Segment Information

The Company’s reportable business segments are based on two distinct lines of business, metallurgical and thermal, and may include a number of mine complexes. The Company manages its coal sales by market, not by individual mining complex. Geology, coal transportation routes to customers, and regulatory environments also have a significant impact on the Company’s marketing and operations management. Mining operations are evaluated based on Adjusted EBITDAR, per-ton cash operating costs (defined as including all mining costs except depreciation, depletion, amortization, accretion on asset retirement obligations, and pass-through transportation expenses), and on other non-financial measures, such as safety and environmental performance. Adjusted EBITDAR is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from Adjusted EBITDAR are significant in understanding and assessing our financial condition. Therefore, Adjusted EBITDAR should not be considered in isolation, nor as an alternative to net income, income from operations, cash flows from operations or as a measure of our profitability, liquidity or performance under generally accepted accounting principles. The Company uses Adjusted EBITDAR to measure the operating performance of its segments and allocate resources to the segments. Furthermore, analogous measures are used by industry analysts and investors to evaluate the Company’s operating performance. Investors should be aware that the Company’s presentation of Adjusted EBITDAR may not be comparable to similarly titled measures used by other companies. The Company reports its results of operations primarily through the following reportable segments: Powder River Basin (PRB) segment containing the Company’s primary thermal operations in Wyoming; the Metallurgical (MET) segment, containing the Company’s metallurgical operations in West Virginia, Kentucky, and Virginia, and the Other Thermal segment containing the Company’s supplementary thermal operations in Colorado, Illinois, and West Virginia. Periods presented in this note have been recast for comparability.

Operating segment results for the Successor period, the three and six months ended June 30, 2017, and the Predecessor period, the three and six months ended June 30, 2016, are presented below. The Company measures its segments based on “adjusted earnings before interest, taxes, depreciation, depletion, amortization, accretion on asset retirements obligations, and reorganization items, net (Adjusted EBITDAR).” Adjusted EBITDAR does not reflect mine closure or impairment costs, since those are not reflected in the operating income reviewed by management. See Note 5, “Asset Impairment and Mine Closure Costs” for discussion of these costs. The Corporate, Other and Eliminations grouping includes these charges, as well as the change in fair value of coal derivatives and coal trading activities, net; corporate overhead; land management activities; other support functions; and the elimination of intercompany transactions.



	PRB		MET			Other Thermal			Corporate, Other and Eliminations			Consolidated
Successor Periods	(in thousands)
Three Months Ended June 30, 2017
Revenues	$	230,579	$	227,649		$	91,639		$	(1	)	$	549,866
Adjusted EBITDAR	31,789		62,552			26,910			(25,883		)	95,368
Depreciation, depletion and amortization	8,574		18,385			3,285			457			30,701
Accretion on asset retirement obligation	5,040		528			540			1,515			7,623
Capital expenditures	822		6,825			1,899			1,426			10,972

Six Months Ended June 30, 2017
Revenues	$	504,007	$	453,232		$	193,545		$	57		$	1,150,841
Adjusted EBITDAR	79,794		130,862			54,152			(48,942		)	215,866
Depreciation, depletion and amortization	18,085		37,149			6,485			903			62,622
Accretion on asset retirement obligation	10,080		1,057			1,080			3,029			15,246
Capital expenditures	950		11,436			2,640			1,896			16,922

Predecessor Periods
Three Months Ended June 30, 2016
Revenues	$	207,735	$	147,499		$	60,032		$	5,032		$	420,298
Adjusted EBITDAR	21,578		(3,593		)	(408		)	(17,887		)	(310		)
Depreciation, depletion and amortization	30,145		17,330			9,907			1,077			58,459
Accretion on asset retirement obligation	5,647		588			663			1,152			8,050
Capital expenditures	489		6,726			949			60,047			68,211

Six Months Ended June 30, 2016
Revenues	$	430,857	$	284,083		$	116,164		$	17,300		$	848,404
Adjusted EBITDAR	34,306		2,759			2,743			(41,838		)	(2,030		)
Depreciation, depletion and amortization	62,905		36,675			19,798			2,780			122,158
Accretion on asset retirement obligation	11,293		1,177			1,325			2,561			16,356
Capital expenditures	499		10,330			2,895			60,413			74,137

A reconciliation of adjusted EBITDAR to consolidated loss before income taxes follows:



	Successor			Predecessor			Successor			Predecessor
	Three Months Ended June 30,			Three Months Ended June 30,			Six Months Ended June 30,			Six Months Ended June 30,
	2017			2016			2017			2016
(In thousands)
Adjusted EBITDAR	$	95,368		$	(310	)	$	215,866		$	(2,030	)
Depreciation, depletion and amortization	30,701			58,459			62,622			122,158
Accretion on asset retirement obligations	7,623			8,050			15,246			16,356
Amortization of sales contracts, net	14,352			1			29,042			(832		)
Asset impairment and mine closure costs	—			43,701			—			129,221
Interest expense, net	(5,161		)	(44,340		)	(14,059		)	(87,653		)
Net loss resulting from early retirement of debt and debt restructuring	(31		)	—			(2,061		)	(2,213		)
Reorganization items, net	(21		)	(21,271		)	(2,849		)	(25,146		)
Income (loss) before income taxes	$	37,479		$	(176,132	)	$	89,987		$	(383,945	)