change in fair value of plan assets: Fair value of plan assets at beginning of period $ 470,353 $ 494,680 Actual return on plan assets 54,222 87,129 Employer contributions 22,745 9,348 Benefits paid ( 30,916 ) ( 31,371 ) Settlement ( 11,627 ) ( 89,433 ) Fair value of plan assets at end of period $ 504,777 $ 470,353 Funded status $ ( 218,671 ) $ ( 204,086 ) Accrued benefit cost at end of period (2) $ ( 218,671 ) $ ( 204,086 ) (1) For the years ended December 31, 2020 and December 31, 2019, the actuarial loss was primarily attributed to the decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations. (2) Amounts are classified as long-term on the Consolidated Balance Sheets as there are sufficient plan assets to make expected benefit payments to plan participants in the succeeding twelve months. Gross amounts related to pension obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2020 and 2019: December 31, 2020 2019 Net actuarial loss $ 88,583 $ 46,568 The following table details the components of net periodic benefit (credit) cost: Year Ended December 31, 2020 2019 Interest cost $ 18,730 $ 26,564 Expected return on plan assets ( 27,064 ) ( 28,042 ) Amortization of net losses 2,012 797 Settlement 1,636 6,224 Net periodic benefit (credit) cost $ ( 4,686 ) $ 5,543 Other changes in plan assets and benefit obligations recognized in other comprehensive loss are as follows: Year Ended December 31, 2020 2019 Actuarial loss (1) $ 45,663 $ 30,514 Amortization of net actuarial loss ( 2,012 ) ( 797 ) Settlement ( 1,636 ) ( 6,224 ) Total recognized in other comprehensive loss $ 42,015 $ 23,493 123 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (1) For the years ended December 31, 2020 and December 31, 2019, the actuarial loss was primarily attributed to the decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations. The following table presents information applicable to plans with accumulated benefit obligations in excess of plan assets: Year Ended December 31, 2020 2019 Projected benefit obligation $ 723,448 $ 674,439 Accumulated benefit obligation $ 723,448 $ 674,439 Fair value of plan assets $ 504,777 $ 470,353 The weighted-average actuarial assumption used in determining the benefit obligations as of December 31, 2020 and 2019 was as follows: December 31, 2020 2019 Discount rate 2.62 % 3.36 % The weighted-average actuarial assumptions used to determine net periodic benefit cost for the years ended December 31, 2020 and 2019 were as follows: Year Ended December 31, 2020 2019 Discount rate for benefit obligation 3.35 % 4.33 % Discount rate for interest cost 2.92 % 4.01 % Expected return on plan assets 5.90 % 5.80 % The discount rate assumptions were determined from a high-quality corporate bond yield-curve timing of the Company’s projected cash out flows. The expected long-term return on assets of the Pension Plans is established each year by the Company’s Benefits Committee in consultation with the plans’ actuaries and outside investment advisors. This rate is determined by taking into consideration the Pension Plans’ target asset allocation, expected long-term rates of return on each major asset class by reference to long-term historic ranges, inflation assumptions and the expected additional value from active management of the Pension Plans’ assets. For the determination of net periodic benefit cost in 2021, the Company will utilize an expected long-term return on plan assets of 5.80 %. Assets of the Pension Plans are held in trusts and are invested in accordance with investment guidelines that have been established by the Company’s Benefits Committee in consultation with outside investment advisors. The target allocation for 2021 and the actual asset allocation as reported at December 31, 2020 are as follows: Target Allocation Percentages 2021 Percentage of Plan Assets 2020 Equity securities 60.0 % 47.0 % Fixed income funds 40.0 % 50.0 % Other — % 3.0 % Total 100.0 % 100.0 % The asset allocation targets have been set with the expectation that the Pension Plans’ assets will fund the expected liabilities within an appropriate level of risk. In determining the appropriate target asset allocations, the Benefits Committee considers the demographics of the Pension Plans’ participants, the funding status of each plan, the Company’s contribution philosophy, the Company’s business and financial profile, and other associated risk factors. The Pension Plans’ assets are periodically rebalanced among the major asset categories to maintain the asset allocation within a specified range of the target 124 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) allocation percentage. In September 2020, the target allocation was adjusted by the Company’s Benefits Committee to transition to 60.0 % equity securities and 40.0 % fixed income funds in approximate 2.0 % increments over a 10 -month period. The Company expects to contribute $ 25,541 to the Pension Plans in 2021. The following represents expected future pension benefit payments for the next ten years: 2021 $ 31,178 2022 31,267 2023 31,628 2024 32,149 2025 32,426 2026-2030 162,622 $ 321,270 The fair values of the Company’s Pension Plans’ assets as of December 31, 2020, by asset category are as follows: Asset Category Total Quoted Market Prices in Active Market for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Equity securities: Multi-asset fund (1) $ 236,405 $ — $ 236,405 $ — Fixed income funds: Bond fund (2) 253,218 — 253,218 — Commingled short-term fund (3) 1,405 — 1,405 — Other types of investments: Guaranteed insurance contract 11,454 — — 11,454 Total $ 502,482 $ — $ 491,028 $ 11,454 Receivable (4) 888 Total assets at fair value 503,370 Private equity funds measured at net asset value practical expedient (5) 1,407 Total plan assets $ 504,777 (1) This fund contains equities (domestic and international), real estate and bonds. (2) This fund contains bonds representing a diversity of sectors and maturities. This fund also includes mortgage-backed securities and U.S. Treasuries. (3) This fund contains cash and highly liquid short-term investments in a collective investment fund. (4) Receivable for investments sold at December 31, 2020, which approximates fair value. (5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans. Changes in Level 3 plan assets for the period ended December 31, 2020 were as follows: 125 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Guaranteed Insurance Contract Beginning balance, December 31, 2019 $ 11,155 Actual return on plan assets: Relating to assets still held at the reporting date 659 Purchases, sales and settlements ( 360 ) Ending balance, December 31, 2020 $ 11,454 The fair values of the Company’s Pension Plans’ assets as of December 31, 2019, by asset category are as follows: Asset Category Total Quoted Market Prices in Active Market for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Equity securities: Multi-asset fund (1) $ 182,782 $ — $ 182,782 $ — Fixed income funds: Bond fund (2) 272,239 — 272,239 — Commingled short-term fund (3) 1,572 — 1,572 — Other types of investments: Guaranteed insurance contract 11,155 — — 11,155 Total $ 467,748 $ — $ 456,593 $ 11,155 Receivable (4) 1,061 Total assets at fair value 468,809 Private equity funds measured at net asset value practical expedient (5) 1,544 Total plan assets $ 470,353 (1) This fund contains equities (domestic and international), real estate and bonds. (2) This fund contains bonds representing a diversity of sectors and maturities. This fund also includes mortgage-backed securities and U.S. Treasuries. (3) This fund contains cash and highly liquid short-term investments in a collective investment fund. (4) Receivable for investments sold at December 31, 2019, which approximates fair value. (5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans. Changes in Level 3 plan assets for the period ended December 31, 2019 were as follows: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Guaranteed Insurance Contract Beginning balance, December 31, 2018 $ 10,886 Acquisition — Actual return on plan assets: Relating to assets still held at the reporting date 644 Purchases, sales and settlements ( 375 ) Ending balance, December 31, 2019 $ 11,155 The following is a description of the valuation methodologies used for assets measured at fair value: 126 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Level 1 Plan Assets: Assets consist of individual security positions that are easily traded on recognized market exchanges. These securities are priced and traded daily, and therefore the fund is valued daily. Level 2 Plan Assets: Funds consist of individual security positions that are mostly securities easily traded on recognized market exchanges. These securities are priced and traded daily, and therefore the fund is valued daily. Level 3 Plan Assets: Assets are valued monthly or quarterly based on the Market Value provided by managers of the underlying fund investments. The Market Value provided typically reflects the fair value of each underlying fund investment, including unrealized gains and losses. Workers’ Compensation and Pneumoconiosis (Black Lung) The Company is required by federal and state statutes to provide benefits to employees for awards related to workers’ compensation and black lung. The Company’s subsidiaries utilize high-deductible third-party insurance for worker’s compensation and black lung obligations with the exception of certain subsidiaries in which the Company is a qualified self-insurer for workers’ compensation and/or black lung obligations. The Company’s subsidiaries that are self-insured for black lung benefits may fund benefit payments through a Section 501(c) (21) tax-exempt trust fund. Pursuant to the Merger Agreement, the Company assumed a reinsurance contract with a third party. In 2017, the Merger Companies made a lump sum payment in exchange for a reinsurance company’s agreement to administer and pay certain future workers’ compensation and state black lung obligations in the state of Kentucky. Pursuant to the Merger Agreement, the Company assumed the estimated liability for these future claims. As the liabilities are paid by the insurance company, the prepaid insurance amounts will be reduced by a corresponding amount. The Company accrues for workers’ compensation liability by recognizing costs when it is probable that a covered liability has been incurred and the cost can be reasonably estimated. The Company’s estimates of these costs are adjusted based upon actuarial studies and include a provision for incurred but not reported losses. Actual losses may differ from these estimates, which could increase or decrease the Company’s costs. Additionally, the liability for black lung benefits is estimated by an independent actuary by prorating the accrual of actuarially projected benefits over the employee’s applicable term of service. Adjustments to the probable ultimate liability for workers’ compensation and black lung are made annually based on actuarial valuations. At December 31, 2020, the Company had $ 124,260 of workers’ compensation liability, including a current portion of $ 10,355 recorded in accrued expenses and other current liabilities, offset by $ 2,368 and $ 48,320 of expected insurance receivable recorded in prepaid expenses and other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets. At December 31, 2019, the Company had $ 136,540 of workers’ compensation liability, including a current portion of $ 11,317 recorded in accrued expenses and other current liabilities, offset by $ 2,375 and $ 52,757 of expected insurance receivable recorded in prepaid expenses and other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets. For the Company’s subsidiaries that are insured with a high-deductible insurance plan for workers’ compensation and black lung claims, the insurance premium expense for the years ended December 31, 2020 and 2019 was $ 7,000 and $ 10,684 , respectively. Workers’ compensation expense for high-deductible insurance plans for the years ended December 31, 2020 and 2019 was $ 1,275 and $ 2,333 , respectively. 127 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) The divestiture of the Company’s former NAPP operations during the fourth quarter of 2020 (refer to Note 3) resulted in a partial plan settlement of $ 8,290 and the accelerated recognition of a portion of the accumulated other comprehensive loss of $ 1,563 during the three months ended December 31, 2020. Refer to the disclosures below for further information on the partial plan settlement. As a result of the strategic actions impacting certain mines during the three months ended June 30, 2020 (refer to Note 8), black lung obligations were revalued for curtailment and remeasured with an updated discount rate as of May 31, 2020, which resulted in an increase in the liability for black lung obligations of approximately $ 7,400 with the offset to accumulated other comprehensive loss and a slight increase in net periodic expense to be recognized subsequent to the remeasurement date. Refer to the disclosures below for further information. The following tables set forth the accumulated black lung benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019: Year Ended December 31, 2020 2019 Change in benefit obligation: Accumulated benefit obligation at beginning of period $ 122,788 $ 94,805 Service cost 2,361 2,057 Interest cost 3,240 4,474 Actuarial loss (1) 14,736 11,166 Benefits paid ( 7,166 ) ( 6,543 ) Acquisition — 16,829 Curtailment gain ( 163 ) — Settlement ( 8,290 ) — Accumulated benefit obligation at end of period $ 127,506 $ 122,788 Change in fair value of plan assets: Fair value of plan assets at beginning of period $ 2,660 $ 2,597 Actual return on plan assets 60 63 Benefits paid ( 7,166 ) ( 6,543 ) Employer contributions 7,166 6,543 Fair value of plan assets at end of period (2) 2,720 2,660 Funded status $ ( 124,786 ) $ ( 120,128 ) Accrued benefit cost at end of period $ ( 124,786 ) $ ( 120,128 ) Summary of accrued benefit cost at end of period: Continuing operations ( 122,961 ) ( 111,036 ) Discontinued operations (3) ( 1,825 ) ( 9,092 ) Total accrued benefit cost at end of period $ ( 124,786 ) $ ( 120,128 ) (1) For the years ended December 31, 2020 and December 31, 2019, the actuarial loss was primarily attributed to the decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations and the annual updates to demographic information. (2) Assets of the plan are held in a Section 501(c)(21) tax-exempt trust fund and consist primarily of government debt securities. All assets are classified as Level 1 and valued based on quoted market prices. (3) The discontinued operations consisted of activity related to the Company’s former NAPP operations. Refer to Note 3 . The table below presents amounts recognized in the Balance Sheets: 128 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 2019 Current liabilities $ 6,784 $ 7,409 Current liabilities - discontinued operations 26 63 Long-term liabilities 116,177 103,627 Long-term liabilities - discontinued operations 1,799 9,029 $ 124,786 $ 120,128 Gross amounts related to the black lung obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2020 and 2019: December 31, 2020 2019 Net actuarial loss $ 24,042 $ 12,980 The following table details the components of the net periodic benefit cost for black lung obligations: Year Ended December 31, 2020 2019 Service cost $ 2,361 $ 2,057 Interest cost 3,240 4,474 Expected return on plan assets ( 54 ) ( 65 ) Amortization of net actuarial loss 1,942 216 Settlement 1,563 — Net periodic benefit cost $ 9,052 $ 6,682 Summary net periodic benefit cost: Continuing operations $ 7,670 $ 6,394 Discontinued operations (1) 1,382 288 Total net periodic benefit cost $ 9,052 $ 6,682 (1) The discontinued operations consisted of activity related to the Company’s former NAPP operations. Refer to Note 3. Other changes in the black lung plan assets and benefit obligations recognized in other comprehensive loss are as follows: Year Ended December 31, 2020 2019 Actuarial loss (1) $ 14,567 $ 11,512 Amortization of net actuarial loss ( 1,942 ) ( 216 ) Settlement ( 1,563 ) — Total recognized in other comprehensive loss $ 11,062 $ 11,296 (1) For the years ended December 31, 2020 and December 31, 2019, the actuarial loss was primarily attributed to the decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations and the annual updates to demographic information. The weighted-average assumptions related to black lung obligations used to determine the benefit obligation as of December 31, 2020 and 2019 were as follows: 129 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 2019 Discount rate 2.75 % 3.47 % Federal black lung benefit trend rate 2.00 % 2.00 % Black lung medical benefit trend rate 5.00 % 5.00 % Black lung benefit expense inflation rate 2.00 % 2.00 % The weighted-average assumptions related to black lung obligations used to determine net periodic benefit cost were as follows: Year Ended December 31, 2020 2019 Discount rate for benefit obligation 3.47 % 4.36 % Discount rate for service cost 3.56 % 4.54 % Discount rate for interest cost 2.61 % 3.99 % Federal black lung benefit trend rate 2.50 % 2.50 % Black lung medical benefit trend rate 5.00 % 5.00 % Black lung benefit expense inflation rate 2.00 % 2.50 % Expected return on plan assets 2.00 % 2.50 % Estimated future cash payments related to black lung obligations for the next 10 years ending after December 31, 2020 are as follows: Year ending December 31: 2021 $ 6,810 2022 6,929 2023 7,038 2024 7,112 2025 7,244 2026-2030 20,004 $ 55,137 Postretirement Life Insurance Benefits As part of the Alpha Natural Resources, Inc. bankruptcy reorganization process and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees. Provisions are made for estimated benefits and adjustments to the probable ultimate liabilities are made annually based on an actuarial study prepared by independent actuaries. These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities. The following tables set forth the accumulated postretirement life insurance benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019: 130 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 2019 Change in benefit obligation: Accumulated benefit obligation at beginning of period $ 12,341 $ 11,368 Interest cost 337 426 Actuarial loss 420 1,002 Benefits paid ( 463 ) ( 455 ) Accumulated benefit obligation at end of period $ 12,635 $ 12,341 Change in fair value of plan assets: Benefits paid (1) ( 463 ) ( 455 ) Employer contributions (1) 463 455 Fair value of plan assets at end of period $ — $ — Funded status ( 12,635 ) ( 12,341 ) Accrued benefit cost at end of year $ ( 12,635 ) $ ( 12,341 ) Amounts recognized in the consolidated balance sheets: Current liabilities $ 628 $ 719 Long-term liabilities 12,007 11,622 $ 12,635 $ 12,341 (1) Amount is comprised of premium payments to commercial life insurance provider. Gross amounts related to the postretirement life insurance benefit obligations recognized in accumulated other comprehensive income consisted of the following as of December 31, 2020 and 2019: December 31, 2020 2019 Net actuarial gain $ ( 390 ) $ ( 872 ) The following table details the components of the net periodic benefit cost for postretirement life insurance benefit obligations: December 31, 2020 2019 Interest cost $ 337 $ 426 Amortization of net actuarial gain ( 48 ) ( 105 ) Settlement ( 14 ) — Net periodic benefit cost $ 275 $ 321 Other changes in the postretirement life insurance plan assets and benefit obligations recognized in other comprehensive income are as follows: December 31, 2020 2019 Actuarial loss $ 420 $ 1,002 Amortization of net actuarial gain 48 105 Settlement 14 — Total recognized in other comprehensive income $ 482 $ 1,107 131 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) The weighted-average assumptions related to postretirement life insurance benefit obligations used to determine the benefit obligation as of December 31, 2020 and 2019 was as follows: December 31, 2020 2019 Discount rate 2.43 % 3.22 % The weighted-average assumptions related to postretirement life insurance benefit obligations used to determine net periodic benefit cost were as follows: Year Ended December 31, 2020 2019 Discount rate for benefit obligations 3.22 % 4.21 % Discount rate for interest cost 2.83 % 3.9 % Estimated future cash payments related to postretirement life insurance benefit obligations for the next 10 years ending after December 31, 2020 are as follows: Year ending December 31: 2021 $ 628 2022 588 2023 586 2024 586 2025 587 2026-2030 2,941 $ 5,916 Defined Contribution and Profit-Sharing Plans The Company sponsors defined contribution plans to assist its eligible employees in providing for retirement. Generally, under the terms of these plans, employees make voluntary contributions through payroll deductions and the Company makes matching and/or discretionary contributions, as defined by each plan. The Company’s total contributions to these plans for the years ended December 31, 2020 and 2019 were $ 3,613 and $ 22,102 , respectively. During the second quarter of 2020, the Company’s matching contributions under the Contura Energy 401(k) Retirement Savings Plan were suspended due to current market conditions. Self-insured Medical Plan The Company is self-insured for health benefit coverage for all of its active employees. Estimated liabilities for health and medical claims are recorded based on the Company’s historical experience and include a component for incurred but not paid claims. During the years ended December 31, 2020 and 2019, the Company incurred total expenses of $ 52,517 and $ 64,430 , respectively, which primarily include claims processed and an estimate for claims incurred but not paid. ( 21) Stock-Based Compensation Awards The MIP is currently authorized for the issuance of awards of up to 1,201,202 shares of common stock, and as of December 31, 2020, there were 89,780 shares of common stock available for grant under the MIP. The Long-Term Incentive Plan (the “LTIP”) is currently authorized for the issuance of awards of up to 1,000,000 shares of common stock, and as of December 31, 2020, there were 349,373 shares of common stock available for grant under the LTIP. Pursuant to the Merger Agreement, the Company assumed the ANR Inc. 2017 Equity Incentive Plan (the “ANR EIP”), which had underlying ANR shares that were converted to 89,766 Contura Energy, Inc. shares. The ANR EIP is no t authorized for additional issuance of 132 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) awards of shares of common stock, and as of December 31, 2020, there were no shares of common stock available for grant under the ANR EIP. As of December 31, 2020, the Company had four types of stock-based awards outstanding: time-based restricted stock units, performance-based restricted stock units, stock options, and performance-based cash awards. Stock-based compensation expense totaled $ 5,540 and $ 12,397 for the years ended December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, approximately 83 % and 76 %, respectively, of stock-based compensation expense was reported as selling, general and administrative expenses, and the remainder was recorded as cost of coal sales. The Company is authorized to repurchase common shares from employees (upon the election by the employee) to satisfy the employees’ statutory tax withholdings upon the vesting of stock grants. Shares that are repurchased to satisfy the employees’ statutory tax withholdings are recorded in treasury stock at cost. During the year ended December 31, 2020, the Company repurchased 43,559 shares of its common stock issued pursuant to awards under the MIP, LTIP and ANR EIP for a total purchase amount of $ 209 , or $ 4.79 average price paid per share. During the year ended December 31, 2019, the Company repurchased 118,935 shares of its common stock issued pursuant to awards under the MIP, LTIP and ANR EIP for a total purchase amount of $ 5,159 , or $ 43.37 average price paid per share. 2020 Awards Granted During the year ended December 31, 2020, the Company granted certain key employees and non-employee directors 402,620 time-based restricted stock units under the MIP and LTIP with a weighted average grant date fair value of $ 6.17 based on the Company’s closing stock price at the trading day before the date of the grant. The awards granted to key employees will vest ratably over a three-year period from date of grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date. The awards granted to non-employee directors will vest on the first to occur of (i) April 30, 2021, (ii) the director’s separation from service due to the director’s death or physical or mental incapacity to perform his or her usual duties, such condition likely to remain continuously and permanently, as determined by the Company, (iii) a change in control, and (iv) the director's service as a member of the board of directors is terminated as of a date that is after October 31, 2021 but prior to May 1, 2022 for any reason other than removal for cause. Upon vesting and settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient. Additionally, during the year ended December 31, 2020, the Company granted the Chief Executive Officer (“CEO”) 302,795 performance-based restricted stock units granted under the LTIP which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder return goals and annually determined operational goals over a three year period. This award was scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. These performance-based restricted stock units had the potential to be earned from 0 % to 200 % of target depending on actual results. Upon vesting of these awards, the Company would issue authorized and previously unissued shares of the Company’s common stock to the recipient. The 151,398 operational performance-based restricted stock units were valued based on the Company’s closing stock price at the trading day before the date of the grant and had a weighted average grant date fair value of $ 6.36 . For the awards with operational performance conditions, the Company reassessed at each reporting date whether achievement of each of the performance conditions was probable and adjusted the accrual of stock-based compensation expense as needed. The 151,397 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator 133 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) group and had a weighted average grant date fair value of $ 8.53 based on a Monte Carlo simulation. The Monte Carlo simulation incorporated the assumptions as presented in the following table: Relative performance-based restricted stock units Start price (1) $ 7.59 Valuation date stock price (2) $ 6.33 Expected volatility (3) 55.27 % Risk-free interest rate (4) 1.37 % Expected dividend yield (5) — % (1) The start price for the Company represented the average closing stock price over the twenty trading days ending on December 31, 2019, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date. (2) The valuation date stock price represented the closing price on the grant date. (3) The expected volatility assumption was based on the historical volatility of the price of the Company’s stock. (4) The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date. (5) The expected dividend yield represented the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit. During the first quarter of 2021, the 302,795 performance-based restricted stock units granted under the LTIP were voluntarily forfeited by the CEO in conjunction with an amendment to his employment agreement and the shares were allocated back to the LTIP for future issuance. The amendment also included an amendment to the participant’s time-based restricted stock granted under the MIP, such that the ratable vesting initially scheduled to occur on the second and third anniversaries of the award shall instead both occur on the second anniversary of the award. Additionally, the Company granted certain key employees performance-based cash incentive awards granted under the LTIP with a target award amount of $ 2,755 . The cash to be awarded is based on the achievement of pre-established relative total shareholder return goals over a three-year period. These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. These awards have the potential to be distributed from 0 % to 200 % of target depending on actual performance. Upon vesting of these awards, the Company issues cash to the recipient. These awards are classified as a liability, and the Company reassesses at each reporting date the fair value of the award and adjusts the accruals of stock-based compensation expense as appropriate based on a Monte Carlo simulation. As of December 31, 2020, the liability for these awards totaled $ 643 . The performance-based cash incentive awards were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value as a percent of target dollar value of 82.45 % based on a Monte Carlo simulation. The Monte Carlo simulation incorporates the assumptions as presented in the following table: Performance-based cash incentive awards Start price (1) $ 7.59 Valuation date stock price (2) $ 6.33 Expected volatility (3) 55.27 % Risk-free interest rate (4) 1.37 % Expected dividend yield (5) — % (1) The start price for the Company represents the average closing stock price over the twenty trading days ending on December 31, 2019, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date. (2) The valuation date stock price represents the closing price at each reporting date. (3) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock. (4) The annual risk-free interest rate equals the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that have a term equal to the length of the remaining performance measurement period as of the valuation date. (5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit. 134 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 2019 Awards Granted During the year ended December 31, 2019, the Company granted certain key employees and non-employee directors 79,474 time-based restricted stock units under the LTIP with a weighted average grant date fair value of $ 49.47 based on the Company’s closing stock price at the trading day before the date of the grant. The awards granted to key employees will either vest ratably over a three-year period or cliff vest in one year from date of grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date. The awards granted to non-employee directors will vest on the first to occur of (i) April 30, 2020, (ii) the director’s separation from service due to the director’s death or physical or mental incapacity to perform his or her usual duties, such condition likely to remain continuously and permanently, as determined by the Company, and (iii) a change in control. Upon vesting and settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient. Additionally, during the year ended December 31, 2019, the Company granted certain key employees 81,065 relative total shareholder return performance-based restricted stock units under the LTIP that are valued relative to the median stock price performance of a comparator group and had a weighted average grant date fair value of $ 65.70 based on a Monte Carlo simulation, and 27,042 absolute total shareholder return performance-based restricted stock units under the LTIP that are valued based on the Company’s stock price performance with a weighted average grant date fair value of $ 50.60 based on a Monte Carlo simulation. These awards cliff vest on the third anniversary of the date of the grant, subject to continued employment and the satisfaction of the performance criteria. These awards have the potential to be distributed from 0 % to 400 % of target for the relative total shareholder return units, and 0 % to 200 % of target for the absolute total shareholder return units depending on actual results versus the pre-established performance criteria over the three-year period. The Monte Carlo simulations incorporate the assumptions as presented in the following tables: Relative performance-based restricted stock units Start price (1) $ 66.06 Dividend adjusted stock price (2) $ 61.27 Expected volatility (3) 29.98 % Risk-free interest rate (4) 2.42 % Expected dividend yield (5) — % (1) The start price for the Company represents the average closing stock price over the ten trading days ending on December 31, 2018, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date. (2) The dividend adjusted stock price represents the closing price on the grant date assuming dividends distributed during the period since December 17, 2018, were reinvested in additional shares of the Company’s stock on the ex-dividend date. (3) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock. (4) The annual risk-free interest rate equals the yield on zero coupon U.S. Treasury Separate Trading of Registered Interest and Principal of Securities (“STRIPS”) that have a term equal to the length of the remaining performance measurement period as of the valuation date. (5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of an absolute performance-based restricted stock unit. Absolute performance-based restricted stock units Valuation date stock price $ 61.27 Expected volatility (1) 29.98 % Risk-free interest rate (2) 2.42 % Expected dividend yield (3) — % (1) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock. (2) The annual risk-free interest rate equals the yield on zero coupon U.S. Treasury STRIPS that have a term equal to the length of the remaining performance measurement period as of the valuation date. (3) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of an absolute performance-based restricted stock unit. 135 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Restricted Stock Restricted stock activity for the year ended December 31, 2020 is summarized in the following table: Restricted stock activity: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2019 23,598 $ 65.55 Granted — $ — Vested ( 23,598 ) $ 65.55 Forfeited or Expired — $ — Non-vested shares outstanding at December 31, 2020 — $ — As of December 31, 2020, there was no unrecognized compensation cost related to non-vested restricted stock units. Restricted Stock Units Time-Based Restricted Stock Units Time-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table: Time-based restricted stock unit activity: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2019 158,082 $ 64.84 Granted 402,620 $ 6.17 Vested (1) ( 149,829 ) $ 45.22 Forfeited or Cancelled ( 43,320 ) $ 21.10 Non-vested shares outstanding at December 31, 2020 367,553 $ 13.72 (1) Includes 33,508 shares with deferred settlement pursuant to the award agreement. As of December 31, 2020, there was $ 1,707 of unrecognized compensation cost related to non-vested time-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.30 years. Performance-Based Restricted Stock Units Relative performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table: Relative performance-based restricted stock unit activity: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2019 31,599 $ 65.70 Granted 151,397 $ 8.53 Vested (1) ( 3,864 ) $ 65.70 Forfeited ( 4,929 ) $ 65.70 Non-vested shares outstanding at December 31, 2020 174,203 $ 16.01 (1) Includes 3,042 of vested shares due to the employment criteria being satisfied during the period. Until the performance criteria is satisfied, these shares will remain unsettled. As of December 31, 2020, there was $ 1,471 of unrecognized compensation cost related to non-vested relative performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.75 years. 136 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Absolute performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table: Absolute performance-based restricted stock unit activity: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2019 10,549 $ 50.60 Granted — $ — Vested (1) ( 1,290 ) $ 50.60 Forfeited ( 1,645 ) $ 50.60 Non-vested shares outstanding at December 31, 2020 7,614 $ 50.60 (1) Includes 1,016 of vested shares due to the employment criteria being satisfied during the period. Until the performance criteria is satisfied, these shares will remain unsettled. As of December 31, 2020, there was $ 142 of unrecognized compensation cost related to non-vested absolute performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.11 years. Operational performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table: Operational performance-based restricted stock unit activity: Number of Shares Weighted-Average Fair Value Non-vested shares outstanding at December 31, 2019 — $ — Granted 151,398 $ 6.36 Vested — $ — Forfeited — $ — Non-vested shares outstanding at December 31, 2020 151,398 $ 6.36 As of December 31, 2020, there was $ 260 of unrecognized compensation cost related to non-vested operational performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 2.13 years. Stock Options 30-Day Volume-Weighted Average Price (“VWAP”) Stock Options 30-day VWAP stock option activity for the year ended December 31, 2020 is summarized in the following table: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (1) Outstanding at December 31, 2019 51,359 $ 63.45 7.15 $ ( 2,794 ) Exercisable at December 31, 2019 44,356 $ 63.03 7.15 $ ( 2,394 ) Granted — $ — Exercised — $ — $ — Forfeited or Expired ( 28,134 ) $ 66.13 Outstanding at December 31, 2020 23,225 $ 60.20 6.12 $ ( 1,134 ) Exercisable at December 31, 2020 23,225 $ 60.20 6.12 $ ( 1,134 ) (1) The aggregate intrinsic value of outstanding and exercisable options is calculated as the difference between the exercise price and the Company’s stock price at each reporting period end. The aggregate intrinsic value of exercised options is calculated as the difference between the exercise price and the Company’s stock price on the exercise date. During the year ended December 31, 2019, the aggregate intrinsic value of options exercised was $ 6,305 . 137 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) As of December 31, 2020, there was $ 0 of unrecognized compensation cost related to the 30-day VWAP stock options. Fixed Price Stock Options As December 31, 2020 and 2019, there were no fixed price stock options outstanding or exercisable. During the year ended December 31, 2019, the aggregate intrinsic value of options exercised was $ 6,879 . As of December 31, 2020, there was no unrecognized compensation cost related to the fixed price stock options. Performance-Based Cash Incentive Awards Performance-based cash incentive award activity for the year ended December 31, 2020 is summarized in the following table: Performance-based cash incentive award activity: Target Dollar Value Weighted-Average Fair Value as a % of Target Dollar Value Non-vested awards outstanding at December 31, 2019 $ — — % Granted 2,755 82.45 % Vested (1) ( 42 ) 100.00 % Forfeited ( 507 ) 70.70 % Non-vested awards outstanding at December 31, 2020 $ 2,206 94.21 % (1) Vested awards were paid at target dollar value due to the employment criteria being satisfied during the period. As of December 31, 2020, there was $ 1,447 of unrecognized compensation cost related to non-vested performance-based cash incentive awards which is expected to be recognized as expense over a weighted-average period of 2.13 years. (22) Related Party Transactions There were no material related party transactions for the year ended December 31, 2020. On June 14, 2019, the Company entered into a Credit Agreement which provides for the Term Loan Credit Facility as provided by a group of existing shareholders as of the agreement date. Refer to Note 15 for additional disclosures. On July 19, 2019, in association with the Blackjewel Chapter 11 bankruptcy filing, the U.S. Bankruptcy Court approved debtor-in-possession (“DIP”) financing of $ 2,900 with DIP lenders, Highbridge Capital Management, LLC and Whitebox Advisors LLC, shareholders of the Company. The Company entered into an arrangement on July 19, 2019 to purchase the obligations under the DIP financing at the request of the lenders thereunder pursuant to certain terms and conditions. On September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox, shareholders of the Company. Refer to Note 13 for additional disclosures. There were no other material related party transactions for the year ended December 31, 2019. (23) Commitments and Contingencies (a) General Estimated losses from loss contingencies are accrued by a charge to income when information available indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the Consolidated Financial Statements when it is at least reasonably possible that a loss may be incurred and that the loss could be material. 138 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (b) Commitments and Contingencies Commitments The Company leases coal mining and other equipment under long-term financing and operating leases with varying terms. Refer to Note 12 for further information on leases. In addition, the Company leases mineral interests and surface rights from landowners under various terms and royalty rates. Coal royalty expense was $ 67,992 and $ 91,879 for the years ended December 31, 2020 and 2019, respectively. Minimum royalty obligations under coal leases total $ 15,708 , $ 14,525 , $ 13,633 , $ 11,560 , $ 10,815 , and $ 43,603 for 2021, 2022, 2023, 2024, 2025, and after 2025, respectively. Other Commitments The Company has obligations under certain coal purchase agreements that contain minimum quantities to be purchased in 2021 totaling an estimated $ 44,707 . The Company has obligations under certain coal transportation agreements that contain minimum quantities to be shipped during contract periods from 2020 through 2022 with estimated obligations based on remaining tons to be shipped totaling $ 29 and $ 338 in 2021 and 2022, respectively. The Company also has obligations under certain equipment purchase agreements that contain minimum quantities to be purchased in 2021 and 2023 totaling $ 5,008 and $ 170 , respectively. Contingencies Extensive regulation of the impacts of mining on the environment and of maintaining workplace safety has had, and is expected to continue to have, a significant effect on the Company’s costs of production and results of operations. Further regulations, legislation or litigation in these areas may also cause the Company’s sales or profitability to decline by increasing costs or by hindering the Company’s ability to continue mining at existing operations or to permit new operations. During the normal course of business, contract-related matters arise between the Company and its customers. When a loss related to such matters is considered probable and can reasonably be estimated, the Company records a liability. Refer to Note 3 for disclosures on the Cumberland and PRB Back-to-Back Coal Supply Agreements. Future Federal Income Tax Refunds As of December 31, 2020, the Company has recorded $ 64,160 of current federal income tax receivable and associated interest receivable of $ 5,213 related to a net operating loss (“NOL”) carryback claim. Because the federal government was a creditor in the Alpha Natural Resources, Inc. bankruptcy proceedings, it is possible that the federal government could withhold some or all of the tax refund attributable to the NOL carryback claim and assert a right to set off the tax refund and associated interest receivable against its prepetition bankruptcy claims. (c) Guarantees and Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as bank letters of credit, performance or surety bonds, and other guarantees and indemnities related to the obligations of affiliated entities which are not reflected in the Company’s Consolidated Balance Sheets. However, the underlying liabilities that they secure, such as asset retirement obligations, workers’ compensation liabilities, and royalty obligations, are reflected in the Company’s Consolidated Balance Sheets. The Company is required to provide financial assurance in order to perform the post-mining reclamation required by its mining permits, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations. In order to provide the required financial assurance, the Company generally uses surety bonds for post-mining reclamation and workers’ compensation obligations. The Company can also use bank letters of credit to collateralize certain obligations. 139 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) As of December 31, 2020, the Company had $ 123,108 in letters of credit outstanding under the Amended and Restated Asset-Based Revolving Credit Agreement. Additionally, as of December 31, 2020, the Company had $ 14,242 in letters of credit outstanding under the Amended and Restated Letter of Credit Agreement dated November 9, 2018 between ANR, Inc. and Citibank, N.A. and $ 613 in letters of credit outstanding under the Credit and Security Agreement dated June 30, 2017, and related amendments, between ANR, Inc. and First Tennessee Bank National Association. As of December 31, 2020, the Company had outstanding surety bonds with a total face amount of $ 351,596 to secure various obligations and commitments, including $ 134,162 attributable to discontinued operations. To secure the Company’s reclamation-related obligations, the Company currently has $ 56,311 of collateral supporting these obligations. The Company meets frequently with its surety providers and has discussions with certain providers regarding the extent of and the terms of their participation in the program. These discussions may cause the Company to shift surety bonds between providers or to alter the terms of their participation in our program. To the extent that surety bonds become unavailable or the Company’s surety bond providers require additional collateral, the Company would seek to secure its obligations with letters of credit, cash deposits or other suitable forms of collateral. The Company’s failure to maintain, or inability to acquire, surety bonds or to provide a suitable alternative would have a material adverse effect on its liquidity. These failures could result from a variety of factors including lack of availability, higher cost or unfavorable market terms of new surety bonds, and the exercise by third-party surety bond issuers of their right to refuse to renew the surety. Amounts included in restricted cash represent cash deposits primarily invested in interest bearing accounts that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf: December 31, 2020 December 31, 2019 Workers’ compensation and black lung obligations $ 69,725 $ 51,650 Reclamation-related obligations 8,445 67,868 Financial payments and other performance obligations 17,863 3,006 Contingent revenue obligation escrow 9,311 12,363 Total restricted cash 105,344 134,887 Less current portion (1) ( 9,311 ) ( 12,363 ) Restricted cash, net of current portion $ 96,033 $ 122,524 (1) Included within prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. Restricted investments consist of FDIC insured certificates of deposit, mutual funds, and U.S. treasury bills that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf: December 31, 2020 December 31, 2019 Workers’ compensation obligations $ 51 $ 613 Reclamation-related obligations 22,233 18,786 Financial payments and other performance obligations 1,484 — Total restricted investments (1), (2) $ 23,768 $ 19,399 (1) Included within other non-current assets on the Company’s Consolidated Balance Sheets. (2) As of December 31, 2020 and 2019, respectively, $ 22,498 and $ 11,021 are classified as trading securities and $ 1,270 and $ 8,378 are classified as held-to-maturity securities. Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral to secure the following obligations which have been written on the Company’s behalf: 140 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 December 31, 2019 Reclamation-related obligations $ 25,633 $ 8,887 Financial payments and other performance obligations 1,596 — Other operating agreements 1,018 1,423 Total deposits (1) $ 28,247 $ 10,310 (1) Included within prepaid expenses and other current assets and other non-current assets on the Company’s Consolidated Balance Sheets. DCMWC Reauthorization Process In July 2019, the U.S. Department of Labor (Division of Coal Mine Workers’ Compensation or “DCMWC”) began implementing a new authorization process for all self-insured coal mine operators. As requested by the DCMWC, the Company filed an application and supporting documentation for reauthorization to self-insure certain of its black lung obligations in October 2019. As a result of this application, the DCMWC notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations for a period of one-year from February 21, 2020. The DCMWC reauthorization is contingent, however, upon the Company’s providing collateral of $ 65,700 to secure certain of its black lung obligations. This proposed collateral requirement is an increase from the approximate $ 2,600 in collateral that the Company currently provides to secure these self-insured black lung obligations. The reauthorization process provided the Company with the right to appeal the security determination in writing within 30 days of the date of the notification, which appeal period the DCMWC agreed to extend to May 22, 2020. The Company exercised this right of appeal in connection with the substantial increase in the amount of required collateral. If the Company’s appeal is unsuccessful, the Company may be required to provide additional letters of credit to receive the self-insurance reauthorization from the DCMWC or alternatively insure these black lung obligations through a third party provider that would likely also require the Company to provide collateral. Either of these outcomes could potentially reduce the Company’s liquidity. (d) Legal Proceedings The Company is party to legal proceedings from time to time. These proceedings, as well as governmental examinations, could involve various business units and a variety of claims including, but not limited to, contract disputes, personal injury claims, property damage claims (including those resulting from blasting, trucking and flooding), environmental and safety issues, securities-related matters and employment matters. While some legal matters may specify the damages claimed by the plaintiffs, many seek an unquantified amount of damages. Even when the amount of damages claimed against the Company or its subsidiaries is stated, (i) the claimed amount may be exaggerated or unsupported; (ii) the claim may be based on a novel legal theory or involve a large number of parties; (iii) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (iv) there may be uncertainty as to the outcome of pending appeals or motions; and/or (v) there may be significant factual issues to be resolved. As a result, if such legal matters arise in the future, the Company may be unable to estimate a range of possible loss for matters that have not yet progressed sufficiently through discovery and development of important factual information and legal issues. The Company records accruals based on an estimate of the ultimate outcome of these matters, but these estimates can be difficult to determine and involve significant judgment. (24) Concentration of Credit Risk and Major Customers The Company markets produced, processed, and purchased coal to customers in the United States and in international markets, primarily India, Brazil, Turkey, the Netherlands, and Italy. The following table presents additional information on our total revenues and top customers: 141 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 2019 Total revenue $ 1,416,187 $ 2,001,280 Top customer as % of total revenue 16 % 13 % Top 10 customers as % of total revenue 63 % 59 % Number of customers exceeding 10% of total revenue 2 2 Number of customers exceeding 10% of total trade accounts receivable, net 3 3 Domestic revenue as % of coal revenue 36 % 39 % Export revenue as % of coal revenue 64 % 61 % Countries with export revenue exceeding 10% of total revenue India, Brazil India Met coal as % of coal sales volume 80 % 74 % Thermal coal as % of coal sales volume 20 % 26 % (25) Segment Information The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities, The Company conducts mining operations only in the United States with mines in Central Appalachia. As of December 31, 2020, the Company has two reportable segments: Met and CAPP - Thermal. Met consists of five active mines and two preparation plants in Virginia, seventeen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines. CAPP - Thermal consists of one active mine and one preparation plant in West Virginia, as well as expenses associated with certain idled/closed mines. Prior to the fourth quarter of 2020, the Company had three reportable segments: CAPP - Met, CAPP - Thermal, and NAPP. As a result of the divestiture of the Cumberland mining operations (refer to Note 3), the Company re-evaluated its previous conclusions with respect to its segment reporting during the period. To conform to the current period reportable segments presentation, the prior periods have been restated to reflect the change in reportable segments. In addition to the two reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, idle and closed mine costs, and the elimination of certain intercompany activity. The operating results of these reportable segments are regularly reviewed by the “CODM,” who is the Chief Executive Officer of the Company. Segment operating results and capital expenditures from continuing operations for the year ended December 31, 2020 were as follows: Year Ended December 31, 2020 Met CAPP - Thermal All Other Consolidated Total revenues $ 1,264,496 $ 149,037 $ 2,654 $ 1,416,187 Depreciation, depletion, and amortization $ 124,060 $ 20,453 $ ( 4,628 ) $ 139,885 Amortization of acquired intangibles, net $ 12,889 $ ( 3,775 ) $ 100 $ 9,214 Adjusted EBITDA $ 120,281 $ 9,853 $ ( 46,732 ) $ 83,402 Capital expenditures $ 111,745 $ 7,106 $ 728 $ 119,579 142 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Segment operating results and capital expenditures from continuing operations for the year ended December 31, 2019 were as follows: Year Ended December 31, 2019 Met CAPP - Thermal All Other Consolidated Total revenues $ 1,711,260 $ 286,486 $ 3,534 $ 2,001,280 Depreciation, depletion, and amortization $ 152,835 $ 57,483 $ 5,439 $ 215,757 Amortization of acquired intangibles, net $ 10,389 $ ( 13,578 ) $ — $ ( 3,189 ) Adjusted EBITDA $ 316,006 $ 11,981 $ ( 63,883 ) $ 264,104 Capital expenditures $ 140,250 $ 17,545 $ 2,652 $ 160,447 The following table presents a reconciliation of net loss from continuing operations to Adjusted EBITDA for the year ended December 31, 2020: Year Ended December 31, 2020 Met CAPP - Thermal All Other Consolidated Net loss from continuing operations $ ( 77,519 ) $ ( 52,520 ) $ ( 111,431 ) $ ( 241,470 ) Interest expense ( 2,014 ) 6 76,536 74,528 Interest income ( 63 ) — ( 6,964 ) ( 7,027 ) Income tax benefit — — ( 2,164 ) ( 2,164 ) Depreciation, depletion and amortization 124,060 20,453 ( 4,628 ) 139,885 Non-cash stock compensation expense 289 8 4,600 4,897 Mark-to-market adjustment - acquisition-related obligations — — ( 8,750 ) ( 8,750 ) Accretion on asset retirement obligations 14,214 9,285 3,005 26,504 Asset impairment and restructuring (1) 46,317 36,719 842 83,878 Management restructuring costs (2) 501 5 435 941 Loss on partial settlement of benefit obligations 1,607 ( 328 ) 1,687 2,966 Amortization of acquired intangibles, net 12,889 ( 3,775 ) 100 9,214 Adjusted EBITDA $ 120,281 $ 9,853 $ ( 46,732 ) $ 83,402 (1) Asset impairment and restructuring for the year ended December 31, 2020 includes long-lived asset impairments of $ 80,954 and restructuring expense of $ 2,924 . Refer to Note 8 for further information. (2) Management restructuring costs are related to severance expense associated with senior management changes during the three months ended March 31, 2020. 143 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) The following table presents a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA for the year ended December 31, 2019: Year Ended December 31, 2019 Met CAPP - Thermal All Other Consolidated Net income (loss) from continuing operations $ 7,944 $ ( 97,398 ) $ ( 130,164 ) $ ( 219,618 ) Interest expense ( 1,209 ) 23 68,707 67,521 Interest income ( 100 ) — ( 7,147 ) ( 7,247 ) Income tax benefit — — ( 53,287 ) ( 53,287 ) Depreciation, depletion and amortization 152,835 57,483 5,439 215,757 Merger-related costs — — 1,090 1,090 Non-cash stock compensation expense 1,494 71 10,783 12,348 Mark-to-market adjustment - acquisition-related obligations — — ( 3,564 ) ( 3,564 ) Accretion on asset retirement obligations 9,599 10,929 3,337 23,865 Loss on modification and extinguishment of debt — — 26,459 26,459 Asset impairment (1) 15,034 50,993 297 66,324 Goodwill impairment (2) 124,353 — — 124,353 Cost impact of coal inventory fair value adjustment (3) 4,751 3,458 — 8,209 Gain on assets acquired in an exchange transaction (4) ( 9,083 ) — — ( 9,083 ) Management restructuring costs (5) — — 7,720 7,720 Loss on partial settlement of benefit obligations ( 1 ) — 6,447 6,446 Amortization of acquired intangibles, net 10,389 ( 13,578 ) — ( 3,189 ) Adjusted EBITDA $ 316,006 $ 11,981 $ ( 63,883 ) $ 264,104 (1) Asset impairment for the year ended December 31, 2019 includes a long-lived asset impairment of $ 60,169 related to asset groups recorded within the Met and CAPP - Thermal reporting segments and an asset impairment of $ 6,155 primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019. Refer to Note 8 for further information. (2) The goodwill impairment testing as of December 31, 2019 resulted in a goodwill impairment of $ 124,353 to write down the full carrying value of goodwill. Refer to Note 2 for further information. (3) The cost impact of the coal inventory fair value adjustment as a result of the Merger was completed during the three months ended June 30, 2019. (4) During the year ended December 31, 2019, the Company entered into an exchange transaction which primarily included the release of the PRB overriding royalty interest owed to the Company in exchange for met coal reserves which resulted in a gain of $ 9,083 . (5) Management restructuring costs are related to severance expense associated with senior management changes in the year ended December 31, 2019. No asset information has been provided for these reportable segments as the CODM does not regularly review asset information by reportable segment. 144 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.