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.

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 September 30, 2018 and December 31, 2017 consisted of the following:



	September 30, 2018		December 31, 2017
	(Dollars in millions)
Trade receivables, net	$	345.9	$	504.2
Miscellaneous receivables, net	99.0		47.9
Accounts receivable, net	$	444.9	$	552.1

Trade receivables, net presented above have been shown net of reserves of $0.1 million and $0.3 million as of September 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 September 30, 2018 and December 31, 2017. Included in “Operating costs and expenses” in the unaudited condensed consolidated statements of operations was a credit of $0.4 million, $0.1 million and $0.2 million for the three months ended September 30, 2018 and 2017, and the nine months ended September 30, 2018, respectively. A charge for doubtful trade receivables of $4.4 million was included for the period April 2 through September 30, 2017. No charges for doubtful accounts were recognized during 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 $35.8 million and $139.3 million as of September 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 $6.3 million during the three and nine months ended September 30, 2018, respectively.

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 September 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	$	373.7	$	208.4	$	149.5		$	—	$	37.4	$	—	$	—		$	769.0
Export	—		—		3.1			—		267.7		—		—			270.8
Total thermal	373.7		208.4		152.6			—		305.1		—		—			1,039.8
Metallurgical coal
Export	—		—		—			369.4		—		—		—			369.4
Total metallurgical	—		—		—			369.4		—		—		—			369.4
Other	—		0.1		3.5			0.9		—		22.6		(23.7		)	3.4
Total revenues	$	373.7	$	208.5	$	156.1		$	370.3	$	305.1	$	22.6	$	(23.7	)	$	1,412.6

	Successor
	Three Months Ended September 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	$	420.9	$	207.1	$	147.1		$	—	$	31.6	$	—	$	—		$	806.7
Export	—		0.4		11.2			—		234.1		—		—			245.7
Total thermal	420.9		207.5		158.3			—		265.7		—		—			1,052.4
Metallurgical coal
Export	—		—		—			414.1		—		—		—			414.1
Total metallurgical	—		—		—			414.1		—		—		—			414.1
Other	—		0.2		(2.6		)	1.8		0.1		19.4		(8.2		)	10.7
Total revenues	$	420.9	$	207.7	$	155.7		$	415.9	$	265.8	$	19.4	$	(8.2	)	$	1,477.2



	Successor
	Nine Months Ended September 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	$	1,084.4	$	606.2	$	410.9		$	—	$	112.0	$	—	$	—		$	2,213.5
Export	—		1.3		15.4			—		661.3		—		—			678.0
Total thermal	1,084.4		607.5		426.3			—		773.3		—		—			2,891.5
Metallurgical coal
Export	—		—		—			1,251.9		—		—		—			1,251.9
Total metallurgical	—		—		—			1,251.9		—		—		—			1,251.9
Other	0.1		0.2		13.1			2.1		0.6		52.7		(27.5		)	41.3
Total revenues	$	1,084.5	$	607.7	$	439.4		$	1,254.0	$	773.9	$	52.7	$	(27.5	)	$	4,184.7

	Successor
	April 2 through September 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	$	782.0	$	401.9	$	270.9		$	—	$	59.7	$	—	$	—		$	1,514.5
Export	—		0.4		11.2			—		445.0		—		—			456.6
Total thermal	782.0		402.3		282.1			—		504.7		—		—			1,971.1
Metallurgical coal
Export	—		—		—			701.9		—		—		—			701.9
Total metallurgical	—		—		—			701.9		—		—		—			701.9
Other	4.3		0.3		(1.0		)	1.8		0.3		24.6		32.2			62.5
Total revenues	$	786.3	$	402.6	$	281.1		$	703.7	$	505.0	$	24.6	$	32.2		$	2,735.5

	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

Revenue by contract duration was as follows:



	Successor
	Three Months Ended September 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	$	330.2	$	205.3	$	146.6		$	199.5	$	235.3	$	—	$	—		$	1,116.9
Less than one year	43.5		3.1		6.0			169.9		69.8		—		—			292.3
Other ⁽²⁾	—		0.1		3.5			0.9		—		22.6		(23.7		)	3.4
Total revenues	$	373.7	$	208.5	$	156.1		$	370.3	$	305.1	$	22.6	$	(23.7	)	$	1,412.6

	Successor
	Three Months Ended September 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	$	373.3	$	199.0	$	144.2		$	270.9	$	164.7	$	—	$	—		$	1,152.1
Less than one year	47.6		8.5		14.1			143.2		101.0		—		—			314.4
Other ⁽²⁾	—		0.2		(2.6		)	1.8		0.1		19.4		(8.2		)	10.7
Total revenues	$	420.9	$	207.7	$	155.7		$	415.9	$	265.8	$	19.4	$	(8.2	)	$	1,477.2



	Successor
	Nine Months Ended September 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	$	984.4	$	587.0	$	400.4		$	852.1	$	585.8	$	—	$	—		$	3,409.7
Less than one year	100.0		20.5		25.9			399.8		187.5		—		—			733.7
Other ⁽²⁾	0.1		0.2		13.1			2.1		0.6		52.7		(27.5		)	41.3
Total revenues	$	1,084.5	$	607.7	$	439.4		$	1,254.0	$	773.9	$	52.7	$	(27.5	)	$	4,184.7

	Successor
	April 2 through September 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	$	700.0	$	386.3	$	266.9		$	524.3	$	300.3	$	—	$	—		$	2,177.8
Less than one year	82.0		16.0		15.2			177.6		204.4		—		—			495.2
Other ⁽²⁾	4.3		0.3		(1.0		)	1.8		0.3		24.6		32.2			62.5
Total revenues	$	786.3	$	402.6	$	281.1		$	703.7	$	505.0	$	24.6	$	32.2		$	2,735.5

	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 ⁽²⁾	—		—		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 economic hedge activities intended to hedge future coal sales. Such net unrealized losses were $26.8 million and $10.8 million during the three months ended September 30, 2018 and 2017, respectively, and $36.3 million and $1.4 million during the nine months ended September 30, 2018 and the period April 2 through September 30, 2017, respectively. During the period January 1 through April 1, 2017, such net unrealized gains were $16.6 million. 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 $11.6 million and $12.3 million during the three months ended September 30, 2018 and 2017, respectively, and $41.1 million, $20.0 million and $11.1 million during the nine months ended September 30, 2018 and the periods April 2 through September 30, 2017 and January 1 through April 1, 2017, respectively). At September 30, 2018 and December 31, 2017, the financial contracts’ fair values resulted in net liabilities, excluding margin, of $75.2 million and $38.9 million, respectively.


⁽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 September 30, 2018 of approximately $5.8 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at September 30, 2018. Approximately 47% 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.