Attached files

file filename
EX-95 - EXHIBIT 95 - PEABODY ENERGY CORPbtu_20180630xex95.htm
EX-32.2 - EXHIBIT 32.2 - PEABODY ENERGY CORPbtu_20180630xex322.htm
EX-32.1 - EXHIBIT 32.1 - PEABODY ENERGY CORPbtu_20180630xex321.htm
EX-31.2 - EXHIBIT 31.2 - PEABODY ENERGY CORPbtu_20180630xex312.htm
EX-31.1 - EXHIBIT 31.1 - PEABODY ENERGY CORPbtu_20180630xex311.htm
EX-10.1 - EXHIBIT 10.1 - PEABODY ENERGY CORPbtu_20180630xex101.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
(Mark One)
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
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
____________________________________________
peabodylogoa15.jpg
PEABODY ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
13-4004153
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
701 Market Street, St. Louis, Missouri
 
63101-1826
(Address of principal executive offices)
 
(Zip Code)
(314) 342-3400
(Registrant’s telephone number, including area code)
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 þ   No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ   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 Securities Exchange Act of 1934. (Check one):
Large accelerated filer þ
 
 
 
 
 
Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
 
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 þ
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 þ No ¨
There were 121.7 million shares of the registrant’s common stock (par value of $0.01 per share) outstanding at July 31, 2018.




TABLE OF CONTENTS
 
Page
 
 




PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Successor
Predecessor
 
Successor
Predecessor
 
Three Months Ended June 30, 2018
 
April 2 through June 30, 2017
April 1, 2017

Six Months Ended June 30, 2018
 
April 2 through June 30, 2017
January 1 through April 1, 2017
 
(Dollars in millions, except per share data)
Revenues
 

 
 
 
 
 
 
 
 
Sales
$
1,137.3

 
$
1,059.6

$

 
$
2,406.4

 
$
1,059.6

$
1,081.4

Other revenues
172.1

 
198.7


 
365.7

 
198.7

244.8

Total revenues
1,309.4

 
1,258.3


 
2,772.1

 
1,258.3

1,326.2

Costs and expenses
 
 
 
 
 

 
 
 
Operating costs and expenses (exclusive of items shown separately below)
946.5

 
927.9


 
2,003.7

 
927.9

950.2

Depreciation, depletion and amortization
163.9

 
148.3


 
333.5

 
148.3

119.9

Asset retirement obligation expenses
13.2

 
11.0


 
25.5

 
11.0

14.6

Selling and administrative expenses
44.1

 
34.7


 
81.1

 
34.7

36.3

Other operating (income) loss:
 
 

 
 
 
 
 
 
Net loss (gain) on disposals
1.6

 
(0.5
)

 
(29.0
)
 
(0.5
)
(22.8
)
Asset impairment

 


 

 

30.5

Income from equity affiliates
(25.2
)
 
(15.7
)

 
(47.2
)
 
(15.7
)
(15.0
)
Operating profit
165.3

 
152.6



404.5

 
152.6

212.5

Interest expense
38.3

 
41.4


 
74.6

 
41.4

32.9

Loss on early debt extinguishment
2.0

 


 
2.0

 


Interest income
(7.0
)
 
(1.5
)

 
(14.2
)
 
(1.5
)
(2.7
)
Net periodic benefit costs, excluding service cost
4.6

 
6.6


 
9.1

 
6.6

14.4

Reorganization items, net

 

585.8

 
(12.8
)
 

627.2

Income (loss) from continuing operations before income taxes
127.4

 
106.1

(585.8
)
 
345.8

 
106.1

(459.3
)
Income tax provision (benefit)
7.4

 
4.7

(266.0
)
 
17.5

 
4.7

(263.8
)
Income (loss) from continuing operations, net of income taxes
120.0

 
101.4

(319.8
)
 
328.3

 
101.4

(195.5
)
Loss from discontinued operations, net of income taxes
(3.6
)
 
(2.7
)
(12.1
)
 
(4.9
)
 
(2.7
)
(16.2
)
Net income (loss)
116.4

 
98.7

(331.9
)
 
323.4

 
98.7

(211.7
)
Less: Series A Convertible Preferred Stock dividends

 
115.1


 
102.5

 
115.1


Less: Net income attributable to noncontrolling interests
2.7

 
3.8


 
0.6

 
3.8

4.8

Net income (loss) attributable to common stockholders
$
113.7

 
$
(20.2
)
$
(331.9
)
 
$
220.3

 
$
(20.2
)
$
(216.5
)
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations:
 
 
 
 
 
 
 
 
 
Basic income (loss) per share
$
0.94

 
$
(0.18
)
$
(17.44
)
 
$
1.78

 
$
(0.18
)
$
(10.93
)
Diluted income (loss) per share
$
0.93

 
$
(0.18
)
$
(17.44
)
 
$
1.76

 
$
(0.18
)
$
(10.93
)
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders:
 
 
 
 
 
 
 
 
 
Basic income (loss) per share
$
0.91

 
$
(0.21
)
$
(18.10
)
 
$
1.74

 
$
(0.21
)
$
(11.81
)
Diluted income (loss) per share
$
0.90

 
$
(0.21
)
$
(18.10
)
 
$
1.72

 
$
(0.21
)
$
(11.81
)
 
 
 
 
 
 
 
 
 
 
Dividends declared per share
$
0.115

 
$

$

 
$
0.230

 
$

$

See accompanying notes to unaudited condensed consolidated financial statements.


1



PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
Successor
Predecessor
 
Successor
Predecessor
 
Three Months Ended June 30, 2018
 
April 2 through June 30, 2017
April 1, 2017
 
Six Months Ended June 30, 2018
 
April 2 through June 30, 2017
January 1 through April 1, 2017
 
(Dollars in millions)
Net income (loss)
$
116.4

 
$
98.7

$
(331.9
)
 
$
323.4

 
$
98.7

$
(211.7
)
Reclassification for realized losses on cash flow hedges (net of respective net tax provision of $0.0, $0.0, $0.0, $0.0, $0.0 and $9.1) included in net income

 


 

 

18.6

Postretirement plans and workers’ compensation obligations (net of respective net tax provision of $0.0, $0.0, $0.0, $0.0, $0.0 and $2.5)

 


 

 

4.4

Foreign currency translation adjustment
(2.2
)
 
0.5


 
(3.0
)
 
0.5

5.5

Other comprehensive (loss) income, net of income taxes
(2.2
)
 
0.5


 
(3.0
)
 
0.5

28.5

Comprehensive income (loss)
114.2

 
99.2

(331.9
)
 
320.4

 
99.2

(183.2
)
Less: Series A Convertible Preferred Stock dividends

 
115.1


 
102.5

 
115.1


Less: Net income attributable to noncontrolling interests
2.7

 
3.8


 
0.6

 
3.8

4.8

Comprehensive income (loss) attributable to common stockholders
$
111.5

 
$
(19.7
)
$
(331.9
)
 
$
217.3

 
$
(19.7
)
$
(188.0
)

See accompanying notes to unaudited condensed consolidated financial statements.


2



PEABODY ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(Unaudited)
 
 
 
June 30, 2018
 
December 31, 2017
 
(Amounts in millions, except per share data)
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
1,451.7

 
$
1,012.1

Restricted cash

 
40.1

Accounts receivable, net of allowance for doubtful accounts of $4.8 at June 30, 2018 and $4.6 at December 31, 2017
503.0

 
552.1

Inventories
290.5

 
291.3

Other current assets
223.2

 
294.4

Total current assets
2,468.4

 
2,190.0

Property, plant, equipment and mine development, net
4,945.7

 
5,111.9

Collateral arrangements

 
323.1

Investments and other assets
296.1

 
470.6

Deferred income taxes
85.5

 
85.6

Total assets
$
7,795.7

 
$
8,181.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Current portion of long-term debt
$
45.0

 
$
42.1

Accounts payable and accrued expenses
1,038.9

 
1,202.8

Total current liabilities
1,083.9

 
1,244.9

Long-term debt, less current portion
1,358.0

 
1,418.7

Deferred income taxes
5.1

 
5.4

Asset retirement obligations
672.6

 
657.0

Accrued postretirement benefit costs
726.8

 
730.0

Other noncurrent liabilities
404.0

 
469.4

Total liabilities
4,250.4

 
4,525.4

Stockholders’ equity
 
 
 
Series A Convertible Preferred Stock — $0.01 per share par value; no shares authorized, issued or outstanding as of June 30, 2018 and 50.0 shares authorized, 30.0 shares issued and 13.5 shares outstanding as of December 31, 2017

 
576.0

Preferred Stock — $0.01 per share par value; 100.0 shares authorized, no shares issued or outstanding as of June 30, 2018 and 50.0 shares authorized, no shares issued or outstanding as of December 31, 2017

 

Series Common Stock — $0.01 per share par value; 50.0 shares authorized, no shares issued or outstanding as of June 30, 2018 or December 31, 2017

 

Common Stock — $0.01 per share par value; 450.0 shares authorized, 137.7 shares issued and 122.3 shares outstanding as of June 30, 2018 and 111.8 shares issued and 105.2 shares outstanding as of December 31, 2017
1.4

 
1.0

Additional paid-in capital
3,285.7

 
2,590.3

Treasury stock, at cost — 15.4 and 5.8 common shares as of June 30, 2018 and December 31, 2017
(564.9
)
 
(175.9
)
Retained earnings
781.3

 
613.6

Accumulated other comprehensive (loss) income
(1.6
)
 
1.4

Peabody Energy Corporation stockholders’ equity
3,501.9

 
3,606.4

Noncontrolling interests
43.4

 
49.4

Total stockholders’ equity
3,545.3

 
3,655.8

Total liabilities and stockholders’ equity
$
7,795.7

 
$
8,181.2

See accompanying notes to unaudited condensed consolidated financial statements.


3



PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Successor
Predecessor
 
 
Six Months Ended June 30, 2018
 
April 2 through June 30, 2017
January 1 through April 1, 2017
 
 
(Dollars in millions)
Cash Flows From Operating Activities
 
 
 
 
 
Net income (loss)
 
$
323.4

 
$
98.7

$
(211.7
)
Loss from discontinued operations, net of income taxes
 
4.9

 
2.7

16.2

Income (loss) from continuing operations, net of income taxes
 
328.3

 
101.4

(195.5
)
Adjustments to reconcile income (loss) from continuing operations, net of income taxes to net cash provided by (used in) operating activities:
 
 
 
 
 
Depreciation, depletion and amortization
 
333.5

 
148.3

119.9

Noncash coal inventory revaluation
 

 
67.3


Noncash interest expense, net
 
8.1

 
4.2

0.5

Deferred income taxes
 
0.5

 
(1.6
)
(252.2
)
Noncash share-based compensation
 
16.5

 
7.0

1.9

Asset impairment
 

 

30.5

Net gain on disposals
 
(29.0
)
 
(0.5
)
(22.8
)
Income from equity affiliates
 
(47.2
)
 
(15.7
)
(15.0
)
Foreign currency option contracts
 
6.4

 
(9.3
)

Reclassification from other comprehensive earnings for terminated hedge contracts
 

 

27.6

Noncash reorganization items, net
 
(12.8
)
 

(485.4
)
Changes in current assets and liabilities:
 
 
 
 
 
Accounts receivable
 
104.4

 
(84.4
)
159.3

Inventories
 
0.9

 
(60.0
)
(47.2
)
Other current assets
 
(38.2
)
 
(17.1
)
0.2

Accounts payable and accrued expenses
 
(40.1
)
 
(118.5
)
(65.5
)
Collateral arrangements
 
323.1

 
49.7

(66.4
)
Asset retirement obligations
 
9.2

 
4.6

10.2

Workers’ compensation obligations
 
(0.6
)
 
(1.2
)
(3.1
)
Postretirement benefit obligations
 
(3.1
)
 
(0.7
)
0.8

Pension obligations
 
(46.6
)
 
(2.1
)
5.4

Other, net
 
5.9

 
(5.1
)
(8.0
)
Net cash provided by (used in) continuing operations
 
919.2

 
66.3

(804.8
)
Net cash used in discontinued operations
 
(3.8
)
 
(0.6
)
(8.2
)
Net cash provided by (used in) operating activities
 
915.4

 
65.7

(813.0
)
Cash Flows From Investing Activities
 
 
 
 
 
Additions to property, plant, equipment and mine development
 
(125.6
)
 
(45.9
)
(32.8
)
Changes in accrued expenses related to capital expenditures
 
(0.9
)
 
1.6

(1.4
)
Federal coal lease expenditures
 
(0.5
)
 

(0.5
)
Proceeds from disposal of assets
 
52.6

 
2.5

24.3

Contributions to joint ventures
 
(243.8
)
 
(96.3
)
(95.4
)
Distributions from joint ventures
 
236.8

 
95.5

90.5

Advances to related parties
 
(4.6
)
 
(0.9
)
(0.4
)
Repayments of loans from related parties
 
70.2

 
26.5

31.1

Other, net
 
(2.2
)
 
(1.5
)
(0.3
)
Net cash (used in) provided by investing activities
 
(18.0
)
 
(18.5
)
15.1



4



PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
 
 
Successor
Predecessor
 
 
Six Months Ended June 30, 2018
 
April 2 through June 30, 2017
January 1 through April 1, 2017
 
 
(Dollars in millions)
Cash Flows From Financing Activities
 
 
 
 
 
Proceeds from long-term debt
 

 

1,000.0

Repayments of long-term debt
 
(63.5
)
 
(23.8
)
(2.1
)
Payment of deferred financing costs
 
(1.4
)
 

(45.4
)
Common stock repurchases
 
(374.5
)
 


Repurchases of employee common stock relinquished for tax withholding
 
(14.5
)
 

(0.1
)
Dividends paid
 
(29.3
)
 


Distributions to noncontrolling interests
 
(6.6
)
 
(6.4
)
(0.1
)
Other, net
 
0.1

 


Net cash (used in) provided by financing activities
 
(489.7
)
 
(30.2
)
952.3

Net change in cash, cash equivalents and restricted cash
 
407.7

 
17.0

154.4

Cash, cash equivalents and restricted cash at beginning of period (1)
 
1,070.2

 
1,095.6

941.2

Cash, cash equivalents and restricted cash at end of period (2)
 
$
1,477.9

 
$
1,112.6

$
1,095.6

 
 
 
 
 
 
 
 
 
 
 
 
(1) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at beginning of period”:
Cash and cash equivalents
 
$
1,012.1

 
 
 
Restricted cash
 
40.1

 
 
 
Restricted cash included in “Investments and other assets”
 
18.0

 
 
 
Cash, cash equivalents and restricted cash at beginning of period
 
$
1,070.2

 
 
 
 
 
 
 
 
 
(2) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at end of period”:
Cash and cash equivalents
 
$
1,451.7

 
 
 
Restricted cash included in “Investments and other assets”
 
26.2

 
 
 
Cash, cash equivalents and restricted cash at end of period
 
$
1,477.9

 
 
 


See accompanying notes to unaudited condensed consolidated financial statements.


5



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

 
Peabody Energy Corporation Stockholders’ Equity
 
 
 
 
 
Series A Convertible Preferred Stock
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 
(Dollars in millions)
December 31, 2017
$
576.0

 
$
1.0

 
$
2,590.3

 
$
(175.9
)
 
$
613.6

 
$
1.4

 
$
49.4

 
$
3,655.8

Impact of adoption of Accounting Standards Update 2014-09








(22.5
)





(22.5
)
Net income








322.8




0.6


323.4

Dividends declared




0.8




(30.1
)





(29.3
)
Foreign currency translation adjustment










(3.0
)



(3.0
)
Series A Convertible Preferred Stock conversions
(576.0
)

0.4


678.1




(102.5
)






Share-based compensation for equity-classified awards




16.5










16.5

Common stock repurchases






(374.5
)







(374.5
)
Repurchase of employee common stock relinquished for tax withholding






(14.5
)







(14.5
)
Distributions to noncontrolling interests












(6.6
)

(6.6
)
June 30, 2018
$


$
1.4


$
3,285.7


$
(564.9
)

$
781.3


$
(1.6
)

$
43.4


$
3,545.3


See accompanying notes to unaudited condensed consolidated financial statements.



6



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 an unincorporated 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, 2017. In the opinion of management, these financial statements reflect all normal, recurring adjustments necessary for a fair presentation and certain prior year amounts have been reclassified for consistency with the current period presentation. As discussed below in Note 2. “Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented,” prior year amounts of net periodic benefit costs, excluding the service cost for benefits earned have been reclassified to conform with the new standard. Balance sheet information presented herein as of December 31, 2017 has been derived from the Company’s audited consolidated balance sheet at that date. The Company’s results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2018.
Plan of Reorganization and Emergence from Chapter 11 Cases
On April 13, 2016, PEC and a majority of its wholly owned domestic subsidiaries, as well as one international subsidiary in Gibraltar (collectively with PEC, the Debtors), filed voluntary petitions (the Bankruptcy Petitions) under Chapter 11 of Title 11 of the U.S. Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Eastern District of Missouri (the Bankruptcy Court). The Debtors’ Chapter 11 cases (the Chapter 11 Cases) were jointly administered under the caption In re Peabody Energy Corporation, et al., Case No. 16-42529.
For periods subsequent to filing the Bankruptcy Petitions, the Company applied the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 852, “Reorganizations”, in preparing its consolidated financial statements. ASC 852 requires that financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses, realized gains and losses and provisions for losses that were realized or incurred in the bankruptcy proceedings were recorded in “Reorganization items, net” in the unaudited condensed consolidated statements of operations.


7


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

The Company's reorganization items consisted of the following for the periods presented below:
 
Predecessor
 
Successor
 
 
Predecessor
 
April 1, 2017
 
Six Months Ended June 30, 2018
 
 
January 1 through April 1, 2017
 
(Dollars in millions)
Gain on settlement of claims (1) (2)
$
(3,031.2
)
 
$
(12.8
)
 
 
$
(3,031.2
)
Fresh start adjustments, net (1)
3,363.1

 

 
 
3,363.1

Fresh start income tax adjustments, net (1)
253.9

 

 
 
253.9

Professional fees (3)

 

 
 
42.5

Accounts payable settlement gains

 

 
 
(0.7
)
Interest income

 

 
 
(0.4
)
Reorganization items, net
$
585.8

 
$
(12.8
)
 
 
$
627.2

 
 
 
 
 
 
 
Cash paid for "Reorganization items, net"
$
14.4

 
$

 
 
$
45.8

(1) 
Refer to Note 2. “Emergence from the Chapter 11 Cases and Fresh Start Reporting” in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further information related to the adjustments recorded in the periods April 1, 2017 and January 1 through April 1, 2017.
(2) 
“Reorganization items, net” for the six months ended June 30, 2018 consisted of settlement gains related to certain unsecured claims.
(3) 
Professional fees are only those that were directly related to the reorganization including, but not limited to, fees associated with advisors to the Debtors, the unsecured creditors' committee and certain other secured and unsecured creditors.
On March 17, 2017, the Bankruptcy Court entered an order, Docket No. 2763 (the Confirmation Order), confirming the Debtors’ Second Amended Joint Plan of Reorganization of Debtors and Debtors in Possession (as further modified, the Plan). On April 3, 2017 (the Effective Date), the Debtors satisfied the conditions to effectiveness set forth in the Plan, the Plan became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases.
On the Effective Date, in accordance with ASC 852, the Company applied fresh start reporting which requires the Company to allocate its reorganization value to the fair value of assets and liabilities in conformity with the guidance for the acquisition method of accounting for business combinations. The Company was permitted to use fresh start reporting because (i) the holders of existing voting shares of the Predecessor (as defined below) company received less than 50% of the voting shares of the emerging entity upon reorganization and (ii) the reorganization value of the Company’s assets immediately prior to Plan confirmation was less than the total of all postpetition liabilities and allowed claims.
Upon adoption of fresh start reporting, the Company became a new entity for financial reporting purposes, reflecting the Successor (as defined below) capital structure. As a result, a new accounting basis in the identifiable assets and liabilities assumed was established with no retained earnings or accumulated other comprehensive income (loss) for financial reporting purposes. The Company selected an accounting convenience date of April 1, 2017 for purposes of applying fresh start reporting as the activity between the convenience date and the Effective Date did not result in a material difference in the results. References to “Successor” in the financial statements and accompanying footnotes are in reference to reporting dates on or after April 2, 2017; references to “Predecessor” in the financial statements and accompanying footnotes are in reference to reporting dates through April 1, 2017 which includes the impact of the Plan provisions and the application of fresh start reporting. As such, the Company’s financial statements for the Successor will not be comparable in many respects to its financial statements for periods prior to the adoption of fresh start reporting and prior to the accounting for the effects of the Plan. For further information on the Plan and fresh start reporting, see Note 2. “Emergence from the Chapter 11 Cases and Fresh Start Reporting” in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
In connection with fresh start reporting, the Company made certain prospective accounting policy elections that impact the Successor periods presented herein. The Company now classifies the amortization associated with its asset retirement obligation assets within “Depreciation, depletion and amortization” in its consolidated statements of operations, rather than within “Asset retirement obligation expenses”, as in Predecessor periods. With respect to its accrued postretirement benefit and pension obligations, the Company now records amounts attributable to prior service cost and actuarial valuation changes, as applicable, currently in earnings rather than recording such amounts within accumulated other comprehensive income and amortizing to expense over the applicable time periods.


8


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
Revenue Recognition. In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606),” that requires recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. The FASB has also issued several updates to ASU 2014-09. On January 1, 2018, the Company adopted ASU 2014-09 using the modified retrospective method. The new standard provides a single principles-based, five-step model to be applied to all contracts with customers, which steps are to (1) identify the contract(s) with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when each performance obligation is satisfied. The Company recognized the cumulative effect of initially applying ASU 2014-09 as an adjustment to the opening balance of retained earnings. Revenue previously recognized under contracts completed prior to January 1, 2018 was not impacted by adoption and comparative information has not been restated. The impact of the adoption of ASU 2014-09 is expected to be immaterial to the Company’s results of operations, financial condition and cash flows on an ongoing basis.
The majority of the Company’s coal sales revenue will continue to be recognized as title and risk of loss transfer to the customer at mines and ports when coal is loaded to the transportation source, as further described in Note 3. “Revenue Recognition.” The impact of the adoption of ASU 2014-09 was limited to a long-term contract in which consideration related to the reimbursement of certain post-mining costs was recognized as costs were incurred, which differs in timing compared to the five-step model described above. The cumulative effects to the Company’s consolidated January 1, 2018 balance sheet were to reduce retained earnings for the amount of revenue that would have been deferred and to reduce long-term customer receivables, as noted in the table below:
 
Balance at
December 31, 2017
 
Adjustments due to ASU 2014-09
 
Balance at
January 1, 2018
 
(Dollars in millions)
ASSETS
 
 
 
 
 
Investments and other assets
$
470.6

 
$
(22.5
)
 
$
448.1

 
 
 
 
 
 
STOCKHOLDERS’ EQUITY
 
 
 
 
 
Retained earnings
613.6

 
(22.5
)
 
591.1

ASU 2014-09 also requires entities to disclose sufficient qualitative and quantitative information to enable financial statement users to understand the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. Such disclosures are included in Note 3. “Revenue Recognition.”
Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued ASU 2016-15 to amend the classification of certain cash receipts and cash payments in the statement of cash flows to reduce diversity in practice. The Company retrospectively adopted all the provisions of this new standard in the first quarter of 2018. The classification requirements under the new guidance are either consistent with the Company’s current practices or are not applicable to its activities, and as such, did not have a material impact on classification of cash receipts and cash payments in the Company’s unaudited condensed consolidated statements of cash flows.
Restricted Cash. In November 2016, the FASB issued ASU 2016-18, which reduces diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The Company retrospectively adopted all the provisions of this new accounting standard in the first quarter of 2018 and as a result of the new guidance, the Company will combine restricted cash with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on its statements of cash flows. The amendments also require a company to disclose information about the nature of the restrictions and amounts described as restricted cash and restricted cash equivalents. Such disclosures are included in Note 17. “Financial Instruments and Other Guarantees.” Further, as cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the Company reconciled these amounts to the total shown in the statement of cash flows in a tabular format within the Company’s unaudited condensed consolidated statements of cash flows.


9


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

Compensation - Retirement Benefits. In March 2017, the FASB issued ASU 2017-07, which requires employers that sponsor defined benefit pension and other postretirement plans to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest costs, expected return on plan assets, amortization of prior service cost or credits and actuarial gains and losses) separately and outside a subtotal of operating income on a retrospective basis. The guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component will be applied prospectively. The Company adopted all the provisions of this new accounting standard in the first quarter of 2018. While adoption of this guidance did impact financial statement presentation, it did not materially impact the Company’s results of operations, financial condition or cash flows. The retrospective impacts to the unaudited condensed consolidated statements of operations were as follows:
 
Successor
 
April 2 through June 30, 2017
 
Before Application of Accounting Guidance
 
Adjustment
 
After Application of Accounting Guidance
 
(Dollars in millions)
Results of Operations Amounts
 
 
 
 
 
Operating costs and expenses
$
934.8

 
$
(6.9
)
 
$
927.9

Selling and administrative expenses
34.4

 
0.3

 
34.7

Operating profit
146.0

 
6.6

 
152.6

Net periodic benefit costs, excluding service cost

 
6.6

 
6.6

Income from continuing operations before income taxes
106.1

 

 
106.1

 
Predecessor
 
January 1 through April 1, 2017
 
Before Application of Accounting Guidance
 
Adjustment
 
After Application of Accounting Guidance
 
(Dollars in millions)
Results of Operations Amounts
 
 
 
 
 
Operating costs and expenses
$
963.7

 
$
(13.5
)
 
$
950.2

Selling and administrative expenses
37.2

 
(0.9
)
 
36.3

Operating profit
198.1

 
14.4

 
212.5

Net periodic benefit costs, excluding service cost

 
14.4

 
14.4

Loss from continuing operations before income taxes
(459.3
)
 

 
(459.3
)
Compensation - Stock Compensation. In May 2017, the FASB issued ASU 2017-09 to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Company prospectively applied all the provisions of this new accounting standard on January 1, 2018, and there was no material impact to the Company’s financial statements.


10


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

Accounting Standards Not Yet Implemented
Leases. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will require a lessee to recognize on its balance sheet a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for leases with lease terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. Additional qualitative disclosures along with specific quantitative disclosures will also be required. The new guidance will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (January 1, 2019 for the Company). In July 2018, the FASB issued the new transition method and practical expedient to simplify the application of the new leasing standard. Under the new transition method, comparative periods presented in the financial statements in the period of adoption will not need to be restated. Instead, a Company would initially apply the new lease requirements at the effective date, and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company would continue to report comparative periods presented in the financial statements in the period of adoption under current GAAP and provide the applicable required disclosures for such periods. The new practical expedient allows lessors to avoid separating lease and associated nonlease components within a contract if certain criteria are met. If elected, lessors will be able to aggregate nonlease components that otherwise would be accounted for under the new revenue standard with the associated lease component if the following conditions are met (1) the timing and pattern of transfer for the nonlease component and the associated lease component are the same and (2) the stand-alone lease component would be classified as an operating lease if accounted for separately. The Company intends to elect some of the available practical expedients on adoption.
The Company is in the process of implementing key systems functionality and internal control processes in order to comply with the new reporting requirements of ASU 2016-02 and expects, through the recognition of significant lease assets and lease liabilities, a material impact on its consolidated balance sheets (dependent upon leases outstanding at adoption date) and related disclosures. ASU 2016-02 is not expected to have a material impact on the Company’s results of operations or its cash flows.
Financial Instruments - Credit Losses. In June 2016, the FASB issued ASU 2016-13 related to the measurement of credit losses on financial instruments. The pronouncement replaces the incurred loss methodology to record credit losses with a methodology that reflects the expected credit losses for financial assets not accounted for at fair value with gains and losses recognized through net income. This standard is effective for fiscal years beginning after December 15, 2019 (January 1, 2020 for the Company) and interim periods therein, with early adoption permitted for fiscal years, and interim periods therein, beginning after December 15, 2018. The Company is in the process of evaluating the impact that the adoption of this guidance will have on its results of operations, financial condition, cash flows and financial statement presentation.
Derivatives and Hedging. In August 2017, the FASB issued ASU 2017-12 to amend the hedge accounting rules to simplify the application of hedge accounting guidance and better align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance expands the ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. The new guidance will be effective for fiscal years beginning after December 15, 2018 (January 1, 2019 for the Company) and interim periods therein, with early adoption permitted. The amendments to cash flow and net investment hedge relationships that exist on the date of adoption will be applied using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. The Company is currently evaluating the impact that the adoption of this guidance will have on its results of operations, financial condition, cash flows and financial statement presentation.
Leases - Land Easements. In January 2018, the FASB issued ASU 2018-01 to provide an optional transition practical expedient to not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under current leasing guidance. An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date that the entity adopts Topic 842. An entity that does not elect this practical expedient should evaluate all existing or expired land easements in connection with the adoption of the new leases requirements in Topic 842 to assess whether they meet the definition of a lease. The amendments in this update affect the amendments in ASU 2016-02. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in ASU 2016-02. The Company is in the process of evaluating the impact that the adoption of this guidance will have on its results of operations, financial condition, cash flows and financial statement presentation.


11


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” (ASC 606), which the Company adopted on January 1, 2018, using the modified retrospective approach. See Note 2. “Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented” for further discussion of the adoption, including the impact on the Company’s opening balance sheet.
Sales
The majority of the Company’s revenue is derived from the sale of coal under long-term coal supply agreements (those with initial terms of one year or longer and which often include price reopener and/or extension provisions) and contracts with terms of less than one year, including sales made on a spot basis. The Company’s revenue from coal sales is realized and earned when risk of loss passes to the customer. Under the typical terms of the Company’s coal supply agreements, title and risk of loss transfer to the customer at the mine or port, where coal is loaded to the transportation source(s) that serves each of the Company’s mines. The Company incurs certain “add-on” taxes and fees on coal sales. Reported coal sales include taxes and fees charged by various federal and state governmental bodies and the freight charged on destination customer contracts.
The Company’s U.S. operating platform primarily sells thermal coal to electric utilities in the U.S. under long-term contracts, with a portion sold into the seaborne markets as conditions warrant. A significant portion of the coal production from the U.S. mining segments is sold under long-term supply agreements, and customers of those segments continue to pursue long-term sales agreements in recognition of the importance of reliability, service and predictable coal prices to their operations. The terms of coal supply agreements result from competitive bidding and extensive negotiations with customers. Consequently, the terms of those agreements may vary 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.
The Company's Australian operating platform is primarily export focused with customers spread across several countries, while a portion of the metallurgical and thermal coal is 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. A majority of these sales are executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing periodically. Industry commercial practice, and the 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. The portion of volume priced on a shorter-term basis and index linked basis has increased in recent years. In the case of periodically negotiated pricing, the Company may deliver coal under provisional pricing until a final agreed-upon price is determined. The resulting make-whole settlements are recognized when reasonably estimable.
Contract pricing is set forth on a per ton basis, and revenue is generally recorded as the product of price and volume delivered. Many of the Company’s coal supply agreements contain provisions that permit the parties to adjust the contract price upward or downward at specified times. These contract prices may be adjusted based on inflation or deflation and/or changes in the factors affecting the cost of producing coal, such as taxes, fees, royalties and changes in the laws regulating the mining, production, sale or use of coal. In a limited number of contracts, failure of the parties to agree on a price under those provisions may allow either party to terminate the contract. The Company sometimes experiences a reduction in coal prices in new long-term coal supply agreements replacing some of its expiring contracts. Coal supply agreements also typically contain force majeure provisions allowing temporary suspension of performance by the Company or the customer during the duration of specified events beyond the control of the affected party. Most of the coal supply agreements contain provisions requiring the Company to deliver coal meeting quality thresholds for certain characteristics such as Btu, sulfur content, ash content, grindability and ash fusion temperature. Failure to meet these specifications could result in economic penalties, including price adjustments, the rejection of deliveries or termination of the contracts. Moreover, some of these agreements allow the Company’s customers to terminate their contracts in the event of changes in regulations affecting the industry that restrict the use or type of coal permissible at the customer’s plant or increase the price of coal beyond specified limits.


12


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

Other Revenues
"Other revenues" may include net revenues from coal trading activities as discussed in Note 7. “Coal Trading,” as well as coal sales revenues that were derived from the Company’s mining operations and sold through the Company’s coal trading business. Also included are revenues from customer contract-related payments, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals. Royalty income generally results from the lease or sublease of mineral rights to third parties, with payments based upon a percentage of the selling price or an amount per ton of coal produced.
Accounts Receivable
The timing of revenue recognition, billings and cash collections results in accounts receivable from customers. Customers are invoiced as coal is shipped or at periodic intervals in accordance with contractual terms. Invoices typically include customary adjustments for the resolution of price variability related to prior shipments, such as coal quality thresholds. Payments are generally received within thirty days of invoicing. “Accounts receivable, net” at June 30, 2018 and December 31, 2017 consisted of the following:
 
June 30, 2018
 
December 31, 2017
 
(Dollars in millions)
Trade receivables, net
$
412.7

 
$
504.2

Miscellaneous receivables, net
90.3

 
47.9

Accounts receivable, net
$
503.0

 
$
552.1

Trade receivables, net presented above have been shown net of reserves of $0.5 million and $0.3 million as of June 30, 2018 and December 31, 2017, respectively. Miscellaneous receivables, net presented above have been shown net of reserves of $4.3 million as of both June 30, 2018 and December 31, 2017. Included in “Operating costs and expenses” in the unaudited condensed consolidated statements of operations was a charge for doubtful trade receivables of $0.2 million and $4.5 million for the six months ended June 30, 2018 and the period April 2 through June 30, 2017, respectively. No charges for doubtful accounts were recognized during the three months ended June 30, 2018 or the period January 1 through April 1, 2017.
The Company also records long-term customer receivables related to the reimbursement of certain post-mining costs which are included within “Investments and other assets” in the accompanying condensed consolidated balance sheets. The balance of such receivables was $47.5 million and $139.3 million as of June 30, 2018 and December 31, 2017, respectively. The balance was adjusted in connection with the adoption of ASC 606, as described in Note 2. “Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented.” Also in connection with the adoption of ASC 606, the Company prospectively records a portion of the consideration received as “Interest income” rather than “Other revenues” in the accompanying unaudited condensed consolidated statements of operations, due to the embedded financing element within the related contract. Interest income related to these arrangements amounted to $2.1 million and $4.2 million during the three and six months ended June 30, 2018, respectively.


13


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 Australian 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.
 
Successor
 
Three Months Ended June 30, 2018
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
Thermal coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
$
321.5

 
$
196.9

 
$
131.1

 
$

 
$
38.5

 
$

 
$

 
$
688.0

Export

 
0.6

 
4.3

 

 
228.7

 

 

 
233.6

Total thermal
321.5

 
197.5

 
135.4

 

 
267.2

 

 

 
921.6

Metallurgical coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Export

 

 

 
417.2

 

 

 

 
417.2

Total metallurgical

 

 

 
417.2

 

 

 

 
417.2

Other

 

 
4.2

 
0.3

 
0.2

 
10.0

 
(44.1
)
 
(29.4
)
Total revenues
$
321.5

 
$
197.5

 
$
139.6

 
$
417.5

 
$
267.4

 
$
10.0

 
$
(44.1
)
 
$
1,309.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Successor
 
April 2 through June 30, 2017
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
Thermal coal
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Domestic
$
361.1

 
$
194.8

 
$
123.8

 
$

 
$
28.1

 
$

 
$

 
$
707.8

Export

 

 

 

 
210.9

 

 

 
210.9

Total thermal
361.1

 
194.8

 
123.8

 

 
239.0

 

 

 
918.7

Metallurgical coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Export

 

 

 
287.8

 

 

 

 
287.8

Total metallurgical

 

 

 
287.8

 

 

 

 
287.8

Other
4.3

 
0.1

 
1.6

 

 
0.2

 
5.2

 
40.4

 
51.8

Total revenues
$
365.4

 
$
194.9

 
$
125.4

 
$
287.8

 
$
239.2

 
$
5.2

 
$
40.4

 
$
1,258.3



14


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

 
Successor
 
Six Months Ended June 30, 2018
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
Thermal coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
$
710.7

 
$
397.8

 
$
261.4

 
$

 
$
74.6

 
$

 
$

 
$
1,444.5

Export

 
1.3

 
12.3

 

 
393.6

 

 

 
407.2

Total thermal
710.7

 
399.1

 
273.7

 

 
468.2

 

 

 
1,851.7

Metallurgical coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Export

 

 

 
882.5

 

 

 

 
882.5

Total metallurgical

 

 

 
882.5

 

 

 

 
882.5

Other
0.1

 
0.1

 
9.6

 
1.2

 
0.6

 
30.1

 
(3.8
)
 
37.9

Total revenues
$
710.8

 
$
399.2

 
$
283.3

 
$
883.7

 
$
468.8

 
$
30.1

 
$
(3.8
)
 
$
2,772.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Predecessor
 
January 1 through April 1, 2017
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
Thermal coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
$
394.3

 
$
193.2

 
$
133.5

 
$

 
$
27.3

 
$

 
$

 
$
748.3

Export

 

 

 

 
197.2

 

 

 
197.2

Total thermal
394.3

 
193.2

 
133.5

 

 
224.5

 

 

 
945.5

Metallurgical coal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Export

 

 

 
324.6

 

 

 

 
324.6

Total metallurgical

 

 

 
324.6

 

 

 

 
324.6

Other

 

 
16.2

 
4.3

 
0.3

 
15.0

 
20.3

 
56.1

Total revenues
$
394.3

 
$
193.2

 
$
149.7

 
$
328.9

 
$
224.8

 
$
15.0

 
$
20.3

 
$
1,326.2



15


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

Revenue by contract duration was as follows:
 
Successor
 
Three Months Ended June 30, 2018
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
One year or longer
$
310.8

 
$
194.1

 
$
126.5

 
$
255.1

 
$
173.2

 
$

 
$

 
$
1,059.7

Less than one year
10.7

 
3.4

 
8.9

 
162.1

 
94.0

 

 

 
279.1

Other

 

 
4.2

 
0.3

 
0.2

 
10.0

 
(44.1
)
 
(29.4
)
Total revenues
$
321.5

 
$
197.5

 
$
139.6

 
$
417.5

 
$
267.4

 
$
10.0

 
$
(44.1
)
 
$
1,309.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Successor
 
April 2 through June 30, 2017
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
One year or longer
$
326.7

 
$
187.3

 
$
122.7

 
$
253.4

 
$
135.6

 
$

 
$

 
$
1,025.7

Less than one year
34.4

 
7.5

 
1.1

 
34.4

 
103.4

 

 

 
180.8

Other
4.3

 
0.1

 
1.6

 

 
0.2

 
5.2

 
40.4

 
51.8

Total revenues
$
365.4

 
$
194.9

 
$
125.4

 
$
287.8

 
$
239.2

 
$
5.2

 
$
40.4

 
$
1,258.3

 
Successor
 
Six Months Ended June 30, 2018
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
One year or longer
$
654.2

 
$
381.7

 
$
253.8

 
$
652.6

 
$
350.5

 
$

 
$

 
$
2,292.8

Less than one year
56.5

 
17.4

 
19.9

 
229.9

 
117.7

 

 

 
441.4

Other
0.1

 
0.1

 
9.6

 
1.2

 
0.6

 
30.1

 
(3.8
)
 
37.9

Total revenues
$
710.8

 
$
399.2

 
$
283.3

 
$
883.7

 
$
468.8

 
$
30.1

 
$
(3.8
)
 
$
2,772.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Predecessor
 
January 1 through April 1, 2017
 
Powder River Basin Mining
 
Midwestern U.S. Mining
 
Western U.S. Mining
 
Australian Metallurgical Mining
 
Australian Thermal Mining
 
Trading and Brokerage
 
Corporate and Other (1)
 
Consolidated
 
(Dollars in millions)
One year or longer
$
357.7

 
$
193.2

 
$
129.3

 
$
240.6

 
$
134.1

 
$

 
$

 
$
1,054.9

Less than one year
36.6

 

 
4.2

 
84.0

 
90.4

 

 

 
215.2

Other

 

 
16.2

 
4.3

 
0.3

 
15.0

 
20.3

 
56.1

Total revenues
$
394.3

 
$
193.2

 
$
149.7

 
$
328.9

 
$
224.8

 
$
15.0

 
$
20.3

 
$
1,326.2

(1) 
Corporate and Other revenue includes unrealized gains and losses related to mark-to-market activity from financial contract hedge activities intended to secure pricing related to certain coal sales contracts. During the three and six months ended June 30, 2018, such net unrealized losses were $48.1 million and $9.5 million, respectively. During the periods April 2 through June 30, 2017 and January 1 through April 1, 2017, such net unrealized gains were $9.4 million and $16.6 million, respectively. When such gains and losses are realized in connection with recognition of the underlying transaction, they are reclassified to realized gains and losses and are then reflected in Trading and Brokerage revenue (realized losses of $9.6 million and $29.5 million during the three and six months ended June 30, 2018, respectively, and realized losses of $7.7 million and $11.1 million during the periods April 2 through June 30, 2017 and January 1 through April 1, 2017, respectively). At June 30, 2018 and December 31, 2017, the financial contracts’ fair values resulted in net liabilities of $48.4 million and $38.9 million, respectively. Assets and liabilities related to the financial contracts were deemed Level 2 according to the U.S. GAAP fair value hierarchy as the valuations are corroborated by the use of market-based pricing.


16


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

Committed Revenue From Contracts With Customers
The Company expects to recognize revenue subsequent to June 30, 2018 of approximately $6.3 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at June 30, 2018. Approximately 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 Australian metallurgical and seaborne thermal coal contracts where pricing is negotiated or settled quarterly or annually.
(4)    Discontinued Operations
Discontinued operations include certain former Australian Thermal Mining and Midwestern U.S. 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).
Summarized Results of Discontinued Operations
Results from discontinued operations were as follows during the periods presented below:
 
 
Successor
Predecessor
 
Successor
Predecessor
 
 
Three Months Ended June 30, 2018
 
April 2 through June 30, 2017
April 1