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Item 7. Management’s Discussion and Analysis

2021-02-23 compared with 2020-02-21 · 655 added, 275 removed, 513 unchanged (64% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our discussion and analysis of the year ended December 31, 2019 compared to the year ended December 31, 2018 is included herein.

For discussion and analysis of the year ended December 31, 2018 compared to the year ended December 31, 2017 , please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2018 , which was filed with the SEC on February 27, 2019 and is incorporated by reference herein.

In 2020, we produced and sold 128.8 million and 132.6 million tons of coal, respectively, from continuing operations.

As of December 31, 2020, we report our results of operations primarily through the following reportable segments:

Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, Midwestern U.S.

Mining, Western U.S.

Mining and Corporate and Other.

Peabody Energy Corporation

2019 Form 10-K

During the year ended December 31, 2019, the Cottage Grove Mine in the Midwestern U.S.

Mining segment and the Kayenta Mine in the Western U.S.

Mining segment shipped their final tons.

We also announced the closures of the Wildcat HiIls Underground and Somerville Central Mines in the Midwestern U.S.

Mining segment, with both of those operations expecting to ship their final tons in 2020.

Due to these changes, we will update our reportable segments beginning in the first quarter of 2020 to combine the Midwestern U.S.

Mining segment with the Western U.S.

Mining segment, which reflects the manner in which our CODM views our businesses going forward for purposes of reviewing performance, allocating resources and assessing future prospects and strategic execution.

Beginning the first quarter of 2020, we will report our results of operations primarily through the following reportable segments:

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

16 unchanged sentences

The mines in that segment are characterized by surface mining extraction processes, coal with a lower sulfur content and Btu and higher customer transportation costs (due to longer shipping distances).

Our Midwestern U.S.

Mining operations include our Illinois and Indiana mining operations, which are characterized by a mix of surface and underground mining extraction processes, coal with a higher sulfur content and Btu and lower customer transportation costs (due to shorter shipping distances).

Our Western U.S.

Mining operations historically reflect the aggregation of our New Mexico, Arizona and Colorado mining operations.

The mines in that segment are characterized by a mix of surface and underground mining extraction processes and coal with a mid-range sulfur content and Btu.

Geologically, our Powder River Basin Mining operations mine sub-bituminous coal deposits, our Midwestern U.S.

Mining operations mine bituminous coal deposits and our Western U.S.

Mining operations mine both bituminous and sub-bituminous coal deposits.

Our Corporate and Other segment includes selling and administrative expenses, including our technical and shared services functions, results from equity affiliates, corporate hedging activities, trading and brokerage activities, certain mining and export/transportation joint ventures, restructuring charges and activities associated with the optimization of our coal reserve and real estate holdings, minimum charges on certain transportation-related contracts, the closure of inactive mining sites and certain commercial matters.

Our Other U.S.

Thermal Mining operations historically reflect the aggregation of our Illinois, Indiana, New Mexico, Colorado and Arizona mining operations.

The mines in that segment are characterized by a mix of surface and underground mining extraction processes, coal with a higher sulfur content and Btu and lower customer transportation costs (due to shorter shipping distances).

Geologically, our Powder River Basin Mining operations mine sub-bituminous coal deposits and our Other U.S.

Thermal Mining operations mine both bituminous and sub-bituminous coal deposits.

Our Corporate and Other segment includes selling and administrative expenses, including our technical and shared services functions;

results from equity affiliates;

corporate hedging activities;

trading and brokerage activities;

results from certain mining and export/transportation joint ventures;

minimum charges on certain transportation-related contracts;

the closure of inactive mining sites;

and certain commercial matters.

Resource Management.

8 unchanged sentences

During the years ended December 31, 2020, 2019 and 2018, the mine sold 3.2 million, 2.9 million and 4.2 million tons of coal, respectively (on a 100% basis).

Peabody Energy Corporation

2019 Form 10-K

Peabody Energy Corporation 2020 Form 10-K

Coronavirus (COVID-19) Pandemic

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

The pandemic has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures.

In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of the COVID-19 pandemic.

Coal mining in the U.S.

and Australia has been designated as an essential business to support coal-fueled electric power generation and critical steelmaking needs.

As part of Peabody’s commitment to the ongoing health and safety of our employees, vendors and communities, we are following advice from government authorities and taking precautions to manage the spread of COVID-19.

Peabody operations have implemented rigorous protocols, control and prevention measures, including mandatory temperature and health checks;

paid leave for recommended self-isolation periods;

enhanced cleaning and sterilization practices;

expanded use of personal protective equipment;

social distancing;

and working remotely when circumstances warrant.

While our operations have been designated as essential, each operation will only continue to operate when it is safe and economic to do so.

The global impact on economic activity has severely curtailed demand for numerous commodities.

Within the global coal industry, supply and demand disruptions have been widespread.

The global economy is showing improvement in industrial production, even as the timing of a recovery varies across countries and sectors.

However, in the seaborne metallurgical and thermal markets, demand remains below pre-pandemic levels.

In the U.S., the impacts of COVID-19 have accelerated a multi-year decline in coal demand.

During the year ended December 31, 2020, coal-fueled generation declined approximately 20% compared to the prior year period and now represents 19% of the overall generation mix.

Additionally, we have faced limited disruption to supply chain and distribution channels and adverse effects to our workforce.

Coal industry fundamentals, as well as known impacts specific to Peabody, are further addressed in the “Results of Operations” section contained within this Item 7.

While the ultimate impacts of the COVID-19 pandemic on our business are unknown, we expect continued interference with general commercial activity, which may negatively affect both demand and prices for our products.

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, we are unable to estimate the full impact of the pandemic on our business, financial condition, results of operations or cash flows at this time.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act), a $2 trillion economic relief bill, was enacted in the U.S..

The CARES Act contained numerous income tax provisions, including a provision that provides for the acceleration of refunds of previously generated alternative minimum tax credits.

Pursuant to the CARES Act, we received approximately $24 million of accelerated refunds from the Internal Revenue Service and adjusted our current and deferred tax asset balances accordingly.

The CARES Act also contained a provision for deferred payment of 2020 employer payroll taxes after the date of enactment to future years.

We deferred a portion of our remaining 2020 employer payroll taxes to subsequent years.

North Goonyella Mine

Our 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.

No mine personnel were physically harmed by the September 2018 events.

On November 13, 2018, the QMI initiated an investigation into the events that occurred at the mine to determine the cause of the event, assess the response to it and make recommendations to reduce the possibility of future incidents and improve response.

During the first quarter of 2019, we completed segmenting of the mine into multiple zones to facilitate a phased reventilation and re-entry of the mine.

We commenced reventilation of the first zone of the mine during the second quarter of 2019 and subsequently re-entered the area in the third quarter.

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

We are currently in discussions with the QMI regarding ventilation and re-entry of the second zone of the current mine configuration.

In 2020, we are commencing 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 the complete sale of North Goonyella.

Alternatively, the commercial process could be abandoned in the absence of an acceptable outcome.

Based on the success of discussions with QMI and/or progression of the commercial process being launched, we will determine the appropriate level, if any, and timing of capital expenditures.

We anticipate annual holding costs of approximately $24 million per year in relation to North Goonyella, excluding $16 million in take-or-pay commitments, which we are in discussions to reduce.

During the year ended December 31, 2018, we recorded $58.0 million in containment and idling costs related to the events at North Goonyella and a provision of $66.4 million for expected equipment losses.

As work progressed and more information became available, we recorded an additional $111.5 million in containment and idling costs and an additional provision of $83.2 million related to equipment losses during the year ended December 31, 2019.

The combined provision includes $50.7 million for the estimated cost to replace leased equipment, $45.6 million related to the cost of Company-owned equipment, $39.7 million related to unrecoverable longwall panel development and $13.6 million of other charges, which represents the best estimate of loss based on the assessments made at December 31, 2019.

In 2020, we commenced a review of strategic alternatives for North Goonyella which is currently ongoing.

During the years ended December 31, 2019 and 2018, we recorded provisions for equipment losses of $83.2 million and $66.4 million, respectively, related to the fire, representing the best estimate of losses to date.

No additional provisions for equipment losses were recorded during the year ended December 31, 2020.

We have also incurred containment and idling costs subsequent to the mine’s suspension which amounted to $32.3 million, $111.5 million and $58.0 million during the years ended December 31, 2020, 2019 and 2018, respectively.

In March 2019, we entered into an insurance claim settlement agreement with our 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.

We have collected the full amount of the recovery.

On April 30, 2019, Peabody (Bowen) Pty Ltd entered into an option exercise and release agreement with Yancoal Technology Development Pty Ltd pursuant to which Peabody (Bowen) Pty Ltd exercised an option to acquire from Yancoal Technology Development Pty Ltd the longwall mining equipment used under license at the North Goonyella Mine for $54.2 million , which was consistent with our provision for equipment losses for the related impaired assets.

Peabody Energy Corporation 2020 Form 10-K

Results of Operations

1 unchanged sentence

The following discussion of our results of operations includes references to and analysis of Adjusted EBITDA, which is a financial measure not recognized in accordance with U.S.

generally accepted accounting principles (U.S.

Adjusted EBITDA is used by management as the primary metric to measure each of our segments’ operating performance.

We have retrospectively modified our calculation of Adjusted EBITDA to exclude restructuring charges and transaction costs related to business combinations and joint ventures as management does not view these items as part of our normal operations.

Also included in the following discussion of our results of operations are references to Revenues per Ton, Costs per Ton and Adjusted EBITDA Margin per Ton for each mining segment.

5 unchanged sentences

Free Cash Flow is used by management as a measure of our financial performance and our ability to generate excess cash flow from our business operations.

Peabody Energy Corporation

2019 Form 10-K

We believe non-GAAP performance measures are used by investors to measure our operating performance and lenders to measure our ability to incur and service debt.

4 unchanged sentences

Spot pricing for premium low-vol hard coking coal (Premium HCC), premium low-vol pulverized coal injection (Premium PCI) coal, Newcastle index thermal coal and API 5 thermal coal, and prompt month pricing for PRB 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the year ended December 31, 2020 is set forth in the table below.

Pricing for our Western U.S.

Mining segment is not included as there is no similar spot or prompt pricing data available.

The seaborne pricing included in the table below is not necessarily indicative of the pricing we realized during the year ended December 31, 2020 due to quality differentials and the majority of our seaborne sales being executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing periodically.

3 unchanged sentences

may vary significantly in many respects, including price adjustment features, price reopener terms, coal quality requirements, quantity parameters, permitted sources of supply, treatment of environmental constraints, extension options, force majeure and termination and assignment provisions.

Competition from alternative fuels such as natural gas and other fuel sources may also impact our realized pricing.

High Low Average December 31, 2020

Premium HCC (1)

$ 163.40 $ 97.60 $ 124.11 $ 101.60

Premium PCI coal (1)

$ 102.80 $ 65.75 $ 78.42 $ 91.50

Newcastle index thermal coal (1)

$ 85.31 $ 47.99 $ 60.24 $ 83.72

API 5 thermal coal (1)

$ 59.63 $ 35.16 $ 44.74 $ 55.00

PRB 8,800 Btu/Lb coal (2)

$ 12.10 $ 11.55 $ 11.83 $ 11.85

Illinois Basin 11,500 Btu/Lb coal (2)

$ 33.80 $ 27.75 $ 30.27 $ 29.75

(1) Prices expressed per tonne.

(2) Prices expressed per ton.

Peabody Energy Corporation 2020 Form 10-K

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.

Future COVID-19-related developments are unknown, including the duration, severity, scope and the necessary government actions to limit the spread of COVID-19.

The global coal industry data for the year ended December 31, 2020 presented herein may not be indicative of the ultimate impacts of the COVID-19 pandemic given the various levels of response and unknown duration, and potential for continued weak demand for our products.

With respect to seaborne metallurgical coal, global steel production decreased approximately 1% during the year ended December 31, 2020 compared to the prior year, with significant declines in most regions due to the impacts of COVID-19, offset by another year of strong growth in China.

Excluding China, steel production was down approximately 10%, while Chinese steel production increased approximately 5% from 2019.

While global steel production remained lower year-over-year, there has been consistent improvement in steel production since July 2020 as COVID-19 related lockdown restrictions eased in key countries.

Improved steel demand has enabled steelmakers, including Peabody customers, to restart capacity and increase output, resulting in improvements in seaborne metallurgical coal demand.

For example, India seaborne metallurgical coal imports set a new all-time monthly volume record each month from October to December.

Elsewhere, the recovery continues steadily with most countries operating at or just below pre-COVID-19 levels.

A key risk to demand for Australian metallurgical coal in 2021 is China’s import policies, which have largely prohibited the buying of Australian products since October 2020 and an end date to the limitations is currently unclear.

Within the seaborne thermal coal market, demand has been below pre-pandemic levels in many key countries, and headwinds such as COVID-19, China import restrictions and competition from alternative fuel sources persist.

China thermal imports were up 6 million tonnes through the year ended December 31, 2020.

India has seen domestic power demand recover, but thermal imports are down by approximately 25 million tonnes through the year ended December 31, 2020 compared to the prior year.

In the United States, overall electricity demand has been negatively impacted year-over-year due to COVID-19 induced economic shutdowns and mild weather during the year ended December 31, 2020.

The reduction in thermal coal demand during that period has exceeded the reduction in overall electricity demand as continued coal plant retirements, and growth in natural gas and renewable generation negatively impacted coal’s share of electricity generation.

Lower total electricity demand driven by COVID-19 related curtailments has resulted in coal’s share of generation declining to approximately 19% for the year ended December 31, 2020, while natural gas and renewables increased.

Through the year ended December 31, 2020 utility consumption of PRB coal fell approximately 20% compared to the prior year period.

Our revenues for the year ended December 31, 2020 decreased compared to the same period in 2019 ($1,742.3 million) primarily due to lower sales volumes which were affected by the COVID-19 pandemic and lower realized prices.

Results from continuing operations, net of income taxes for the year ended December 31, 2020 decreased compared to the same period in the prior year ($1,671.5 million).

The decrease was driven by the unfavorable revenue variance described above, higher asset impairment charges recorded in the current period ($1,217.2 million) and a prior year insurance recovery related to the events at our North Goonyella Mine ($125.0 million).

These unfavorable variances were partially offset by reduced operating costs and expenses owing largely to the sales volume decline as well as production efficiencies and other cost improvements ($1,011.7 million) and lower depreciation, depletion and amortization ($255.0 million).

Adjusted EBITDA for the year ended December 31, 2020 reflected a year-over-year decrease of $624.2 million.

As of December 31, 2020, our available liquidity was approximately $729 million.

Refer to the “Liquidity and Capital Resources” section contained within this Item 7 for a further discussion of factors affecting our available liquidity.

Peabody Energy Corporation 2020 Form 10-K

The following table presents tons sold by operating segment:

(Decrease) Increase

Year Ended December 31, to Volumes

2020 2019 Tons %

(Tons in millions)

Seaborne Thermal Mining 19.0 19.5 (0.5) (2.6) %

Seaborne Metallurgical Mining 5.6 8.1 (2.5) (30.9) %

Powder River Basin Mining 87.2 108.1 (20.9) (19.3) %

Thermal Mining 18.3 27.9 (9.6) (34.4) %

Total tons sold from mining segments 130.1 163.6 (33.5) (20.5) %

Corporate and Other 2.5 1.9 0.6 31.6 %

Total tons sold 132.6 165.5 (32.9) (19.9) %

Supplemental Financial Data

The following table presents supplemental financial data by operating segment:

Year Ended December 31, (Decrease) Increase

2020 2019 $ %

Revenues per Ton - Mining Operations (1)

Seaborne Thermal $ 37.46 $ 49.69 $ (12.23) (24.6) %

Seaborne Metallurgical 86.33 127.62 (41.29) (32.4) %

Powder River Basin 11.37 11.37 — — %

Thermal 38.73 46.85 (8.12) (17.3) %

Costs per Ton - Mining Operations (1) (2)

Seaborne Thermal $ 28.87 $ 32.84 $ (3.97) (12.1) %

Seaborne Metallurgical (3)

109.44 110.30 (0.86) (0.8) %

Powder River Basin 9.14 9.32 (0.18) (1.9) %

Thermal 29.51 33.91 (4.40) (13.0) %

Adjusted EBITDA Margin per Ton - Mining Operations (1) (2)

Seaborne Thermal $ 8.59 $ 16.85 $ (8.26) (49.0) %

Seaborne Metallurgical (3)

(23.11) 17.32 (40.43) (233.4) %

Powder River Basin 2.23 2.05 0.18 8.8 %

Thermal 9.22 12.94 (3.72) (28.7) %

(1) This is an operating/statistical measure not recognized in accordance with U.S.

Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S.

(2) Includes revenue-based production taxes and royalties;

excludes depreciation, depletion and amortization;

asset retirement obligation expenses;

selling and administrative expenses;

restructuring charges;

asset impairment;

provision for North Goonyella equipment loss and related insurance recovery;

amortization of take-or-pay contract-based intangibles;

and certain other costs related to post-mining activities.

(3) Costs incurred at the North Goonyella Mine from January 1, 2020 forward are included within the Corporate and Other segment.

Costs incurred at the North Goonyella Mine during the year ended December 31, 2019 remain within the Seaborne Metallurgical Mining segment and resulted in additional Costs per Ton and lower Adjusted EBITDA Margin per Ton of $9.59.

Peabody Energy Corporation 2020 Form 10-K

The following table presents revenues by reporting segment:

Year Ended December 31, to Revenues

2020 2019 $ %

(Dollars in millions)

Seaborne Thermal Mining $ 711.8 $ 971.7 $ (259.9) (26.7) %

Seaborne Metallurgical Mining 486.5 1,033.1 (546.6) (52.9) %

Powder River Basin Mining 991.1 1,228.7 (237.6) (19.3) %

Thermal Mining 707.3 1,309.4 (602.1) (46.0) %

Corporate and Other (15.6) 80.5 (96.1) (119.4) %

Revenues $ 2,881.1 $ 4,623.4 $ (1,742.3) (37.7) %

Seaborne Thermal Mining.

The decrease in our Seaborne Thermal Mining segment revenues for the year ended December 31, 2020 compared to the prior year was driven by unfavorable realized coal pricing ($220.3 million) and unfavorable volume and mix variances ($39.6 million).

Seaborne Metallurgical Mining.

Segment revenues decreased during the year ended December 31, 2020 compared to the prior year due to unfavorable volume and mix variances ($340.8 million) resulting from demand-based volume decreases across our mines and unfavorable realized coal pricing ($205.8 million).

Powder River Basin Mining.

Segment revenues decreased during the year ended December 31, 2020 compared to the prior year period due to demand-based volume decreases ($244.3 million) and the prior year benefit of a contract settlement with a PRB customer ($19.7 million).

These unfavorable variances were partially offset by favorable realized coal pricing ($26.4 million).

Thermal Mining.

The decrease in segment revenues for the year ended December 31, 2020 compared to the same period in the prior year was primarily due to volume decreases ($453.6 million) which were driven by the closure of the Kayenta and Cottage Grove Mines during the third quarter of 2019 and the Wildcat Hills Underground Mine during the second quarter of 2020, the prior year benefit of revenues associated with the final commercial negotiations for the Kayenta Mine ($127.8 million) and unfavorable realized coal pricing ($20.7 million).

Corporate and Other.

Segment revenues decreased during the year ended December 31, 2020 compared to the prior year due to lower results on economic hedge activities.

Adjusted EBITDA

The following table presents Adjusted EBITDA for each of our reporting segments:

(Decrease) Increase to

Year Ended December 31, Adjusted EBITDA

2020 2019 $ %

(Dollars in millions)

Seaborne Thermal Mining $ 163.2 $ 329.4 $ (166.2) (50.5) %

Seaborne Metallurgical Mining (130.2) 140.2 (270.4) (192.9) %

Powder River Basin Mining 194.8 221.2 (26.4) (11.9) %

Thermal Mining 168.4 361.4 (193.0) (53.4) %

Corporate and Other (137.4) (169.2) 31.8 18.8 %

Adjusted EBITDA (1)

$ 258.8 $ 883.0 $ (624.2) (70.7) %

(1) This is a financial measure not recognized in accordance with U.S.

Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S.

Seaborne Thermal Mining.

Segment Adjusted EBITDA decreased during the year ended December 31, 2020 compared to the same period in the prior year as a result of lower realized net coal pricing ($202.4 million), unfavorable volume variances ($12.6 million) and the unfavorable impacts of a temporary shutdown at our Wambo Underground Mine ($12.2 million).

The decrease was partially offset by favorable mine sequencing impacts and lower costs for materials, services and repairs at our thermal surface mines ($35.6 million) and lower pricing for fuel ($14.0 million).

Peabody Energy Corporation 2020 Form 10-K

Seaborne Metallurgical Mining.

Segment Adjusted EBITDA decreased during the year ended December 31, 2020 compared to the same period in the prior year due to lower realized net coal pricing ($188.0 million), unfavorable volume variances ($138.7 million) and higher costs at our Shoal Creek Mine, including those related to a conveyor upgrade ($51.1 million).

These negative variances were partially offset by the inclusion of North Goonyella Mine containment and holding costs within our Corporate and Other segment in the current year ($77.6 million) and lower pricing for fuel ($10.9 million).

Powder River Basin Mining.

Segment Adjusted EBITDA decreased during the year ended December 31, 2020 compared to the same period in the prior year due to the impact of lower volumes ($43.6 million), the prior year net benefit of a contract settlement with a PRB customer ($24.0 million) and unfavorable mine sequencing impacts ($22.2 million).

These negative variances were partially offset by lower costs for materials, services, repairs and labor ($31.1 million), lower pricing for fuel and explosives ($23.5 million) and higher realized net coal pricing ($6.5 million).

Thermal Mining.

Segment Adjusted EBITDA decreased during the year ended December 31, 2020 compared to the same period in the prior year primarily due to the impact of lower volumes ($135.4 million) as described above, the prior year net benefit associated with the final commercial negotiations for the Kayenta Mine ($83.3 million), lower realized net coal pricing ($37.8 million) and unfavorable mine sequencing impacts ($12.9 million).

These unfavorable variances were partially offset by lower costs for materials, services, repairs and labor ($42.4 million) and lower pricing for fuel and explosives ($16.8 million).

Corporate and Other Adjusted EBITDA.

The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:

(Decrease) Increase

Year Ended December 31, to Income

2020 2019 $ %

(Dollars in millions)

Middlemount (1)

$ (29.2) $ (9.8) $ (19.4) (198.0) %

Resource management activities (2)

15.3 8.2 7.1 86.6 %

Selling and administrative expenses

(99.5) (145.0) 45.5 31.4 %

Other items, net (3)(4)

(24.0) (22.6) (1.4) (6.2) %

Corporate and Other Adjusted EBITDA $ (137.4) $ (169.2) $ 31.8 18.8 %

(1) Middlemount’s results are before the impact of related changes in deferred tax asset valuation allowance and reserves and amortization of basis difference.

Middlemount’s standalone results included (on a 50% attributable basis) aggregate amounts of depreciation, depletion and amortization, asset retirement obligation expenses, net interest expense and income taxes of $29.9 million and $25.1 million during the years ended December 31, 2020 and 2019, respectively.

(2) Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenues.

(3) Includes trading and brokerage activities, costs associated with post-mining activities, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts, costs associated with suspended operations including the North Goonyella Mine and expenses related to our other commercial activities.

(4) North Goonyella costs incurred from January 1, 2020 forward are included within the Corporate and Other segment.

Costs incurred prior to January 1, 2020 remain within the Seaborne Metallurgical Mining segment.

The increase in Corporate and Other Adjusted EBITDA during the year ended December 31, 2020 compared to the same period in the prior year was due to lower selling and administrative expenses driven by lower personnel costs;

the favorable impact of changes made to one of our postretirement health care benefit plans during the third quarter of 2020 ($14.9 million);

resource management gains recorded in the current period ($14.8 million);

and favorable corporate hedging results ($10.7 million).

These favorable results were partially offset by current year containment and holding costs for our North Goonyella Mine ($32.3 million) and an unfavorable variance in Middlemount’s results due to the continuing impacts of lower sales pricing and a significant change to the mine plan following a highwall failure in mid-2019.

Peabody Energy Corporation 2020 Form 10-K

Loss From Continuing Operations, Net of Income Taxes

The following table presents loss from continuing operations, net of income taxes:

(Decrease) Increase to Income

Year Ended December 31,

2020 2019 $ %

(Dollars in millions)

Adjusted EBITDA (1)

$ 258.8 $ 883.0 $ (624.2) (70.7) %

Depreciation, depletion and amortization

(346.0) (601.0) 255.0 42.4 %

Asset retirement obligation expenses (45.7) (58.4) 12.7 21.7 %

Restructuring charges (37.9) (24.3) (13.6) (56.0) %

Transaction costs related to joint ventures (23.1) (21.6) (1.5) (6.9) %

Gain on formation of United Wambo Joint Venture — 48.1 (48.1) (100.0) %

Asset impairment (1,487.4) (270.2) (1,217.2) (450.5) %

Provision for North Goonyella equipment loss — (83.2) 83.2 100.0 %

North Goonyella insurance recovery - equipment

— 91.1 (91.1) (100.0) %

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

(30.9) 18.8 (49.7) (264.4) %

Interest expense (139.8) (144.2) 4.4 3.1 %

Interest income 9.4 27.0 (17.6) (65.2) %

Net mark-to-market adjustment on actuarially determined liabilities

5.1 (67.4) 72.5 107.6 %

Unrealized (losses) gains on economic hedges (29.6) 42.2 (71.8) (170.1) %

Unrealized gains on non-coal trading derivative contracts 7.1 1.2 5.9 491.7 %

Take-or-pay contract-based intangible recognition 8.2 16.6 (8.4) (50.6) %

Income tax provision

(8.0) (46.0) 38.0 82.6 %

Loss from continuing operations, net of income taxes $ (1,859.8) $ (188.3) $ (1,671.5) (887.7) %

(1) This is a financial measure not recognized in accordance with U.S.

Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S.

Depreciation, Depletion and Amortization.

The following table presents a summary of depreciation, depletion and amortization expense by segment:

Increase (Decrease)

Year Ended December 31, to Income

2020 2019 $ %

(Dollars in millions)

Seaborne Thermal Mining $ (88.0) $ (90.7) $ 2.7 3.0 %

Seaborne Metallurgical Mining

(85.4) (125.3) 39.9 31.8 %

Powder River Basin Mining (85.3) (148.5) 63.2 42.6 %

Thermal Mining (72.1) (228.2) 156.1 68.4 %

Corporate and Other

(15.2) (8.3) (6.9) (83.1) %

Total $ (346.0) $ (601.0) $ 255.0 42.4 %

Additionally, the following table presents a summary of our weighted-average depletion rate per ton for active mines in each of our mining segments:

Year Ended December 31,

Seaborne Thermal Mining $ 1.90 $ 1.84

Seaborne Metallurgical Mining

Powder River Basin Mining 0.50 0.80

Thermal Mining 1.04 1.33

Peabody Energy Corporation 2020 Form 10-K

Depreciation, depletion and amortization expense decreased during the year ended December 31, 2020 compared to the same period in the prior year primarily due to the closure of the Kayenta and Cottage Grove Mines during the third quarter of 2019 and the Millennium and Wildcat Hills Underground Mines during the second quarter of 2020 ($122.7 million), the impact of the asset impairment recorded at the North Antelope Rochelle Mine during the second quarter of 2020 ($52.6 million), decreased depletion driven by lower sales volumes ($22.5 million) and lower amortization of contract based intangibles ($21.8 million).

The decrease in the weighted-average depletion rate per ton for the Seaborne Metallurgical Mining segment during the year ended December 31, 2020 compared to the same period in the prior year reflects the volume and mix variances which impacted our revenues as described above.

The decrease in the weighted-average depletion rate per ton for the Powder River Basin Mining segment during the year ended December 31, 2020 compared to the same period in the prior year reflects the asset impairment recorded during the second quarter of 2020.

Asset Retirement Obligation Expenses.

Asset retirement obligation expenses decreased during the year ended December 31, 2020 compared to the same period in the prior year as the result of favorable revisions to the estimates for our closed mines.

Restructuring Charges.

Restructuring charges increased during the year ended December 31, 2020 compared to the same period in the prior year as the result of workforce reductions made across the organization through the use of involuntary and voluntary reductions, as discussed in Note 1.

“Summary of Significant Accounting Policies” to the accompanying consolidated financial statements.

Transaction Costs Related to Joint Ventures.

The charges recorded during the current and prior year periods related to the proposed PRB Colorado joint venture with Arch Resources, Inc.

as further described in Note 20.

“Other Events” to the accompanying consolidated financial statements.

Gain on Formation of United Wambo Joint Venture.

During the year ended December 31, 2019, we recognized a $48.1 million gain upon the formation of the United Wambo Joint Venture.

Refer to Note 20.

“Other Events” to the accompanying consolidated financial statements for further information regarding the calculation of the gain, which information is incorporated herein by reference.

Asset Impairment.

We recognized $1,487.4 million in aggregate asset impairment charges during the year ended December 31, 2020, primarily related to the fair value of our North Antelope Rochelle Mine in our Powder River Basin Mining segment.

During the year ended December 31, 2019, we recognized $270.2 million in aggregate asset impairment charges primarily related to the El Segundo/Lee Ranch and Wildcat Hills Underground Mines in our Other U.S.

Thermal Mining segment.

Refer to Note 3.

“Asset Impairment” to the accompanying consolidated financial statements for further information regarding the nature and composition of those charges, which information is incorporated herein by reference.

Provision for North Goonyella Equipment Loss.

A provision for expected equipment losses related to the events at our North Goonyella Mine was recorded during the prior year as discussed in Note 20.

“Other Events” to the accompanying consolidated financial statements.

North Goonyella Insurance Recovery - Equipment.

During the year ended December 31, 2019, we entered into an insurance claim settlement agreement with our insurance providers related to North Goonyella equipment losses and recorded a $125.0 million insurance recovery, as discussed in Note 20.

“Other Events” to the accompanying consolidated financial statements.

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 years ended December 31, 2019 and 2018, respectively.

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

Changes in Deferred Tax Asset Valuation Allowance and Reserves and Amortization of Basis Difference Related to Equity Affiliates.

During the year ended December 31, 2020, we established a valuation allowance on Middlemount’s net deferred tax position of approximately $33 million.

During the year ended December 31, 2019, we released a tax reserve of approximately $17 million.

Refer to Note 6.

“Equity Method Investments” to the accompanying consolidated financial statements for further information regarding these changes, which information is incorporated herein by reference

Interest Income.

The decrease in interest income during the year ended December 31, 2020 compared to the prior year was driven by the conclusion of a contract during the fourth quarter of 2019 which contained an embedded financing element and by lower cash balances.

Peabody Energy Corporation 2020 Form 10-K

Net Mark-to-Market Adjustment on Actuarially Determined Liabilities.

The gain recorded during the year ended December 31, 2020 was driven by gains on pension and postretirement benefit plan assets ($73.7 million), the favorable impacts of a mortality update for all actuarially determined liabilities ($39.5 million) and changes related to claims for the postretirement benefit plans ($21.2 million).

These increases were offset by decreases to the discount rates for all actuarially determined liabilities ($116.5 million).

The expense recorded during the year ended December 31, 2019 was driven by decreases to the discount rates for all actuarially determined liabilities ($137.6 million) and the unfavorable impact of changes related to claims and an update to our census data for the postretirement benefits plans ($19.7 million).

These decreases were partially offset by actuarial gains on pension assets ($94.5 million).

Unrealized (Losses) Gains on Economic Hedges.

Unrealized (losses) gains primarily relate to mark-to-market activity from economic hedge activities intended to hedge future coal sales.

For additional information, refer to Note 7.

“Derivatives and Fair Value Measurements” to the accompanying consolidated financial statements.

Take-or-Pay Contract-Based Intangible Recognition .

During the years ended December 31, 2020 and 2019, we ratably recognized contract-based intangible liabilities for port and rail take-or-pay contracts.

For additional details, refer to Note 8.

“Intangible Contract Assets and Liabilities” to the accompanying consolidated financial statements.

Income Tax Provision .

The decrease in the income tax provision during the year ended December 31, 2020 compared to the prior year period was primarily due to year-over-year decreases in taxable income, partially offset by an increase in the provision related to the remeasurement of foreign income tax accounts.

Refer to Note 10.

“Income Taxes” to the accompanying consolidated financial statements for additional information.

Net Loss Attributable to Common Stockholders

The following table presents net loss attributable to common stockholders:

Year Ended December 31, to Income

2020 2019 $ %

(Dollars in millions)

Loss from continuing operations, net of income taxes $ (1,859.8) $ (188.3) $ (1,671.5) (887.7) %

(Loss) income from discontinued operations, net of income taxes (14.0) 3.2 (17.2) (537.5) %

Net loss (1,873.8) (185.1) (1,688.7) (912.3) %

Net (loss) income attributable to noncontrolling interests (3.5) 26.2 (29.7) (113.4) %

Net loss attributable to common stockholders $ (1,870.3) $ (211.3) $ (1,659.0) (785.1) %

(Loss) Income from Discontinued Operations, Net of Income Taxes .

The decrease in results from discontinued operations, net of income taxes during the year ended December 31, 2020 compared to the prior year period was primarily driven by decreases to the discount rates for black lung liabilities.

Net (Loss) Income Attributable to Noncontrolling Interests .

The decrease in net results attributable to noncontrolling interests during the year ended December 31, 2020 compared to the prior year period was primarily due to lower results of our majority-owned mines in which there is an outside non-controlling interest.

The following table presents diluted EPS:

Year Ended December 31, EPS

2020 2019 $ %

Diluted EPS attributable to common stockholders:

Loss from continuing operations $ (18.99) $ (2.07) $ (16.92) (817.4) %

(Loss) income from discontinued operations (0.15) 0.03 (0.18) (600.0) %

Net loss attributable to common stockholders $ (19.14) $ (2.04) $ (17.10) (838.2) %

Diluted EPS is commensurate with the changes in results from continuing operations and discontinued operations during that period.

Diluted EPS reflects weighted average diluted common shares outstanding of 97.7 million and 103.7 million for the years ended December 31, 2020 and 2019, respectively.

Peabody Energy Corporation 2020 Form 10-K

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Spot pricing for Premium HCC, Premium PCI coal, Newcastle index thermal coal and API 5 thermal coal, and prompt month pricing for PRB 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the year ended December 31, 2019 is set forth in the table below.

The seaborne pricing included in the table below is not necessarily indicative of the pricing we realized during the year ended December 31, 2019 due to quality differentials and the majority of our seaborne sales being executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing periodically.

Our typical practice is to negotiate pricing for seaborne metallurgical coal contracts on a quarterly, spot or index basis and seaborne thermal coal contracts on an annual, spot or index basis.

In the U.S., the pricing included in the table below is also not necessarily indicative of the pricing we realized during the year ended December 31, 2019 since we generally sell coal under long-term contracts where pricing is determined based on various factors.

Such long-term contracts in the U.S.

Competition from alternative fuels such as natural gas and other coal producers may also impact our realized pricing.

December 31, 2019

High Low Average December 31, 2019

Premium HCC (1)

$ 215.80 $ 127.30 $ 176.66 $ 136.10

Premium PCI coal (1)

$ 129.85 $ 85.50 $ 110.50 $ 86.65

Newcastle index thermal coal (1)

$ 99.78 $ 62.32 $ 77.74 $ 66.55

API 5 thermal coal (1)

$ 62.87 $ 48.00 $ 54.41 $ 51.30

PRB 8,800 Btu/Lb coal (2)

$ 12.60 $ 12.05 $ 12.22 $ 12.10

Illinois Basin 11,500 Btu/Lb coal (2)

$ 47.50 $ 33.50 $ 38.83 $ 33.65

(1) Prices expressed per tonne.

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Steel production in China increased approximately 7% through the year ended December 31, 2019 as compared to the prior year, resulting in an approximate 15% increase in coking coal imports during the same period.

China’s steel production continues to be fueled by infrastructure spending.

China’s seaborne demand will remain dependent upon the country’s import policies.

Seaborne thermal coal demand and pricing was subdued due to restrictions in China and low gas prices coupled with elevated stockpiles in Europe, despite robust demand from India and other Asian regions.

2 unchanged sentences

India’s domestic production declined approximately 1% through the year ended December 31, 2019, which was not sufficient to meet growing demand from its industrial and power sectors.

As a result, India’s thermal coal imports have increased by approximately 6% or 10 million tonnes year-over-year through December 31, 2019.

As a result, India’s thermal coal imports increased by approximately 6% or 10 million tonnes year-over-year through December 31, 2019.

Demand from countries comprising the Association of Southeast Asian Nations (ASEAN) increased 23 million tonnes through the year ended December 31, 2019 as compared to the prior year, primarily led by Vietnam.

Peabody Energy Corporation

2019 Form 10-K

In the United States, overall electricity demand was down year-over-year through the year ended December 31, 2019.

Continued coal plant retirements, growth in natural gas and renewable generation and weak natural gas prices have negatively impacted coal demand.

For the year ended December 31, 2019, utility consumption of PRB coal fell approximately 16% as compared to the prior year due to ongoing pressure from retirements, wind generation and regional natural gas prices that continue to trade at a discount to quoted Henry Hub natural gas spot prices.

Continued coal plant retirements, growth in natural gas and renewable generation and weak natural gas prices negatively impacted coal demand.

For the year ended December 31, 2019, utility consumption of PRB coal fell approximately 16% as compared to the prior year due to ongoing pressure from retirements, wind generation and regional natural gas prices that traded at a discount to quoted Henry Hub natural gas spot prices.

Our revenues for the year ended December 31, 2019 decreased as compared to the same period in 2018 ($958.4 million) primarily due to lower sales volumes and realized prices.

1 unchanged sentence

Our Powder River Basin Mining segment was adversely impacted by lower demand and delays in rail shipments caused by severe flooding during the first half of 2019.

Peabody Energy Corporation 2020 Form 10-K

Results from continuing operations, net of income taxes for the year ended December 31, 2019 decreased as compared to the same period in the prior year ($834.0 million).

3 unchanged sentences

Adjusted EBITDA for the year ended December 31, 2019 reflected a year-over-year decrease of $504.9 million.

As of December 31, 2019 , our available liquidity was approximately $1.3 billion .

Refer to the “Liquidity and Capital Resources” section contained within this Item 7 for a further discussion of factors affecting our available liquidity.

The following table presents tons sold by operating segment:

1 unchanged sentence

Year Ended December 31,

2019 2018 Tons %

(Tons in millions)

2 unchanged sentences

Powder River Basin Mining 108.1 120.3 (12.2) (10.1) %

Midwestern U.S.

Thermal Mining 27.9 33.6 (5.7) (17.0) %

Total tons sold from mining segments 163.6 184.0 (20.4) (11.1) %

1 unchanged sentence

Total tons sold 165.5 186.7 (21.2) (11.4) %

Peabody Energy Corporation

2019 Form 10-K

Peabody Energy Corporation 2020 Form 10-K

Supplemental Financial Data

The following table presents supplemental financial data by operating segment:

Year Ended December 31,

(Decrease) Increase

Year Ended December 31, (Decrease) Increase

2019 2018 $ %

Revenues per Ton - Mining Operations (1)

2 unchanged sentences

Powder River Basin 11.37 11.84 (0.47) (4.0) %

Midwestern U.S.

Thermal 46.85 41.46 5.39 13.0 %

Costs per Ton - Mining Operations (1) (2)

1 unchanged sentence

Seaborne Metallurgical (3)

110.30 100.97 9.33 9.2 %

Powder River Basin 9.32 9.47 (0.15) (1.6) %

Midwestern U.S.

Thermal 33.91 32.81 1.10 3.4 %

Adjusted EBITDA Margin per Ton - Mining Operations (1) (2)

1 unchanged sentence

Seaborne Metallurgical (3)

17.32 40.09 (22.77) (56.8) %

Powder River Basin 2.05 2.37 (0.32) (13.5) %

Midwestern U.S.

Thermal 12.94 8.65 4.29 49.6 %

(1) This is an operating/statistical measure not recognized in accordance with U.S.

7 unchanged sentences

provision for North Goonyella equipment loss and related insurance recovery;

amortization of fresh start reporting adjustments related to take-or-pay contract-based intangibles;

amortization of take-or-pay contract-based intangibles;

and certain other costs related to post-mining activities.

1 unchanged sentence

The following table presents revenues by reporting segment:

(Decrease) Increase

Year Ended December 31,

Year Ended December 31, Decrease to Revenues

2019 2018 $ %

(Dollars in millions)

2 unchanged sentences

Powder River Basin Mining 1,228.7 1,424.8 (196.1) (13.8) %

Midwestern U.S.

Thermal Mining 1,309.4 1,393.0 (83.6) (6.0) %

Corporate and Other 80.5 111.8 (31.3) (28.0) %

Revenues $ 4,623.4 $ 5,581.8 $ (958.4) (17.2) %

Seaborne Thermal Mining.

The decrease in our Seaborne Thermal Mining segment revenues for the year ended December 31, 2019 compared to the prior year was primarily driven by unfavorable realized coal pricing ($131.9 million), partially offset by favorable volume and mix variances ($4.4 million).

Peabody Energy Corporation

2019 Form 10-K

Seaborne Metallurgical Mining.

Segment revenues decreased during the year ended December 31, 2019 compared to the same period in the prior year primarily due to unfavorable volumes (2.9 million tons, $441.1 million).

The unfavorable volume variance resulting from the transition to highwall mining at our Millennium Mine in September 2018, an extended longwall move at our Metropolitan Mine and various mine sequencing impacts (3.2 million tons, $424.4 million) and no current year volume from our North Goonyella Mine (1.7 million tons, $337.6 million) was partially offset by incremental volume provided by our Shoal Creek Mine, acquired in December 2018 (2.0 million tons, $320.9 million).

The unfavorable volume variance resulting from the transition to highwall mining at our Millennium Mine in September 2018, an extended longwall move at our Metropolitan Mine and various mine sequencing impacts (3.2 million tons, $424.4 million) and no volume from our North Goonyella Mine during 2019 (1.7 million tons, $337.6 million) was partially offset by incremental volume provided by our Shoal Creek Mine, acquired in December 2018 (2.0 million tons, $320.9 million).

Segment revenues were further impacted by lower realized pricing ($78.8 million).

Peabody Energy Corporation 2020 Form 10-K

Powder River Basin Mining.

1 unchanged sentence

These unfavorable variances were partially offset by a favorable contract settlement with a PRB customer ($19.7 million).

Midwestern U.S.

Segment revenues decreased during the year ended December 31, 2019 compared to the same period in the prior year primarily due to lower demand-based volume ($124.0 million) and unfavorable realized pricing ($7.3 million).

Segment revenues increased during the year ended December 31, 2019 compared to the same period in the prior year due to revenues associated with the final commercial negotiations for the Kayenta Mine ($127.8 million), offset by an unfavorable volume and mix variance ($75.7 million) and unfavorable realized pricing ($4.4 million).

Thermal Mining.

Segment revenues decreased during the year ended December 31, 2019 compared to the same period in the prior year primarily due to unfavorable volume and mix variances ($200.2 million) and unfavorable realized pricing ($11.2 million).

These unfavorable variances were partially offset by revenues associated with the final commercial negotiations for the Kayenta Mine ($127.8 million).

Corporate and Other.

2 unchanged sentences

The following table presents Adjusted EBITDA for each of our reporting segments:

(Decrease) Increase to

Year Ended December 31,

Year Ended December 31, (Decrease) Increase to

Adjusted EBITDA

2019 2018 $ %

(Dollars in millions)

2 unchanged sentences

Powder River Basin Mining 221.2 284.5 (63.3) (22.2) %

Midwestern U.S.

Thermal Mining 361.4 290.6 70.8 24.4 %

Corporate and Other (169.2) (80.6) (88.6) (109.9) %

Adjusted EBITDA (1)

$ 883.0 $ 1,387.9 $ (504.9) (36.4) %

(1) This is a financial measure not recognized in accordance with U.S.

7 unchanged sentences

These negative variances were partially offset by favorable foreign currency impacts ($50.5 million).

Peabody Energy Corporation

2019 Form 10-K

Powder River Basin Mining.

Segment Adjusted EBITDA decreased during the year ended December 31, 2019 compared to the same period in the prior year due to the impact of lower volume ($78.7 million) described above, lower realized net coal pricing ($10.7 million) and unfavorable mine sequencing impacts ($10.0 million), partially offset by the net impact of the favorable contract settlement with a PRB customer ($24.0 million) and lower lease expenses due to early lease buyouts ($8.6 million).

Midwestern U.S.

Segment Adjusted EBITDA decreased during the year ended December 31, 2019 compared to the same period in the prior year primarily due to the impact of lower volume ($18.7 million) and lower realized net coal pricing ($2.0 million), partially offset by lower costs for materials, services and repairs ($4.2 million) and lower pricing for fuel and explosives ($3.2 million).

Thermal Mining.

Segment Adjusted EBITDA increased during the year ended December 31, 2019 compared to the same period in the prior year primarily due to the net impact associated with the final commercial negotiations for the Kayenta Mine ($83.3 million) and higher realized net coal pricing ($13.0 million), partially offset by the unfavorable impact of lower volume ($25.7 million).

Peabody Energy Corporation 2020 Form 10-K

Corporate and Other Adjusted EBITDA.

The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:

(Decrease) Increase

Year Ended December 31,

Year Ended December 31, (Decrease) Increase

2019 2018 $ %

(Dollars in millions)

Middlemount (1)

$ (9.8) $ 51.1 $ (60.9) (119.2) %

Resource management activities (2)

8.2 44.7 (36.5) (81.7) %

Selling and administrative expenses

Restructuring charges

Transaction costs related to business combinations and joint ventures

(145.0) (158.1) 13.1 8.3 %

Other items, net (3)

(22.6) (18.3) (4.3) (23.5) %

Corporate and Other Adjusted EBITDA $ (169.2) (80.6) $ (88.6) (109.9) %

2 unchanged sentences

(2) Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenues.

Includes trading and brokerage activities, costs associated with post mining activities, certain coal royalty expenses, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts and expenses related to our other commercial activities.

resource management gains recorded in the prior year period related to the sale of surplus land assets in Queensland’s Bowen Basin ($20.6 million) and the sale of surplus coal resources associated with the Millennium Mine ($20.5 million);

restructuring charges recorded in the current year for workforce reductions resulting from actions taken at the the North Goonyella Mine, U.S.

mine closures and reductions in overhead and support functions;

and increased transaction costs in the current year period related to the PRB Colorado joint venture with Arch.

These unfavorable results were partially offset by lower selling and administrative expenses primarily related to outside services and incentive compensation.

Peabody Energy Corporation

2019 Form 10-K

(3) Includes trading and brokerage activities, costs associated with post-mining activities, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts, costs associated with suspended operations and expenses related to our other commercial activities.

The decrease in Corporate and Other Adjusted EBITDA during the year ended December 31, 2019 compared to the same period in the prior year was primarily driven by an unfavorable variance in Middlemount’s results due to the temporary suspension of operations and a significant change to the mine plan following a highwall failure mid-2019 and resource management gains recorded in the prior year period related to the sale of surplus land assets in Queensland’s Bowen Basin ($20.6 million) and the sale of surplus coal resources associated with the Millennium Mine ($20.5 million).

These unfavorable results were partially offset by lower selling and administrative expenses primarily related to outside services and lower personnel costs.

Peabody Energy Corporation 2020 Form 10-K

(Loss) Income From Continuing Operations, Net of Income Taxes

The following table presents (loss) income from continuing operations, net of income taxes:

(Decrease) Increase to Income

Year Ended December 31,

Year Ended December 31, (Decrease) Increase

2019 2018 $ %

(Dollars in millions)

Adjusted EBITDA (1)

$ 883.0 $ 1,387.9 $ (504.9) (36.4) %

Depreciation, depletion and amortization (601.0) (679.0) 78.0 11.5 %

Asset retirement obligation expenses (58.4) (53.0) (5.4) (10.2) %

Gain on formation of United Wambo Joint Venture

Asset impairment

Restructuring charges (24.3) (1.2) (23.1) (1,925.0) %

Transaction costs related to business combinations and joint ventures (21.6) (7.4) (14.2) (191.9) %

Gain on formation of United Wambo Joint Venture 48.1 — 48.1 n.m.

Asset impairment (270.2) — (270.2) n.m.

Provision for North Goonyella equipment loss

North Goonyella insurance recovery - equipment

(83.2) (66.4) (16.8) (25.3) %

North Goonyella insurance recovery - equipment 91.1 — 91.1 n.m.

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

18.8 18.3 0.5 2.7 %

Interest expense (144.2) (151.3) 7.1 4.7 %

Loss on early debt extinguishment

Interest income 27.0 33.6 (6.6) (19.6) %

Net mark-to-market adjustment on actuarially determined liabilities

(67.4) 125.5 (192.9) (153.7) %

Reorganization items, net — 12.8 (12.8) (100.0) %

1 unchanged sentence

Unrealized gains (losses) on non-coal trading derivative contracts 1.2 (0.7) 1.9 271.4 %

Fresh start take-or-pay contract-based intangible recognition

Take-or-pay contract-based intangible recognition 16.6 26.7 (10.1) (37.8) %

Income tax provision (46.0) (18.4) (27.6) (150.0) %

5 unchanged sentences

(Decrease) Increase

Year Ended December 31,

Year Ended December 31, to Income

2019 2018 $ %

(Dollars in millions)

1 unchanged sentence

Seaborne Metallurgical Mining

(125.3) (129.8) 4.5 3.5 %

Powder River Basin Mining (148.5) (183.4) 34.9 19.0 %

Midwestern U.S.

Thermal Mining (228.2) (268.8) 40.6 15.1 %

Corporate and Other

Peabody Energy Corporation

2019 Form 10-K

(8.3) (8.6) 0.3 3.5 %

Total $ (601.0) $ (679.0) $ 78.0 11.5 %

Peabody Energy Corporation 2020 Form 10-K

Additionally, the following table presents a summary of our weighted-average depletion rate per ton for active mines in each of our mining segments:

3 unchanged sentences

Powder River Basin Mining 0.80 0.81

Midwestern U.S.

Thermal Mining 1.33 1.51

Depreciation, depletion and amortization expense decreased during the year ended December 31, 2019 as compared to the same period in the prior year primarily due to lower amortization of the fair value of certain U.S.

1 unchanged sentence

The acquisition of the Shoal Creek Mine in the fourth quarter of 2018 partly offset the decrease in depreciation, depletion and amortization ($41.0 million) and was the driver of the year-over-year increase in the weighted-average depletion rate per ton for the Seaborne Metallurgical Mining segment.

Restructuring Charges.

Restructuring charges increased during the year ended December 31, 2019 compared to the same period in the prior year as the result of workforce reductions made during 2019 resulting from actions taken at the North Goonyella Mine, U.S.

mine closures and reductions in overhead and support functions.

Transaction Costs Related to Business Combinations and Joint Ventures.

The increase in transaction costs was primarily related to the proposed PRB Colorado joint venture with Arch Resources, Inc.

as further described in Note 20.

“Other Events” to the accompanying consolidated financial statements.

Gain on Formation of United Wambo Joint Venture .

9 unchanged sentences

“Other Events” to the accompanying consolidated financial statements.

The current year provision is incremental to the provisions recorded during 2018 and represents the best estimate of potential loss associated with these events based on assessments made to date.

The provision recorded during 2019 was incremental to the provisions recorded during 2018 and represents the best estimate of potential loss associated with these events based on assessments made to date.

North Goonyella Insurance Recovery - Equipment.

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The impact on our pension plans was small as actuarial losses on pension assets were largely offset by an increase in discount rates.

Peabody Energy Corporation 2020 Form 10-K

Reorganization Items, Net.

4 unchanged sentences

“Derivatives and Fair Value Measurements” to the accompanying consolidated financial statements.

Peabody Energy Corporation

2019 Form 10-K

Fresh Start Take-or-Pay Contract-Based Intangible Recognition .

Included in the fresh start reporting adjustments were contract-based intangible liabilities for port and rail take-or-pay contracts.

During the years ended December 31, 2019 and 2018 we ratably recognized these contract-based intangible liabilities.

Take-or-Pay Contract-Based Intangible Recognition.

During the years ended December 31, 2019 and 2018, we ratably recognized contract-based intangible liabilities for port and rail take-or-pay contracts.

For additional details, refer to Note 8.

7 unchanged sentences

(Decrease) Increase to

Year Ended December 31,

Year Ended December 31, to Income

2019 2018 $ %

(Dollars in millions)

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

$ (188.3) $ 645.7 $ (834.0) (129.2) %

Income from discontinued operations, net of income taxes

3.2 18.1 (14.9) (82.3) %

Net (loss) income (185.1) 663.8 (848.9) (127.9) %

Series A Convertible Preferred Stock dividends

— 102.5 (102.5) (100.0) %

Net income attributable to noncontrolling interests

26.2 16.9 9.3 55.0 %

Net (loss) income attributable to common stockholders

$ (211.3) $ 544.4 $ (755.7) (138.8) %

Income from Discontinued Operations, Net of Income Taxes .

5 unchanged sentences

The following table presents diluted EPS:

Year Ended December 31,

Year Ended December 31, EPS

2019 2018 $ %

Diluted EPS attributable to common stockholders:

(Loss) income from continuing operations

$ (2.07) $ 4.28 $ (6.35) (148.4) %

Income from discontinued operations 0.03 0.15 (0.12) (80.0) %

2 unchanged sentences

Diluted EPS reflects weighted average diluted common shares outstanding of 103.7 million and 121.0 million for the years ended December 31, 2019 and 2018, respectively

Peabody Energy Corporation

2019 Form 10-K

Peabody Energy Corporation 2020 Form 10-K

Reconciliation of Non-GAAP Financial Measures

1 unchanged sentence

Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing each of our segment’s operating performance, as displayed in the reconciliations below.

Year Ended December 31,

2020 2019 2018

(Dollars in millions)

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

$ (1,859.8) $ (188.3) $ 645.7

Depreciation, depletion and amortization

346.0 601.0 679.0

Asset retirement obligation expenses 45.7 58.4 53.0

Restructuring charges 37.9 24.3 1.2

Transaction costs related to business combinations and joint ventures 23.1 21.6 7.4

Gain on formation of United Wambo Joint Venture — (48.1) —

3 unchanged sentences

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

30.9 (18.8) (18.3)

Interest expense 139.8 144.2 151.3

Loss on early debt extinguishment

Interest income (9.4) (27.0) (33.6)

Net mark-to-market adjustment on actuarially determined liabilities

(5.1) 67.4 (125.5)

Reorganization items, net — — (12.8)

Unrealized gains on economic hedges

Unrealized losses (gains) on economic hedges 29.6 (42.2) (18.3)

Unrealized (gains) losses on non-coal trading derivative contracts

Fresh start take-or-pay contract-based intangible recognition

(7.1) (1.2) 0.7

Take-or-pay contract-based intangible recognition (8.2) (16.6) (26.7)

Income tax provision

8.0 46.0 18.4

Adjusted EBITDA $ 258.8 $ 883.0 $ 1,387.9

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

(Dollars in millions)

Operating costs and expenses

$ 2,524.9 $ 3,536.6 $ 4,071.4

Unrealized gains (losses) on non-coal trading derivative contracts

Fresh start take-or-pay contract-based intangible recognition

7.1 1.2 (0.7)

Take-or-pay contract-based intangible recognition 8.2 16.6 26.7

North Goonyella insurance recovery - cost recovery and business interruption

Net periodic benefit costs, excluding service cost

Restructuring charges

Net periodic benefit (credit) costs, excluding service cost (1.8) 19.4 18.1

Total Reporting Segment Costs

Peabody Energy Corporation

2019 Form 10-K

$ 2,538.4 $ 3,539.9 $ 4,115.5

Peabody Energy Corporation 2020 Form 10-K

The following table presents Reporting Segment Costs by reporting segment:

Year Ended December 31,

2020 2019 2018

(Dollars in millions)

2 unchanged sentences

Powder River Basin Mining 796.3 1,007.5 1,140.3

Midwestern U.S.

Mining 538.9 948.0 1,102.4

Corporate and Other 37.9 49.2 114.0

Total Reporting Segment Costs $ 2,538.4 $ 3,539.9 $ 4,115.5

The following tables present tons sold, revenues, Reporting Segment Costs and Adjusted EBITDA by reporting segment:

The following tables present tons sold, revenues, Reporting Segment Costs and Adjusted EBITDA by mining segment:

Year Ended December 31, 2020

Seaborne Thermal Mining

Seaborne Metallurgical Mining

Powder River Basin Mining

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

Thermal Mining

(Amounts in millions, except per ton data)

Tons sold 19.0 5.6 87.2 18.3

Revenues $ 711.8 $ 486.5 $ 991.1 $ 707.3

Reporting Segment Costs 548.6 616.7 796.3 538.9

Adjusted EBITDA

163.2 (130.2) 194.8 168.4

Revenues per Ton

$ 37.46 $ 86.33 $ 11.37 $ 38.73

Costs per Ton

28.87 109.44 9.14 29.51

Adjusted EBITDA Margin per Ton

8.59 (23.11) 2.23 9.22

Year Ended December 31, 2019

Seaborne Thermal Mining

Seaborne Metallurgical Mining

Powder River Basin Mining

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

Thermal Mining

(Amounts in millions, except per ton data)

Tons sold 19.5 8.1 108.1 27.9

Revenues $ 971.7 $ 1,033.1 $ 1,228.7 $ 1,309.4

Reporting Segment Costs 642.3 892.9 1,007.5 948.0

Adjusted EBITDA

329.4 140.2 221.2 361.4

Revenues per Ton

$ 49.69 $ 127.62 $ 11.37 $ 46.85

Costs per Ton

32.84 110.30 9.32 33.91

Adjusted EBITDA Margin per Ton

Peabody Energy Corporation

2019 Form 10-K

Free Cash Flow is defined as net cash provided by operating activities less net cash used in investing activities and excludes cash outflows related to business combinations.

16.85 17.32 2.05 12.94

Peabody Energy Corporation 2020 Form 10-K

Year Ended December 31, 2018

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

Thermal Mining

(Amounts in millions, except per ton data)

Tons sold 19.1 11.0 120.3 33.6

Revenues $ 1,099.2 $ 1,553.0 $ 1,424.8 $ 1,393.0

Reporting Segment Costs 647.2 1,111.6 1,140.3 1,102.4

Adjusted EBITDA

452.0 441.4 284.5 290.6

Revenues per Ton

$ 57.58 $ 141.06 $ 11.84 $ 41.46

Costs per Ton

33.90 100.97 9.47 32.81

Adjusted EBITDA Margin per Ton

23.68 40.09 2.37 8.65

Free Cash Flow is defined as net cash (used in) provided by operating activities less net cash used in investing activities and excludes cash outflows related to business combinations.

See the table below for a reconciliation of Free Cash Flow to its most comparable measure under U.S.

1 unchanged sentence

(Dollars in millions)

Net cash provided by operating activities

Net cash (used in) provided by operating activities $ (9.7) $ 677.4

Net cash used in investing activities (206.7) (261.3)

1 unchanged sentence

Free Cash Flow $ (216.4) $ 418.5

As part of its normal planning and forecasting process, Peabody utilizes a broad approach to develop macroeconomic assumptions for key variables, including country-level gross domestic product (GDP), industrial production, fixed asset investment and third-party inputs, driving detailed supply and demand projections for key demand centers for coal, electricity generation and steel.

As part of its normal planning and forecasting process, Peabody utilizes a broad approach to develop macroeconomic assumptions for key variables, including country-level gross domestic product, industrial production, fixed asset investment and third-party inputs, driving detailed supply and demand projections for key demand centers for coal, electricity generation and steel.

Specific to the U.S., the Company evaluates individual plant needs, including expected retirements, on a plant by plant basis in developing its demand models.

2 unchanged sentences

Our near-term outlook is intended to coincide with the next 12 to 24 months, with subsequent periods addressed in our long-term outlook.

Peabody is continuing to monitor the rapidly evolving COVID-19 pandemic and any impacts related to both our near-term and long-term outlook.

Near-Term Outlook

Seaborne Thermal Coal.

Demand growth continues to be led by the Asia-Pacific region.

Continued urbanization trends in Vietnam led to the country approximately doubling its 2019 imports over the prior year and contributed to total ASEAN imports rising some 23 million tonnes.

Even with record Chinese domestic coal production, Chinese thermal coal imports rose approximately 4% year-over-year on increased domestic power consumption.

In addition, India thermal coal imports increased 6% to 177 million tonnes.

As expected, demand in Europe declined as the region continues to shift away from coal-fueled generation.

On the supply side, lower-quality Indonesian and Russian exports rose 29 and 12 million tonnes, respectively, in 2019 over the prior year primarily in response to increased demand from China, India and Vietnam.

Australian thermal coal exports rose modestly, while U.S.

thermal coal exports declined 25% given unfavorable economics on delivered coal pricing.

Looking ahead, Peabody expects growth from the Asia-Pacific region to mitigate impacts of declines in the Atlantic.

Indonesia, Australia and Russia will continue to serve as the major sources of seaborne thermal supply.

Seaborne Metallurgical Coal.

Supply and demand balance remains favorable as modest demand growth was met with limited supply growth.

Limited new sources of metallurgical coal supply are expected to be largely offset by natural depletion.

In 2019, Chinese metallurgical coal imports rose approximately 10 million tonnes on increased pig iron production.

India’s metallurgical coal imports continued to rise, growing 5% in 2019 compared to the prior year as the country lacks the domestic quantity and quality to meet its steelmaking needs.

Increased steel production from ASEAN nations also continued to support seaborne metallurgical coal demand.

Supply growth was muted in 2019 with rising metallurgical exports from Russia and Australia largely offset by declines in U.S.

Looking ahead, Peabody anticipates demand growth to be led by India.

Thermal Coal.

Within the U.S., substantial plant retirements, unfavorable weather conditions, low natural gas prices and continued growth in other available energy sources resulted in an estimated 95 million ton decline in total electric power sector demand in 2019.

Coal’s share of the total U.S.

electricity generation mix fell to 23% in 2019, compared to 27% in 2018.

Declining coal capacity, along with natural gas prices and the availability of other sources of electricity generation are expected to continue to impact total U.S.

Peabody Energy Corporation

2019 Form 10-K

The COVID-19 pandemic continues to impact the global economy, including demand and pricing for global coal markets.

Ultimately, demand for seaborne coal will be dependent on the timing and scale of a COVID-19 recovery.

Seaborne thermal coal markets have recently shown signs of improvement with Newcastle forward prices averaging over $80 per tonne in 2021.

Colder than expected weather across Asia and Europe has resulted in record high power generation in key markets, driving global liquefied natural gas prices significantly higher and supporting increased seaborne thermal coal demand.

In addition, seaborne thermal supply has been impacted by severe wet weather in Indonesia as well as COVID-related production disruptions in China and labor issues in Colombia.

Peabody’s seaborne thermal segment is well positioned to serve that demand.

Peabody Energy Corporation 2020 Form 10-K

While seaborne metallurgical coal pricing has improved from 2020 lows, disrupted metallurgical trade flows have contributed to short term pricing volatility.

In addition, limitations on Australian imports into China as well as the scope and scale of a steel recovery in traditional regions continue to weigh on markets.

China has continued to not import Australian coals even as the spread between Australian and non-Australian premium hard coking coals reached an all-time high in January 2021, resulting in China paying a significant premium for non-Australian metallurgical coal.

However, outside of China, demand has started to pick up in the traditional markets of Japan and Korea as well as India.

Peabody remains focused on improving its seaborne metallurgical segment cost profile, particularly at the Shoal Creek and Metropolitan Mines, and will continue to be cautious and deliberate in its actions to resume production at currently idled operations.

thermal coal markets continue to be heavily influenced by natural gas prices, growth in renewable generation and weather.

In 2020, coal's share of the generation mix declined to 19% from 23% in the prior year, while natural gas' share rose to 40% as prompt natural gas prices averaged $2.13 per mmBtu.

While current natural gas forward prices are above a key competitive mark of $2.50 per mmBtu, coal demand continues to be impacted by secular decline.

Peabody remains committed to continuing to serve its customers from its low-cost operations.

Long-Term Outlook

Current projections indicate a slow seaborne market recovery as the global economy continues to be impacted by COVID-19.

Future supply and demand will be impacted by economic conditions and public policy related to the COVID-19 pandemic in key supply and demand centers.

Further, we believe coal demand and use will be adversely impacted by the policy decisions of various governments, regulatory bodies, financial institutions and others with respect to concerns over the environmental and social impacts of coal generation.

Seaborne Fundamentals .

Peabody anticipates that seaborne metallurgical coal demand will continue to grow as India increases steel production and China continues to have a significant influence on seaborne balances.

On the supply side, we expect Australia to maintain its leading metallurgical coal export position, followed by other key seaborne suppliers - U.S., Canada and Russia, among others.

For seaborne thermal, Peabody expects demand to remain relatively stable as demand growth from ASEAN nations helps offset demand decline elsewhere, including, notably, in the Atlantic markets.

Over 80% of seaborne thermal coal demand is projected to come from the Asia-Pacific region as Europe’s coal generation continues its secular decline.

Peabody projects global seaborne metallurgical demand to show consistent, albeit modest, growth over the next several years.

During this time, India is expected to account for the vast majority of overall demand growth amid significant steel capacity additions and lack of domestic reserves.

ASEAN countries are also projected to be a notable contributor to growth as demand in Japan and Korea remains largely stable.

Australia will continue to account for more than 50% of seaborne supply.

For seaborne thermal, Peabody expects ASEAN countries and India to be drivers for seaborne coal demand growth due to increased electrification and economic gains.

This growth is anticipated to more than offset declines from developed economies, including the U.S.

Seaborne thermal coal will continue to be sourced primarily from seaborne exporters Indonesia and Australia, along with Russia, Colombia, South Africa and the U.S., among others.

Fundamentals.

Coal is expected to remain an important piece of the U.S.

electric generation mix, albeit declining from current levels.

Peabody expects coal-fueled plant retirements to continue to negatively impact future coal demand.

The combination of fluctuations in natural gas prices, growth in renewable generation and other competing fuels, and policy and regulations, among other things, are expected to continue to be a key determinant of future U.S.

thermal coal demand continues to be pressured by the ongoing secular decline and is expected to continue to decline longer-term.

Future demand will be highly dependent on natural gas prices, growth in renewable generation and other competing fuels, general economic conditions, weather, and policy and regulations, among other factors.

Liquidity and Capital Resources

1 unchanged sentence

We have also generated cash from the sale of non-strategic assets, including coal reserves and surface lands, borrowings under our credit facilities and, from time to time, the issuance of securities.

Our primary uses of cash include the cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs, finance and operating lease payments, postretirement plans, take-or-pay obligations, post-mining retirement obligations, and selling and administrative expenses.

Our primary uses of cash include the cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs, capital and operating lease payments, postretirement plans, take-or-pay obligations, post-mining reclamation obligations, and selling and administrative expenses.

We have also used cash for dividends, share repurchases and early debt retirements.

We believe that our capital structure allows us to satisfy our working capital requirements and fund capital expenditures and debt-service obligations with cash generated from operations and cash on hand.

Any future determinations to return capital to stockholders, such as dividends or share repurchases will be at the discretion of our Board of Directors and will depend on a variety of factors, including the restrictions set forth under our debt agreements, our net income or other sources of cash, liquidity position and potential alternative uses of cash, such as internal development projects or acquisitions, as well as economic conditions and expected future financial results.

Our ability to declare dividends, repurchase shares, or early retire debt in the future will depend on our future financial performance, which in turn depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand for and selling prices of coal and other factors specific to our industry, many of which are beyond our control.

Total Indebtedness.

Our total indebtedness as of December 31, 2019 and 2018 consisted of the following:

(Dollars in millions)

6.000% Senior Secured Notes due March 2022

6.375% Senior Secured Notes due March 2025

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

Finance lease and other obligations

Debt issuance costs

Current portion of long-term debt

Long-term debt

Refer to Note 14.

“Long-term Debt” to the accompanying consolidated financial statements for further information regarding our indebtedness.

Peabody Energy Corporation

2019 Form 10-K

As of December 31, 2019 , our available liquidity was $1,275.8 million , which was comprised of cash and cash equivalents and availability under our revolving credit facility and receivables securitization program described below.

Any future determinations to return capital to stockholders, such as dividends or share repurchases will depend on a variety of factors, including the restrictions set forth under our debt and surety agreements, our net income or other sources of cash, liquidity position and potential alternative uses of cash, such as internal development projects or acquisitions, as well as economic conditions and expected future financial results.

Our ability to early retire debt, declare dividends, or repurchase shares in the future will depend on our future financial performance, which in turn depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand for and selling prices of coal and other factors specific to our industry, many of which are beyond our control.

We have presently suspended the payment of dividends and share repurchases, as discussed in Part II, Item 5.

“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

Peabody Energy Corporation 2020 Form 10-K

As of December 31, 2020, our cash balances totaled $709.2 million, including approximately $555 million held by U.S.

entities, $62.8 million held by Australian subsidiaries, and the remaining balance held by other foreign subsidiaries.

A significant majority of the cash held by our foreign subsidiaries is in accounts domiciled in the U.S.

and denominated in U.S.

subsidiaries and $136 million held by Australian subsidiaries, approximately $107 million of which was held by the subsidiary which conducts the operations of our Wilpinjong Mine.

Our remaining balance was held by other foreign subsidiaries in accounts predominantly domiciled in the U.S.

A significant majority of the cash held by our foreign subsidiaries is denominated in U.S.

This cash is generally used to support non-U.S.

liquidity needs, including capital and operating expenditures in Australia.

During 2019, we repatriated to the U.S.

approximately $420 million previously held by foreign subsidiaries.

If we repatriate additional foreign-held cash in the future, we do not expect restrictions or potential taxes to have a material effect on our overall liquidity.

During the year ended December 31, 2019, we paid dividends of $258.1 million , including $200 million for a supplemental dividend, made stock repurchases totaling $329.9 million , and made open-market purchases of $41.0 million of our senior secured notes for $39.9 million, plus accrued interest.

No additional dividends or stock repurchases are currently planned.

Our ability to maintain adequate liquidity depends on the successful operation of our business and appropriate management of operating expenses and capital spending.

Our anticipated liquidity needs are highly sensitive to changes in these and other factors.

Debt Financing

We experienced negative cash flows from operations during the year ended December 31, 2020.

Results from continuing operations, net of income taxes and Adjusted EBITDA for the year ended December 31, 2020 declined by $1,671.5 million and $624.2 million, respectively, compared to the year ended December 31, 2019.

Our total liquidity declined from $1,275.8 million at December 31, 2019 to $728.7 million at December 31, 2020.

Available liquidity as of December 31, 2020 and 2019 was comprised of the following:

December 31, 2020 December 31, 2019

(Dollars in millions)

Cash and cash equivalents $ 709.2 $ 732.2

Revolving credit facility availability 0.2 498.6

Accounts receivable securitization program availability 19.3 45.0

Total liquidity $ 728.7 $ 1,275.8

During the year ended December 31, 2020, the combined availability under our revolving credit facility and accounts receivable securitization program decreased as a result of $375.0 million of borrowings, $159.0 million of which was subsequently repaid, an additional $237.0 million of letters of credit issuances, a $46.1 million reduction in available receivable balances under the accounts receivable securitization program, and the maturity of a $25.0 million commitment under the revolving credit facility.

As further described in Note 23.

“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees,” we are party to various guarantees and financial instruments to provide support for our reclamation bonding requirements, lease obligations, insurance policies and various other performance guarantees.

At December 31, 2020, such instruments included $1,633.6 million face amount of surety bonds and $437.6 million of outstanding letters of credit.

As further described below, we have reached an agreement with the majority of our surety bond providers to limit future collateral requests related to surety bonding.

Existing Debt Financing

As described in Note 12.

1 unchanged sentence

We make semi-annual interest payments on the senior notes each March 31 and September 30 until maturity.

Also during 2017, we entered into a credit agreement and related term loan under which we originally borrowed $950.0 million and have repaid $557.0 million through December 31, 2019.

Also during 2017, we entered into a credit agreement (the Credit Agreement) and related term loan under which we originally borrowed $950.0 million and have repaid $561.0 million through December 31, 2020.

The term loan requires quarterly principal payments of $1.0 million and periodic interest payments, currently at LIBOR plus 2.75%, through December 2024 with the remaining balance due in March 2025.

We also entered into a revolving credit facility allowable under our credit agreement during 2017 for an aggregate commitment of $350.0 million for general corporate purposes.

In September 2019, we entered into an amendment to the credit agreement which increased the aggregate commitment amount under the revolver to $565.0 million and, beginning in 2020, makes applicable interest rates and fees dependent upon our periodically-determined first lien leverage ratio, as defined in the credit agreement.

To date, we have only utilized this revolving credit facility for letters of credit which incur combined fees of 3.375%, while unused capacity bears a commitment fee of 0.5%.

As of December 31, 2019, such letters of credit amounted to $66.4 million and were primarily in support of our reclamation obligations.

Availability under the revolver was $498.6 million at December 31, 2019.

We entered into the revolving credit facility allowable under our Credit Agreement during 2017 for an aggregate commitment of $350.0 million for general corporate purposes.

In September 2019, we entered into an amendment to the Credit Agreement which increased the aggregate commitment amount under the revolver to $565.0 million and, beginning in 2020, made applicable interest rates and fees dependent upon our periodically-determined first lien leverage ratio, as defined in the Credit Agreement.

During 2020, we utilized the revolving credit facility to borrow $315.0 million, of which we subsequently repaid $99.0 million.

At December 31, 2020, the revolving loan balance of $216.0 million bore interest at LIBOR plus 3.25%.

The revolving credit facility was also utilized for letters of credit, amounting to $323.8 million at December 31, 2020, which incur combined fees of 3.375%, while unused capacity bears a commitment fee of 0.5%.

Such letters of credit were primarily in support of our reclamation obligations.

Our debt agreements impose various restrictions and limits on certain categories of payments that we may make, such as those for dividends, investments, and stock repurchases.

We are also subject to customary affirmative and negative covenants.

We were in compliance with all such restrictions and covenants at December 31, 2019.

As described in the “Overview” section contained within Item 1.

Business, the September 2019 amendment to our credit facility removed that agreement’s restrictions pertaining to the formation of the PRB Colorado joint venture with Arch.

We are currently considering alternatives for addressing similar restrictions contained within the indenture underlying our senior secured notes.

Our ability to accomplish this objective is subject to market conditions and other factors, including financing options that may be available to us from time to time and conditions in the credit and debt capital markets generally.

Peabody Energy Corporation 2020 Form 10-K

Refinancing and Related Transactions

During the fourth quarter of 2020 and the first quarter of 2021, we entered into a series of interrelated agreements with our surety bond providers, the revolving lenders under our credit agreement and certain holders of our senior secured notes to extend a significant portion of our near-term debt maturities to December 2024 and to stabilize collateral requirements for our existing surety bond portfolio.

Such agreements and related activities are described below.

Organizational Realignment

In July and August 2020, we effected certain changes to our corporate structure in contemplation of a debt-for-debt exchange, which included, among other steps, the formation of certain wholly-owned subsidiaries (the Co-Issuers) to indirectly own and conduct the operations of our Wilpinjong Mine in Australia and the designation of such entities as unrestricted subsidiaries under the Credit Agreement and our senior notes’ indenture (the Existing Indenture).

In connection with these actions, we contributed $100.0 million to the Co-Issuers to provide the Wilpinjong Mine with operating liquidity and address its capital needs over the next twelve months.

Surety Agreement

In November 2020, we entered into a surety transaction support agreement (Surety Agreement) with the providers of 99% of our surety bond portfolio (Participating Sureties) to resolve approximately $800 million in additional collateral demands made by the Participating Sureties.

In accordance with the Surety Agreement, we initially provided $75.0 million of collateral, in the form of letters of credit.

Upon completion of the Refinancing Transactions, as defined below, other provisions of the Surety Agreement became effective.

In particular, we granted second liens on $200.0 million of certain mining equipment and will post an additional $25.0 million of collateral per year from 2021 through 2024 for the benefit of the Participating Sureties.

The collateral postings may also further increase to the extent we generate more than $100.0 million of free cash flow (as defined in the Surety Agreement) in any twelve-month period or have asset sales in excess of $10.0 million.

Further, the Participating Sureties have agreed to a standstill through December 31, 2024, during which time, the Participating Sureties will not demand any additional collateral, draw on letters of credit posted for the benefit of themselves, or cancel any existing surety bond.

We will not pay dividends or make share repurchases during the standstill period, unless otherwise agreed between parties.

Refinancing Transactions

On January 29, 2021 (the Settlement Date), we completed a series of transactions (collectively, the Refinancing Transactions) to, among other things, provide us with maturity extensions and covenant relief, while allowing us to maintain sufficient operating liquidity and financial flexibility.

The Refinancing Transactions included a senior notes exchange and related consent solicitation, a revolving credit facility exchange, and various amendments to our existing debt agreements, as summarized below.

Exchange Offer

On January 29, 2021, we settled an exchange offer (Exchange Offer) pursuant to which $398.7 million aggregate principal amount of our 6.000% Senior Secured Notes due March 2022 (2022 Notes) were validly tendered, accepted by us and exchanged for aggregate consideration consisting of (a) $193.9 million aggregate principal amount of new 10.000% Senior Secured Notes due 2024 issued by the Co-Issuers (New Co-Issuer Notes), (b) $195.1 million aggregate principal amount of new 8.500% Senior Secured Notes due 2024 issued by Peabody (New Peabody Notes), and (c) a cash payment of approximately $9.4 million.

In connection with the settlement of the Exchange Offer, we also paid early tender premiums totaling $4.0 million in cash.

Refer to Note 12.

“Long-term Debt” for additional information associated with the New Co-Issuer Notes and the New Peabody Notes.

Following the settlement of the Exchange Offer, approximately $60.3 million aggregate principal amount of the 2022 Notes remain outstanding and are governed by the Existing Indenture, as amended by the supplemental indenture described below.

In connection with the Exchange Offer, we must offer to purchase up to $22.5 million New Peabody Notes at 80% of their accreted value, plus accrued and unpaid interest, subsequent to the Settlement Date.

We expect to complete this purchase during the first quarter of 2021.

Peabody Energy Corporation 2020 Form 10-K

Consent Solicitation

Concurrently with the Exchange Offer, we solicited consents from holders of the 2022 Notes to certain proposed amendments to the Existing Indenture to (i) eliminate substantially all of the restrictive covenants, certain events of default applicable to the 2022 Notes and certain other provisions contained in the Existing Indenture and (ii) release the collateral securing the 2022 Notes and eliminate certain other related provisions contained in the Existing Indenture.

The Company received the requisite consents from holders of the 2022 Notes and entered into a supplemental indenture to the Existing Indenture, which became operative on January 29, 2021.

Revolver Transactions

In connection with the Refinancing Transactions, we restructured the revolving loans under the Credit Agreement by (i) making a pay down of revolving loans thereunder in the aggregate amount of $10.0 million, (ii) the Co-Issuers incurring $206.0 million of term loans under a credit agreement, dated as of the Settlement Date (New Co-Issuer Term Loans, New Co-Issuer Term Loan Agreement), (iii) Peabody entering into a letter of credit facility (the New Company LC Agreement), and (iv) amending the Credit Agreement (collectively, the Revolver Transactions).

The New Co-Issuer Term Loans mature on December 31, 2024 and bear interest at a rate of 10.00% per annum.

On the Settlement Date, we entered into the New Company LC Agreement with the revolving lenders party to the Credit Agreement, pursuant to which we obtained a $324.0 million letter of credit facility under which our existing letters of credit under the Credit Agreement were deemed to be issued.

The commitments under the New Company LC Agreement mature on December 31, 2024.

Undrawn letters of credit under the New Company LC Agreement bear interest at 6.00% per annum and unused commitments are subject to a 0.50% per annum commitment fee.

In connection with the Revolver Transactions, we amended the Credit Agreement to make certain changes in consideration of the New Company LC Agreement.

After giving effect to the Revolver Transactions, there remain no revolving commitments or revolving loans under the Credit Agreement and the first lien net leverage ratio covenant was eliminated, effectively negating the compliance requirement at December 31, 2020.

The New Company LC Agreement requires that our restricted subsidiaries maintain minimum aggregate liquidity of $125.0 million at the end of each quarter through December 31, 2024.

As such, liquidity attributable to the Co-Issuers will be excluded from the calculation.

Considering the Refinancing Transactions, we expect to incur approximately $200 million of interest expense, including approximately $50 million of non-cash interest expense, during the year ended December 31, 2021.

Accounts Receivable Securitization Program

As described in Note 23.

“Financial Instruments and Other Guarantees” of the accompanying unaudited condensed consolidated financial statements, we entered into an amended accounts receivable securitization program during 2017 which currently expires in 2022.

“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees” of the accompanying consolidated financial statements, we entered into an amended accounts receivable securitization program during 2017 which currently expires in 2022.

The program provides for up to $250.0 million in funding, limited to the availability of eligible receivables, accounted for as a secured borrowing.

1 unchanged sentence

At December 31, 2020, we had no outstanding borrowings and $112.3 million of letters of credit provided under the program.

The letters of credit are primarily in support of portions of our obligations for reclamation, workers’ compensation and postretirement benefits.

Availability under the program, which is adjusted for certain ineligible receivables, was $45.0 million at December 31, 2019 and there was no cash collateral requirement.

Peabody Energy Corporation

2019 Form 10-K

The letters of credit are primarily in support of portions of our obligations for property and casualty insurance.

Capital Requirements

Additions to Property, Plant, Equipment and Mine Development.

For 2020, we are targeting capital expenditures of approximately $250 million, which includes approximately $100 million for ongoing extension projects related to our Seaborne Thermal Mining segment, and approximately $150 million in sustaining capital across our portfolio of mines.

We plan to consider other growth and development projects across our global platform beyond 2020 and will continue to evaluate the timing associated with those projects based on changes in global coal supply and demand.

For 2021, we are targeting capital expenditures of approximately $225 million, which includes approximately $135 million for ongoing extension projects primarily related to our Seaborne Thermal Mining segment.

We have no substantial future payment requirements under U.S.

federal coal reserve leases.

Pension and Postretirement Benefit Contributions.

Annual contributions to qualified pension plans are made in accordance with minimum funding standards and our 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%).

Subsequent to the Effective Date, we no longer sponsor any non-qualified plans.

During 2019, we made discretionary contributions of $20.0 million to our qualified pension plans and $17.0 million to our postretirement benefit plans.

Based upon our current funding status, we have no minimum funding requirement for 2020.

From time to time, Peabody may make discretionary contributions to its qualified pension and postretirement benefit plans.

Peabody Energy Corporation 2020 Form 10-K

Historical Cash Flows and Free Cash Flow

2 unchanged sentences

(Dollars in millions)

Net cash provided by operating activities

Net cash (used in) provided by operating activities $ (9.7) $ 677.4

Net cash used in investing activities (206.7) (261.3)

Net cash used in financing activities

Net cash provided by (used in) financing activities 193.4 (701.3)

Net change in cash, cash equivalents and restricted cash (23.0) (285.2)

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Cash, cash equivalents and restricted cash at end of period $ 709.2 $ 732.2

Net cash provided by operating activities

Net cash (used in) provided by operating activities $ (9.7) $ 677.4

Net cash used in investing activities (206.7) (261.3)

Acquisition of Shoal Creek Mine

Amount attributable to acquisition of Shoal Creek Mine — 2.4

Free Cash Flow $ (216.4) $ 418.5

Operating Activities.

The decrease in net cash provided by operating activities for the year ended December 31, 2019 compared to the year ended December 31, 2018 was driven by the following:

A year-over-year decrease in cash from our mining operations;

A substantial release of collateral obligations during 2018 upon establishing our new surety bonding program in Australia ($323.1 million);

An unfavorable change in net cash flows associated with our working capital ($155.4 million)

The net decrease in net cash (used in) provided by operating activities for the year ended December 31, 2020 compared to the prior year was driven by a year-over-year decrease in cash from our mining operations, partially offset by a favorable change in net cash flows associated with our working capital ($108.0 million), and higher funding of our pension and retiree healthcare plans during 2019 ($16.7 million).

Investing Activities.

The decrease in net cash used in investing activities for the year ended December 31, 2019 compared to the year ended December 31, 2018 was driven by the following:

Greater expenditures for the acquisition of our Shoal Creek Mine in 2018 ($385.0 million);

The receipt of insurance proceeds attributable to North Goonyella Company-owned equipment losses ($23.2 million);

partially offset by

Higher net receipts from related parties for loans and other advances in 2018 ($124.2 million);

Lower proceeds from disposals of assets, net of receivables ($46.4 million)

The decrease in net cash used in investing activities for the year ended December 31, 2020 compared to the prior year was driven by lower capital expenditures ($87.8 million), partially offset by higher proceeds from insurance recoveries attributable to North Goonyella equipment in the prior year period ($23.2 million) and higher cash receipts from Middlemount in the prior year period ($14.7 million).

Financing Activities.

The decrease in net cash used in financing activities for the year ended December 31, 2019 compared to the year ended December 31, 2018 was driven by the following:

Lower common stock repurchases ($504.8 million);

partially offset by

Higher dividends paid ($198.5 million), primarily due to a supplemental dividend of $1.85 per share of common stock

Peabody Energy Corporation

2019 Form 10-K

The increase in net cash provided by (used in) financing activities for the year ended December 31, 2020 compared to the prior year was driven by borrowings under our revolving credit facility and accounts receivable securitization program ($315.0 million and $60.0 million, respectively), greater common stock repurchases and dividends in the prior year ($329.9 million and $258.1 million, respectively), partially offset by higher long-term debt repayments in the current year ($98.4 million).

Peabody Energy Corporation 2020 Form 10-K

Contractual Obligations

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Payments Due By Year

Total Less than

Years More than

(Dollars in millions)

Long-term debt obligations (principal and interest) (1)

$ 1,787.3 $ 74.9 $ 781.8 $ 930.6 $ —

Finance lease obligations (principal and interest) 33.3 17.1 7.3 1.2 7.7

Operating lease obligations (2)

72.4 24.8 34.4 9.4 3.8

Unconditional purchase obligations (3)

37.0 29.3 7.7 — —

Coal reserve lease and royalty obligations 55.7 5.5 10.8 8.9 30.5

Take-or-pay obligations (4)

1,206.5 94.5 177.7 180.2 754.1

Other long-term liabilities (5)

2,756.0 243.3 346.1 325.0 1,841.6

Total contractual cash obligations $ 5,948.2 $ 489.4 $ 1,365.8 $ 1,455.3 $ 2,637.7

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The related interest on long-term debt was calculated using rates in effect at December 31, 2020 for the remaining contractual term of the outstanding borrowings.

Following the completion of the Refinancing Transactions, our total long-term debt obligations (principal and interest) increased to $1,953.6 million.

(2) Excludes contingent rents.

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(5) Represents estimated cash outflows for long-term liabilities relating to our postretirement benefit plans, work-related injuries and illnesses, defined benefit pension plans, mine reclamation and end-of-mine closure costs and exploration obligations.

Also includes $2 million of required payments to the Voluntary Employees Beneficiary Association (VEBA) established in connection with Patriot’s bankruptcy, as well as $30 million related to the settlement of the United Mine Workers of America (UMWA) 1974 Pension Plan Litigation described in Note 6.

Also includes $15 million related to the settlement of the United Mine Workers of America (UMWA) 1974 Pension Plan Litigation described in Note 4.

“Discontinued Operations” to the accompanying consolidated financial statements.

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We do not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in our consolidated balance sheets.

Peabody Energy Corporation 2020 Form 10-K

As of December 31, 2020, the Company was party to financial instruments with off-balance sheet risk in support of the following obligations:

Reclamation Health and welfare (1)

Contract performance (2)

Leased property and equipment Other (3)

(Dollars in millions)

Surety bonds and bank guarantees $ 1,451.9 $ 43.9 $ 83.7 $ 38.3 $ 15.8 $ 1,633.6

Letters of credit outstanding under revolving credit facility 220.9 90.4 7.5 5.0 — 323.8

Letters of credit outstanding under accounts receivable securitization program 94.1 17.7 0.5 — — 112.3

Other letters of credit — 1.5 — — — 1.5

1,766.9 153.5 91.7 43.3 15.8 2,071.2

Letters of credit in support of surety bonds (4)

(315.0) (29.6) — (1.2) — (345.8)

Cash collateral in support of surety bonds (4)

(15.0) — — — — (15.0)

Obligations supported, net $ 1,436.9 $ 123.9 $ 91.7 $ 42.1 $ 15.8 $ 1,710.4

(1) Obligations include pension and healthcare plans, workers’ compensation, and property and casualty insurance

(2) Obligations pertain to customer and vendor contracts

(3) Obligations primarily pertain to the disturbance or alteration of public roadways in connection with the Company’s mining activities that is subject to future restoration

(4) Serve as collateral for certain surety bonds at the request of surety bond providers

We could experience a decline in our liquidity as financial assurances associated with reclamation bonding requirements, surety bonds or other obligations are required to be collateralized by cash or letters of credit.

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At December 31, 2020, we had total asset retirement obligations of $728.2 million which were backed by a combination of surety bonds, bank guarantees and letters of credit.

Peabody Energy Corporation

2019 Form 10-K

Bonding requirement amounts may differ significantly from the related asset retirement obligation because such requirements are calculated under the assumption that reclamation begins currently, whereas our accounting liabilities are discounted from the end of a mine’s economic life (when final reclamation work would begin) to the balance sheet date.

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Actual results may differ from these estimates.

Business Combinations.

We account for business combinations using the purchase method of accounting.

The purchase method requires us to determine the fair value of all acquired assets, including identifiable intangible assets, and all assumed liabilities.

The total cost of acquisitions is allocated to the underlying identifiable net assets, based on their respective estimated fair values.

Determining the fair value of assets acquired and liabilities assumed requires management's judgment and the utilization of independent valuation experts, and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates and asset lives, among other items.

Due to the unobservable inputs to the valuation, the fair value would be considered Level 3 in the fair value hierarchy.

Subsequent to the finalization of the purchase price allocation, any adjustments to the recorded values of acquired assets and liabilities would be reflected in the consolidated statements of operations.

Once final, it is not permitted to revise the allocation of the original purchase price, even if subsequent events or circumstances prove the original judgments and estimates to be incorrect.

The assumptions and judgments made when recording business combinations will have an impact on reported results of operations for many years into the future.

“Acquisition of Shoal Creek Mine” to our accompanying consolidated financial statements for additional information regarding business combinations.

Peabody Energy Corporation 2020 Form 10-K

Impairment of Long-Lived Assets.

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Such factors include geographic proximity to one another, the expectation of shared infrastructure upon development based on future mining plans and whether it would be most advantageous to bundle such assets in the event of a sale to a third party.

Peabody Energy Corporation

2019 Form 10-K

When indicators of impairment are present, we evaluate our long-lived assets for recoverability by comparing the estimated undiscounted cash flows expected to be generated by those assets under various assumptions to their carrying amounts.

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The assumptions used are based on our best knowledge at the time we prepare our analysis but can vary significantly due to the volatile and cyclical nature of coal prices and demand, regulatory issues, unforeseen mining conditions, commodity prices and cost of labor.

These types of changes may cause us to be unable to recover all or a portion of the carrying value of our long-lived assets.

Additionally, the 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, was a significant consideration in our analysis.

These factors may cause us to be unable to recover all or a portion of the carrying value of our long-lived assets.

We conducted a review of all other long-lived assets for recoverability as of December 31, 2020 and determined that no further impairment charge was necessary as of that date.

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If actual results differ from the assumptions made in our annual evaluation of our valuation allowance, we may record a change in valuation allowance through income tax expense in the period such determination is made.

Peabody Energy Corporation 2020 Form 10-K

Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions.

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Liabilities for postretirement benefit costs are funded at our discretion.

In connection with fresh start reporting, we made an accounting policy election to prospectively record amounts attributable to actuarial valuation changes currently in earnings rather than recording such amounts within accumulated other comprehensive income and amortizing to expense over applicable time periods.

Expense for the year ended December 31, 2020 for postretirement benefit costs and pension liabilities totaled $1.1 million, while employer contributions were $36.3 million.

An actuarial loss of $61.7 million was recorded for the year ended December 31, 2019 .

Peabody Energy Corporation

2019 Form 10-K

An actuarial gain of $9.1 million was recorded for the year ended December 31, 2020.

Each of these liabilities is actuarially determined and we use various actuarial assumptions, including the discount rate, future cost trends, demographic assumptions and expected asset returns to estimate the costs and obligations for these items.

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One-Percentage-

Point Increase

One-Percentage-

Point Increase One-Percentage-

Point Decrease

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For Year Ended December 31, 2020

Point Increase

Point Increase One-Half

Point Decrease

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Effect on total postretirement benefit obligation $ (22.1) $ 25.2

Expected return on assets:

Effect on total net periodic postretirement benefit cost $ (0.1) $ 0.1

Peabody Energy Corporation 2020 Form 10-K

For our pension obligation, assumed discount rates and expected returns on assets have a significant effect on the expense and funded status amounts reported for our defined benefit pension plans.

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For Year Ended December 31, 2020

Point Increase

Point Increase One-Half

Point Decrease

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“Pension and Savings Plans” to the accompanying consolidated financial statements for additional information regarding postretirement benefit and pension plans.

Peabody Energy Corporation

2019 Form 10-K

Asset Retirement Obligations.

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Moreover, regulatory changes could increase our obligation to perform reclamation and mine closing activities.

In connection with fresh start reporting, we made an accounting policy election to classify the amortization associated with our asset retirement obligation assets within “Depreciation, depletion and amortization” in the consolidated statements of operations, rather than within “Asset retirement obligation expenses”, as in Predecessor periods.

Amortization associated with our asset retirement obligation assets was $26.7 million for the year ended December 31, 2020.

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“Commitments and Contingencies” to the accompanying consolidated financial statements for further discussion of our contingent liabilities.

Peabody Energy Corporation 2020 Form 10-K

Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

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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-K

Item 7. Management’s Discussion and Analysis