Derivatives and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

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 fair value of derivatives reflected in the accompanying condensed consolidated balance sheets are set forth in the table below.


	March 31, 2021				December 31, 2020
	Asset Derivative		Liability Derivative		Asset Derivative		Liability Derivative
	(Dollars in millions)
Foreign currency option contracts	$	2.7	$	—	$	10.3	$	—
Coal contracts related to forecasted sales	1.1		(8.6)		0.9		(8.8)
Coal trading contracts	30.4		(35.5)		23.4		(23.1)
Total derivatives	34.2		(44.1)		34.6		(31.9)
Effect of counterparty netting	(44.1)		44.1		(30.2)		30.2
Variation margin posted	13.6		—		6.5		—
Net derivatives and margin as classified in the balance sheets	$	3.7	$	—	$	10.9	$	(1.7)

Derivative Instruments, Gain (Loss)

The tables below show the amounts of pre-tax gains and losses related to the Company’s derivatives.


	Three Months Ended March 31, 2021
	Total (loss) gain recognized in income		Gain realized in income on derivatives		Unrealized loss recognized in income on derivatives
Financial Instrument
	(Dollars in millions)
Foreign currency option contracts	$	(2.9)	$	4.7	$	(7.6)
Coal contracts related to forecasted sales	8.2		10.0		(1.8)
Coal trading contracts	(0.7)		2.4		(3.1)
Total	$	4.6	$	17.1	$	(12.5)

	Three Months Ended March 31, 2020
	Total loss recognized in income		(Loss) gain realized in income on derivatives		Unrealized gain (loss) recognized in income on derivatives
Financial Instrument
	(Dollars in millions)
Foreign currency option contracts	$	(0.9)	$	(1.0)	$	0.1
Coal contracts related to forecasted sales	(8.6)		(6.4)		(2.2)
Coal trading contracts	(0.1)		4.1		(4.2)
Total	$	(9.6)	$	(3.3)	$	(6.3)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

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, 2021
	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Foreign currency option contracts	$	—	$	2.7	$	—	$	2.7
Coal contracts related to forecasted sales	—		(7.5)		—		(7.5)
Coal trading contracts	—		8.5		—		8.5
Equity securities	—		—		4.0		4.0
Total net financial assets	$	—	$	3.7	$	4.0	$	7.7

	December 31, 2020
	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Foreign currency option contracts	$	—	$	10.3	$	—	$	10.3
Coal contracts related to forecasted sales	—		(7.9)		—		(7.9)
Coal trading contracts	—		6.8		—		6.8
Equity securities	—		—		4.0		4.0
Total net financial assets	$	—	$	9.2	$	4.0	$	13.2

Carrying Amounts And Estimated Fair Values Of Companys Debt

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, 2021		December 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