Intangible Contract Assets and Liabilities

9 Months Ended

Sep. 30, 2020

Revenue Recognition [Abstract]

Intangible Contract Assets and Liabilities

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 September 30, 2020 and December 31, 2019, are set forth in the following tables:

	September 30, 2020
	Assets		Liabilities		Net Total
	(Dollars in millions)
Coal supply agreements	$	8.8	$	(18.1)	$	(9.3)
Take-or-pay contracts	—		(33.4)		(33.4)
Total	$	8.8	$	(51.5)	$	(42.7)
Balance sheet classification:
Investments and other assets	$	8.8	$	—	$	8.8
Accounts payable and accrued expenses	—		(4.4)		(4.4)
Other noncurrent liabilities	—		(47.1)		(47.1)
Total	$	8.8	$	(51.5)	$	(42.7)
	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 $0.4 million and $5.3 million during the three months ended September 30, 2020 and 2019, respectively, and $4.1 million and $16.9 million during the nine months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020, the Company also charged to expense intangible assets of $4.5 million related to a coal supply agreement deemed to have been impaired, as further described in Note 9. “Property, Plant, Equipment and Mine Development.” The Company anticipates net amortization of sales contracts, based upon expected shipments, to be credits of less than $1 million during both the remaining three months of 2020 and the year 2021, credits of approximately $2 million per year for the years 2022 through 2024, and credits of $3 million in total thereafter.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 $1.5 million and $2.7 million during the three months ended September 30, 2020 and 2019, respectively, and $6.8 million and $13.9 million during the nine months ended September 30, 2020 and 2019, respectively. The Company anticipates net amortization of take-or-pay contract intangible liabilities to be approximately $1 million during the remaining three months of 2020, and for the years 2021 through 2024 to be approximately $4 million, $3 million, $3 million and $3 million, respectively, and $19 million thereafter.