What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 261 added, 407 removed, 492 unchanged (58% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions, except per share data)

2 unchanged sentences

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

838.4 649.4 2,363.0 1,843.4

Depreciation, depletion and amortization 76.3 72.9

2 unchanged sentences

Restructuring charges

1.0 1.7 2.8 5.9

Other operating (income) loss:

Other operating income:

Net gain on disposals ( 1.9 ) ( 4.9 )

3 unchanged sentences

Interest expense 18.4 39.4

Net loss (gain) on early debt extinguishment 8.7 ( 16.0 ) 34.5 ( 31.3 )

Net loss on early debt extinguishment 6.8 23.5

Interest income ( 13.1 ) ( 0.5 )

3 unchanged sentences

Income (loss) from continuing operations, net of income taxes 284.1 ( 119.8 )

(Loss) income from discontinued operations, net of income taxes ( 0.8 ) 24.3 ( 2.3 ) 20.0

Loss from discontinued operations, net of income taxes ( 1.3 ) ( 0.8 )

Net income (loss) 282.8 ( 120.6 )

Net income attributable to noncontrolling interests 8.5 8.9 8.5 12.6

Net income (loss) attributable to noncontrolling interests 14.3 ( 1.1 )

Net income (loss) attributable to common stockholders $ 268.5 $ ( 119.5 )

8 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

5 unchanged sentences

Comprehensive income (loss) 269.2 ( 132.1 )

Net income attributable to noncontrolling interests 8.5 8.9 8.5 12.6

Net income (loss) attributable to noncontrolling interests 14.3 ( 1.1 )

Comprehensive income (loss) attributable to common stockholders $ 254.9 $ ( 131.0 )

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(Amounts in millions, except per share data)

1 unchanged sentence

Cash and cash equivalents $ 892.2 $ 1,307.3

Accounts receivable, net of allowance for credit losses of $ 0.0 at September 30, 2022 and December 31, 2021

Accounts receivable, net of allowance for credit losses of $ 0.0 at March 31, 2023 and December 31, 2022

Inventories, net 331.5 296.1

3 unchanged sentences

Operating lease right-of-use assets 22.7 26.9

Restricted cash and collateral 936.7 187.4

Investments and other assets 85.6 84.3

Deferred income taxes 28.5 74.7

Total assets $ 5,799.9 $ 5,610.8

13 unchanged sentences

Preferred Stock — $ 0.01 per share par value;

100.0 shares authorized, no shares issued or outstanding as of September 30, 2022 and December 31, 2021

100.0 shares authorized, no shares issued or outstanding as of March 31, 2023 and December 31, 2022

Series Common Stock — $ 0.01 per share par value;

50.0 shares authorized, no shares issued or outstanding as of September 30, 2022 and December 31, 2021

50.0 shares authorized, no shares issued or outstanding as of March 31, 2023 and December 31, 2022

Common Stock — $ 0.01 per share par value;

450.0 shares authorized, 187.1 shares issued and 143.9 shares outstanding as of September 30, 2022 and 176.3 shares issued and 133.3 shares outstanding as of December 31, 2021

450.0 shares authorized, 188.4 shares issued and 144.7 shares outstanding as of March 31, 2023 and 187.1 shares issued and 143.9 shares outstanding as of December 31, 2022

Additional paid-in capital 3,977.6 3,975.9

Treasury stock, at cost — 43.2 and 43.0 common shares as of September 30, 2022 and December 31, 2021

Treasury stock, at cost — 43.7 and 43.2 common shares as of March 31, 2023 and December 31, 2022

( 1,386.1 ) ( 1,372.9 )

Accumulated deficit ( 248.1 ) ( 913.2 )

Retained earnings 652.4 383.9

Accumulated other comprehensive income 228.9 242.5

6 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 income (loss) $ 282.8 $ ( 120.6 )

Loss (income) from discontinued operations, net of income taxes 2.3 ( 20.0 )

Loss from discontinued operations, net of income taxes 1.3 0.8

Income (loss) from continuing operations, net of income taxes 284.1 ( 119.8 )

6 unchanged sentences

Net gain on disposals ( 1.9 ) ( 4.9 )

Net loss (gain) on early debt extinguishment 34.5 ( 31.3 )

Noncash income from port and rail capacity assignment ( 9.2 ) —

Net loss on early debt extinguishment 6.8 23.5

Income from equity affiliates ( 1.8 ) ( 44.7 )

11 unchanged sentences

Other, net 0.6 3.2

Net cash provided by continuing operations 508.9 0.5

Net cash provided by (used in) continuing operations 389.4 ( 272.5 )

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

2 unchanged sentences

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 202.0 148.2

Advances to related parties ( 1.3 ) ( 0.4 )

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

Other, net 0.1 ( 0.5 )

Net cash provided by (used in) investing activities 61.1 ( 119.7 )

Net cash (used in) provided by investing activities ( 58.5 ) 35.2

Cash Flows From Financing Activities

5 unchanged sentences

Distributions to noncontrolling interests ( 22.8 ) ( 13.8 )

Other, net — 0.1

Net cash (used in) provided by financing activities ( 39.0 ) 132.2

1 unchanged sentence

Cash, cash equivalents and restricted cash at beginning of period (1)

1,417.6 954.3

Cash, cash equivalents and restricted cash at end of period (2)

$ 1,706.4 $ 848.0

(1) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at end of period” at September 30, 2022

(1) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at beginning of period”:

Cash and cash equivalents $ 1,307.3

Restricted cash included in “Investments and other assets” 44.5

Restricted cash included in “Restricted cash and collateral” 110.3

Cash, cash equivalents and restricted cash at beginning of period $ 1,417.6

(2) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at end of period”:

Cash and cash equivalents $ 892.2

Restricted cash included in “Restricted cash and collateral” 814.2

Cash, cash equivalents and restricted cash at end of period $ 1,706.4

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

5 unchanged sentences

Share-based compensation for equity-classified awards 1.7 2.0

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 ( 1,386.1 ) ( 1,372.3 )

Accumulated deficit

Retained earnings (Accumulated deficit)

Balance, beginning of period 383.9 ( 913.2 )

9 unchanged sentences

Balance, beginning of period 63.5 59.0

Net income attributable to noncontrolling interests 8.5 8.9 8.5 12.6

Net income (loss) attributable to noncontrolling interests 14.3 ( 1.1 )

Distributions to noncontrolling interests ( 22.8 ) ( 13.8 )

15 unchanged sentences

Balance sheet information presented herein as of December 31, 2022 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, 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

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 9.

“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 requires the application of the “if-converted” method to calculate the impact of convertible instruments on diluted earnings per share, as reflected in the Company’s calculations within Note 11.

“Earnings per Share (EPS).”

Accounting Standards Not Yet Implemented

Reference Rate Reform.

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)

The Company’s results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2023.

Although there are new accounting pronouncements issued by the Financial Accounting Standards Board that the Company will adopt, as applicable, the Company does not believe any of these accounting pronouncements will have a material impact on its unaudited condensed consolidated financial statements or disclosures.

(2) Revenue Recognition

3 unchanged sentences

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, 2022

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

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 44.8 $ — $ 290.2 $ 259.8 $ — $ 594.8

Export 308.3 — — — — 308.3

Total thermal 353.1 — 290.2 259.8 — 903.1

Metallurgical coal

Export — 309.9 — — — 309.9

Total metallurgical — 309.9 — — — 309.9

0.1 0.8 0.3 1.6 126.7 129.5

Revenue $ 353.2 $ 310.7 $ 290.5 $ 261.4 $ 126.7 $ 1,342.5

Three Months Ended September 30, 2021

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

Three Months Ended March 31, 2023

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

11 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nine Months Ended September 30, 2022

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

Thermal Mining Corporate and Other (1)

(Dollars in millions)

Domestic $ 125.0 $ — $ 771.6 $ 682.5 $ — $ 1,579.1

Export 833.7 — — 1.0 — 834.7

Total thermal 958.7 — 771.6 683.5 — 2,413.8

Metallurgical coal

Export — 1,161.2 — — — 1,161.2

Total metallurgical — 1,161.2 — — — 1,161.2

0.6 4.6 ( 0.2 ) 5.9 ( 230.1 ) ( 219.2 )

Revenue $ 959.3 $ 1,165.8 $ 771.4 $ 689.4 $ ( 230.1 ) $ 3,355.8

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.

10 unchanged sentences

(1) Corporate and Other includes the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

2 unchanged sentences

Revenue from physical sale of coal (3)

150.7 56.9 294.0 98.0

Trading revenue — 10.1

2.7 1.0 8.3 7.1

Total Corporate and Other $ 174.4 $ ( 335.4 )

(2) 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.

(2) Includes revenue from arrangements such as customer contract-related payments associated with volume shortfalls;

royalties related to coal lease agreements;

sales agency commissions;

property and facility rentals;

and revenue related to the Company’s assignment of rights to its excess port and rail capacity.

(3) Includes revenue recognized upon the physical sale of coal purchased from the Company’s operating segments and sold to customers through the Company’s coal trading business as part of settling certain derivative contracts.

Primarily represents the difference between the price contracted with the customer and the price allocated to the operating segment.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts Receivable

“Accounts receivable, net” at September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022 December 31, 2021

“Accounts receivable, net” at March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023 December 31, 2022

(Dollars in millions)

2 unchanged sentences

Accounts receivable, net $ 394.7 $ 465.5

None of the above receivables included allowances for credit losses at September 30, 2022 or December 31, 2021.

No charges for credit losses were recognized during the three and nine months ended September 30, 2022 or 2021.

None of the above receivables included allowances for credit losses at March 31, 2023 or December 31, 2022.

No charges for credit losses were recognized during the three months ended March 31, 2023 or 2022.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Inventories

“ Inventories, net” as of September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022 December 31, 2021

“ Inventories, net” as of March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023 December 31, 2022

(Dollars in millions)

3 unchanged sentences

Inventories, net $ 331.5 $ 296.1

Materials and supplies inventories, net presented above have been shown net of reserves of $ 7.6 million and $ 9.0 million as of September 30, 2022 and December 31, 2021.

Materials and supplies inventories, net presented above have been shown net of reserves of $ 9.4 million and $ 9.5 million as of March 31, 2023 and December 31, 2022.

(4) Equity Method Investments

The Company had total equity method investments and financing receivables of $ 32.8 million and $ 62.2 million reflected in “Investments and other assets” in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively, related to Middlemount Coal Pty Ltd (Middlemount).

Included in “Income from equity affiliates” in the unaudited condensed consolidated statements of operations was income related to Middlemount of $ 28.4 million and $ 15.8 million during the three months ended September 30, 2022 and 2021, respectively, and $ 123.6 million and $ 11.4 million during the nine months ended September 30, 2022 and 2021, respectively.

The Company received cash payments from Middlemount of $ 151.5 million and $ 7.6 million during the nine months ended September 30, 2022 and 2021, respectively.

The Company’s equity method investments include its joint venture interest in Middlemount Coal Pty Ltd (Middlemount), R3 Renewables LLC (R3) and certain other equity method investments.

The table below summarizes the book value of those investments, which are reported in “Investments and other assets” in the condensed consolidated balance sheets, and the related “Income from equity affiliates”:

(Income) Loss from Equity Affiliates

Book Value at Three Months Ended March 31,

March 31, 2023 December 31, 2022 2023 2022

(Dollars in millions)

Equity method investment related to Middlemount $ 29.4 $ 27.1 $ ( 2.6 ) $ ( 45.7 )

Equity method investment related to R3 8.2 7.0 0.8 1.0

Total equity method investments $ 37.6 $ 34.1 $ ( 1.8 ) $ ( 44.7 )

The Company received no cash payments from Middlemount during the three months ended March 31, 2023.

Payments of $ 47.0 million were received from Middlemount during the three months ended March 31, 2022.

One of the Company’s Australian subsidiaries is party to an agreement to provide a revolving loan to Middlemount.

The Compa ny’s participation in the revolving loan will not, at any time, exceed its 50 % equity interest of the revolving loan limit, which was $ 50 million Australian dollars at September 30, 2022.

The Company’s participation in the revolving loan will not, at any time, exceed its 50 % equity interest of the revolving loan limit, which was $ 50 million Australian dollars at March 31, 2023.

The revolving loan bears interest at 10 % per annum and expires on December 31, 2023.

There was no outstanding revolving loan at September 30, 2022 or December 31, 2021.

There was no outstanding revolving loan at March 31, 2023 or December 31, 2022.

In March 2022, the Company entered into a joint venture with unrelated partners to form R3.

R3 was formed with the intent of developing various sites, including certain reclaimed mining land held by the Company in the U.S., for utility-scale photovoltaic solar generation and battery storage.

The Company contributed $ 2.0 million to R3 during both the three months ended March 31, 2023 and 2022.

(5) Derivatives and Fair Value Measurements

1 unchanged sentence

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

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On a limited basis, the Company engages in the direct and brokered trading of coal and freight-related contracts.

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, 2022.

The Company had no diesel fuel or interest rate derivatives in place as of March 31, 2023.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Option Contracts

As of September 30, 2022, the Company had currency options outstanding with an aggregate notional amount of $ 855.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the nine-month period ending June 30, 2023.

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 $ 0.70 to $ 0.80 over the nine-month period ending June 30, 2023.

The Company has historically utilized currency forwards and options to hedge currency risk associated with anticipated Australian dollar expenditures.

As of March 31, 2023, the Company held average rate options with an aggregate notional amount of $ 632.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the nine-month period ending December 31, 2023.

The instruments 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 $ 0.70 to $ 0.75 over the nine-month period ending December 31, 2023.

As of March 31, 2023, the Company also held purchased collars with an aggregate notional amount of $ 350.0 million Australian dollars related to anticipated Australian dollar expenditures during the third and fourth quarters of 2023.

The purchased collars have a floor and ceiling of approximately $ 0.63 and $ 0.73 , respectively, whereby the Company will incur a loss on the instruments for rates below the floor and a gain for rates above the ceiling.

Derivative Contracts Related to Forecasted Sales

As of September 30, 2022, the Company held coal derivative contracts related to a portion of its forecasted sales with an aggregate notional volume of 1.0 million tonnes.

As of March 31, 2023, the Company held coal derivative contracts related to a portion of its forecasted sales with an aggregate notional volume of 0.3 million tonnes.

Such financial contracts may include futures, forwards and options.

Included in this total are 0.9 million tonnes related to financial derivatives entered to support the profitability of the Wambo Underground Mine as part of a strategy to extend the mine life through mid-2023.

Of this total, 0.3 million tonnes will settle in 2022 and 0.6 million tonnes will settle in 2023.

The remaining 0.1 million tonnes aggregate notional volume related to other coal financial contracts will settle in 2022.

The notional volume is related predominantly to financial derivatives entered to support the profitability of the Wambo Underground Mine as part of a strategy to extend the mine’s life.

All such tonnes will settle in 2023.

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, 2022, the Company recorded a net unrealized mark-to-market gain of $ 90.4 million on these coal derivative contracts, which includes approximately $ 49 million of unrealized mark-to-market gains on financial derivatives and approximately $ 41 million of unrealized mark-to-market gains on physical forward sales contracts.

During the nine months ended September 30, 2022, the Company recorded a net unrealized mark-to-market loss of $ 235.1 million on these coal derivative contracts, which includes approximately $ 257 million of unrealized mark-to-market losses on financial derivatives and approximately $ 22 million of unrealized mark-to-market gains on physical forward sales contracts.

During the three months ended March 31, 2023, the Company recorded a net unrealized mark-to-market gain of $ 118.7 million on financial coal derivative contracts, and no unrealized mark-to-market gains or losses on physical forward sales contracts.

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

The Company held nominal financial trading contracts as of March 31, 2023.

Tabular Derivatives Disclosures

3 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Asset Derivative Liability Derivative Asset Derivative Liability Derivative

5 unchanged sentences

Effect of counterparty netting ( 31.1 ) 31.1 ( 100.6 ) 100.6

Variation margin (received) posted ( 12.2 ) 390.0 ( 3.4 ) 95.2

Variation margin posted (received) — 48.8 ( 11.7 ) 209.7

Net derivatives and variation margin as classified in the balance sheets $ — $ — $ 3.0 $ —

2 unchanged sentences

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, 2022, the Company had posted $ 465.9 million aggregate margin cash, consisting of $ 377.8 million variation margin cash and $ 88.1 million initial margin.

As of March 31, 2023, the Company had posted $ 59.8 million aggregate margin cash, consisting of $ 48.8 million variation margin cash and $ 11.0 million initial margin.

As of December 31, 2022, the Company had posted $ 255.5 million aggregate margin cash, consisting of $ 198.0 million variation margin cash and $ 57.5 million initial margin.

3 unchanged sentences

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

Three Months Ended September 30, 2022

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

Derivative Instrument Classification

(Dollars in millions)

Foreign currency option contracts Operating costs and expenses $ ( 3.0 ) $ ( 1.6 ) $ ( 1.4 )

Derivative contracts related to forecasted sales Revenue ( 27.0 ) ( 117.4 ) 90.4

Financial trading contracts Revenue 0.3 0.5 ( 0.2 )

Total $ ( 29.7 ) $ ( 118.5 ) $ 88.8

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 Revenue ( 251.5 ) ( 13.1 ) ( 238.4 )

Financial trading contracts Revenue 0.7 0.7 —

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

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

5 unchanged sentences

Total $ 63.1 $ ( 36.1 ) $ 99.2

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

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

15 unchanged sentences

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

September 30, 2022

March 31, 2023

Level 1 Level 2 Level 3 Total

4 unchanged sentences

Equity securities 0.3 — — 0.3

Total net (liabilities) assets $ — $ ( 384.1 ) $ 2.3 $ ( 381.8 )

Total net assets (liabilities) $ 0.3 $ ( 48.8 ) $ — $ ( 48.5 )

December 31, 2022

11 unchanged sentences

• Derivative contracts related to forecasted sales and financial trading contracts are generally valued based on unadjusted quoted prices in active markets (Level 1) or a valuation that is corroborated by the use of market-based pricing (Level 2) except when credit and non-performance risk is considered to be a significant input (greater than 10 % of fair value), then the Company classifies as Level 3.

• Investments in equity securities are based on observed prices in an inactive market (Level 3).

• Investments in equity securities are currently based on unadjusted quoted prices in active markets (Level 1).

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, 2022 and December 31, 2021:

The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of March 31, 2023 and December 31, 2022:

• 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.

4 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(Dollars in millions)

Total debt at par value $ 345.0 $ 343.6

Unamortized debt issuance costs and original issue discount ( 21.8 ) ( 35.4 )

Unamortized debt issuance costs ( 9.4 ) ( 9.8 )

Net carrying amount $ 335.6 $ 333.8

Estimated fair value $ 511.3 $ 560.0

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.

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 to credit risk is substantially with electric utilities, energy marketers, steel producers and nonfinancial trading houses.

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

1 unchanged sentence

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 and nine months ended September 30, 2022 and 2021.

During the three months ended March 31, 2023, the entity in which the Company held a Level 3 investment in equity securities completed a merger transaction and its shares were exchanged for the shares of the newly-combined entity, which are publicly traded.

The Company recorded an impairment loss of $ 2.0 million upon the exchange of shares, and will mark the investment to market as a Level 1 asset prospectively.

The Company had no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2023 and 2022.

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

The Company recorded an impairment loss of $ 1.7 million related to its Level 3 investment in equity securities during the three months ended September 30, 2022.

(6) Property, Plant, Equipment and Mine Development

The composition of property, plant, equipment and mine development, net, as of September 30, 2022 and December 31, 2021 is set forth in the table below:

September 30, 2022 December 31, 2021

The composition of property, plant, equipment and mine development, net, as of March 31, 2023 and December 31, 2022 is set forth in the table below:

March 31, 2023 December 31, 2022

(Dollars in millions)

4 unchanged sentences

Property, plant, equipment and mine development, net $ 2,847.9 $ 2,865.0

Asset Impairment and Other At-Risk Assets

The Company has identified certain assets with an aggregate carrying value of $ 209.2 million at September 30, 2022 in its Other U.S.

Thermal Mining segment 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 September 30, 2022 and determined that no impairment charges were necessary as of that date.

(7) Income Taxes

The Company's effective tax rate before remeasurement for the three months ended March 31, 2023 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance.

The Company’s income tax provision of $ 118.0 million and income tax benefit of $ 1.0 million for the three months ended March 31, 2023 and 2022, respectively, included tax provisions of $ 0.4 million and $ 1.6 million, respectively, related to the remeasurement of foreign income tax accounts.

The Company’s estimated full year pretax income is expected to be primarily generated in Australia.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8) Income Taxes

The Company's effective tax rate before remeasurement for the nine months ended September 30, 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 is expecting to utilize substantial net operating losses in Australia and the U.S.

in 2022 based on estimated pretax income.

The Company’s income tax provision of $ 10.7 million and income tax benefit of $ 3.7 million for the three months ended September 30, 2022 and 2021, respectively, included tax benefits of $ 1.6 million and $ 1.1 million, respectively, related to the remeasurement of foreign income tax accounts.

The Company’s income tax provision of $ 21.0 million and income tax benefit of $ 10.3 million for the nine months ended September 30, 2022 and 2021, respectively, included tax benefits of $ 3.5 million and $ 1.6 million, respectively, related to the remeasurement of foreign income tax accounts.

(8) Long-term Debt

The Company’s total indebtedness as of September 30, 2022 and December 31, 2021 consisted of the following:

Debt Instrument (defined below, as applicable) September 30, 2022 December 31, 2021

The Company’s total indebtedness as of March 31, 2023 and December 31, 2022 consisted of the following:

Debt Instrument (defined below, as applicable) March 31, 2023 December 31, 2022

(Dollars in millions)

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

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

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

Senior Secured Term Loan due 2024 (Co-Issuer Term Loans) 114.6 206.0

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) 282.6 322.8

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

$ 320.0 $ 320.0

Finance lease obligations 25.0 23.6

Debt issuance costs ( 9.4 ) ( 9.8 )

869.2 1,137.8

Current portion of long-term debt 13.2 13.2

Long-term debt $ 322.4 $ 320.6

(1) The Company has the positive intent and ability to retire additional debt in the next twelve months using working capital.

As such, all debt with the exception of the 2028 Convertible Notes and finance lease obligations was classified within “Current portion of long-term debt” in the accompanying condensed consolidated balance sheets at September 30, 2022.

2021 Financing Activity and Subsequent Debt Repurchases

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

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

Subsequent to these transactions, the Company completed additional financing transactions during 2021 which 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.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the event of open market purchases of its debt, the terms of the 2024 Peabody Notes - now redeemed as described below - required, and the letter of credit facility entered into by the Company in connection with the 2021 financing activity (Company LC Agreement) requires the Company to make repurchase offers 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 94.94 % 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 September 30, 2022, the Company repurchased $ 48.8 million aggregate principal amount of its Senior Secured Term Loan and 2025 Notes for $ 46.6 million in various open market transactions.

As a result of these repurchases, the Company made a mandatory offer to repurchase $ 12.2 million of priority lien obligations under the Company LC Agreement at 95.57 % on October 17, 2022.

The offer will expire on November 16, 2022.

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 may 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 and $ 0.3 million of 2024 Co-Issuer Notes principal during the three months ended March 31, 2022.

Based upon the Wilpinjong Mine’s results for the six-month period ended June 30, 2022, the Company offered to prepay $ 65.1 million of total principal at 103.91 % during the three months ended September 30, 2022.

The holders of the Co-Issuer Term Loans unanimously declined their $ 37.9 million pro rata portion of the offer and the holders of the 2024 Co-Issuer Notes tendered for prepayment $ 18.2 million principal amount of their $ 27.2 million pro rata portion of the offer.

The Company completed the prepayment during the three months ended September 30, 2022.

Voluntary repurchases of Co-Issuer Term Loans are permissible through various methods, including a modified Dutch auction process in which the Company may solicit acceptable prices from holders.

During the three months ended June 30, 2022, the Company solicited bids from all holders of Co-Issuer Term Loans for the repurchase of up to $ 50.0 million principal amount, resulting in that full amount of principal being repurchased at a weighted average price of 103.91 %, or $ 52.0 million in total.

During the three months ended September 30, 2022, the Company solicited bids from all holders of Co-Issuer Term Loans for the repurchase of up to $ 75.0 million principal amount, resulting in $ 20.4 million of principal being repurchased at a weighted average price of 105.91 %, or $ 21.6 million in total.

The indenture which governs the 2024 Co-Issuer Notes requires that, within 30 business days following a repurchase of the Co-Issuer Term Loans such as that undertaken through the auction processes described above, the Company must also offer to repurchase an equivalent principal amount of the 2024 Co-Issuer Notes at the equivalent purchase price.

Further, the credit agreement which governs the Co-Issuer Term Loans requires parity between the holders of Co-Issuer Term Loans and holders of the 2024 Co-Issuer Notes with respect to repurchase offers.

As a result of the modified Dutch auction process completed during the three months ended June 30, 2022, the required equivalent offer to purchase $ 50.0 million aggregate principal amount of 2024 Co-Issuer Notes was made by the Company on May 26, 2022 and was subsequently increased to $ 93.9 million, at the Company’s discretion.

The offer was fully tendered and the Company completed the repurchase on July 25, 2022 for $ 97.5 million.

The discretionary increase to the 2024 Co-Issuer Notes repurchase offer compelled the Company to offer to repurchase an additional $ 43.9 million principal amount of Co-Issuer Term Loans at 103.91 % which resulted in the valid tender and purchase of $ 3.8 million principal for $ 4.0 million during the three months ended September 30, 2022.

As a result of the modified Dutch auction process completed during the three months ended September 30, 2022, the Company offered to repurchase the outstanding $ 81.6 million principal amount of 2024 Co-Issuer Notes at 105.91 % on September 19, 2022, which exceeded the required offer amount.

To maintain parity with respect to the holders of the Co-Issuer Term Loans, the Company simultaneously offered to repurchase $ 61.2 million principal amount of Co-Issuer Term Loans at 105.91 %.

Both offers will expire on November 18, 2022.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s various debt repurchases during 2022 resulted in the realization of net losses from early debt extinguishment of $ 8.7 million and $ 11.5 million during the three months and nine months ended September 30, 2022, respectively.

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).

During 2022, the Company utilized various methods allowable or required under its then-existing debt agreements to retire all of its senior secured long-term debt, leaving only its unsecured 3.250 % Convertible Senior Notes due 2028 (the 2028 Convertible Notes), which are further described below, and various finance lease obligations outstanding at December 31, 2022.

2028 Convertible Notes

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

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 Company used the proceeds of the offering of the 2028 Convertible Notes and available cash to redeem $ 62.6 million of senior secured notes maturing in 2024 and $ 257.4 million of senior secured notes maturing in 2025, and to pay related premiums, fees and expenses relating to the offering and redemptions.

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.

1 unchanged sentence

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.

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

(1) during any calendar quarter commencing after the calendar quarter ended 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.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 provided for a $ 150 million unsecured revolving credit facility (the Revolving Facility), was scheduled to mature on April 1, 2025 and bore interest at a rate of 10.0 % per annum on drawn amounts.

The Revolving Facility was 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 Company made no additional borrowings and terminated the facility on August 4, 2022.

Retirement of 2022 Notes

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

During the first quarter of 2023, the Company’s reported common stock prices did not prompt the conversion feature of the 2028 Convertible Notes.

As a result, the 2028 Convertible Notes are not convertible at the option of the holders during the second quarter of 2023.

As of March 31, 2023, the if-converted value of the 2028 Convertible Notes exceeded the principal amount by $ 92.6 million.

Interest Charges

1 unchanged sentence

Additionally, the table sets forth the amount of cash paid for interest and the amount of non-cash interest expense primarily related to the amortization of debt issuance costs.

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

4 unchanged sentences

Non-cash interest expense $ 1.6 $ 3.8

The Senior Secured Term Loan is the Company’s only outstanding variable rate debt, which bore interest at LIBOR plus 2.75 % per annum ( 5.83 %) at September 30, 2022.

The rate increased to 6.33 % on October 26, 2022.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Covenant Compliance

The Company was compliant with all relevant covenants under its debt agreements at September 30, 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.

The Company was compliant with all relevant covenants under its debt and other finance agreements at March 31, 2023.

The April 2023 termination of the Company’s credit agreement and related letter of credit facility, as described in Note 11.

“Financial Instruments and Other Guarantees,” eliminated the related compliance requirements as of March 31, 2023 and prospectively.

(9) 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, excluding service cost” in the unaudited condensed consolidated statements of operations.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net periodic pension credit included the following components:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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

Three Months Ended March 31,

(Dollars in millions)

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

Interest cost on projected benefit obligation $ 7.4 $ 5.3

Expected return on plan assets ( 6.6 ) ( 5.9 )

Net periodic pension credit $ ( 0.6 ) $ ( 0.6 ) $ ( 1.8 ) $ ( 1.7 )

Net periodic pension cost (credit) $ 0.8 $ ( 0.6 )

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

As of March 31, 2023, 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 2023 based on minimum funding requirements and does not expect to make any discretionary contributions in 2023 at this time.

1 unchanged sentence

(PIC), a wholly-owned subsidiary of PEC, entered into a commitment agreement relating to the Peabody Investments Corp.

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

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

The Peabody Retirement Plan continues to administer and pay the retirement benefits of Peabody Retirement Plan participants and is reimbursed by Prudential for the payment of all benefits covered by the GAC.

The purchase of the GAC was funded directly by the Peabody Retirement Plan’s assets.

There will be no impact on the monthly retirement benefits paid to Peabody Retirement Plan participants and no material impact on contributions for the Peabody Retirement Plan in 2022 as a result of this transaction.

In May 2022, the Board of Directors of PIC approved the termination of the Peabody Retirement Plan effective July 31, 2022.

In June 2022, the Peabody Retirement Plan’s participants were notified of the Peabody Retirement Plan termination and the Peabody Retirement Plan filed an application with the Internal Revenue Service to request a determination as to the qualified status under §401(a) of the Internal Revenue Code of 1986 with respect to the amendment and termination of the Peabody Retirement Plan.

Once all regulatory approvals are received, benefits will be distributed to participants or transferred to an insurance company.

Anticipated asset distribution, via voluntary lump sum payouts for active and deferred participants, is expected in the first half of 2023, following which participants not electing a lump sum and all participants in payment status will be transferred to a highly qualified insurance company.

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

Under the commitment agreement, the Peabody Plan purchased a buy-in group annuity contract (GAC) from Prudential for approximately $ 500 million and Prudential will reimburse the Peabody Plan for benefit payments to be made to the Peabody Plan’s participants.

The benefit obligation was not transferred to Prudential and the Peabody Plan continues to administer and pay the retirement benefits of Peabody Plan participants and is reimbursed by Prudential for the payment of all benefits covered by the GAC.

The purchase of the GAC was funded directly by the Peabody Plan’s assets.

There was no impact on the monthly retirement benefits paid to Peabody Plan participants and no material impact on contributions for the Peabody Plan in 2022 or 2023 as a result of this transaction.

In May 2022, the Board of Directors of PIC approved the termination of the Peabody Plan effective July 31, 2022.

In June 2022, the Peabody Plan’s participants were notified of the Peabody Plan termination and the Peabody Plan filed an application with the Internal Revenue Service to request a determination as to the qualified status under §401(a) of the Internal Revenue Code of 1986 with respect to the amendment and termination of the Peabody Plan.

In February 2023, as part of the Peabody Plan termination process, the Company announced a program to offer a voluntary lump-sum pension payout to certain active and deferred participants of the Peabody Plan which would fully settle the Peabody Plan’s obligation to them.

The program provided participants with a limited-time opportunity to elect to receive a lump-sum settlement of their pension benefit or begin to receive their benefit in the form of a monthly annuity in May 2023.

Participants not electing the lump-sum settlement or annuity options will have their pension benefit transferred to a highly qualified insurance company.

Through May 1, 2023, the Company settled $ 21.5 million of its pension obligations for active and deferred participants in the Peabody Plan with an equal amount paid from plan assets.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net periodic postretirement benefit credit included the following components:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

4 unchanged sentences

Net periodic postretirement benefit credit $ ( 10.9 ) $ ( 11.7 )

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.

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.

12 unchanged sentences

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 less than 0.1 million for both the three and nine months ended September 30, 2022, and approximately 0.9 million and 0.8 million for the three and nine months ended September 30, 2021, respectively, because to do so would have been anti-dilutive for those periods.

The computation of diluted EPS excluded aggregate share-based compensation awards of less than 0.1 million and approximately 1.2 million for the three months ended March 31, 2023 and 2022, 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.

3 unchanged sentences

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,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions, except per share data)

1 unchanged sentence

Income (loss) from continuing operations, net of income taxes $ 284.1 $ ( 119.8 )

Net income attributable to noncontrolling interests 8.5 8.9 8.5 12.6

Net income (loss) attributable to noncontrolling interests 14.3 ( 1.1 )

Income (loss) from continuing operations attributable to common stockholders 269.8 ( 118.7 )

(Loss) income from discontinued operations, net of income taxes ( 0.8 ) 24.3 ( 2.3 ) 20.0

Loss from discontinued operations, net of income taxes ( 1.3 ) ( 0.8 )

Net income (loss) attributable to common stockholders $ 268.5 $ ( 119.5 )

2 unchanged sentences

Tax adjusted interest expense related to 2028 Convertible Notes 2.6 —

Net income attributable to noncontrolling interests 8.5 8.9 8.5 12.6

Net income (loss) attributable to noncontrolling interests 14.3 ( 1.1 )

Income (loss) from continuing operations attributable to common stockholders 272.4 ( 118.7 )

(Loss) income from discontinued operations, net of income taxes ( 0.8 ) 24.3 ( 2.3 ) 20.0

Loss from discontinued operations, net of income taxes ( 1.3 ) ( 0.8 )

Net income (loss) attributable to common stockholders $ 271.1 $ ( 119.5 )

1 unchanged sentence

Weighted average shares outstanding — basic

144.1 114.9 141.4 104.9

Dilutive impact of share-based compensation awards 0.7 —

3 unchanged sentences

Income (loss) from continuing operations $ 1.87 $ ( 0.87 )

(Loss) income from discontinued operations ( 0.01 ) 0.22 ( 0.02 ) 0.19

Loss from discontinued operations ( 0.01 ) ( 0.01 )

Net income (loss) attributable to common stockholders $ 1.86 $ ( 0.88 )

1 unchanged sentence

Income (loss) from continuing operations $ 1.69 $ ( 0.87 )

(Loss) income from discontinued operations ( 0.01 ) 0.22 ( 0.02 ) 0.19

Loss from discontinued operations ( 0.01 ) ( 0.01 )

Net income (loss) attributable to common stockholders $ 1.68 $ ( 0.88 )

(11) 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, 2022, such instruments included $ 1,380.5 million of surety bonds and $ 505.4 million of letters of credit.

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

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

3 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

In accordance with the 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 since entering into the surety agreement, additional collateral of $ 38.7 million was posted during the nine months ended September 30, 2022 and $ 57.4 million was posted subsequent to September 30, 2022, primarily in the form of cash-collateralized letters of credit.

At September 30, 2022, the Company’s asset retirement obligations of $ 725.8 million were supported by surety bonds of $ 1,234.6 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, 2022 which served as collateral for surety bonds in support of asset retirement obligations amounted to $ 369.9 million.

The following table summarizes the Company’s financial instruments that carry off-balance-sheet risk.

March 31, 2023 December 31, 2022

Reclamation Support Other Support (1)

Total Reclamation Support Other Support (1)

(Dollars in millions)

Surety bonds $ 1,236.4 $ 152.1 $ 1,388.5 $ 1,250.1 $ 126.7 $ 1,376.8

Letters of credit (2)

22.4 67.0 89.4 437.8 131.8 569.6

1,258.8 219.1 1,477.9 1,687.9 258.5 1,946.4

Letters of credit in support of surety

( 22.4 ) ( 5.4 ) ( 27.8 ) ( 431.7 ) ( 37.2 ) ( 468.9 )

Obligations supported, net $ 1,236.4 $ 213.7 $ 1,450.1 $ 1,256.2 $ 221.3 $ 1,477.5

(1) Instruments support obligations related to pension and health care plans, workers’ compensation, property and casualty insurance, customer and vendor contracts, and certain restoration ancillary to prior mining activities.

(2) March 31, 2023 balances exclude $ 223.8 million of letters of credit outstanding under the LC Facility and $ 101.3 million of letters of credit outstanding under the Company’s accounts receivable securitization program that were cancelled by April 14, 2023.

The collateral obligations related to such letters of credit were met by the March 31, 2023 funding of collateral trust accounts in connection with the surety agreement amendment described below.

Amounts do not include cash collateralized letters of credit.

(3) Certain letters of credit serve as collateral for surety bonds at the request of surety bond providers.

Surety Agreement Amendment and Collateral Requirements

In April 2023, the Company amended its existing agreement with the providers of its surety bond portfolio, dated November 6, 2020.

Under the agreement, the Company was required to post collateral on a periodic basis through December 31, 2025.

Prior to the April 2023 amendment, the Company had posted cumulative collateral of $ 557.8 million, primarily in the form of letters of credit.

Under the April 2023 amendment, the Company and surety providers agreed to a maximum aggregate collateral amount of $ 721.8 million based upon bonding levels at the effective date of the amendment.

This maximum collateral amount represents a negotiated increase from the uncapped cumulative collateral amount prior to the amendment and may vary prospectively as future bonding levels increase or decrease.

The amendment also removes restrictions on the payment of dividends and share repurchases, and extends the agreement through December 31, 2026.

In order to maintain the new maximum collateral standstill, the Company must remain compliant with a minimum liquidity test and a maximum net leverage ratio, as measured each quarter.

The minimum liquidity test requires the Company to maintain liquidity at the greater of $ 400 million or the difference between the penal sum of all surety bonds and the amount of collateral posted in favor of surety providers.

The Company must also maintain a maximum net leverage ratio of 1.5 to 1.0 , where the numerator consists of its funded debt, net of cash, and the denominator consists of its Adjusted EBITDA for the trailing twelve months.

For purposes of calculating the ratio, only 50 % of the outstanding principal amount of the Company’s 2028 Convertible Notes is deemed to be funded debt.

The Company’s ability to pay dividends and make share repurchases is also subject to the quarterly minimum liquidity test.

Such compliance requirements will commence for the second quarter of 2023.

The Company granted second liens on $ 200.0 million of mining equipment under the original agreement, which remain in force under the April 2023 amendment.

To fund the maximum collateral amount, the Company deposited $ 566.3 million into trust accounts for the benefit of certain surety providers on March 31, 2023.

The remainder was comprised of $ 140.5 million of existing cash-collateralized letters of credit and $ 15.0 million already held on behalf of a surety provider.

The amendment became effective on April 14, 2023, when the Company terminated a credit agreement which, as amended, provided for $ 237.2 million of capacity for irrevocable standby letters of credit (LC Facility).

The $ 223.8 million of letters of credit that were outstanding under the LC Facility at March 31, 2023 were subsequently cancelled and, in certain cases, replaced by cash-collateralized letters of credit or letters of credit issued under the Company’s accounts receivable securitization program.

The now-terminated LC Facility had an original capacity of $ 324.0 million and was subsequently amended at various dates to reduce its capacity and effect certain other changes, including in February 2023 to reduce capacity by $ 65.0 million, accelerate the expiration date to December 31, 2023 from December 31, 2024, and eliminate the prepayment premium due upon any reduction of commitments thereunder prior to July 29, 2023.

The Company recorded early debt extinguishment losses of $ 6.8 million during the three months ended March 31, 2023, primarily as a result of the February 2023 amendment.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Prior to its termination, undrawn letters of credit under the LC Facility bore interest at 6.00 % per annum and unused commitments were subject to a 0.50 % per annum commitment fee.

Accounts Receivable Securitization

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

The 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.

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 September 30, 2022, the Com pany had no outstanding borrowings and $ 164.1 million o f letters of credit outstanding 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 $ 10.9 million at September 30, 2022.

The Company was not required to post cash collateral under the Securitization Program at September 30, 2022.

The Company incurred interest and fees associated with the Securitization Program of $ 1.2 million and $ 1.0 million during the three months ended September 30, 2022 and 2021, respectively, and $ 3.4 million and $ 3.0 million during the nine months ended September 30, 2022 and 2021, respectively, which have been recorded as “Interest expense” in the accompanying unaudited condensed consolidated statements of operations.

In 2017, the Company entered into the Sixth Amended and Restated Receivables Purchase Agreement, as amended from time to time (the Receivables Purchase Agreement.) The receivables securitization program authorized under the agreement (Securitization Program) is subject to customary events of default.

The Receivables Purchase Agreement was amended in February 2023 to increase the available funding capacity from $ 175.0 million to $ 225.0 million and adjust the relevant interest rate for borrowings to a secured overnight financing rate (SOFR).

Funding capacity under the Securitization Program may also be utilized for letters of credit in support of other obligations, which has been the Company’s primary utilization.

Borrowings under the Securitization Program bear interest at SOFR 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, 2023, the Com pany had no outstanding borrowings and $ 190.7 million o f letters of credit outstanding under the Securitization Program, primarily in support of reclamation obligations.

Availability under the Securitizatio n Program, which is adjusted for certain ineligible receivables, was $ 15.3 million at March 31, 2023.

The Company was not required to post cash collateral under the Securitization Program at March 31, 2023.

By April 14, 2023, $ 101.3 million of letters of credit outstanding under the Securitization Program were cancelled in connection with the surety agreement amendment and related trust accounts described above.

The Company incurred interest and fees associated with the Securitization Program of $ 1.0 million and $ 0.9 million during the three months ended March 31, 2023 and 2022, respectively, which have been recorded as “Interest expense” in the accompanying unaudited condensed consolidated statements of operations.

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, expected to primarily support reclamation bonding requirements.

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

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 2.24 % per annum on the amount of cash collateral posted in support of letters of credit, with the rate subject to variation over time.

The Company receives a variable deposit rate on the amount of cash collateral posted in support of letters of credit.

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

At September 30, 2022, collateralized letters of credit of $ 43.2 million were outstanding under the agreement.

The underlying collateral balance of $ 44.5 million at September 30, 2022 is included with “Investments and other assets” in the accompanying condensed consolidated balance sheets.

At March 31, 2023, letters of credit of $ 245.3 million were outstanding under the agreement, which were collateralized by cash of approximately $ 250.0 million.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 2022, the Company had other collateral balances of $ 60.9 million posted, including $ 43.8 million related to reclamation, which are included with “Investments and other assets” in the accompanying condensed consolidated balance sheets.

Such collateral balances amounted to $ 23.8 million at December 31, 2021, including $ 15.0 million related to reclamation.

Restricted Cash and Collateral

The following table summarizes the Company’s “Restricted cash and collateral” in the accompanying condensed consolidated balance sheets.

Restricted cash balances are held in controlled accounts with minimum balance requirements;

withdrawals are subject to the approval of account beneficiaries, such as the Company’s surety providers, who have perfected security interests in the funds.

The Company’s other collateral generally includes deposits held by regulatory authorities or financial institutions over which the Company has no control or ability to access.

March 31, 2023 December 31, 2022

(Dollars in millions)

Restricted cash (1)

Surety trust accounts (2)

Collateralized letters of credit funding (2)

Other collateral (1)

Deposits with regulatory authorities for reclamation and other obligations 78.4 33.6

LC Facility (3)

Deposit held on behalf of surety 15.0 15.0

Restricted cash and collateral $ 936.7 $ 187.4

(1) Restricted cash balances are combined with unrestricted cash and cash equivalents in the accompanying unaudited condensed consolidated statements of cash flows;

changes in restricted cash balances are thus not reflected in the operating, investing or financing activities therein.

Changes in other collateral balances are reflected as operating activities therein.

(2) Surety trust accounts and the funding for collateralized letters of credit are comprised of highly liquid investments with original maturities of three months or less;

interest and other earnings on such funds accrue to the Company.

(3) Balance relates to the Company’s mandatory repurchase of $ 30.0 million priority lien obligations under the LC Facility during 2022 at approximately 95 %.

The Company received $ 30.0 million upon termination of the LC Facility on April 14, 2023 .

(12) Commitments and Contingencies

Unconditional Purchase Obligations

As of September 30, 2022, purchase commitments for capital expenditures were $ 77.8 million, all of which is obligated within the next three years, with $ 71.3 million obligated within the next 12 months.

As of March 31, 2023, purchase commitments for capital expenditures were $ 105.4 million, all of which is obligated within the next two years, with $ 97.4 million obligated within the next 12 months.

There were no other material changes to the Company’s commitments from the information provided in Note 21.

3 unchanged sentences

The Company believes it has recorded adequate reserves for these liabilities.

The Company discusses its significant legal proceedings below, including ongoing proceedings and those that impacted the Company’s results of operations for the periods presented.

Litigation and Matters Relating to Continuing Operations

Securities Class Action.

On September 28, 2020, the Oklahoma Firefighters Pension and Retirement System brought a lawsuit, styled In Re Peabody Energy Corporation Securities Litigation No.

1:20-cv-08024 (PKC), against the Company and certain of its officers in the U.S.

District Court for the Southern District of New York (the Court) on behalf of a putative class of shareholders (Plaintiffs) who held Company stock between April 3, 2017 and October 28, 2019, for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (Securities Class Action).

Plaintiffs alleged 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.

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

On January 25, 2021, the Court entered a scheduling order for this matter.

Plaintiffs filed their amended complaint on March 19, 2021.

The defendants filed a pre-motion letter on April 30, 2021, while the Plaintiffs’ response letter was filed on May 6, 2021.

The defendants filed their motion to dismiss on June 7, 2021.

The Plaintiffs’ opposition brief to the motion to dismiss was filed on July 22, 2021.

The defendants filed their reply to Plaintiffs’ opposition on August 23, 2021, which completed briefing.

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 remained in the case.

On May 13, 2022, the Court entered a Case Management and Scheduling Order.

On August 2, 2022, Peabody and Plaintiffs agreed to settle all claims brought on behalf of all persons who purchased or otherwise acquired the Company’s shares between April 3, 2017 and October 28, 2019 in exchange for $ 4.6 million, to be paid by Peabody’s insurers.

The parties further agreed to negotiate in good faith and execute a definitive stipulation of settlement and related documents, which are subject to the Court’s approval.

The stipulation of settlement will not contain any admission of liability, wrongdoing or responsibility by any of the parties and will provide that upon final approval of the settlement, the case will be dismissed with prejudice, with mutual releases by all parties.

On October 13, 2022, the Court entered an Order of Preliminary Approval of the settlement agreement.

A hearing date of February 7, 2023 is set for final approval of the settlement agreement.

The Company discusses its significant legal proceedings below, including ongoing proceedings and those that impacted the Company’s consolidated results of operations for the periods presented.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivative Actions.

On December 22, 2020, a plaintiff (Phelps), putatively on behalf of the Company, brought a shareholder derivative lawsuit, styled Phelps v.

Samantha Algaze, et al.

1:20-cv-01747-UNA (D.

22, 2020), in the U.S.

District Court for the District of Delaware against certain directors and former officers of the Company, as defendants.

The Company was also named as a nominal defendant.

The plaintiff did not make a demand on the Company’s board before instituting the lawsuit and alleges such demand would have been futile.

In the complaint, the plaintiff alleges that the defendants failed to disclose adverse facts relating to the safety practices at the Company’s North Goonyella Mine, thereby leading to a September 28, 2018 fire, and allegedly failed to disclose adverse facts pertaining to the feasibility of reopening the mine.

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.

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.

Glenn Kellow, et al.

1:21-cv-00183-UNA (D.

10, 2021), in the U.S.

District Court for the District of Delaware against the directors and current and former officers of the Company, as defendants.

The Company was named as a nominal defendant.

This suit makes claims similar to those made in the Phelps matter, but asserts a claim for alleged misstatements in a proxy statement under Section 14(a) of the Securities and Exchange Act of 1934.

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 ruled on the motion to dismiss in the Securities Class Action.

In light of the settlement agreement in the Securities Class Action, on September 7, 2022, the Court entered Stipulation and Order of Voluntary Dismissal Without Prejudice Pursuant to Fed.

419a)(1)(A)(ii) for the Phelps and Di Fusco matters;

effectively closing the shareholder derivative lawsuits.

Litigation and Matters Relating to Continuing Operations

Metropolitan Mine Stormwater Discharge.

Over the past two years, there has been significantly high rainfall in New South Wales, including unprecedented rain totals at the Metropolitan Mine site.

Over the past few years, there has been significantly high rainfall in New South Wales, including unprecedented rain totals at the Metropolitan Mine site.

While stormwater collected at the mine site is managed through two sedimentation dams, at times the heavy rainfall has presented challenges with managing the significant volumes of stormwater, as the surface water management infrastructure has not had sufficient capacity.

As a result, on multiple occasions throughout 2021 and 2022 stormwater has been discharged from the mine site.

During this period of time, Metropolitan Collieries Pty Ltd (MCPL), a wholly-owned subsidiary of PEC, has been actively undertaking works, including the use of long reach excavators and pumping systems, to remove accumulated material from the sedimentation dams to restore full site stormwater capacity.

Despite the measures undertaken by MCPL to manage and improve the situation, the Environment Protection Authority is currently undertaking an investigation in relation to the discharges of sediment laden water from the mine site.

The Environment Protection Authority is investigating potential offenses against the environmental protection legislation.

MCPL is fully cooperating with the Environment Protection Authority in relation to this investigation and has also engaged external consultants to undertake a review of the surface water management infrastructure.

MCPL is in ongoing discussions with the Environmental Protection Authority with respect to the timeline for the restoration of stormwater capacity and sediment removal.

Metropolitan Collieries Pty Ltd (MCPL), a wholly-owned subsidiary of PEC, removed accumulated material from the sedimentation dams to restore full site stormwater capacity by December 31, 2022 and has identified and is implementing additional controls for the management of sediment moving forward.

The Environment Protection Authority is investigating potential offenses against the environmental protection legislation arising from the stormwater discharges from the site.

Puerto Rico Climate Change Lawsuit .

On November 22, 2022, the Municipalities of Puerto Rico filed a class action complaint for damages against several major energy fuel producers, including Peabody Energy.

This lawsuit represents the latest in a series of lawsuits that have been brought in both state and federal court around the United States, generally seeking to impose liability on the energy fuel producers for the effects allegedly caused by climate change.

Many of these lawsuits have been brought on behalf of governmental entities (counties, cities, and towns) by plaintiff law firms on a contingent fee arrangement.

The causes of action in the Puerto Rico lawsuit include public and private nuisance, liability for failure to warn, consumer fraud, antitrust and claims under the Racketeer Influenced and Corrupt Organizations Act.

On April 21, 2023, the plaintiffs filed a Notice of Voluntary Dismissal dismissing all claims against the Company without prejudice.

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

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

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

The Company reassesses the probability and estimability of contingent losses as new information becomes available.

8 unchanged sentences

On October 9, 2015, Patriot’s bankruptcy court entered an order confirming Patriot’s plan of reorganization, which provided, among other things, for the sale of substantially all of Patriot’s assets to two different buyers.

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Patriot had federal and state black lung occupational disease liabilities related to workers employed in periods prior to Patriot’s spin-off from the Company in 2007.

4 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 $ 85.7 million and $ 87.2 million at September 30, 2022 and December 31, 2021, respectively.

The liability, which is classified as discontinued operations, is included in the Company’s condensed consolidated balance sheet within “Accounts payable and accrued expenses” and “Other noncurrent liabilities.” 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.

The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $ 80.7 million and $ 82.3 million at March 31, 2023 and December 31, 2022, respectively.

The liability, which is classified as discontinued operations, is included in the Company’s condensed consolidated balance sheets within “Accounts payable and accrued expenses” and “Other noncurrent liabilities.” 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.

The amount of the Company’s recorded liability reflects only Patriot workers employed by former subsidiaries of the Company that are presently retired, disabled or otherwise not actively employed.

7 unchanged sentences

Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments’ operating performance, as displayed in the reconciliation below.

Management believes non-GAAP performance measures are used by investors to measure the Company’s operating performance and lenders to measure the Company’s ability to incur and service debt.

Management believes non-GAAP performance measures are used by investors to measure the Company’s operating performance.

Adjusted EBITDA is not intended to serve as an alternative to U.S.

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

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reportable segment results were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

12 unchanged sentences

Total $ 390.6 $ 327.5

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

4 unchanged sentences

Asset impairment 2.0 —

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates ( 0.5 ) ( 6.4 ) ( 1.7 ) ( 8.4 )

Changes in amortization of basis difference related to equity affiliates ( 0.3 ) ( 0.6 )

Interest expense 18.4 39.4

Net loss (gain) on early debt extinguishment 8.7 ( 16.0 ) 34.5 ( 31.3 )

Net loss on early debt extinguishment 6.8 23.5

Interest income ( 13.1 ) ( 0.5 )

4 unchanged sentences

Adjusted EBITDA $ 390.6 $ 327.5

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(14) Other Events

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.

At September 30, 2022, the Company remains responsible for $ 6.4 million of reclamation liabilities.

The Company recorded a gain of $ 26.1 million in connection with the sale, which is included within “Net gain on disposals” in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

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

The Company recorded a gain of $ 24.6 million in connection with the sale, which is included within “(Loss) income from discontinued operations, net of income taxes” in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

Shoal Creek Incident

On March 29, 2023, the Company’s Shoal Creek Mine experienced a fire involving void fill material utilized to stabilize the roof structure of the mine.

All mine personnel were safely evacuated from the mine.

The Mine Safety and Health Administration (MSHA) has allowed mine rescue-equipped personnel into the mine at various times to assess the situation.

On April 26, 2023, MSHA approved a temporary sealing program which was completed on April 28, 2023, and the Company continues to monitor air quality in the affected underground area.

Port and Rail Capacity Assignment

During the three months ended March 31, 2023, the Company entered into an agreement to assign the right to its excess port and rail capacity related to its North Goonyella Mine to an unrelated party in exchange for $ 30.0 million Australian dollars.

Half of such amount was received by the Company upon entry into the agreement, and half is payable in June 2024, subject to certain conditions.

The Company recorded revenue of $ 19.2 million and a discounted long-term receivable of $ 9.2 million in connection with the transaction during the three months ended March 31, 2023.

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