Summary of Significant Accounting Policies

Use of Estimates

The preparation of the Company’s Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include inventories; mineral reserves; asset impairments; goodwill impairment; reclamation obligations; post-employment and other employee benefit obligations; useful lives, depletion and amortization; reserves for workers’ compensation and black lung claims; deferred income taxes; income taxes refundable and receivable; reserves for contingencies and litigation; fair value of financial instruments; and fair value adjustments for acquisition accounting. Estimates are based on facts and circumstances believed to be reasonable at the time; however, actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash held with reputable depository institutions and highly liquid, short-term investments with original maturities of three months or less. Cash and cash equivalents are stated at cost, which approximates fair value. As of December 31, 2019 and December 31, 2018, the Company’s cash equivalents of $212,793 and $233,599, respectively, consisted of highly-rated money market funds.

Restricted Cash

Amounts included in restricted cash represent cash deposits that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $38,944, $12,706, $67,868, and $3,006 as of December 31, 2019 for securing the Company’s obligations under certain workers’ compensation, black lung, reclamation-related obligations, and financial guarantees and other, respectively, which have been written on the Company’s behalf. Additionally, the Company had $12,363 of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation as of December 31, 2019. As of December 31, 2018, collateral was provided in the amounts of $90,759, $29,611, $86,217, $27,386, and $2,833 for securing the Company’s obligations under certain workers’ compensation, black lung, reclamation-related obligations, general liabilities, and financial guarantees, respectively, which have been written on the Company’s behalf. Additionally, the Company had $6,841 of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation as of December 31, 2018. Refer to Note 16 for further information regarding the contingent payment revenue obligation. The Company’s restricted cash is primarily invested in interest-bearing accounts. This restricted cash is classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

Restricted Investments

Amounts included in restricted investments consist of certificates of deposit, mutual funds, and U.S. treasury bills classified as either trading securities or held-to-maturity securities. The trading securities are recorded initially at cost and adjusted to fair value at each reporting period. The trading securities’ unrealized gains and losses resulting from fair value adjustments are recorded in current period earnings or loss. The held-to-maturity securities are recorded at amortized cost with interest income recorded in current period earnings.

These restricted investments are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $3,100 and $18,786 as of December 31, 2019 for securing the Company’s obligations under certain workers’ compensation and reclamation-related obligations, respectively, which have been written on the Company’s behalf, of which $13,508 are classified as trading securities and $8,378 are classified as held-to-maturity securities. As of December 31, 2018, collateral was provided in the amounts of $1,888, $27,049, and $200 for securing the Company’s obligations under certain workers’ compensation, reclamation-related obligations, and general liabilities, respectively, which have been written on the Company’s behalf, of which all were classified as held-to-maturity securities. These restricted investments are classified as long-term on the Company’s Consolidated Balance Sheets.

Deposits

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral. The Company had cash collateral in the form of deposits in the amounts of $8,887 and $1,836 as of December 31, 2019 and $24,002 and $1,390 as of December 31, 2018 to secure the Company’s obligations under reclamation-related obligations and various other operating agreements, respectively. These deposits are classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records an allowance for doubtful accounts at the estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company establishes provisions for losses on accounts receivable when it is probable that all or part of the outstanding balance will not be collected. The Company regularly reviews its accounts receivable balances and establishes or adjusts the allowance as necessary primarily using the specific identification method. The allowance for doubtful accounts was $0 at both December 31, 2019 and 2018. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

Coal is reported as inventory at the point in time the coal is extracted from the mine. Raw coal represents coal stockpiles that may be sold in current condition or may be further processed prior to shipment to a customer. Saleable coal represents coal stockpiles that require no further processing prior to shipment to a customer.

Coal inventories are valued at the lower of average cost or net realizable value. The cost of coal inventories is determined based on the average cost of production, which includes labor, supplies, equipment costs, operating overhead, depreciation, and other related costs. Net realizable value considers the projected future sales price of the product, less estimated preparation and selling costs.

Material and supplies inventories are valued at average cost, less an allowance for obsolete and surplus items.

Discontinued Operations

In accordance with Accounting Standards Codification (“ASC”) 205-20-45, the Company treats a disposal transaction as a discontinued operation when the disposal of a component or group of components represents a strategic shift that will have a major effect on the Company’s operations and financial results. In the period in which the discontinued operations criteria are met, the assets and liabilities of the discontinued operations are separately presented on the Company's Consolidated Balance Sheets and the results of operations, including any gain or loss recognized, is reclassified to discontinued operations on the Company’s Consolidated Statement of Operations. Refer to Note 4 for further information on discontinued operations.

Deferred Longwall Move Expenses

The Company defers the direct costs, including labor and supplies, associated with moving longwall equipment, the related equipment refurbishment costs, costs to drill vent holes and plug existing gas wells in advance of the longwall panel. These deferred costs are amortized on a units-of-production basis into cost of coal sales over the life of the related panel of coal mined by the longwall equipment. The amount of deferred longwall move expenses was $11,852 and $9,822 as of December 31, 2019 and 2018, respectively, included within prepaid expenses and other current assets and other non-current assets in the Company’s Consolidated Balance Sheets.

Advanced Mining Royalties

Lease rights to coal reserves are often acquired in exchange for royalty payments. Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production royalties. These advance payments are deferred and charged to operations as the coal reserves are mined. The Company regularly reviews recoverability of advance mining royalties and establishes or adjusts the allowance for advance mining royalties as necessary using the specific identification method. Advance royalty balances are generally charged off against the allowance when they are no longer recoupable.

Property, Plant, and Equipment, Net

Costs for mine development incurred to expand capacity of operating mines or to develop new mines are capitalized and charged to operations on the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures. Mine development costs include costs incurred for site preparation and development of the mines during the development stage less any incidental revenue generated during the development stage. Mining equipment, buildings and other fixed assets are stated at cost and depreciated on a straight-line basis over estimated useful lives ranging from one to 47 years. Leasehold improvements are amortized using the straight-line method, over the shorter of the estimated useful lives or term of the lease. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When equipment is retired or disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposal is recognized in other (income) expense in the Company’s Consolidated Statements of Operations. Costs to obtain owned and leased mineral rights are capitalized and amortized to operations as depletion expense using the units-of-production method. Only proven and probable reserves are included in the depletion base. Refer to Note 10 for further detail on property, plant and equipment, net.

Owned and Leased Mineral Rights

Owned and leased mineral rights, net of accumulated depletion, for the years ended December 31, 2019 and 2018 were $523,141 and $528,232, respectively, and are reported in assets in the Company’s Consolidated Balance Sheets. These amounts include $36,772 and $47,276 of asset retirement obligation assets, net of accumulated depletion, associated with active mining operations for the years ended December 31, 2019 and 2018, respectively. Refer to Note 3 for information on owned and leased mineral rights assumed with the Merger. During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of owned and leased mineral rights, net, by $35,445. Refer to the asset impairment disclosure included in Note 2.

Costs to obtain owned and leased mineral rights are capitalized and amortized to operations as depletion expense using the units-of-production method. Only proven and probable reserves are included in the depletion base. Depletion expense is included in depreciation, depletion and amortization on the accompanying Consolidated Statements of Operations and was $2,140, $6,804, and $2,954 for the years ended December 31, 2019, 2018, and 2017, respectively.

Depletion expense for the years ended December 31, 2019, 2018, and 2017 includes a credit of ($19,973), an expense of $1,907, and a credit of ($821), respectively, related to revisions to asset retirement obligations. Refer to Note 17 for further disclosures related to asset retirement obligations.

Acquired Intangibles

The Company has recognized assets for acquired above market-priced coal supply agreements and acquired mine permits and liabilities for acquired below market-priced coal supply agreements. The coal supply agreements were valued based on the present value of the difference between the expected net contractual cash flows based on the stated contract terms, and the estimated net contractual cash flows derived from applying forward market prices at the Merger or acquisition date for new contracts of similar terms and conditions. The acquired mine permits were valued based on the replacement cost and lost profits method as of the Merger date. The balances and respective balance sheet classifications of such assets and liabilities as of December 31, 2019 and 2018, net of accumulated amortization, are set forth in the following tables:



	December 31, 2019
	Assets ⁽¹⁾		Liabilities ⁽²⁾			Net Total
Coal supply agreements, net	$	917	$	(6,018	)	$	(5,101	)
Acquired mine permits, net	124,228		—			124,228
Total	$	125,145	$	(6,018	)	$	119,127



	December 31, 2018
	Assets ⁽¹⁾		Liabilities ⁽²⁾			Net Total
Coal supply agreements, net	$	4,687	$	(33,912	)	$	(29,225	)
Acquired mine permits, net	149,897		—			149,897
Total	$	154,584	$	(33,912	)	$	120,672

⁽¹⁾Included within other acquired intangibles, net of accumulated amortization, on the Company’s Consolidated Balance Sheets.

⁽²⁾Included within other non-current liabilities on the Company’s Consolidated Balance Sheets.

During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of acquired mine permits, net, by $5,997. Refer to the asset impairment disclosure included in Note 2.

The acquired mine permits are amortized over the estimated life of the associated mine. The coal supply agreement assets and liabilities are amortized over the actual number of tons shipped over the life of each contract. Amortization of mine permits acquired as a result of the Merger was $23,921 and $3,409 for the years ended December 31, 2019 and 2018, respectively, which is reported within amortization of acquired intangibles, net, in the Consolidated Statements of Operations. Amortization of above-market coal supply agreements was $3,884, $14,506, and $59,007, and amortization of below-market coal supply agreements was ($27,893), ($23,307), and $0, resulting in a net (income) expense of ($24,009), ($8,801), and $59,007 for the years ended December 31, 2019, 2018, and 2017, respectively, which is reported within amortization of acquired intangibles, net, in the Consolidated Statements of Operations.

Future net amortization expense related to acquired intangibles is expected to be as follows:



2020	$	15,204
2021	12,556
2022	12,584
2023	10,709
2024	8,657
Thereafter	59,417
Total net future amortization expense	$	119,127

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets of acquired companies. In connection with the Merger, the Company recorded goodwill of $124,353 and allocated it to the CAPP - Met reportable segment. Refer to Note 3 for further information. Goodwill is not amortized; instead, it is tested for impairment annually as of October 31 of each year or more frequently if indicators of impairment exist.

The Company performed an interim goodwill impairment test as of August 31, 2019 due to a decline in the Company’s market capitalization to amounts below book value combined with a decline in global metallurgical coal pricing which indicated that the fair value of the CAPP - Met segment reporting unit may have been below its carrying value. Following the quantitative testing, the Company concluded that the fair value of the reporting unit exceeded its carrying value and no amounts of goodwill were impaired. As of October 31, 2019, the Company performed its annual goodwill impairment test and concluded that more likely than not the fair value of its CAPP - Met reporting unit to which the Company’s goodwill is allocated exceeded its carrying value. As a result, no amounts of goodwill were considered impaired as a result of impairment testing at October 31, 2019.

However, due to the continued weakening in coal market pricing combined with a significant market price decline for the Company’s stock late in the fourth quarter of 2019, the Company performed an interim goodwill impairment test as of December 31, 2019. Following the quantitative testing, the Company concluded that the carrying value of the CAPP - Met reporting unit exceeded its fair value and recorded a goodwill impairment of $124,353 to write down the full carrying amount of goodwill.

The Company early adopted Accounting Standards Update (“ASU”) 2017-04 for the period ended December 31, 2017, which eliminated Step 2 of the quantitative goodwill impairment test. The Company first assesses goodwill for impairment on a qualitative basis. If the Company determines that more likely than not the fair value of a reporting unit containing goodwill exceeds its carrying amount, no further impairment testing is required. If the qualitative assessment indicates that an impairment potentially exists, then the Company quantitatively tests goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is lower than its carrying amount, its goodwill is written down by the lesser of the amount by which the reporting units carrying amount exceeded its fair value or its carrying amount of goodwill.

The valuation methodology utilized to estimate the fair value of the reporting units is based on both a market and income approach and is within the range of fair values yielded under each approach. The income approach is based on a discounted cash flow methodology in which expected future net cash flows are discounted to present value, using an appropriate after-tax weighted average cost of capital (discount rate). The market approach is based on a guideline company and similar transaction methodology. Under the guideline company approach, certain metrics from a selected group of publicly traded guideline companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the reporting units. Under the similar transactions approach, recent merger and acquisition transactions for companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the Company’s reporting units.

Asset Impairment

Long-lived assets, such as property, plant, and equipment, and acquired intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groups may not be recoverable. Recoverability of assets or asset groups to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. Long-lived assets located in a close geographic area are grouped together for purposes of impairment testing when, after considering revenue and cost interdependencies, circumstances indicate the assets are used together to produce future cash flows. The Company’s asset groups generally consist of the assets and applicable liabilities of one or more mines and preparation plants and associated coal reserves for which cash flows are largely independent of cash flows of other mines, preparation plants, and associated coal reserves. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, the potential impairment is equal to the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. The Company estimates the fair value of an asset group using discounted cash flow analyses utilizing marketplace participant assumptions. The amount of impairment, if any, is allocated to the long-lived assets on a pro-rata basis, except that the carrying value of the individual long-lived assets are not reduced below their estimated fair value.

During the year ended December 31, 2019, the Company determined that indicators of impairment were present for three long-lived asset groups within each of its CAPP - Met and CAPP - Thermal reporting segments and performed impairment testing as of December 31, 2019. At December 31, 2019, the Company determined that the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values. As a result, after allocating the potential impairment to individual assets, the Company recorded a long-lived asset impairment of $60,169, of which $9,176 was recorded within CAPP - Met and $50,993 was recorded within CAPP - Thermal. The long-lived asset impairment reduced the carrying values of mineral rights by $35,445, property, plant, and equipment, net, by $17,056, acquired mine permits, net, by $5,997, and long-lived assets related to asset retirement obligations by $1,671.

There were no asset impairments during the years ended December 31, 2018 and 2017.

Additionally, during the year ended December 31, 2019, the Company recorded an asset impairment of $6,155 primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019. Refer to Note 4 for further information.

Asset Retirement Obligations

Minimum standards for mine reclamation have been established by various regulatory agencies and dictate the reclamation requirements at the Company’s operations. The Company’s asset retirement obligations consist principally of costs to reclaim acreage disturbed at surface operations and estimated costs to reclaim support acreage, treat mine water discharge, and perform other related functions at underground mines. The Company records these reclamation obligations at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. Changes to the liability at operations that are not currently being reclaimed are offset by increasing or decreasing the carrying amount of the related long-lived asset. Changes to the liability at operations that are currently being reclaimed are recorded to depreciation, depletion, and amortization. Over time, the liability is accreted and any capitalized cost is depreciated or depleted over the useful life of the related asset. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded. The Company annually reviews its estimated future cash flows for its asset retirement obligations. Refer to Note 17 for further disclosures related to asset retirement obligations.

During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of long-lived assets related to asset retirement obligations by $1,671. Refer to the asset impairment disclosure included in Note 2.

Income Taxes

The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of taxable temporary differences, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes that the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized.

Refer to Note 19 for further disclosures related to income taxes.

Revenue Recognition

The Company adopted ASC 606 Revenue from Contracts with Customers (“ASC 606”), with a date of initial application of January 1, 2018, using the modified retrospective method. The Company applied the guidance only to contracts that were not completed as of the date of adoption, with no cumulative adjustment to retained earnings as a result of the adoption of this guidance. As a result, the Company made changes to its accounting policy for revenue recognition as outlined below.

Subsequent to the adoption of ASC 606, the Company measures revenue based on the consideration specified in a contract with a customer and recognizes revenue as a result of satisfying its promise to transfer goods or services in a contract with a customer using the following general revenue recognition five-step model: (1) identify the contract; (2) identify performance obligations; (3) determine transaction price; (4) allocate transaction price; and (5) recognize revenue. Freight and handling costs paid to third-party carriers and invoiced to coal customers are recorded as freight and handling costs and freight and handling fulfillment revenues within cost of coal sales and coal revenues, respectively.

Prior to the adoption of ASC 606, the Company earned revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties. The Company recognized revenue using the following general revenue recognition criteria: (i) persuasive evidence of an arrangement exists; (ii) delivery had occurred or services have been rendered; (iii) the price to the buyer was fixed or determinable; and (iv) collectability was reasonably assured.

Delivery on the Company’s coal sales was determined to be complete for revenue recognition purposes when title and risk of loss had passed to the customer in accordance with stated contractual terms and there are no other future obligations related to the shipment. For domestic shipments, title and risk of loss generally passed as the coal is loaded into transport carriers for delivery to the customer. For international shipments, title generally passed at the time coal is loaded onto the shipping vessel.

Freight and handling costs paid to third-party carriers and invoiced to coal customers were recorded as freight and handling costs and freight and handling revenues, respectively.

Adoption of ASC 606

Subsequent to adoption of ASC 606, freight and handling revenues are now classified within coal revenues.Under ASC 606, the Company has elected to treat all shipping and handling costs as fulfillment costs and to recognize these amounts within coal revenues upon control transfer. Prior to the adoption of ASC 606, all freight and handling activities occurring subsequent to control transfer were accounted for as deferred revenue and recognized within freight and handling revenues as the Company fulfilled the related shipping activity. Refer to Note 5 for further disclosure requirements under the new standard. The following table summarizes the impact of the adoption of ASC 606 to the Company’s Consolidated Statements of Operations:



	Year Ended December 31, 2018
	As reported		Adjustments ⁽¹⁾			Balances prior to adoption of ASC 606
Revenues:
Coal revenues	$	2,020,889	$	(363,128	)	$	1,657,761
Freight and handling revenues	—		362,346			362,346
Other revenues	10,316		—			10,316
Total revenues	$	2,031,205	$	(782	)	$	2,030,423

Freight and handling costs	$	363,128	$	(782	)	$	362,346

⁽¹⁾ Adjustments primarily represent freight and handling revenues being treated as fulfillments costs and included within coal revenues under ASC 606. The remainder of these adjustments represent freight and handling activity occurring subsequent to control transfer also impacting freight and handling costs and prepaid expenses.

Deferred Financing Costs

The costs to obtain new debt financing or amend existing financing agreements are generally deferred and amortized to interest expense over the life of the related indebtedness or credit facility using the effective interest method. Unamortized deferred financing costs are presented in the Consolidated Balance Sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. Unamortized deferred financing costs associated with undrawn credit facilities are included in the Consolidated Balance Sheets within other non-current assets.

Workers’ Compensation and Pneumoconiosis (Black Lung) Benefits

Workers’ Compensation

As of December 31, 2019, the Company’s subsidiaries generally utilize high-deductible insurance programs for workers’ compensation claims at its operations with the exception of certain subsidiaries in which the Company is a qualified self-insurer for workers’ compensation related obligations. The liabilities for workers’ compensation claims are estimates of the ultimate losses incurred based on the Company’s experience, and include a provision for incurred but not reported losses. Adjustments to the probable ultimate liabilities are made annually based on an actuarial study and adjustments to the liability are recorded based on the results of this study. These short-term and long-term obligations are included in the Consolidated Balance Sheets within accrued expenses and other current liabilities and workers’ compensation and black lung obligations, respectively, with an offsetting insurance receivable within prepaid expenses and other current assets and other non-current assets. As of December 31, 2019 and 2018, the workers’ compensation liability was net of a discount of $24,458 and $24,655, respectively, related to fair value adjustments associated with acquisition accounting. Refer to Note 20 for further disclosures related to workers’ compensation.

Black Lung Benefits

The Company is required by federal and state statutes to provide benefits to employees for awards related to black lung. As of December 31, 2019, certain of the Company’s subsidiaries are insured for black lung obligations by a third-party insurance provider and certain subsidiaries are self-insured for state black lung obligations. Certain other subsidiaries are self-insured for federal black lung benefits and may fund benefit payments through Section 501(c)(21) tax-exempt trust fund. Charges are made to operations for black lung claims, as determined by an independent actuary at the present value of the actuarially computed liability for such benefits over the employee’s applicable term of service. The Company recognizes in its balance sheet the amount of the Company’s unfunded Accumulated Benefit Obligation (“ABO”) at the end of the year. Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost. These short-term and long-term obligations are included in the Consolidated Balance Sheets within accrued expenses and other current liabilities and workers’ compensation and black lung obligations, respectively. Refer to Note 20 for further disclosures related to black lung benefits.

Pension

The Company is required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in its Consolidated Balance Sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive (loss) income. The Company is required to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end Consolidated Balance Sheet and provide the required disclosures as of the end of each fiscal year. Refer to Note 20 for further disclosures related to pension.

Life Insurance Benefits

As part of the Alpha Restructuring and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees. Provisions are made for estimated benefits based on annual evaluations prepared by independent actuaries. Adjustments to the probable ultimate liabilities are made annually based on an actuarial study and adjustments to the liability are recorded based on the results of this study. These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities. Refer to Note 20 for further disclosures related to life insurance benefits.

Net (Loss) Income per Share

Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of outstanding common shares for the period. Diluted (loss) earnings per share reflects the potential dilution that could occur if instruments that may require the issuance of common shares in the future were settled and the underlying common shares were issued. Diluted (loss) earnings per share is computed by increasing the weighted-average number of outstanding common shares computed in basic (loss) earnings per share to include the additional common shares that would be outstanding after issuance and adjusting net (loss) income for changes that would result from the issuance. Only those securities that are dilutive are included in the calculation. In periods of loss, the number of shares used to calculate diluted earnings is the same as basic earnings per share. Refer to Note 7 for further disclosures related to net (loss) income per share.

Stock-Based Compensation

The Company recognizes expense for stock-based compensation awards based on their grant-date fair value. The expense is recorded over the respective service period of the underlying award. Liability classified stock-based compensation awards are remeasured each reporting period at fair value until the award is settled. The Company recognizes forfeitures of stock-based compensation awards as they occur. Refer to Note 21 for further disclosures related to stock-based compensation arrangements.

Warrants

On July 26, 2016 (the “Initial Issue Date”), the Company issued 810,811 warrants, which are classified as equity instruments, each with an initial Exercise Price, as defined in the Series A Warrants Agreement (the “Warrants Agreement”), of $55.93 per share of common stock and exercisable for one share of the Company’s common stock, par value $0.01 per share. Pursuant to the Warrants Agreement, the warrants are exercisable for cash or on a cashless basis at any time from the Initial Issue Date until July 26, 2023, and no fractional shares shall be issued upon warrant exercises. The exercise price and the warrant share number will be adjusted in respect of certain dilutive events with respect to the common stock (namely, dividends or distributions on the common stock, share splits and combinations, above-market tender offers for common stock by Contura or a subsidiary thereof, and discounted issuances of common stock or rights or options to purchase common stock or securities convertible or exchangeable into common stock). Additionally, in the case of any reorganization (i.e., a consolidation, merger, or sale of all or substantially all of the consolidated assets of Contura) pursuant to which the common stock is converted into cash, securities or other property, the warrants would become exercisable for such property.

During the year ended December 31, 2017, the Exercise Price and the Warrant Share Number, as defined in the Warrants Agreement, were adjusted as a result of the occurrence of the Special Dividend. The Warrant Share Number was adjusted from 1.00 to 1.15, and the Exercise Price was adjusted from $55.93 per share to $48.741 per share as of the July 5, 2017 record date.

The United States Bankruptcy Court for the Eastern District of Virginia issued an order and final decree on June 28, 2018, granting a motion to close the Chapter 11 case of Alpha Natural Resources, Inc. and its affiliates, as reorganized debtors (the “Reorganized Debtors”), and authorizing the Reorganized Debtors to make a distribution (the “Distribution”) of additional cash as defined in the Warrants Agreement. The Distribution was effected on October 26, 2018 (the “Distribution Date”) in the aggregate amount of approximately $18,350. During the year ended December 31, 2018, the Exercise Price was adjusted as a result of the occurrence of the Distribution. The Exercise Price was adjusted from $48.741 per share to $46.911 per share as of the Distribution Date. The Warrant Share Number remained equal to 1.15. As of December 31, 2018, of the 810,811 warrants that were originally issued, 801,730 remained outstanding, with a total of 921,990 shares underlying the un-exercised warrants. For the year ended December 31, 2018, the Company issued 325 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld 125 of the issued shares in satisfaction of the Warrant Exercise Price, which were subsequently reclassified as treasury stock.

As of December 31, 2019, of the 810,811 warrants that were originally issued, 801,370 remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants. For the year ended December 31, 2019, the Company issued 414 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld five of the issued shares in satisfaction of the Warrant Exercise Price, which were subsequently reclassified as treasury stock.

Equity Method Investments

Investments in unconsolidated affiliates that the Company has the ability to exercise significant influence over, but not control, are accounted for under the equity method of accounting. Under the equity method of accounting, the Company records its proportionate share of the entity’s net income or loss at each reporting period in the Consolidated Statements of Operations in other income (expense), with a corresponding entry to increase or decrease the carrying value of the investment. The carrying value of the Company’s equity method investments was $18,413 and $15,236 as of December 31, 2019 and 2018, respectively.

Recently Adopted Accounting Guidance

Leases: In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update and subsequent amendments related to ASC 842, Leases, (“ASC 842”). ASC 842 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet. The Company adopted ASC 842 effective January 1, 2019 and elected the option not to restate comparative periods in transition and also elected the hindsight practical expedient, which allows the Company to use hindsight when considering lessee options to extend or terminate leases when determining the lease term of lease arrangements for classification purposes, and the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification, and initial direct costs. Additionally, the Company elected the transition practical expedient to continue to account for existing and expired land easements at transition as executory contracts. Only land easements entered into or modified after the effective date of ASC 842 are accounted for as leases by the Company.

As a result of the adoption, the Company recorded operating lease right-of-use assets and lease liabilities on our Consolidated Balance Sheet. The following table summarizes the impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet:



		Balance at December 31, 2018 ⁽¹⁾		Adjustments		Balance at January 1, 2019
Assets	Balance Sheet Classification
Operating lease right-of-use assets	Other non-current assets	$	—	$	11,845	$	11,845
Financing lease assets	Property, plant, and equipment, net	9,786		—		9,786
Total lease assets		$	9,786	$	11,845	$	21,631

Liabilities	Balance Sheet Classification
Operating lease liabilities - current	Accrued expenses and other current liabilities	$	—	$	3,624	$	3,624
Financing lease liabilities - current	Current portion of long-term debt	2,110		—		2,110
Operating lease liabilities - long-term	Other non-current liabilities	—		8,221		8,221
Financing lease liabilities - long-term	Long-term debt	4,313		—		4,313
Total lease liabilities		$	6,423	$	11,845	$	18,268

⁽¹⁾ Balances do not include measurement-period adjustments recorded during the period. Refer to Note 3 for further details on measurement-period adjustments recorded during the period.

The adoption of ASC 842 did not have a material impact on our Consolidated Statements of Operations, Consolidated Statements of Comprehensive (Loss) Income, or Consolidated Statements of Cash Flows. Refer to Note 12 for further disclosure requirements under the new standard.

Stock Compensation: In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted ASU 2018-07 during the first quarter of 2019. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Recent Accounting Guidance Issued Not Yet Effective

Credit Losses: In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses (“ASU 2016-13”). ASU 2016-13, along with related amendments and improvements issued in 2018 and 2019, replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable supportable information to inform credit loss estimates. The Company will adopt ASU 2016-13 during the first quarter of 2020. The adoption of this ASU is not expected to have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Fair Value Measurement: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The amendments in this update modify the disclosure requirements for fair value measurements. For public business entities, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

Defined Benefit Plans: In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public business entities, the standard is effective for fiscal years ending after December 15, 2020. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

Income Taxes: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, with early adoption permitted. The Company is currently assessing the impact of this ASU on the Company’s consolidated financial statements and related disclosures.