UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(Mark One)
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 20202021


or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 1-16463

btu-20210331_g1.jpg
PEABODY ENERGY CORPORATIONCORPORATION
(Exact name of registrant as specified in its charter)
Delaware13-4004153
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Delaware13-4004153
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
701 Market Street,St. Louis,Missouri63101-1826
(Address of principal executive offices)(Zip Code)
(314) (314) 342-3400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareBTUNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer☑☐                         Accelerated filer ☐☑
Non-accelerated filer ☐                         Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ☐
There were 97.798.3 million shares of the registrant’s common stock (par value of $0.01 per share) outstanding at May 1, 2020.
April 30, 2021.




TABLE OF CONTENTS
Page
Item 1. Financial Statements
1
Unaudited Condensed Consolidated Statements of Operations
1
Unaudited Condensed Consolidated Statements of Comprehensive Income
2
Condensed Consolidated Balance Sheets
3
Unaudited Condensed Consolidated Statements of Cash Flows
4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
6
Notes to Unaudited Condensed Consolidated Financial Statements
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
3327
Item 3. Quantitative and Qualitative Disclosures About Market Risk
5450
Item 4. Controls and Procedures
5450
Item 1. Legal Proceedings
5450
Item 1A. Risk Factors
5550
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
5651
Item 4. Mine Safety Disclosures
5652
Item 6. Exhibits
52
5753
5855
SIGNATURE
59


Table of Contents



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions, except per share data)
Revenues$846.2
 $1,250.6
Costs and expenses   
Operating costs and expenses (exclusive of items shown separately below)779.5
 948.2
Depreciation, depletion and amortization106.0
 172.5
Asset retirement obligation expenses17.6
 13.8
Selling and administrative expenses24.9
 36.7
Restructuring charges6.5
 0.2
Transaction costs related to joint ventures4.2
 —
Other operating (income) loss:  
Net gain on disposals(8.1) (1.5)
Provision for North Goonyella equipment loss—
 24.7
North Goonyella insurance recovery—
 (125.0)
Loss (income) from equity affiliates9.1
 (3.5)
Operating (loss) profit(93.5) 184.5
Interest expense33.1
 35.8
Interest income(3.1) (8.3)
Net periodic benefit costs, excluding service cost2.8
 4.9
(Loss) income from continuing operations before income taxes(126.3) 152.1
Income tax provision3.0
 18.8
(Loss) income from continuing operations, net of income taxes(129.3) 133.3
Loss from discontinued operations, net of income taxes(2.2) (3.4)
Net (loss) income(131.5) 129.9
Less: Net (loss) income attributable to noncontrolling interests(1.8) 5.7
Net (loss) income attributable to common stockholders$(129.7) $124.2
    
(Loss) income from continuing operations:   
Basic (loss) income per share$(1.31) $1.18
Diluted (loss) income per share$(1.31) $1.15
Net (loss) income attributable to common stockholders:   
Basic (loss) income per share$(1.33) $1.14
Diluted (loss) income per share$(1.33) $1.12


Three Months Ended March 31,
20212020
(Dollars in millions, except per share data)
Revenues$651.3 $846.2 
Costs and expenses
Operating costs and expenses (exclusive of items shown separately below)582.6 779.5 
Depreciation, depletion and amortization68.3 106.0 
Asset retirement obligation expenses15.9 17.6 
Selling and administrative expenses21.7 24.9 
Restructuring charges2.1 6.5 
Transaction costs related to joint ventures0 4.2 
Other operating (income) loss:
Net loss (gain) on disposals0.6 (8.1)
Loss from equity affiliates0.9 9.1 
Operating loss(40.8)(93.5)
Interest expense52.4 33.1 
Gain on early debt extinguishment(3.5)0 
Interest income(1.5)(3.1)
Net periodic benefit (credit) costs, excluding service cost(8.7)2.8 
Loss from continuing operations before income taxes(79.5)(126.3)
Income tax (benefit) provision(1.8)3.0 
Loss from continuing operations, net of income taxes(77.7)(129.3)
Loss from discontinued operations, net of income taxes(2.0)(2.2)
Net loss(79.7)(131.5)
Less: Net income (loss) attributable to noncontrolling interests0.4 (1.8)
Net loss attributable to common stockholders$(80.1)$(129.7)
Loss from continuing operations:
Basic loss per share$(0.79)$(1.31)
Diluted loss per share$(0.79)$(1.31)
Net loss attributable to common stockholders: 
Basic loss per share$(0.81)$(1.33)
Diluted loss per share$(0.81)$(1.33)
See accompanying notes to unaudited condensed consolidated financial statements.


1

Table of Contents



PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Net (loss) income$(131.5) $129.9
Postretirement plans and workers’ compensation obligations (net of $0.0 tax provisions in each period)(2.2) (2.2)
Foreign currency translation adjustment(6.8) 0.1
Other comprehensive loss, net of income taxes(9.0) (2.1)
Comprehensive (loss) income(140.5) 127.8
Less: Net (loss) income attributable to noncontrolling interests(1.8) 5.7
Comprehensive (loss) income attributable to common stockholders$(138.7) $122.1


Three Months Ended March 31,
20212020
(Dollars in millions)
Net loss$(79.7)$(131.5)
Postretirement plans (net of $0.0 tax provisions in each period)(11.0)(2.2)
Foreign currency translation adjustment(0.2)(6.8)
Other comprehensive loss, net of income taxes(11.2)(9.0)
Comprehensive loss(90.9)(140.5)
Less: Net income (loss) attributable to noncontrolling interests0.4 (1.8)
Comprehensive loss attributable to common stockholders$(91.3)$(138.7)
See accompanying notes to unaudited condensed consolidated financial statements.


2

Table of Contents



PEABODY ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)  
 March 31, 2020 December 31, 2019
 (Amounts in millions, except per share data)
ASSETS   
Current assets   
Cash and cash equivalents$682.5
 $732.2
Accounts receivable, net of allowance for credit losses of $0.0 at March 31, 2020 and December 31, 2019265.2
 329.5
Inventories269.2
 331.5
Other current assets202.3
 220.7
Total current assets1,419.2
 1,613.9
Property, plant, equipment and mine development, net4,607.8
 4,679.1
Operating lease right-of-use assets78.0
 82.4
Investments and other assets120.5
 139.1
Deferred income taxes4.9
 28.3
Total assets$6,230.4
 $6,542.8
    
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities   
Current portion of long-term debt$12.6
 $18.3
Accounts payable and accrued expenses793.4
 957.0
Total current liabilities806.0
 975.3
Long-term debt, less current portion1,294.3
 1,292.5
Deferred income taxes25.5
 28.8
Asset retirement obligations666.6
 654.1
Accrued postretirement benefit costs587.7
 593.4
Operating lease liabilities, less current portion44.5
 52.8
Other noncurrent liabilities272.5
 273.4
Total liabilities3,697.1
 3,870.3
Stockholders’ equity   
Preferred Stock — $0.01 per share par value; 100.0 shares authorized, no shares issued or outstanding as of March 31, 2020 and December 31, 2019—
 —
Series Common Stock — $0.01 per share par value; 50.0 shares authorized, no shares issued or outstanding as of March 31, 2020 and December 31, 2019—
 —
Common Stock — $0.01 per share par value; 450.0 shares authorized, 139.6 shares issued and 97.2 shares outstanding as of March 31, 2020 and 139.2 shares issued and 96.9 shares outstanding as of December 31, 20191.4
 1.4
Additional paid-in capital3,353.3
 3,351.1
Treasury stock, at cost — 42.4 and 42.3 common shares as of March 31, 2020 and December 31, 2019(1,368.1) (1,367.3)
Retained earnings467.3
 597.0
Accumulated other comprehensive income22.6
 31.6
Peabody Energy Corporation stockholders’ equity2,476.5
 2,613.8
Noncontrolling interests56.8
 58.7
Total stockholders’ equity2,533.3
 2,672.5
Total liabilities and stockholders’ equity$6,230.4
 $6,542.8

(Unaudited)
March 31, 2021December 31, 2020
(Amounts in millions, except per share data)
ASSETS  
Current assets  
Cash and cash equivalents$580.2 $709.2 
Restricted cash43.5 0 
Accounts receivable, net of allowance for credit losses of $0.0 at March 31, 2021 and December 31, 2020167.8 244.8 
Inventories241.4 261.6 
Other current assets239.2 204.7 
Total current assets1,272.1 1,420.3 
Property, plant, equipment and mine development, net3,025.4 3,051.1 
Operating lease right-of-use assets46.8 49.9 
Investments and other assets142.0 140.9 
Deferred income taxes0 4.9 
Total assets$4,486.3 $4,667.1 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities  
Current portion of long-term debt$69.4 $44.9 
Accounts payable and accrued expenses721.6 745.7 
Total current liabilities791.0 790.6 
Long-term debt, less current portion1,411.3 1,502.9 
Deferred income taxes34.6 35.0 
Asset retirement obligations658.6 650.5 
Accrued postretirement benefit costs410.8 413.2 
Operating lease liabilities, less current portion37.5 42.1 
Other noncurrent liabilities251.0 251.5 
Total liabilities3,594.8 3,685.8 
Stockholders’ equity  
Preferred Stock — $0.01 per share par value; 100.0 shares authorized, 0 shares issued or outstanding as of March 31, 2021 and December 31, 20200 0 
Series Common Stock — $0.01 per share par value; 50.0 shares authorized, 0 shares issued or outstanding as of March 31, 2021 and December 31, 20200 0 
Common Stock — $0.01 per share par value; 450.0 shares authorized, 141.2 shares issued and 98.3 shares outstanding as of March 31, 2021 and 140.5 shares issued and 97.8 shares outstanding as of December 31, 20201.4 1.4 
Additional paid-in capital3,366.4 3,364.6 
Treasury stock, at cost — 42.9 and 42.7 common shares as of March 31, 2021 and December 31, 2020(1,369.5)(1,368.9)
Accumulated deficit(1,353.4)(1,273.3)
Accumulated other comprehensive income194.6 205.8 
Peabody Energy Corporation stockholders’ equity839.5 929.6 
Noncontrolling interests52.0 51.7 
Total stockholders’ equity891.5 981.3 
Total liabilities and stockholders’ equity$4,486.3 $4,667.1 
See accompanying notes to unaudited condensed consolidated financial statements.


3

Table of Contents


PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
20212020
 (Dollars in millions)
Cash Flows From Operating Activities 
Net loss$(79.7)$(131.5)
Loss from discontinued operations, net of income taxes2.0 2.2 
Loss from continuing operations, net of income taxes(77.7)(129.3)
Adjustments to reconcile loss from continuing operations, net of income taxes to net cash provided by (used in) operating activities: 
Depreciation, depletion and amortization68.3 106.0 
Noncash interest expense, net4.9 4.0 
Noncash coal inventory revaluation5.5 0 
Deferred income taxes(0.4)(3.4)
Noncash share-based compensation1.8 2.2 
Net loss (gain) on disposals0.6 (8.1)
Gain on early debt extinguishment(3.5)0 
Loss from equity affiliates0.9 9.1 
Foreign currency option contracts2.9 0.9 
Changes in current assets and liabilities: 
Accounts receivable77.0 64.2 
Inventories14.8 62.4 
Other current assets1.6 17.5 
Accounts payable and accrued expenses(15.4)(125.1)
Collateral arrangements(5.3)0 
Asset retirement obligations8.1 6.4 
Workers’ compensation obligations0.6 (0.8)
Postretirement benefit obligations(13.4)(7.9)
Pension obligations2.8 0.1 
Other, net0 0.2 
Net cash provided by (used in) continuing operations74.1 (1.6)
Net cash used in discontinued operations(3.1)(3.1)
Net cash provided by (used in) operating activities71.0 (4.7)


PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Cash Flows From Operating Activities   
Net (loss) income$(131.5) $129.9
Loss from discontinued operations, net of income taxes2.2
 3.4
(Loss) income from continuing operations, net of income taxes(129.3) 133.3
Adjustments to reconcile (loss) income from continuing operations, net of income taxes to net cash (used in) provided by operating activities:   
Depreciation, depletion and amortization106.0
 172.5
Noncash interest expense, net4.0
 5.5
Deferred income taxes(3.4) —
Noncash share-based compensation2.2
 11.6
Net gain on disposals(8.1) (1.5)
Loss (income) from equity affiliates9.1
 (3.5)
Provision for North Goonyella equipment loss—
 24.7
North Goonyella insurance recovery—
 (116.9)
Foreign currency option contracts0.9
 1.1
Changes in current assets and liabilities:   
Accounts receivable64.2
 5.5
Inventories62.4
 11.1
Other current assets17.5
 (3.1)
Accounts payable and accrued expenses(125.1) (30.6)
Asset retirement obligations6.4
 5.5
Workers’ compensation obligations(0.8) 0.8
Postretirement benefit obligations(7.9) (6.2)
Pension obligations0.1
 1.0
Other, net0.2
 (10.0)
Net cash (used in) provided by continuing operations(1.6) 200.8
Net cash used in discontinued operations(3.1) (3.2)
Net cash (used in) provided by operating activities(4.7) 197.6
Cash Flows From Investing Activities   
Additions to property, plant, equipment and mine development(31.3) (35.8)
Changes in accrued expenses related to capital expenditures(11.4) (3.8)
Proceeds from disposal of assets, net of receivables10.5
 11.0
Amount attributable to acquisition of Shoal Creek Mine—
 (2.4)
Contributions to joint ventures(96.3) (118.4)
Distributions from joint ventures98.4
 110.9
Advances to related parties(6.9) (1.5)
Cash receipts from Middlemount Coal Pty Ltd—
 1.1
Other, net(0.1) 0.8
Net cash used in investing activities(37.1) (38.1)
See accompanying notes to unaudited condensed consolidated financial statements.


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PEABODY ENERGY CORPORATIONPEABODY ENERGY CORPORATIONPEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
   
Three Months Ended March 31,Three Months Ended March 31,
2020 201920212020
(Dollars in millions)(Dollars in millions)
Cash Flows From Investing ActivitiesCash Flows From Investing Activities
Additions to property, plant, equipment and mine developmentAdditions to property, plant, equipment and mine development(50.3)(31.3)
Changes in accrued expenses related to capital expendituresChanges in accrued expenses related to capital expenditures(11.4)(11.4)
Proceeds from disposal of assets, net of receivablesProceeds from disposal of assets, net of receivables0.9 10.5 
Contributions to joint venturesContributions to joint ventures(136.1)(96.3)
Distributions from joint venturesDistributions from joint ventures102.4 98.4 
Advances to related partiesAdvances to related parties0 (6.9)
Cash receipts from Middlemount Coal Pty LtdCash receipts from Middlemount Coal Pty Ltd2.3 0 
Other, netOther, net(1.0)(0.1)
Net cash used in investing activitiesNet cash used in investing activities(93.2)(37.1)
Cash Flows From Financing Activities   Cash Flows From Financing Activities
Repayments of long-term debt(7.2) (8.3)Repayments of long-term debt(40.2)(7.2)
Common stock repurchases—
 (98.8)
Payment of debt issuance and other deferred financing costsPayment of debt issuance and other deferred financing costs(22.5)0 
Repurchase of employee common stock relinquished for tax withholding(0.8) (1.4)Repurchase of employee common stock relinquished for tax withholding(0.6)(0.8)
Dividends paid—
 (214.4)
Distributions to noncontrolling interests(0.1) (14.3)Distributions to noncontrolling interests(0.1)(0.1)
Other, net0.2
 (0.1)Other, net0.1 0.2 
Net cash used in financing activities(7.9) (337.3)Net cash used in financing activities(63.3)(7.9)
Net change in cash, cash equivalents and restricted cash(49.7) (177.8)Net change in cash, cash equivalents and restricted cash(85.5)(49.7)
Cash, cash equivalents and restricted cash at beginning of period732.2
 1,017.4
Cash, cash equivalents and restricted cash at beginning of period709.2 732.2 
Cash, cash equivalents and restricted cash at end of period$682.5
 $839.6
Cash, cash equivalents and restricted cash at end of period$623.7 $682.5 
   
See accompanying notes to unaudited condensed consolidated financial statements.



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PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 Three Months Ended March 31,
 2020 2019
 (Dollars in millions, except per share data)
Common Stock   
Balance, beginning of period$1.4
 $1.4
Balance, end of period1.4
 1.4
Additional paid-in capital   
Balance, beginning of period3,351.1
 3,304.7
Dividend equivalent units on dividends declared—
 6.0
Share-based compensation for equity-classified awards2.2
 11.6
Balance, end of period3,353.3
 3,322.3
Treasury stock   
Balance, beginning of period(1,367.3) (1,025.1)
Common stock repurchases—
 (98.8)
Repurchase of employee common stock relinquished for tax withholding(0.8) (1.4)
Balance, end of period(1,368.1) (1,125.3)
Retained earnings   
Balance, beginning of period597.0
 1,074.5
Net (loss) income(129.7) 124.2
Dividends declared ($0.000 per share, $1.980 per share)—
 (220.4)
Balance, end of period467.3
 978.3
Accumulated other comprehensive income   
Balance, beginning of period31.6
��40.1
Postretirement plans and workers' compensation obligations (net of $0.0 tax provisions in each period)(2.2) (2.2)
Foreign currency translation adjustment(6.8) 0.1
Balance, end of period22.6
 38.0
Noncontrolling interests   
Balance, beginning of period58.7
 56.0
Net (loss) income(1.8) 5.7
Distributions to noncontrolling interests(0.1) (14.3)
Balance, end of period56.8
 47.4
Total stockholders’ equity$2,533.3
 $3,262.1

Three Months Ended March 31,
20212020
 (Dollars in millions, except per share data)
Common Stock
Balance, beginning of period$1.4 $1.4 
Balance, end of period1.4 1.4 
Additional paid-in capital
Balance, beginning of period3,364.6 3,351.1 
Share-based compensation for equity-classified awards1.8 2.2 
Balance, end of period3,366.4 3,353.3 
Treasury stock
Balance, beginning of period(1,368.9)(1,367.3)
Repurchase of employee common stock relinquished for tax withholding(0.6)(0.8)
Balance, end of period(1,369.5)(1,368.1)
(Accumulated deficit) retained earnings
Balance, beginning of period(1,273.3)597.0 
Net loss attributable to common stockholders(80.1)(129.7)
Balance, end of period(1,353.4)467.3 
Accumulated other comprehensive income
Balance, beginning of period205.8 31.6 
Postretirement plans (net of $0.0 tax provisions in each period)(11.0)(2.2)
Foreign currency translation adjustment(0.2)(6.8)
Balance, end of period194.6 22.6 
Noncontrolling interests
Balance, beginning of period51.7 58.7 
Net income (loss) attributable to noncontrolling interests0.4 (1.8)
Distributions to noncontrolling interests(0.1)(0.1)
Balance, end of period52.0 56.8 
Total stockholders’ equity$891.5 $2,533.3 
See accompanying notes to unaudited condensed consolidated financial statements.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1)    Basis of Presentation
The condensed consolidated financial statements include the accounts of Peabody Energy Corporation (PEC) and its consolidated subsidiaries and affiliates (along with PEC, the Company or Peabody). Interests in subsidiaries controlled by the Company are consolidated with any outside stockholder interests reflected as noncontrolling interests, except when the Company has an undivided interest in a joint venture. In those cases, the Company includes its proportionate share in the assets, liabilities, revenues and expenses of the jointly controlled entities within each applicable line item of the unaudited condensed consolidated financial statements. All intercompany transactions, profits and balances have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.2020. In the opinion of management, these financial statements reflect all normal, recurring adjustments necessary for a fair presentation. Balance sheet information presented herein as of December 31, 20192020 has been derived from the Company’s audited consolidated balance sheet at that date. The Company’s results of operations for the three months ended March 31, 20202021 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2020.2021.
Coronavirus Disease 2019 (COVID-19) Pandemic
On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The global impact on economic activity has severely curtailed demand for numerous commodities. Within the global coal industry, supply and demand disruptions have been widespread as the COVID-19 pandemic has forced country-wide lockdowns and regional restrictions. In the seaborne markets, thermal demand from non-power sectors remains weak and steel production has been curtailed. Thermal coal demand in the U.S. has been pressured by low natural gas prices, subsidized renewable energy and weak electric power sector consumption due to reduced industrial activity. Supply risks have also emerged at a number of global and domestic producers.
While the ultimate impacts of the COVID-19 pandemic are unknown, the Company expects continued interference with general commercial activity, which may further negatively affect both demand and prices for the Company’s products. The Company also faces potential disruption to supply chain and distribution channels, potentially increasing its costs of production, storage and distribution, and potential adverse effects to the Company’s workforce, each of which could have a material adverse effect on the Company’s business, financial condition or results of operations. In addition, the COVID-19 pandemic could have an adverse impact on the timing of key events, including the timing of the Company’s litigation in the U.S. federal court system as it pursues the completion of the proposed joint venture with Arch Coal, Inc. (Arch), as further described in Note 15. “Other Events.”
In response to the COVID-19 pandemic, on March 27, 2020, the President of the United States signed and enacted into law the Coronavirus Aid, Relief and Economic Security Act (the CARES Act). The Company has requested accelerated refunds of previously generated alternative minimum tax (AMT) credits from the Internal Revenue Service (IRS) as further described in Note 11. “Income Taxes” and expects to defer 2020 employer payroll taxes incurred after the date of enactment to future years. As further described in Note 12. “Long-term Debt,” subsequent to March 31, 2020, the Company borrowed funds under its revolving credit facility as part of its ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets caused by the COVID-19 pandemic. Given the uncertainties with respect to future COVID-19 developments, including the duration, severity and scope, as well as the necessary government actions to limit the spread, the Company is unable to estimate the full impact of the pandemic on its business, financial condition or results of operations at this time.


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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2)    Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented
Newly Adopted Accounting Standards
Financial Instruments - Credit Losses.Equity Method Investments. In June 2016,January 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13 (Topic 326) related to the measurement of credit losses on financial instruments. The new standard replaces the incurred loss methodology to record credit losses with a methodology that reflects the expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the standard on January 1, 2020 using the modified retrospective approach. The Company will be required to use a forward-looking expected loss model for accounts receivables, loans and other financial instruments to record an allowance for the estimated contractual cash flows not expected to be collected. The Company has not restated comparative information for 2019 and no adjustments to retained earnings were necessary as a result of adopting Topic 326.
Effective January 1, 2020, the Company recognizes an allowance for credit losses for financial assets carried at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the life of the asset (contractual term) which includes consideration of prepayments and is based on the Company’s expectations as of the balance sheet date.
Assets are written off when the Company determines that such financial assets are deemed uncollectible. Write-offs are recognized as deductions from the allowance for credit losses. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the necessary reserve at the balance sheet date.
The Company pools its accounts receivable based on similar risk characteristics in estimating its expected credit losses. The Company also continuously evaluates such pooling decisions and adjusts as needed from period to period as risk characteristics change.
Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, which amended the fair value measurement guidance by removing and modifying certain disclosure requirements, while also adding new disclosure requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted the disclosure requirements effective January 1, 2020.
Compensation- Retirement Benefits. In August 2018, the FASB issued ASU 2018-14 to add, remove and clarify disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The Company adopted the disclosure requirements effective January 1, 2020.
Accounting Standards Not Yet Implemented
Income Taxes. In December 2019, the FASB issued ASU 2019-12 as part of its effort to reduce the complexity of accounting standards. The ASU enhances and simplifies various aspects of the income tax accounting guidance in Accounting Standards Codification (ASC) 740, including requirements related to (1) hybrid tax regimes, (2) the tax basis step-up in goodwill obtained in a transaction that is not a business combination, (3) separate financial statements of entities not subject to tax, (4) the intraperiod tax allocation exception to the incremental approach, (5) recognition of a deferred tax liability after an investor in a foreign entity transitions to or from the equity method of accounting, (6) interim-period accounting for enacted changes in tax law and (7) the year-to-date loss limitation in interim-period tax accounting. ASU 2019-12 is effective on January 1, 2021 for calendar year-end public companies and early adoption is permitted. The Company plans to adopt the requirements effective January 1, 2021.
Equity Method Investments. In January 2020, the FASB issued ASU 2020-01, which clarifies the interactions between ASCAccounting Standards Codification (ASC) 321, ASC 323 and ASC 815. The new guidance addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. ASU 2020-01 is effective on January 1, 2021 for calendar year-end public companies and early adoption is permitted.companies. The Company plans to adoptadopted the requirements effective January 1, 2021. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or disclosures.

Accounting Standards Not Yet Implemented

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TableEffects of ContentsReference Rate Reform. In March 2020, ASU 2020-04 was issued, which provides optional guidance for a limited period of time to ease the potential burden on accounting for contract modifications caused by reference rate reform. This guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The guidance may be adopted over time as reference rate reform activities occur and should be applied on a prospective basis. In January 2021, the FASB issued ASU 2021-01 to permit entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculation price alignment interest in connection with reference rate reform activities. The Company is still completing its evaluation of the impact of ASU 2020-04 and ASU 2021-01 and plans to elect optional expedients as reference rate reform activities occur. While the Company is still evaluating, it does not expect the guidance to have a material impact on its consolidated financial statements or disclosures.
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3)    Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Refer to Note 1. “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, for the Company’s policies regarding “Revenues” and “Accounts receivable, net.” On January 1, 2020, the Company adopted Topic 326 using the modified retrospective approach. See Note 2. “Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented” for further discussion

7

Table of the adoption, including the impact on the Company’s opening balance sheet.Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Disaggregation of Revenues
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 March 31, 2021
Seaborne Thermal MiningSeaborne Metallurgical MiningPowder River Basin MiningOther U.S. Thermal Mining
Corporate and Other (1)
Consolidated
 (Dollars in millions)
Thermal coal
Domestic$44.1 $0 $228.4 $146.8 $0 $419.3 
Export131.9 0 0 0 0 131.9 
Total thermal176.0 0 228.4 146.8 0 551.2 
Metallurgical coal
Domestic0 2.7 0 0 0 2.7 
Export0 83.9 0 0 0 83.9 
Total metallurgical0 86.6 0 0 0 86.6 
Other (2)
0.4 0.9 0 2.5 9.7 13.5 
Revenues$176.4 $87.5 $228.4 $149.3 $9.7 $651.3 
Three Months Ended March 31, 2020Three Months Ended March 31, 2020
Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining 
Corporate and Other (1)
 ConsolidatedSeaborne Thermal MiningSeaborne Metallurgical MiningPowder River Basin MiningOther U.S. Thermal Mining
Corporate and Other (1)
Consolidated
(Dollars in millions)(Dollars in millions)
Thermal coal           Thermal coal
Domestic$36.5
 $—
 $266.6
 $184.6
 $—
 $487.7
Domestic$36.5 $0 $266.6 $184.6 $0 $487.7 
Export163.7
 —
 —
 —
 —
 163.7
Export163.7 0 0 0 0 163.7 
Total thermal200.2
 —
 266.6
 184.6
 —
 651.4
Total thermal200.2 0 266.6 184.6 0 651.4 
Metallurgical coal           Metallurgical coal
Export—
 192.5
 —
 —
 —
 192.5
Export0 192.5 0 0 0 192.5 
Total metallurgical—
 192.5
 —
 —
 —
 192.5
Total metallurgical0 192.5 0 0 0 192.5 
Other(2)0.9
 0.7
 —
 7.7
 (7.0) 2.3
0.9 0.7 0 7.7 (7.0)2.3 
Revenues$201.1
 $193.2
 $266.6
 $192.3
 $(7.0) $846.2
Revenues$201.1 $193.2 $266.6 $192.3 $(7.0)$846.2 
 Three Months Ended March 31, 2019
 Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining 
Corporate and Other (1)
 Consolidated
 (Dollars in millions)
Thermal coal           
Domestic$38.4
 $—
 $287.3
 $321.7
 $—
 $647.4
Export211.9
 —
 —
 7.0
 —
 218.9
Total thermal250.3
 —
 287.3
 328.7
 —
 866.3
Metallurgical coal           
Export—
 323.7
 —
 —
 —
 323.7
Total metallurgical—
 323.7
 —
 —
 —
 323.7
Other0.7
 0.8
 —
 6.1
 53.0
 60.6
Revenues$251.0
 $324.5
 $287.3
 $334.8
 $53.0
 $1,250.6


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Table of Contents(1)    Corporate and Other revenue includes gains and losses related to mark-to-market adjustments from economic hedge activities intended to hedge future coal sales. Refer to Note 7. “Derivatives and Fair Value Measurements” for additional information regarding the economic hedge activities.
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue by initial contract duration was(2)    Other includes revenues from arrangements such as follows:
 Three Months Ended March 31, 2020
 Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining 
Corporate and Other (1)
 Consolidated
 (Dollars in millions)
One year or longer$99.3
 $140.1
 $243.4
 $184.6
 $—
 $667.4
Less than one year100.9
 52.4
 23.2
 —
 —
 176.5
Other (2)
0.9
 0.7
 —
 7.7
 (7.0) 2.3
Revenues$201.1
 $193.2
 $266.6
 $192.3
 $(7.0) $846.2
 Three Months Ended March 31, 2019
 Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining 
Corporate and Other (1)
 Consolidated
 (Dollars in millions)
One year or longer$171.1
 $232.8
 $280.1
 $313.8
 $—
 $997.8
Less than one year79.2
 90.9
 7.2
 14.9
 —
 192.2
Other (2)
0.7
 0.8
 —
 6.1
 53.0
 60.6
Revenues$251.0
 $324.5
 $287.3
 $334.8
 $53.0
 $1,250.6
(1)customer contract-related payments associated with volume shortfalls, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals.
Corporate and Other revenue includes gains and losses related to mark-to-market adjustments from economic hedge activities intended to hedge future coal sales. Refer to Note 7. “Derivatives and Fair Value Measurements” for additional information regarding the economic hedge activities.
(2)
Other includes revenues from arrangements such as customer contract-related payments, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals, for which contract duration is not meaningful.
Committed Revenue from Contracts with Customers
The Company expects to recognize revenue subsequent to March 31, 20202021 of approximately $4.0$3.6 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at March 31, 2020.2021. Approximately 46%45% of such amount is expected to be recognized over the next twelve months and the remainder thereafter. Actual revenue related to such contracts may differ materially for various reasons, including price adjustment features for coal quality and cost escalations, volume optionality provisions and potential force majeure events. This estimate of future revenue does not include any revenue related to contracts with variable prices per ton that cannot be reasonably estimated, such as the majority of seaborne metallurgical and seaborne thermal coal contracts where pricing is negotiated or settled quarterly or annually.

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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accounts Receivable
“Accounts receivable, net” at March 31, 20202021 and December 31, 20192020 consisted of the following:
 March 31, 2020 December 31, 2019
 (Dollars in millions)
Trade receivables, net$230.0
 $283.1
Miscellaneous receivables, net35.2
 46.4
Accounts receivable, net$265.2
 $329.5

March 31, 2021December 31, 2020
 (Dollars in millions)
Trade receivables, net$131.2 $180.9 
Miscellaneous receivables, net36.6 63.9 
Accounts receivable, net$167.8 $244.8 
Trade receivables, net included 0 allowance for credit losses as of both March 31, 20202021 and December 31, 2019.2020. Miscellaneous receivables, net included 0 allowance for credit losses as of both March 31, 20202021 and December 31, 2019.2020. NaN charges for credit losses were recognized during the three months ended March 31, 2020 or 2019.2021 and 2020.
(4)    Discontinued Operations
Discontinued operations include certain former Seaborne Thermal Mining and Other U.S. Thermal Mining segment assets that have ceased production and other previously divested legacy operations, including Patriot Coal Corporation and certain of its wholly-owned subsidiaries (Patriot).


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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Summarized Results of Discontinued Operations
Results from discontinued operations were as follows during the periods presented below:
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Loss from discontinued operations, net of income taxes$(2.2) $(3.4)

Three Months Ended March 31,
20212020
(Dollars in millions)
Loss from discontinued operations, net of income taxes$(2.0)$(2.2)
Liabilities of Discontinued Operations
Liabilities classified as discontinued operations included in the Company’s condensed consolidated balance sheets were as follows:
 March 31, 2020 December 31, 2019
 (Dollars in millions)
Liabilities:   
Accounts payable and accrued expenses$58.4
 $58.8
Other noncurrent liabilities105.1
 105.5
Total liabilities classified as discontinued operations$163.5
 $164.3

March 31, 2021December 31, 2020
(Dollars in millions)
Liabilities:
Accounts payable and accrued expenses$62.8 $62.3 
Other noncurrent liabilities85.0 91.4 
Total liabilities classified as discontinued operations$147.8 $153.7 
Patriot-Related Matters
A significant portion of the liabilities in the table above relate to Patriot. In 2012, Patriot filed voluntary petitions for relief under Chapter 11 of Title 11 of the U.S. Code (the Bankruptcy Code). In 2013, the Company entered into a definitive settlement agreement (2013 Agreement) with Patriot and the United Mine Workers of America (UMWA), on behalf of itself, its represented Patriot employees and its represented Patriot retirees, to resolve all then-disputed issues related to Patriot’s bankruptcy. In May 2015, Patriot again filed voluntary petitions for relief under the Bankruptcy Code in the U.S. District Court for the Eastern District of Virginia and subsequently initiated a process to sell some orsubstantially all of its assets to qualified bidders. 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 2 different buyers.

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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Black Lung Occupational Disease Liabilities. 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. Upon spin-off, Patriot indemnified the Company against any claim relating to these liabilities, which amounted to approximately $150 million at that time. The indemnification included any claim made by the U.S. Department of Labor (DOL) against the Company with respect to these obligations as a potentially liable operator under the Federal Coal Mine Health and Safety Act of 1969. The 2013 Agreement included Patriot’s affirmance of indemnities provided in the spin-off agreements, including the indemnity relating to such black lung liabilities; however, Patriot rejected this indemnity in its May 2015 bankruptcy.
By statute, the Company had secondary liability for the black lung liabilities related to Patriot’s workers employed by former subsidiaries of the Company. The Company’s accounting for the black lung liabilities related to Patriot is based on an interpretation of applicable statutes. Management believes that inconsistencies exist among the applicable statutes, regulations promulgated under those statutes and the DOL’s interpretative guidance. The Company has sought clarification from the DOL regarding these inconsistencies. The amount of these liabilities could be reduced in the future. 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$89.8 million and $90.1 million at both March 31, 20202021 and December 31, 2019.2020, respectively. While the Company has recorded a liability, it intends to review each claim on a case-by-case basis and contest liability estimates as appropriate. 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. The Company cannot reliably estimate the potential liabilities for Patriot’s workers employed by former subsidiaries of the Company that are presently active in the workforce because of the potential for such workers to continue to work for another coal operator that is a going concern.
Combined Benefit Fund (Combined Fund).The Combined Fund was created by the Coal Act in 1992
(5)     Inventories
Inventories as a multi-employer plan to provide health care benefits to a closed group of retirees who last worked prior to 1976, as well as orphaned beneficiaries of bankrupt companies who were receiving benefits as orphans prior to the passage of the Coal Act. NaN new retirees will be added to this group, which includes retirees formerly employed by certain Patriot subsidiaries and their predecessors. Former employers are required to contribute to the Combined Fund according to a formula.


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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the terms of the Patriot spin-off, Patriot was primarily liable to the Combined Fund for the approximately $40 million of its subsidiaries’ obligations at that time. Once Patriot ceased meeting its obligations, the Company was held responsible for these costs and, as a result, recorded “Loss from discontinued operations, net of income taxes” charges of $0.1 million and $0.2 million during the three months ended March 31, 2020 and 2019, respectively. The Company made payments into the fund of $0.4 million and $0.5 million during the three months ended March 31, 2020 and 2019, respectively, and estimates that the annual cash cost to fund these potential Combined Fund liabilities will range between $1 million and $2 million in the near-term, with those premiums expected to decline over time because the fund is closed to new participants. The liability related to the fund was $14.9 million and $15.2 million at March 31, 20202021 and December 31, 2019, respectively.
UMWA 1974 Pension Plan (UMWA Plan) Litigation. On July 16, 2015, a lawsuit was filed by the UMWA Plan, the UMWA 1974 Pension Trust (Trust) and the Trustees of the UMWA Plan and Trust (Trustees) in the United States District Court for the District of Columbia, against the Company, Peabody Holding Company, LLC, a subsidiary of the Company, and Arch. The plaintiffs sought, pursuant to the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Multiemployer Pension Plan Amendments Act of 1980, a declaratory judgment that the defendants were obligated to arbitrate any opposition to the Trustees’ determination that the defendants had statutory withdrawal liability as a result of the 2015 Patriot bankruptcy. After a legal and arbitration process and with the approval of the U.S. Bankruptcy Court for the Eastern District of Missouri (Bankruptcy Court), on January 25, 2017, the UMWA Plan and the Company agreed to a settlement of the claim which entitled the UMWA Plan to $75 million to be paid by the Company in increments through 2021. The balance of the liability, on a discounted basis, was $26.7 million and $26.0 million at March 31, 2020 and December 31, 2019, respectively.
(5)     Inventories
Inventories as of March 31, 2020 and December 31, 2019 consisted of the following:
 March 31, 2020 December 31, 2019
 (Dollars in millions)
Materials and supplies$113.7
 $116.3
Raw coal59.1
 85.1
Saleable coal96.4
 130.1
Total$269.2
 $331.5
March 31, 2021December 31, 2020
 (Dollars in millions)
Materials and supplies$104.3 $102.6 
Raw coal52.4 70.5 
Saleable coal84.7 88.5 
Total$241.4 $261.6 
Materials and supplies inventories presented above have been shown net of reserves of $8.2$10.5 million and $7.9$10.4 million as of March 31, 20202021 and December 31, 2019,2020, respectively. The coal inventory balances above are presented net of net realizable value adjustments of $5.5 million as of March 31, 2021.
(6) Equity Method Investments
The Company had total equity method investments of $47.1$21.2 million and $56.9$24.6 million reflected in “Investments and other assets” in the condensed consolidated balance sheets as of March 31, 20202021 and December 31, 2019,2020, respectively, related to Middlemount Coal Pty Ltd (Middlemount). Included in “Loss (income) from equity affiliates” in the unaudited condensed consolidated statements of operations was a loss of $9.1 millionwere losses related to Middlemount during the three months ended March 31, 2020of $0.9 million and income of $3.8$9.1 million during the three months ended March 31, 2019.2021 and 2020, respectively.
The Company received cash payments from Middlemount of $1.1$2.3 million during the three months ended March 31, 2019, related to financing receivables accounted for as in-substance common stock due to the limited fair value attributed to Middlemount’s equity.2021. NaN payments were received from from Middlemount during the three months ended March 31, 2020.
One of the Company’s Australian subsidiaries and the other shareholder of Middlemount are parties to an agreement, as amended from time to time, to provide a revolving loan (Revolving Loans) to Middlemount. The Company’s participation in the Revolving Loans will not, at any time, exceed its 50% equity interest of the revolving loan limit. At March 31, 2020,2021, the revolving loan limit was $70$160 million Australian dollarsdollars and the Revolving Loans were not fully drawn upon by Middlemount. Per the terms of the current agreement, the revolving loan limit will be reduced to $50 million Australian dollars in August 2020. The Revolving Loans bear interest at 15%10% per annum and expire on December 31, 2020. The carrying2021. The value of the portion of the Revolving Loans due to the Company’s Australian subsidiary was $23.6$43.3 million and $17.1 $46.2 million as of March 31, 20202021 and December 31, 2019, respectively.2020, respectively, with the decrease during the three months ended March 31, 2021 primarily attributable to payments made by Middlemount.

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

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(7) Derivatives and Fair Value Measurements
Derivatives
Corporate Risk Management Activities
From time to time, the Company may utilize various types of derivative instruments to manage its exposure to risks in the normal course of business, including (1) foreign currency exchange rate risk and the variability of cash flows associated with forecasted Australian dollar expenditures made in its Australian mining platform, (2) price risk of fluctuating coal prices related to forecasted sales or purchases of coal, or changes in the fair value of a fixed price physical sales contract, (3) price risk and the variability of cash flows related to forecasted diesel fuel purchased for use in its operations and (4) interest rate risk on long-term debt. These risk management activities are actively monitored for compliance with the Company’s risk management policies.
As of March 31, 2020,2021, the Company had currency options outstanding with an aggregate notional amount of $550.0$575.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the six-monthnine-month period ending September 30, 2020.December 31, 2021. The instruments are quarterly average rate options which entitle the Company to receive payment on the notional amount should the quarterly average Australian dollar-to-U.S. dollar exchange rate exceed amounts ranging from $0.73$0.76 to $0.75$0.81 over the six-monthnine-month period ending September 30, 2020.December 31, 2021.
As of March 31, 2020,2021, the Company held coal-related financial contracts related to a portion of its forecasted sales for an aggregate notional volume of 1.61.5 million tonnes. Such financial contracts include futures, forwards and options. Of the aggregate notional volume, 1.30.5 million tonnes will settle in 20202021 and the remainder will settle in 2021.2022.
The Company had 0 diesel fuel or interest rate derivatives in place as of March 31, 2020.2021.
Coal Trading Activities
On a limited basis, the Company engages in the direct and brokered trading of coal and freight-related contracts (coal trading). 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. Coal brokering is conducted both as principal and agent in support of various coal production-related activities that may involve coal produced from the Company’s mines, coal sourcing arrangements with third-party mining companies or offtake agreements with other coal producers. The Company also provides transportation-related services, which involve both financial derivative contracts and physical contracts. Collectively, coal and freight-related hedging activities include both economic hedging and, from time to time, cash flow hedging in support of the Company’s coal trading strategy. Revenues from such transactions include realized and unrealized gains and losses on derivative instruments, including those that arise from coal deliveries related to contracts accounted for on an accrual basis under the normal purchases and normal sales exception.
Offsetting and Balance Sheet PresentationTabular Derivatives Disclosures
The Company has master netting agreements with certain of its counterparties which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce the Company’s credit exposure related to these counterparties. For classification purposes, the Company records the net fair value of all the positions with a given counterparty as a net asset or liability in the condensed consolidated balance sheets.
The Company’s coal trading assets and liabilities include financial instruments cleared through various exchanges, which involve the daily net settlement of open positions. The Company must post cash collateral in the form of initial margin, in addition to variation margin, on exchange-cleared positions that are in a net liability position and receives variation margin when in a net asset position. The Company also transacts in coal trading financial swaps and options through over-the-counter (OTC) markets with financial institutions and other non-financial trading entities under International Swaps and Derivatives Association (ISDA) Master Agreements, which contain symmetrical default provisions. Certain of the Company’s coal trading agreements with OTC counterparties also contain credit support provisions that may periodically require the Company to post, or entitle the Company to receive, variation margin. Physical coal and freight-related purchase and sale contracts included in the Company’s coal trading assets and liabilities are executed pursuant to master purchase and sale agreements that also contain symmetrical default provisions and allow for the netting and setoff of receivables and payables that arise during the same time period. The Company offsets its coal trading asset and liability derivative positions, and variation margin related to those positions, on a counterparty-by-counterparty basis in the condensed consolidated balance sheets.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of derivatives reflected in the accompanying condensed consolidated balance sheets are set forth in the table below.
 March 31, 2020 December 31, 2019
 Asset Derivative Liability Derivative Asset Derivative Liability Derivative
 (Dollars in millions)
Foreign currency option contracts$0.2
 $—
 $1.1
 $—
Coal contracts related to forecasted sales18.9
 (0.8) 20.1
 (0.1)
Coal trading contracts71.8
 (69.6) 81.1
 (74.2)
Total derivatives90.9
 (70.4) 102.3
 (74.3)
Effect of counterparty netting(69.6) 69.6
 (74.3) 74.3
Variation margin (held) posted(16.8) —
 (22.1) —
Net derivatives and margin as classified in the balance sheets$4.5
 $(0.8) $5.9
 $—

 March 31, 2021December 31, 2020
 Asset DerivativeLiability DerivativeAsset DerivativeLiability Derivative
 (Dollars in millions)
Foreign currency option contracts$2.7 $0 $10.3 $0 
Coal contracts related to forecasted sales1.1 (8.6)0.9 (8.8)
Coal trading contracts30.4 (35.5)23.4 (23.1)
Total derivatives34.2 (44.1)34.6 (31.9)
Effect of counterparty netting(44.1)44.1 (30.2)30.2 
Variation margin posted13.6 0 6.5 0 
Net derivatives and margin as classified in the balance sheets$3.7 $0 $10.9 $(1.7)
The net amount of asset derivatives, net of margin, are included in “Other current assets” and the net amount of liability derivatives, net of margin, are included in “Accounts payable and accrued expenses” in the accompanying condensed consolidated balance sheets.
EffectsThe Company had a current asset representing cash collateral held as initial margin for derivative positions primarily related to coal derivatives of Derivatives on Measures$6.5 million and $3.0 million at March 31, 2021 and December 31, 2020, respectively. These amounts are not included with the derivatives presented in the table above and are included in “Other current assets” in the accompanying condensed consolidated balance sheets.

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Table of Financial PerformanceContents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Currently, the Company does not seek cash flow hedge accounting treatment for its currency- or coal-related derivative financial instruments and thus changes in fair value are reflected in current earnings.
The tables below show the amounts of pre-tax gains and losses related to the Company’s derivatives.
Three Months Ended March 31, 2020Three Months Ended March 31, 2021
Total loss recognized in income (Loss) gain realized in income on derivatives Unrealized gain (loss) recognized in income on derivativesTotal (loss) gain recognized in incomeGain realized in income on derivativesUnrealized loss recognized in income on derivatives
Financial Instrument Financial Instrument
(Dollars in millions)(Dollars in millions)
Foreign currency option contracts$(0.9) $(1.0) $0.1
Foreign currency option contracts$(2.9)$4.7 $(7.6)
Coal contracts related to forecasted sales(8.6) (6.4) (2.2)Coal contracts related to forecasted sales8.2 10.0 (1.8)
Coal trading contracts(0.1) 4.1
 (4.2)Coal trading contracts(0.7)2.4 (3.1)
Total$(9.6) $(3.3) $(6.3)Total$4.6 $17.1 $(12.5)
Three Months Ended March 31, 2019Three Months Ended March 31, 2020
Total (loss) gain recognized in income (Loss) gain realized in income on derivatives Unrealized gain recognized in income on derivativesTotal loss recognized in income(Loss) gain realized in income on derivativesUnrealized gain (loss) recognized in income on derivatives
Financial Instrument Financial Instrument
(Dollars in millions)(Dollars in millions)
Foreign currency option contracts$(1.1) $(1.3) $0.2
Foreign currency option contracts$(0.9)$(1.0)$0.1 
Coal contracts related to forecasted sales50.7
 10.9
 39.8
Coal contracts related to forecasted sales(8.6)(6.4)(2.2)
Coal trading contracts(1.1) (4.8) 3.7
Coal trading contracts(0.1)4.1 (4.2)
Total$48.5
 $4.8
 $43.7
Total$(9.6)$(3.3)$(6.3)
During the three months ended March 31, 20202021 and 2019,2020, gains and losses on foreign currency option contracts were included in “Operating costs and expenses,” and gains and losses on coal contracts related to forecasted sales and those related to coal trading contracts were included in “Revenues” in the accompanying unaudited condensed consolidated statements of operations.
The Company classifies the cash effects of its derivatives within the “Cash Flows From Operating Activities” section of the unaudited condensed consolidated statements of cash flows.


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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements
The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1 - inputs are quoted prices in active markets for the identical assets or liabilities; Level 2 - inputs are other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants.

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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables set forth the hierarchy of the Company’s net financial asset positions for which fair value is measured on a recurring basis:
 March 31, 2020
 Level 1 Level 2 Level 3 Total
 (Dollars in millions)
Foreign currency option contracts$—
 $0.2
 $—
 $0.2
Coal contracts related to forecasted sales—
 20.0
 —
 20.0
Coal trading contracts—
 (16.5) —
 (16.5)
Equity securities—
 —
 4.0
 4.0
Total net financial assets$—
 $3.7
 $4.0
 $7.7
        
 December 31, 2019
 Level 1 Level 2 Level 3 Total
 (Dollars in millions)
Foreign currency option contracts$—
 $1.1
 $—
 $1.1
Coal contracts related to forecasted sales—
 21.2
 —
 21.2
Coal trading contracts—
 (16.4) —
 (16.4)
Equity securities—
 —
 4.0
 4.0
Total net financial assets$—
 $5.9
 $4.0
 $9.9

 March 31, 2021
 Level 1Level 2Level 3Total
 (Dollars in millions)
Foreign currency option contracts$0 $2.7 $0 $2.7 
Coal contracts related to forecasted sales0 (7.5)0 (7.5)
Coal trading contracts0 8.5 0 8.5 
Equity securities0 0 4.0 4.0 
Total net financial assets$0 $3.7 $4.0 $7.7 
 December 31, 2020
 Level 1Level 2Level 3Total
 (Dollars in millions)
Foreign currency option contracts$0 $10.3 $0 $10.3 
Coal contracts related to forecasted sales0 (7.9)0 (7.9)
Coal trading contracts0 6.8 0 6.8 
Equity securities0 0 4.0 4.0 
Total net financial assets$0 $9.2 $4.0 $13.2 
For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker/dealer quotes, published indices, issuer spreads, benchmark securities and other market quotes. In the case of certain debt securities, fair value is provided by a third-party pricing service. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:
•Foreign currency option contracts are valued utilizing inputs obtained in quoted public markets (Level 2) except when credit and non-performance risk is considered to be a significant input, then the Company classifies such contracts as Level 3.
•Coal contracts related to forecasted sales and coal 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).
Other Financial Instruments. The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of March 31, 20202021 and December 31, 2019:2020:
•Cash and cash equivalents, restricted cash, accounts receivable, including those within the Company’s accounts receivable securitization program, notes receivable and accounts payable have carrying values which approximate fair value due to the short maturity or the liquid nature of these instruments.
•Long-term debt fair value estimates are based on observed prices for securities with an active trading market when available (Level 2), and otherwise on estimated borrowing rates to discount the cash flows to their present value (Level 3).


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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Market risk associated with the Company’s fixed- and variable-rate long-term debt relates to the potential reduction in the fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values and estimates based on interest rates, maturities, credit risk, underlying collateral and completed market transactions, which have been limited in recent history.
 March 31, 2021December 31, 2020
 (Dollars in millions)
Total debt at par value$1,538.2 $1,591.3 
Less: Unamortized debt issuance costs and original issue discount(57.5)(43.5)
Net carrying amount$1,480.7 $1,547.8 
Estimated fair value$862.1 $987.6 
 March 31, 2020December 31, 2019
 (Dollars in millions)
Total debt at par value$1,360.1
 $1,367.2
Less: Unamortized debt issuance costs and original issue discount(53.2) (56.4)
Net carrying amount$1,306.9
 $1,310.8
    
Estimated fair value$793.5
 $1,271.1

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Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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. Generally, the Company’s Level 3 instruments or contracts are valued using bid/ask price quotations and other market assessments obtained from multiple, independent third-party brokers or other transactional data incorporated into internally-generated discounted cash flow models. Decreases in the number of third-party brokers or market liquidity could erode the quality of market information and therefore the valuation of the Company’s market positions. The Company’s valuation techniques include basis adjustments to the foregoing price inputs for quality, such as sulfur and ash content, location differentials, expressed as port and freight costs, and credit risk. The Company’s risk management function independently validates the Company’s valuation inputs, including unobservable inputs, with third-party information and settlement prices from other sources where available. A daily process is performed to analyze market price changes and changes to the portfolio. Further periodic validation occurs at the time contracts are settled with the counterparty. These valuation techniques have been consistently applied in all periods presented, and the Company believes it has obtained the most accurate information available for the types of derivative contracts held.
Significant increases or decreases in the inputs in isolation could result in a significantly higher or lower fair value measurement. The unobservable inputs do not have a direct interrelationship; therefore, a change in one unobservable input would not necessarily correspond with a change in another unobservable input.
The Company had 0 transfers between Levels 1, 2 and 3 during the three months ended March 31, 2020 and 2019. The Company’s policy is to value all transfers between levels using the beginning of period valuation.
Credit and Nonperformance Risk. The fair value of the Company’s coal derivative assets and liabilities reflects adjustments for credit risk. The Company’s exposure is substantially with electric utilities, energy marketers, steel producers and nonfinancial trading houses. The Company’s policy is to independently evaluate each customer’s creditworthiness prior to entering into transactions and to regularly monitor the credit extended. If the Company engages in a transaction with a counterparty that does not meet its credit standards, the Company seeks to protect its position by requiring the counterparty to provide an appropriate credit enhancement. Also, when appropriate (as determined by its credit management function), the Company has taken steps to reduce its exposure to customers or counterparties whose credit has deteriorated and who may pose a higher risk of failure to perform under their contractual obligations. These steps include obtaining letters of credit or cash collateral (margin), requiring prepayments for shipments or the creation of customer trust accounts held for the Company’s benefit to serve as collateral in the event of a failure to pay or perform. To reduce its credit exposure related to trading and brokerage activities, the Company seeks to enter into netting agreements with counterparties that permit the Company to offset asset and liability positions with such counterparties and, to the extent required, the Company will post or receive margin amounts associated with exchange-cleared and certain OTC positions. The Company also continually monitors counterparty and contract non-performance risk, if present, on a case-by-case basis.
Performance Assurances and Collateral
The Company is required by the exchanges upon which it transacts to post certain additional collateral, known as initial margin, which represents an estimate of potential future adverse price movements across the Company’s portfolio under normal market conditions. The Company posted initial margin of $5.6 millionhad no transfers between Levels 1, 2 and $7.9 million as of March 31, 2020 and December 31, 2019, respectively, which is reflected in “Other current assets” in the condensed consolidated balance sheets. As of March 31, 2020 and December 31, 2019, respectively, the Company had posted $2.8 million and $1.3 million in excess of margin requirements.


16

Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company is required to post variation margin on positions that are in a net liability position and is entitled to receive and hold variation margin on positions that are in a net asset position with an exchange and certain of its OTC derivative contract counterparties. As of March 31, 2020 and December 31, 2019, respectively, the Company was in receipt of $16.8 million and $22.1 million in variation margin.
Certain of the Company’s derivative trading instruments require the parties to provide additional performance assurances whenever a material adverse event jeopardizes one party’s ability to perform under the instrument. If the Company was to sustain a material adverse event (using commercially reasonable standards), its counterparties could request collateralization on derivative trading instruments in which the Company holds a net liability position. Based on the aggregate fair values of such net liability positions at March 31, 2020 and December 31, 2019, the Company would have been required to post additional collateral of $0.8 million and approximately $0.0 million, respectively. As of March 31, 2020 and December 31, 2019, the Company was not required to post collateral to counterparties for such positions.
(8)     Intangible Contract Assets and Liabilities
The Company has recorded intangible assets and liabilities to reflect the fair value of certain U.S. coal supply agreements as a result of differences between contract terms and estimated market terms for the same coal products and also recorded intangible liabilities related to unutilized capacity under its port and rail take-or-pay contracts. The balances, net of accumulated amortization, and respective balance sheet classifications at March 31, 2020 and December 31, 2019, are set forth in the following tables:
 March 31, 2020
 Assets Liabilities Net Total
 (Dollars in millions)
Coal supply agreements$16.8
 $(19.9) $(3.1)
Take-or-pay contracts—
 (32.9) (32.9)
Total$16.8
 $(52.8) $(36.0)
      
Balance sheet classification:     
Investments and other assets$16.8
 $—
 $16.8
Accounts payable and accrued expenses—
 (5.9) (5.9)
Other noncurrent liabilities—
 (46.9) (46.9)
Total$16.8
 $(52.8) $(36.0)
      
 December 31, 2019
 Assets Liabilities Net Total
 (Dollars in millions)
Coal supply agreements$20.7
 $(21.4) $(0.7)
Take-or-pay contracts—
 (40.0) (40.0)
Total$20.7
 $(61.4) $(40.7)
      
Balance sheet classification:     
Investments and other assets$20.7
 $—
 $20.7
Accounts payable and accrued expenses—
 (8.4) (8.4)
Other noncurrent liabilities—
 (53.0) (53.0)
Total$20.7
 $(61.4) $(40.7)

Amortization of the intangible assets and liabilities related to coal supply agreements occurs ratably based upon coal volumes shipped per contract and is recorded as a component of “Depreciation, depletion and amortization” in the accompanying unaudited condensed consolidated statements of operations. Such amortization amounted to $2.4 million and $4.8 million3 during the three months ended March 31, 2020 and 2019, respectively. The Company anticipates net amortization of sales contracts, based upon expected shipments, to be an expense of approximately $5 million during the remaining nine months of 2020, expense of approximately $1 million for the year 2021 and credits2020. The Company’s policy is to value all transfers between levels using the beginning of approximately $2 million per year for the years 2022 through 2024, and $3 million in total thereafter.period valuation.


17

Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future unutilized capacity and the amortization periods related to the take-or-pay contract intangible liabilities are based upon estimates of forecasted usage. Such amortization, which is classified as a reduction to “Operating costs and expenses” in the accompanying unaudited condensed consolidated statements of operations, amounted to $2.6 million and $5.6 million during the three months ended March 31, 2020 and 2019, respectively. The Company anticipates net amortization of take-or-pay contract intangible liabilities to be approximately $5 million during the remaining nine months of 2020, and for the years 2021 through 2024 to be approximately $4 million, $3 million, $2 million and $3 million, respectively, and $16 million thereafter.
(9)(8) Property, Plant, Equipment and Mine Development
The composition of property, plant, equipment and mine development, net, as of March 31, 20202021 and December 31, 20192020 is set forth in the table below:
 March 31, 2020 December 31, 2019
 (Dollars in millions)
Land and coal interests$4,025.4
 $4,022.4
Buildings and improvements557.6
 547.9
Machinery and equipment1,534.4
 1,518.6
Less: Accumulated depreciation, depletion and amortization(1,509.6) (1,409.8)
Property, plant, equipment and mine development, net$4,607.8
 $4,679.1

March 31, 2021December 31, 2020
(Dollars in millions)
Land and coal interests$2,484.1 $2,482.9 
Buildings and improvements484.7 481.0 
Machinery and equipment1,442.5 1,408.5 
Less: Accumulated depreciation, depletion and amortization(1,385.9)(1,321.3)
Property, plant, equipment and mine development, net$3,025.4 $3,051.1 
Asset Impairment and Other At-Risk Assets
(10)The Company has identified certain assets with an aggregate carrying value of approximately $1.2 billion at March 31, 2021 in its Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to coal pricing, cost pressures, customer demand, customer concentration risk and future economic viability. The Company conducted a review of those assets for recoverability as of March 31, 2021 and determined that 0 impairment charges were necessary as of that date.
(9) Leases
The Company has operating and finance leases for mining and non-mining equipment, office space and certain other facilities under various non-cancellable agreements. Historically, the majority of the Company’s leases have been accounted for as operating leases. Refer to Note 1. “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, for the Company’s policies regarding “Leases.”
The Company and certain of its subsidiaries have guaranteed other subsidiaries’ performance under various lease obligations. Certain lease agreements are subject to the restrictive covenants of the Company’s credit facilities and include cross-acceleration provisions, under which the lessor could require remedies including, but not limited to, immediate recovery of the present value of any remaining lease payments. The Company typically agrees to indemnify lessors for the value of the property or equipment leased, should the property be damaged or lost during the course of the Company’s operations. The Company expects that losses with respect to leased property, if any, may be covered by insurance (subject to deductibles). Aside from indemnification of the lessor for the value of the property leased, the Company’s maximum potential obligations under its leases are equal to the respective future minimum lease payments, and the Company assumes that 0 amounts could be recovered from third parties.
NaN of the Company’s operating lease agreements for underground mining equipment in Australia entered into in 2013 requires contingent rent to be paid only if and when certain coal is mined at a specified margin as defined in the agreements. There was 0 contingent expense related to that arrangement for the periods listed below.


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18

Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of lease expense during the three months ended March 31, 20202021 and 20192020 were as follows:
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Operating lease cost:   
Operating lease cost$8.6
 $15.5
Short-term lease cost9.9
 8.3
Variable lease cost1.0
 6.0
Sublease income—
 (1.4)
Total operating lease cost$19.5
 $28.4
    
Finance lease cost:   
Amortization of right-of-use assets$3.4
 $4.1
Interest on lease liabilities0.2
 0.5
Total finance lease cost$3.6
 $4.6

Three Months Ended March 31,
20212020
(Dollars in millions)
Operating lease cost:
Operating lease cost$6.0 $8.6 
Short-term lease cost3.4 9.9 
Variable lease cost0.5 1.0 
Sublease income(0.5)0 
Total operating lease cost$9.4 $19.5 
Finance lease cost:
Amortization of right-of-use assets$0.6 $3.4 
Interest on lease liabilities0.5 0.2 
Total finance lease cost$1.1 $3.6 
Supplemental balance sheet information related to leases at March 31, 20202021 and December 31, 20192020 was as follows:
March 31, 2021December 31, 2020
(Dollars in millions)
Operating leases:
Operating lease right-of-use assets$46.8 $49.9 
Accounts payable and accrued expenses$21.1 $24.5 
Operating lease liabilities, less current portion37.5 42.1 
Total operating lease liabilities$58.6 $66.6 
Finance leases:
Property, plant, equipment and mine development$13.8 $20.4 
Accumulated depreciation(3.1)(2.5)
Property, plant, equipment and mine development, net$10.7 $17.9 
Current portion of long-term debt$5.9 $21.5 
Long-term debt, less current portion11.4 5.8 
Total finance lease liabilities$17.3 $27.3 
Weighted average remaining lease term (years)
Operating leases3.4
Finance leases8.2
Weighted average discount rate
Operating leases6.7 %
Finance leases10.1 %
 March 31, 2020 December 31, 2019
 (Dollars in millions)
Operating leases:   
Operating lease right-of-use assets$78.0
 $82.4
    
Accounts payable and accrued expenses$25.2
 $29.6
Operating lease liabilities, less current portion44.5
 52.8
Total operating lease liabilities$69.7
 $82.4
    
Finance leases:   
Property, plant, equipment and mine development$88.0
 $89.6
Accumulated depreciation(47.6) (45.9)
Property, plant, equipment and mine development, net$40.4
 $43.7
    
Current portion of long-term debt$8.6
 $14.3
Long-term debt, less current portion0.5
 0.9
Total finance lease liabilities$9.1
 $15.2
    
Weighted average remaining lease term (years)   
Operating leases3.7
  
Finance leases14.8
  
    
Weighted average discount rate   
Operating leases7.3%  
Finance leases6.0%  


15

19

Table of Contents
PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental cash flow information related to leases during the three months ended March 31, 20202021 and 20192020 was as follows:
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:   
Operating cash flows for operating leases$12.8
 $24.1
Operating cash flows for finance leases0.2
 0.7
Financing cash flows for finance leases5.8
 7.3
    
Right-of-use assets obtained in exchange for lease obligations:   
Operating leases1.3
 0.5
Finance leases0.1
 —

Three Months Ended March 31,
20212020
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$8.3 $12.8 
Operating cash flows for finance leases0.7 0.2 
Financing cash flows for finance leases1.3 5.8 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases3.1 1.3 
Finance leases3.6 0.1 
The Company's leases have remaining lease terms ofranging from less than 1 year to 21.821.0 years years, some of which include options to extend the terms deemed reasonably certain of exercise. MaturitiesThe contractual maturities of lease liabilities were as follows:
Period Ending December 31, Operating Leases Finance Leases
  (Dollars in millions)
2020 $21.8
 $0.7
2021 22.6
 1.0
2022 13.5
 0.7
2023 11.6
 0.5
2024 4.7
 0.5
2025 and thereafter 7.3
 8.2
Total lease payments 81.5
 11.6
Less imputed interest (11.8) (2.5)
Total lease liabilities $69.7
 $9.1

Period Ending December 31,Operating LeasesFinance Leases
 (Dollars in millions)
2021$17.5 $5.6 
202218.6 7.1 
202316.7 1.6 
20246.0 0.7 
20253.4 0.5 
2026 and thereafter3.8 7.7 
Total lease payments66.0 23.2 
Less imputed interest(7.4)(5.9)
Total lease liabilities$58.6 $17.3 
(11)(10)  Income Taxes
The Company's effective tax rate before remeasurement for the three months ended March 31, 20202021 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance. The Company’s income tax benefit of $1.8 million and income tax provision of $3.0 million and $18.8 million for the three months ended March 31, 20202021 and 2019,2020, respectively, included a tax benefitbenefits of $3.3$0.2 million and less than $0.1$3.3 million, respectively, related to the remeasurement of foreign income tax accounts.
In responseAs described in Note 11. “Long-term Debt,” the Company completed the Refinancing Transactions (as defined below), which included a senior notes exchange and related consent solicitation, a revolving credit facility exchange and various amendments to existing debt agreements. Generally, absent an exception, for U.S. tax purposes a debtor recognizes cancellation of debt income (CODI) upon discharge of its outstanding indebtedness for an amount of consideration less than the COVID-19 pandemic, the United States enacted the CARES Act. The CARES Act contains numerous tax provisions including a provision that provides for the accelerationadjusted issue price of refunds of previously generated AMT credits.such indebtedness. The Company has requested accelerated refundswill recognize CODI from the Refinancing Transactions of approximately $24$60 million, fromand the IRS and has adjusted its current and deferred tax asset balances accordingly. The Company continues to evaluateincome will be offset by the implications of the remaining provisions of the CARES Act.

Company’s operating losses.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12)(11)     Long-term Debt 
The Company’s total funded indebtedness (Indebtedness) as of March 31, 20202021 and December 31, 20192020 consisted of the following:
Debt Instrument (defined below, as applicable)March 31, 2021December 31, 2020
(Dollars in millions)
6.000% Senior Secured Notes due March 2022 (2022 Notes)$60.3 $459.0 
8.500% Senior Secured Notes due December 2024 (Peabody Notes)172.7 0 
10.000% Senior Secured Notes due December 2024 (Co-Issuer Notes)193.9 0 
6.375% Senior Secured Notes due March 2025 (2025 Notes)500.0 500.0 
Senior Secured Term Loan due 2024 (Co-Issuer Term Loan)206.0 0 
Senior Secured Term Loan due 2025, net of original issue discount (Senior Secured Term Loan)387.3 388.2 
Revolving credit facility0 216.0 
Finance lease obligations17.3 27.3 
Less: Debt issuance costs(56.8)(42.7)
1,480.7 1,547.8 
Less: Current portion of long-term debt69.4 44.9 
Long-term debt$1,411.3 $1,502.9 
 March 31, 2020 December 31, 2019
 (Dollars in millions)
6.000% Senior Secured Notes due March 2022$459.0
 $459.0
6.375% Senior Secured Notes due March 2025500.0
 500.0
Senior Secured Term Loan due 2025, net of original issue discount391.1
 392.1
Finance lease obligations9.1
 15.2
Less: Debt issuance costs(52.3) (55.5)
 1,306.9
 1,310.8
Less: Current portion of long-term debt12.6
 18.3
Long-term debt$1,294.3
 $1,292.5
Refinancing Transactions
On January 29, 2021 (the Settlement Date), the Company completed a series of transactions (collectively, the Refinancing Transactions) to, among other things, provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity and financial flexibility. The Refinancing Transactions included a senior notes exchange and related consent solicitation, a revolving credit facility exchange and various amendments to the Company’s existing debt agreements, as summarized below. As further discussed in Note 16. “Financial Instruments and Other Guarantees,” upon completion of the Refinancing Transactions, the surety transaction support agreement (Surety Agreement) entered into with the Company’s surety bond providers in November 2020 became effective.
On the Settlement Date, the Company settled an exchange offer (Exchange Offer) pursuant to which $398.7 million aggregate principal amount of the Company’s 6.000% Senior Secured Notes due March 2022 (the 2022 Notes) were validly tendered, accepted by the Company and exchanged for aggregate consideration consisting of (a) $193.9 million aggregate principal amount of new 10.000% Senior Secured Notes due December 2024 (Co-Issuer Notes) issued by certain wholly-owned subsidiaries of the Company (the Co-Issuers), (b) $195.1 million aggregate principal amount of new 8.500% Senior Secured Notes due December 2024 issued by the Company (Peabody Notes) and (c) a cash payment of approximately $9.4 million. In connection with the settlement of the Exchange Offer, the Company also paid early tender premiums totaling $4.0 million in cash. The Company’s Wilpinjong Mine in Australia is owned and operated by a subsidiary of the Co-Issuers.
The Exchange Offer was accounted for as a debt modification based upon the relative similarity of the present value of the future cash flows of the instruments. As such, 0 gain or loss was recorded in connection with the Exchange Offer. Fees paid to third parties of $10.6 million were included in “Interest expense” in the accompanying unaudited condensed consolidated statements of operations during the three months ended March 31, 2021. Following the settlement of the Exchange Offer, approximately $60.3 million aggregate principal amount of the 2022 Notes remain outstanding and are governed by the existing senior notes’ indenture (the Existing Indenture), as amended by the supplemental indenture described below.
Concurrently with the Exchange Offer, the Company solicited consents from holders of the 2022 Notes to certain proposed amendments to its Existing Indenture to (i) eliminate substantially all of the restrictive covenants, certain events of default applicable to the 2022 Notes and certain other provisions contained in the Existing Indenture and (ii) release the collateral securing the 2022 Notes and eliminate certain other related provisions contained in the Existing Indenture. The Company received the requisite consents from holders of the 2022 Notes and entered into a supplemental indenture to the Existing Indenture, which became operative on January 29, 2021.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In connection with the Refinancing Transactions, the Company restructured the revolving loans under its existing credit agreement (the Credit Agreement) by (i) making a pay down of revolving loans thereunder in the aggregate amount of $10.0 million, (ii) the Co-Issuers incurring $206.0 million of term loans under a credit agreement, dated as of the Settlement Date (Co-Issuer Term Loans, Co-Issuer Term Loan Agreement), (iii) the Company entering into a letter of credit facility (the Company LC Agreement) and (iv) amending the Credit Agreement (collectively, the Revolver Transactions).
Co-Issuer Notes
The terms of the Co-Issuer Notes are governed by an indenture, as amended and restated as of February 3, 2021, by and among the Co-Issuers, Wilmington Trust, National Association, as trustee, and, on a limited basis, the Company (Co-Issuer Notes Indenture).
The Co-Issuer Notes mature on December 31, 2024 and bear interest at an annual rate of 10.000%. The Company paid aggregate debt issuance costs of $5.6 million, which are being amortized over the terms of the notes. Beginning March 31, 2021, interest is payable on March 31, June 30, September 30 and December 31 of each year. During the three months ended March 31, 2021, the Company recorded interest expense of $3.6 million related to the Co-Issuer Notes.
The Co-Issuer Notes are subject to amortization at the end of each six-month period, beginning with June 30, 2021, whereby the Excess Cash Flow (as defined in the Co-Issuer Notes Indenture) generated by the Wilpinjong Mine during each such period will be applied to the principal of the Co-Issuer Notes and the Co-Issuer Term Loans on a pro rata basis, provided that the liquidity attributable to the Co-Issuers would not fall below $60.0 million.
The Co-Issuer Notes Indenture contains customary covenants that, among other things, limit the Co-Issuers’ and their subsidiaries’ ability to incur additional Indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets, and place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Co-Issuers.
The Co-Issuer Notes are not guaranteed by any of the Co-Issuers’ subsidiaries and thus are structurally subordinated to any existing or future Indebtedness or other liabilities, including trade payables, of any such subsidiaries. The Co-Issuer Notes initially are secured by liens on substantially all of the assets of the Co-Issuers, including by (i) 100% of the capital stock of PIC Acquisition Corp. owned by PIC AU Holdings LLC and (ii) all other property subject or purported to be subject, from time to time, to a lien under the Co-Issuers’ collateral trust agreement (collectively, the Wilpinjong Collateral).
The Co-Issuers may redeem some or all of the Co-Issuer Notes at the redemption prices and on the terms specified in the Co-Issuer Notes Indenture.
The Co-Issuer Notes Indenture contains certain events of default, including, in certain circumstances, (i) specified events occurring at the Wilpinjong Mine, (ii) the termination or modification of the Surety Agreement, (iii) the Company’s failure to comply with any obligation under the transaction support agreement entered into prior to, and in contemplation of, the Refinancing Transactions and (iv) the termination of the management services agreements between the Company and the Co-Issuers. If the Co-Issuer Notes are accelerated or otherwise become due and payable as a result of an event of default, certain additional premium amounts may become due and payable in addition to unpaid principal and interest at the time of acceleration. In addition, the holders of the Co-Issuer Notes have the right, under certain circumstances specified in the Co-Issuer Notes Indenture, to exchange their Co-Issuer Notes for Peabody Notes.
Peabody Notes
The terms of the Peabody Notes are governed by an indenture, as amended and restated as of February 3, 2021, by and among Peabody, the guarantors party thereto, and Wilmington Trust, National Association, as trustee (the Peabody Notes Indenture).
The Peabody Notes mature on December 31, 2024. The Company paid aggregate debt issuance costs of $5.7 million, which are being amortized over the terms of the notes. The Peabody Notes bear interest at an annual rate of 8.500%, consisting of 6.000% per annum in cash and an additional 2.500% per annum to be paid-in-kind through an increase of the principal amount of the outstanding Peabody Notes, which is payable on June 30 and December 31 of each year, commencing on June 30, 2021. During the three months ended March 31, 2021, the Company recorded interest expense of $3.1 million related to the Peabody Notes, which included approximately $0.8 million of in-kind interest.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As a requirement of the Exchange Offer, during the three months ended March 31, 2021, the Company purchased $22.4 million of the Peabody Notes at 80% of their accreted value, plus accrued and unpaid interest. In connection with the purchases, the Company recognized a net gain of $3.5 million to “Gain on early debt extinguishment.” The notes were subsequently canceled.
The Peabody Notes Indenture contains customary covenants that, among other things, limit the Company’s and its restricted subsidiaries’ ability to incur additional Indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from restricted subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of its assets, and place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company.
The Peabody Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by the Peabody Guarantors (as defined below) on the Peabody Collateral (as defined below). The obligations are secured on a pari passu basis by the same collateral that secures the 6.375% senior secured notes due 2025 (the 2025 Notes), the Credit Agreement and the Company LC Agreement described below.
Co-Issuer Term Loans
The Co-Issuer Term Loans mature on December 31, 2024 and bear interest at a rate of 10.00% per annum. The Company paid aggregate debt issuance costs of $7.1 million, that are being amortized over its term. During the three months ended March 31, 2021, the Company recorded interest expense of $3.7 million related to the Co-Issuer Term Loans.
The Co-Issuer Term Loan Agreement contains customary covenants that, among other things, limit the Co-Issuers’ and their subsidiaries’ ability to incur additional Indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets, and place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Co-Issuers. The Co-Issuer Term Loan Agreement is guaranteed and secured to the same extent as the Co-Issuer Notes as described above. In addition, the Co-Issuer Term Loan Agreement contains events of default substantially similar to those described above for the Co-Issuer Notes Indenture.
Company LC Agreement
On the Settlement Date, the Company entered into the Company LC Agreement with the revolving lenders party to the Credit Agreement, pursuant to which the Company obtained a $324.0 million letter of credit facility under which its existing letters under the Credit Agreement were deemed to be issued. The Company paid aggregate debt issuance costs of $4.1 million. The commitments under the Company LC Agreement mature on December 31, 2024. Undrawn letters of credit under the Company LC Agreement bear interest at 6.00% per annum and unused commitments are subject to a 0.50% per annum commitment fee. During the three months ended March 31, 2021, the Company recorded interest expense and fees of $4.1 million related to the Company LC Agreement.
In connection with the Revolver Transactions, the Company amended its Credit Agreement to make certain changes in consideration of the Company LC Agreement. After giving effect to the Revolver Transactions, there remain 0 revolving commitments or revolving loans under the Credit Agreement and the first lien net leverage ratio covenant was eliminated. The Company LC Agreement requires that the Company’s restricted subsidiaries maintain minimum aggregate liquidity of $125.0 million at the end of each quarter through December 31, 2024. As such, liquidity attributable to the Co-Issuers, its subsidiaries and other unrestricted subsidiaries will be excluded from the calculation.
The Company LC Agreement is guaranteed and secured to the same extent of the Peabody Notes as described above. In addition, the Company LC Agreement contains events of default substantially similar to those described above for the Peabody Notes.
Under the Company LC Agreement, the Company is permitted to effectuate open market debt repurchases, subject to certain limitations, including, but not limited to: (i) the Company’s unrestricted subsidiaries’ liquidity must be greater than or equal to $200.0 million after giving effect to such repurchases and (ii) for every $4 of principal repurchased in any fiscal quarter, the Company must make an offer on a pro rata basis to purchase $1 of principal amount of debt from holders of the Peabody Notes and Company LC Agreement within 30 days of the end of such fiscal quarter at a price equal to the weighted average repurchase price paid over that quarter.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.375% Senior Secured Notes
On February 15, 2017, the Company entered into an indenture (the Indenture)the Existing Indenture with Wilmington Trust, National Association, as trustee, relating to its issuance of $500.0 million aggregate principal amount of 6.000% senior secured notes due 2022 (the 2022 Notes) and $500.0 million aggregate principal amount of 6.375% senior secured notes duethe 2025 (theNotes. The 2025 Notes and, together with the 2022 Notes, the Senior Notes). The Senior Notes were soldissued on February 15, 2017 in a private transaction exempt from the registration requirements of the Securities Act of 1933.
The Senior2025 Notes were issued at par value. The Company paid aggregate debt issuance costs of $49.5$25.1 million related to the offering, which are being amortized over the respective termsterm of the Senior2025 Notes. Interest payments on the Senior2025 Notes are scheduled to occur each year on March 31 and September 30 until maturity. During thethree months ended March 31, 20202021 and 2019,2020, the Company recorded interest expense of $17.5of $9.2 million and $18.0$9.1 million, respectively, related to the Senior2025 Notes.
The 2022 Notes were redeemable beginning March 31, 2019, in whole or in part, at 103.0% of par, beginning March 31, 2020 at 101.5% of par and beginning March 31, 2021 and thereafter at par. The 2025 Notes may be redeemed, in whole or in part, beginning March 31, 2020 at 104.8% of par, beginning March 31, 2021 at 103.2% of par, beginning March 31, 2022 at 101.6% of par and beginning March 31, 2023 and thereafter at par. In addition, prior to the first date on which the Senior Notes are redeemable at the redemption prices noted above, the Company may also redeem some or all of the Senior Notes at a calculated make-whole premium, plus accrued and unpaid interest.
On August 9, 2018, the Company executed an amendment to the Existing Indenture following the solicitation of consents from the requisite majoritiesmajority of holders of each series of Seniorthe 2025 Notes. The amendment permits a category of restricted payments at any time not to exceed the sum of $650.0 million, plus an additional $150.0 million per calendar year, commencing with calendar year 2019, with unused amounts in any calendar year carrying forward to and available for restricted payments in any subsequent calendar year. The Company paid consenting Seniorconsent fees to 2025 Note holders $10.00 in cash per $1,000 principal amount of 2022 Notes and $30.00 in cash per $1,000 principal amount of 2025 Notes, which amounted to $19.8$14.9 million. Such consent paymentsfees were capitalized as additional debt issuance costs to be amortized over the respective termsterm of the Senior2025 Notes. The Company also expensed $1.5 million of other payments associated with
With respect to the amendment to “Interest expense” in2025 Notes, the accompanying unaudited condensed consolidated statements of operations during 2018.
During the fourth quarter of 2019, the Company made open-market purchases of $41.0 million of the 2022 Notes for $39.9 million, plus accrued interest. In connection with the purchases, the Company wrote off $1.3 million of debt issuance costs and charged $0.2 million to “Loss on early debt extinguishment.” The notes were subsequently canceled.
TheExisting Indenture contains customary conditions of default and imposes certain restrictions on the Company’s activities, including its ability to incur debt, incur liens, make investments, engage in fundamental changes such as mergers and dissolutions, dispose of assets, enter into transactions with affiliates and make certain restricted payments, such as cash dividends and share repurchases.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Senior2025 Notes rank senior in right of payment to any subordinated indebtednessIndebtedness and equally in right of payment with any senior indebtednessIndebtedness to the extent of the collateral securing that indebtedness.Indebtedness. The Senior2025 Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by substantially all of the Company’s material domestic restricted subsidiaries (the Peabody Guarantors) and secured by (a) first priority liens over (1) substantially all of the assets of the Company and the guarantors,Peabody Guarantors, except for certain excluded assets, (2) 100% of the capital stock of each domestic restricted subsidiary of the Company, (3) 100% of the non-voting capital stock of each first tier foreign subsidiary of the Company or a foreign subsidiary holding company and no more than 65% of the voting capital stock of each first tier foreign subsidiary of the Company or a foreign subsidiary holding company, (4) a legal charge of 65% of the voting capital stock and 100% of the non-voting capital stock of Peabody Investments (Gibraltar) Limited and (5) all intercompany debt owed to the Company or any guarantor,Peabody Guarantor, in each case, subject to certain exceptions.exceptions (the Peabody Collateral), and (b) second priority liens over the Wilpinjong Collateral. The obligations under the Senior2025 Notes are secured on a pari passu basis by the same collateral securing the Credit Agreement, (as defined below), subject to certain exceptions.and the other priority lien debt of the Company, including the Peabody Notes and the Company LC Agreement described above.
Credit Agreement
The Company originally entered into a credit agreement on April 3, 2017 among the Company, as borrower, Goldman Sachs Bank USA, as administrative agent, and other lenders party thereto (the Credit Agreement). The Credit Agreement originallyduring 2017, which provided for a $950.0 million senior secured term loan (the Senior Secured Term Loan), which was to mature due in 2022 prior to the amendments described below.
Following the voluntary prepayments and amendments described below, the Credit Agreement provided for a $400.0 million first lien senior secured term loan, which bore interest at LIBOR plus 2.75% per annum as of March 31, 2020. During the three months ended March 31, 2020 and 2019, the Company recorded interest expense of $4.9 million and $5.7 million, respectively, related to the Senior Secured Term Loan.
2022. Proceeds from the Senior Secured Term Loan were received net of an original issue discount and deferred financing costs of $37.3 million that are being amortized over its term. The Credit Agreement has been amended periodically over its term to add a revolving loan facility, to increase the capacity and extend the maturity date of the revolving loan facility, to extend the maturity date of the Senior Secured Term Loan to 2025 and to make various changes to terms such as those related to interest, fees and payment restrictions. In connection with certain of the amendments, the Company voluntarily prepaid $46.0 million of Senior Secured Term Loan principal is payableand incurred $10.4 million of deferred financing costs related to the revolving loan facility. The Company also voluntarily repaid an additional $500.0 million of Senior Secured Term Loan principal in various installments.
At March 31, 2021 the Senior Secured Term Loan had a balance of $387.3 million. The Senior Secured Term Loan requires quarterly installments plus accruedprincipal payments of $1.0 million and periodic interest payments through December 2024 with the remaining balance due in March 2025. The loan principal was voluntarily prepayable at 101%During the three months ended March 31, 2021 and 2020, the Company recorded interest expense of the principal amount repaid if prepayment occurred prior$3.3 million and $4.9 million, respectively, related to October 2018 (subject to certain exceptions, including prepayments made with internally generated cash) and is voluntarily prepayable at any time thereafter without premium or penalty. The Senior Secured Term Loan may require mandatory principal prepayments of up to 75% of Excess Cash Flow (as defined in the Credit Agreement) for any fiscal year if the Company’s Total Leverage Ratio (as defined in the Credit Agreement and calculated at December 31, net of any unrestricted cash) is greater than 2.00:1.00. The mandatory principal prepayment requirement changes to (i) 50% of Excess Cash Flow if the Company’s Total Leverage Ratio is less than or equal to 2.00:1.00 and greater than 1.50:1.00, (ii) 25% of Excess Cash Flow if the Company’s Total Leverage Ratio is less than or equal to 1.50:1.00 and greater than 1.00:1.00, or (iii) 0 if the Company’s Total Leverage Ratio is less than or equal to 1.00:1.00. If required, mandatory prepayments resulting from Excess Cash Flows are payable within 100 days after the end of each fiscal year. The calculation of mandatory prepayments would be reduced commensurately by the amount of previous voluntary prepayments. In certain circumstances, the Senior Secured Term Loan, requires that Excess Proceeds (as defined inwhich bore interest at LIBOR plus 2.75% per annum as of March 31, 2021.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In connection with the Revolver Transactions, the Company amended the Credit Agreement)Agreement to make certain changes in consideration of $10.0the Company LC Agreement. After giving effect to the Revolver Transactions, there remain no revolving commitments or revolving loans under the Credit Agreement. Further, all covenants specific to the former revolving credit facility under the Credit Agreement were eliminated in connection with the Refinancing Transactions and were not applicable at March 31, 2021. During the three months ended March 31, 2021 and 2020, the Company recorded interest expense and fees of $1.4 million or greater received from sales of Company assets be applied againstand $1.7 million, respectively, related to the revolving loan principal, unless such proceeds are reinvested within one year. The Senior Secured Term Loan also requires that any net insurance proceeds be applied against the loan principal, unless such proceeds are reinvested within one year.facility.
The Credit Agreement contains customary conditions of default and imposes certain restrictions on the Company’s activities, including its ability to incur liens, incur debt, make investments, engage in fundamental changes such as mergers and dissolutions, dispose of assets, enter into transactions with affiliates and make certain restricted payments, such as cash dividends and share repurchases. Obligations under the Credit Agreement are guaranteed by the Peabody Guarantors and are secured by first priority liens on the Peabody Collateral and second priority liens on the Wilpinjong Collateral. The obligations are secured on a pari passu basis by the same collateral securing the Senior Notes.
Since entering into2025 Notes and the Credit Agreement,other priority lien debt of the Company, has repaid $558.0 million ofincluding the original $950.0 million loan principal amount on the Senior Secured Term Loan in various installments, including $546.0 million which was voluntarily prepaid. In September 2017,Peabody Notes and the Company entered into an amendment to the CreditLC Agreement which permitted the Company to add an incremental revolving credit facility in addition to the Company’s ability to add one or more incremental term loan facilities under the Credit Agreement. The incremental revolving credit facility and/or incremental term loan facilities can be in an aggregate principal amount of up to $350.0 million plus additional amounts so long as the Company remains in compliance with Total Leverage Ratio requirements as set forth in the Credit Agreement. The amendment also made available an additional restricted payment basket that permits additional repurchases, dividends or other distributions with respect to the Company’s common and preferred stock in an aggregate amount up to $450.0 million so long as the Company’s Fixed Charge Coverage Ratio (as defined in the Credit Agreement) is at least 2.00:1.00 on a pro forma basis.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In April 2018, the Company entered into another amendment to the Credit Agreement which lowered the interest rate on the Senior Secured Term Loan to its current level of LIBOR plus 2.75% and eliminated an existing 1.0% LIBOR floor. The amendment also extended the maturity of the Senior Secured Term Loan by three years to 2025 and eliminated previous capital expenditure restriction covenants on both the Senior Secured Term Loan and the incremental revolving credit facility described below. In connection with this amendment, the Company voluntarily repaid $46.0 million of principal on the Senior Secured Term Loan.
During the fourth quarter of 2017, the Company entered into the incremental revolving credit facility (the Revolver) for an aggregate commitment of $350.0 million for general corporate purposes and paid debt issuance costs of $4.7 million. In September 2019, the Company entered into an amendment to the Credit Agreement which increased the aggregate commitment amount under the Revolver to $565.0 million and extended the maturity date on $540.0 million of the commitments from November 2020 to September 2023. The maturity date for the remaining $25.0 million commitment is November 2020. The Company incurred $5.7 million of additionalwas compliant with all covenants under its debt issuance costs in connection with the amendment. As a result of the amendment, such loans, letters of credit and unused capacity related to the $540.0 million of extended commitments bear interest and incur feesagreements at rates dependent upon the Company’s First Lien Leverage Ratio (as defined in the Credit Agreement) beginning in 2020. At March 31, 2020, such rates were LIBOR plus 3.00% for revolving loans, 0.4% per annum for the unused portion of Revolver capacity, and 3.125% per annum for letters of credit fees. The Revolver is also subject to a 2.00:1.00 Total Leverage Ratio requirement (as defined in the Credit Agreement), modified to limit unrestricted cash netting to $800.0 million.
At March 31, 2020, the Revolver was utilized solely for letters of credit of $72.6 million, primarily in support of the Company’s reclamation obligations, as further described in Note 17. “Financial Instruments and Other Guarantees.” During the three months ended March 31, 2020 and 2019, the Company recorded interest expense and fees of $1.7 million and $1.6 million, respectively, related to the Revolver.
In early April 2020, the Company borrowed $300.0 million under the Revolver, reducing its remaining availability to $192.4 million. The borrowing was made as part of the Company’s ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets and related effects on the Company resulting from the COVID-19 pandemic. While the Company does not currently expect to use the proceeds from these borrowings for any near-term liquidity needs, it may use the proceeds for working capital and other general corporate purposes.
Restricted Payments Under the Senior Notes and Credit Agreement
In addition to the $450.0 million restricted payment basket provided for under the September 2017 amendment, the Credit Agreement provides a builder basket for additional restricted payments subject to a maximum Total Leverage Ratio of 2.00:1.00 (as defined in the Credit Agreement).
In addition to the $650.0 million restricted payment basket, plus an additional $150.0 million per calendar year, provided under the August 2018 amendment, the Indenture provides a builder basket for restricted payments that is calculated based upon the Company’s Consolidated Net Income, and is subject to a Fixed Charge Coverage Ratio of at least 2.25:1.00 (as defined in the Indenture).
Further, under both the Indenture and Credit Agreement, additional restricted payments are permitted through a $50.0 million general basket and an annual aggregate $25.0 million basket which allows dividends and common stock repurchases. The payment of dividends and purchases of common stock under this annual aggregate $25.0 million basket are permitted so long as the Company’s Total Leverage Ratio would not exceed 1.25:1.00 on a pro forma basis (as defined in the Credit Agreement and Indenture).2021.
Finance Lease Obligations
Refer to Note 10.9. “Leases” for additional information associated with the Company’s finance leases, which pertain to the financing of mining equipment used in operations.
(13)(12) Pension and Postretirement Benefit Costs
The components of net periodic pension and postretirement benefit costs, excluding the service cost for benefits earned, are included in “Net periodic benefit (credit) costs, excluding service cost” in the unaudited condensed consolidated statements of operations.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net periodic pension (benefit) costbenefit included the following components:
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Service cost for benefits earned$—
 $0.5
Interest cost on projected benefit obligation7.0
 8.3
Expected return on plan assets(7.4) (7.8)
Net periodic pension (benefit) cost$(0.4) $1.0

Three Months Ended March 31,
20212020
 (Dollars in millions)
Interest cost on projected benefit obligation$5.1 $7.0 
Expected return on plan assets(5.7)(7.4)
Net periodic pension benefit$(0.6)$(0.4)
Annual contributions to the qualified plans are made in accordance with minimum funding standards and the Company’s agreement with the Pension Benefit Guaranty Corporation. Funding decisions also consider certain funded status thresholds defined by the Pension Protection Act of 2006 (generally 80%). As of March 31, 2020,2021, the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds. Minimum funding standards are legislated by ERISAthe Employee Retirement Income Security Act of 1974 and are modified by pension funding stabilization provisions included in the Moving Ahead for Progress in the 21st Century Act of 2012, the Highway and Transportation Funding Act of 2014, and the Bipartisan Budget Act of 2015.2015 and the American Rescue Plan Act of 2021. The Company is not required to make any contributions to its qualified pension plans in 20202021 based on minimum funding requirements and does not expect to make any discretionary contributions in 2020.2021.
Net periodic postretirement benefit (benefit) cost included the following components:
Three Months Ended March 31,
20212020
 (Dollars in millions)
Service cost for benefits earned$0.2 $1.1 
Interest cost on accumulated postretirement benefit obligation2.9 5.5 
Expected return on plan assets(0.2)(0.4)
Amortization of prior service credit(11.0)(2.2)
Net periodic postretirement benefit (benefit) cost$(8.1)$4.0 
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Service cost for benefits earned$1.1
 $1.2
Interest cost on accumulated postretirement benefit obligation5.5
 6.3
Expected return on plan assets(0.4) (0.1)
Amortization of prior service credit(2.2) (2.2)
Net periodic postretirement benefit cost$4.0
 $5.2

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In October 2018,September 2020, the Company amendedannounced changes to its postretirement health care benefit planplans for non-represented employees and retirees which reduced its accumulated postretirement benefit obligation, as further described in Note 17.15. “Postretirement Health Care and Life Insurance Benefits” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.2020. The reduction in liability has beenwas recorded with an offsetting balance in “Accumulated other comprehensive income,” net of a deferred tax provision,income” and is being amortized to earnings over an average remaining service period to full eligibility for participating employees.earnings.
In 2018, theThe Company has established atwo Voluntary Employees Beneficiary Association (VEBA) trusttrusts to pre-fund a portion of benefits for non-represented and represented retirees. The Company does not expect to make any discretionary contributions to either of the VEBA trusts in 2020.2021 and plans to utilize VEBA assets to make benefit payments.
(14)(13) Accumulated Other Comprehensive Income
The following table sets forth the after-tax components of accumulated other comprehensive income and changes thereto recorded during the three months ended March 31, 2020:2021:
 
Foreign Currency Translation
Adjustment
 
Prior Service
Credit (Cost) Associated
with
Postretirement
Plans
 Total Accumulated Other Comprehensive Income
 (Dollars in millions)
December 31, 2019$(4.3) $35.9
 $31.6
Reclassification from other comprehensive income to earnings—
 (2.2) (2.2)
Current period change(6.8) —
 (6.8)
March 31, 2020$(11.1) $33.7
 $22.6

Foreign Currency Translation
Adjustment		Prior Service
Credit Associated
with
Postretirement
Plans		Total Accumulated Other Comprehensive Income
 (Dollars in millions)
December 31, 2020$1.8 $204.0 $205.8 
Reclassification from other comprehensive income to earnings0 (11.0)(11.0)
Current period change(0.2)0 (0.2)
March 31, 2021$1.6 $193.0 $194.6 


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Postretirement health care and life insurance benefits reclassified from other comprehensive income to earnings of $2.2$11.0 million during both and $2.2 million during the three months ended March 31, 2021 and 2020, and 2019respectively, are included in “Net periodic benefit (credit) costs, excluding service cost” in the unaudited condensed consolidated statements of operations.
(15)(14) Other Events
Organizational RealignmentCost Repositioning Program
From time to time, the Company initiates restructuring activities in connection with its repositioning efforts to appropriately align its cost structure or optimize its coal production relative to prevailing market conditions. Costs associated with restructuring actions can include the impact of early mine closures, voluntary and involuntary workforce reductions, office closures and other related activities. Costs associated with restructuring activities are recognized in the period incurred. Such charges included as “Restructuring charges” in the Company's unaudited condensed consolidated statements of operations amounted to $2.1 million and $6.5 million for the three months ended March 31, 2021 and 2020, respectively, and 2019 amounted to $6.5 million and $0.2 million, respectively, primarilywere associated with both involuntary and voluntary workforce reductions.
During April 2020,The Shoal Creek Mine remains idled as the Company further reduced itscontinues activities to increase productivity, lower costs and improve yields from the operation in the future. The restart of mine production and coal shipments is contingent upon successful completion of these initiatives and stable customer demand. Included in the initiatives is a preparation plant upgrade project, which is anticipated to be commissioned by the middle of the third quarter of 2021. Additionally, the Shoal Creek labor contract expired on April 1, 2021 and negotiations with the workforce by approximately 250 positions, primarily withinare ongoing.
While discussions are ongoing with customers and workforce, the Powder River Basin Mining and Other U.S. Thermal Mining operating segments,Metropolitan Mine full workforce returned to the mine in early May. Development work at the mine has been ongoing through the use of involuntary reductionsidle period and voluntary programs. The Company will incur additional restructuring charges duringlongwall production is anticipated to restart in the second quarter of 2020, the amount of which will be dependent upon the ultimate participation in ongoing voluntary programs.
United Wambo Joint Venture2021, with Glencore
In December 2019, after receiving the requisite regulatory and permitting approvals, the Company formed an unincorporated joint venture with Glencore plc (Glencore), in which the Company holds a 50% interest,ramp up to combine the existing operations of the Company’s Wambo Open-Cut Mine in Australia with the adjacent coal reserves of Glencore’s United Mine. The Company proportionally consolidates the entity based upon its economic interest.
Both parties contributed mining tenements upon formation of the joint venture. Construction and development efforts are currently underway to combine operations. The joint venture agreement specifies that the Company will continue to fully own and operate the existing Wambo Open-Cut Mine through December 1, 2020, at which point the development of the combined operations is expected to be completed, the parties will contribute mining equipment and other assets, and joint operations will commence. Glencore is responsible for construction and development activities and will manage the mining operations of the joint venture.
PRB Colorado Joint Venture with Arch
On June 18, 2019, the Company entered into a definitive implementation agreement (the Implementation Agreement) with Arch, to establish a joint venture that will combine the respective Powder River Basin (PRB) and Colorado operations of Peabody and Arch. Pursuant to the terms of the Implementation Agreement, Peabody will hold a 66.5% economic interestfull production in the joint venture and Arch will hold a 33.5% economic interest. The Company expects to proportionally consolidate the entity based upon its economic interest. Governance of the joint venture will be overseen by the joint venture’s board of managers, which will be comprised of Peabody and Arch representatives with voting powers proportionate with the companies’ economic interests, with the exception of certain specified matters which will require supermajority approval. Peabody will manage the operations of the joint venture, subject to the supervision of the joint venture’s board of managers.
On February 26, 2020, the U.S. Federal Trade Commission (FTC) sought a preliminary injunction to challenge the Company’s proposed joint venture. Peabody and Arch intend to continue to pursue creation of the joint venture and will litigate the FTC’s decision within the U.S. federal court system. Court proceedings are currently scheduled to begin on July 13, 2020, with a ruling expected shortly thereafter, subject to any potential changes to the court’s schedule as a result of the COVID-19 pandemic or other exigent circumstances. The FTC has also initiated an administrative proceeding on the merits, which is currently scheduled for hearing on October 27, 2020.
Formation of the joint venture is subject to favorable resolution of the FTC’s challenge noted above and customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of certain other required regulatory approvals and the absence of injunctions or other legal restraints preventing the formation of the joint venture. In September 2019, the Company amended its Credit Agreement to expressly permit formation of the joint venture and is currently addressing such formation under the Indenture governing the Senior Notes. At such time as control over the existing operations is exchanged, the Company will account for its interest in the combined operations at fair value, which could result in a significant loss.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

North Goonyella
The Company’s North Goonyella Mine in Queensland, Australia experienced a fire in a portion of the mine during September 2018 and mining operations have been suspended since then. During 2019, the Company completed segmenting of the mine into multiple zones to facilitate a phased re-ventilation and re-entry of the mine, re-ventilation of the first zone of the mine and subsequently re-entered the area. Following these activities and a detailed review and assessment, the Company determined that due to the time, cost and required regulatory approach to ventilate and re-enter the rest of the mine, the Company will not pursue attempts to access certain portions of the mine through existing mine workings, but instead will move to the southern panels. The Company is in ongoing discussions with the Queensland Mines Inspectorate regarding ventilation and re-entry of the second zone of the current mine configuration. Based on the planned approach, the Company expects no meaningful production from North Goonyella for three or more years. In 2020, the Company commenced a commercial process for North Goonyella in conjunction with the existing mine development. The process comes in response to expressions of interest from potential strategic partners and other producers. Commercial outcomes could include a strategic financial partner, a joint venture structure or complete sale of North Goonyella. Subsequent to the firstthird quarter of 2020, the Company entered into commercial agreements to reduce the rail and port commitments related to North Goonyella for the second half of 2020 through the first half of 2023, while maintaining sufficient capacity for future production.2021.
During the three months ended March 31, 2020 and 2019, the Company recorded $10.1 million and $36.9 million in containment and idling costs. An additional provision of $24.7 million related to equipment losses was recorded during the three months ended March 31, 2019, which was incremental to amounts recorded in prior periods and represented the best estimate of loss based on the assessments made as of that date. NaN provision for equipment losses was recorded during the three months ended March 31, 2020.
In March 2019, the Company entered into an insurance claim settlement agreement with its insurers and various re-insurers under a combined property damage and business interruption policy and recorded a $125 million insurance recovery, the maximum amount available under the policy above a $50 million deductible. The Company has collected the full amount of the recovery.
In the event that no future mining occurs at the North Goonyella Mine or the Company is unable to find a commercial alternative, the Company may record additional charges for the remaining carrying value of the North Goonyella Mine of up to approximately $300 million. Incremental exposures above the aforementioned include take-or-pay obligations and other costs associated with idling or closing the mine.
Asset Impairment and Other At-Risk Assets
Other than the provision for North Goonyella equipment losses described above, the Company recorded 0 asset impairment charges during the three months ended March 31, 2020 or 2019. However, the Company has identified certain assets with an aggregate carrying value of approximately $2.1 billion at March 31, 2020 in its Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to coal pricing, cost pressures, customer demand and customer concentration risk. The Company conducted a review of those assets for recoverability as of March 31, 2020 and determined that 0 further impairment charges were necessary as of that date.
(16)(15) Earnings per Share (EPS)
Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding. As such, the Company includes the share-based compensation awards in its potentially dilutive securities. Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For all but the performance units, the potentially dilutive impact of the Company’s share-based compensation awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with any proceeds used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and purchased is included in the diluted share computation. For the performance units, their contingent features result in an assessment for any potentially dilutive common stock by using the end of the reporting period as if it were the end of the contingency period for all units granted.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The computation of diluted EPS excluded aggregate share-based compensation awards of approximately 3.01.3 million and 0.33.0 million for the three months ended March 31, 20202021 and 2019,2020, respectively, because to do so would have been anti-dilutive for those periods. Because the potential dilutive impact of such share-based compensation awards is calculated under the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share of such awards are higher than the Company’s average stock price during the applicable period. Anti-dilution also occurs when a company reports a net loss from continuing operations, and the dilutive impact of all share-based compensation awards are excluded accordingly.
The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.
 Three Months Ended March 31,
 2020 2019
 (In millions, except per share data)
EPS numerator:   
(Loss) income from continuing operations, net of income taxes$(129.3) $133.3
Less: Net (loss) income attributable to noncontrolling interests(1.8) 5.7
(Loss) income from continuing operations attributable to common stockholders(127.5) 127.6
Loss from discontinued operations, net of income taxes(2.2) (3.4)
Net (loss) income attributable to common stockholders$(129.7) $124.2
    
EPS denominator:   
Weighted average shares outstanding — basic97.2
 108.5
Impact of dilutive securities—
 2.0
Weighted average shares outstanding — diluted97.2
 110.5
    
Basic EPS attributable to common stockholders:   
(Loss) income from continuing operations$(1.31) $1.18
Loss from discontinued operations(0.02) (0.04)
Net (loss) income attributable to common stockholders$(1.33) $1.14
    
Diluted EPS attributable to common stockholders:   
(Loss) income from continuing operations$(1.31) $1.15
Loss from discontinued operations(0.02) (0.03)
Net (loss) income attributable to common stockholders$(1.33) $1.12

Three Months Ended March 31,
 20212020
(In millions, except per share data)
EPS numerator: 
Loss from continuing operations, net of income taxes$(77.7)$(129.3)
Less: Net income (loss) attributable to noncontrolling interests0.4 (1.8)
Loss from continuing operations attributable to common stockholders(78.1)(127.5)
Loss from discontinued operations, net of income taxes(2.0)(2.2)
Net loss attributable to common stockholders$(80.1)$(129.7)
EPS denominator: 
Weighted average shares outstanding — basic and diluted98.4 97.2 
Basic and diluted EPS attributable to common stockholders: 
Loss from continuing operations$(0.79)$(1.31)
Loss from discontinued operations(0.02)(0.02)
Net loss attributable to common stockholders$(0.81)$(1.33)
(17)(16) Financial Instruments and Other Guarantees
In the normal course of business, the Company is a party to various guarantees and financial instruments that carry off-balance-sheetoff-balance-sheet risk and are not reflected in the accompanying condensed consolidated balance sheets. At March 31, 2020,2021, such instruments included $1,557.4$1,570.8 million of surety bonds and $206.8$423.4 million of letters of credit. TheseSuch financial instruments provide support for the Company’s reclamation bonding requirements, lease obligations, insurance policies and various other performance guarantees. The Company periodically evaluates the instruments for on-balance-sheeton-balance sheet treatment based on the amount of exposure under the instrument and the likelihood of required performance. The Company does not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in the accompanying condensed consolidated balance sheets.
In connection with the Refinancing Transactions described in Note 11. “Long-term Debt,” at the Settlement Date, all letters of credit issued under the Company’s former revolving credit facility were deemed issued under the Company LC Agreement in support of the same obligations.
The Company is required to provide various forms of financial assurance in support of its mining reclamation obligations in the jurisdictions in which it operates. Such requirements are typically established by statute or under mining permits. At March 31, 2020,2021, the Company’s asset retirement obligations of $758.7$735.9 million were supported by surety bonds of $1,365.0$1,394.5 million, as well as letters of credit issued under the Company’s receivables securitization program and Revolver amountingthe Company LC Agreement. Letters of credit issued at March 31, 2021 which served as collateral for surety bonds in support of asset retirement obligations amounted to $111.1$297.7 million.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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)is party to extend the Company’s receivablesan accounts receivable securitization facility previously in place and expand that facility to include certain receivables from the Company’s Australian operations. The receivables securitization programagreement (Securitization Program) is subject to customary events of default set forthwhich expires in the Receivables Purchase Agreement. The Securitization ProgramApril 2022 and provides for up to $250.0 million in funding, accounted for as a secured borrowing, limited to the availability of eligible receivables, and may be secured by a combination of collateral and the trade receivables underlying the program, from time to time. Funding capacity under the Securitization Program may also be utilized for letters of credit in support of other obligations. During 2019, the Company entered into an amendment toThe borrowings under the Securitization Program bear interest at LIBOR plus 1.5% per annum and remain outstanding throughout the term of the agreement, subject to extend its term through April 1, 2022 and reduce program fees.the Company maintaining sufficient eligible receivables, by continuing to contribute trade receivables, unless an event of default occurs. The Securitization Program is subject to customary events of default.
Under the terms of the Securitization Program, the Company contributes the trade receivables of its participating subsidiaries on a revolving basis to P&L Receivables, itsa wholly-owned, bankruptcy-remote subsidiary, which then sells the receivables to unaffiliated banks. P&L Receivables retainsThe Securitization Program does not receive off-balance sheet accounting treatment due to the Company’s ability to repurchase the receivables in certain circumstances. The assets and liabilities of P&L Receivables are consolidated with Peabody, and the Securitization Program is treated as a secured borrowing for accounting purposes, but the assets of P&L Receivables will be used first to satisfy the creditors of P&L Receivables, not Peabody’s creditors. The borrowings under the Securitization Program remain outstanding throughout the term of the agreement, subject to the Company maintaining sufficient eligible receivables, by continuing to contribute trade receivables to P&L Receivables, unless an event of default occurs.
At March 31, 2020,2021, the CompanyCompany had 0 outstanding borrowings and $132.7$120.8 million ofof letters of credit issued under the Securitization Program. The letters of credit were primarily in support of portions of the Company’s obligations for reclamation, workers’ compensationproperty and postretirement benefits.casualty insurance. Availability under the SecuritizationSecuritization Program, which is adjusted for certain ineligible receivables, was $12.8$0.8 million at March 31, 2020.2021. The Company had 0$43.5 million of collateral requirement posted under the Securitization Program at either March 31, 2020 or2021 and none at December 31, 2019.2020. The Company incurred interest and fees associated with the Securitization Program of $0.7 million and $1.1 million during the three months ended March 31, 20202021 and 2019,2020, respectively, which have been recorded as interest expense“Interest expense” in the accompanying unaudited condensed consolidated statements of operations.
Cash Collateral Arrangements and Restricted Cash
From time to time, the Company is required to remit cash to certain regulatory authorities and other third parties as collateral for financial assurances associated with a variety of long-term obligations and commitments surrounding employee related matters and the mining, reclamation and shipping of its production. At March 31, 2021, the Company had $43.5 million of cash collateral and restricted cash requirements due to outstanding letters of credit temporarily exceeding the balance of eligible receivables at quarter-end. The Company had 0 such requirements at December 31, 2020.
Other
The Company has provided financial guarantees under certain long-term debt agreements entered into by its subsidiaries and substantiallySubstantially all of the Company’s U.S. subsidiaries provide financial guarantees under long-term debt agreements entered into by the Company. The maximum amounts payable under the Company’s debt agreements are equal to the respective principal and interest payments.
(18)(17) Commitments and Contingencies
Commitments
Unconditional Purchase Obligations
As of March 31, 2020,2021, purchase commitments for capital expenditures were $42.7$46.0 million, all of which is obligated within the next fivefour years, with $35.6$38.4 million obligated within the next 12 months.
As of March 31, 2020, Australian and U.S. commitments under take-or-pay arrangements totaled $945.0 million, of which approximately $105 million is obligated within the next year. The change in commitments under take-or-pay arrangements since the year ended December 31, 2019 was largely driven byThere were no other material changes in the foreign currency exchange rates. For additional information regardingto the Company’s commitments under take-or-pay arrangements, refer tofrom the information provided in Note 26.24. “Commitments and Contingencies” to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2020.
Contingencies
From time to time, the Company or its subsidiaries are involved in legal proceedings arising in the ordinary course of business or related to indemnities or historical operations. 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 Relating to Continuing Operations

24
Peabody Monto Coal Pty Ltd, Monto Coal 2 Pty Ltd and Peabody Energy Australia PCI Pty Ltd (PEA-PCI). On October 1, 2007, a claim was made against Peabody Monto Coal Pty Ltd, a wholly-owned subsidiary of Macarthur Coal Limited (Macarthur) that is now a wholly-owned subsidiary of the Company, and Monto Coal 2 Pty Ltd, an equity accounted investee of Macarthur, now known as PEA-PCI. The claim, made by the minority interest holders in the joint venture, alleged that the Macarthur companies breached certain agreements by failing to develop a mine project. The claim was amended to assert that Macarthur also induced the alleged breach of the Monto Coal Joint Venture Agreement. The Company acquired Macarthur and its subsidiaries in 2011. The claim originally sought damages of up to $1.1 billion Australian dollars, plus interest and costs, but was amended in November 2019 to seek $18 million Australian dollars, plus interest and costs.
The Company asserted that the Macarthur companies were never under an obligation to develop the mine project because the project was not economically viable. A trial commenced in the Supreme Court of Queensland, Australia on April 8, 2019 and concluded on December 12, 2019. Before a decision was handed down, the parties reached a settlement to end the multi-year dispute, the terms of which included the Company (a) transferring its interests in Monto Coal 2 Pty Ltd, and therefore the Monto Coal Joint Venture, to the claimant; and (b) agreeing to use commercially reasonable efforts to transfer certain other assets to the claimant. These settlement terms are not expected to result in a material impact to the Company’s financial accounts. As a result of the settlement, the parties filed a dismissal of the litigation on January 24, 2020.
County of San Mateo, County of Marin, City of Imperial Beach. The Company was named as a defendant, along with numerous other companies, in 3 nearly identical lawsuits brought by municipalities in California on July 17, 2017. The lawsuits seek to hold a wide variety of companies that produce fossil fuels liable for the alleged impacts of the greenhouse gas emissions attributable to those fuels and seek compensatory and punitive damages in an amount to be proven at trial, attorneys’ fees and costs, disgorgement of profits and equitable relief of abatement.The lawsuits primarily assert that the companies’ products have caused a sea level rise that is damaging the plaintiffs. The complaints specifically alleged that the defendants’ activities from 1965 to 2015 caused such damage. The Company filed a motion to enforce the Company’s Second Amended Joint Plan of Reorganization of Debtors and Debtors in Possession as revised March 15, 2017 (the Plan) because it enjoins claims that arose before the effective date of the Plan. The motion to enforce was granted on October 24, 2017, and the Bankruptcy Court ordered the plaintiffs to dismiss their lawsuits against the Company. On November 26, 2017, the plaintiffs appealed the Bankruptcy Court’s October 24, 2017 order to the United States District Court for the Eastern District of Missouri (the District Court). On November 28, 2017, the plaintiffs sought a stay pending appeal from the Bankruptcy Court, which was denied on December 8, 2017. On December 19, 2017, the plaintiffs moved the District Court for a stay pending appeal. The District Court denied the stay request on September 20, 2018, and the plaintiffs have appealed that decision to the United States Court of Appeals for the Eighth Circuit. On March 29, 2019, the District Court affirmed the Bankruptcy Court ruling enjoining the plaintiffs from proceeding with their lawsuits against the Company. That ruling likewise was appealed. On May 6, 2020, the Eighth Circuit Court of Appeals denied the plaintiffs’ request for stay and affirmed the order compelling the plaintiffs to dismiss the Company. The plaintiffs may ask the Eight Circuit Court of Appeals to reconsider or may appeal to the United States Supreme Court.In the underlying cases pending in California, the U.S. District Court for the Northern District of California granted plaintiffs’ motion for remand and decided the cases should be heard in state court. The defendants appealed the order granting remand to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) and sought a stay of the U.S. District Court for the Northern District of California decision pending completion of the Ninth Circuit appeal. The U.S. District Court for the Northern District of California granted defendants’ request for a stay pending completion of the Ninth Circuit appeal. The plaintiffs filed a motion to dismiss part of the appeal. The parties are now litigating at the Ninth Circuit whether a state or federal court should hear these lawsuits. Regardless of whether state court or federal court is the venue, the Company believes the lawsuits against it should be dismissed under enforcement of the Plan. The Company does not believe the lawsuits are meritorious and, if the lawsuits are not dismissed, the Company intends to vigorously defend them.


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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Litigation Relating to Continuing Operations
OtherSecurities 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 allege that the defendants made false or misleading statements and/or failed to disclose certain adverse facts pertaining to safety practices at the Company’s North Goonyella Mine and the events leading up to a fire at the mine, and that, after a September 28, 2018 fire at the mine, made false or misleading statements and/or failed to disclose certain adverse facts pertaining to the feasibility of the Company’s plan to restart the mine after the fire. The Company believes the lawsuit lacks merit and intends to vigorously defend against the allegations. On January 12, 2021, the Court appointed the Oregon Public Employees Retirement Fund as lead plaintiff. 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 and the Plaintiffs’ response letter is due May 6, 2021. The defendants must file their motion to dismiss by June 7, 2021. Additional briefings at this phase of litigation should be completed by the end of August 2021.
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., Case No. 1:20-cv-01747-UNA (D. Del. filed Dec. 22, 2020), in the United States District Court for the District of Delaware against certain directors and a former officer 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., Case No. 1:21-cv-00183-UNA (D. Del. filed Feb. 10, 2021), in the United States District Court for the District of Delaware against the directors, two current officers and a former officer 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 United States District Court for the District of Delaware ruled on the motion to dismiss in the Securities Class Action. The Company also believes that the derivative actions lack merit and intended to vigorously defend against the allegations.
Litigation Relating to Continuing Operations
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. The Company reassesses the probability and estimability of contingent losses as new information becomes available.
(19)(18) Segment Information
During the year ended December 31, 2019, the Cottage Grove and Kayenta Mines shipped their final tons, and the Company announced the closures of the Wildcat HiIls Underground and Somerville Central Mines, with both of those operations expecting to ship their final tons in 2020. Due to these changes, the Company has revised its reportable segments beginning in the first quarter of 2020 to reflect the manner in which the chief operating decision maker (CODM) views the Company’s businesses going forward for purposes of reviewing performance, allocating resources and assessing future prospects and strategic execution. The Company now reports its results of operations primarily through the following reportable segments: Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining and Corporate and Other. Prior period results have been recast for comparability.
The business of the Company’s seabornechief operating platform is primarily export focused with customers spread across several countries, with a portion of its thermal and metallurgical coal sold within Australia. Generally, revenues from individual countries vary year by year based on electricity and steel demand, the strength of the global economy, governmental policies and several other factors, including those specific to each country. The Company classifies its seaborne mines within the Seaborne Thermal Mining or Seaborne Metallurgical Mining segments based ondecision maker uses Adjusted EBITDA as the primary customer base and coal reserve type of each mining operation. A small portion ofmetric to measure the coal mined by the Seaborne Thermal Mining segment is of a metallurgical grade. Similarly, a small portion of the coal mined by the Seaborne Metallurgical Mining segment is of a thermal grade. Additionally, the Company may market some of its metallurgical coal products as a thermal coal product from time to time depending on market conditions.
The Company’s Seaborne Thermal Mining operations consist of mines in New South Wales, Australia. The mines in that segment utilize both surface and underground extraction processes to mine low-sulfur, high Btu thermal coal.
The Company’s Seaborne Metallurgical Mining operations consist of mines in Queensland, Australia, one in New South Wales, Australia and one in Alabama. The mines in that segment utilize both surface and underground extraction processes to mine various qualities of metallurgical coal (low-sulfur, high Btu coal). The metallurgical coal qualities include hard coking coal, semi-hard coking coal, semi-soft coking coal and pulverized coal injection coal.
The principal business of the Company’s thermal mining segments in the U.S. is the mining, preparation and sale of thermal coal, sold primarily to electric utilities in the U.S. under long-term contracts, with a relatively small portion sold as international exports as conditions warrant. The Company’s Powder River Basin Mining operations consist of its mines in Wyoming. The mines in that segment are characterized by surface mining extraction processes, coal with a lower sulfur content and Btu and higher customer transportation costs (due to longer shipping distances). The Company’s Other U.S. Thermal Mining operations historically reflect the aggregation of its Illinois, Indiana, New Mexico, Colorado and Arizona mining operations. The mines in that segment are characterized by a mix of surface and underground mining extraction processes, coal with a higher sulfur content and Btu and lower customer transportation costs (due to shorter shipping distances). Geologically, the Company’s Powder River Basin Mining operations mine sub-bituminous coal deposits and its Other U.S. Thermal Mining operations mine both bituminous and sub-bituminous coal deposits.
The Company’s Corporate and Other segment includes selling and administrative expenses, including its technical and shared services functions; results from equity affiliates; corporate hedging activities; trading and brokerage activities; results from certain mining and export/transportation joint ventures; minimum charges on certain transportation-related contracts; the closure of inactive mining sites; and certain commercial matters.

segments’ operating performance.

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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s CODM uses Adjusted EBITDA as the primary metric to measure the segments’ operating performance. Adjusted EBITDA is a non-GAAP financial measure defined as (loss) incomeloss from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments’ operating performance, as displayed in the reconciliation below. The Company has retrospectively modified its calculation of Adjusted EBITDA to exclude restructuring charges and transaction costs related to joint ventures as management does not view these items as part of its normal operations. 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. 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.
Reportable segment results were as follows:
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Revenues:   
Seaborne Thermal Mining$201.1
 $251.0
Seaborne Metallurgical Mining193.2
 324.5
Powder River Basin Mining266.6
 287.3
Other U.S. Thermal Mining192.3
 334.8
Corporate and Other(7.0) 53.0
Total$846.2
 $1,250.6
    
Adjusted EBITDA:   
Seaborne Thermal Mining$55.1
 $94.7
Seaborne Metallurgical Mining(32.7) 85.8
Powder River Basin Mining25.4
 36.4
Other U.S. Thermal Mining38.5
 75.9
Corporate and Other(49.5) (38.7)
Total$36.8
 $254.1



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PEABODY ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended March 31,
 20212020
 (Dollars in millions)
Revenues:
Seaborne Thermal Mining$176.4 $201.1 
Seaborne Metallurgical Mining87.5 193.2 
Powder River Basin Mining228.4 266.6 
Other U.S. Thermal Mining149.3 192.3 
Corporate and Other9.7 (7.0)
Total$651.3 $846.2 
Adjusted EBITDA:
Seaborne Thermal Mining$28.5 $55.1 
Seaborne Metallurgical Mining(22.4)(32.7)
Powder River Basin Mining30.1 25.4 
Other U.S. Thermal Mining36.2 38.5 
Corporate and Other(11.3)(49.5)
Total$61.1 $36.8 
A reconciliation of consolidated (loss) incomeloss from continuing operations, net of income taxes to Adjusted EBITDA follows:
Three Months Ended March 31,
20212020
 (Dollars in millions)
Loss from continuing operations, net of income taxes$(77.7)$(129.3)
Depreciation, depletion and amortization68.3 106.0 
Asset retirement obligation expenses15.9 17.6 
Restructuring charges2.1 6.5 
Transaction costs related to joint ventures0 4.2 
Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates(1.5)(0.7)
Interest expense52.4 33.1 
Gain on early debt extinguishment(3.5)0 
Interest income(1.5)(3.1)
Unrealized losses on economic hedges1.9 2.2 
Unrealized losses (gains) on non-coal trading derivative contracts7.6 (0.1)
Take-or-pay contract-based intangible recognition(1.1)(2.6)
Income tax (benefit) provision(1.8)3.0 
Adjusted EBITDA$61.1 $36.8 
 Three Months Ended March 31,

2020 2019
 (Dollars in millions)
(Loss) income from continuing operations, net of income taxes$(129.3) $133.3
Depreciation, depletion and amortization106.0
 172.5
Asset retirement obligation expenses17.6
 13.8
Restructuring charges6.5
 0.2
Transaction costs related to joint ventures4.2
 —
Provision for North Goonyella equipment loss—
 24.7
North Goonyella insurance recovery - equipment (1)
—
 (91.1)
Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates(0.7) —
Interest expense33.1
 35.8
Interest income(3.1) (8.3)
Unrealized losses (gains) on economic hedges2.2
 (39.8)
Unrealized gains on non-coal trading derivative contracts(0.1) (0.2)
Take-or-pay contract-based intangible recognition(2.6) (5.6)
Income tax provision3.0
 18.8
Total Adjusted EBITDA$36.8
 $254.1

(1)
As described in Note 15. “Other Events,” the Company recorded a $125.0 million insurance recovery during the three months ended March 31, 2019 related to losses incurred at its North Goonyella Mine. Of this amount, Adjusted EBITDA excludes an allocated amount applicable to total equipment losses recognized at the time of the insurance recovery settlement, which consisted of $24.7 million and $66.4 million recognized during the three months ended March 31, 2019 and the year ended December 31, 2018, respectively. The remaining $33.9 million, applicable to incremental costs and business interruption losses, is included in Adjusted EBITDA for the three months ended March 31, 2019.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As used in this report, the terms “we,” “us,” “our,” “Peabody” or “the Company” refer to Peabody Energy Corporation or its applicable subsidiary or subsidiaries. Unless otherwise noted herein, disclosures in this Quarterly Report on Form 10-Q relate only to ourthe Company’s continuing operations.
When used in this filing, the term “ton” refers to short or net tons, equal to 2,000 pounds (907.18 kilograms), while “tonne” refers to metric tons, equal to 2,204.62 pounds (1,000 kilograms).
Cautionary Notice Regarding Forward-Looking Statements
This report includes statements of ourPeabody’s expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and are intended to come within the safe harbor protection provided by those sections. These statements relate to future events or ourPeabody’s future financial performance, including, without limitation, the section captioned “Outlook” in this Item 2. We useThe Company uses words such as “anticipate,” “believe,” “expect,” “may,” “forecast,” “project,” “should,” “estimate,” “plan,” “outlook,” “target,” “likely,” “will,” “to be” or other similar words to identify forward-looking statements.
Without limiting the foregoing, all statements relating to ourPeabody’s future operating results, anticipated capital expenditures, future cash flows and borrowings, and sources of funding are forward-looking statements and speak only as of the date of this report. These forward-looking statements are based on numerous assumptions that we believePeabody believes are reasonable, but are subject to a wide range of uncertainties and business risks, and actual results may differ materially from those discussed in these statements. These factors are difficult to accurately predict and may be beyond ourthe Company’s control. Factors that could affect ourits results or an investment in ourits securities include, but are not limited to:
our•the Company’s profitability depends upon the prices we receiveit receives for ourits coal;
•if a substantial number of ourthe Company’s long-term coal supply agreements, including those with its largest customers, terminate, or if the pricing, volumes or other elements of those agreements materially adjust, ourits revenues and operating profits could suffer if we arethe Company is unable to find alternate buyers willing to purchase ourits coal on comparable terms to those in ourits contracts;
the loss of, or significant reduction in, purchases by our largest customers could adversely affect our revenues;
our trading and hedging activities do not cover certain risks and may expose us to earnings volatility and other risks;
our operating results could be adversely affected by unfavorable economic and financial market conditions;
our ability to collect payments from our customers could be impaired if their creditworthiness or contractual performance deteriorates;
•risks inherent to mining could increase the cost of operating ourthe Company’s business, and events and conditions that could occur during the course of ourits mining operations could have a material adverse impact on us;the Company;
if transportation for our coal becomes unavailable or uneconomic for our customers, our ability to sell coal may be diminished;
a decrease in •the availability or increase in costs of key supplies, capital equipment or commodities such as diesel fuel, steel, explosives and tires could decrease our anticipated profitability;
Company’s take-or-pay arrangements within the coal industry could unfavorably affect ourits profitability;
an inability of trading, brokerage, mining or freight counterparties to fulfill •the terms of their contracts with us could reduce our profitability;
weCompany may not recover ourits investments in ourits mining, exploration and other assets, which may require usthe Company to recognize impairment charges related to those assets;
our ability to operate our company effectively could be impaired if we lose key personnel or fail to attract qualified personnel;
we•the Company could be negatively affected if we failit fails to maintain satisfactory labor relations;
we•the Company could be adversely affected if we failit fails to appropriately provide financial assurances for ourits obligations;
our•the Company’s mining operations are extensively regulated, which imposes significant costs on us,it, and future regulations and developments could increase those costs or limit ourits ability to produce coal;
our•the Company’s operations may impact the environment or cause exposure to hazardous substances, and ourits properties may have environmental contamination, which could result in material liabilities to us;the Company;
we•the Company may be unable to obtain, renew or maintain permits necessary for ourits operations, or wethe Company may be unable to obtain, renew or maintain such permits without conditions on the manner in which we run ourit runs its operations, which would reduce ourits production, cash flows and profitability;


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our mining operations are subject to extensive forms of taxation, which imposes significant costs on us, and future regulations and developments could increase those costs or limit our ability to produce coal competitively;
if the assumptions underlying our asset retirement obligations for reclamation and mine closures are materially inaccurate, our costs could be significantly greater than anticipated;
our future success depends upon our ability to continue acquiring and developing coal reserves that are economically recoverable;
we face numerous uncertainties in estimating our economically recoverable coal reserves and inaccuracies in our estimates could result in lower than expected revenues, higher than expected costs and decreased profitability;
our global operations increase our exposure to risks unique to international mining and trading operations;
our proposed joint venture with Arch Coal, Inc. (Arch) may not be completed;
joint ventures, partnerships or non-managed operations may not be successful and may not comply with our operating standards;
we may undertake further repositioning plans that would require additional charges;
we could be exposed to significant liability, reputational harm, loss of revenue, increased costs or other risks if we sustain cyber-attacks or other security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us, our employees, our customers or other third-parties;
our business, results of operations, financial condition and prospects could be materially and adversely affected by the recent COVID-19 pandemic and the related effects on public health, or by other global events;
our expenditures for postretirement benefit obligations could be materially higher than we have predicted if our underlying assumptions prove to be incorrect;
•concerns about the impacts of coal combustion on global climate are increasingly leading to consequences that have affected and could continue to affect demand for ourthe Company’s products or ourits securities and ourits ability to produce, including increased governmental regulation of coal combustion and unfavorable investment decisions by electricity generators;
•numerous activist groups are devoting substantial resources to anti-coal activities to minimize or eliminate the use of coal as a source of electricity generation, domestically and internationally, thereby further reducing the demand and pricing for coal, and potentially materially and adversely impacting ourthe Company’s future financial results, liquidity and growth prospects;
our•the Company’s trading and hedging activities do not cover certain risks and may expose it to earnings volatility and other risks;
•if the assumptions underlying the Company’s asset retirement obligations for reclamation and mine closures are materially inaccurate, its costs could be significantly greater than anticipated;

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•the Company’s future success depends upon its ability to continue acquiring and developing coal reserves that are economically recoverable;
•the Company faces numerous uncertainties in estimating its economically recoverable coal reserves and inaccuracies in its estimates could result in lower than expected revenues, higher than expected costs and decreased profitability;
•joint ventures, partnerships or non-managed operations may not be successful and may not comply with the Company’s operating standards;
•the Company may undertake further repositioning plans that would require additional charges;
•the Company’s business, results of operations, financial condition and prospects could be materially and adversely affected by the coronavirus (COVID-19) pandemic and the related effects on public health;
•the Company’s expenditures for postretirement benefit obligations could be materially higher than it has predicted if its underlying assumptions prove to be incorrect;
•the Company is subject to various general operating risks which may be fully or partially outside of its control;
•the Company’s financial performance could be adversely affected by our indebtedness;its funded indebtedness (Indebtedness);
•despite our indebtedness, wethe Company’s Indebtedness, it may still be able to incur substantially more debt, including secured debt, which could further increase the risks associated with our indebtedness;its Indebtedness;
•the terms of our indenturethe indentures governing ourthe Company’s senior secured notes and the agreements and instruments governing ourits other indebtednessIndebtedness and surety bonding obligations impose restrictions that may limit ourits operating and financial flexibility;
•the number and quantity of viable financing and insurance alternatives available to usthe Company may be significantly impacted by unfavorable lending and investment policies by financial institutions and insurance companies associated with concerns about environmental impacts of coal combustion, and negative views around ourits efforts with respect to environmental and social matters and related governance considerations could harm the perception of our companythe Company by certaina significant number of investors or result in the exclusion of ourits securities from consideration by those investors;
•the price of ourPeabody’s securities may be volatile;volatile and could fall below the minimum allowed by New York Stock Exchange listing requirements;
our Common Stock•Peabody’s common stock is subject to dilution and may be subject to further dilution in the future;
•there may be circumstances in which the interests of a significant stockholder could be in conflict with other stakeholders’ interests;
•the payment of dividends on ourPeabody’s stock or repurchasesrepurchase of ourits stock is dependent on a number of factors, and future payments and repurchases cannot be assured;
we•the Company may not be able to fully utilize ourits deferred tax assets;
•acquisitions and divestitures are a potentially important part of ourthe Company’s long-term strategy, subject to ourits investment criteria, and involve a number of risks, any of which could cause usthe Company not to realize the anticipated benefits;
our•Peabody’s certificate of incorporation and by-laws include provisions that may discourage a takeover attempt;
•diversity in interpretation and application of accounting literature in the mining industry may impact ourthe Company’s reported financial results; and
•other risks and factors detailed in this report, including, but not limited to, those discussed in “Legal Proceedings,” set forth in Part II, Item 1 and in “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q.


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When considering these forward-looking statements, you should keep in mind the cautionary statements in this document and in ourthe Company’s other Securities and Exchange Commission (SEC) filings, including, but not limited to, the more detailed discussion of these factors and other factors that could affect ourits results contained in Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” of ourits Annual Report on Form 10-K for the year ended December 31, 20192020 filed with the SEC on February 21, 2020.23, 2021. These forward-looking statements speak only as of the date on which such statements were made, and we undertakethe Company undertakes no obligation to update these statements except as required by federal securities laws.

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Table of Contents

Overview
We arePeabody is a leading coal producer. In 2019, we2020, the Company produced and sold 164.7128.8 million and 165.5132.6 million tons of coal, respectively, from continuing operations. As ofAt March 31, 2020, we2021, the Company owned interests in 2117 active coal mining operations located in the United States (U.S.) and Australia. Included in that count is ourPeabody’s 50% equity interest in Middlemount Coal Pty Ltd. (Middlemount), which owns the Middlemount Mine in Queensland, Australia and our 50% proportional interest in the United Wambo Joint Venture with Glencore plc (Glencore).Australia. In addition to ourits mining operations, we marketthe Company markets and brokerbrokers coal from other coal producers, both as principal and agent, and tradetrades coal and freight-related contracts.
We conduct businessThe Company reports its results of operations primarily through four operatingthe following reportable segments: Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, and Other U.S. Thermal Mining. During the year ended December 31, 2019, the Cottage GroveMining and Kayenta Mines shipped their final tons,Corporate and we announced the closures of the Wildcat HiIls Underground and Somerville Central Mines, with both of those operations expecting to ship their final tons in 2020. Due to these changes, we have revised our segment reporting beginning with this report to reflect the manner in which our chief operating decision maker now views our businesses for purposes of reviewing performance, allocating resources and assessing future prospects and strategic execution. Prior period results have been recast for comparability.Other. Refer to Note 19.18. “Segment Information” to the accompanying unaudited condensed consolidated financial statements for further information regarding those segments and the components of ourits Corporate and Other segment.
From time to time, we initiatethe Company initiates restructuring activities in connection with its repositioning efforts to appropriately align ourits cost structure or optimize ourits coal production relative to prevailing market conditions. As further described in the “Results of Operations” section contained within this Item 2, wethe Company incurred restructuring charges of $2.1 million and $6.5 million during the three months ended March 31, 2021 and 2020, respectively, related primarily to involuntary workforce reductions. During April 2020, we further reduced our workforce by approximately 250 positions, primarily within our Powder River Basin Mining and Other U.S. Thermal Mining operating segments,reductions made across the organization through the use of both involuntary reductions and voluntary programs. We will incur additional restructuring charges duringreductions.
The Shoal Creek Mine remains idled as the Company continues activities to increase productivity, lower costs and improve yields from the operation in the future. The restart of mine production and coal shipments is contingent upon successful completion of these initiatives and stable customer demand. Included in the initiatives is a preparation plant upgrade project, which is anticipated to be commissioned by the middle of the third quarter of 2021. Additionally, the Shoal Creek labor contract expired on April 1, 2021 and negotiations with the workforce are ongoing.
While discussions are ongoing with customers and workforce, the Metropolitan Mine full workforce returned to the mine in early May. Development work at the mine has been ongoing through the idle period and longwall production is anticipated to restart in the second quarter of 2020, the amount of which will be dependent upon the ultimate participation in ongoing voluntary programs. Additionally, we have advanced a detailed mine-by-mine analysis2021, with ramp up to improve operating capabilities. Our initial focus will be on the highest-value opportunities, and mines that cannot demonstrate a path to cash generation at lower pricing levels will be suspended.
Coronavirus Disease 2019 (COVID-19) Pandemic
On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of the COVID-19 pandemic.
Coal miningfull production in the U.S. and Australia has been designated as an essential business to support coal-fueled electric power generation and critical steelmaking needs. As partthird quarter of Peabody’s commitment to the ongoing health and safety of our employees, vendors and communities, we are following advice from government authorities and taking precautions to manage the spread of COVID-19. Peabody operations have implemented rigorous protocols, control and prevention measures, including mandatory temperature and health checks; paid leave for recommended self-isolation periods; enhanced cleaning and sterilization practices; expanded use of personal protective equipment; working remotely, where possible; and social distancing. While our operations have been designated as essential, each operation will only continue to operate when it is safe and economic to do so.2021.
The global impact on economic activity has severely curtailed demand for numerous commodities. Within the global coal industry, supply and demand disruptions have been widespread. In the seaborne markets, thermal demand from non-power sectors remains weak and steel production has been curtailed. Thermal coal demand in the U.S. has been pressured by low natural gas prices, subsidized renewable energy and weak electric power sector consumption due to reduced industrial activity. Supply risks have also emerged at a number of global and domestic producers. Coal industry fundamentals, as well as known impacts specific to Peabody, are further addressed in the “Results of Operations” section contained within this Item 2.


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While the ultimate impacts of the COVID-19 pandemic are unknown, we expect continued interference with general commercial activity, which may further negatively affect both demand and prices for our products. We also face potential disruption to supply chain and distribution channels, potentially increasing costs of production, storage and distribution, and potential adverse effects to our workforce, each of which could have a material adverse effect on our business, financial condition or results of operations. In addition, the COVID-19 pandemic could have an adverse impact on the timing of key events, including the timing of our litigation in the U.S. federal court system as we pursue the completion of the proposed joint venture with Arch. Given the uncertainties with respect to future COVID-19 developments, including the duration, severity and scope, as well as the necessary government actions to limit the spread, we are unable to estimate the full impact of the pandemic on our business, financial condition or results of operations at this time.
We have taken actions to mitigate our financial risk given the uncertainty in global markets caused by the COVID-19 pandemic, and we also made the decision during the first quarter to pause debt reduction activities. In early April 2020, we borrowed $300.0 million under our revolving credit facility. The borrowing was made as part of our ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets and related effects on our business resulting from the COVID-19 pandemic. While we do not currently expect to use the proceeds from these borrowings for any near-term liquidity needs, we may use the proceeds for working capital and other general corporate purposes.
On March 27, 2020, the President of the United States signed and enacted into law the Coronavirus Aid, Relief and Economic Security Act (the CARES Act), a $2 trillion economic relief bill. The CARES Act contains numerous tax provisions including a provision that provides for the acceleration of refunds of previously generated alternative minimum tax credits. We have requested accelerated refunds of approximately $24 million from the Internal Revenue Service and have adjusted our current and deferred tax asset balances accordingly. The CARES Act also contains a provision for deferred payment of 2020 employer payroll taxes after the date of enactment to future years. We expect to defer a portion of our remaining 2020 employer payroll taxes to subsequent years. We continue to evaluate the implications of the remaining provisions of the CARES Act.
United Wambo Joint Venture with Glencore
In December 2019, after receiving the requisite regulatory and permitting approvals, we formed an unincorporated joint venture with Glencore, in which we hold a 50% interest, to combine the existing operations of our Wambo Open-Cut Mine in Australia with the adjacent coal reserves of Glencore’s United Mine. We proportionally consolidate the entity based upon our economic interest.
Both parties contributed mining tenements upon formation of the joint venture. Construction and development efforts are currently underway to combine operations. The joint venture agreement specifies that we will continue to fully own and operate the existing Wambo Open-Cut Mine through December 1, 2020, at which point the development of the combined operations is expected to be completed, the parties will contribute mining equipment and other assets, and joint operations will commence. Glencore is responsible for construction and development activities and will manage the mining operations of the joint venture.
PRB Colorado Joint Venture with Arch
On June 18, 2019, we entered into a definitive implementation agreement (the Implementation Agreement) with Arch, to establish a joint venture that will combine the respective Powder River Basin (PRB) and Colorado operations of Peabody and Arch. We expect the joint venture to result in several operational synergies, including improved mining productivity and lower per-unit operating costs. Pursuant to the terms of the Implementation Agreement, we will hold a 66.5% economic interest in the joint venture and Arch will hold a 33.5% economic interest. We expect to proportionally consolidate the entity based upon our economic interest. Governance of the joint venture will be overseen by the joint venture’s board of managers, which will be comprised of Peabody and Arch representatives with voting powers proportionate with the companies’ economic interests, with the exception of certain specified matters which will require supermajority approval. We will manage the operations of the joint venture, subject to the supervision of the joint venture’s board of managers.
On February 26, 2020, the U.S. Federal Trade Commission (FTC) sought a preliminary injunction to challenge our proposed joint venture. We and Arch intend to continue to pursue creation of the joint venture and will litigate the FTC’s decision within the U.S. federal court system. Court proceedings are currently scheduled to begin on July 13, 2020, with a ruling expected shortly thereafter, subject to any potential changes to the court’s schedule as a result of the COVID-19 pandemic or other exigent circumstances. The FTC has also initiated an administrative proceeding on the merits, which is currently scheduled for hearing on October 27, 2020.


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Formation of the joint venture is subject to favorable resolution of the FTC’s challenge noted above and customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of certain other required regulatory approvals and the absence of injunctions or other legal restraints preventing the formation of the joint venture. In September 2019, we amended our credit agreement to expressly permit formation of the joint venture and we are currently addressing such formation under the indenture governing our senior secured notes. At such time as control over the existing operations is exchanged, we will account for our interest in the combined operations at fair value.
North Goonyella
Our North Goonyella Mine in Queensland, Australia experienced a fire in a portion of the mine during September 2018 and mining operations have been suspended since then. During 2019, we completed segmenting of the mine into multiple zones to facilitate a phased re-ventilation and re-entry of the mine, re-ventilation of the first zone of the mine and subsequently re-entered the area. Following these activities and a detailed review and assessment, we determined that due to the time, cost and required regulatory approach to ventilate and re-enter the rest of the mine, we will not pursue attempts to access certain portions of the mine through existing mine workings, but instead will move to the southern panels. We are in ongoing discussions with the Queensland Mines Inspectorate (QMI) regarding ventilation and re-entry of the second zone of the current mine configuration. Based on the planned approach, we expect no meaningful production from North Goonyella for three or more years. In 2020, we commenced a commercial process for North Goonyella in conjunction with the existing mine development. The process comes in response to expressions of interest from potential strategic partners and other producers. Commercial outcomes could include a strategic financial partner, a joint venture structure or the complete sale of North Goonyella. Alternatively, the commercial process could be abandoned in the absence of an acceptable outcome. Based on the success of discussions with QMI and/or progression of the commercial process being launched, we will determine the appropriate level, if any, and timing of capital expenditures. We have entered into commercial agreements to reduce the rail and port commitments related to North Goonyella for the second half of 2020 through the first half of 2023, while maintaining sufficient capacity for future production. As a result, we anticipate that ongoing holding costs will decrease to approximately $5 million per quarter by the second half of 2020.
During the three months ended March 31, 2020 and 2019, we recorded $10.1 million and $36.9 million, respectively, in containment and idling costs. An additional provision of $24.7 million related to equipment losses was recorded during the three months ended March 31, 2019, which was incremental to amounts recorded in prior periods and represented the best estimate of loss based on the assessments made as of that date. No provision for equipment losses was recorded during the three months ended March 31, 2020.
In March 2019, we entered into an insurance claim settlement agreement with our insurers and various re-insurers under a combined property damage and business interruption policy and recorded a $125 million insurance recovery, the maximum amount available under the policy above a $50 million deductible. We have collected the full amount of the recovery.
Results of Operations
Non-GAAP Financial Measures
The following discussion of ourthe Company’s results of operations includes references to and analysis of Adjusted EBITDA, which is a financial measure not recognized in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Adjusted EBITDA is used by management as the primary metric to measure each of ourits segments’ operating performance. We have retrospectively modified our calculation of Adjusted EBITDA to exclude restructuring charges and transaction costs related to joint ventures as management does not view these items as part of our normal operations.
Also included in the following discussion of ourthe Company’s results of operations are references to Revenues per Ton, Costs per Ton and Adjusted EBITDA Margin per Ton for each mining segment. These metrics are used by management to measure each of ourits mining segments’ operating performance. Management believes Costs per Ton and Adjusted EBITDA Margin per Ton best reflect controllable costs and operating results at the mining segment level. We considerThe Company considers all measures reported on a per ton basis to be operating/statistical measures; however, we includethe Company includes reconciliations of the related non-GAAP financial measures (Adjusted EBITDA and Total Reporting Segment Costs) in the “Reconciliation of Non-GAAP Financial Measures” section contained within this Item 2.
In ourits discussion of liquidity and capital resources, we includethe Company includes references to Free Cash Flow which is also a non-GAAP measure. Free Cash Flow is used by management as a measure of ourits financial performance and ourits ability to generate excess cash flow from ourits business operations.


37


We believeThe Company believes non-GAAP performance measures are used by investors to measure ourits operating performance and lenders to measure ourits ability to incur and service debt. These measures are not intended to serve as alternatives to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies. Refer to the “Reconciliation of Non-GAAP Financial Measures” section contained within this Item 2 for definitions and reconciliations to the most comparable measures under U.S. GAAP.

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Three Months Ended March 31, 20202021 Compared to the Three Months Ended March 31, 20192020
Summary
Spot pricing for premium low-vol hard coking coal (Premium HCC), premium low-vol pulverized coal injection (Premium PCI) coal, Newcastle index thermal coal and API 5 thermal coal, and prompt month pricing for PRB 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the three months ended March 31, 20202021 is set forth in the table below.
The seaborne pricing included in the table below is not necessarily indicative of the pricing wethe Company realized during the three months ended March 31, 20202021 due to quality differentials and the majority of ourits seaborne sales being executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing periodically. OurThe Company’s typical practice is to negotiate pricing for seaborne metallurgical coal contracts on a quarterly, spot or index basis and seaborne thermal coal contracts on an annual, spot or index basis.
In the U.S., the pricing included in the table below is also not necessarily indicative of the pricing wethe Company realized during the three months ended March 31, 20202021 since wethe Company generally sellsells coal under long-term contracts where pricing is determined based on various factors. Such long-term contracts in the U.S. may vary significantly in many respects, including price adjustment features, price reopener terms, coal quality requirements, quantity parameters, permitted sources of supply, treatment of environmental constraints, extension options, force majeure and termination and assignment provisions. Competition from alternative fuels such as natural gas and other coal producersfuel sources may also impact ourthe Company’s realized pricing. Subsequent to March 31, 2020, seaborne pricing decreased as a result of economic and industry conditions related to the COVID-19 pandemic as evidenced by the April 30, 2020 pricing provided in the table and as further discussed below.
HighLowAverageMarch 31, 2021
Premium HCC (1)
$158.70 $99.50 $127.57 $112.80 
Premium PCI coal (1)
110.50 91.50 103.22 110.50 
Newcastle index thermal coal (1)
103.95 80.78 88.50 100.59 
API 5 thermal coal (1)
59.32 50.75 54.65 56.00 
PRB 8,800 Btu/Lb coal (2)
11.95 11.85 11.91 11.95 
Illinois Basin 11,500 Btu/Lb coal (2)
32.00 29.75 30.96 32.00 
  High Low Average March 31, 2020 April 30, 2020
Premium HCC (1)
 $163.40
 $139.00
 $154.88
 $145.50
 $108.80
Premium PCI coal (1)
 $102.80
 $85.75
 $94.53
 $85.75
 $67.20
Newcastle index thermal coal (1)
 $73.78
 $64.80
 $67.70
 $69.41
 $50.76
API 5 thermal coal (1)
 $57.90
 $52.49
 $54.83
 $54.30
 $40.50
PRB 8,800 Btu/Lb coal (2)
 $12.10
 $12.00
 $12.02
 $12.00
 $12.00
Illinois Basin 11,500 Btu/Lb coal (2)
 $33.80
 $31.15
 $32.62
 $31.15
 $31.15
(1)    Prices expressed per tonne.
(1)
(2)    Prices expressed per ton.
Prices expressed per tonne.
(2)
Prices expressed per ton.
Within the global coal industry, supply and demand disruptions have been widespread as the COVID-19 pandemic has forced country-wide lockdowns and regional restrictions, some of which occurred after March 31, 2020.restrictions. Future COVID-19COVID-19-related developments are unknown, including the duration, severity, scope and the necessary government actions to limit the spread.spread of COVID-19. The global coal industry data for the three months ended March 31, 20202021 presented herein ismay not be indicative of the ultimate impacts of the COVID-19 pandemic given the various levels of response and unknown duration, and the significant decline in pricespotential for our products at the start of the second quarter and continued weak demand for ourthe Company’s products.
With respect toWithin the seaborne metallurgical coal market, the imbalance between Australian export and Chinese delivered prices remains wide, with the delivered price into China trading at roughly double those seen free on board Australia as the unofficial ban on Australian coals remains in place. In addition, increased COVID-19 concerns in India are further weighing on Australian hard coking coal pricing. These factors continue to pressure the seaborne metallurgical coal market despite global steel production decreased 1% throughincreasing 5% year-over-year.
In contrast, the three months ended March 31, 2020spread between Australian hard coking coal pricing and low-vol PCI has recently narrowed to near parity. Tight low-vol PCI supply, coupled with China paying a premium for Russian coals, have contributed to rising low-vol PCI prices.
Within the seaborne thermal coal market, tight supplies and low inventory levels have kept Newcastle thermal coal pricing at improved levels year-to-date. China’s domestic thermal coal supply remains hampered by heightened safety inspections. In addition, India’s thermal coal stockpiles have been falling gradually since mid-December as compared togovernment-owned plants have reduced intake and there has been a delay in typical restocking ahead of the prior year period, and declined 6% year-over-yearmonsoon season in June. As of the monthend of March as the impacts of the COVID-19 pandemic2021, India’s plant inventory levels were beginning to materialize. Steel production in China increasedestimated at approximately 1% through the three months ended March 31, 2020 as compared to the prior15 days burn versus 28 days a year and was down 2% year-over-year in the month of March. Despite a strong start to the year, China’s coking coal imports have been pressured by reduced margins for steel producers and high steel inventories. Steel production, excluding China, was down 4% through the three months ended March 31, 2020, and declined 11% year-over-year in the month of March due to COVID-19 related lockdowns. Steel demand deterioration has caused producers, including Peabody customers, to idle capacity and restrict output, while steel prices continue to fall. There is weakness in seaborne metallurgical coal demand which could continue given ongoing lockdowns in key demand centers, including India and Japan.

ago.

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Seaborne thermal coal demand was impacted by the COVID-19 pandemic which further exacerbated the weak fundamentals and low gas prices in Europe, while significantly dampening Asian demand as major importers entered into lockdown. Chinese thermal coal imports increased by approximately 17 million tonnes through the three months ended March 31, 2020 as compared to the prior year mainly reflecting carryover tonnes from port restrictions in 2019. China’s domestic production, which had been constrained by COVID-19 lockdowns, declined 6% through the two months ended February 29, 2020, but increased 10% year-over-year in the month of March. Meanwhile, Chinese thermal power generation declined 8% during the three months ended March 31, 2020 year-over-year leading to above average stockpiles at utilities, dampening the outlook for seaborne imports. Seaborne demand outside of China has also been pressured by reduced industrial activity related to the COVID-19 pandemic, impacting global electric generation and coal consumption.
In the United States, overall electricity demand was downincreased 2% year-over-year, throughpositively impacted by cold weather during the three months ended March 31, 20202021. Electricity generation from thermal coal has increased by 37% year-over-year as a result of milder weather. Lower demand, continued coal plant retirements, growth inhigher natural gas and renewableprices. This has positively impacted coal’s share of electricity generation, and weakwith a rise to approximately 24% for the three months ended March 31, 2021, while causing natural gas prices negatively impactedgas’s share to decline to approximately 34%. Stronger coal generation.use has contributed to decreasing coal stockpile levels. Since December 2020, coal inventories have fallen by approximately 20 million tons. Through the three months ended March 31, 20202021, utility consumption of PRB coal fell over 30%rose approximately 35% compared to the prior year period. Demand pressures related to COVID-19 related curtailments have reduced total electricity demand in April to the lowest levels in over 15 years, which has resulted in coal’s share of generation declining to 18% for the three months ended March 31, 2020, while gas, nuclear and renewables continue to gain. Moreover, reduced coal consumption year-to-date has resulted in elevated coal inventories, pressuring the required coal shipments needed to meet demand. Our U.S. customers’ 2020 volume nominations have declined approximately 8% from the beginning of the year.
OurThe Company’s revenues for the three months ended March 31, 20202021 decreased as compared to the same periodperiods in 20192020 ($404.4194.9 million) primarily due to lower sales volumes and lower realized prices.
Results from continuing operations, net of income taxes for the three months ended March 31, 2020 decreased as2021 increased compared to the same period in the prior year ($262.651.6 million). The decrease was driven by as the unfavorable revenue variance described above and a prior year insurance recovery related to the events at our North Goonyella Mine ($125.0 million). These unfavorable variances were partially offset byresult of lower operating costs and expenses due largely to the sales volume decline as well as production efficiencies and other cost improvements ($168.7196.9 million), and lower depreciation, depletion and amortization ($66.537.7 million). These favorable variances were offset by the unfavorable revenue variance described above and a prior year provision for equipment losses at our North Goonyella Mineincreased interest expense ($24.719.3 million). primarily resulting from fees related to new debt arrangements entered into during the three months ended March 31, 2021.
Adjusted EBITDA for the three months ended March 31, 20202021 reflected a year-over-year decreaseincrease of $217.3$24.3 million.
As of March 31, 2020, our2021, the Company’s available liquidity was approximately $1.19 billion.$604 million. Refer to the “Liquidity and Capital Resources” section contained within this Item 2 for a further discussion of factors affecting ourthe Company’s available liquidity.
Tons Sold
The following table presents tons sold by operating segment:
 Three Months Ended Increase (Decrease)
 March 31, to Volumes
 2020 2019 Tons %
 (Tons in millions)  
Seaborne Thermal Mining4.6
 4.5
 0.1
 2 %
Seaborne Metallurgical Mining2.0
 2.3
 (0.3) (13)%
Powder River Basin Mining23.5
 25.3
 (1.8) (7)%
Other U.S. Thermal Mining4.9
 7.9
 (3.0) (38)%
Total tons sold from mining segments35.0
 40.0
 (5.0) (13)%
Corporate and Other0.6
 0.5
 0.1
 20 %
Total tons sold35.6
 40.5
 (4.9) (12)%

Three Months EndedDecrease
March 31,to Volumes
 20212020Tons%
 (Tons in millions)
Seaborne Thermal Mining4.1 4.6 (0.5)(11)%
Seaborne Metallurgical Mining1.0 2.0 (1.0)(50)%
Powder River Basin Mining20.7 23.5 (2.8)(12)%
Other U.S. Thermal Mining3.9 4.9 (1.0)(20)%
Total tons sold from mining segments29.7 35.0 (5.3)(15)%
Corporate and Other0.5 0.6 (0.1)(17)%
Total tons sold30.2 35.6 (5.4)(15)%

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Supplemental Financial Data
The following table presents supplemental financial data by operating segment:
Three Months Ended(Decrease)
March 31,Increase
 20212020$%
Revenues per Ton - Mining Operations (1)
Seaborne Thermal$43.36 $44.10 $(0.74)(2)%
Seaborne Metallurgical87.47 95.65 (8.18)(9)%
Powder River Basin11.01 11.36 (0.35)(3)%
Other U.S. Thermal38.76 39.25 (0.49)(1)%
Costs per Ton - Mining Operations (1)(2)
Seaborne Thermal$36.36 $32.03 $4.33 14 %
Seaborne Metallurgical109.89 111.82 (1.93)(2)%
Powder River Basin9.56 10.28 (0.72)(7)%
Other U.S. Thermal29.37 31.39 (2.02)(6)%
Adjusted EBITDA Margin per Ton - Mining Operations (1)(2)
Seaborne Thermal$7.00 $12.07 $(5.07)(42)%
Seaborne Metallurgical(22.42)(16.17)(6.25)(39)%
Powder River Basin1.45 1.08 0.37 34 %
Other U.S. Thermal9.39 7.86 1.53 19 %
 Three Months Ended (Decrease)
 March 31, Increase
 2020 2019 $ %
Revenues per Ton - Mining Operations (1)
       
Seaborne Thermal$44.10
 $56.24
 $(12.14) (22)%
Seaborne Metallurgical95.65
 142.33
 (46.68) (33)%
Powder River Basin11.36
 11.35
 0.01
 — %
Other U.S. Thermal39.25
 42.21
 (2.96) (7)%
Costs per Ton - Mining Operations (1)(2)
       
Seaborne Thermal$32.03
 $35.03
 $(3.00) (9)%
Seaborne Metallurgical (3)
111.82
 104.69
 7.13
 7 %
Powder River Basin10.28
 9.91
 0.37
 4 %
Other U.S. Thermal31.39
 32.65
 (1.26) (4)%
Adjusted EBITDA Margin per Ton - Mining Operations (1)(2)
       
Seaborne Thermal$12.07
 $21.21
 $(9.14) (43)%
Seaborne Metallurgical (3)
(16.17) 37.64
 (53.81) (143)%
Powder River Basin1.08
 1.44
 (0.36) (25)%
Other U.S. Thermal7.86
 9.56
 (1.70) (18)%
(1)This is an operating/statistical measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.
(1)
(2)Includes revenue-based production taxes and royalties; excludes depreciation, depletion and amortization; asset retirement obligation expenses; selling and administrative expenses; restructuring charges; asset impairment; amortization of take-or-pay contract-based intangibles; and certain other costs related to post-mining activities.
This is an operating/statistical measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.
(2)
Includes revenue-based production taxes and royalties; excludes depreciation, depletion and amortization; asset retirement obligation expenses; selling and administrative expenses; restructuring charges; asset impairment; provision for North Goonyella equipment loss and related insurance recovery; amortization of take-or-pay contract-based intangibles; and certain other costs related to post-mining activities.
(3)
Costs incurred at the North Goonyella Mine from January 1, 2020 forward are included within the Corporate and Other segment. Costs incurred at the North Goonyella Mine during the three months ended March 31, 2019 remain within the Seaborne Metallurgical segment and resulted in additional Costs per Ton and lower Adjusted EBITDA Margin per Ton of $1.32.
Revenues
The following table presents revenues by reporting segment:
Three Months Ended DecreaseThree Months Ended(Decrease) Increase
March 31, to RevenuesMarch 31,to Revenues
2020 2019 $ %20212020$%
(Dollars in millions)   (Dollars in millions) 
Seaborne Thermal Mining$201.1
 $251.0
 $(49.9) (20)%Seaborne Thermal Mining$176.4 $201.1 $(24.7)(12)%
Seaborne Metallurgical Mining193.2
 324.5
 (131.3) (40)%Seaborne Metallurgical Mining87.5 193.2 (105.7)(55)%
Powder River Basin Mining266.6
 287.3
 (20.7) (7)%Powder River Basin Mining228.4 266.6 (38.2)(14)%
Other U.S. Thermal Mining192.3
 334.8
 (142.5) (43)%Other U.S. Thermal Mining149.3 192.3 (43.0)(22)%
Corporate and Other(7.0) 53.0
 (60.0) (113)%Corporate and Other9.7 (7.0)16.7 239 %
Revenues$846.2
 $1,250.6
 $(404.4) (32)%Revenues$651.3 $846.2 $(194.9)(23)%
Seaborne Thermal Mining. Segment revenues decreased during the three months ended March 31, 20202021 compared to the same period in the prior year primarily due to unfavorable volume and mix variances ($18.6 million) and unfavorable realized coal pricing ($50.7 million), partially offset by favorable volume and mix variances ($0.86.1 million).


40


Seaborne Metallurgical Mining. Segment revenues decreased during the three months ended March 31, 20202021 compared to the same period in the prior year due to unfavorable realized coal pricing ($80.7 million) and unfavorable volume and mix variances (0.3 million tons; $50.6($101.3 million) and unfavorable realized coal pricing ($4.4 million). The unfavorable volume variance resultingvariances resulted from the beginningidling of the upgrade project for the main line conveyor system at our Shoal Creek and Metropolitan Mines during the fourth quarter of 2020, lower demand and the closure of the Millennium Mine (0.3 million tons) and an extended longwall move at our Metropolitan Mine (0.1 million tons) was partially offset by favorable volumes at our surface operations (0.2 million tons) due to sales deferrals fromduring the previous quarter.second quarter of 2020.

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Powder River Basin Mining. Segment revenues decreased during the three months ended March 31, 20202021 compared to the same period in the prior year primarily due to demand-based volume decreaseslower demand ($24.631.6 million), partially offset by favorable and unfavorable realized pricing.coal pricing ($6.6 million).
Other U.S. Thermal Mining. Segment revenues decreased during the three months ended March 31, 2020 compared to the same period in the prior year primarily due to demand-based volume decreases ($135.4 million) which were driven by the closure of the Kayenta and Cottage Grove Mines during the third quarter of 2019 and unfavorable realized pricing ($7.1 million).
Corporate and Other. Segment revenues decreased during the three months ended March 31, 20202021 compared to the same period in the prior year primarily due to lower demand.
Corporate and Other. Segment revenues increased during the three months ended March 31, 2021 compared to the same period in the prior year primarily due to higher results on economic hedgefrom trading activities.
Adjusted EBITDA
The following table presents Adjusted EBITDA for each of ourthe Company’s reporting segments:
Three Months Ended(Decrease) Increase
 March 31,to Segment Adjusted EBITDA
20212020$%
 (Dollars in millions) 
Seaborne Thermal Mining$28.5 $55.1 $(26.6)(48)%
Seaborne Metallurgical Mining(22.4)(32.7)10.3 31 %
Powder River Basin Mining30.1 25.4 4.7 19 %
Other U.S. Thermal Mining36.2 38.5 (2.3)(6)%
Corporate and Other(11.3)(49.5)38.2 77 %
Adjusted EBITDA (1)
$61.1 $36.8 $24.3 66 %
 Three Months Ended Decrease
 March 31, to Segment Adjusted EBITDA
 2020 2019 $ %
 (Dollars in millions)  
Seaborne Thermal Mining$55.1
 $94.7
 $(39.6) (42)%
Seaborne Metallurgical Mining(32.7) 85.8
 (118.5) (138)%
Powder River Basin Mining25.4
 36.4
 (11.0) (30)%
Other U.S. Thermal Mining38.5
 75.9
 (37.4) (49)%
Corporate and Other(49.5) (38.7) (10.8) (28)%
Adjusted EBITDA (1)
$36.8
 $254.1
 $(217.3) (86)%
(1)(1)This is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.
This is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.
Seaborne Thermal Mining. Segment Adjusted EBITDA decreased during the three months ended March 31, 20202021 compared to the same period in the prior year as a result of unfavorable foreign currency impacts ($16.5 million), unfavorable volume variances ($14.6 million) and lower realized net coal pricing ($46.6 million) and longwall performance issues at our Wambo Underground Mine ($16.35.6 million). The decrease in Segment Adjusted EBITDA was partially offset by favorable mine sequencing impacts and lower costs for materials, services and repairs at our thermal surface minesvarious cost improvements ($11.3 million) and favorable foreign currency impacts ($9.07.5 million).
Seaborne Metallurgical Mining. Segment Adjusted EBITDA decreasedincreased during the three months ended March 31, 2021 compared to the same period in the prior year due to cost improvements at certain mines ($18.6 million) and lower costs for materials, services, repairs and labor ($21.2 million) as a result of the idling of the Metropolitan Mine during the fourth quarter of 2020 and the closure of the Millennium Mine during the second quarter of 2020. The increase was offset by unfavorable foreign currency impacts ($28.2 million).
Powder River Basin Mining. Segment Adjusted EBITDA increased during the three months ended March 31, 2021 compared to the same period in the prior year due to lower realized net coal pricingcosts for materials, services, repairs and labor ($76.3 million), unfavorable volume variances as described above ($39.27.4 million) and the impact of a longwall move at our Metropolitan Mine during the current quarter ($25.6 million). These negative variances were partially offset by favorable foreign currency impacts ($12.9 million)
Powder River Basin Mining. Segment Adjusted EBITDA decreased during the three months ended March 31, 2020 compared to the same period in the prior year as the result of unfavorable mine sequencing impacts ($11.23.8 million),. The increase was partially offset by the impact of lower volumes ($3.54.9 million) as described above and lower realized net coal pricing ($2.4 million), partially offset by lower pricing for fuel and explosives ($4.1 million) and lower costs for materials, services and repairs ($1.93.8 million).
Other U.S. Thermal Mining. Segment Adjusted EBITDA decreased during the three months ended March 31, 20202021 compared to the same period in the prior year due to the impact of lowerunfavorable volume ($45.2 million) which was primarily driven by the closure of the Kayenta Mine during the third quarter of 2019 and lower realized net coal pricingmix variances ($7.021.5 million), partially offset by lower costs for materials, services, repairs and repairslabor ($6.6 million) and lower pricing for fuel and explosives ($2.821.3 million).


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Corporate and Other Adjusted EBITDA. The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:
Three Months EndedIncrease (Decrease)
March 31,to Adjusted EBITDA
20212020$%
 (Dollars in millions)
Middlemount (1)
$(2.3)$(9.7)$7.4 76 %
Resource management activities (2)
0.4 8.0 (7.6)(95)%
Selling and administrative expenses(21.7)(24.9)3.2 13 %
Other items, net (3)
12.3 (22.9)35.2 154 %
Corporate and Other Adjusted EBITDA$(11.3)$(49.5)$38.2 77 %
 Three Months Ended (Decrease) Increase
 March 31, to Adjusted EBITDA
 2020 2019 $ %
 (Dollars in millions)  
Middlemount (1)
$(9.7) $3.9
 $(13.6) (349)%
Resource management activities (2)
8.0
 2.0
 6.0
 300 %
Selling and administrative expenses(24.9) (36.7) 11.8
 32 %
Other items, net (3)(4)
(22.9) (7.9) (15.0) (190)%
Corporate and Other Adjusted EBITDA$(49.5) $(38.7) $(10.8) (28)%
(1)Middlemount’s results are before the impact of related changes in deferred tax asset valuation allowance and reserves and amortization of basis difference. Middlemount’s standalone results included (on a 50% attributable basis) aggregate amounts of depreciation, depletion and amortization, asset retirement obligation expenses, net interest expense and income taxes of $11.7 million and $4.4 million during the three months ended March 31, 2021 and 2020, respectively.
(1)
(2)Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenues.
(3)Includes trading and brokerage activities, costs associated with post-mining activities, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts, costs associated with suspended operations including the North Goonyella Mine and expenses related to the Company’s other commercial activities.
Middlemount’s results are before the impact of related changes in deferred tax asset valuation allowance and reserves and amortization of basis difference. Middlemount’s standalone results included (on a 50% attributable basis) aggregate amounts of depreciation, depletion and amortization, asset retirement obligation expenses, net interest expense and income taxes of $4.4 million and $7.5 million during the three months ended March 31, 2020 and 2019, respectively.
(2)
Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenues.
(3)
Includes trading and brokerage activities, costs associated with post-mining activities, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts, costs associated with suspended operations including the North Goonyella Mine and expenses related to our other commercial activities.
(4)
North Goonyella costs incurred from January 1, 2020 forward are included within the Corporate and Other segment. Costs incurred prior to January 1, 2020 remain within the Seaborne Metallurgical segment.
The decreaseincrease in Corporate and Other Adjusted EBITDA during the three months ended March 31, 20202021 compared to the same period in the prior year was primarily driven by an unfavorablefavorable trading results ($12.1 million); lower postretirement healthcare costs ($11.3 million) primarily due to changes made to one of the Company’s postretirement health care benefit plans during the third quarter of 2020; a favorable variance in Middlemount’s results due to the impactscombined impact of wet weather, current yearimproved production and cost improvements; lower containment and holding costs for ourthe Company’s North Goonyella Mine ($10.16.1 million); and unfavorablefavorable corporate hedging results from trading and brokerage activities ($8.85.7 million). These unfavorable variancesfavorable results were partially offset by lower selling and administrative expenses ($11.8 million) driven by lower personnel costs and reduced expense associated with our share-based incentive plans and a gain on the sale of undeveloped Australian land tenementsresource management gains recorded in the Bowen Basinprior year period ($7.5 million).


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(Loss) IncomeLoss From Continuing Operations, Net of Income Taxes
The following table presents (loss) incomeloss from continuing operations, net of income taxes:
Three Months EndedIncrease (Decrease)
March 31,to Income
 20212020$%
 (Dollars in millions)
Adjusted EBITDA (1)
$61.1 $36.8 $24.3 66 %
Depreciation, depletion and amortization(68.3)(106.0)37.7 36 %
Asset retirement obligation expenses(15.9)(17.6)1.7 10 %
Restructuring charges(2.1)(6.5)4.4 68 %
Transaction costs related to joint ventures— (4.2)4.2 100 %
Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates1.5 0.7 0.8 114 %
Interest expense(52.4)(33.1)(19.3)(58)%
Gain on early debt extinguishment3.5 — 3.5 n.m.
Interest income1.5 3.1 (1.6)(52)%
Unrealized losses on economic hedges(1.9)(2.2)0.3 14 %
Unrealized (losses) gains on non-coal trading derivative contracts(7.6)0.1 (7.7)(7,700)%
Take-or-pay contract-based intangible recognition1.1 2.6 (1.5)(58)%
Income tax benefit (provision)1.8 (3.0)4.8 160 %
Loss from continuing operations, net of income taxes$(77.7)$(129.3)$51.6 40 %
 Three Months Ended (Decrease) Increase
 March 31, to Income
 2020 2019 $ %
 (Dollars in millions)  
Adjusted EBITDA (1)
$36.8
 $254.1
 $(217.3) (86)%
Depreciation, depletion and amortization(106.0) (172.5) 66.5
 39 %
Asset retirement obligation expenses(17.6) (13.8) (3.8) (28)%
Restructuring charges(6.5) (0.2) (6.3) (3,150)%
Transaction costs related to joint ventures(4.2) —
 (4.2) n.m.
Provision for North Goonyella equipment loss—
 (24.7) 24.7
 100 %
North Goonyella insurance recovery - equipment—
 91.1
 (91.1) (100)%
Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates0.7
 —
 0.7
 n.m.
Interest expense(33.1) (35.8) 2.7
 8 %
Interest income3.1
 8.3
 (5.2) (63)%
Unrealized (losses) gains on economic hedges(2.2) 39.8
 (42.0) (106)%
Unrealized gains on non-coal trading derivative contracts0.1
 0.2
 (0.1) (50)%
Take-or-pay contract-based intangible recognition2.6
 5.6
 (3.0) (54)%
Income tax provision(3.0) (18.8) 15.8
 84 %
(Loss) income from continuing operations, net of income taxes$(129.3) $133.3
 $(262.6) (197)%
(1)(1)This is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.
This is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.
Depreciation, Depletion and Amortization. The following table presents a summary of depreciation, depletion and amortization expense by segment:
Three Months Ended Increase (Decrease)Three Months EndedIncrease (Decrease)
March 31, to IncomeMarch 31,to Income
2020 2019 $ %20212020$%
(Dollars in millions)   (Dollars in millions)
Seaborne Thermal Mining$(22.2) $(23.2) $1.0
 4 %Seaborne Thermal Mining$(21.1)$(22.2)$1.1 5 %
Seaborne Metallurgical Mining(24.8) (40.1) 15.3
 38 %Seaborne Metallurgical Mining(16.5)(24.8)8.3 33 %
Powder River Basin Mining(35.2) (36.6) 1.4
 4 %Powder River Basin Mining(9.6)(35.2)25.6 73 %
Other U.S. Thermal Mining(21.4) (70.8) 49.4
 70 %Other U.S. Thermal Mining(17.2)(21.4)4.2 20 %
Corporate and Other(2.4) (1.8) (0.6) (33)%Corporate and Other(3.9)(2.4)(1.5)(63)%
Total$(106.0) $(172.5) $66.5
 39 %Total$(68.3)$(106.0)$37.7 36 %
Additionally, the following table presents a summary of ourthe Company’s weighted-average depletion rate per ton for active mines in each of ourits mining segments:
 Three Months Ended
 March 31,
 2020 2019
Seaborne Thermal Mining$1.90
 $1.80
Seaborne Metallurgical Mining2.68
 2.58
Powder River Basin Mining0.79
 0.81
Other U.S. Thermal Mining1.06
 1.53

Three Months Ended
March 31,
 20212020
Seaborne Thermal Mining$1.87 $1.90 
Seaborne Metallurgical Mining1.00 2.68 
Powder River Basin Mining0.23 0.79 
Other U.S. Thermal Mining1.12 1.06 

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Depreciation, depletion and amortization expense decreased during the three months ended March 31, 20202021 compared to the same period in the prior year primarily due to the closureimpact of the Kayenta and Cottage Grove Minesasset impairment recorded at the North Antelope Rochelle Mine during the thirdsecond quarter of 20192020 ($40.9 million), lower amortization of the fair value of certain U.S. coal supply agreements ($6.025.2 million) and decreased expense related todepletion driven by lower sales volumes ($6.6 million). The decrease in the upcoming closure ofweighted-average depletion rate per ton for the Millennium Mine ($5.4 million).
Restructuring Charges. Restructuring charges increasedSeaborne Metallurgical Mining segment during the three months ended March 31, 20202021 compared to the same period in the prior year reflects the volume and mix variances which impacted the Company’s revenues as described above. The decrease in the weighted-average depletion rate per ton for the Powder River Basin Mining segment during the three months ended March 31, 2021 compared to the same period in the prior year reflects the asset impairment recorded during the second quarter of 2020.
Restructuring Charges. Restructuring charges decreased during the three months ended March 31, 2021 compared to the same period in the prior year as the result of involuntary workforce reductions made across the organization during the prior year through the use of involuntary and voluntary reductions, as discussed in Note 15.14. “Other Events” to the accompanying unaudited condensed consolidated financial statements.
Transaction Costs Related to Joint Ventures. The charges recorded during the three months ended March 31, 2020prior year period related to the proposed PRB Colorado joint venture with Arch Resources, Inc. which was terminated during the third quarter of 2020.
Interest Expense. Interest expense increased during the three months ended March 31, 2021 compared to the same period in the prior year as the result of a series of refinancing transactions completed by the Company during the first quarter of 2021, which included a senior notes exchange, a revolving credit facility exchange and various amendments to the Company’s existing debt agreements as further describeddiscussed in Note 15. “Other Events”11. “Long-term Debt” to the accompanying unaudited condensed consolidated financial statements.
Provision for North Goonyella Equipment Loss.Gain on Early Debt Extinguishment. A provision for expected equipment lossesThe gain recognized during the three months ended March 31, 2021 related to the events at our North Goonyella Mine was recordedsenior notes exchange completed during the prior yearfirst quarter of 2021 as further discussed in Note 15. “Other Events”11. “Long-term Debt” to the accompanying unaudited condensed consolidated financial statements.
North Goonyella Insurance Recovery - Equipment. During the three months ended March 31, 2019, we entered into an insurance claim settlement agreement with our insurance providers related to North Goonyella equipment losses and recorded a $125.0 million insurance recovery, as discussed in Note 15. “Other Events” to the accompanying unaudited condensed consolidated financial statements. Of this amount, Adjusted EBITDA excludes an allocated amount applicable to total equipment losses recognized at the time of the insurance recovery settlement, which consisted of $24.7 million and $66.4 million recognized during the three months ended March 31, 2019 and the year ended December 31, 2018, respectively. The remaining $33.9 million, applicable to incremental costs and business interruption losses, is included in Adjusted EBITDA for the three months ended March 31, 2019.
Interest Income. The decrease in interest income during the three months ended March 31, 2020 compared to the same period in the prior year was driven by the conclusion of a contract during the fourth quarter of 2019 which contained an embedded financing element and by lower cash balances.
Unrealized (Losses) Gains on Economic Hedges.Non-Coal Trading Derivative Contracts. Unrealized (losses) gains primarily relate to mark-to-market activity from economic hedge activities intended to hedge future coal sales.foreign currency option contracts. For additional information, refer to Note 7. “Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements.
Take-or-Pay Contract-Based Intangible Recognition. During the three months ended March 31, 2020 and 2019, we ratably recognized contract-based intangible liabilities for port and rail take-or-pay contracts. For additional details, refer to Note 8. “Intangible Contract Assets and Liabilities” to the accompanying unaudited condensed consolidated financial statements.
Income Tax ProvisionBenefit (Provision). The decrease in the income tax provision for the three months ended March 31, 20202021 compared to the same period in the prior year was primarily due to changesdifferences in forecasted taxable income, andpartially offset by an increase in the benefitprovision related to the remeasurement of foreign income tax accounts. Refer to Note 11.10. “Income Taxes” to the accompanying unaudited condensed consolidated financial statements for additional information.
Net (Loss) IncomeLoss Attributable to Common Stockholders
The following table presents net (loss) incomeloss attributable to common stockholders:
Three Months EndedIncrease
March 31,to Income
20212020$%
 (Dollars in millions)
Loss from continuing operations, net of income taxes$(77.7)$(129.3)$51.6 40 %
Loss from discontinued operations, net of income taxes(2.0)(2.2)0.2 9 %
Net loss(79.7)(131.5)51.8 39 %
Less: Net income (loss) attributable to noncontrolling interests0.4 (1.8)2.2 122 %
Net loss attributable to common stockholders$(80.1)$(129.7)$49.6 38 %

36

 Three Months Ended (Decrease) Increase
 March 31, to Income
 2020 2019 $ %
 (Dollars in millions)  
(Loss) income from continuing operations, net of income taxes$(129.3) $133.3
 $(262.6) (197)%
Loss from discontinued operations, net of income taxes(2.2) (3.4) 1.2
 35 %
Net (loss) income(131.5) 129.9
 (261.4) (201)%
Less: Net (loss) income attributable to noncontrolling interests(1.8) 5.7
 (7.5) (132)%
Net (loss) income attributable to common stockholders$(129.7) $124.2
 $(253.9) (204)%


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Net (Loss) Income Attributable to Noncontrolling Interests. The decrease in net results attributable to noncontrolling interests during the three months ended March 31, 2020 compared to the prior year period was primarily due to lower results of our majority-owned mines in which there is an outside non-controlling interest.
Diluted Earnings per Share (EPS)
The following table presents diluted EPS:
Three Months Ended (Decrease) IncreaseThree Months EndedIncrease
March 31, to EPSMarch 31,to EPS
2020 2019 $ % 20212020$%
Diluted EPS attributable to common stockholders:       Diluted EPS attributable to common stockholders:
(Loss) income from continuing operations$(1.31) $1.15
 $(2.46) (214)%
Loss from continuing operationsLoss from continuing operations$(0.79)$(1.31)$0.52 40 %
Loss from discontinued operations(0.02) (0.03) 0.01
 33 %Loss from discontinued operations(0.02)(0.02)— — %
Net (loss) income attributable to common stockholders$(1.33) $1.12
 $(2.45) (219)%
Net loss attributable to common stockholdersNet loss attributable to common stockholders$(0.81)$(1.33)$0.52 39 %
Diluted EPS is commensurate with the changes in results from continuing operations and discontinued operations during that period. Diluted EPS reflects weighted average diluted common shares outstanding of 97.298.4 million and 110.597.2 million for the three months ended March 31, 20202021 and 2019,2020, respectively.
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA is defined as (loss) incomeloss from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing each of ourits segment’s operating performance, as displayed in the reconciliations below. We have retrospectively modified our calculation of Adjusted EBITDA to exclude restructuring charges and transaction costs related to joint ventures as management does not view these items as part of our normal operations.
Three Months Ended
March 31,
20212020
 (Dollars in millions)
Loss from continuing operations, net of income taxes$(77.7)$(129.3)
Depreciation, depletion and amortization68.3 106.0 
Asset retirement obligation expenses15.9 17.6 
Restructuring charges2.1 6.5 
Transaction costs related to joint ventures— 4.2 
Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates(1.5)(0.7)
Interest expense52.4 33.1 
Gain on early debt extinguishment(3.5)— 
Interest income(1.5)(3.1)
Unrealized losses on economic hedges1.9 2.2 
Unrealized losses (gains) on non-coal trading derivative contracts7.6 (0.1)
Take-or-pay contract-based intangible recognition(1.1)(2.6)
Income tax (benefit) provision(1.8)3.0 
Total Adjusted EBITDA$61.1 $36.8 

 Three Months Ended
 March 31,
 2020 2019
 (Dollars in millions)
(Loss) income from continuing operations, net of income taxes$(129.3) $133.3
Depreciation, depletion and amortization106.0
 172.5
Asset retirement obligation expenses17.6
 13.8
Restructuring charges6.5
 0.2
Transaction costs related to joint ventures4.2
 —
Provision for North Goonyella equipment loss—
 24.7
North Goonyella insurance recovery - equipment—
 (91.1)
Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates(0.7) —
Interest expense33.1
 35.8
Interest income(3.1) (8.3)
Unrealized losses (gains) on economic hedges2.2
 (39.8)
Unrealized gains on non-coal trading derivative contracts(0.1) (0.2)
Take-or-pay contract-based intangible recognition(2.6) (5.6)
Income tax provision3.0
 18.8
Total Adjusted EBITDA$36.8
 $254.1
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Revenues per Ton and Adjusted EBITDA Margin per Ton are equal to revenues by segment and Adjusted EBITDA by segment, respectively, divided by segment tons sold. Costs per Ton is equal to Revenues per Ton less Adjusted EBITDA Margin per Ton, and are reconciled to operating costs and expenses as follows:
Three Months EndedThree Months Ended
March 31,March 31,
2020 201920212020
(Dollars in millions) (Dollars in millions)
Operating costs and expenses$779.5
 $948.2
Operating costs and expenses$582.6 $779.5 
Unrealized gains on non-coal trading derivative contracts0.1
 0.2
Unrealized (losses) gains on non-coal trading derivative contractsUnrealized (losses) gains on non-coal trading derivative contracts(7.6)0.1 
Take-or-pay contract-based intangible recognition2.6
 5.6
Take-or-pay contract-based intangible recognition1.1 2.6 
North Goonyella insurance recovery - cost recovery and business interruption—
 (33.9)
Net periodic benefit costs, excluding service cost2.8
 4.9
Net periodic benefit (credit) costs, excluding service costNet periodic benefit (credit) costs, excluding service cost(8.7)2.8 
Total Reporting Segment Costs$785.0
 $925.0
Total Reporting Segment Costs$567.4 $785.0 
The following table presents Reporting Segment Costs by reporting segment:
Three Months EndedThree Months Ended
March 31,March 31,
2020 201920212020
(Dollars in millions) (Dollars in millions)
Seaborne Thermal Mining$146.0
 $156.3
Seaborne Thermal Mining$147.9 $146.0 
Seaborne Metallurgical Mining225.9
 238.7
Seaborne Metallurgical Mining109.9 225.9 
Powder River Basin Mining241.2
 250.9
Powder River Basin Mining198.3 241.2 
Other U.S. Thermal Mining153.8
 258.9
Other U.S. Thermal Mining113.1 153.8 
Corporate and Other18.1
 20.2
Corporate and Other(1.8)18.1 
Total Reporting Segment Costs$785.0
 $925.0
Total Reporting Segment Costs$567.4 $785.0 
The following tables present tons sold, revenues, Reporting Segment Costs and Adjusted EBITDA by mining segment:
 Three Months Ended March 31, 2020
 Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining
 (Amounts in millions, except per ton data)
Tons sold4.6
 2.0
 23.5
 4.9
        
Revenues$201.1
 $193.2
 $266.6
 $192.3
Reporting Segment Costs146.0
 225.9
 241.2
 153.8
Adjusted EBITDA55.1
 (32.7) 25.4
 38.5
        
Revenues per Ton$44.10
 $95.65
 $11.36
 $39.25
Costs per Ton32.03
 111.82
 10.28
 31.39
Adjusted EBITDA Margin per Ton12.07
 (16.17) 1.08
 7.86

Three Months Ended March 31, 2021
Seaborne Thermal MiningSeaborne Metallurgical MiningPowder River Basin MiningOther U.S. Thermal Mining
(Amounts in millions, except per ton data)
Tons sold4.1 1.0 20.7 3.9 
Revenues$176.4 $87.5 $228.4 $149.3 
Reporting Segment Costs147.9 109.9 198.3 113.1 
Adjusted EBITDA$28.5 $(22.4)$30.1 $36.2 
Revenues per Ton$43.36 $87.47 $11.01 $38.76 
Costs per Ton36.36 109.89 9.56 29.37 
Adjusted EBITDA Margin per Ton$7.00 $(22.42)$1.45 $9.39 

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Three Months Ended March 31, 2019Three Months Ended March 31, 2020
Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal MiningSeaborne Thermal MiningSeaborne Metallurgical MiningPowder River Basin MiningOther U.S. Thermal Mining
(Amounts in millions, except per ton data)(Amounts in millions, except per ton data)
Tons sold4.5
 2.3
 25.3
 7.9
Tons sold4.6 2.0 23.5 4.9 
       
Revenues$251.0
 $324.5
 $287.3
 $334.8
Revenues$201.1 $193.2 $266.6 $192.3 
Reporting Segment Costs156.3
 238.7
 250.9
 258.9
Reporting Segment Costs146.0 225.9 241.2 153.8 
Adjusted EBITDA94.7
 85.8
 36.4
 75.9
Adjusted EBITDA$55.1 $(32.7)$25.4 $38.5 
       
Revenues per Ton$56.24
 $142.33
 $11.35
 $42.21
Revenues per Ton$44.10 $95.65 $11.36 $39.25 
Costs per Ton35.03
 104.69
 9.91
 32.65
Costs per Ton32.03 111.82 10.28 31.39 
Adjusted EBITDA Margin per Ton21.21
 37.64
 1.44
 9.56
Adjusted EBITDA Margin per Ton$12.07 $(16.17)$1.08 $7.86 
Free Cash Flow is defined as net cash provided by (used in) provided by operating activities less net cash used in investing activities and excludes cash outflows related to business combinations. See the table below for a reconciliation of Free Cash Flow to its most comparable measure under U.S. GAAP.
Three Months Ended
March 31,
20212020
(Dollars in millions)
Net cash provided by (used in) operating activities$71.0 $(4.7)
Net cash used in investing activities(93.2)(37.1)
Free Cash Flow$(22.2)$(41.8)
 Three Months Ended
 March 31,
 2020 2019
 (Dollars in millions)
Net cash (used in) provided by operating activities$(4.7) $197.6
Net cash used in investing activities(37.1) (38.1)
Add back: Amount attributable to acquisition of Shoal Creek Mine—
 2.4
Free Cash Flow$(41.8) $161.9
Outlook
As part of its normal planning and forecasting process, Peabody utilizes a broad approach to develop macroeconomic assumptions for key variables, including country-level gross domestic product, industrial production, fixed asset investment and third-party inputs, driving detailed supply and demand projections for key demand centers for coal, electricity generation and steel. Specific to the U.S., the Company evaluates individual plant needs, including expected retirements, on a plant by plant basis in developing its demand models. Supply models and cost curves concentrate on major supply regions/countries that impact the regions in which the Company operates.
OurThe Company’s estimates involve risks and uncertainties and are subject to change based on various factors as described more fullysummarized in the “Cautionary Notice Regarding Forward-Looking Statements” section contained within this Item 2.
OurThe Company’s near-term outlook is intended to coincide with the next 12 to 24 months, with subsequent periods addressed in ourits long-term outlook. Peabody is continuing to monitor the rapidly evolving COVID-19 pandemic and any impacts related to both ourits near-term and long-term outlook.
Near-Term Outlook
Seaborne Thermal and Metallurgical Coal. Within the global coal industry, supply and demand disruptions have been widespread due to the ongoing impacts ofas the COVID-19 pandemic which has resulted inforced country-wide lockdowns and regional restrictions acrossrestrictions. Future COVID-19-related developments are unknown, including the globe. While outcomes remain highly uncertain, we believe that significantduration, severity, scope and the necessary government actions to limit the spread of COVID-19.
Within the seaborne metallurgical coal market, the imbalance between Australian export and Chinese delivered prices remains wide, with the delivered price into China trading at roughly double those seen free on board Australia as the unofficial ban on Australian coals remains in place. In addition, increased COVID-19 concerns in India are further weighing on Australian hard coking coal pricing. These factors continue to pressure the seaborne metallurgical coal market despite global steel production increasing 5% year-over-year.
In contrast, the spread between Australian hard coking coal pricing and low-vol PCI has recently narrowed to near parity. Tight low-vol PCI supply, coupled with China paying a premium for Russian coals, have contributed to rising low-vol PCI prices.

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Within the seaborne thermal coal market, tight supplies and low inventory levels have kept Newcastle thermal coal pricing at improved levels year-to-date. China’s domestic thermal coal supply remains hampered by heightened safety inspections. In addition, India’s thermal coal stockpiles have been falling gradually since mid-December as government-owned plants have reduced intake and there has been a delay in typical restocking ahead of the monsoon season in June. As of the end of March 2021, India’s plant inventory levels were estimated at approximately 15 days burn versus 28 days a year ago.
In the United States, overall electricity demand increased 2% year-over-year, demand declines are possible. While recovery in China is occurringpositively impacted by cold weather during the three months ended March 31, 2021. Electricity generation from thermal coal has increased by 37% year-over-year as major infrastructure projects recommence,a result of higher natural gas prices. This has positively impacted coal’s share of electricity generation, with a rise to approximately 24% for the three months ended March 31, 2021, while causing natural gas’s share to decline to approximately 34%. Stronger coal use has contributed to decreasing coal stockpile levels. Since December 2020, coal inventories have fallen by approximately 20 million tons. Through the three months ended March 31, 2021, utility consumption of PRB coal rose approximately 35% compared to the prior year period. Ultimately, U.S. thermal demand from non-power sectors remains weak. At the same time, Japan and India - hubs for seaborne coal demand - have shut down non-essential services and slowed steel production.
In addition to demand impacts, supply risks continue to emerge. A number of global and domestic producers have curtailed or suspended production due to precautionary measures and high levels of workforce absenteeism.


47


U.S. Thermal Coal. Within the U.S., coal demand has been further challenged by the effects of the COVID-19 pandemic. The combination of weak total electric power sector consumption, depressed power prices, reduced industrial activity, as well as lowwill be dependent on general economic conditions, weather, natural gas prices, utility inventory levels and high utility stockpiles continues to pressure demand.other factors.
Long-Term Outlook
There were no significant changes to ourthe Company’s Long-Term Outlook subsequent to December 31, 2019.2020. Information regarding ourthe Company’s Long-Term Outlook is outlined in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ourits Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Regulatory Update
Other than as described in the following section, there were no significant changes to ourthe Company’s regulatory matters subsequent to December 31, 2019.2020. Information regarding ourthe Company’s regulatory matters is outlined in Part I, Item 1. “Business” in ourits Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Regulatory Matters - U.S.
Clean Air Act (CAA). The CAA, enacted in 1970, and comparable state and tribal laws that regulate air emissions affect the Company’s U.S. coal mining operations both directly and indirectly.
The Clean Air Act requires the EPA to review national ambient air quality standards (NAAQS) every five years to determine whether revision to current standards are appropriate. As part of this recurring review process, the EPA in 2020 proposed to retain the ozone standards promulgated in 2015, including current secondary standards, and subsequently promulgated final standards to this effect. Fifteen states and other petitioners have filed a petition for review of the rule in the D.C. Circuit, State of New York v. EPA, No. 21-1028.
The EPA also proposed to retain the particulate matter (PM) standards promulgated in 2012. On March 26,December 18, 2020, the United States Environmental Protection Agency (EPA) announcedEPA issued a temporary policy regardingfinal rule to retain both the primary annual and 24-hour PM standards for fine particulate matter (PM2.5) and the primary 24-hour standard for coarse particulate matter (PM10) and secondary PM10 standards. This rule has also been challenged in the D.C. Circuit by several states and environmental organizations, State of California v. EPA, enforcement of environmental legal obligations as a result of the COVID-19 pandemic. Under the temporary policy,No. 21-2014.
More stringent PM or ozone standards would require new state implementation plans to be developed and filed with the EPA will exerciseand may trigger additional control technology for mining equipment or result in additional challenges to permitting and expansion efforts. This could also be the enforcement discretioncase with respect to the implementation for certain noncompliance events covered byother NAAQS for nitrogen oxide and SO2 although the temporary policy. For noncompliance that occurs during the period of time that the temporary policy is in effect, and that results from the COVID-19 pandemic, the EPA’s temporary policy will apply to such noncompliance in lieu of an otherwise applicable EPA enforcement response policy. The EPA’s temporary policy does not provide leniency for intentional criminal violations of law and does not apply to activities that are carried out under Superfund and Resource Conservation and Recovery Act (RCRA) Corrective Action enforcement instruments. The EPA will address these matters in separate communications. The EPA's temporary policy became retroactively effectivepromulgated a final rule on March 13, 2020. The EPA will assess18, 2019 that retains, without revision, the continued needexisting NAAQS for and scopeSO2 of this temporary policy on a regular basis and will update it if the EPA determines modifications are necessary.75 ppb averaged over an hour.
EPA Regulation of Greenhouse Gas Emissions from Existing Fossil Fuel-Fired Electricity Utility Generating Units (EGUs).EGUs. On October 23, 2015, the EPA published a final rule in the Federal Register regulating greenhouse gas emissions from existing fossil fuel-fired EGUs under Section 111(d) of the Clean Air Act (CAA)CAA (80 Fed. Reg. 64,662 (Oct. 23, 2015)). The rule (known as the Clean Power Plan or CPP) established emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired EGUs. The CPP required that the states individually or collectively create systems that would reduce carbon emissions from any EGU located within their borders by 28% in 2025 and 32% in 2030 (compared with a 2005 baseline).
Following Federal Register publication, 39 separate petitions for review

40

Table of the CPP by approximately 157 entities were filed in the United States Court of Appeals for the D.C. Circuit (D.C. Circuit). Contents

The petitions reflected challenges by 27 states and governmental entities, as well as by utilities, industry groups, trade associations, coal companies and other entities. The lawsuits were consolidated with the case filed by West Virginia and Texas (in which other states also joined) (D.C. Cir. No. 15-1363). On October 29, 2015, we filed a motion to intervene in the case filed by West Virginia and Texas, in support of the petitioning states. The motion was granted on January 11, 2016. Numerous states and other entities also intervened in support of the EPA.
On February 9, 2016, the U.S. Supreme Court granted a motion to stay implementation of the CPP until the legal challenges were resolved. Thereafter, oral arguments in the case were heard in the D.C. Circuit sitting en banc. On April 28, 2017, the D.C. Circuit granted the EPA’s motion to hold the case in abeyance while the agency reconsidered the rule. The D.C. Circuit caseEPA has been in abeyance since so no opinion has been issued.
In October 2017, the EPA proposed to repeal the CPP (82 Fed. Reg. 48,035 (Oct. 16, 2017)). Inand in August 2018 the EPA issued a proposed rule to replace the CPP, with the Affordable Clean Energy (ACE) Rule. (83 Fed. Reg. 44,746 (August 31, 2018)). OnIn June 19, 2019, the EPA issued a combined package that finalizesfinalized the CPP repeal rule as well as the replacement rule, ACE. Repeal of the Clean Power Plan; Emission Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emission Guidelines Implementing Regulations, EPA-HQ-OAR-2017-0355.
The final ACE rule sets emissions guidelines for greenhouse gas emissions from existing EGUs based on usinga determination that efficiency heat rate improvements as “Bestconstitute the Best System of Emission Reduction” measures.Reduction (BSER). The EPA’s final rule also revises the CAA Section 111(d)certain regulations to give the states greater flexibility on the content and timing of their state plans. Proposed revisions to the regulations under the New Source Review (NSR) program that were part of the ACE proposal were separated, and the EPA indicated that it intends to take final action on the proposed NSR program reforms at a later date.


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Based on the EPA’s final rules repealing and replacing the CPP, petitioners in the D.C. Circuit matter seeking review of CPP, including Peabody,the Company, filed a motion to dismiss, which the court granted in September 2019. Meanwhile, challengers to
Numerous petitions for review challenging the ACE Rule were filed petitions for judicial review; briefing in this case (No. 19-1140 (D.C. Cir.)) is scheduledthe D.C. Circuit and subsequently consolidated. In January 2021, a 3-judge panel of the D.C. Circuit vacated and remanded the ACE Rule to conclude at the end of July 2020.
On March 25, 2020, the EPA, released a draft guidance documentincluding its repeal of the CPP and amendments to the implementing regulations that would allow power plants, refineriesextended the compliance timeline.
Cross State Air Pollution Rule (CSAPR) and other sources of emissions to begin certain construction activities while still awaiting a permit under the NSR program. Under the EPA’s revised interpretation, a source owner or operator may, prior to obtaining a NSR permit, undertake physical on-site activities- including activities that may significantly alter the site, and/or are permanent in nature- provided that those activities do not constitute physical construction on an emissions unit. The EPA will take comment on the draft memo until May 11, 2020.
National Environmental Policy Act (NEPA)CSAPR Update Rule. NEPA, signed into law in 1970,In 2011, the EPA finalized the CSAPR, which requires federal agencies to review the environmental impactsDistrict of their decisionsColumbia and issue either an environmental assessment27 states from Texas eastward (not including the New England states or an environmental impact statement. We must provide information to agencies when we propose actions that will be under the authority of the federal government. The NEPA process involves public participation and can involve lengthy timeframes. The White House Council on Environmental Quality (CEQ) issued a proposed rule that would comprehensively update and modernize its longstanding NEPA regulations on January 10, 2020. The comment period closed on March 10, 2020. As proposed, the rule seeksDelaware) to reduce unnecessary paperwork, burdenspower plant emissions that cross state lines and delays, promote better coordination among agency decision makers, and clarify scope of NEPA reviews, amongsignificantly contribute to ozone and/or fine particle pollution in other things.states. In 2016, the EPA published the final CSAPR Update Rule which imposed reductions in nitrogen oxides emissions beginning in 2017 in 22 states subject to CSAPR.
Proposed Rule for Disposal of Coal Combustion Residuals (CCR) from Electric Utilities; Federal CCR Permit Program. On February 20,In October 2020, as required by the Water Infrastructure Improvements for the Nation Act, the EPA proposed a federal permitting program for the disposal of CCR in surface impoundments and landfills. Under the proposal, the EPA would directly implement the permit program in Indian Country, and at CCR units located in states that have not submitted their own CCR permit program for approval. The proposal includes requirements for federal CCR permit applications, content and modification,rule to address a previous D.C. Circuit remand as well as procedural requirements.NOx emissions in 21 states targeted by the CSAPR Update Rule. On March 15, 2021, the EPA signed a final rule which determined that 9 states do not significantly contribute to downwind nonattainment and/or maintenance issues and therefore do not need additional emission reductions. For 12 other states, however, EPA issued Federal Implementation Plans to lower state ozone season NOx budgets in 2021 to 2024, although limited emission trading can be used for compliance.
Mercury and Air Toxic Standards (MATS). The comment periodEPA published the final MATS rule in the Federal Register in 2012. The MATS rule revised the NSPS for EPA’s proposal endednitrogen oxides, SO2 and PM for new and modified coal-fueled electricity generating plants, and imposed MACT emission limits on April 20,hazardous air pollutants (HAPs) from new and existing coal-fueled and oil-fueled electric generating plants. MACT standards limit emissions of mercury, acid gas HAPs, non-mercury HAP metals and organic HAPs.
In 2020, the EPA issued a final rule reversing a prior finding and determined that it is not “appropriate and necessary” under the CAA to regulate HAP emissions from coal- and oil-fired power plants. This rule also finalized residual risk and technology review standards for the coal- and oil-fired EGU source category. Both actions have been challenged in the D.C. Circuit and placed in abeyance.
CWA Definition of “Waters of the United States”. In January 2020 the EPA and the Corps finalized the Navigable Waters Protection Rule to revise the definition of “Waters of the United States” and thereby establish the scope of federal regulatory authority under the CWA. A federal district judge in Colorado preliminarily enjoined the Navigable Waters Protection Rule in the State of Colorado on June 19, 2020, but the new rule took effect in all other states on June 22, 2020. The U.S. Court of Appeals for the Tenth Circuit reversed the preliminary injunction in Colorado on March 2, 2021, so the Navigable Waters Protection Rule is in effect nationwide. Litigation over the 2020 Navigable Waters Protection Rule remains pending in several federal district courts.
Regulatory Matters - Australia
Occupational HealthThe Australian mining industry is regulated by Australian federal, state and Safety. State legislation requires uslocal governments with respect to provideenvironmental issues such as land reclamation, water quality, air quality, dust control, noise, planning issues (such as approvals to expand existing mines or to develop new mines) and maintain a safe workplace by providing safe systems of work, safety equipment and appropriate information, instruction, training and supervision. In recognition of the specialized nature of mining and mining activities, specific occupational health and safety obligations have been mandatedissues. The Australian federal government retains control over the level of foreign investment and export approvals. Industrial relations are regulated under both federal and state legislation specificlaws. Australian state governments also require coal companies to the coalpost deposits or give other security against land which is being used for mining, industry. There are some differences in the application and detail of the laws, and mining operators, directors, officers and certain other employees are all subject to the obligations under this legislation.
Beginning in 2015, a small number of coal mine workers in Queensland and New South Wales were diagnosed with coal workers’ pneumoconiosis (CWP, also known as black lung) following decades of assumed eradication of the disease. The Queensland government held a Parliamentary inquiry into the re-emergence of CWP in the state, which included public hearings with appearances by representatives of the coal mining industry, coal mine workers, the regulator and others. The Queensland Parliamentary Committee conducting the inquiry issued its final report on May 29, 2017. In finding that itthose deposits being returned or security released after satisfactory reclamation is highly unlikely CWP was ever eradicated in Queensland, the Committee made 68 recommendations to ensure the safety and health of coal mine workers. These include an immediate reduction to the occupational exposure limit for respirable coal dust equivalent to 1.5 mg/m3 for coal dust and 0.05 mg/m3 for silica and the establishment of a new and independent Mine Safety Authority to be funded by a dedicated proportion of coal and mineral royalties and overseeing the Mines Safety Inspectorate. The Queensland government has instituted increased reporting requirements for dust monitoring results, broader coal mine worker health assessment requirements and voluntary retirement examinations for coal mine workers to be arranged by the relevant employer and further reform may follow.completed.
Safe Work Australia (SWA). As part of a broader review of workplace exposure standards, SWA is currently reviewingconsidering a proposal to reduce the time weighted average (TWA) Workplace Exposure StandardsStandard (WES) for all airborne contaminantscarbon dioxide (CO2) in Australian coal mines from 12,500ppm to 5,000ppm. Currently there is a separate TWA for CO2 in coal mines however SWA proposes to remove this to align with a general industry standard. If implemented, the change has the potential to affect underground mines operating in CO2 rich coal seams, including welding fumesthe primary coal seam of the Company’s Metropolitan Mine. Importantly, a minimum three-year transition period applies for any change to standards.

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Environment Protection and diesel particulate matterBiodiversity Conservation Amendment (Standards and giving priorityAssurance) Bill 2021. On February 25, 2021 the Commonwealth Government introduced the Environment Protection and Biodiversity Conservation Amendment (Standards and Assurance) Bill 2021 into Parliament, which proposes amendments to the WES for coal dustEnvironment Protection and silica. The review is expected to continue until June 2020. SWA’s draft evaluation reports will includeBiodiversity Conservation Act 1999 (EPBC Act) following the release of the Final Report of the Independent Review of the Act undertaken by Professor Graeme Samuel (the Samuel Review) that made 38 recommendations for exposure limits.short and long-term reforms, and ultimately calls for a complete overhaul of the existing legislative framework by 2022, to be undertaken in several tranches, with a strong focus on the setting of National Environmental Standards, assurance and compliance, data availability and management, and indigenous engagement. The exposure limits recommended by SWA are based on toxicological informationbill responds to some of the recommendations for immediate reform made in the Samuel Review, and seeks to: establish a framework for the making, varying, revoking and application of National Environmental Standards; apply the National Environmental Standards to bilateral agreements with States and Territories; and establish an Environment Assurance Commissioner to monitor and audit bilateral agreements and other monitoring data. SWA have recommended exposure limitsprocesses under the EPBC Act.
Native Title and Cultural Heritage. On February 3, 2021 the Native Title Act 1993 was amended largely directed at improving the efficiency of 1.5 mg/m3the native title system for coal dustall parties. The amendments confirm the validity of most section 31 right to negotiate agreements which might be invalid because of non-execution by any of the persons comprising the registered native title claimant following the Full Federal Court's decision in McGlade v Registrar National Native Title Tribunal. Other significant amendments include that: during the right to negotiate process the parties to section 31 agreements are now required to notify the National Native Title Tribunal of the existence of any ancillary agreements; new section 47C allows historical extinguishment to be disregarded on park areas including extinguishment by public works; and 0.05 mg/m3new section 24MD(6B)(f) creates a new 8 month objection period for silica.the creation of a right to mine for the purpose of an infrastructure facility associated with mining and to some compulsory acquisitions of native title.
Since AugustGlobal Climate
In the U.S., Congress has considered legislation addressing global climate issues and greenhouse gas emissions, but to date, no such legislation has been signed into law. While it is possible that the U.S. will adopt legislation in the future, the timing and specific requirements of any such legislation are uncertain. In the absence of new U.S. federal legislation, the EPA has taken steps to regulate greenhouse gas emissions pursuant to the CAA. In response to the U.S. Supreme Court ruling in Massachusetts v. EPA, 549 U.S. 497 (2007) the EPA commenced several rulemaking projects as described under “Regulatory Matters - U.S.” In particular, in 2015, the EPA announced final rules (known as the CPP) for regulating carbon dioxide emissions from existing and new fossil fuel-fired EGUs. Twenty-seven states and governmental entities, as well as utilities, industry groups, trade associations, coal companies (including Peabody), and other entities, challenged the CPP in federal court. Implementation of the CPP was stayed by the U.S. Supreme Court pending resolution of its legal challenges. In October 2017, the Workers’ CompensationEPA proposed to change its legal interpretation of section 111(d) of the CAA, the authority that the agency relied on for the original CPP. The EPA relied on the proposed reinterpretation until August 2018, when it proposed the Affordable Clean Energy Rule (the ACE Rule) to replace the CPP with a system where states would develop emissions reduction plans using BSER measures (essentially efficiency heat rate improvements), and Rehabilitation Act 2003the EPA would approve the state plans if they use EPA-approved candidate technologies. The EPA thereafter repealed the CPP and promulgated the final ACE Rule on July 8, 2019. On January 19, 2021, the D.C. Circuit Court of Appeals vacated and remanded the ACE Rule, including the repeal of the CPP and amendments to implementing regulations that extended compliance timelines.
Several changes in the NSR program have also been issued through guidance and rulemaking as described under “Regulatory Matters – U.S.” in the Company’s Annual Report on Form 10-K and herein. The NSR program provides for the pre-construction review of new, reconstructed and modified stationary sources and results in determinations concerning the emission control technology that must be installed and operated at a medical examination processsource. Clean Air Act standards, known as new source performance standards, generally serve as a “floor” level of control for retiredsources subject to NSR review; the final level of control is determined through the permitting process. In certain cases, performance standards or former coal workers with suspected CWP and an additional lump sum compensation for workers with CWP, and additionally clarifies that a worker with CWP can access further workers’ compensation entitlements if they experience disease progression.

controls regarding greenhouse gas emissions may be required through the NSR process.

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At the same time, a number of states in the U.S. have adopted programs to regulate greenhouse gas emissions. For example, 10 northeastern states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont) entered into the Regional Greenhouse Gas Initiative (RGGI) in 2005, which is a mandatory cap-and-trade program to cap regional carbon dioxide emissions from power plants. Six mid-western states (Illinois, Iowa, Kansas, Michigan, Minnesota and Wisconsin) and one Canadian province have entered into the Midwestern Regional Greenhouse Gas Reduction Accord (MGGRA) to establish voluntary regional greenhouse gas reduction targets and develop a voluntary multi-sector cap-and-trade system to help meet the targets. It has been reported that, while the MGGRA has not been formally suspended, the participating states are no longer pursuing it. Seven western states (Arizona, California, Montana, New Mexico, Oregon, Utah and Washington) and four Canadian provinces entered into the Western Climate Initiative (WCI) in 2008 to establish a voluntary regional greenhouse gas reduction goal and develop market-based strategies to achieve emissions reductions. However, in November 2011, the WCI announced that six states had withdrawn from the WCI, leaving California and four Canadian provinces as the remaining members. Of those five jurisdictions, only California and Quebec have adopted greenhouse gas cap-and-trade regulations to date and both programs have begun operating. Many of the states and provinces that left WCI, RGGI and MGGRA, along with many that continue to participate, have joined the new North America 2050 initiative, which seeks to reduce greenhouse gas emissions and create economic opportunities in ways not limited to cap-and-trade programs. Separately, California has committed through Executive Order B-55-18 and SB 100 to 100 percent “clean energy” by 2045.
Several other U.S. states have enacted legislation establishing greenhouse gas emissions reduction goals or requirements. In addition, several states have enacted legislation or have in effect regulations requiring electricity suppliers to use renewable energy sources to generate a certain percentage of power or that provide financial incentives to electricity suppliers for using renewable energy sources. Some states have initiated public utility proceedings that may establish values for carbon emissions.
Increasingly, both foreign and domestic banks, insurance companies and large investors are curtailing or ending their financial relationships with fossil fuel-related companies. This has had adverse impacts on the liquidity and operations of coal producers.
Peabody participated in the Department of Energy’s Voluntary Reporting of Greenhouse Gases Program until its suspension in May 2011, and Peabody regularly discloses in its annual Environmental, Social and Governance Report the quantity of emissions per ton of coal produced by the Company in the U.S. The vast majority of the Company’s emissions are generated by the operation of heavy machinery to extract and transport material at its mines and fugitive emissions from the extraction of coal.
The Kyoto Protocol, adopted in December 1997 by the signatories to the 1992 United Nations Framework Convention on Climate Change (UNFCCC), established a binding set of greenhouse gas emission targets for developed nations. The U.S. signed the Kyoto Protocol but it has never been ratified by the U.S. Senate. Australia ratified the Kyoto Protocol in December 2007 and became a full member in March 2008. There were discussions to develop a treaty to replace the Kyoto Protocol after the expiration of its commitment period in 2012, including at the UNFCCC conferences in Cancun (2010), Durban (2011), Doha (2012) and Paris (2015). At the Durban conference, an ad hoc working group was established to develop a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC, applicable to all parties. At the Doha meeting, an amendment to the Kyoto Protocol was adopted, which included new commitments for certain parties in a second commitment period, from 2013 to 2020. In December 2012, Australia signed on to the second commitment period. During the UNFCCC conference in Paris, France in late 2015, an agreement was adopted calling for voluntary emissions reductions contributions after the second commitment period ends in 2020 (the Paris Agreement). The agreement was entered into force on November 4, 2016 after ratification and execution by more than 55 countries, including Australia, that account for at least 55% of global greenhouse gas emissions.
In January 2021, the U.S. reentered the Paris Agreement by accepting the agreement and all of its articles and clauses, after having announced its withdrawal from the agreement in November 2019. In April 2021, the U.S. announced its own Nationally Determined Contribution (NDC) with respect to the Paris Agreement. The NDC is voluntary and would aim to cut carbon dioxide output by 50% to 52% compared with 2005 levels by 2030. Recently, the U.S. has announced the goal of a completely emissions-free power grid by 2035, but has not provided specificity for a regulatory framework to achieve that goal. The Company anticipates a series of executive actions and/or orders from the current presidential administration aimed at curbing emission levels.

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In October 20182017, the QueenslandAustralian Federal Government released a plan aimed at delivering an affordable and reliable energy system that meets Australia’s international commitments to emissions reduction. The plan was referred to as the National Energy Guarantee (NEG) and was aimed at changing the National Electricity Market and associated legislative framework. The NEG was abandoned by the Australian government passedin September 2018. Following the Mines Legislation (Resources Safety) Amendment Act 2018,outcome of the federal election in May 2019, the federal government confirmed it will not revive the former NEG policy. Instead, the government will pursue a new energy and climate change policy, which introduces significant changesincludes a $2 billion Australian dollars investment in projects to bring down Australia's greenhouse gas emissions. The Climate Solutions Fund is an extension of the Coal Mining Safety and Health Act 1999 concerning, amongformer Emissions Reduction Fund. The government has confirmed that it remains committed to meeting Australia’s Paris Agreement targets but that the focus of energy policy will be on driving down electricity prices.
The enactment of future laws or the passage of regulations regarding emissions from the use of coal by the U.S., some of its states or other things, dutiescountries, or other actions to limit such emissions, could result in electricity generators switching from coal to other fuel sources. Further, policies limiting available financing for the development of officers, reporting requirementsnew coal-fueled power stations could adversely impact the global demand for coal mine worker diseases, reporting defects and hazards affecting plant and substances, contractor and service provider safety and health management plans, new powersin the future. The potential financial impact on the Company of such future laws, regulations or other policies will depend upon the degree to suspendwhich any such laws or cancel an individual’s statutory certificate of competency and increasing penalties and inspector powers.
Following the re-identification ofregulations force electricity generators to diminish their reliance on coal workers’ pneumoconiosis and six mining and quarrying fatalities that occurred over a 12-month period, the Resources Safety and Health Queensland Bill 2019 was introduced into Queensland Parliament in September 2019, was passed into law in March 2020 and will take effect on July 1, 2020. It establishes Resources Safety and Health Queensland (RSHQ) as a statutory body designed to ensure independencefuel source. That, in turn, will depend on a number of factors, including the mining safety and health regulator. RSHQ will include inspectorates for coal mines, mineral mines and quarries, explosives and petroleum and gas. The newspecific requirements imposed by any such laws, seek to enhanceregulations or other policies, the role of advisory committees to identify, quantify and prioritize safety and health issuestime periods over which those laws, regulations or other policies would be phased in, the miningstate of development and quarrying industries. It also provides for an independent Work Health and Safety Prosecutor to prosecute serious offenses under resources safety legislation.
In February 2020, the Queensland government introduced into Parliament a bill to introduce the criminal offensedeployment of ‘industrial manslaughter’ for executive officers, individuals who are “senior officers” and companies in the mining industry. Individuals would face a maximum prison sentence of 20 years and companies could be fined up to approximately $13 million Australian dollars. The bill also introduces the requirement for statutory role holders to be employees of the coal mine operator entity with a 12-month transition period. The bill is currently under review by a Parliamentary Committee.
Sydney Water Catchment Areas. In November 2017, the New South Wales government established an independent expert panel (Panel) to advise the Department of Planning, Industry and Environment (DPIE) on the impact of underground mining activities in Sydney’s water catchment areas, including at our Metropolitan Mine. The Panel issued an initial report to DPIE in November 2018, which was publicly released in December 2018 and only concerned mining activities at two mines, our Metropolitan Mine and a competitor’s Dendrobium Mine. After consultation with stakeholders, including Peabody, a final report was released in October 2019. The final report updates and finalizes the initial report and also makes findings and recommendations concerning mining activities and effects across the catchment as a whole.
The Panel’s reports acknowledge the major effort at the Metropolitan and Dendrobium Mines over the last decade to employ best practice modeling and assessment methods undertaken by suitable specialists, with expert peer review while recommending continued rigorous monitoring and impact assessment in order to build on the knowledge base regarding mining-induced subsidence and its impacts on groundwater and surface water. The reports endorse the government taking an incremental approach to mining approvals that provides for considering existing and emerging information and knowledge gaps. The Panel concluded in the final report that the average daily water inflow over the last three years at the Metropolitan Mine is generally less than 0.2 megaliters per day and shows no evidence of connected fracture regime to surface or correlation with rainfall. It also concluded that the potential for water to be diverted out of Woronora Reservoir and into other catchments through valley closure shear planes and geological structures will require careful assessment in the future because it is planned that most of the remaining longwall panels in the approved mining area will pass beneath the reservoir. A range of matters remain to be considered by the Panel, including the cumulative impacts of flow losses and the relative significance of these for water suppliesCCUS technologies as well as acceptance of CCUS technologies to meet regulations and the practicalities associated with establishing a robust regional water balance model.
The DPIE will now consideralternative uses for coal. Higher-efficiency coal-fired power plants may also be an option for meeting laws or regulations related to emissions from coal use. Several countries, including major coal users such as China, India and Japan, included using higher-efficiency coal-fueled power plants in their plans under the recommendationsParis Agreement. From time to time, Peabody attempts to analyze the potential impact on the Company of as-yet-unadopted, potential laws, regulations and policies. Such analyses require that Peabody make significant assumptions as to the specific provisions of such potential laws, regulations and policies which sometimes show that if implemented in the Panel’s final reportmanner assumed by the analyses, the potential laws, regulations and has saidpolicies could result in material adverse impacts on its operations, financial condition or cash flow. The Company does not believe that insuch analyses reasonably predict the meantime no new development applications for mining in the catchment will be determined. We do not currentlyquantitative impact that future laws, regulations or other policies may have any such applications awaiting determination. In March 2020 the DPIE approved the extraction plans for longwalls 305-307. We continue to conduct robust monitoring, data collection and reporting and have been actively consulting with the government on Metropolitan’s approval processes and mine design to ensure that operational impacts are appropriately managed and minimized as far as possible.its results of operations, financial condition or cash flows.
Liquidity and Capital Resources
Overview
OurThe Company’s primary source of cash is proceeds from the sale of ourits coal production to customers. We haveThe Company has also generated cash from the sale of non-strategic assets, including coal reserves and surface lands, borrowings under ourits credit facilities and, from time to time, the issuance of securities. OurThe Company’s primary uses of cash include the cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs, capital and operating lease payments, postretirement plans, take-or-pay obligations, post-mining reclamation obligations, and selling and administrative expenses. We haveThe Company has also used cash for dividends, share repurchases and early debt retirements. We believe that our capital structure allows us to satisfy our working capital requirements and fund capital expenditures and debt-service obligations with cash generated from operations and cash on hand.


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Any future determinations to return capital to stockholders, such as dividends or share repurchases will be at the discretion of our Board of Directors and will depend on a variety of factors, including the restrictions set forth under ourthe Company’s debt and surety agreements, ourits net income or other sources of cash, liquidity position and potential alternative uses of cash, such as internal development projects or acquisitions, as well as economic conditions and expected future financial results. OurThe Company’s ability to declare dividends, repurchase shares or early retire debt, declare dividends or repurchase shares in the future will depend on ourits future financial performance, which in turn depends on the successful implementation of ourits strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand for and selling prices of coal and other factors specific to ourits industry, many of which are beyond ourthe Company’s control. The Company has presently suspended the payment of dividends and share repurchases, as discussed in Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds.”
Liquidity
As of March 31, 2020, our available liquidity was $1,187.7 million, which was comprised of cash and cash equivalents and availability under our revolver and accounts receivable securitization program as described below. As of March 31, 2020, our2021, the Company’s cash balances totaled $682.5$580.2 million, including approximately $603$396 million held by U.S. subsidiaries $68and $157 million held by Australian subsidiaries, andapproximately $104 million of which was held by the subsidiaries that conduct the operations of its Wilpinjong Mine. The Company’s remaining balance was held by other foreign subsidiaries in accounts predominantly domiciled in the U.S. A significant majority of the cash held by ourits foreign subsidiaries is denominated in U.S. dollars. This cash is generally used to support non-U.S. liquidity needs, including capital and operating expenditures in Australia.

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The Company’s available liquidity declined from $728.7 million as of December 31, 2020 to $603.8 million as of March 31, 2021. Available liquidity, which excluded $43.5 million of restricted cash as of March 31, 2021, was comprised of the following:
March 31, 2021December 31, 2020
(Dollars in millions)
Cash and cash equivalents$580.2 $709.2 
Revolving credit facility availability22.8 0.2 
Accounts receivable securitization program availability0.8 19.3 
Total liquidity$603.8 $728.7 
Refinancing and Related Transactions
During the fourth quarter of 2020 and the first quarter of 2021, the Company entered into a series of interrelated agreements with its surety bond providers, the revolving lenders under its credit agreement and certain holders of its senior secured notes to extend a significant portion of its near-term debt maturities to December 2024 and to stabilize collateral requirements for its existing surety bond portfolio. Such agreements and related activities are described below.
Organizational Realignment
In July and August 2020, the Company effected certain changes to its corporate structure in contemplation of a debt-for-debt exchange, which included, among other steps, the formation of certain wholly-owned subsidiaries (the Co-Issuers). In connection with the change in structure, the Company’s subsidiary which owns and operates its Wilpinjong Mine in Australia became a subsidiary of the Co-Issuers. The Co-Issuers and the Wilpinjong subsidiary were designated as unrestricted subsidiaries under the Company’s Credit Agreement and its senior notes’ indenture (the Existing Indenture). In connection with these actions, the Company contributed $100.0 million to the Co-Issuers to provide the Wilpinjong Mine with operating liquidity and address its capital needs over the next twelve months.
Surety Agreement
In November 2020, the Company entered into a surety transaction support agreement (Surety Agreement) with the providers of 99% of its surety bond portfolio (Participating Sureties) to resolve previous collateral demands made by the Participating Sureties. In accordance with the Surety Agreement, the Company initially provided $75.0 million of collateral, in the form of letters of credit.
Upon completion of the Refinancing Transactions, as defined below, other provisions of the Surety Agreement became effective. In particular, the Company granted second liens on $200.0 million of certain mining equipment and will post an additional $25.0 million of collateral per year from 2021 through 2024 for the benefit of the Participating Sureties. The collateral postings may also further increase to the extent the Company generates more than $100.0 million of free cash flow (as defined in the Surety Agreement) in any twelve-month period or have asset sales in excess of $10.0 million. Further, the Participating Sureties have agreed to a standstill through December 31, 2024, during which time, the Participating Sureties will not demand any additional collateral, draw on letters of credit posted for the benefit of themselves, or cancel any existing surety bond. The Company will not pay dividends or make share repurchases during the standstill period, unless otherwise agreed between parties.
Refinancing Transactions
On April 3, 2020, we borrowed $300.0 million under ourJanuary 29, 2021 (the Settlement Date), the Company completed a series of transactions (collectively, the Refinancing Transactions) to, among other things, provide it with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity and financial flexibility. The Refinancing Transactions included a senior notes exchange and related consent solicitation, a revolving credit facility which is further described belowexchange, and in Note 12. “Long-term Debt” of the accompanying unaudited condensed consolidated financial statements. This borrowing provides us with additional financial flexibility in light of the current uncertainty in the global markets and related effects on our business resulting from the COVID-19 pandemic. While we do not currently expectvarious amendments to use the proceeds from these borrowings for any near-term liquidity needs, we may use the proceeds for working capital and other general corporate purposes.its existing debt agreements, as summarized below.
Our ability to maintain adequate liquidity depends on the successful operation of our business and appropriate management of operating expenses and capital spending. Our anticipated liquidity needs are highly sensitive to changes in each of these and other factors, including the evolving impact of the COVID-19 pandemic.

Debt Financing45
As described in Note 12. “Long-term Debt”
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Exchange Offer
On January 29, 2021, the accompanying unaudited condensed consolidated financial statements, during 2017, we entered intoCompany settled an indenture relatedexchange offer (Exchange Offer) pursuant to the issuancewhich $398.7 million aggregate principal amount of $500.0 million ofits 6.000% senior secured notesSenior Secured Notes due March 2022 (2022 Notes) were validly tendered, accepted by the Company and exchanged for aggregate consideration consisting of (a) $193.9 million aggregate principal amount of new 10.000% Senior Secured Notes due 2024 issued by the Co-Issuers (Co-Issuer Notes), (b) $195.1 million aggregate principal amount of new 8.500% Senior Secured Notes due 2024 issued by Peabody (Peabody Notes), and (c) a cash payment of approximately $9.4 million. In connection with the settlement of the Exchange Offer, the Company also paid early tender premiums totaling $4.0 million in cash. Refer to Note 11. “Long-term Debt” for additional information associated with the Co-Issuer Notes and the Peabody Notes.
Following the settlement of the Exchange Offer, approximately $60.3 million aggregate principal amount of the 2022 Notes remain outstanding and are governed by the Existing Indenture, as amended by the supplemental indenture described below.
As required under the Exchange Offer, the Company purchased $22.4 million Peabody Notes at 80% of their accreted value, plus accrued and unpaid interest, during the first quarter of 2021 and recognized a related net gain of $3.5 million.
Consent Solicitation
Concurrently with the Exchange Offer, the Company solicited consents from holders of the 2022 Notes to certain proposed amendments to the Existing Indenture to (i) eliminate substantially all of the restrictive covenants, certain events of default applicable to the 2022 Notes and certain other provisions contained in the Existing Indenture and (ii) release the collateral securing the 2022 Notes and eliminate certain other related provisions contained in the Existing Indenture. The Company received the requisite consents from holders of the 2022 Notes and entered into a supplemental indenture to the Existing Indenture, which became operative on January 29, 2021.
Revolver Transactions
In connection with the Refinancing Transactions, the Company restructured the revolving loans under the Credit Agreement by (i) making a pay down of revolving loans thereunder in the aggregate amount of $10.0 million, (ii) the Co-Issuers incurring $206.0 million of term loans under a credit agreement, dated as of the Settlement Date (Co-Issuer Term Loans, Co-Issuer Term Loan Agreement), (iii) Peabody entering into a letter of credit facility (the Company LC Agreement), and (iv) amending the Credit Agreement (collectively, the Revolver Transactions).
The Co-Issuer Term Loans mature on December 31, 2024 and bear interest at a rate of 10.00% per annum.
On the Settlement Date, the Company entered into the Company LC Agreement with the revolving lenders party to the Credit Agreement, pursuant to which the Company obtained a $324.0 million letter of credit facility under which its existing letters of credit under the Credit Agreement were deemed to be issued. The commitments under the Company LC Agreement mature on December 31, 2024. Undrawn letters of credit under the Company LC Agreement bear interest at 6.00% per annum and unused commitments are subject to a 0.50% per annum commitment fee.
In connection with the Revolver Transactions, the Company amended the Credit Agreement to make certain changes in consideration of the Company LC Agreement. After giving effect to the Revolver Transactions, there remain no revolving commitments or revolving loans under the Credit Agreement and the first lien net leverage ratio covenant was eliminated, effectively negating the compliance requirement at December 31, 2020 and prospectively. The Company LC Agreement requires that the Company’s restricted subsidiaries maintain minimum aggregate liquidity of $125.0 million at the end of each quarter through December 31, 2024. As such, liquidity attributable to the Co-Issuers, its subsidiaries, and other unrestricted subsidiaries is excluded from the calculation. Liquidity calculated in this manner amounted to $475.3 million at March 31, 2021.
Other Debt Financing
The Refinancing Transactions did not significantly impact the Company’s existing senior secured term loan under the Credit Facility, or its $500.0 million of 6.375% senior secured notes due March 2025. We make semi-annual interest payments on theThe senior notes eachsecured term loan had a balance of $387.3 million at March 31, and September 30 until maturity. Also during 2017, we entered into a credit agreement and related term loan under which we originally borrowed $950.0 million and have repaid $558.0 million through March 31, 2020.2021. The term loan requires quarterly principal payments of $1.0 million and periodic interest payments, currently at LIBOR plus 2.75%, through December 2024 with the remaining balance due in March 2025.
We also entered into a revolving credit facility allowable under our credit agreement during 2017 for an aggregate commitment of $350.0 million for general corporate purposes. In September 2019, we entered into an amendment to the credit agreement which increased the aggregate commitment amount under the revolver to $565.0 million and, beginning in 2020, made applicable The senior secured notes require semi-annual interest rates and fees dependent upon our periodically-determined first lien leverage ratio, as defined in the credit agreement. To date, we have utilized this revolving credit facility for the borrowing described above and for letters of credit which incur combined fees of 3.125%, while unused capacity bears a commitment fee of 0.4%. As ofpayments each March 31 2020, such lettersand September 30 until maturity.

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Table of credit amounted to $72.6 million and were primarily in support of our reclamation obligations.Contents
Our
The Company’s debt agreements impose various restrictions and limits on certain categories of payments that wethe Company may make, such as those for dividends, investments, and stock repurchases. We areThe Company is also subject to customary affirmative and negative covenants. We were in complianceThe Company was compliant with all such restrictions and covenants under its debt agreements at March 31, 2020.2021.
As described inConsidering the “Overview” section contained within this Item 2,Refinancing Transactions, the September 2019 amendmentCompany expects to our credit facility madeincur approximately $200 million of interest expense, including approximately $50 million of non-cash interest expense, during the formation of the PRB Colorado joint venture with Arch expressly permissible. We are currently considering various alternatives for implementing the joint venture in accordance with the terms of the indenture governing our senior secured notes. Our ability to accomplish this objective is subject to market conditions and other factors, including financing options that may be available to us from time to time and conditions in the credit and debt capital markets generally.


51


year ended December 31, 2021.
Accounts Receivable Securitization Program
As described in Note 17.16. “Financial Instruments and Other Guarantees” of the accompanying unaudited condensed consolidated financial statements, wethe Company entered into an amended accounts receivable securitization program during 2017 which currently expires in 2022. The program provides for up to $250.0 million in funding, limited to the availability of eligible receivables, accounted for as a secured borrowing. Funding capacity under the program may also be providedutilized for letters of credit in support of other obligations. At March 31, 2020, we had2021, the Company had no outstanding borrowings and $132.7$120.8 million of letters of credit providedissued under the program. The letters of credit areprogram, which were primarily in support of portions of ourthe Company’s obligations for reclamation, workers’ compensationproperty and postretirement benefits. Availabilitycasualty insurance. The Company had $43.5 million of cash collateral posted under the program, which is adjusted for certain ineligible receivables, was $12.8 millionSecuritization Program at March 31, 2020 and there was no cash collateral requirement.2021 due to outstanding letters of credit temporarily exceeding the balance of eligible receivables at quarter-end.
Capital Requirements
There were no material changes to our targetedFor 2021, the Company is targeting capital expenditures from the information previously provided in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-Kapproximately $225 million, which includes approximately $135 million for the year ended December 31, 2019.ongoing extension projects primarily related to its Seaborne Thermal Mining segment. The Company has no substantial future payment requirements under U.S. federal coal reserve leases.
Contractual Obligations
There were no material changes to ourthe Company’s contractual obligations from the information previously provided in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 2019, with the exception of our obligations for various short- and long-term take-or-pay arrangements in Australia and the U.S. associated with rail and port commitments for the delivery of coal, including amounts relating to export facilities. Due to changes in the foreign currency exchange rates, our estimated obligations are expected to be $11.1 million less for the remainder of 2020 than that provided in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2019. For the two-year period 2021 through 2022 and the two-year period 2023 through 2024, such obligations are comparatively reduced by $20.4 million and $18.2 million, respectively. For periods thereafter, such obligations are reduced by $72.6 million.2020.
Historical Cash Flows and Free Cash Flow
The following table summarizes ourthe Company’s cash flows for the three months ended March 31, 20202021 and 2019,2020, as reported in the accompanying unaudited condensed consolidated financial statements. Free Cash Flow is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section above for definitions and reconciliations to the most comparable measures under U.S. GAAP.
 Three Months Ended March 31,
 2020 2019
 (Dollars in millions)
Net cash (used in) provided by operating activities$(4.7) $197.6
Net cash used in investing activities(37.1) (38.1)
Net cash used in financing activities(7.9) (337.3)
Net change in cash, cash equivalents and restricted cash(49.7) (177.8)
Cash, cash equivalents and restricted cash at beginning of period732.2
 1,017.4
Cash, cash equivalents and restricted cash at end of period$682.5
 $839.6
    
Net cash (used in) provided by operating activities$(4.7) $197.6
Net cash used in investing activities(37.1) (38.1)
Add back: Amount attributable to acquisition of Shoal Creek Mine—
 2.4
Free Cash Flow$(41.8) $161.9

Three Months Ended March 31,
20212020
 (Dollars in millions)
Net cash provided by (used in) operating activities$71.0 $(4.7)
Net cash used in investing activities(93.2)(37.1)
Net cash used in financing activities(63.3)(7.9)
Net change in cash, cash equivalents and restricted cash(85.5)(49.7)
Cash, cash equivalents and restricted cash at beginning of period709.2 732.2 
Cash, cash equivalents and restricted cash at end of period$623.7 $682.5 
Net cash provided by (used in) operating activities$71.0 $(4.7)
Net cash used in investing activities(93.2)(37.1)
Free Cash Flow$(22.2)$(41.8)

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Operating Activities. The decreasenet increase in net cash (used in) provided by operating activities for the three months ended March 31, 20202021 compared to the same period in the prior year was driven by thea year-over-year decreaseincrease in cash from ourgenerated by Company’s mining operations and an unfavorablea favorable change in net cash flows associated with ourits working capital of $36.1 million.($59.0 million).
Investing Activities. NetThe increase in net cash used in investing activities for the three months ended March 31, 2020 was comparable2021 compared to the same period in the prior year and in both periods was driven by higher capital expenditures ($19.0 million) and higher net contributions to sustain operations.joint ventures ($35.8 million).
Financing Activities. The decreaseincrease in net cash used in financing activities for the three months ended March 31, 20202021 compared to the same period in the prior year was driven by comparatively higher long-term debt repayments ($33.0 million), including $37.3 million associated with the prior year periodRefinancing Transactions, and the payment of dividends of $214.4 million, including a supplemental dividend of $1.85 per share of common stock, and common stock repurchases of $98.8 million. We have presently suspended such payments, as discussed in Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds.”deferred financing costs associated with the Refinancing Transactions ($22.5 million).
Off-Balance SheetOff-Balance-Sheet Arrangements
In the normal course of business, we arethe Company is a party to various guarantees and financial instruments that carry off-balance-sheet risk and are not reflected in the accompanying condensed consolidated balance sheets. At March 31, 2020,2021, such instruments included $1,557.4included $1,570.8 million of surety bonds and $206.8$423.4 million ofof letters of credit. TheseSuch financial instruments provide support for ourits reclamation bonding requirements, lease obligations, insuranceinsurance policies and various other performance guarantees. WeThe Company periodically evaluateevaluates the instruments for on-balance-sheet treatment based on the amount of exposure under the instrument and the likelihood of required performance. We doThe Company does not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in ourits condensed consolidated balance sheets.
We could experienceAs of March 31, 2021, the Company was party to financial instruments with off-balance-sheet risk in support of the following obligations:
Reclamation
Health and welfare (1)
Contract performance (2)
Leased property and equipment
Other (3)
Total
(Dollars in millions)
Surety bonds and bank guarantees$1,394.5 $42.1 $87.6 $30.9 $15.7 $1,570.8 
Letters of credit outstanding under letter of credit facility198.3 90.4 7.5 5.0 — 301.2 
Letters of credit outstanding under accounts receivable securitization program99.4 17.0 4.4 — — 120.8 
Other letters of credit— 1.4 — — — 1.4 
1,692.2 150.9 99.5 35.9 15.7 1,994.2 
Less: Letters of credit in support of surety bonds (4)
(297.7)(29.5)— (1.2)— (328.4)
Less: Cash collateral in support of surety bonds (4)
(15.0)— — — — (15.0)
Obligations supported, net$1,379.5 $121.4 $99.5 $34.7 $15.7 $1,650.8 
(1)    Obligations include pension and healthcare plans, workers’ compensation, and property and casualty insurance
(2)    Obligations pertain to customer and vendor contracts
(3)    Obligations primarily pertain to the disturbance or alteration of public roadways in connection with the Company’s mining activities that is subject to future restoration
(4)    Serve as collateral for certain surety bonds at the request of surety bond providers. The Company has also posted $5.3 million in incremental collateral directly with the beneficiary that is not supported by a decline in our liquidity as financialsurety bond.
Financial assurances associated with new reclamation bonding requirements, surety bonds or other obligations are required to be collateralized bymay require additional collateral in the form of cash or letters of credit.credit causing a decline in the Company’s liquidity.

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As described in Note 17.16. “Financial Instruments and Other Guarantees” in the accompanying unaudited condensed consolidated financial statements, we arethe Company is required to provide various forms of financial assurance in support of ourits mining reclamation obligations in the jurisdictions in which we operate.it operates. Such requirements are typically established by statute or under mining permits. Historically, such assurances have taken the form of third-party instruments such as surety bonds, bank guarantees and letters of credit, as well as self-bonding arrangements in the U.S. We have shifted away from extensive self-bondingSelf-bonding in the U.S. has become increasingly restricted in favor ofrecent years, leading to the Company’s increased usage of surety bonds and similar third-party instruments. This change in practice has had an unfavorable impact on ourits liquidity due to increased collateral requirements and surety and related fees.
At March 31, 2020, we2021, the Company had total asset retirement obligations of $758.7$735.9 million which were backed by a combination of surety bonds, bank guarantees and letters of credit.
Bonding requirement amounts may differ significantly from the relatedrelated asset retirement obligation because such requirements are calculated under the assumption that reclamation begins currently, whereas ourthe Company’s accounting liabilities are discounted from the end of a mine’s economic life (when final reclamation work would begin) to the balance sheet date.
Guarantees and Other Financial Instruments with Off-Balance SheetOff-Balance-Sheet Risk. See Note 17.16. “Financial Instruments and Other Guarantees” in ourthe Company’s unaudited condensed consolidated financial statements for a discussion of ourits accounts receivable securitization program and guarantees and other financial instruments with off-balance sheetoff-balance-sheet risk.
Critical Accounting Policies and Estimates
OurThe Company’s discussion and analysis of ourits financial condition, results of operations, liquidity and capital resources is based upon ourits financial statements, which have been prepared in accordance with U.S. GAAP. We areThe Company is also required under U.S. GAAP to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate ourthe Company evaluates its estimates. We base ourThe Company bases its estimates on historical experience and on various other assumptions that we believeit believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
At March 31, 2020, we have2021, the Company identified certain assets with an aggregate carrying value of approximately $2.1$1.2 billion in ourits Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to coal pricing, cost pressures, customer demand, and customer concentration risk. Werisk and future economic viability. The Company conducted a review of those assets for recoverability as of March 31, 20202021 and determined that no impairment charges were necessary as of that date.


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OurThe Company’s critical accounting policies are discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ourits Annual Report on Form 10-K for the year ended December 31, 2019. Our2020. The Company’s critical accounting policies remain unchanged at March 31, 2020.2021.
Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented
See Note 2. “Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented” to ourthe Company’s unaudited condensed consolidated financial statements for a discussion of newly adopted accounting standards and accounting standards not yet implemented.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Foreign Currency Risk
We haveThe Company has historically utilized currency forwards and options to hedge currency risk associated with anticipated Australian dollar expenditures. The accounting for these derivatives is discussed in Note 7. “Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements. As of March 31, 2020,2021, the Company had currency options outstanding with an aggregate notional amount of $550.0$575.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the six-monthnine-month period ending September 30, 2020.December 31, 2021. Assuming wethe Company had no foreign currency hedging instruments in place, ourits exposure in operating costs and expenses due to a $0.10 change in the Australian dollar/U.S. dollar exchange rate is approximately $145 to $155$115 million for the next twelve months. Based upon the Australian dollar/U.S. dollar exchange rate at March 31, 2020,2021, the currency option contracts outstanding at that date would not materially limit ourthe Company’s net exposure to a $0.10 unfavorable change in the exchange rate to approximately $80 million for the next twelve months.
Other Non-Coal Trading Activities — Diesel Fuel Price Risk
Diesel Fuel Hedges. Previously, wethe Company managed price risk of the diesel fuel used in ourits mining activities through the use of derivatives, primarily swaps. As of March 31, 2020, we2021, the Company did not have any diesel fuel derivative instruments in place. WeThe Company also managemanages the price risk of diesel fuel through the use of cost pass-through contacts with certain customers.
We expectThe Company expects to consume 10075 to 11085 million gallons of diesel fuel during the next twelve months. A $10 per barrel change in the price of crude oil (the primary component of a refined diesel fuel product) would increase or decrease ourits annual diesel fuel costs by approximately $25$20 million based on ourits expected usage.
Item 4. Controls and Procedures.
OurThe Company’s disclosure controls and procedures are designed to, among other things, provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is accumulated and communicated to senior management, including ourits principal executive and financial officers, on a timely basis. OurThe Company’s Chief Executive Officer and Interim Chief Financial Officer have evaluated ourits disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of March 31, 2020,2021, and concluded that such controls and procedures arewere effective to provide reasonable assurance that the desired control objectives were achieved. Additionally, there have been no changes to ourthe Company’s internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, ourits internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We areThe Company is subject to various legal and regulatory proceedings. For a description of ourits significant legal proceedings refer to Note 4. “Discontinued Operations” and Note 18.17. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report, which information is incorporated by reference herein.


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Item 1A. Risk Factors.
We operateThe Company operates in a rapidly changing environment that involves a number of risks. In addition to the risks discussed below,For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in Part I, Item 1A. “Risk Factors” in ourits Annual Report on Form 10-K for the year ended December 31, 20192020 filed with the SEC on February 21, 2020.23, 2021. In addition to the other information set forth in this Quarterly Report, including the information presented in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully consider thosethe risk factors disclosed in the aforementioned filing, which could materially affect the Company’s results of operations, financial condition and liquidity.
Our business, results of operations, financial condition and prospects could be materially and adversely affected by the recent COVID-19 pandemic and the related effects on public health, or by other global events.

Our operations are susceptible to a widespread outbreak of an illness or other public health issue, such as the recent and continuing COVID-19 pandemic, resulting in confirmed cases across the United States, Australia and China, and many additional cases identified in other countries in which we conduct business, or our customers are located. We are also susceptible to other global events, including acts or threats of war or terrorism, international conflicts, political instability and natural disasters. The occurrence of any of these events could have a material adverse effect on our business, results of operations, financial condition and prospects, including our ability to comply with covenants under our debt agreements.50
The COVID-19 pandemic has caused governments around the world, including in the United States and Australia, to implement quarantines, travel bans, shutdowns and “shelter in place” or “stay-at-home” orders, which have significantly restricted the movement of people and goods and have necessitated teleworking by a significant portion of our workforce, including our executive leadership team. These restrictions and measures, and our efforts to act in the best interests of our employees, customers, suppliers, vendors and joint venture and other business partners, have affected and are continuing to affect our business and operations, causing us to modify a number of our normal business practices and may adversely affect our business, financial condition and results of operations in ways that may be material.
Governmental mandates also may require forced shutdowns of our mines and other facilities for extended or indefinite periods. In addition, the COVID-19 pandemic may cause supply chains to be interrupted, slowed or rendered inoperable, and widespread outbreaks in locations significant to our operations could adversely affect our workforce, resulting in serious health issues and absenteeism. If our operations are curtailed, we may need to seek alternate sources of supply for commodities, services and labor, which may be more expensive. Alternate sources may not be available or may result in delays in shipments to our customers, each of which would affect our results of operations. Further, if our customers’ businesses are similarly affected, they might delay, reduce or cancel purchases from us.
In addition, the COVID-19 pandemic has substantially interfered with general commercial activity related to the transportation of coal and our customer base, which could materially and adversely affect our business, financial condition, results of operations, business and prospects. The continuing spread of COVID-19 has contributed to adverse changes in general domestic and global economic conditions and disrupted domestic and international credit markets, which could negatively affect our customers’ ability to pay us as well as our ability to access capital that could in the future negatively affect our liquidity.
Despite our efforts to manage these potential impacts, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic as well as third-party actions taken to contain its spread and mitigate its public health effects. In this regard, there are no comparable recent events that provide guidance as to the effect of the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change and we do not yet know the full extent of the impacts on our business, financial condition, results of operations and prospects, or the global economy as a whole. However, in addition to having a material adverse effect on our business, results of operations, financial condition and prospects, the effects could heighten many of our known risks described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.


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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Dividends
The Company suspended dividends in 2020. As more fully described within “Liquidity and Capital Resources” of Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” during the fourth quarter of 2020, the Company entered into transaction support agreements with its surety bond providers which prohibit the payment of dividends through December 31, 2024, unless otherwise agreed to by the parties to the agreements. Additionally, restrictive covenants in its credit facility and in the indentures governing its senior secured notes also limit the Company’s ability to pay cash dividends.
Share Repurchase Program
OurOn August 1, 2017, the Company announced that its Board of Directors has authorized a share repurchase program as amended, to allow repurchases of up to $1.5 billion$500 million of the then outstanding shares of ourits common stock and/or preferred stock (Repurchase Program). Repurchases may be made from timeOn April 25, 2018, the Company announced that the Board authorized the expansion of the Repurchase Program to time at$1.0 billion. On October 30, 2018, the Company’s discretion. The specific timing, price and sizeCompany announced that the Board authorized an additional expansion of purchases will depend on the share price, general market and economic conditions and other considerations, including compliance with various debt agreements as they may be amended from timeRepurchase Program to time.$1.5 billion. The Repurchase Program does not have an expiration date and may be discontinued at any time. Through March 31, 2020, we have2021, the Company has repurchased 41.5 million shares of ourits common stock for $1,340.3$1,340.3 million, which included commissions paid of $0.8$0.8 million, leaving $160.5$160.5 million available for share repurchase under the Repurchase Program.
The purchases were made in compliance with our debt instruments. Limitations on share repurchases imposed by our debt instruments are discussed in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” WeCompany suspended share repurchases in 2019, and no additionalsimilar to the payment of dividends as described above, the same agreements with its surety bond providers prohibit share repurchases are planned.through December 31, 2024, unless otherwise agreed to by the parties to the agreements. Additionally, restrictive covenants in its credit facility and in the indentures governing its senior secured notes also limit the Company’s ability to repurchase shares. Prior to the suspension, repurchases were made at the Company’s discretion. The specific timing, price and size of purchases depended upon the share price, general market and economic conditions and other considerations, including compliance with various debt agreements in effect at the time the repurchases were made.
Share Relinquishments
WeThe Company routinely allowallows employees to relinquish common stock to pay estimated taxes upon the vesting of restricted stock units and the payout of performance units that are settled in common stock under ourits equity incentive plans. The value of common stock tendered by employees is determined based on the closing price of ourthe Company’s common stock on the dates of the respective relinquishments.
Purchases of Equity Securities
The following table summarizes all share purchases for the three months ended March 31, 2020:2021:
Period
Total
Number of
Shares
Purchased (1)
Average
Price Paid per
Share		Total Number of
Shares Purchased
as Part of Publicly
Announced
Program		Maximum Dollar
Value that May
Yet Be Used to
Repurchase Shares
Under the Publicly
Announced Program
(In millions)
January 1 through January 31, 2021143,465 $2.42 — $160.5 
February 1 through February 28, 202165,244 3.83 — 160.5 
March 1 through March 31, 2021— — — 160.5 
Total208,709 2.86 —  
(1)Includes shares withheld to cover the withholding taxes upon the vesting of equity awards, which are not part of the Repurchase Program.

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Period 
Total
Number of
Shares
Purchased (1)
 
Average
Price Paid per
Share
 
Total Number of
Shares Purchased
as Part of Publicly
Announced
Program
 
Maximum Dollar
Value that May
Yet Be Used to
Repurchase Shares
Under the Publicly
Announced Program
(In millions)
January 1 through January 31, 2020 46,872
 $9.99
 —
 $160.5
February 1 through February 29, 2020 34,147
 8.26
 —
 160.5
March 1 through March 31, 2020 6,563
 2.90
 —
 160.5
Total 87,582
 8.79
 —
  
(1)
Table of Contents
Includes shares withheld to cover the withholding taxes upon the vesting of equity awards, which are not part of the Repurchase Program.
Dividends
The payment of dividends is subject to certain limitations, as set forth in our debt agreements. Such limitations on dividends are discussed in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We are suspending dividends in 2020 and our Board of Directors will continue to evaluate the declaration and payment of dividends in the future. The amount of those dividends, if any, will depend on our results of operations, financial condition, cash requirements, future prospects, any limitations imposed by our debt covenants and other factors that our Board of Directors may deem relevant to such evaluations.
Item 4. Mine Safety Disclosures.
OurPeabody’s “Safety a Way of Lifeand Sustainability Management System” has been designed to set clear and consistent expectations for safety, health and healthenvironmental stewardship across ourthe Company’s business. It aligns to the National Mining Association’s CORESafety® framework and encompasses three fundamental areas: leadership and organization, safety and health risk management and assurance. WePeabody also partnerpartners with other companies and certain governmental agencies to pursue new technologies that have the potential to improve ourits safety performance and provide better safety protection for employees.
WePeabody continually monitor ourmonitors its safety performance and regulatory compliance. The information concerning mine safety violations or other regulatory matters required by SEC regulations is included in Exhibit 95 to this Quarterly Report on Form 10-Q.


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Item 6. Exhibits.
See Exhibit Index at page 5853 of this report.


52
57


EXHIBIT INDEX
The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
Exhibit No.Description of Exhibit
4.8
Indenture dated as of January 29, 2021, by and among the Co-Issuers, Wilmington Trust, National Association, as trustee, and the Company (on a limited basis, to the extent of its obligations specifically set forth therein) (Incorporated by reference to Exhibit No.
Description of Exhibit4.1 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
10.14.9
Indenture dated as of January 29, 2021, by and among Peabody, the guarantors party thereto, and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
4.10
Seventh Supplemental Indenture, dated as of January 8, 2021, by and among the Company and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
4.11
Eighth Supplemental Indenture, dated as of January 29, 2021, by and among the Company and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
4.12
First Supplemental Indenture, dated as of February 3, 2021, by and among the Co-Issuers, Wilmington Trust, National Association, as trustee, and Peabody (on a limited basis, to the extent of its obligations specifically set forth therein) (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on February 5, 2021).
4.13
First Supplemental Indenture, dated as of February 3, 2021, by and among Peabody, the guarantors party thereto, and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on February 5, 2021)
10.1
First Amendment to Amended and Restated Transaction Support Agreement, dated as of February 4, 2020, byJanuary 29, 2021, between Peabody, certain subsidiaries of Peabody, the Revolving Lenders, the Administrative Agent, and among Peabody Energy Corporation, Elliott Investment management L.P., Elliott Associates L.P., and Elliott International, L.P. incorporatedthe Consenting Noteholders (Incorporated by reference to Exhibit 10.1 ofto the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
10.2
Credit Agreement, dated as of January 29, 2021, among the Co-Issuers, as borrowers, Peabody Energy Corporation, as parent, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
10.3
Credit Agreement, dated as of January 29, 2021, among Peabody, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
10.4
Amendment No. 8 to Credit Agreement, dated as of January 29, 2021, among Peabody Energy Corporation, the subsidiaries of Peabody Energy Corporation party thereto as reaffirming parties, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as successor to Goldman Sachs Bank USA in its capacity as administrative agent) (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021).
10.5*
Form of 2021 Service-Based Cash Award Agreement (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed Februaryon March 5, 20202021).
10.2†10.6*
Form of Deferred Stock UnitAmendment No. 1 to 2021 Service-Based Cash Award Agreement under(Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 5, 2021).
10.7*
Employment Transition Agreement, dated March 18, 2021, between Peabody Energy Corporation 2017 Incentive Planand Glenn L. Kellow (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 18, 2021).
10.3†31.1†
Form of Restricted Stock Unit Agreement (Director Level and Above 2020 Off-Cycle Award) under the Peabody Energy Corporation 2017 Incentive Plan
10.4†
Form of Performance Share Units Agreement under the Peabody Energy Corporation 2017 Incentive Plan
10.5†
Form of Restricted Stock Unit Agreement under the Peabody Energy Corporation 2017 Incentive Plan
31.1†
Certification of periodic financial report by the Registrant’s Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2†

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31.2†
Certification of periodic financial report by the Registrant’s Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1†
Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Registrant’s Chief Executive Officer
32.2†
Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Registrant’s Chief Financial Officer
95†
Mine Safety Disclosure required by Item 104 of Regulation S-K
101.INSInline XBRL Instance Document - the instance document does not appear in the interactive data file because XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within theformatted as Inline XBRL document).and contained in Exhibit 101
*These exhibits constitute all management contracts, compensatory plans and arrangements required to be filed as an exhibit to this form pursuant to Item 15(a)(3) and 15(b) of this report.
†Filed herewith.


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PEABODY ENERGY CORPORATION
Date:May 6, 20205, 2021By:/s/ MARK A. SPURBECK
Mark A. Spurbeck
InterimExecutive Vice President and Chief Financial Officer

(On behalf of the registrant and as Principal Financial Officer) 




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