What changed in this filing

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Item 1. Financial Statements

2020-08-07 compared with 2020-05-06 · 464 added, 286 removed, 759 unchanged (50% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions, except per share data)

Revenues $ 626.7 $ 1,149.0 $ 1,472.9 $ 2,399.6

Costs and expenses

Operating costs and expenses (exclusive of items shown separately below)

556.3 857.8 1,335.8 1,806.0

Depreciation, depletion and amortization 88.3 165.4 194.3 337.9

2 unchanged sentences

Restructuring charges

16.5 0.4 23.0 0.6

Transaction costs related to joint ventures

Other operating (income) loss:

Net gain on disposals

12.9 1.6 17.1 1.6

Other operating loss (income):

Net loss (gain) on disposals 0.2 ( 0.2 ) ( 7.9 ) ( 1.7 )

Asset impairment 1,418.1 — 1,418.1 —

Provision for North Goonyella equipment loss — — — 24.7

6 unchanged sentences

(Loss) income from continuing operations before income taxes ( 1,545.5 ) 45.9 ( 1,671.8 ) 198.0

Income tax provision

Income tax (benefit) provision ( 0.2 ) 3.0 2.8 21.8

(Loss) income from continuing operations, net of income taxes ( 1,545.3 ) 42.9 ( 1,674.6 ) 176.2

12 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

1 unchanged sentence

Postretirement plans and workers’ compensation obligations (net of $0.0 tax provisions in each period)

( 2.2 ) ( 2.2 ) ( 4.4 ) ( 4.4 )

Foreign currency translation adjustment 6.1 ( 0.5 ) ( 0.7 ) ( 0.4 )

Other comprehensive loss, net of income taxes

Other comprehensive income (loss), net of income taxes 3.9 ( 2.7 ) ( 5.1 ) ( 4.8 )

Comprehensive (loss) income ( 1,543.7 ) 36.8 ( 1,684.2 ) 164.6

Net (loss) income attributable to noncontrolling in terests

Net (loss) income attributable to noncontrolling interests ( 3.4 ) 2.4 ( 5.2 ) 8.1

Comprehensive (loss) income attributable to common stockholders $ ( 1,540.3 ) $ 34.4 $ ( 1,679.0 ) $ 156.5

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

(Amounts in millions, except per share data)

1 unchanged sentence

Cash and cash equivalents $ 848.5 $ 732.2

Accounts receivable, net of allowance for credit losses of $0.0 at March 31, 2020 and December 31, 2019

Accounts receivable, net of allowance for credit losses of $0.0 at June 30, 2020 and December 31, 2019

Inventories 301.6 331.5

Other current assets 241.2 220.7

4 unchanged sentences

Deferred income taxes 4.9 28.3

Total assets $ 4,948.8 $ 6,542.8

LIABILITIES AND STOCKHOLDERS’ EQUITY

12 unchanged sentences

Preferred Stock — $0.01 per share par value;

100.0 shares authorized, no shares issued or outstanding as of March 31, 2020 and December 31, 2019

100.0 shares authorized, no shares issued or outstanding as of June 30, 2020 and December 31, 2019

Series Common Stock — $0.01 per share par value;

50.0 shares authorized, no shares issued or outstanding as of March 31, 2020 and December 31, 2019

50.0 shares authorized, no shares issued or outstanding as of June 30, 2020 and December 31, 2019

Common Stock — $0.01 per share par value;

450.0 shares authorized, 139.6 shares issued and 97.2 shares outstanding as of March 31, 2020 and 139.2 shares issued and 96.9 shares outstanding as of December 31, 2019

450.0 shares authorized, 140.5 shares issued and 97.8 shares outstanding as of June 30, 2020 and 139.2 shares issued and 96.9 shares outstanding as of December 31, 2019

Additional paid-in capital 3,357.2 3,351.1

Treasury stock, at cost — 42.4 and 42.3 common shares as of March 31, 2020 and December 31, 2019

Retained earnings

Treasury stock, at cost — 42.7 and 42.3 common shares as of June 30, 2020 and December 31, 2019

( 1,368.9 ) ( 1,367.3 )

(Accumulated deficit) retained earnings ( 1,076.9 ) 597.0

Accumulated other comprehensive income 26.5 31.6

6 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions)

8 unchanged sentences

Noncash share-based compensation 6.1 21.6

Asset impairment 1,418.1 —

Net gain on disposals ( 7.9 ) ( 1.7 )

1 unchanged sentence

Provision for North Goonyella equipment loss — 24.7

North Goonyella insurance recovery

Foreign currency option contracts ( 1.3 ) 2.4

1 unchanged sentence

Accounts receivable 138.1 20.8

Inventories 29.9 ( 42.5 )

Other current assets ( 13.3 ) ( 32.0 )

4 unchanged sentences

Pension obligations 0.2 ( 17.9 )

Other, net ( 2.6 ) ( 14.8 )

Net cash (used in) provided by continuing operations ( 32.7 ) 398.6

4 unchanged sentences

Changes in accrued expenses related to capital expenditures ( 14.3 ) 0.2

Insurance proceeds attributable to North Goonyella equipment losses — 23.2

Proceeds from disposal of assets, net of receivables 12.0 15.8

4 unchanged sentences

Cash receipts from Middlemount Coal Pty Ltd — 14.7

Other, net ( 0.6 ) ( 0.1 )

Net cash used in investing activities ( 115.6 ) ( 64.0 )

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions)

Cash Flows From Financing Activities

Proceeds from long-term debt 300.0 —

Repayments of long-term debt ( 9.9 ) ( 17.5 )

Payment of debt issuance and other deferred financing costs — ( 0.8 )

Common stock repurchases — ( 156.0 )

2 unchanged sentences

Distributions to noncontrolling interests ( 3.5 ) ( 14.4 )

Net cash used in financing activities

Net cash provided by (used in) in financing activities 285.0 ( 430.3 )

Net change in cash, cash equivalents and restricted cash 116.3 ( 117.3 )

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions, except per share data)

Balance, beginning of period

$ 1.4 $ 1.4 $ 1.4 $ 1.4

Balance, end of period

1.4 1.4 1.4 1.4

Additional paid-in capital

Balance, beginning of period

3,353.3 3,322.3 3,351.1 3,304.7

Dividend equivalent units on dividends declared

Share-based compensation for equity-classified awards

3.9 10.0 6.1 21.6

Balance, end of period

3,357.2 3,333.7 3,357.2 3,333.7

Treasury stock

Balance, beginning of period

( 1,368.1 ) ( 1,125.3 ) ( 1,367.3 ) ( 1,025.1 )

Common stock repurchases

— ( 57.2 ) — ( 156.0 )

Repurchase of employee common stock relinquished for tax withholding

( 0.8 ) ( 10.9 ) ( 1.6 ) ( 12.3 )

Balance, end of period

Retained earnings

( 1,368.9 ) ( 1,193.4 ) ( 1,368.9 ) ( 1,193.4 )

(Accumulated deficit) retained earnings

Balance, beginning of period

467.3 978.3 597.0 1,074.5

Net (loss) income

Dividends declared ($0.000 per share, $1.980 per share)

( 1,544.2 ) 37.1 ( 1,673.9 ) 161.3

Dividends declared ($0.000, $0.140, $0.000, and $2.120 per share, respectively)

— ( 16.3 ) — ( 236.7 )

Balance, end of period

( 1,076.9 ) 999.1 ( 1,076.9 ) 999.1

Accumulated other comprehensive income

Balance, beginning of period

22.6 38.0 31.6 40.1

Postretirement plans and workers' compensation obligations (net of $0.0 tax provisions in each period)

( 2.2 ) ( 2.2 ) ( 4.4 ) ( 4.4 )

Foreign currency translation adjustment

6.1 ( 0.5 ) ( 0.7 ) ( 0.4 )

Balance, end of period

26.5 35.3 26.5 35.3

Noncontrolling interests

Balance, beginning of period

56.8 47.4 58.7 56.0

Net (loss) income

( 3.4 ) 2.4 ( 5.2 ) 8.1

Distributions to noncontrolling interests

( 3.4 ) ( 0.1 ) ( 3.5 ) ( 14.4 )

Balance, end of period

50.0 49.7 50.0 49.7

Total stockholders’ equity

$ 989.3 $ 3,225.8 $ 989.3 $ 3,225.8

See accompanying notes to unaudited condensed consolidated financial statements.

12 unchanged sentences

Balance sheet information presented herein as of December 31, 2019 has been derived from the Company’s audited consolidated balance sheet at that date.

The Company’s results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2020 .

Coronavirus Disease 2019 (COVID-19) Pandemic

The Company’s results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2020.

Coronavirus (COVID-19) Pandemic

On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization.

1 unchanged sentence

Within the global coal industry, supply and demand disruptions have been widespread as the COVID-19 pandemic has forced country-wide lockdowns and regional restrictions.

In the seaborne markets, thermal demand from non-power sectors remains weak and steel production has been curtailed.

In the seaborne metallurgical and thermal markets, demand remains weak as a result of curtailed steel production and reduced electricity generation.

Thermal coal demand in the U.S.

has been pressured by low natural gas prices, subsidized renewable energy and weak electric power sector consumption due to reduced industrial activity.

Supply risks have also emerged at a number of global and domestic producers.

While the ultimate impacts of the COVID-19 pandemic are unknown, the Company expects continued interference with general commercial activity, which may further negatively affect both demand and prices for the Company’s products.

The Company also faces potential disruption to supply chain and distribution channels, potentially increasing its costs of production, storage and distribution, and potential adverse effects to the Company’s workforce, each of which could have a material adverse effect on the Company’s business, financial condition or results of operations.

In addition, the COVID-19 pandemic could have an adverse impact on the timing of key events, including the timing of the Company’s litigation in the U.S.

federal court system as it pursues the completion of the proposed joint venture with Arch Coal, Inc.

(Arch), as further described in Note 15.

“Other Events.”

has been pressured by low natural gas prices, increased renewable energy usage and weak electric power sector consumption due to reduced industrial activity.

While the ultimate impacts of the COVID-19 pandemic on the Company’s business are unknown, the Company expects continued interference with general commercial activity, which may further negatively affect both demand and prices for the Company’s products.

The Company also faces disruption to supply chain and distribution channels, potentially increasing its costs of production, storage and distribution, and potential adverse effects to the Company’s workforce, each of which could have a material adverse effect on the Company’s business, financial condition or results of operations.

In addition, the COVID-19 pandemic could continue to have an adverse impact on the timing of key events.

In response to the COVID-19 pandemic, on March 27, 2020, the President of the United States signed and enacted into law the Coronavirus Aid, Relief and Economic Security Act (the CARES Act).

The Company has requested accelerated refunds of previously generated alternative minimum tax (AMT) credits from the Internal Revenue Service (IRS) as further described in Note 11.

“Income Taxes” and expects to defer 2020 employer payroll taxes incurred after the date of enactment to future years.

As further described in Note 12.

“Long-term Debt,” subsequent to March 31, 2020, the Company borrowed funds under its revolving credit facility as part of its ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets caused by the COVID-19 pandemic.

Given the uncertainties with respect to future COVID-19 developments, including the duration, severity and scope, as well as the necessary government actions to limit the spread, the Company is unable to estimate the full impact of the pandemic on its business, financial condition or results of operations at this time.

“Income Taxes” and will defer 2020 employer payroll taxes incurred after the date of enactment to future years.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As further described in Note 12.

“Long-term Debt,” during the second quarter of 2020, the Company borrowed $ 300.0 million under its revolving credit facility as part of its ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets caused by the COVID-19 pandemic.

The Company experienced negative cash flows from operations during the first half of 2020.

Results from continuing operations, net of income taxes and Adjusted EBITDA for the six months ended June 30, 2020 declined by $ 1,850.8 million and $ 423.9 million, respectively, compared to the corresponding prior year period.

The Company’s available liquidity declined from $ 1,275.8 million as of December 31, 2019 to $ 926.1 million as of June 30, 2020.

Available liquidity was comprised of cash and cash equivalents of $ 732.2 million and $ 848.5 million as of December 31, 2019 and June 30, 2020, respectively, and combined availability under the Company’s revolving credit facility and accounts receivable securitization program of $ 543.6 million and $ 77.6 million as of December 31, 2019 and June 30, 2020, respectively.

During the six months ended June 30, 2020, the combined availability under the Company’s revolving credit facility and accounts receivable securitization program decreased as a result of the $ 300.0 million borrowing described above, an additional $ 83.0 million of letters of credit issuances, and an $ 83.0 million decrease in available receivable balances under the accounts receivable securitization program.

There is significant risk of noncompliance with the leverage ratio limitations under the Company’s credit agreement in the second half of 2020 if the Company does not successfully take mitigating action.

Noncompliance with the ratio covenant would constitute a default under the credit agreement, and the revolving lenders could elect to accelerate the maturity of the related indebtedness, and could potentially choose to exercise other rights and remedies under the agreement.

Further, the Company’s senior secured notes and certain lease agreements contain cross-default provisions that would be activated by a default under the credit agreement, which could result in a similar acceleration of maturity under those obligations.

The Company believes it could seek to avoid noncompliance by taking certain mitigating actions, such as obtaining a waiver of the default condition, executing an amendment to the credit agreement, or completing asset sales to generate additional liquidity, but can offer no assurance as to the likelihood of success of such actions.

If such actions were not successful, the Company could avoid noncompliance while maintaining operating liquidity beyond twelve months by repaying the amount currently outstanding under its revolving credit facility and replacing outstanding letters of credit with cash collateral.

Such actions would avoid default on the remaining indebtedness under the credit agreement and cross-default on the senior secured notes and lease agreements as described above, but would have negative impacts to the Company’s liquidity.

Any of these actions could have an adverse effect on the Company’s financial condition, results of operations or cash flows.

Given the uncertainties with respect to future COVID-19 developments, including the duration, severity and scope, as well as the necessary government actions to limit the spread, the Company is unable to estimate the full impact of the pandemic on its financial condition, results of operations or cash flows at this time.

(2) Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

11 unchanged sentences

Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the necessary reserve at the balance sheet date.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company pools its accounts receivable based on similar risk characteristics in estimating its expected credit losses.

19 unchanged sentences

The Company plans to adopt the requirements effective January 1, 2021.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effects of Reference Rate Reform.

In March 2020, ASU 2020-04 was issued which provides optional guidance for a limited period of time to ease the potential burden on accounting for contract modifications caused by reference rate reform.

This guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

The guidance may be adopted over time as reference rate reform activities occur and should be applied on a prospective basis.

The Company is still completing its evaluation of the impact of ASU 2020-04 and plans to elect optional expedients as reference rate reform activities occur.

While the Company is still evaluating, it does not expect the guidance to have a material impact on its consolidated financial statements or disclosures.

(3) Revenue Recognition

2 unchanged sentences

“Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented” for further discussion of the adoption, including the impact on the Company’s opening balance sheet.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Disaggregation of Revenues

1 unchanged sentence

With respect to its seaborne mining segments, the Company classifies as “Export” certain revenue from domestically-delivered coal under contracts in which the price is derived on a basis similar to export contracts.

Three Months Ended March 31, 2020

Seaborne Thermal Mining

Seaborne Metallurgical Mining

Powder River Basin Mining

Thermal Mining

Corporate and Other (1)

Three Months Ended June 30, 2020

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 38.3 $ — $ 205.8 $ 144.1 $ — $ 388.2

Export 123.5 — — — — 123.5

Total thermal 161.8 — 205.8 144.1 — 511.7

Metallurgical coal

Export — 91.4 — — — 91.4

Total metallurgical — 91.4 — — — 91.4

Three Months Ended March 31, 2019

Seaborne Thermal Mining

Seaborne Metallurgical Mining

Powder River Basin Mining

Thermal Mining

Corporate and Other (1)

Other 0.2 0.2 — 7.9 15.3 23.6

Revenues $ 162.0 $ 91.6 $ 205.8 $ 152.0 $ 15.3 $ 626.7

Three Months Ended June 30, 2019

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 37.7 $ — $ 282.5 $ 298.2 $ — $ 618.4

Export 182.2 — — 4.3 — 186.5

Total thermal 219.9 — 282.5 302.5 — 804.9

Metallurgical coal

Export — 290.3 — — — 290.3

Total metallurgical — 290.3 — — — 290.3

Other 0.3 0.6 0.1 7.1 45.7 53.8

Revenues $ 220.2 $ 290.9 $ 282.6 $ 309.6 $ 45.7 $ 1,149.0

Six Months Ended June 30, 2020

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 74.8 $ — $ 472.4 $ 328.7 $ — $ 875.9

Export 287.2 — — — — 287.2

Total thermal 362.0 — 472.4 328.7 — 1,163.1

Metallurgical coal

Export — 283.9 — — — 283.9

Total metallurgical — 283.9 — — — 283.9

Other 1.1 0.9 — 15.6 8.3 25.9

Revenues $ 363.1 $ 284.8 $ 472.4 $ 344.3 $ 8.3 $ 1,472.9

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended June 30, 2019

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 76.1 $ — $ 569.8 $ 619.9 $ — $ 1,265.8

Export 394.1 — — 11.3 — 405.4

Total thermal 470.2 — 569.8 631.2 — 1,671.2

Metallurgical coal

Export — 614.0 — — — 614.0

Total metallurgical — 614.0 — — — 614.0

Other 1.0 1.4 0.1 13.2 98.7 114.4

Revenues $ 471.2 $ 615.4 $ 569.9 $ 644.4 $ 98.7 $ 2,399.6

Revenue by initial contract duration was as follows:

Three Months Ended March 31, 2020

Seaborne Thermal Mining

Seaborne Metallurgical Mining

Powder River Basin Mining

Thermal Mining

Corporate and Other (1)

Three Months Ended June 30, 2020

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

1 unchanged sentence

Less than one year 82.3 27.3 10.1 2.0 — 121.7

Three Months Ended March 31, 2019

Seaborne Thermal Mining

Seaborne Metallurgical Mining

Powder River Basin Mining

Thermal Mining

Corporate and Other (1)

0.2 0.2 — 7.9 15.3 23.6

Revenues $ 162.0 $ 91.6 $ 205.8 $ 152.0 $ 15.3 $ 626.7

Three Months Ended June 30, 2019

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

1 unchanged sentence

Less than one year 69.3 47.6 12.8 11.7 — 141.4

0.3 0.6 0.1 7.1 45.7 53.8

Revenues $ 220.2 $ 290.9 $ 282.6 $ 309.6 $ 45.7 $ 1,149.0

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended June 30, 2020

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

One year or longer $ 178.8 $ 204.2 $ 439.1 $ 326.7 $ — $ 1,148.8

Less than one year 183.2 79.7 33.3 2.0 — 298.2

1.1 0.9 — 15.6 8.3 25.9

Revenues $ 363.1 $ 284.8 $ 472.4 $ 344.3 $ 8.3 $ 1,472.9

Six Months Ended June 30, 2019

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining Corporate and Other (1)

(Dollars in millions)

One year or longer $ 321.7 $ 475.5 $ 549.8 $ 604.6 $ — $ 1,951.6

Less than one year 148.5 138.5 20.0 26.6 — 333.6

1.0 1.4 0.1 13.2 98.7 114.4

Revenues $ 471.2 $ 615.4 $ 569.9 $ 644.4 $ 98.7 $ 2,399.6

(1) Corporate and Other revenue includes gains and losses related to mark-to-market adjustments from economic hedge activities intended to hedge future coal sales.

1 unchanged sentence

“Derivatives and Fair Value Measurements” for additional information regarding the economic hedge activities.

Other includes revenues from arrangements such as customer contract-related payments, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals, for which contract duration is not meaningful.

(2) Other includes revenues from arrangements such as customer contract-related payments associated with volume shortfalls, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals, for which contract duration is not meaningful.

Committed Revenue from Contracts with Customers

The Company expects to recognize revenue subsequent to March 31, 2020 of approximately $ 4.0 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at March 31, 2020 .

The Company expects to recognize revenue subsequent to June 30, 2020 of approximately $ 4.1 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at June 30, 2020.

Approximately 43 % of such amount is expected to be recognized over the next twelve months and the remainder thereafter.

2 unchanged sentences

Accounts Receivable

“Accounts receivable, net” at March 31, 2020 and December 31, 2019 consisted of the following:

March 31, 2020

December 31, 2019

“Accounts receivable, net” at June 30, 2020 and December 31, 2019 consisted of the following:

June 30, 2020 December 31, 2019

(Dollars in millions)

2 unchanged sentences

Accounts receivable, net $ 191.4 $ 329.5

Trade receivables, net included no allowance for credit losses as of both March 31, 2020 and December 31, 2019 .

Miscellaneous receivables, net included no allowance for credit losses as of both March 31, 2020 and December 31, 2019 .

No charges for credit losses were recognized during the three months ended March 31, 2020 or 2019 .

Trade receivables, net included no allowance for credit losses as of both June 30, 2020 and December 31, 2019.

Miscellaneous receivables, net included no allowance for credit losses as of both June 30, 2020 and December 31, 2019.

No charges for credit losses were recognized during the three and six months ended June 30, 2020.

A reduction of previously recorded credit losses of $ 0.1 million for both the three and six months ended June 30, 2019 was included in “Operating costs and expenses” in the unaudited condensed consolidated statements of operations.

(4) Discontinued Operations

5 unchanged sentences

Results from discontinued operations were as follows during the periods presented below:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

2 unchanged sentences

Liabilities classified as discontinued operations included in the Company’s condensed consolidated balance sheets were as follows:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

(Dollars in millions)

23 unchanged sentences

Whether the Company will ultimately be required to fund certain of those obligations in the future as a result of Patriot’s May 2015 bankruptcy remains uncertain.

The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $ 85.7 million at both March 31, 2020 and December 31, 2019 .

The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $ 85.7 million at both June 30, 2020 and December 31, 2019.

While the Company has recorded a liability, it intends to review each claim on a case-by-case basis and contest liability estimates as appropriate.

1 unchanged sentence

The Company cannot reliably estimate the potential liabilities for Patriot’s workers employed by former subsidiaries of the Company that are presently active in the workforce because of the potential for such workers to continue to work for another coal operator that is a going concern.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Combined Benefit Fund (Combined Fund).

2 unchanged sentences

Former employers are required to contribute to the Combined Fund according to a formula.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the terms of the Patriot spin-off, Patriot was primarily liable to the Combined Fund for the approximately $ 40 million of its subsidiaries’ obligations at that time.

Once Patriot ceased meeting its obligations, the Company was held responsible for these costs and, as a result, recorded “Loss from discontinued operations, net of income taxes” charges of $ 0.1 million and $ 0.2 million during the three months ended March 31, 2020 and 2019 , respectively.

The Company made payments into the fund of $ 0.4 million and $ 0.5 million during the three months ended March 31, 2020 and 2019 , respectively, and estimates that the annual cash cost to fund these potential Combined Fund liabilities will range between $ 1 million and $ 2 million in the near-term, with those premiums expected to decline over time because the fund is closed to new participants.

The liability related to the fund was $ 14.9 million and $ 15.2 million at March 31, 2020 and December 31, 2019 , respectively.

Once Patriot ceased meeting its obligations, the Company was held responsible for these costs and, as a result, recorded “Loss from discontinued operations, net of income taxes” charges of $ 0.1 million during both the three months ended June 30, 2020 and 2019, and $ 0.2 million and $ 0.3 million during the six months ended June 30, 2020 and 2019, respectively.

The Company made payments into the fund of $ 0.4 million and $ 0.5 million during the three months ended June 30, 2020 and 2019, respectively, and $ 0.8 million and $ 1.0 million during the six months ended June 30, 2020 and 2019, respectively, and estimates that the annual cash cost to fund these potential Combined Fund liabilities will range between $ 1 million and $ 2 million in the near-term, with those premiums expected to decline over time because the fund is closed to new participants.

The liability related to the fund was $ 14.7 million and $ 15.2 million at June 30, 2020 and December 31, 2019, respectively.

UMWA 1974 Pension Plan (UMWA Plan) Litigation.

On July 16, 2015, a lawsuit was filed by the UMWA Plan, the UMWA 1974 Pension Trust (Trust) and the Trustees of the UMWA Plan and Trust (Trustees) in the United States District Court for the District of Columbia, against the Company, Peabody Holding Company, LLC, a subsidiary of the Company, and Arch.

(Arch), known as Arch Coal, Inc.

prior to May 15, 2020.

The plaintiffs sought, pursuant to the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Multiemployer Pension Plan Amendments Act of 1980, a declaratory judgment that the defendants were obligated to arbitrate any opposition to the Trustees’ determination that the defendants had statutory withdrawal liability as a result of the 2015 Patriot bankruptcy.

1 unchanged sentence

Bankruptcy Court for the Eastern District of Missouri (Bankruptcy Court), on January 25, 2017, the UMWA Plan and the Company agreed to a settlement of the claim which entitled the UMWA Plan to $ 75 million to be paid by the Company in increments through 2021.

The balance of the liability, on a discounted basis, was $ 26.7 million and $ 26.0 million at March 31, 2020 and December 31, 2019 , respectively.

The balance of the liability, on a discounted basis, was $ 12.5 million and $ 26.0 million at June 30, 2020 and December 31, 2019, respectively.

(5) Inventories

Inventories as of March 31, 2020 and December 31, 2019 consisted of the following:

March 31, 2020

December 31, 2019

Inventories as of June 30, 2020 and December 31, 2019 consisted of the following:

June 30, 2020 December 31, 2019

(Dollars in millions)

Materials and supplies $ 111.2 $ 116.3

Raw coal 49.7 85.1

Saleable coal 140.7 130.1

Materials and supplies inventories presented above have been shown net of reserves of $ 8.2 million and $ 7.9 million as of March 31, 2020 and December 31, 2019 , respectively.

Total $ 301.6 $ 331.5

Materials and supplies inventories presented above have been shown net of reserves of $ 9.3 million and $ 7.9 million as of June 30, 2020 and December 31, 2019, respectively.

(6) Equity Method Investments

The Company had total equity method investments of $ 47.1 million and $ 56.9 million reflected in “Investments and other assets” in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 , respectively, related to Middlemount Coal Pty Ltd (Middlemount).

Included in “Loss (income) from equity affiliates” in the unaudited condensed consolidated statements of operations was a loss of $ 9.1 million related to Middlemount during the three months ended March 31, 2020 and income of $ 3.8 million during the three months ended March 31, 2019 .

The Company received cash payments from Middlemount of $ 1.1 million during the three months ended March 31, 2019 , related to financing receivables accounted for as in-substance common stock due to the limited fair value attributed to Middlemount’s equity.

No payments were received from Middlemount during the three months ended March 31, 2020 .

The Company had total equity method investments of $ 63.1 million and $ 56.9 million reflected in “Investments and other assets” in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively, related to Middlemount Coal Pty Ltd (Middlemount).

Included in “Loss (income) from equity affiliates” in the unaudited condensed consolidated statements of operations were losses of $ 6.0 million and $ 15.1 million related to Middlemount during the three and six months ended June 30, 2020, respectively, and income of $ 9.7 million and $ 13.5 million during the three and six months ended June 30, 2019, respectively.

The Company received cash payments from Middlemount of $ 14.7 million during the six months ended June 30, 2019, related to financing receivables.

No paym ents were received from Middlemount during the six months ended June 30, 2020.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

One of the Company’s Australian subsidiaries and the other shareholder of Middlemount are parties to an agreement, as amended from time to time, to provide a revolving loan (Revolving Loans) to Middlemount.

The Company’s participation in the Revolving Loans will not, at any time, exceed its 50 % equity interest of the revolving loan limit.

At March 31, 2020 , the revolving loan limit was $ 70 million Australian dollars and the Revolving Loans were fully drawn upon by Middlemount.

Per the terms of the current agreement, the revolving loan limit will be reduced to $ 50 million Australian dollars in August 2020.

At June 30, 2020, the revolving loan limit was $ 120 million Australian dollars and the Revolving Loans were fully drawn upon by Middlemount.

The Revolving Loans bear interest at 10 % per annum and expire on December 31, 2020.

The carrying value of the portion of the Revolving Loans due to the Company’s Australian subsidiary was $ 23.6 million and $ 17.1 million as of March 31, 2020 and December 31, 2019 , respectively.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The carrying value of the portion of the Revolving Loans due to the Company’s Australian subsidiary, which is included in the total investment balance, was $ 41.2 million and $ 17.5 million as of June 30, 2020 and December 31, 2019, respectively.

As of both June 30, 2020 and December 31, 2019, the financing receivables and Revolving Loans are accounted for as in-substance common stock due to the limited fair value attributed to Middlemount’s equi ty.

(7) Derivatives and Fair Value Measurements

2 unchanged sentences

These risk management activities are actively monitored for compliance with the Company’s risk management policies.

As of March 31, 2020 , the Company had currency options outstanding with an aggregate notional amount of $ 550.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the six-month period ending September 30, 2020.

As of June 30, 2020, the Company had currency options outstanding with an aggregate notional amount of $ 613.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the six-month period ending December 31, 2020.

The instruments are quarterly average rate options which entitle the Company to receive payment on the notional amount should the quarterly average Australian dollar-to-U.S.

dollar exchange rate exceed amounts ranging from $ 0.73 to $ 0.75 over the six-month period ending September 30, 2020.

As of March 31, 2020 , the Company held coal-related financial contracts related to a portion of its forecasted sales for an aggregate notional volume of 1.6 million tonnes.

dollar exchange rate exceed amounts ranging from $ 0.70 to $ 0.75 over the six-month period ending December 31, 2020.

As of June 30, 2020, the Company held coal-related financial contracts related to a portion of its forecasted sales for an aggregate notional volume of 1.2 million tonnes.

Such financial contracts include futures, forwards and options.

Of the aggregate notional volume, 0.9 million tonnes will settle in 2020 and the remainder will settle in 2021.

The Company had no diesel fuel or interest rate derivatives in place as of March 31, 2020 .

The Company had no diesel fuel or interest rate derivatives in place as of June 30, 2020.

Coal Trading Activities

9 unchanged sentences

For classification purposes, the Company records the net fair value of all the positions with a given counterparty as a net asset or liability in the condensed consolidated balance sheets.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s coal trading assets and liabilities include financial instruments cleared through various exchanges, which involve the daily net settlement of open positions.

4 unchanged sentences

The Company offsets its coal trading asset and liability derivative positions, and variation margin related to those positions, on a counterparty-by-counterparty basis in the condensed consolidated balance sheets.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of derivatives reflected in the accompanying condensed consolidated balance sheets are set forth in the table below.

March 31, 2020

December 31, 2019

Asset Derivative

Liability Derivative

Asset Derivative

Liability Derivative

June 30, 2020 December 31, 2019

Asset Derivative Liability Derivative Asset Derivative Liability Derivative

(Dollars in millions)

9 unchanged sentences

Currently, the Company does not seek cash flow hedge accounting treatment for its currency- or coal-related derivative financial instruments and thus changes in fair value are reflected in current earnings.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below show the amounts of pre-tax gains and losses related to the Company’s derivatives.

Three Months Ended March 31, 2020

Total loss recognized in income

(Loss) gain realized in income on derivatives

Unrealized gain (loss) recognized in income on derivatives

Three Months Ended June 30, 2020

Total gain (loss) recognized in income (Loss) gain realized in income on derivatives Unrealized gain (loss) recognized in income on derivatives

Financial Instrument

1 unchanged sentence

Foreign currency option contracts

$ 2.2 $ ( 0.6 ) $ 2.8

Coal contracts related to forecasted sales

Coal trading contracts

Three Months Ended March 31, 2019

Total (loss) gain recognized in income

(Loss) gain realized in income on derivatives

Unrealized gain recognized in income on derivatives

( 0.1 ) ( 1.9 ) 1.8

Total $ 14.7 $ 3.2 $ 11.5

Three Months Ended June 30, 2019

Total (loss) gain recognized in income (Loss) gain realized in income on derivatives Unrealized (loss) gain recognized in income on derivatives

Financial Instrument

1 unchanged sentence

Foreign currency option contracts

$ ( 1.4 ) $ ( 1.1 ) $ ( 0.3 )

Coal contracts related to forecasted sales

42.5 20.1 22.4

Coal trading contracts

During the three months ended March 31, 2020 and 2019 , gains and losses on foreign currency option contracts were included in “Operating costs and expenses,” and gains and losses on coal contracts related to forecasted sales and those related to coal trading contracts were included in “Revenues” in the accompanying unaudited condensed consolidated statements of operations.

( 0.3 ) ( 6.0 ) 5.7

Total $ 40.8 $ 13.0 $ 27.8

Six Months Ended June 30, 2020

Total gain (loss) recognized in income (Loss) gain realized in income on derivatives Unrealized gain (loss) recognized in income on derivatives

Financial Instrument

(Dollars in millions)

Foreign currency option contracts $ 1.3 $ ( 1.6 ) $ 2.9

Coal contracts related to forecasted sales 4.1 ( 0.6 ) 4.7

Coal trading contracts ( 0.3 ) 2.2 ( 2.5 )

Total $ 5.1 $ — $ 5.1

Six Months Ended June 30, 2019

Total (loss) gain recognized in income (Loss) gain realized in income on derivatives Unrealized (loss) gain recognized in income on derivatives

Financial Instrument

(Dollars in millions)

Foreign currency option contracts $ ( 2.5 ) $ ( 2.4 ) $ ( 0.1 )

Coal contracts related to forecasted sales 93.2 31.0 62.2

Coal trading contracts ( 1.3 ) ( 10.8 ) 9.5

Total $ 89.4 $ 17.8 $ 71.6

During the three and six months ended June 30, 2020 and 2019, gains and losses on foreign currency option contracts were included in “Operating costs and expenses,” and gains and losses on coal contracts related to forecasted sales and those related to coal trading contracts were included in “Revenues” in the accompanying unaudited condensed consolidated statements of operations.

The Company classifies the cash effects of its derivatives within the “Cash Flows From Operating Activities” section of the unaudited condensed consolidated statements of cash flows.

8 unchanged sentences

The following tables set forth the hierarchy of the Company’s net financial asset positions for which fair value is measured on a recurring basis:

March 31, 2020

June 30, 2020

Level 1 Level 2 Level 3 Total

(Dollars in millions)

5 unchanged sentences

December 31, 2019

Level 1 Level 2 Level 3 Total

(Dollars in millions)

11 unchanged sentences

Other Financial Instruments .

The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of March 31, 2020 and December 31, 2019 :

The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of June 30, 2020 and December 31, 2019:

• Cash and cash equivalents, restricted cash, accounts receivable, including those within the Company’s accounts receivable securitization program, notes receivable and accounts payable have carrying values which approximate fair value due to the short maturity or the liquid nature of these instruments.

4 unchanged sentences

The fair value of debt, shown below, is principally based on reported market values and estimates based on interest rates, maturities, credit risk, underlying collateral, and completed market transactions, which have been limited in recent history.

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

(Dollars in millions)

14 unchanged sentences

therefore, a change in one unobservable input would not necessarily correspond with a change in another unobservable input.

The Company had no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2020 and 2019 .

The Company had no transfers between Levels 1, 2 and 3 during the three and six months ended June 30, 2020 and 2019.

The Company’s policy is to value all transfers between levels using the beginning of period valuation.

10 unchanged sentences

The Company is required by the exchanges upon which it transacts to post certain additional collateral, known as initial margin, which represents an estimate of potential future adverse price movements across the Company’s portfolio under normal market conditions.

The Company posted initial margin of $ 5.6 million and $ 7.9 million as of March 31, 2020 and December 31, 2019 , respectively, which is reflected in “Other current assets” in the condensed consolidated balance sheets.

As of March 31, 2020 and December 31, 2019 , respectively, the Company had posted $ 2.8 million and $ 1.3 million in excess of margin requirements.

The Company posted initial margin of $ 4.5 million and $ 7.9 million as of June 30, 2020 and December 31, 2019, respectively, which is reflected in “Other current assets” in the condensed consolidated balance sheets.

As of June 30, 2020 and December 31, 2019, respectively, the Company had posted $ 1.7 million and $ 1.3 million in excess of margin requirements.

PEABODY ENERGY CORPORATION

1 unchanged sentence

The Company is required to post variation margin on positions that are in a net liability position and is entitled to receive and hold variation margin on positions that are in a net asset position with an exchange and certain of its OTC derivative contract counterparties.

As of March 31, 2020 and December 31, 2019 , respectively, the Company was in receipt of $ 16.8 million and $ 22.1 million in variation margin.

As of June 30, 2020 and December 31, 2019, respectively, the Company was in receipt of $ 23.8 million and $ 22.1 million in variation margin.

Certain of the Company’s derivative trading instruments require the parties to provide additional performance assurances whenever a material adverse event jeopardizes one party’s ability to perform under the instrument.

If the Company was to sustain a material adverse event (using commercially reasonable standards), its counterparties could request collateralization on derivative trading instruments in which the Company holds a net liability position.

Based on the aggregate fair values of such net liability positions at March 31, 2020 and December 31, 2019 , the Company would have been required to post additional collateral of $ 0.8 million and approximately $ 0.0 million , respectively.

As of March 31, 2020 and December 31, 2019 , the Company was not required to post collateral to counterparties for such positions.

As of June 30, 2020 and December 31, 2019, the Company was not required to post collateral to counterparties for such positions.

(8) Intangible Contract Assets and Liabilities

1 unchanged sentence

coal supply agreements as a result of differences between contract terms and estimated market terms for the same coal products and also recorded intangible liabilities related to unutilized capacity under its port and rail take-or-pay contracts.

The balances, net of accumulated amortization, and respective balance sheet classifications at March 31, 2020 and December 31, 2019 , are set forth in the following tables:

March 31, 2020

The balances, net of accumulated amortization, and respective balance sheet classifications at June 30, 2020 and December 31, 2019, are set forth in the following tables:

June 30, 2020

Assets Liabilities Net Total

(Dollars in millions)

1 unchanged sentence

Take-or-pay contracts — ( 33.7 ) ( 33.7 )

Total $ 10.1 $ ( 52.7 ) $ ( 42.6 )

Balance sheet classification:

2 unchanged sentences

Other noncurrent liabilities — ( 48.0 ) ( 48.0 )

Total $ 10.1 $ ( 52.7 ) $ ( 42.6 )

December 31, 2019

Assets Liabilities Net Total

(Dollars in millions)

1 unchanged sentence

Take-or-pay contracts — ( 40.0 ) ( 40.0 )

Total $ 20.7 $ ( 61.4 ) $ ( 40.7 )

Balance sheet classification:

2 unchanged sentences

Other noncurrent liabilities — ( 53.0 ) ( 53.0 )

Amortization of the intangible assets and liabilities related to coal supply agreements occurs ratably based upon coal volumes shipped per contract and is recorded as a component of “Depreciation, depletion and amortization” in the accompanying unaudited condensed consolidated statements of operations.

Such amortization amounted to $ 2.4 million and $ 4.8 million during the three months ended March 31, 2020 and 2019 , respectively.

The Company anticipates net amortization of sales contracts, based upon expected shipments, to be an expense of approximately $ 5 million during the remaining nine months of 2020, expense of approximately $ 1 million for the year 2021 and credits of approximately $ 2 million per year for the years 2022 through 2024, and $ 3 million in total thereafter.

Total $ 20.7 $ ( 61.4 ) $ ( 40.7 )

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Such amortization amounted to $ 1.3 million and $ 6.8 million during the three months ended June 30, 2020 and 2019, respectively, and $ 3.7 million and $ 11.6 million during the six months ended June 30, 2020 and 2019, respectively.

During the three and six months ended June 30, 2020, the Company also charged to expense intangible assets of $ 4.5 million related to a coal supply agreement deemed to have been impaired, as further described in Note 9.

“Property, Plant, Equipment and Mine Development.” The Company anticipates net amortization of sales contracts, based upon expected shipments, to be an expense of less than $ 1 million during the remaining six months of 2020, expense of less than $ 1 million for the year 2021 and credits of approximately $ 2 million per year for the years 2022 through 2024, and $ 3 million in total thereafter.

Future unutilized capacity and the amortization periods related to the take-or-pay contract intangible liabilities are based upon estimates of forecasted usage.

Such amortization, which is classified as a reduction to “Operating costs and expenses” in the accompanying unaudited condensed consolidated statements of operations, amounted to $ 2.6 million and $ 5.6 million during the three months ended March 31, 2020 and 2019 , respectively.

The Company anticipates net amortization of take-or-pay contract intangible liabilities to be approximately $ 5 million during the remaining nine months of 2020, and for the years 2021 through 2024 to be approximately $ 4 million , $ 3 million , $ 2 million and $ 3 million , respectively, and $ 16 million thereafter.

Such amortization, which is classified as a reduction to “Operating costs and expenses” in the accompanying unaudited condensed consolidated statements of operations, amounted to $ 2.7 million and $ 5.6 million during the three months ended June 30, 2020 and 2019, respectively, and $ 5.3 million and $ 11.2 million during the six months ended June 30, 2020 and 2019, respectively.

The Company anticipates net amortization of take-or-pay contract intangible liabilities to be approximately $ 3 million during the remaining six months of 2020, and for the years 2021 through 2024 to be approximately $ 4 million, $ 3 million, $ 3 million and $ 3 million, respectively, and $ 18 million thereafter.

(9) Property, Plant, Equipment and Mine Development

The composition of property, plant, equipment and mine development, net, as of March 31, 2020 and December 31, 2019 is set forth in the table below:

March 31, 2020

December 31, 2019

The composition of property, plant, equipment and mine development, net, as of June 30, 2020 and December 31, 2019 is set forth in the table below:

June 30, 2020 December 31, 2019

(Dollars in millions)

4 unchanged sentences

Property, plant, equipment and mine development, net $ 3,178.4 $ 4,679.1

( 10 ) Leases

Asset Impairment and Other At-Risk Assets

During the three and six months ended June 30, 2020, the Company recognized an asset impairment charge of $ 1,418.1 million related to its North Antelope Rochelle Mine of the Powder River Basin Mining segment.

Of this amount, $ 1,393.7 million related to the property, plant, equipment and mine development assets, $ 19.9 million related to operating lease right-of-use assets, and $ 4.5 million related to contract-based intangible assets.

After giving effect to the impairment charge, the combined net book value of the property, plant, equipment and mine development assets, operating lease right-of-use assets, and contract-based intangible assets of the Powder River Basin Mining segment was $ 742.2 million at June 30, 2020.

The outlook for the mine has been negatively impacted by the accelerated decline of coal-fired electricity generation in the U.S., driven by the reduced utilization of plants and plant retirements, sustained low natural gas pricing, and the increased use of renewable energy sources.

These factors have led to the expectation of reduced future sales volumes.

The impairment charge was based upon the remaining estimated discounted cash flows of the mine.

Such cash flows were based upon estimates which generally constitute unobservable Level 3 inputs under the fair value hierarchy, including, but not limited to, future tons sold, coal prices for unpriced coal, production costs (including costs for labor, commodity supplies and contractors), transportation costs, and a risk-adjusted, cost of capital.

The Company also identified certain assets with an aggregate carrying value of approximately $ 850 million at June 30, 2020 in its Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S.

Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to coal pricing, cost pressures, customer demand and customer concentration risk.

The Company conducted a review of those assets for recoverability as of June 30, 2020 and determined that no further impairment charges were necessary as of that date.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has operating and finance leases for mining and non-mining equipment, office space and certain other facilities under various non-cancellable agreements.

9 unchanged sentences

There was no contingent expense related to that arrangement for the periods listed below.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of lease expense during the three months ended March 31, 2020 and 2019 were as follows:

Three Months Ended March 31,

The components of lease expense during the three and six months ended June 30, 2020 and 2019 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

9 unchanged sentences

Total finance lease cost $ 1.1 $ 2.3 $ 4.7 $ 9.5

Supplemental balance sheet information related to leases at March 31, 2020 and December 31, 2019 was as follows:

March 31, 2020

December 31, 2019

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental balance sheet information related to leases at June 30, 2020 and December 31, 2019 was as follows:

June 30, 2020 December 31, 2019

(Dollars in millions)

17 unchanged sentences

Finance leases 6.2 %

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental cash flow information related to leases during the three months ended March 31, 2020 and 2019 was as follows:

Three Months Ended March 31,

Supplemental cash flow information related to leases during the three and six months ended June 30, 2020 and 2019 was as follows:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

6 unchanged sentences

Finance leases 0.8 0.1 0.9 0.1

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company's leases have remaining lease terms of 1 year to 21.5 years, some of which include options to extend the terms deemed reasonably certain of exercise.

Maturities of lease liabilities were as follows:

Period Ending December 31,

Operating Leases

Finance Leases

Period Ending December 31, Operating Leases Finance Leases

(Dollars in millions)

2020 $ 15.9 $ 0.6

2021 23.6 1.2

2022 14.0 0.9

2023 11.9 0.7

2025 and thereafter 7.2 8.2

3 unchanged sentences

(11) Income Taxes

The Company's effective tax rate before remeasurement for the three months ended March 31, 2020 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance.

The Company’s income tax provision of $ 3.0 million and $ 18.8 million for the three months ended March 31, 2020 and 2019 , respectively, included a tax benefit of $ 3.3 million and less than $ 0.1 million , respectively, related to the remeasurement of foreign income tax accounts.

In response to the COVID-19 pandemic, the United States enacted the CARES Act.

The CARES Act contains numerous tax provisions including a provision that provides for the acceleration of refunds of previously generated AMT credits.

The Company's effective tax rate before remeasurement for the six months ended June 30, 2020 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance.

The Company’s income tax benefit of $ 0.2 million and income tax provision of $ 3.0 million for the three months ended June 30, 2020 and 2019, respectively, included a tax provision of $ 2.6 million and a tax benefit of $ 0.3 million, respectively, related to the remeasurement of foreign income tax accounts.

The Company’s income tax provision of $ 2.8 million and $ 21.8 million for the six months ended June 30, 2020 and 2019, respectively, included a tax benefit of $ 0.7 million and $ 0.3 million, respectively, related to the remeasurement of foreign income tax accounts.

In response to the COVID-19 pandemic, the United States ena cted the CARES Act.

The CARES Act contains an income tax provision that provides for the acceleration of refunds of previously generated AMT credits.

The Company has requested accelerated refunds of approximately $ 24 million from the IRS and has adjusted its current and deferred tax asset balances accordingly.

The Company continues to evaluate the implications of the remaining provisions of the CARES Act.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12) Long-term Debt

The Company’s total indebtedness as of March 31, 2020 and December 31, 2019 consisted of the following:

March 31, 2020

December 31, 2019

The Company’s total indebtedness as of June 30, 2020 and December 31, 2019 consisted of the following:

June 30, 2020 December 31, 2019

(Dollars in millions)

2 unchanged sentences

Senior Secured Term Loan due 2025, net of original issue discount 390.1 392.1

Revolving credit facility 300.0 —

Finance lease obligations 7.9 15.2

Debt issuance costs ( 49.1 ) ( 55.5 )

1,607.9 1,310.8

Current portion of long-term debt 10.9 18.3

3 unchanged sentences

The Senior Notes were sold on February 15, 2017 in a private transaction exempt from the registration requirements of the Securities Act of 1933.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Senior Notes were issued at par value.

1 unchanged sentence

Interest payments on the Senior Notes are scheduled to occur each year on March 31 and September 30 until maturity.

During the three months ended March 31, 2020 and 2019 , the Company recorded interest expense o f $ 17.5 million and $ 18.0 million , respectively, related to the Senior Notes.

During the three months ended June 30, 2020 and 2019, the Company recorded interest expense of $ 17.5 million and $ 18.6 million, respectively, and during the six months ended June 30, 2020 and 2019, the Company recorded interest expense of $ 35.0 million an d $ 36.1 million, respectively, related to the Senior Notes.

The 2022 Notes were redeemable beginning March 31, 2019, in whole or in part, at 103.0 % of par, beginning March 31, 2020 at 101.5 % of par and beginning March 31, 2021 and thereafter at par.

The 2025 Notes may be redeemed, in whole or in part, beginning March 31, 2020 at 104.8 % of par, beginning March 31, 2021 at 103.2 % of par, beginning March 31, 2022 at 101.6 % of par and beginning March 31, 2023 and thereafter at par.

In addition, prior to the first date on which the Senior Notes are redeemable at the redemption prices noted above, the Company may also redeem some or all of the Senior Notes at a calculated make-whole premium, plus accrued and unpaid interest.

In addition, prior to the first date on which the Senior Notes were redeemable at the redemption prices noted above, the Company was entitled to redeem some or all of the Senior Notes at a calculated make-whole premium, plus accrued and unpaid interest.

On August 9, 2018, the Company executed an amendment to the Indenture following the solicitation of consents from the requisite majorities of holders of each series of Senior Notes.

6 unchanged sentences

The Indenture contains customary conditions of default and imposes certain restrictions on the Company’s activities, including its ability to incur debt, incur liens, make investments, engage in fundamental changes such as mergers and dissolutions, dispose of assets, enter into transactions with affiliates and make certain restricted payments, such as cash dividends and share repurchases.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Senior Notes rank senior in right of payment to any subordinated indebtedness and equally in right of payment with any senior indebtedness to the extent of the collateral securing that indebtedness.

4 unchanged sentences

The Credit Agreement originally provided for a $ 950.0 million senior secured term loan (the Senior Secured Term Loan), which was to mature in 2022 prior to the amendments described below.

Following the voluntary prepayments and amendments described below, the Credit Agreement provided for a $ 400.0 million first lien senior secured term loan, which bore interest at LIBOR plus 2.75% per annum as of March 31, 2020 .

During the three months ended March 31, 2020 and 2019 , the Company recorded interest expense of $ 4.9 million and $ 5.7 million , respectively, related to the Senior Secured Term Loan.

During the three months ended June 30, 2020 and 2019, the Company recorded interest expe nse of $ 3.8 million and $ 5.7 million, respectively, and during the six months ended June 30, 2020 and 2019, the Company recorded interest expense of $ 8.7 million and $ 11.4 million, respectively, related to the Senior Secured Term Loan.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Proceeds from the Senior Secured Term Loan were received net of an original issue discount and deferred financing costs of $ 37.3 million that are being amortized over its term.

The loan principal is payable in quarterly installments plus accrued interest through December 2024 with the remaining balance due in March 2025.

The loan requires quarterly principal payments of $ 1.0 million and periodic interest payments through December 2024 with the remaining balance due in March 2025.

The loan principal was voluntarily prepayable at 101 % of the principal amount repaid if prepayment occurred prior to October 2018 (subject to certain exceptions, including prepayments made with internally generated cash) and is voluntarily prepayable at any time thereafter without premium or penalty.

7 unchanged sentences

Obligations under the Credit Agreement are secured on a pari passu basis by the same collateral securing the Senior Notes.

Since entering into the Credit Agreement, the Company has repaid $ 558.0 million of the original $ 950.0 million loan principal amount on the Senior Secured Term Loan in various installments, including $ 546.0 million which was voluntarily prepaid.

Since entering into the Credit Agreement, the Company has repai d $ 559.0 million of the o riginal $ 950.0 million loan principal amount on the Senior Secured Term Loan in various installments, including $ 546.0 million which was voluntarily prepaid.

In September 2017, the Company entered into an amendment to the Credit Agreement which permitted the Company to add an incremental revolving credit facility in addition to the Company’s ability to add one or more incremental term loan facilities under the Credit Agreement.

1 unchanged sentence

The amendment also made available an additional restricted payment basket that permits additional repurchases, dividends or other distributions with respect to the Company’s common and preferred stock in an aggregate amount up to $ 450.0 million so long as the Company’s Fixed Charge Coverage Ratio (as defined in the Credit Agreement) is at least 2.00 :1.00 on a pro forma basis.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In April 2018, the Company entered into another amendment to the Credit Agreement which lowered the interest rate on the Senior Secured Term Loan to its current level of LIBOR plus 2.75 % and eliminated an existing 1.0 % LIBOR floor.

6 unchanged sentences

As a result of the amendment, such loans, letters of credit and unused capacity related to the $ 540.0 million of extended commitments bear interest and incur fees at rates dependent upon the Company’s First Lien Leverage Ratio (as defined in the Credit Agreement) beginning in 2020.

At March 31, 2020, such rates were LIBOR plus 3.00 % for revolving loans, 0.4 % per annum for the unused portion of Revolver capacity, and 3.125 % per annum for letters of credit fees.

The Revolver is also subject to a 2.00 :1.00 Total Leverage Ratio requirement (as defined in the Credit Agreement), modified to limit unrestricted cash netting to $ 800.0 million .

At March 31, 2020 , the Revolver was utilized solely for letters of credit of $ 72.6 million , primarily in support of the Company’s reclamation obligations, as further described in Note 17.

“Financial Instruments and Other Guarantees.” During the three months ended March 31, 2020 and 2019 , the Company recorded interest expense and fees of $ 1.7 million and $ 1.6 million , respectively, related to the Revolver.

In early April 2020, the Company borrowed $ 300.0 million under the Revolver, reducing its remaining availability to $ 192.4 million .

The borrowing was made as part of the Company’s ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets and related effects on the Company resulting from the COVID-19 pandemic.

While the Company does not currently expect to use the proceeds from these borrowings for any near-term liquidity needs, it may use the proceeds for working capital and other general corporate purposes.

Specific to the Revolver, the Credit Agreement requires that the Company maintain a 2.00 :1.00 First Lien Leverage Ratio, calculated on a trailing twelve-month basis and modified to limit unrestricted cash netting to $ 800.0 million.

As previously described in Note 1.

“Basis of Presentation,” the Company anticipates significant risk of noncompliance with the First Lien Leverage Ratio requirement during the second half of 2020 without successfully taking mitigating action.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the second quarter of 2020, the Company borrowed $ 300.0 million under the Revolver.

The borrowing was made to preserve financial flexibility in light of the current uncertainty in the global markets and related effects on the Company resulting from the COVID-19 pandemic.

At June 30, 2020 , the Revolver was also utilized for letters of credit of $ 197.9 million, primarily in support of the Company’s reclamation obligations, as further described in Note 17.

“Financial Instruments and Other Guarantees.” At June 30, 2020, the remaining availability under the Revolver was $ 67.1 million.

At June 30, 2020, applicable Revolver rates were LIBOR plus 3.00 % for revolving loans, 0.4 % per annum for unused capacity, and 3.125 % per annum for letters of credit fees.

During the three months ended June 30, 2020 and 2019, the Company recorded interest expense and fees of $ 4.0 million and $ 1.5 million, respectively, and during the six months ended June 30, 2020 and 2019, the Company recorded interest expense and fees of $ 5.7 million and $ 3.1 million, respe ctively, related to the Revolver.

Restricted Payments Under the Senior Notes and Credit Agreement

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The components of net periodic pension and postretirement benefit costs, excluding the service cost for benefits earned, are included in “Net periodic benefit costs, excluding service cost” in the unaudited condensed consolidated statements of operations.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net periodic pension (benefit) cost included the following components:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

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Net periodic pension (benefit) cost

$ ( 0.3 ) $ 1.1 $ ( 0.7 ) $ 2.1

Annual contributions to the qualified plans are made in accordance with minimum funding standards and the Company’s agreement with the Pension Benefit Guaranty Corporation.

Funding decisions also consider certain funded status thresholds defined by the Pension Protection Act of 2006 (generally 80 %).

As of March 31, 2020 , the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds.

As of June 30, 2020, the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds.

Minimum funding standards are legislated by ERISA and are modified by pension funding stabilization provisions included in the Moving Ahead for Progress in the 21st Century Act of 2012, the Highway and Transportation Funding Act of 2014 and the Bipartisan Budget Act of 2015.

The Company is not required to make any contributions to its qualified pension plans in 2020 based on minimum funding requirements and does not expect to make any discretionary contributions in 2020.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net periodic postretirement benefit cost included the following components:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

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Interest cost on accumulated postretirement benefit obligation

5.4 6.3 10.9 12.6

Expected return on plan assets

( 0.4 ) ( 0.1 ) ( 0.8 ) ( 0.2 )

Amortization of prior service credit

( 2.2 ) ( 2.2 ) ( 4.4 ) ( 4.4 )

Net periodic postretirement benefit cost $ 3.9 $ 5.2 $ 7.9 $ 10.4

In October 2018, the Company amended its postretirement health care benefit plan which reduced its accumulated postretirement benefit obligation, as further described in Note 17.

In October 2018, the Company amended one of its postretirement health care benefit plans which reduced its accumulated postretirement benefit obligation, as further described in Note 17.

“Postretirement Health Care and Life Insurance Benefits” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

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(14) Accumulated Other Comprehensive Income

The following table sets forth the after-tax components of accumulated other comprehensive income and changes thereto recorded during the three months ended March 31, 2020 :

The following table sets forth the after-tax components of accumulated other comprehensive income and changes thereto recorded during the six months ended June 30, 2020:

Foreign Currency Translation

Prior Service

Adjustment Prior Service

Credit (Cost) Associated

Postretirement

Total Accumulated Other Comprehensive Income

Plans Total Accumulated Other Comprehensive Income

(Dollars in millions)

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Current period change ( 0.7 ) — ( 0.7 )

March 31, 2020

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Postretirement health care and life insurance benefits reclassified from other comprehensive income to earnings of $ 2.2 million during both the three months ended March 31, 2020 and 2019 are included in “Net periodic benefit costs, excluding service cost” in the unaudited condensed consolidated statements of operations.

June 30, 2020 $ ( 5.0 ) $ 31.5 $ 26.5

Postretirement health care and life insurance benefits reclassified from other comprehensive income to earnings of $ 2.2 million during both the three months ended June 30, 2020 and 2019 and $ 4.4 million du ring both the six months ended June 30, 2020 and 2019 are included in “Net periodic benefit costs, excluding service cost” in the unaudited condensed consolidated statements of operations.

(15) Other Events

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From time to time, the Company initiates restructuring activities in connection with its repositioning efforts to appropriately align its cost structure or optimize its coal production relative to prevailing market conditions.

Costs associated with restructuring actions can include early mine closures, voluntary and involuntary workforce reductions, office closures and other related activities.

Costs associated with restructuring actions can include the impact of early mine closures, voluntary and involuntary workforce reductions, office closures and other related activities.

Costs associated with restructuring activities are recognized in the period incurred.

Such charges included as “Restructuring charges” in the Company's unaudited condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019 amounted to $ 6.5 million and $ 0.2 million , respectively, primarily associated with involuntary workforce reductions.

During April 2020, the Company further reduced its workforce by approximately 250 positions, primarily within the Powder River Basin Mining and Other U.S.

Thermal Mining operating segments, through the use of involuntary reductions and voluntary programs.

The Company will incur additional restructuring charges during the second quarter of 2020, the amount of which will be dependent upon the ultimate participation in ongoing voluntary programs.

Such charges included as “Restructuring charges” in the Company's unaudited condensed consolidated statements of operations amoun ted to $ 16.5 million and $ 0.4 million for the three months ended June 30, 2020 and 2019, respectively, and $ 23.0 million and $ 0.6 million for the six months ended June 30, 2020 and 2019, respectively, and were associated with both involuntary and voluntary workforce reductions .

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

United Wambo Joint Venture with Glencore

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Construction and development efforts are currently underway to combine operations.

The joint venture agreement specifies that the Company will continue to fully own and operate the existing Wambo Open-Cut Mine through December 1, 2020, at which point the development of the combined operations is expected to be completed, the parties will contribute mining equipment and other assets, and joint operations will commence.

The joint venture agreement specifies that the Company will continue to fully own and operate the existing Wambo Open-Cut Mine through the date that development of the combined operations is completed, which is currently expected to be during the second half of 2020.

The parties will then contribute mining equipment and other assets, and joint operations will commence.

Glencore is responsible for construction and development activities and will manage the mining operations of the joint venture.

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Peabody will manage the operations of the joint venture, subject to the supervision of the joint venture’s board of managers.

On February 26, 2020, the U.S.

As further described in Note 18.

“Commitments and Contingencies,” on February 26, 2020, the U.S.

Federal Trade Commission (FTC) sought a preliminary injunction to challenge the Company’s proposed joint venture.

Peabody and Arch intend to continue to pursue creation of the joint venture and will litigate the FTC’s decision within the U.S.

federal court system.

Court proceedings are currently scheduled to begin on July 13, 2020, with a ruling expected shortly thereafter, subject to any potential changes to the court’s schedule as a result of the COVID-19 pandemic or other exigent circumstances.

Peabody and Arch continue to pursue creation of the joint venture and are litigating the FTC’s decision in the U.S.

federal court in the Eastern District of Missouri.

Related hearings took place July 14, 2020 through July 24, 2020 and closing arguments are scheduled for August 10, 2020, with a ruling expected during the third quarter of 2020.

The FTC has also initiated an administrative proceeding on the merits, which is currently scheduled for hearing on October 27, 2020.

Formation of the joint venture is subject to favorable resolution of the FTC’s challenge noted above and customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of certain other required regulatory approvals and the absence of injunctions or other legal restraints preventing the formation of the joint venture.

In September 2019, the Company amended its Credit Agreement to expressly permit formation of the joint venture and is currently addressing such formation under the Indenture governing the Senior Notes.

At such time as control over the existing operations is exchanged, the Company will account for its interest in the combined operations at fair value, which could result in a significant loss.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In September 2019, the Company amended its Credit Agreement to expressly permit formation of the joint venture and intends to address such formation under the Indenture governing the Senior Notes.

At such time as control over the existing operations is exchanged, the Company will account for its interest in the combined operations at fair value.

North Goonyella

The Company’s North Goonyella Mine in Queensland, Australia experienced a fire in a portion of the mine during September 2018 and mining operations have been suspended since then.

During 2019, the Company completed segmenting of the mine into multiple zones to facilitate a phased re-ventilation and re-entry of the mine, re-ventilation of the first zone of the mine and subsequently re-entered the area.

Following these activities and a detailed review and assessment, the Company determined that due to the time, cost and required regulatory approach to ventilate and re-enter the rest of the mine, the Company will not pursue attempts to access certain portions of the mine through existing mine workings, but instead will move to the southern panels.

The Company is in ongoing discussions with the Queensland Mines Inspectorate regarding ventilation and re-entry of the second zone of the current mine configuration.

Based on the planned approach, the Company expects no meaningful production from North Goonyella for three or more years.

In 2020, the Company commenced a commercial process for North Goonyella in conjunction with the existing mine development.

The process comes in response to expressions of interest from potential strategic partners and other producers.

Commercial outcomes could include a strategic financial partner, a joint venture structure or complete sale of North Goonyella.

Subsequent to the first quarter of 2020, the Company entered into commercial agreements to reduce the rail and port commitments related to North Goonyella for the second half of 2020 through the first half of 2023, while maintaining sufficient capacity for future production.

During the three months ended March 31, 2020 and 2019, the Company recorded $ 10.1 million and $ 36.9 million in containment and idling costs.

An additional provision of $ 24.7 million related to equipment losses was recorded during the three months ended March 31, 2019, which was incremental to amounts recorded in prior periods and represented the best estimate of loss based on the assessments made as of that date.

No provision for equipment losses was recorded during the three months ended March 31, 2020 .

During 2018 and 2019, the Company recorded provisions for equipment losses amounting to $ 149.6 million related to the fire, representing the best estimate of losses to date.

Of that amount, $ 24.7 million was recorded during the six months ended June 30, 2019.

No additional provisions for equipment losses were recorded during the three and six months ended June 30, 2020.

The Company has also incurred containment and idling costs subsequent to the mine’s suspension which amounted to $ 11.3 million and $ 28.4 million during the three months ended June 30, 2020 and 2019, respectively, and $ 21.4 million and $ 65.3 million during the six months ended June 30, 2020 and 2019, respectively.

In March 2019, the Company entered into an insurance claim settlement agreement with its insurers and various re-insurers under a combined property damage and business interruption policy and recorded a $ 125 million insurance recovery, the maximum amount available under the policy above a $ 50 million deductible.

The Company has collected the full amount of the recovery.

In the event that no future mining occurs at the North Goonyella Mine or the Company is unable to find a commercial alternative, the Company may record additional charges for the remaining carrying value of the North Goonyella Mine of up to approximately $ 300 million .

Incremental exposures above the aforementioned include take-or-pay obligations and other costs associated with idling or closing the mine.

Asset Impairment and Other At-Risk Assets

Other than the provision for North Goonyella equipment losses described above, the Company recorded no asset impairment charges during the three months ended March 31, 2020 or 2019.

However, the Company has identified certain assets with an aggregate carrying value of approximately $ 2.1 billion at March 31, 2020 in its Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S.

Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to coal pricing, cost pressures, customer demand and customer concentration risk.

The Company conducted a review of those assets for recoverability as of March 31, 2020 and determined that no further impairment charges were necessary as of that date.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company is currently evaluating various alternatives regarding the future utility of the mine.

“Property, Plant, Equipment and Mine Development.” Incremental exposures above the aforementioned include take-or-pay obligations and other costs associated with idling or closing the mine.

Corporate Structure

The Company is undertaking a process to explore and evaluate various strategic financing alternatives.

In connection with considering various options to enhance its financial flexibility, the Company has made changes to its corporate structure by designating certain of its subsidiaries as unrestricted subsidiaries under the Indenture and the Credit Agreement.

The designated subsidiaries consist primarily of the entities through which the Company conducts the operations of its Wilpinjong Mine, which accounted for 74% of the Seaborne Thermal Mining segment’s Adjusted EBITDA for the six months ended June 30, 2020.

(16) Earnings per Share (EPS)

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For the performance units, their contingent features result in an assessment for any potentially dilutive common stock by using the end of the reporting period as if it were the end of the contingency period for all units granted.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The computation of diluted EPS excluded aggregate share-based compensation awards of approximately 3.0 million and 0.3 million for the three months ended March 31, 2020 and 2019, respectively, because to do so would have been anti-dilutive for those periods.

The computation of diluted EPS excluded aggregate share-based compensation awards of approximately 2.2 million and 0.7 million for the three months ended June 30, 2020 and 2019, respectively, and 2.5 million and 0.7 million for the six months ended June 30, 2020 and 2019, respectively, because to do so would have been anti-dilutive for those periods.

Because the potential dilutive impact of such share-based compensation awards is calculated under the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share of such awards are higher than the Company’s average stock price during the applicable period.

Anti-dilution also occurs when a company reports a net loss from continuing operations, and the dilutive impact of all share-based compensation awards are excluded accordingly.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(In millions, except per share data)

1 unchanged sentence

(Loss) income from continuing operations, net of income taxes

Net (loss) income attributable to noncontrolling in terests

$ ( 1,545.3 ) $ 42.9 $ ( 1,674.6 ) $ 176.2

Net (loss) income attributable to noncontrolling interests

( 3.4 ) 2.4 ( 5.2 ) 8.1

(Loss) income from continuing operations attributable to common stockholders

( 1,541.9 ) 40.5 ( 1,669.4 ) 168.1

Loss from discontinued operations, net of income taxes

( 2.3 ) ( 3.4 ) ( 4.5 ) ( 6.8 )

Net (loss) income attributable to common stockholders

$ ( 1,544.2 ) $ 37.1 $ ( 1,673.9 ) $ 161.3

EPS denominator:

Weighted average shares outstanding — basic

97.9 107.0 97.5 107.7

Impact of dilutive securities

Weighted average shares outstanding — diluted

97.9 108.1 97.5 109.3

Basic EPS attributable to common stockholders:

(Loss) income from continuing operations

$ ( 15.76 ) $ 0.38 $ ( 17.12 ) $ 1.56

Loss from discontinued operations

( 0.02 ) ( 0.03 ) ( 0.04 ) ( 0.06 )

Net (loss) income attributable to common stockholders

$ ( 15.78 ) $ 0.35 $ ( 17.16 ) $ 1.50

Diluted EPS attributable to common stockholders:

(Loss) income from continuing operations

$ ( 15.76 ) $ 0.37 $ ( 17.12 ) $ 1.54

Loss from discontinued operations

( 0.02 ) ( 0.03 ) ( 0.04 ) ( 0.06 )

Net (loss) income attributable to common stockholders

$ ( 15.78 ) $ 0.34 $ ( 17.16 ) $ 1.48

(17) Financial Instruments and Other Guarantees

In the normal course of business, the Company is a party to various guarantees and financial instruments that carry off-balance-sheet risk and are not reflected in the accompanying condensed consolidated balance sheets.

At March 31, 2020 , such instruments included $ 1,557.4 million of surety bonds and $ 206.8 million of letters of credit.

In the normal course of business, the Company is a party to various guarantees and financial instruments that carry off-balance-she et risk and are not reflected in the accompanying condensed consolidated balance sheets.

At June 30, 2020, such instruments included $ 1,589.4 million of surety bonds and $ 283.6 million of letters of credit.

These financial instruments provide support for the Company’s reclamation bonding requirements, lease obligations, insurance policies and various other performance guarantees.

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Such requirements are typically established by statute or under mining permits.

At March 31, 2020 , the Company’s asset retirement obligations of $ 758.7 million were supported by surety bonds of $ 1,365.0 million , as well as letters of credit issued under the Company’s receivables securitization program and Revolver amounting to $ 111.1 million .

At June 30, 2020, the Company’s asset retirement obligations of $ 757.5 million were supported by surety bonds of $ 1,398.9 million, as well as letters of credit issued under the Company’s receivables securitization program and Revolver.

Letters of credit issued at June 30, 2020 amounted to $ 185.4 million, some of which were directly in support of asset retirement obligations and some of which were in support of other obligations.

PEABODY ENERGY CORPORATION

1 unchanged sentence

Accounts Receivable Securitization

The Company entered into the Sixth Amended and Restated Receivables Purchase Agreement, as amended, dated as of April 3, 2017 (the Receivables Purchase Agreement) to extend the Company’s receivables securitization facility previously in place and expand that facility to include certain receivables from the Company’s Australian operations.

The Company entered into the Sixth Amended and Restate d Receivables Purchase Agreement, as amended, dated as of April 3, 2017 (the Receivables Purchase Agreement) to extend the Company’s receivables securitization facility previously in place and expand that facility to include certain receivables from the Company’s Australian operations.

The receivables securitization program (Securitization Program) is subject to customary events of default set forth in the Receivables Purchase Agreement.

The Securitization Program provides for up to $ 250.0 million in funding accounted for as a secured borrowing, limited to the availability of eligible receivables, and may be secured by a combination of collateral and the trade receivables underlying the program, from time to time.

The Securitization Program expires April 1, 2022 and provides for up to $ 250.0 million in funding accounted for as a secured borrowing, limited to the availability of eligible receivables, and may be secured by a combination of collateral and the trade receivables underlying the program, from time to time.

Funding capacity under the Securitization Program may also be utilized for letters of credit in support of other obligations.

During 2019, the Company entered into an amendment to the Securitization Program to extend its term through April 1, 2022 and reduce program fees.

During 2020, the Receivables Purchase Agreement was amended to reduce certain dilutive constraints on eligible receivables and modify the Company’s reporting requirements under the Securitization Program.

Under the terms of the Securitization Program, the Company contributes the trade receivables of its participating subsidiaries on a revolving basis to P&L Receivables, its wholly-owned, bankruptcy-remote subsidiary, which then sells the receivables to unaffiliated banks.

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The borrowings under the Securitization Program remain outstanding throughout the term of the agreement, subject to the Company maintaining sufficient eligible receivables, by continuing to contribute trade receivables to P&L Receivables, unless an event of default occurs.

At March 31, 2020 , the Company had no outstanding borrowings and $ 132.7 million of letters of credit issued under the Securitization Program.

At June 30, 2020, the Com pany had no outstanding borrowings and $ 84.2 million of letters of credit issued under the Securitization Program.

The letters of credit were primarily in support of portions of the Company’s obligations for reclamation, workers’ compensation and postretirement benefits.

Availability under the Securitization Program, which is adjusted for certain ineligible receivables, was $ 12.8 million at March 31, 2020.

The Company had no collateral requirement under the Securitization Program at either March 31, 2020 or December 31, 2019 .

The Company incurred fees associated with the Securitization Program of $ 0.7 million and $ 1.1 million during the three months ended March 31, 2020 and 2019 , respectively, which have been recorded as interest expense in the accompanying unaudited condensed consolidated statements of operations.

Collateral Arrangements and Restricted Cash

From time to time, the Company is required to remit cash to certain regulatory authorities and other third parties as collateral for financial assurances associated with a variety of long-term obligations and commitments surrounding the mining, reclamation and shipping of its production.

The Company has provided financial guarantees under certain long-term debt agreements entered into by its subsidiaries and substantially all of the Company’s U.S.

Availability under the Securitization Program, which is adjusted for certain ineligible receivables, was $ 10.5 million at June 30, 2020.

The Company had no collateral requirement under the Securitization Program at either June 30, 2020 or December 31, 2019.

The Company incurred fees associated with the Securitization Program of $ 0.8 million and $ 1.0 million during the three months ended June 30, 2020 and 2019, respectively, and $ 1.5 million and $ 2.6 million during the six months ended June 30, 2020 and 2019, respectively, which have been recorded as interest expense in the accompanyin g unaudited condensed consolidated statements of operations.

Cash Collateral Arrangements and Restricted Cash

From time to time, the Company is required to remit cash to certain regulatory authorities and other third parties as collateral for financial assurances associated with a variety of long-term obligations and commitments surrounding employee related matters and the mining, reclamation and shipping of its production.

The Company had no such requirements as of either June 30, 2020 or December 31, 2019.

Substantially all of the Company’s U.S.

subsidiaries provide financial guarantees under long-term debt agreements entered into by the Company.

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Unconditional Purchase Obligations

As of March 31, 2020 , purchase commitments for capital expenditures were $ 42.7 million , all of which is obligated within the next five years, with $ 35.6 million obligated within the next 12 months.

As of March 31, 2020 , Australian and U.S.

commitments under take-or-pay arrangements totaled $ 945.0 million , of which approximately $ 105 million is obligated within the next year.

The change in commitments under take-or-pay arrangements since the year ended December 31, 2019 was largely driven by changes in the foreign currency exchange rates.

As of June 30, 2020, purchase commitments for capital expenditures were $ 43.5 million, all of which is obligated within the next five years, with $ 27.2 million obligated within the next 12 months.

As of June 30, 2020, Australian and U.S.

commitments under take-or-pay arrangements totaled $ 1.2 billion, of which approximately $ 110 million is obligated within the next year.

The change in commitments under take-or-pay arrangements since the year ended December 31, 2019 was largely driven by extensions to the Company’s commercial agreements for rail and port commitments, partially offset by reductions to near-term commitments related to its North Goonyella Mine.

For additional information regarding the Company’s commitments under take-or-pay arrangements, refer to Note 26.

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Litigation Relating to Continuing Operations

Peabody Monto Coal Pty Ltd, Monto Coal 2 Pty Ltd and Peabody Energy Australia PCI Pty Ltd (PEA-PCI).

On October 1, 2007, a claim was made against Peabody Monto Coal Pty Ltd, a wholly-owned subsidiary of Macarthur Coal Limited (Macarthur) that is now a wholly-owned subsidiary of the Company, and Monto Coal 2 Pty Ltd, an equity accounted investee of Macarthur, now known as PEA-PCI.

The claim, made by the minority interest holders in the joint venture, alleged that the Macarthur companies breached certain agreements by failing to develop a mine project.

The claim was amended to assert that Macarthur also induced the alleged breach of the Monto Coal Joint Venture Agreement.

The Company acquired Macarthur and its subsidiaries in 2011.

The claim originally sought damages of up to $ 1.1 billion Australian dollars, plus interest and costs, but was amended in November 2019 to seek $ 18 million Australian dollars, plus interest and costs.

The Company asserted that the Macarthur companies were never under an obligation to develop the mine project because the project was not economically viable.

A trial commenced in the Supreme Court of Queensland, Australia on April 8, 2019 and concluded on December 12, 2019.

Before a decision was handed down, the parties reached a settlement to end the multi-year dispute, the terms of which included the Company (a) transferring its interests in Monto Coal 2 Pty Ltd, and therefore the Monto Coal Joint Venture, to the claimant;

and (b) agreeing to use commercially reasonable efforts to transfer certain other assets to the claimant.

These settlement terms are not expected to result in a material impact to the Company’s financial accounts.

As a result of the settlement, the parties filed a dismissal of the litigation on January 24, 2020.

County of San Mateo, County of Marin, City of Imperial Beach.

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On December 19, 2017, the plaintiffs moved the District Court for a stay pending appeal.

The District Court denied the stay request on September 20, 2018, and the plaintiffs have appealed that decision to the United States Court of Appeals for the Eighth Circuit.

The District Court denied the stay request on September 20, 2018, and the plaintiffs appealed that decision to the United States Court of Appeals for the Eighth Circuit (the Eighth Circuit).

On March 29, 2019, the District Court affirmed the Bankruptcy Court ruling enjoining the plaintiffs from proceeding with their lawsuits against the Company.

That ruling likewise was appealed.

On May 6, 2020, the Eighth Circuit Court of Appeals denied the plaintiffs’ request for stay and affirmed the order compelling the plaintiffs to dismiss the Company.

The plaintiffs may ask the Eight Circuit Court of Appeals to reconsider or may appeal to the United States Supreme Court.

In the underlying cases pending in California, the U.S.

District Court for the Northern District of California granted plaintiffs’ motion for remand and decided the cases should be heard in state court.

The defendants appealed the order granting remand to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) and sought a stay of the U.S.

District Court for the Northern District of California decision pending completion of the Ninth Circuit appeal.

District Court for the Northern District of California granted defendants’ request for a stay pending completion of the Ninth Circuit appeal.

The plaintiffs filed a motion to dismiss part of the appeal.

The parties are now litigating at the Ninth Circuit whether a state or federal court should hear these lawsuits.

Regardless of whether state court or federal court is the venue, the Company believes the lawsuits against it should be dismissed under enforcement of the Plan.

The Company does not believe the lawsuits are meritorious and, if the lawsuits are not dismissed, the Company intends to vigorously defend them.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On May 6, 2020, the Eighth Circuit denied the plaintiffs’ request for stay and affirmed the order compelling the plaintiffs to dismiss the Company.

The plaintiffs filed an application with the United States Supreme Court to recall the Eighth Circuit’s mandate, which the Supreme Court denied on June 24, 2020.

Plaintiffs have until October 5, 2020 to file a writ of certiorari with the Supreme Court.

On July 1, 2020, plaintiffs dismissed Peabody with prejudice from the underlying cases pending in California.

In the underlying cases pending in California, on May 26, 2020, the United States Court of Appeals for the Ninth Circuit decided that the cases should be heard in state court rather than federal court.

The Company does not believe the lawsuits are meritorious and, if the Company is brought back into these lawsuits, the Company would expect to vigorously defend them.

FTC Complaint for Preliminary Injunction.

On February 26, 2020, the FTC brought a complaint against the Company and Arch in the District Court seeking a preliminary injunction enjoining the Company and Arch from consummating their proposed joint venture relating to their operations in Wyoming and Colorado.

Peabody and Arch continue to pursue creation of the joint venture and are litigating the FTC’s decision in the District Court.

Related hearings took place July 14, 2020 through July 24, 2020 and closing arguments are scheduled for August 10, 2020, with a ruling expected during the third quarter of 2020.

The FTC has also initiated an administrative proceeding on the merits, which is currently scheduled for hearing on October 27, 2020.

If the court denies the preliminary injunction, Peabody plans to proceed with the joint venture.

At times the Company becomes a party to other disputes, including those related to contract miner performance, claims, lawsuits, arbitration proceedings, regulatory investigations and administrative procedures in the ordinary course of business in the U.S., Australia and other countries where the Company does business.

Based on current information, the Company believes that such other pending or threatened proceedings are likely to be resolved without a material adverse effect on its financial condition, results of operations or cash flows.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(19) Segment Information

During the year ended December 31, 2019, the Cottage Grove and Kayenta Mines shipped their final tons, and the Company announced the closures of the Wildcat HiIls Underground and Somerville Central Mines, with both of those operations expecting to ship their final tons in 2020.

Due to these changes, the Company has revised its reportable segments beginning in the first quarter of 2020 to reflect the manner in which the chief operating decision maker (CODM) views the Company’s businesses going forward for purposes of reviewing performance, allocating resources and assessing future prospects and strategic execution.

During the year ended December 31, 2019, the Cottage Grove and Kayenta Mines shipped their final tons, and the Company announced the closures of the Wildcat HiIls Underground Mine, which shipped its final tons during the second quarter of 2020 and the Somerville Central Mine, which is expected to ship its final tons during the second half of 2020.

Due to these changes, the Company revised its reportable segments beginning in the first quarter of 2020 to reflect the manner in which the chief operating decision maker (CODM) views the Company’s businesses going forward for purposes of reviewing performance, allocating resources and assessing future prospects and strategic execution.

The Company now reports its results of operations primarily through the following reportable segments:

31 unchanged sentences

and certain commercial matters.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s CODM uses Adjusted EBITDA as the primary metric to measure the segments’ operating performance.

5 unchanged sentences

GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reportable segment results were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

4 unchanged sentences

Corporate and Other 15.3 45.7 8.3 98.7

Total $ 626.7 $ 1,149.0 $ 1,472.9 $ 2,399.6

Adjusted EBITDA:

4 unchanged sentences

Corporate and Other ( 40.4 ) ( 25.1 ) ( 89.9 ) ( 63.8 )

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total $ 23.4 $ 230.0 $ 60.2 $ 484.1

A reconciliation of consolidated (loss) income from continuing operations, net of income taxes to Adjusted EBITDA follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

(Dollars in millions)

4 unchanged sentences

Transaction costs related to joint ventures 12.9 1.6 17.1 1.6

Asset impairment 1,418.1 — 1,418.1 —

Provision for North Goonyella equipment loss — — — 24.7

North Goonyella insurance recovery - equipment (1)

— — — ( 91.1 )

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates

( 0.4 ) 0.3 ( 1.1 ) 0.3

Interest expense 34.3 36.0 67.4 71.8

Interest income ( 2.4 ) ( 7.2 ) ( 5.5 ) ( 15.5 )

Unrealized losses (gains) on economic hedges

Unrealized gains on non-coal trading derivative contracts

Unrealized gains on economic hedges ( 7.0 ) ( 22.4 ) ( 4.8 ) ( 62.2 )

Unrealized (gains) losses on non-coal trading derivative contracts ( 2.8 ) 0.3 ( 2.9 ) 0.1

Take-or-pay contract-based intangible recognition

Income tax provision

Total Adjusted EBITDA

( 2.7 ) ( 5.6 ) ( 5.3 ) ( 11.2 )

Income tax (benefit) provision ( 0.2 ) 3.0 2.8 21.8

Adjusted EBITDA

$ 23.4 $ 230.0 $ 60.2 $ 484.1

(1) As described in Note 15.

“Other Events,” the Company recorded a $ 125.0 million insurance recovery during the three months ended March 31, 2019 related to losses incurred at its North Goonyella Mine.

Of this amount, Adjusted EBITDA excludes an allocated amount applicable to total equipment losses recognized at the time of the insurance recovery settlement, which consisted of $ 24.7 million and $ 66.4 million recognized during the three months ended March 31, 2019 and the year ended December 31, 2018, respectively.

The remaining $ 33.9 million , applicable to incremental costs and business interruption losses, is included in Adjusted EBITDA for the three months ended March 31, 2019 .

“Other Events,” the Company recorded a $ 125.0 million insurance recovery during the six months ended June 30, 2019 related to losses incurred at its North Goonyella Mine.

Of this amount, Adjusted EBITDA excludes an allocated amount applicable to total equipment losses recognized at the time of the insurance recovery settlement, which consisted of $ 24.7 million and $ 66.4 million recognized during the six months ended June 30, 2019 and the year ended December 31, 2018, respectively.

The remaining $ 33.9 million, applicable to incremental costs and business interruption losses, is included in Adjusted EBITDA for the six months ended June 30, 2019.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total assets and property, plant equipment and mine development, net decreased during 2020 within the U.S.

Thermal Mining division primarily as a result of the asset impairment charge recognized during the three and six months ended June 30, 2020, as further described in Note 9.

“Property, Plant, Equipment and Mine Development.”

Asset details are included in the table below.

Asset details are reflected at the division level only for the Company’s mining segments and are not allocated between each individual segment as such information is not regularly reviewed by the Company's CODM.

Further, some assets service more than one segment within the division and an allocation of such assets would not be meaningful or representative on a segment by segment basis.

Assets related to closed, suspended, or otherwise inactive mines are included within the Corporate and Other category.

Assets as of June 30, 2020 were as follows:

Seaborne Mining U.S.

Thermal Mining Corporate and Other Consolidated

(Dollars in millions)

Total assets $ 1,748.4 $ 1,470.9 $ 1,729.5 $ 4,948.8

Property, plant, equipment and mine development, net

1,347.9 1,297.9 532.6 3,178.4

Operating lease right-of-use assets 27.0 5.5 18.2 50.7

Assets as of December 31, 2019 were as follows:

Seaborne Mining U.S.

Thermal Mining Corporate and Other Consolidated

(Dollars in millions)

Total assets $ 2,001.3 $ 3,044.8 $ 1,496.7 $ 6,542.8

Property, plant, equipment and mine development, net

1,610.9 2,776.9 291.3 4,679.1

Operating lease right-of-use assets 32.1 30.3 20.0 82.4

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements