What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-05 · 298 added, 436 removed, 554 unchanged (57% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(Dollars in millions, except per share data)

Revenues $ 679.0 $ 671.0 $ 2,053.7 $ 2,143.9

Revenue $ 691.4 $ 651.3

Costs and expenses

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

649.4 550.9 1,843.4 1,886.7

Depreciation, depletion and amortization 72.9 68.3

2 unchanged sentences

Restructuring charges

1.7 8.1 5.9 31.1

Transaction costs related to joint ventures

Other operating (income) loss:

Net gain on disposals ( 25.8 ) ( 2.5 ) ( 28.2 ) ( 10.4 )

Asset impairment — — — 1,418.1

Net (gain) loss on disposals ( 4.9 ) 0.6

(Income) loss from equity affiliates ( 44.7 ) 0.9

1 unchanged sentence

Interest expense 39.4 52.4

Net gain on early debt extinguishment ( 16.0 ) — ( 31.3 ) —

Net loss (gain) on early debt extinguishment 23.5 ( 3.5 )

Interest income ( 0.5 ) ( 1.5 )

Net periodic benefit (credit) costs, excluding service cost ( 8.6 ) 2.8 ( 26.0 ) 8.3

Net mark-to-market adjustment on actuarially determined liabilities — 13.0 — 13.0

Net periodic benefit credit, excluding service cost ( 12.2 ) ( 8.7 )

Loss from continuing operations before income taxes ( 120.8 ) ( 79.5 )

Income tax (benefit) provision ( 3.7 ) ( 0.1 ) ( 10.3 ) 2.7

Income tax benefit ( 1.0 ) ( 1.8 )

Loss from continuing operations, net of income taxes ( 119.8 ) ( 77.7 )

Income (loss) from discontinued operations, net of income taxes 24.3 ( 2.3 ) 20.0 ( 6.8 )

Loss from discontinued operations, net of income taxes ( 0.8 ) ( 2.0 )

Net loss ( 120.6 ) ( 79.7 )

Net income (loss) attributable to noncontrolling interests 8.9 0.1 12.6 ( 5.1 )

Net (loss) income attributable to noncontrolling interests ( 1.1 ) 0.4

Net loss attributable to common stockholders $ ( 119.5 ) $ ( 80.1 )

8 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(Dollars in millions)

3 unchanged sentences

Foreign currency translation adjustment 1.9 ( 0.2 )

Other comprehensive (loss) income, net of income taxes ( 11.8 ) 174.8 ( 34.2 ) 169.7

Comprehensive (loss) income ( 47.1 ) 107.7 ( 174.5 ) ( 1,576.5 )

Net income (loss) attributable to noncontrolling interests 8.9 0.1 12.6 ( 5.1 )

Comprehensive (loss) income attributable to common stockholders $ ( 56.0 ) $ 107.6 $ ( 187.1 ) $ ( 1,571.4 )

Other comprehensive loss, net of income taxes ( 11.5 ) ( 11.2 )

Comprehensive loss ( 132.1 ) ( 90.9 )

Net (loss) income attributable to noncontrolling interests ( 1.1 ) 0.4

Comprehensive loss attributable to common stockholders $ ( 131.0 ) $ ( 91.3 )

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Amounts in millions, except per share data)

1 unchanged sentence

Cash and cash equivalents $ 823.3 $ 954.3

Accounts receivable, net of allowance for credit losses of $ 0.0 at September 30, 2021 and December 31, 2020

Inventories 224.5 261.6

Restricted cash

Accounts receivable, net of allowance for credit losses of $ 0.0 at March 31, 2022 and December 31, 2021

Inventories, net 269.1 226.7

Other current assets 331.8 270.2

3 unchanged sentences

Investments and other assets 201.2 162.0

Deferred income taxes — 4.9

Total assets $ 4,943.8 $ 4,949.8

13 unchanged sentences

Preferred Stock — $ 0.01 per share par value;

100.0 shares authorized, no shares issued or outstanding as of September 30, 2021 and December 31, 2020

100.0 shares authorized, no shares issued or outstanding as of March 31, 2022 and December 31, 2021

Series Common Stock — $ 0.01 per share par value;

50.0 shares authorized, no shares issued or outstanding as of September 30, 2021 and December 31, 2020

50.0 shares authorized, no shares issued or outstanding as of March 31, 2022 and December 31, 2021

Common Stock — $ 0.01 per share par value;

450.0 shares authorized, 165.3 shares issued and 122.3 shares outstanding as of September 30, 2021 and 140.5 shares issued and 97.8 shares outstanding as of December 31, 2020

450.0 shares authorized, 187.0 shares issued and 143.8 shares outstanding as of March 31, 2022 and 176.3 shares issued and 133.3 shares outstanding as of December 31, 2021

Additional paid-in capital 3,969.5 3,745.6

Treasury stock, at cost — 43.0 and 42.7 common shares as of September 30, 2021 and December 31, 2020

Treasury stock, at cost — 43.2 and 43.0 common shares as of March 31, 2022 and December 31, 2021

( 1,372.3 ) ( 1,370.3 )

8 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in millions)

1 unchanged sentence

Net loss $ ( 120.6 ) $ ( 79.7 )

(Income) loss from discontinued operations, net of income taxes ( 20.0 ) 6.8

Loss from discontinued operations, net of income taxes 0.8 2.0

Loss from continuing operations, net of income taxes ( 119.8 ) ( 77.7 )

Adjustments to reconcile loss from continuing operations, net of income taxes to net cash used in operating activities:

Adjustments to reconcile loss from continuing operations, net of income taxes to net cash (used in) provided by operating activities:

Depreciation, depletion and amortization 72.9 68.3

2 unchanged sentences

Noncash share-based compensation 2.0 1.8

Asset impairment — 1,418.1

Net gain on disposals ( 28.2 ) ( 10.4 )

Net gain on early debt extinguishment ( 31.3 ) —

Net (gain) loss on disposals ( 4.9 ) 0.6

Net loss (gain) on early debt extinguishment 23.5 ( 3.5 )

(Income) loss from equity affiliates ( 44.7 ) 0.9

11 unchanged sentences

Other, net 3.2 —

Net cash provided by (used in) continuing operations 0.5 ( 9.7 )

Net cash (used in) provided by continuing operations ( 272.5 ) 74.1

Net cash used in discontinued operations ( 1.2 ) ( 3.1 )

Net cash used in operating activities ( 18.4 ) ( 32.1 )

Net cash (used in) provided by operating activities ( 273.7 ) 71.0

PEABODY ENERGY CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in millions)

5 unchanged sentences

Distributions from joint ventures 148.2 102.4

Advances to related parties ( 0.4 ) ( 23.1 )

Cash receipts from Middlemount Coal Pty Ltd and other related parties 47.2 2.3

Other, net ( 0.5 ) ( 1.0 )

Net cash used in investing activities ( 119.7 ) ( 159.4 )

Net cash provided by (used in) investing activities 35.2 ( 93.2 )

Cash Flows From Financing Activities

5 unchanged sentences

Distributions to noncontrolling interests ( 13.8 ) ( 0.1 )

Net cash provided by financing activities 15.9 273.9

Other, net 0.1 0.1

Net cash provided by (used in) financing activities 132.2 ( 63.3 )

Net change in cash, cash equivalents and restricted cash ( 106.3 ) ( 85.5 )

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(Dollars in millions)

5 unchanged sentences

Share-based compensation for equity-classified awards 2.0 1.8

Common stock issued in exchange for debt retirement 27.7 — 58.2 —

Common stock issuances, net of costs 221.9 —

4 unchanged sentences

Balance, end of period ( 1,372.3 ) ( 1,369.5 )

(Accumulated deficit) retained earnings

Accumulated deficit

Balance, beginning of period ( 913.2 ) ( 1,273.3 )

9 unchanged sentences

Balance, beginning of period 59.0 51.7

Net income (loss) attributable to noncontrolling interests 8.9 0.1 12.6 ( 5.1 )

Net (loss) income attributable to noncontrolling interests ( 1.1 ) 0.4

Distributions to noncontrolling interests ( 13.8 ) ( 0.1 )

7 unchanged sentences

Interests in subsidiaries controlled by the Company are consolidated with any outside stockholder interests reflected as noncontrolling interests, except when the Company has an undivided interest in a joint venture.

In those cases, the Company includes its proportionate share in the assets, liabilities, revenues and expenses of the jointly controlled entities within each applicable line item of the unaudited condensed consolidated financial statements.

In those cases, the Company includes its proportionate share in the assets, liabilities, revenue and expenses of the jointly controlled entities within each applicable line item of the unaudited condensed consolidated financial statements.

All intercompany transactions, profits and balances have been eliminated in consolidation.

5 unchanged sentences

Balance sheet information presented herein as of December 31, 2021 has been derived from the Company’s audited consolidated balance sheet at that date.

The Company’s results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2021.

The Company’s results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2022.

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

Newly Adopted Accounting Standards

Equity Method Investments.

In January 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-01, which clarifies the interactions between Accounting Standards Codification (ASC) 321, ASC 323 and ASC 815.

The new guidance addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments.

ASU 2020-01 is effective on January 1, 2021 for calendar year-end public companies.

The Company adopted the requirements effective January 1, 2021.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or disclosures.

Convertible Debt.

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

Among other changes, ASU 2020-06 removes from U.S.

GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.

Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and can be adopted on either a fully retrospective or modified retrospective basis.

The Company adopted ASU 2020-06, effective January 1, 2022.

In the Company’s accompanying condensed consolidated balance sheets, the adoption of the new standard impacted the accounting for the Company’s $ 320.0 million of convertible debt issued in March 2022, as further described in Note 11.

“Long-term Debt.” In particular, because the related senior notes have cash conversion features, bifurcation of the principal balance between debt and equity is no longer applicable.

Additionally, this guidance will require the application of the “if-converted” method to calculate the impact of convertible instruments on diluted earnings per share, which may increase their dilutive impact compared to the prior accounting model.

Accounting Standards Not Yet Implemented

Reference Rate Reform.

In March 2020, ASU 2020-04 was issued, which provides optional guidance for a limited period of time to ease the potential burden on accounting for contract modifications caused by reference rate reform (including reform of the London Interbank Offered Rate (LIBOR) or other reference rate reform).

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

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

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

The Company does not expect the guidance to have a material impact on its consolidated financial statements or disclosures.

(3) Revenue Recognition

Refer to Note 1.

“Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, for the Company’s policies regarding “Revenues” and “Accounts receivable, net.”

In March 2020, ASU 2020-04 was issued, which provides temporary optional expedients to applying the reference rate reform guidance to contracts that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued.

Under this update, contract modifications resulting in a new reference rate may be accounted for as a continuation of the existing contract.

This guidance is effective upon issuance of the update and applies to contract modifications made through December 31, 2022.

The Company has certain debt which utilizes a U.S.

Dollar one-month LIBOR rate, which is expected to be published until June 2023.

The LIBOR rate is likely to be replaced by a similar secured or unsecured overnight financing rate.

The Company cannot estimate the impact of such variable rates on its consolidated financial statements.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Disaggregation of Revenues

Government Assistance.

In November 2021, ASU 2021-10 was issued, which aims to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements.

The guidance is effective for annual periods beginning after December 15, 2021, with early application permitted.

The Company did not early adopt the guidance in ASU 2021-10 and does not expect the guidance to have a material impact on its disclosures.

(3) Revenue Recognition

Refer to Note 1.

“Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for the Company’s policies regarding “Revenue” and “Accounts receivable, net.”

Disaggregation of Revenue

Revenue by product type and market is set forth in the following tables.

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

Three Months Ended September 30, 2021

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

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 41.1 $ — $ 247.3 $ 181.0 $ — $ 469.4

Export 219.4 — — 2.2 — 221.6

Total thermal 260.5 — 247.3 183.2 — 691.0

Metallurgical coal

Export — 176.8 — — — 176.8

Total metallurgical — 176.8 — — — 176.8

0.2 2.7 ( 0.2 ) 1.4 ( 192.9 ) ( 188.8 )

Revenues $ 260.7 $ 179.5 $ 247.1 $ 184.6 $ ( 192.9 ) $ 679.0

Three Months Ended September 30, 2020

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

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 37.1 $ — $ 264.3 $ 172.8 $ — $ 474.2

Export 125.7 — — — — 125.7

Total thermal 162.8 — 264.3 172.8 — 599.9

Metallurgical coal

Export — 78.4 — — — 78.4

Total metallurgical — 78.4 — — — 78.4

0.2 0.4 0.5 7.0 ( 15.4 ) ( 7.3 )

Revenues $ 163.0 $ 78.8 $ 264.8 $ 179.8 $ ( 15.4 ) $ 671.0

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

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

5 unchanged sentences

Metallurgical coal

Domestic — 2.7 — — — 2.7

Export — 318.0 — — — 318.0

1 unchanged sentence

0.3 3.3 ( 0.3 ) 3.2 ( 335.4 ) ( 328.9 )

Revenues $ 631.2 $ 388.0 $ 724.1 $ 496.0 $ ( 185.6 ) $ 2,053.7

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nine Months Ended September 30, 2020

Revenue $ 251.2 $ 321.3 $ 251.2 $ 203.1 $ ( 335.4 ) $ 691.4

Three Months Ended March 31, 2021

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

8 unchanged sentences

0.4 0.9 — 2.5 9.7 13.5

Revenues $ 526.1 $ 363.6 $ 737.2 $ 524.1 $ ( 7.1 ) $ 2,143.9

(1) Corporate and Other revenue includes net losses related to unrealized mark-to-market adjustments on derivatives related to forecasted sales and other financial trading activity of $ 238.4 million and $ 16.1 million during the three months ended September 30, 2021 and 2020, respectively, and $ 263.2 million and $ 13.7 million during the nine months ended September 30, 2021 and 2020, respectively.

Revenue $ 176.4 $ 87.5 $ 228.4 $ 149.3 $ 9.7 $ 651.3

(1) Corporate and Other revenue includes net losses related to unrealized mark-to-market adjustments on derivatives related to forecasted sales and other financial trading activity of $ 290.2 million and $ 4.9 million during the three months ended March 31, 2022 and 2021, respectively.

Refer to Note 7.

“Derivatives and Fair Value Measurements” for additional information.

Also included in Corporate and Other revenue are revenues with customers of $ 55.5 million and $ 97.3 million during the three and nine months ended September 30, 2021, respectively, and ($ 13.0 ) million and ($ 32.1 ) million during the three and nine months ended September 30, 2020, respectively.

(2) Other includes revenues from arrangements such as customer contract-related payments associated with volume shortfalls, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals.

The Company recorded revenue related to delivered coal to customers of approximately $ 923 million and $ 665 million during the three months ended September 30, 2021 and 2020, respectively, and approximately $ 2,327 million and $ 2,093 million during the nine months ended September 30, 2021 and 2020, respectively.

Such amounts exclude unrealized and realized gains and losses on derivative contracts related to forecasted sales and certain other revenues unrelated to delivered coal.

Also included in Corporate and Other revenue is revenue with customers of $ 19.0 million and $ 17.9 million during the three months ended March 31, 2022 and 2021, respectively.

(2) Other includes revenue from arrangements such as customer contract-related payments associated with volume shortfalls, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recorded revenue related to delivered coal to customers of approximately $ 1,039 million and $ 656 million during the three months ended March 31, 2022 and 2021, respectively.

Such amounts exclude unrealized and realized gains and losses on derivative contracts related to forecasted sales and certain other revenue unrelated to delivered coal.

Committed Revenue from Contracts with Customers

The Company expects to recognize revenue subsequent to September 30, 2021 of approximately $ 4.6 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at September 30, 2021.

The Company expects to recognize revenue subsequent to March 31, 2022 of approximately $ 5.1 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at March 31, 2022.

Approximately 48 % of such amount is expected to be recognized over the next twelve months and the remainder thereafter.

2 unchanged sentences

Accounts Receivable

“Accounts receivable, net” at September 30, 2021 and December 31, 2020 consisted of the following:

September 30, 2021 December 31, 2020

“Accounts receivable, net” at March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022 December 31, 2021

(Dollars in millions)

2 unchanged sentences

Accounts receivable, net $ 357.4 $ 350.5

Trade receivables, net included no allowance for credit losses as of both September 30, 2021 and December 31, 2020.

Miscellaneous receivables, net included no allowance for credit losses as of both September 30, 2021 and December 31, 2020.

Charges for credit losses of less than $ 0.1 million were recognized during the nine months ended September 30, 2021.

No charges for credit losses were recognized during the three months ended September 30, 2021 and 2020 or during the nine months ended September 30, 2020.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

None of the above receivables included allowances for credit losses at March 31, 2022 or December 31, 2021.

No charges for credit losses were recognized during the three months ended March 31, 2022 or 2021.

(4) Discontinued Operations

Discontinued operations include certain former Seaborne Thermal Mining and Other U.S.

Historically, discontinued operations included certain former Seaborne Thermal Mining and Other U.S.

Thermal Mining segment assets that have ceased production and other previously divested legacy operations, including Patriot Coal Corporation and certain of its wholly-owned subsidiaries (Patriot).

In the third quarter of 2021, the Company executed the sale of the closed Wilkie Creek Mine, which reduced its closed mine reclamation liabilities and associated costs.

Refer to Note 14.

“Other Events” for additional information associated with the Company’s sale of the Wilkie Creek Mine.

Summarized Results of Discontinued Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(Dollars in millions)

Income (loss) from discontinued operations, net of income taxes $ 24.3 $ ( 2.3 ) $ 20.0 $ ( 6.8 )

Loss from discontinued operations, net of income taxes $ ( 0.8 ) $ ( 2.0 )

Liabilities of Discontinued Operations

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in millions)

2 unchanged sentences

Total liabilities classified as discontinued operations $ 103.7 $ 104.0

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Patriot-Related Matters

13 unchanged sentences

however, Patriot rejected this indemnity in its May 2015 bankruptcy.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

By statute, the Company had secondary liability for the black lung liabilities related to Patriot’s workers employed by former subsidiaries of the Company.

4 unchanged sentences

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

The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $ 89.7 million and $ 90.1 million at September 30, 2021 and December 31, 2020, respectively.

The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $ 87.1 million and $ 87.2 million at March 31, 2022 and December 31, 2021, respectively.

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

2 unchanged sentences

(5) Inventories

Inventories as of September 30, 2021 and December 31, 2020 consisted of the following:

September 30, 2021 December 31, 2020

“ Inventories, net” as of March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022 December 31, 2021

(Dollars in millions)

Materials and supplies $ 98.3 $ 102.6

Materials and supplies, net $ 112.8 $ 102.1

Raw coal 46.9 54.6

Saleable coal 109.4 70.0

Total $ 224.5 $ 261.6

Materials and supplies inventories presented above have been shown net of reserves of $ 9.8 million and $ 10.4 million as of September 30, 2021 and December 31, 2020, respectively.

Inventories, net $ 269.1 $ 226.7

Materials and supplies inventories, net presented above have been shown net of reserves of $ 9.0 million as of both March 31, 2022 and December 31, 2021.

(6) Equity Method Investments

The Company had total equity method investments and financing receivables of $ 26.8 million and $ 24.6 million reflected in “Investments and other assets” in the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively, related to Middlemount Coal Pty Ltd (Middlemount).

Included in “(Income) loss from equity affiliates” in the unaudited condensed consolidated statements of operations were gains related to Middlemount of $ 15.8 million and $ 11.4 million during the three and nine months ended September 30, 2021, respectively, and losses of $ 10.6 million and $ 25.7 million during the three and nine months ended September 30, 2020, respectively.

The Company received cash payments from Middlemount of $ 7.6 million during the nine months ended September 30, 2021.

No payments were received from from Middlemount during the nine months ended September 30, 2020.

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

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

At September 30, 2021, the revolving loan limit was $ 160 million Australian dolla rs and the Revolving Loans were not fully drawn upon by Middlemount.

The Revolving Loans bear interest at 10 % per annum and expire on December 31, 2021.

T he value of the portion of the Revolving Loans due to the Company’s Australian subsidiary was $ 35.7 million and $ 46.2 million as of September 30, 2021 and December 31, 2020, respectively, with the decreas e during the nine months ended September 30, 2021 primarily attributable to payments made by Middlemount.

As of both September 30, 2021 and December 31, 2020, the financing receivables and Revolving Loans are accounted for as in-substance common stock due to the limited fair value attributed to Middlemount’s equi ty.

The Company had total equity method investments and financing receivables of $ 62.9 million and $ 62.2 million reflected in “Investments and other assets” in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively, related to Middlemount Coal Pty Ltd (Middlemount).

Included in “(Income) loss from equity affiliates” in the unaudited condensed consolidated statements of operations were gains related to Middlemount of $ 45.1 million during the three months ended March 31, 2022, and losses of $ 0.9 million during the three months ended March 31, 2021.

The Company received cash payments from Middlemount of $ 47.0 million and $ 2.3 million during the three months ended March 31, 2022 and 2021, respectively.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s participation in the Revolving Loans will not, at any time, exceed its 50 % equity interest of the revolving loan limit, which was $ 50 million Australian dolla rs at March 31, 2022.

The Revolving Loans bear interest at 10 % per annum and expire on December 31, 2023.

T he Revolving Loans were not drawn upon by Middlemount as of either March 31, 2022 or December 31, 2021.

As of both March 31, 2022 and December 31, 2021, the financing receivables and Revolving Loans are accounted for as in-substance common stock due to the limited fair value attributed to Middlemount’s equi ty.

(7) Derivatives and Fair Value Measurements

3 unchanged sentences

Except those contracts for which the Company has elected to apply a normal purchases and normal sales exception, all derivative coal trading contracts are accounted for at fair value.

The Company had no diesel fuel or interest rate derivatives in place as of September 30, 2021.

The Company had no diesel fuel or interest rate derivatives in place as of March 31, 2022.

Foreign Currency Option Contracts

As of September 30, 2021, the Company had currency options outstanding with an aggregate notional amount of $ 595.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the nine-month period ending June 30, 2022.

As of March 31, 2022, the Company had currency options outstanding with an aggregate notional amount of $ 705.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the nine-month period ending December 31, 2022.

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

dollar exchange rate exceed amounts ranging from $ 0.77 to $ 0.81 over the nine-month period ending June 30, 2022.

dollar exchange rate exceed amounts ranging from $ 0.76 to $ 0.80 over the nine-month period ending December 31, 2022.

Derivative Contracts Related to Forecasted Sales

As of September 30, 2021, the Company held coal derivative contracts related to a portion of its forecasted sales with an aggregate notional volume of 2.9 million tonnes.

As of March 31, 2022, the Company held coal derivative contracts related to a portion of its forecasted sales with an aggregate notional volume of 1.6 million tonnes.

Such financial contracts may include futures, forwards and options.

1 unchanged sentence

Of this total, 0.6 million tonnes will settle in 2022 and 0.7 million tonnes will settle in 2023 at expected average pricing of approximately $ 84 per tonne (Newcastle index).

The remaining 0.8 million tonnes aggregate notional volume related to other coal financial contracts will settle in the fourth quarter of 2021 ( 0.2 million tonnes) and 2022 ( 0.6 million tonnes).

The remaining 0.3 million tonnes aggregate notional volume related to other coal financial contracts will settle in 2022.

Additionally, the Company classifies certain physical forward sales contracts as derivatives for which the normal purchase, normal sales exception does not apply.

During the three months ended September 30, 2021, the Company recorded an unrealized mark-to-market loss of $ 238.4 million on these coal derivative contracts, which includes approximately $ 183 million of unrealized mark-to-market losses on financial derivatives, and approximately $ 55 million on physical forward sales contracts.

During the three months ended March 31, 2022, the Company recorded an unrealized mark-to-market loss of $ 301.0 million on these coal derivative contracts, which includes approximately $ 237 million of unrealized mark-to-market losses on financial derivatives, and approximately $ 64 million on physical forward sales contracts.

Financial Trading Contracts

1 unchanged sentence

Such financial contracts may include futures, forwards and options.

The Company held nominal financial trading contracts as of September 30, 2021.

The Company held nominal financial trading contracts as of March 31, 2022.

PEABODY ENERGY CORPORATION

5 unchanged sentences

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

September 30, 2021 December 31, 2020 (1)

March 31, 2022 December 31, 2021

Asset Derivative Liability Derivative Asset Derivative Liability Derivative

7 unchanged sentences

Net derivatives and variation margin as classified in the balance sheets $ 6.3 $ ( 64.3 ) $ 1.4 $ ( 29.5 )

(1) Certain comparative amounts have been reclassified to conform with the 2021 presentation.

The reclassifications do not impact the prior year presentation of the accompanying condensed consolidated balance sheets.

The Company generally posts or receives variation margin cash with its clearing broker on the majority of its financial derivatives as market values of the financial derivatives fluctuate.

As of September 30, 2021, the Company had posted $ 239.6 million aggregate margin cash, consisting of $ 214.3 million variation margin cash and $ 25.3 million initial margin.

As of March 31, 2022, the Company had posted $ 481.7 million aggregate margin cash, consisting of $ 347.1 million variation margin cash and $ 134.6 million initial margin.

As of December 31, 2021, the Company had posted $ 130.1 million aggregate margin cash, consisting of $ 91.8 million variation margin cash and $ 38.3 million initial margin.

The net amount of asset derivatives, net of variation margin, are included in “Other current assets” and the net amount of liability derivatives, net of variation margin, are included in “Accounts payable and accrued expenses” in the accompanying condensed consolidated balance sheets.

To reduce exposure to additional margin requirements, subsequent to March 31, 2022, the Company converted 0.8 million metric tons of financial hedges into fixed price physical sales over the next 12 months, eliminating further margin requirements on these tons.

With these transactions, 1.4 million metric tons remain outstanding with 0.9 million metric tons projected to settle over the remainder of 2022.

The net amount of asset derivatives, net of variation margin, is included in “Other current assets” and the net amount of liability derivatives, net of variation margin, is included in “Accounts payable and accrued expenses” in the accompanying condensed consolidated balance sheets.

The amounts of initial margin are not included with the derivatives presented in the tabular disclosures above and are included in “Other current assets” in the accompanying condensed consolidated balance sheets.

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

The tables below show the amounts of pre-tax gains and losses related to the Company’s derivatives and their classification within the accompanying unaudited condensed consolidated statements of operations.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended September 30, 2021

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

Derivative Instrument Classification

(Dollars in millions)

Foreign currency option contracts Operating costs and expenses $ ( 1.0 ) $ ( 1.6 ) $ 0.6

Derivative contracts related to forecasted sales Revenues ( 251.5 ) ( 13.1 ) ( 238.4 )

Financial trading contracts Revenues 0.7 0.7 —

Total $ ( 251.8 ) $ ( 14.0 ) $ ( 237.8 )

Three Months Ended September 30, 2020 (1)

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

Derivative Instrument Classification

(Dollars in millions)

Foreign currency option contracts Operating costs and expenses $ 3.9 $ 3.2 $ 0.7

Derivative contracts related to forecasted sales Revenues ( 3.3 ) 12.8 ( 16.1 )

Financial trading contracts Revenues ( 0.2 ) ( 0.2 ) —

Total $ 0.4 $ 15.8 $ ( 15.4 )

Nine Months Ended September 30, 2021

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

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

Three Months Ended March 31, 2022

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

Derivative Instrument Classification

1 unchanged sentence

Foreign currency option contracts Operating costs and expenses $ 2.3 $ ( 1.0 ) $ 3.3

Derivative contracts related to forecasted sales Revenues ( 292.1 ) ( 28.1 ) ( 264.0 )

Financial trading contracts Revenues 1.4 0.6 0.8

Derivative contracts related to forecasted sales Revenue ( 369.0 ) ( 68.0 ) ( 301.0 )

Financial trading contracts Revenue 10.1 ( 0.7 ) 10.8

Total $ ( 356.6 ) $ ( 69.7 ) $ ( 286.9 )

Nine Months Ended September 30, 2020 (1)

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

Three Months Ended March 31, 2021 (1)

Total loss recognized in income Gain (loss) realized in income on derivatives Unrealized loss recognized in income on derivatives

Derivative Instrument Classification

1 unchanged sentence

Foreign currency option contracts Operating costs and expenses $ ( 2.9 ) $ 4.7 $ ( 7.6 )

Derivative contracts related to forecasted sales Revenues 19.6 30.9 ( 11.3 )

Financial trading contracts Revenues ( 0.5 ) 1.9 ( 2.4 )

Derivative contracts related to forecasted sales Revenue ( 9.7 ) ( 7.9 ) ( 1.8 )

Financial trading contracts Revenue ( 0.7 ) 2.4 ( 3.1 )

Total $ ( 13.3 ) $ ( 0.8 ) $ ( 12.5 )

(1) 2020 ‘gain/(loss) realized in income on derivatives’ has been revised to exclude revenues arising from coal deliveries earned by the Company’s trading and brokerage function of ($ 13.0 ) million and ($ 32.1 ) million for the three and nine month periods ending September 30, 2020, respectively, to be comparable to the presentation of the 2021 amounts.

(1) ‘Results realized in income on derivatives’ has been revised to exclude revenue arising from coal deliveries earned by the Company’s trading and brokerage function of $ 17.9 million for the three months ended March 31, 2021, to be comparable to the presentation of the 2022 amounts.

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

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

4 unchanged sentences

and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

As noted below, variation margin cash associated with the derivative balances is excluded from this table.

September 30, 2021

Variation margin cash associated with the derivative balances is excluded from this table.

March 31, 2022

Level 1 Level 2 Level 3 Total

12 unchanged sentences

Equity securities — — 4.0 4.0

Total net assets $ — $ 2.8 $ 4.0 $ 6.8

(1) December 31, 2020 ‘total net assets’ has been revised to exclude $ 6.5 million variation margin cash for comparability to 2021 presentation.

Variation margin cash was $ 214.3 million as of September 30, 2021.

Total net (liabilities) assets $ — $ ( 119.9 ) $ 4.0 $ ( 115.9 )

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker/dealer quotes, published indices, issuer spreads, benchmark securities and other market quotes.

5 unchanged sentences

Other Financial Instruments .

The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of September 30, 2021 and December 31, 2020:

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

The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of March 31, 2022 and December 31, 2021:

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

• Long-term debt fair value estimates are based on observed prices for securities when available (Level 2), and otherwise on estimated borrowing rates to discount the cash flows to their present value (Level 3).

3 unchanged sentences

The fair value of debt, shown below, is principally based on reported market values and estimates based on interest rates, maturities, credit risk, underlying collateral and completed market transactions.

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in millions)

3 unchanged sentences

Estimated fair value $ 1,277.3 $ 1,136.5

The Company’s risk management function, which is independent of the Company’s coal trading function, is responsible for valuation policies and procedures, with oversight from executive management.

The fair value of the Company’s coal derivative assets and liabilities reflects adjustments for credit risk.

The Company’s exposure is substantially with electric utilities, energy marketers, steel producers and nonfinancial trading houses.

The Company had no transfers between Levels 1, 2 and 3 during the three and nine months ended September 30, 2021 and 2020.

Generally, the Company’s Level 3 instruments or contracts are valued using bid/ask price quotations and other market assessments obtained from multiple, independent third-party brokers or other transactional data incorporated into internally-generated discounted cash flow models.

Decreases in the number of third-party brokers or market liquidity could erode the quality of market information and therefore the valuation of the Company’s market positions.

The Company’s valuation techniques include basis adjustments to the foregoing price inputs for quality, such as sulfur and ash content, location differentials, expressed as port and freight costs, and credit risk.

The Company’s risk management function independently validates the Company’s valuation inputs, including unobservable inputs, with third-party information and settlement prices from other sources where available.

A daily process is performed to analyze market price changes and changes to the portfolio.

Further periodic validation occurs at the time contracts are settled with the counterparty.

These valuation techniques have been consistently applied in all periods presented, and the Company believes it has obtained the most accurate information available for the types of derivative contracts held.

Significant increases or decreases in the inputs in isolation could result in a significantly higher or lower fair value measurement.

The unobservable inputs do not have a direct interrelationship;

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

The Company had no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2022 and 2021.

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

(8) Property, Plant, Equipment and Mine Development

The composition of property, plant, equipment and mine development, net, as of September 30, 2021 and December 31, 2020 is set forth in the table below:

September 30, 2021 December 31, 2020

The composition of property, plant, equipment and mine development, net, as of March 31, 2022 and December 31, 2021 is set forth in the table below:

March 31, 2022 December 31, 2021

(Dollars in millions)

5 unchanged sentences

Asset Impairment and Other At-Risk Assets

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

Of this amount, $ 1,393.7 million related to the property, plant, equipment and mine development assets;

$ 19.9 million related to operating lease right-of-use assets;

and $ 4.5 million related to contract-based intangible assets.

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

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

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

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

No asset impairment charges were recorded during the three and nine months ended September 30, 2021 or the three months ended September 30, 2020.

The Company has identified certain assets with an aggregate carrying value of approximately $ 1.1 billion at September 30, 2021 in its Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S.

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

The Company conducted a review of those assets as of September 30, 2021 and determined that no impairment charges were necessary as of that date.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has identified certain assets with an aggregate carrying value of approximately $ 0.5 billion at March 31, 2022 in its Other U.S.

Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to customer demand, customer concentration risk and future economic viability.

The Company conducted a review of those assets as of March 31, 2022 and determined that no impairment charges were necessary as of that date.

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

2 unchanged sentences

“Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for the Company’s policies regarding “Leases.”

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company and certain of its subsidiaries have guaranteed other subsidiaries’ performance under various lease obligations.

3 unchanged sentences

Aside from indemnification of the lessor for the value of the property leased, the Company’s maximum potential obligations under its leases are equal to the respective future minimum lease payments, and the Company assumes that no amounts could be recovered from third parties.

The components of lease expense during the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The components of lease expense during the three months ended March 31, 2022 and 2021 were as follows:

Three Months Ended March 31,

(Dollars in millions)

11 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental balance sheet information related to leases at September 30, 2021 and December 31, 2020 was as follows:

September 30, 2021 December 31, 2020

Supplemental balance sheet information related to leases at March 31, 2022 and December 31, 2021 was as follows:

March 31, 2022 December 31, 2021

(Dollars in millions)

17 unchanged sentences

Finance leases 8.2 %

Supplemental cash flow information related to leases during the three and nine months ended September 30, 2021 and 2020 was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Supplemental cash flow information related to leases during the three months ended March 31, 2022 and 2021 was as follows:

Three Months Ended March 31,

(Dollars in millions)

14 unchanged sentences

2023 17.6 6.0

2023 16.8 5.6

2027 and thereafter 0.8 7.2

3 unchanged sentences

(10) Income Taxes

The Company's effective tax rate before remeasurement for the nine months ended September 30, 2021 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance.

The Company’s income tax benefit of $ 3.7 million and $ 0.1 million for the three months ended September 30, 2021 and 2020, respectively, included a tax benefit of $ 1.1 million and a tax provision of $ 1.1 million, respectively, related to the remeasurement of foreign income tax accounts.

The Company’s income tax benefit of $ 10.3 million and income tax provision of $ 2.7 million for the nine months ended September 30, 2021 and 2020, respectively, included a tax benefit of $ 1.6 million and a tax provision of $ 0.4 million, respectively, related to the remeasurement of foreign income tax accounts.

As described in Note 11.

“Long-term Debt,” the Company completed the Refinancing Transactions (as defined below), which included a senior notes exchange and related consent solicitation, a revolving credit facility exchange and various amendments to existing debt agreements.

Generally, absent an exception, for U.S.

tax purposes a debtor recognizes cancellation of debt income (CODI) upon discharge of its outstanding indebtedness for an amount of consideration less than the adjusted issue price of such indebtedness.

The Company recognized CODI from the Refinancing Transactions of approximately $ 60 million, and the income will be offset by the Company’s operating losses.

The Company's effective tax rate before remeasurement for the three months ended March 31, 2022 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance.

The Company’s income tax benefit of $ 1.0 million and $ 1.8 million for the three months ended March 31, 2022 and 2021, respectively, included a tax provision of $ 1.6 million and a tax benefit of $ 0.2 million, respectively, related to the remeasurement of foreign income tax accounts.

(11) Long-term Debt

The Company’s total funded indebtedness (Indebtedness) as of September 30, 2021 and December 31, 2020 consisted of the following:

Debt Instrument (defined below, as applicable) September 30, 2021 December 31, 2020

The Company’s total funded indebtedness (Indebtedness) as of March 31, 2022 and December 31, 2021 consisted of the following:

Debt Instrument (defined below, as applicable) March 31, 2022 December 31, 2021

(Dollars in millions)

6.000 % Senior Secured Notes due March 2022 (2022 Notes)

$ 23.1 $ 459.0

8.500 % Senior Secured Notes due December 2024 (2024 Peabody Notes)

10.000 % Senior Secured Notes due December 2024 (2024 Co-Issuer Notes)

6.375 % Senior Secured Notes due March 2025 (2025 Notes)

Senior Secured Term Loan due 2024 (Co-Issuer Term Loans) 188.8 206.0

6.375 % Senior Secured Notes due March 2025 (2025 Notes)

Senior Secured Term Loan due 2025, net of original issue discount (Senior Secured Term Loan) 321.8 322.8

Revolving credit facility — 216.0

3.250 % Convertible Senior Notes due March 2028 (2028 Convertible Notes)

Finance lease obligations 27.6 29.3

3 unchanged sentences

Long-term debt $ 1,079.0 $ 1,078.2

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Refinancing Transactions

On January 29, 2021 (the Settlement Date), the Company completed a series of transactions (collectively, the Refinancing Transactions) to, among other things, provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term 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 the Company’s existing debt agreements, as summarized below.

As further discussed in Note 16.

“Financial Instruments and Other Guarantees,” upon completion of the Refinancing Transactions, the surety transaction support agreement (Surety Agreement) entered into with the Company’s surety bond providers in November 2020 became effective.

On the Settlement Date, the Company settled an exchange offer (Exchange Offer) pursuant to which $ 398.7 million aggregate principal amount of the Company’s 6.000 % Senior Secured Notes due March 2022 (the 2022 Notes) were validly tendered, accepted by the Company and exchanged for aggregate consideration consisting of (a) $ 193.9 million aggregate principal amount of new 10.000 % Senior Secured Notes due December 2024 (Co-Issuer Notes) issued by certain wholly-owned subsidiaries of the Company (the Co-Issuers), (b) $ 195.1 million aggregate principal amount of new 8.500 % Senior Secured Notes due December 2024 issued by the Company (Peabody Notes) and (c) a cash payment of approximately $ 9.4 million.

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

The Company’s Wilpinjong Mine in Australia is owned and operated by a subsidiary of the Co-Issuers.

The Exchange Offer was accounted for as a debt modification based upon the relative similarity of the present value of the future cash flows of the instruments.

As such, no gain or loss was recorded in connection with the Exchange Offer.

Fees paid to third parties of $ 10.6 million were included in “Interest expense” in the accompanying unaudited condensed consolidated statements of operations during the nine months ended September 30, 2021.

Concurrently with the Exchange Offer, the Company solicited consents from holders of the 2022 Notes to certain proposed amendments to its existing senior notes’ indenture (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.

In connection with the Refinancing Transactions, the Company restructured the revolving loans under its existing credit agreement (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 (Co-Issuer Term Loans, Co-Issuer Term Loan Agreement), (iii) the Company entering into a letter of credit facility (the Company LC Agreement) and (iv) amending the Credit Agreement (collectively, the Revolver Transactions).

Co-Issuer Notes

The terms of the Co-Issuer Notes are governed by an indenture, as amended and restated as of February 3, 2021, by and among the Co-Issuers, Wilmington Trust, National Association, as trustee, and, on a limited basis, the Company (Co-Issuer Notes Indenture).

The Co-Issuer Notes mature on December 31, 2024 and bear interest at an annual rate of 10.000 %.

The Company paid aggregate debt issuance costs of $ 5.6 million, which are being amortized over the terms of the notes.

Beginning March 31, 2021, interest is payable on March 31, June 30, September 30 and December 31 of each year.

During the three and nine months ended September 30, 2021, the Company recorded interest expense of $ 5.4 million and $ 14.3 million, respectively, related to the Co-Issuer Notes.

The Co-Issuer Notes are subject to amortization at the end of each six-month period, beginning with June 30, 2021, whereby the Excess Cash Flow (as defined in the Co-Issuer Notes Indenture) generated by the Wilpinjong Mine during each such period will be applied to the principal of the Co-Issuer Notes and the Co-Issuer Term Loans on a pro rata basis, provided that the liquidity attributable to the Co-Issuers would not fall below $ 60.0 million.

The Co-Issuer Notes Indenture contains customary covenants that, among other things, limit the Co-Issuers’ and their subsidiaries’ ability to incur additional Indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets, and place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Co-Issuers.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Co-Issuer Notes are not guaranteed by any of the Co-Issuers’ subsidiaries and thus are structurally subordinated to any existing or future Indebtedness or other liabilities, including trade payables, of any such subsidiaries.

The Co-Issuer Notes initially are secured by liens on substantially all of the assets of the Co-Issuers, including by (i) 100 % of the capital stock of PIC Acquisition Corp.

owned by PIC AU Holdings LLC and (ii) all other property subject or purported to be subject, from time to time, to a lien under the Co-Issuers’ collateral trust agreement (collectively, the Wilpinjong Collateral).

The Co-Issuers may redeem some or all of the Co-Issuer Notes at the redemption prices and on the terms specified in the Co-Issuer Notes Indenture.

The Co-Issuer Notes Indenture contains certain events of default, including, in certain circumstances, (i) specified events occurring at the Wilpinjong Mine, (ii) the termination or certain modifications of the Surety Agreement, (iii) the Company’s failure to comply with any obligation under the transaction support agreement entered into prior to, and in contemplation of, the Refinancing Transactions and (iv) the termination of the management services agreements between the Company and the Co-Issuers.

If the Co-Issuer Notes are accelerated or otherwise become due and payable as a result of an event of default, certain additional premium amounts may become due and payable in addition to unpaid principal and interest at the time of acceleration.

In addition, the holders of the Co-Issuer Notes have the right, under certain circumstances specified in the Co-Issuer Notes Indenture, to exchange their Co-Issuer Notes for Peabody Notes.

Peabody Notes

The terms of the Peabody Notes are governed by an indenture, as amended and restated as of February 3, 2021, by and among Peabody, the guarantors party thereto, and Wilmington Trust, National Association, as trustee (the Peabody Notes Indenture).

The Peabody Notes mature on December 31, 2024.

The Company paid aggregate debt issuance costs of $ 5.7 million, which are being amortized over the terms of the notes.

The Peabody Notes bear interest at an annual rate of 8.500 %, consisting of 6.000 % per annum in cash and an additional 2.500 % per annum to be paid-in-kind through an increase of the principal amount of the outstanding Peabody Notes, which is payable on June 30 and December 31 of each year, commencing on June 30, 2021.

During the three and nine months ended September 30, 2021, the Company recorded interest expense of $ 3.8 million and $ 10.8 million, respectively, related to the Peabody Notes, which included in-kind interest of approximately $ 0.8 million and $ 2.4 million, respectively.

As a requirement of the Exchange Offer, during the three months ended March 31, 2021, the Company purchased $ 22.4 million of the Peabody Notes at 80 % of their accreted value, plus accrued and unpaid interest.

In connection with the purchases, the Company recognized a net gain of $ 3.5 million to “Net gain on early debt extinguishment” during the nine months ended September 30, 2021.

The notes were subsequently canceled.

The Peabody Notes Indenture contains customary covenants that, among other things, limit the Company’s and its restricted subsidiaries’ ability to incur additional Indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from restricted subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of its assets, and place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company.

The Peabody Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by the Peabody Guarantors (as defined below) on the Peabody Collateral (as defined below).

The obligations are secured on a pari passu basis by the same collateral that secures the 6.375 % Senior Secured Notes due March 2025 (the 2025 Notes), the Credit Agreement and the Company LC Agreement described below.

Co-Issuer Term Loans

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

The Company paid aggregate debt issuance costs of $ 7.1 million, that are being amortized over its term.

During the three and nine months ended September 30, 2021, the Company recorded interest expense of $ 5.7 million and $ 14.9 million, respectively, related to the Co-Issuer Term Loans.

2021 Financing Activity

During the first quarter of 2021, the Company completed a series of transactions to, among other things, provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity and financial flexibility.

These transactions included a senior notes exchange and related consent solicitation, a revolving credit facility exchange, various amendments to the Company’s existing debt agreements, and completion of a related surety transaction support agreement with the Company’s surety bond providers.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Co-Issuer Term Loan Agreement contains customary covenants that, among other things, limit the Co-Issuers’ and their subsidiaries’ ability to incur additional Indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets, and place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Co-Issuers.

The Co-Issuer Term Loan Agreement is guaranteed and secured to the same extent as the Co-Issuer Notes as described above.

In addition, the Co-Issuer Term Loan Agreement contains events of default substantially similar to those described above for the Co-Issuer Notes Indenture.

Company LC Agreement

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

The Company paid aggregate debt issuance costs of $ 4.1 million.

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

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

During the three and nine months ended September 30, 2021, the Company recorded interest expense and fees of $ 6.0 million and $ 15.9 million, respectively, related to the Company LC Agreement.

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

The Company LC Agreement requires that the Company’s 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, its subsidiaries and other unrestricted subsidiaries is excluded from the calculation.

The Company LC Agreement is guaranteed and secured to the same extent of the Peabody Notes as described above.

In addition, the Company LC Agreement contains events of default substantially similar to those described above for the Peabody Notes.

The Peabody Notes Indenture and the Company LC Agreement allow the Company to make open market debt repurchases, subject to certain limitations, including, but not limited to:

(i) the Company’s unrestricted subsidiaries’ liquidity must be greater than or equal to $ 200.0 million after giving effect to such repurchases and (ii) for every $ 4 of principal repurchased in any fiscal quarter, the Company must make an offer on a pro rata basis to purchase $ 1 of principal amount of debt from holders of the Peabody Notes and the priority lien obligations under the Company LC Agreement within 30 days of the end of such fiscal quarter at a price equal to the weighted average repurchase price paid over that quarter (Mandatory Repurchase Offer).

6.375 % Senior Secured Notes

On February 15, 2017, the Company entered into the Existing Indenture with Wilmington Trust, National Association, as trustee, relating to its issuance of $ 500.0 million aggregate principal amount of the 2025 Notes.

The 2025 Notes were issued on February 15, 2017 in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act).

The 2025 Notes were issued at par value.

The Company paid aggregate debt issuance costs of $ 25.1 million related to the offering, which are being amortized over the term of the 2025 Notes.

Interest payments on the 2025 Notes are scheduled to occur each year on March 31 and September 30 until maturity.

The Company recorded interest expense of $ 9.5 million and $ 9.2 million during the three months ended September 30, 2021 and 2020, respectively, and $ 27.9 million and $ 27.5 million during the nine months ended September 30, 2021 and 2020, respectively, related to the 2025 Notes.

With respect to the 2025 Notes, the Existing Indenture contains customary conditions of default and imposes certain restrictions on the Company’s activities, including its ability to incur debt, incur liens, make investments, engage in fundamental changes such as mergers and dissolutions, dispose of assets, enter into transactions with affiliates and make certain restricted payments, such as cash dividends and share repurchases.

Subsequent to these transactions in the first quarter of 2021, the Company completed additional financing transactions during 2021 intended to improve its capital structure.

Such transactions included the implementation of an at-the-market equity offering program pursuant to which the Company sold approximately 24.8 million shares of common stock for net cash proceeds of $ 269.8 million, the retirement of $ 270.9 million principal amount of existing debt through various open market purchases at an aggregate cost of $ 232.4 million, and the issuance of an aggregate 10.0 million shares of common stock in exchange for an additional $ 106.1 million principal amount of existing debt through multiple bilateral transactions with debt holders.

In the event of allowable open market purchases of its debt, the terms of the 2024 Peabody Notes and the letter of credit facility entered into by the Company in connection with the 2021 financing activity (Company LC Agreement) require the Company to make a mandatory repurchase offer to those debt and lien holders.

In general, the repurchase offers equate to 25 % of the principal amount of priority lien debt repurchased in the preceding quarter at a price equal to the weighted average repurchase price paid over that quarter.

The open market debt repurchases completed during the three months ended December 31, 2021 necessitated a mandatory repurchase offer of up to $ 38.6 million of 2024 Peabody Notes, at 94.940 % of their aggregate accreted value, plus accrued and unpaid interest, and a concurrent repurchase offer of priority lien obligations under the Company LC Agreement.

The offer resulted in the valid tender and purchase of $ 0.1 million aggregate accreted value of 2024 Peabody Notes and $ 30.0 million aggregate principal and commitment amounts under the Company LC Agreement during the three months ended March 31, 2022.

The Company’s purchase of the principal and commitment amounts under the Company LC Agreement was effected by the posting of $ 28.5 million of collateral with the administrative agent and did not reduce the availability under the facility.

During the three months ended March 31, 2022, the Company made no other open market purchases of its debt.

The 2024 Co-Issuer Notes and the Co-Issuer Term Loans are also subject to mandatory prepayment offers at the end of each six-month period, beginning with June 30, 2021, whereby the Excess Cash Flow (as defined in the 2024 Co-Issuer Notes indenture) generated by the Wilpinjong Mine during each such period will be applied to the principal of such notes and loans on a pro rata basis, provided that the liquidity attributable to the Wilpinjong Mine would not fall below $ 60.0 million.

Such prepayments may be accepted or declined at the option of the debt holders.

Based upon the Wilpinjong Mine’s results for the six-month period ended December 31, 2021, a required offer to prepay $ 105.6 million of total principal resulted in the prepayment of $ 17.2 million of Co-Issuer Term Loans principal, $ 0.3 million of 2024 Co-Issuer Notes principal, and a related loss on early debt extinguishment of $ 0.5 million during the three months ended March 31, 2022.

The 2021 financing activity and related agreements are more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S.

Securities and Exchange Commission on February 18, 2022.

3.250 % Convertible Senior Notes due 2028

On March 1, 2022, through a private offering, the Company issued $ 320.0 million in aggregate principal amount of 3.250 % Convertible Senior Notes due 2028 (the 2028 Convertible Notes).

The 2028 Convertible Notes are senior unsecured obligations of the Company and are governed under an indenture.

The Company used the proceeds of the offering of the 2028 Convertible Notes to redeem the remaining $ 62.6 million of its outstanding 2024 Peabody Notes and, together with available cash, approximately $ 257.4 million of its outstanding 2025 Notes, and to pay related premiums, fees and expenses relating to the offering of the 2028 Convertible Notes and the redemptions.

The redemption of existing notes was deemed a debt extinguishment for accounting purposes.

The Company capitalized $ 11.2 million of debt issuance costs related to the offering and recognized a loss on early debt extinguishment of $ 23.0 million during the three months ended March 31, 2022.

The 2028 Convertible Notes will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in accordance with their terms.

The 2028 Convertible Notes will bear interest from March 1, 2022 at a rate of 3.250 % per year payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2022.

During the three months ended March 31, 2022, the Company incurred interest expense of $ 1.0 million related to the 2028 Convertible Notes.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 2025 Notes rank senior in right of payment to any subordinated Indebtedness and equally in right of payment with any senior Indebtedness to the extent of the collateral securing that Indebtedness.

The 2025 Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by substantially all of the Company’s domestic restricted subsidiaries (the Peabody Guarantors) and secured by (a) first priority liens over (1) substantially all of the assets of the Company and the Peabody Guarantors, except for certain excluded assets, (2) 100 % of the capital stock of each domestic restricted subsidiary of the Company, (3) 100 % of the capital stock of each first tier foreign subsidiary of the Company or a foreign subsidiary holding company and (4) all intercompany debt owed to the Company or any Peabody Guarantor, in each case, subject to certain exceptions (the Peabody Collateral), and (b) second priority liens over the Wilpinjong Collateral.

The 2025 Notes are secured on a pari passu basis by the same collateral securing the Credit Agreement, and the other priority lien debt of the Company, including the Peabody Notes and the Company LC Agreement described above.

Credit Agreement

The Company originally entered into the Credit Agreement during 2017, which provided for a $ 950.0 million senior secured term loan (the Senior Secured Term Loan) due in 2022.

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

The Credit Agreement has been amended periodically over its term to add a revolving loan facility, to increase the capacity and extend the maturity date of the revolving loan facility, to extend the maturity date of the Senior Secured Term Loan to 2025 and to make various changes to terms such as those related to interest, fees and payment restrictions.

In connection with certain of the amendments, the Company voluntarily prepaid $ 46.0 million of Senior Secured Term Loan principal and incurred $ 10.4 million of deferred financing costs related to the revolving loan facility.

The Company also voluntarily repaid an additional $ 500.0 million of Senior Secured Term Loan principal in various installments.

At September 30, 2021 the Senior Secured Term Loan had a balance of $ 328.7 million.

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

The Company recorded interest expense of $ 3.3 million and $ 3.4 million, during the three months ended September 30, 2021 and 2020, respectively, and $ 10.1 million and $ 12.1 million during the nine months ended September 30, 2021 and 2020, respectively, related to the Senior Secured Term Loan, which bore interest at LIBOR plus 2.75 % per annum as of September 30, 2021.

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

After giving effect to the Revolver Transactions, there remain no revolving commitments or revolving loans under the Credit Agreement.

Further, all financial covenants specific to the former revolving credit facility under the Credit Agreement were eliminated in connection with the Refinancing Transactions and were not applicable at September 30, 2021.

The Company recorded interest expense and fees of $ 1.4 million during the nine months ended September 30, 2021, and $ 5.1 million and $ 10.8 million, during the three and nine months ended September 30, 2020, respectively, related to the revolving loan facility.

No interest expense or fees related to the revolving loan facility were recorded during the three months ended September 30, 2021.

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

Obligations under the Credit Agreement are guaranteed by the Peabody Guarantors and are secured by first priority liens on the Peabody Collateral and second priority liens on the Wilpinjong Collateral.

The obligations are secured on a pari passu basis by the same collateral securing the 2025 Notes and the other priority lien debt of the Company, including the Peabody Notes and the Company LC Agreement described above.

The Company was compliant with all covenants under its debt agreements, including the minimum liquidity covenant under the Company LC Agreement, at September 30, 2021.

Subsequent Financing Transactions

Subsequent to the Refinancing Transactions, the Company completed a series of financing transactions intended to improve its capital structure.

The 2028 Convertible Notes will be convertible at the option of the holders only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2022, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the Measurement Period) in which the trading price per $ 1,000 principal amount of 2028 Convertible Notes for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company’s common stock;

(4) if the Company calls any 2028 Convertible Notes for redemption;

and (5) at any time from, and including, September 1, 2027 until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture.

The initial conversion rate for the 2028 Convertible Notes will be 50.3816 shares of the Company’s common stock per $ 1,000 principal amount of 2028 Convertible Notes, which represents an initial conversion price of approximately $ 19.85 per share of the Company’s common stock.

The initial conversion price represents a premium of approximately 32.5 % to the $ 14.98 per share closing price of the Company’s common stock on February 24, 2022.

The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture.

If certain corporate events described in the indenture occur prior to the maturity date, or the Company delivers a notice of redemption (as described below), the conversion rate will be increased for a holder who elects to convert its 2028 Convertible Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances.

The Company may not redeem the 2028 Convertible Notes prior to March 1, 2025.

The Company may redeem for cash all or any portion of the 2028 Convertible Notes, at its option, on or after March 1, 2025 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to 100 % of the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (2) the trading day immediately before the date the Company sends such notice.

However, the Company may not redeem less than all of the outstanding 2028 Convertible Notes unless at least $ 75 million aggregate principal amount of 2028 Convertible Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

No sinking fund is provided for the 2028 Convertible Notes.

If the Company undergoes a fundamental change (as defined in the indenture), noteholders may require the Company to repurchase their 2028 Convertible Notes at a cash repurchase price equal to 100 % of the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

Margin Financing Arrangement

On March 7, 2022, the Company entered into a credit agreement, by and among the Company, as borrower, Goldman Sachs Lending Partners LLC, as administrative agent, and the lenders party thereto (the Credit Agreement).

The Credit Agreement provides for a $ 150 million unsecured revolving credit facility (the Revolving Facility), which will mature on April 1, 2025 and bears interest at a rate of 10.0 % per annum on drawn amounts.

The Revolving Facility is intended to support the Company’s near-term liquidity requirements, particularly with respect to the cash margin requirements associated with the Company’s coal derivative contracts, which fluctuate depending upon underlying market coal prices.

Concurrently with the Credit Agreement, the Company entered into an agreement with Goldman Sachs & Company LLC to act as sales agent for at-the-market equity offerings of up to $ 225.0 million of the Company’s common stock.

During the three months ended March 31, 2022, the Company borrowed and repaid $ 225.0 million under the Revolving Facility using net proceeds of $ 222.0 million from at-the-market issuances of 10.1 million shares of common stock and available cash.

The equity offering agreement limit was reached as a result of these issuances and may not be further utilized without amendment and approval by the sales agent.

The Company had no outstanding borrowings and no availability under the Revolving Facility at March 31, 2022.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2021, the Company announced an at-the-market equity offering program pursuant to which the Company could offer and sell up to 12.5 million shares of its common stock.

During September 2021, the Company announced that it could offer and sell up to an additional 12.5 million shares, for a total of 25.0 million shares authorized through the at-the-market offering program.

The shares are offered and sold pursuant to the Company’s Registration Statement on Form S-3, which was declared effective by the Securities and Exchange Commission on April 23, 2021, as supplemented by prospectus supplements dated June 4, 2021 and September 17, 2021, relating to the offer and sale of the shares.

During the three and nine months ended September 30, 2021, the Company sold approximately 9.0 million shares and 17.1 million shares, respectively, for net cash proceeds of $ 112.1 million and $ 177.2 million, respectively.

Between October 1, 2021 and November 2, 2021, the Company settled sales of an additional 3.2 million shares for net proceeds of $ 43.4 million.

During the three months ended September 30, 2021, the Company retired $ 22.1 million of Peabody Notes, $ 2.3 million of 2025 Notes and $ 38.9 million of its Senior Secured Term Loan primarily through various open market purchases at an aggregate cost of $ 46.7 million.

The Company recorded a gain on early debt extinguishment of $ 15.0 million, net of debt issuance costs and original issue discount related to the retired debt of $ 1.6 million.

During the nine months ended September 30, 2021, the Company retired $ 40.1 million of Peabody Notes, $ 19.7 million of 2025 Notes and $ 56.7 million of its Senior Secured Term Loan primarily through various open market purchases at an aggregate cost of $ 85.9 million.

The Company recorded a gain on early debt extinguishment of $ 26.9 million, net of debt issuance costs and original issue discount related to the retired debt of $ 3.7 million.

Also during the three months ended September 30, 2021, the Company completed multiple bilateral transactions with holders of the 2022 Notes, the 2025 Notes and the Peabody Notes in which the Company issued an aggregate 2.2 million shares of its common stock in exchange for $ 6.4 million aggregate principal amount of the 2022 Notes, $ 17.9 million aggregate principal amount of the 2025 Notes and $ 5.5 million aggregate principal amount of the Peabody Notes.

Based upon the fair value of the Company’s common stock at the respective settlement dates, the Company recorded a net gain on early debt extinguishment of $ 1.0 million in connection with the transactions.

During the nine months ended September 30, 2021, the Company completed multiple bilateral transactions with holders of the 2022 Notes, the 2025 Notes and the Peabody Notes in which the Company issued an aggregate 6.7 million shares of its common stock in exchange for $ 37.3 million aggregate principal amount of the 2022 Notes, $ 17.9 million aggregate principal amount of the 2025 Notes and $ 5.5 million aggregate principal amount of the Peabody Notes.

Based upon the fair value of the Company’s common stock at the respective settlement dates, the Company recorded a net gain on early debt extinguishment of $ 0.9 million in connection with the transactions.

The issuance of shares of common stock in exchange for the 2022 Notes, the 2025 Notes and the Peabody Notes was made in reliance on the exemption from registration provided in Section 3(a)(9) under the Securities Act of 1933, based in part on representations of holders of the 2022 Notes, the 2025 Notes and the Peabody Notes, and on the basis that the exchange was completed with existing holders of the Company's securities and no commission or other remuneration was paid or given for soliciting the exchange.

Prior to September 30, 2021, the Company reached agreements to retire an additional $ 17.0 million of aggregate principal, which will settle subsequent to September 30, 2021.

This included $ 5.0 million of its Senior Secured Term Loan through similar open market purchases for an aggregate cost of $ 3.3 million, and by issuing an aggregate 0.8 million shares of its common stock in exchange for $ 12.0 million aggregate principal amount of the Peabody Notes in a similar manner as noted above.

Such amounts are reflected within the current portion of long-term debt in the accompanying condensed consolidated balance sheet at September 30, 2021.

Between October 1, 2021 and November 2, 2021, the Company reached additional agreements to issue an aggregate 1.1 million shares of its common stock in exchange for $ 19.0 million aggregate principal amount of the 2025 Notes, which was reflected within the long-term debt in the accompanying condensed consolidated balance sheet at September 30, 2021.

As a result of the Company’s open market purchases of its debt during the three months ended September 30, 2021, on October 22, 2021, the Company announced a Mandatory Repurchase Offer of up to $ 15.8 million of Peabody Notes, at 73.590 % of their aggregate accreted value, plus accrued and unpaid interest, and a concurrent repurchase offer of priority lien obligations under the Company LC Agreement.

The offers expire on November 22, 2021, unless extended by the Company.

The Credit Agreement contains customary covenants that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets.

Borrowings under the Revolving Facility are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by substantially all of the Company’s material domestic subsidiaries (excluding any unrestricted subsidiaries).

Retirement of 2022 Notes

On March 31, 2022, the Company retired the remaining principal balance of 2022 Notes upon maturity for $ 23.1 million.

Interest Charges

The Company incurred total interest expense of $ 39.4 million and $ 52.4 million during the three months ended March 31, 2022 and 2021, respectively.

These amounts included $ 13.5 million and $ 10.9 million, respectively, related to financial assurance instruments such as surety bonds and letters of credit, with the remainder primarily related to the Company’s funded debt.

Of total interest expense incurred during the three months ended March 31, 2022 and 2021, $ 3.8 million and $ 4.9 million, respectively, was comprised of non-cash charges primarily related to the amortization of debt issuance costs.

Cash payments for interest amounted to $ 37.2 million and $ 56.3 million during the three months ended March 31, 2022 and 2021, respectively.

The Senior Secured Term Loan is the Company’s only outstanding variable rate debt, which bore interest at LIBOR plus 2.75 % per annum at March 31, 2022.

Covenant Compliance

The Company was compliant with all relevant covenants under its debt agreements at March 31, 2022, including the minimum aggregate liquidity requirement under the Company LC Agreement which requires the Company’s restricted subsidiaries to maintain minimum aggregate liquidity of $ 125.0 million at the end of each quarter through December 31, 2024.

Finance Lease Obligations

1 unchanged sentence

“Leases” for additional information associated with the Company’s finance leases, which pertain to the financing of mining equipment used in operations.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12) Pension and Postretirement Benefit Costs

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

Net periodic pension benefit included the following components:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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

Net periodic pension credit included the following components:

Three Months Ended March 31,

(Dollars in millions)

Service cost for benefits earned $ — $ 0.1 $ 0.1 $ 0.2

Interest cost on projected benefit obligation $ 5.3 $ 5.1

Expected return on plan assets ( 5.9 ) ( 5.7 )

Net periodic pension benefit $ ( 0.6 ) $ ( 0.4 ) $ ( 1.7 ) $ ( 1.1 )

Net periodic pension credit $ ( 0.6 ) $ ( 0.6 )

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

As of September 30, 2021, the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds.

As of March 31, 2022, the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds.

The Company is not required to make any contributions to its qualified pension plans in 2022 based on minimum funding requirements and does not expect to make any discretionary contributions in 2022 at this time.

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

In March 2022, Peabody Investments Corp., a wholly owned subsidiary of the Company, entered into a commitment agreement relating to the Peabody Investments Corp.

Retirement Plan (the Plan) with The Prudential Insurance Company of America (Prudential) and Fiduciary Counselors Inc., as independent fiduciary to the Plan.

Under the commitment agreement, the Plan purchased a group annuity contract (Group Annuity Contract) from Prudential for approximately $ 500 million and Prudential will reimburse the Plan for future benefit payments to be made to the Plan’s participants.

Under the terms of this transaction, the Plan will continue to administer and pay the retirement benefits of Plan participants but will be reimbursed by Prudential for the payment of all benefits covered by the Group Annuity Contract.

The purchase of the Group Annuity Contract was funded directly by the Plan’s assets.

There will be no impact on the monthly retirement benefits paid to Plan participants.

In addition, there will be no material impact on discretionary contributions for the Plan in 2022 or on the Company’s earnings in 2022 as a result of this transaction.

Net periodic postretirement benefit credit included the following components:

Three Months Ended March 31,

(Dollars in millions)

3 unchanged sentences

Amortization of prior service credit ( 13.4 ) ( 11.0 )

Net actuarial loss — 13.0 — 13.0

Net periodic postretirement benefit (benefit) cost $ ( 8.1 ) $ 17.0 $ ( 24.2 ) $ 24.9

In September 2020, the Company announced changes to its postretirement health care benefit plans for non-represented employees and retirees which reduced its accumulated postretirement benefit obligation, as further described in Note 15.

Net periodic postretirement benefit credit $ ( 11.7 ) $ ( 8.1 )

In October 2021, the Company announced changes to its postretirement health care benefit plan for certain represented retirees which reduced its accumulated postretirement benefit obligation, as further described in Note 14.

“Postretirement Health Care and Life Insurance Benefits” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The reduction in liability was recorded with an offsetting balance in “Accumulated other comprehensive income” and is being amortized to earnings.

The Company has established two Voluntary Employees Beneficiary Association (VEBA) trusts to pre-fund a portion of benefits for non-represented and represented retirees.

The Company does not expect to make any discretionary contributions to either of the VEBA trusts in 2021 and plans to utilize a portion of VEBA assets to make certain benefit payments.

In October 2021, the Company announced changes to its postretirement health care benefit plan for certain represented retirees.

Effective January 1, 2022, the Company will not provide medical coverage to certain existing retirees but will continue to offer a life insurance benefit to eligible retirees.

As of September 30, 2021, the health care benefit obligation attributed to these certain existing retirees is approximately $ 160 million.

The impact of the changes will reduce the Company’s postretirement benefit obligation during the fourth quarter of 2021.

The liability is expected to be remeasured, with the resulting benefit of the plan changes recorded in “Accumulated other comprehensive income” and amortized to future earnings based upon the estimated remaining life expectancies of certain plan participants.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has established a Voluntary Employees Beneficiary Association (VEBA) trust to pre-fund a portion of benefits for non-represented retirees.

The Company does not expect to make any discretionary contributions to the VEBA trust in 2022 and plans to utilize a portion of VEBA assets to make certain benefit payments.

(13) Accumulated Other Comprehensive Income

The following table sets forth the after-tax components of accumulated other comprehensive income and changes thereto recorded during the nine months ended September 30, 2021:

The following table sets forth the after-tax components of accumulated other comprehensive income and changes thereto recorded during the three months ended March 31, 2022:

Foreign Currency Translation

7 unchanged sentences

Current period change 1.9 — 1.9

September 30, 2021 $ 0.6 $ 171.0 $ 171.6

Postretirement health care and life insurance benefits reclassified from other comprehensive income to earnings of $ 11.0 million and $ 2.2 million during the three months ended September 30, 2021 and 2020, respectively, and $ 33.0 million and $ 6.6 million du ring the nine months ended September 30, 2021 and 2020, respectively, are included in “Net periodic benefit (credit) costs, excluding service cost” in the unaudited condensed consolidated statements of operations.

(14) Other Events

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

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

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

Such charges included as “Restructuring charges” in the Company's unaudited condensed consolidated statements of operations amounted to $ 1.7 million and $ 5.9 million for the three and nine months ended September 30, 2021, respectively, and $ 8.1 million and $ 31.1 million for the three and nine months ended September 30, 2020, respectively, were associated with both involuntary and voluntary workforce reductions.

In September 2021, the Company reached a new collective bargaining agreement with the UMWA on behalf of the hourly workforce of its Shoal Creek Mine.

The Company idled the mine in the fourth quarter of 2020 due to market conditions.

During the idle period the Company undertook activities, including a preparation plant upgrade project, to increase productivity, lower costs and improve yields from the operation in the future.

The Company expects to begin production at Shoal Creek Mine in the second half of the fourth quarter of 2021, with ramp up through the first quarter of 2022.

The full workforce of the Metropolitan Mine, which was idled in December 2020, returned to the mine in May 2021.

Development work at the mine has been ongoing and longwall production restarted late in the second quarter of 2021, with a ramp up to planned production levels in the fourth quarter of 2021.

The underground workforce enterprise agreement expired in January 2021 and was renegotiated in October 2021.

During July 2021, the Company executed transactions to sell its closed Millennium and Wilkie Creek Mines, which reduced its closed mine reclamation liabilities and associated costs.

The Millennium Mine was sold for minimal cash consideration and the assumption of the majority of the mine’s reclamation liabilities.

The Company will remain responsible for $ 9.4 million of reclamation liabilities and retains certain royalty rights on future sales.

The Company recorded a gain of $ 26.1 million in connection with the sale, and will recognize royalty revenue when it is deemed collectible.

The gain is included within “Net gain on disposals” in the accompanying unaudited condensed consolidated statements of operations.

The Wilkie Creek Mine was sold for minimal cash consideration and full assumption of the mine’s reclamation liabilities.

The Company retains certain royalty rights on future sales.

The Company recorded a gain of $ 24.6 million in connection with the sale, and will recognize royalty revenue when it is deemed collectible.

The gain is included within “Income (loss) from discontinued operations, net of income taxes” in the accompanying unaudited condensed consolidated statements of operations.

March 31, 2022 $ 2.7 $ 283.7 $ 286.4

Postretirement health care and life insurance benefits reclassified from other comprehensive income to earnings of $ 13.4 million a nd $ 11.0 million du ring the three months ended March 31, 2022 and 2021, respectively, are included in “Net periodic benefit credit, excluding service cost” in the unaudited condensed consolidated statements of operations.

PEABODY ENERGY CORPORATION

3 unchanged sentences

Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding.

As such, the Company includes the share-based compensation awards in its potentially dilutive securities.

As such, the Company includes the 2028 Convertible Notes and share-based compensation awards in its potentially dilutive securities.

Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive.

3 unchanged sentences

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

The computation of diluted EPS excluded aggregate share-based compensation awards of approximately 0.9 million and 2.1 million for the three months ended September 30, 2021 and 2020, respectively, and 0.8 million and 2.3 million for the nine months ended September 30, 2021 and 2020, respectively, because to do so would have been anti-dilutive for those periods.

A conversion of the 2028 Convertible Notes may result in payment in the Company’s common stock.

For diluted EPS purposes, the potentially dilutive common stock is assumed to have been converted at the beginning of the period (or at the time of issuance, if later).

Since the 2028 Convertible Notes were issued on March 1, 2022, there were approximately 5.5 million shares of potentially dilutive common stock for the three months ended March 31, 2022.

These potentially dilutive shares were excluded from the computation of diluted EPS for the three months ended March 31, 2022, because to do so would have been anti-dilutive as the Company reported a net loss from continuing operations during the period.

In periods where the potentially dilutive common stock is included in the computation of diluted EPS, the numerator will be adjusted to add back tax adjusted interest expense related to the convertible debt.

The computation of diluted EPS excluded aggregate share-based compensation awards of approximately 1.2 million and 1.3 million for the three months ended March 31, 2022 and 2021, respectively, because to do so would have been anti-dilutive for those periods.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(In millions, except per share data)

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Loss from continuing operations, net of income taxes $ ( 119.8 ) $ ( 77.7 )

Net income (loss) attributable to noncontrolling interests 8.9 0.1 12.6 ( 5.1 )

Net (loss) income attributable to noncontrolling interests ( 1.1 ) 0.4

Loss from continuing operations attributable to common stockholders ( 118.7 ) ( 78.1 )

Income (loss) from discontinued operations, net of income taxes 24.3 ( 2.3 ) 20.0 ( 6.8 )

Loss from discontinued operations, net of income taxes ( 0.8 ) ( 2.0 )

Net loss attributable to common stockholders $ ( 119.5 ) $ ( 80.1 )

3 unchanged sentences

Loss from continuing operations $ ( 0.87 ) $ ( 0.79 )

Income (loss) from discontinued operations 0.22 ( 0.03 ) 0.19 ( 0.07 )

Loss from discontinued operations ( 0.01 ) ( 0.02 )

Net loss attributable to common stockholders $ ( 0.88 ) $ ( 0.81 )

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(15) Financial Instruments and Other Guarantees

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

At September 30, 2021, such instruments included $ 1,462.4 million of surety bonds and $ 443.2 million of letters of credit.

At March 31, 2022, such instruments included $ 1,484.9 million of surety bonds and $ 469.1 million of letters of credit.

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

Reclamation bonding requirements are typically established by statute or under mining permits.

At September 30, 2021, the Company’s asset retirement obligations of $ 710.2 million were supported by surety bonds of $ 1,293.4 million, as well as letters of credit issued under the Company’s receivables securitization program and the Company LC Agreement.

Letters of credit issued at September 30, 2021 which served as collateral for surety bonds in support of asset retirement obligations amounted to $ 316.1 million.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In November 2020, the Company entered into a Surety Agreement with the providers of 99 % of its surety bond portfolio (Participating Sureties) to resolve previous collateral demands made by the Participating Sureties.

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

Upon completion of the Refinancing Transactions described in Note 11.

“Long-term Debt,” other provisions of the Surety Agreement became effective.

In particular, the Company 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 the Company generates more than $ 100.0 million of free cash flow (as defined in the Surety Agreement) in any twelve-month period or has cumulative asset sales in excess of $ 10.0 million, as of the last quarter end during the term of the agreement.

Further, the Participating Sureties have agreed to a standstill through the earlier of December 31, 2025, or the maturity of the Credit Agreement (currently March 31, 2025), 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.

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

In connection with the Refinancing Transactions, at the Settlement Date, all letters of credit issued under the Company’s former revolving credit facility were deemed issued under the Company LC Agreement in support of the same obligations.

The Company periodically evaluates the instruments for on-balance sheet treatment based on the amount of exposure under the instrument and the likelihood of required performance.

The Company does not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in the accompanying condensed consolidated balance sheets.

In November 2020, the Company entered into a surety agreement with the providers of its surety bond portfolio to resolve previous collateral demands.

In accordance with the surety agreement, the Company initially provided $ 75.0 million of collateral, in the form of letters of credit.

The Company subsequently granted second liens on $ 200.0 million of certain mining equipment and is further required to post an additional $ 25.0 million of collateral per year from 2021 through 2024 for the benefit of the surety providers.

The collateral postings further increase to the extent the Company generates more than $ 100.0 million of free cash flow (as defined in the surety agreement) in any twelve-month period or has cumulative asset sales in excess of $ 10.0 million, as of the last quarter end during the term of the agreement.

Based upon the Company’s free cash flow for the year ended December 31, 2021, additional collateral of $ 13.0 million was posted in January 2022 in the form of letters of credit.

No such additional collateral was required for the period ended March 31, 2022.

Reclamation Bonding

The Company is required to provide various forms of financial assurance in support of its mining reclamation obligations in the jurisdictions in which it operates.

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

At March 31, 2022, the Company’s asset retirement obligations of $ 724.5 million were supported by surety bonds of $ 1,312.1 million, as well as letters of credit issued under the Company’s receivables securitization program and the Company LC Agreement.

Letters of credit issued at March 31, 2022 which served as collateral for surety bonds in support of asset retirement obligations amounted to $ 340.0 million.

Accounts Receivable Securitization

The Company is party to an accounts receivable securitization agreement (Securitization Program) which expires in April 2022 and provides up to $ 250.0 million in funding, limited to the availability of eligible receivables, and may be secured by a combination of collateral and the trade receivables underlying the program, from time to time.

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

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

The Receivables Purchase Agreement was amended in January 2022 to extend the Securitization Program to January 2025, reduce the available funding capacity from $ 250.0 million to $ 175.0 million, and amend the relevant borrowing rate from a LIBOR-based rate to one based on Bloomberg’s Short-Term Bank Yield Index (BSBY).

Such funding is accounted for as a secured borrowing, limited to the availability of eligible receivables, and may be secured by a combination of collateral and the trade receivables underlying the program, from time to time.

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

The borrowings under the Securitization Program bear interest at LIBOR plus 1.5 % per annum and remain outstanding throughout the term of the agreement, subject to the Company maintaining sufficient eligible receivables, by continuing to contribute trade receivables, unless an event of default occurs.

The Securitization Program is subject to customary events of default.

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

The Securitization Program does not receive off-balance sheet accounting treatment due to the Company’s ability to repurchase the receivables in certain circumstances.

At September 30, 2021, the Com pany had no outstanding borrowings and $ 133.6 million o f letters of credit issued under the Securitization Program.

Borrowings under the Securitization Program bear interest at BSBY plus 2.1 % per annum and remain outstanding throughout the term of the agreement, subject to the Company maintaining sufficient eligible receivables.

At March 31, 2022, the Com pany had no outstanding borrowings and $ 161.8 million o f letters of credit issued under the Securitization Program.

The letters of credit were primarily in support of reclamation obligations.

Availability under the Securitizatio n Program, which is adjusted for certain ineligible receivables, was $ 12.6 million at September 30, 2021.

The Company was not required to post cash collateral under the Securitization Program at either September 30, 2021 or December 31, 2020.

The Company incurred interest and fees associated with the Securitization Program of $ 1.0 million and $ 0.8 million during the three months ended September 30, 2021 and 2020, respectively, and $ 3.0 million and $ 2.9 million during the nine months ended September 30, 2021 and 2020, respectively, which have been recorded as “Interest expense” in the accompanying unaudited condensed consolidated statements of operations.

Substantially all of the Company’s U.S.

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

The maximum amounts payable under the Company’s debt agreements are equal to the respective principal and interest payments.

Availability under the Securitizatio n Program, which is adjusted for certain ineligible receivables, was $ 1.6 million at March 31, 2022.

The Company was required to post cash collateral under the Securitization Program of $ 24.7 million at March 31, 2022 and none at December 31, 2021.

The Company incurred interest and fees associated with the Securitization Program of $ 0.9 million and $ 0.7 million during the three months ended March 31, 2022 and 2021, respectively, which have been recorded as “Interest expense” in the accompanying unaudited condensed consolidated statements of operations.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Collateralized Letter of Credit Agreement

In February 2022, the Company entered into a new agreement, which provides up to $ 250.0 million of capacity for irrevocable standby letters of credit in support of reclamation bonding.

The agreement requires the Company to provide cash collateral at a level of 103 % of the aggregate amount of letters of credit outstanding under the arrangement (limited to $ 5.0 million total excess collateralization.) Outstanding letters of credit bear a fixed fee in the amount of 0.75 % per annum.

The Company receives a deposit rate of 0.35 % per annum on the amount of cash collateral posted in support of letters of credit, with the rate subject to increases over time.

The agreement has an initial expiration date of December 31, 2025.

The Company did not utilize the collateralized letter of credit facility until subsequent to March 31, 2022.

(16) Commitments and Contingencies

Unconditional Purchase Obligations

As of September 30, 2021, purchase commitments for capital expenditures were $ 23.4 million, all of which is obligated within the next four years, with $ 16.2 million obligated within the next 12 months.

As of March 31, 2022, purchase commitments for capital expenditures were $ 43.9 million, all of which is obligated within the next three years, with $ 35.6 million obligated within the next 12 months.

There were no other material changes to the Company’s commitments from the information provided in Note 23.

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Plaintiffs allege that the defendants made false or misleading statements and/or failed to disclose certain adverse facts pertaining to safety practices at the Company’s North Goonyella Mine and the events leading up to a fire at the mine, and that, after a September 28, 2018 fire at the mine, made false or misleading statements and/or failed to disclose certain adverse facts pertaining to the feasibility of the Company’s plan to restart the mine after the fire.

The Company believes the lawsuit lacks merit and intends to vigorously defend against the allegations.

On January 12, 2021, the Court appointed the Oregon Public Employees Retirement Fund as lead plaintiff.

5 unchanged sentences

The defendants filed their reply to Plaintiff’s opposition on August 23, 2021, completing briefing at this phase of the litigation.

On March 7, 2022, the Court granted in part and denied in part the defendants’ motion to dismiss.

As a result of this decision, only Plaintiffs’ allegations relating to the Company’s September 25, 2018 statements remain in the case.

The Company believes the lawsuit lacks merit and intends to vigorously defend against the allegations.

Derivative Actions.

8 unchanged sentences

The derivative complaint alleges (i) contribution against certain current and former officers for securities fraud based on the Securities Class Action, and against all defendants, (ii) breach of fiduciary duties, (iii) waste of corporate assets for causing the Company to incur legal liability and (iv) unjust enrichment.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On February 10, 2021, a second plaintiff (Di Fusco), putatively on behalf of the Company, filed a similar shareholder derivative lawsuit, styled Di Fusco v.

6 unchanged sentences

In late March 2021, the parties filed a stipulation agreeing to consolidate and stay both derivative actions for judicial efficiency and cost until the Court rules on the motion to dismiss in the Securities Class Action.

In light of the March 7, 2022 decision on the motion to dismiss in the Securities Class Action, the parties are discussing how to proceed with the derivative actions, which currently remained stayed.

The Company also believes that the derivative actions lack merit and intends to vigorously defend against the allegations.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Thermal Mining and Corporate and Other.

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

The Company’s chief operating decision maker, defined as our Chief Executive Officer, uses Adjusted EBITDA as the primary metric to measure the segments’ operating performance and allocate resources.

Adjusted EBITDA is a non-GAAP financial measure defined as loss from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization.

4 unchanged sentences

Reportable segment results were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(Dollars in millions)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(Dollars in millions)

3 unchanged sentences

Restructuring charges 1.6 2.1

Transaction costs related to joint ventures — 6.0 — 23.1

Asset impairment — — — 1,418.1

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates ( 0.6 ) ( 1.5 )

Interest expense 39.4 52.4

Net gain on early debt extinguishment ( 16.0 ) — ( 31.3 ) —

Net loss (gain) on early debt extinguishment 23.5 ( 3.5 )

Interest income ( 0.5 ) ( 1.5 )

Net mark-to-market adjustment on actuarially determined liabilities — 13.0 — 13.0

Unrealized losses on derivative contracts related to forecasted sales 301.0 1.9

1 unchanged sentence

Take-or-pay contract-based intangible recognition ( 0.7 ) ( 1.1 )

Income tax (benefit) provision ( 3.7 ) ( 0.1 ) ( 10.3 ) 2.7

Income tax benefit ( 1.0 ) ( 1.8 )

Adjusted EBITDA $ 327.5 $ 61.1

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

What changed 10-Q

Item 1. Financial Statements