Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 10-K/A
(Amendment No. 2)
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2016
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-16463
____________________________________________
peabody201510ka04.gif
PEABODY ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
 
13-4004153
(I.R.S. Employer Identification No.)
701 Market Street, St. Louis, Missouri
(Address of principal executive offices)
 
63101
(Zip Code)
(314) 342-3400
Registrant’s telephone number, including area code
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.01 per share

Securities Registered Pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o    No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o    No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes þ   No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ   No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
Smaller reporting company o
Emerging growth company o
(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
Aggregate market value of the voting stock held by non-affiliates (stockholders who are not directors or executive officers) of the Registrant, calculated using the closing price on June 30, 2016: Common Stock, par value $0.01 per share, $25.3 million.
Number of shares outstanding of each of the Registrant’s classes of Common Stock, as of March 15, 2017: Common Stock, par value $0.01 per share, 18,491,188 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.



Explanatory Note
Peabody Energy Corporation (Peabody or the Company) is filing this Amendment No. 2 on Form 10-K/A (Amended Filing) in order to amend our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, originally filed March 22, 2017 (Original Filing) and as amended on July 10, 2017 (Amendment No. 1), to correct for an immaterial error in the previously reported 2014 through 2016 financial statements. When determining whether a valuation allowance was required to reduce the deferred tax assets of one of our tax paying components to an amount that was more likely than not to be realized, we inappropriately considered the future reversal of existing temporary differences from another tax paying component as a source of taxable income. The initial error occurred in 2013 and resulted in a $251.3 million understatement of the required valuation allowance and an overstatement of retained earnings of the same amount. Although the error does not materially impact the statements of operations for the three year period presented in the Consolidated Financial Statements included in this Form 10-K/A, the effect of correcting the entire cumulative balance sheet difference in the current period would be material to the current period results. The correction of the error increased the reported net deferred tax liability by $156.3 million and $166.8 million and increased the accumulated deficit balance by those same amounts as of December 31, 2016 and 2015, respectively, compared to the amounts previously reported. This error had no impact on our cash flows from operations for any of those years. The following items were impacted by these corrected disclosures:
Part II. Item 6. - We corrected the items impacted as a result of the error.
Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - We corrected the items impacted as a result of the error and updated the comparative disclosure as applicable.
Part II. Item 9A. Controls and Procedures - We amended this item to disclose the material weakness that was identified as a result of the error and to include the revised audit report of our independent registered public accounting firm on our internal control over financial reporting as of December 31, 2016.
Part IV. Item 15. Exhibits and Financial Statements - We corrected the items impacted in the financial statements, included a revised audit report of our independent registered public accounting firm on our financial statements, and updated Note 1. "Summary of Significant Accounting Policies", Note 12. "Income Taxes", Note 23. "Earnings per Share (EPS)", Note 28. "Summary of Quarterly Financial Information (Unaudited)", Note 29. "Segment and Geographical Information" and Note 30. "Supplemental Guarantor/Non-Guarantor Financial Information", as well as Schedule II - Valuation and Qualifying Accounts, as applicable.
Other than as expressly set forth above and except with respect to certain conforming changes made to our Exhibit Index, this Amended Filing does not, and does not purport to, update or restate the information in the Original Filing or Amendment No. 1 or reflect any events that have occurred after the Original Filing was filed. See our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission subsequent to our Original Filing for updated information.
We are including currently dated certifications by our Principal Executive Officer and Principal Accounting and Financial Officer as Exhibits 31.5 and 31.6 under Section 302 and Exhibits 32.3 and 32.4 under Section 906 of the Sarbanes-Oxley Act of 2002, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (Exchange Act).  



CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are intended to come within the safe harbor protection provided by those sections. These statements relate to future events or our future financial performance, including, without limitation, the section captioned “Outlook” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. We use words such as “anticipate,” “believe,” “expect,” “may,” "forecast," “project,” “should,” “estimate,” “plan,” "outlook," "target," "likely," "will," "to be" or other similar words to identify forward-looking statements.
Without limiting the foregoing, all statements relating to our future operating results, anticipated capital expenditures, future cash flows and borrowings and sources of funding are forward-looking statements and speak only as of the date of this report. These forward-looking statements are based on numerous assumptions that we believe are reasonable, but are subject to a wide range of uncertainties and business risks and actual results may differ materially from those discussed in these statements. These factors are difficult to accurately predict and may be beyond our control. Factors that could affect our results or an investment in our securities include, but are not limited to:
Factors related to our Chapter 11 Cases (as defined herein)
our ability to consummate the Second Amended Joint Plan of Reorganization of Debtors and Debtors in Possession, dated January 27, 2017 (as further modified, the Plan) as confirmed by an order of the Bankruptcy Court entered on March 17, 2017;
the effects of the Chapter 11 Cases on our operations, including customer, supplier, banking, insurance and other relationships and agreements;
Bankruptcy Court rulings in the Chapter 11 Cases as well as the outcome of all other pending litigation and the outcome of the Chapter 11 Cases in general;
the length of time that we will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the proceedings;
the risks associated with third-party motions in the Chapter 11 Cases, which may interfere with our ability to consummate the Plan and restructuring generally;
increased advisory costs to execute a plan of reorganization;
the volatility of the trading price of our common stock and the absence of correlation between any increases in the trading price and our expectation that the common stock will be canceled and extinguished upon the Plan's effective date (Plan Effective Date);
the risk that the Plan does not become effective, in which case there can be no assurance that the Chapter 11 Cases will continue rather than be converted to Chapter 7 liquidation cases or that any alternative plan of reorganization would be on terms as favorable to holders of claims and interests as the terms of the Plan;
Peabody Energy’s ability to use cash collateral and the possibility that Peabody Energy may be required to post additional cash collateral to secure its obligations;
the effect of the Chapter 11 Cases on our relationships with third parties, regulatory authorities and employees;
the potential adverse effects of the Chapter 11 Cases on our liquidity, results of operations, or business prospects;
our ability to execute our business and restructuring plan;
increased administrative and legal costs related to the Chapter 11 Cases and other litigation and the inherent risks involved in a bankruptcy process;
the cost, availability and access to capital and financial markets, including the ability to secure new financing after emerging from the Chapter 11 Cases; and
the risk that the Chapter 11 Cases will disrupt or impede our international operations, including our business operations in Australia.

Peabody Energy Corporation
2016 Form 10-K/A
i


Other factors
competition in the energy market and supply and demand for our coal products, including the impact of alternative energy sources, such as natural gas and renewables;
global steel demand and the downstream impact on metallurgical coal prices, and lower demand for our products by electric power generators;
our ability to successfully consummate planned divestitures, including the planned sale of all of our equity interests in Metropolitan Collieries Pty Ltd, the entity that owns the Metropolitan coal mine in New South Wales, Australia (the Metropolitan Mine);
our ability to appropriately secure our requirements for reclamation, federal and state workers’ compensation, federal coal leases and other obligations related to our operations, including our ability to utilize self-bonding and/or successfully access the commercial surety bond market;
customer procurement practices and contract duration;
the impact of weather and natural disasters on demand, production and transportation;
reductions and/or deferrals of purchases by major customers and our ability to renew sales contracts;
credit and performance risks associated with customers, suppliers, contract miners, co-shippers, and trading, bank and other financial counterparties;
geologic, equipment, permitting, site access, operational risks and new technologies related to mining;
transportation availability, performance and costs;
availability, timing of delivery and costs of key supplies, capital equipment or commodities such as diesel fuel, steel, explosives and tires;
impact of take-or-pay arrangements for rail and port commitments for the delivery of coal;
successful implementation of business strategies, including, without limitation, the actions we are implementing to improve our organization and respond to current market conditions;
negotiation of labor contracts, employee relations and workforce availability, including, without limitation, attracting and retaining key personnel;
changes in postretirement benefit and pension obligations and their related funding requirements;
replacement and development of coal reserves;
effects of changes in interest rates and currency exchange rates (primarily the Australian dollar);
effects of acquisitions or divestitures;
economic strength and political stability of countries in which we have operations or serve customers;
legislation, regulations and court decisions or other government actions, including, but not limited to, new environmental and mine safety requirements, changes in income tax regulations, sales-related royalties, or other regulatory taxes and changes in derivative laws and regulations;
our ability to obtain and renew permits necessary for our operations;
litigation or other dispute resolution, including, but not limited to, claims not yet asserted;
terrorist attacks or security threats, including, but not limited to, cybersecurity breaches; and
impacts of pandemic illnesses.
Factors related to our indebtedness and expected post-emergence capital structure under the Plan
the fact that our common stock will be canceled and extinguished upon the Plan Effective Date, if the Plan becomes effective, with no payments made to the holders of our common stock;
the lack of an established market for the shares of new common stock (Reorganized PEC Common Stock) or the preferred stock (Preferred Equity) to be issued pursuant to the Plan on the Plan Effective Date, and potential dilution of Reorganized PEC Common Stock due to future issuances of equity securities;
our ability to generate sufficient cash to service all of our expected post-emergence indebtedness;
our post-emergence debt instruments and capital structure will place certain limits on our ability to pay dividends and repurchase common stock;
our ability to comply with financial and other restrictive covenants in various agreements, including the credit facility contemplated by the Plan; and
other risks and factors, including those discussed in "Legal Proceedings," set forth Part I, Item 3 of this report and “Risk Factors,” set forth in Part I, Item 1A of this report.

Peabody Energy Corporation
2016 Form 10-K/A
ii


When considering these forward-looking statements, you should keep in mind the cautionary statements in this document and in our other Securities and Exchange Commission (SEC) filings. These forward-looking statements speak only as of the date on which such statements were made, and we undertake no obligation to update these statements, except as required by the federal securities laws.

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2016 Form 10-K/A
iii


TABLE OF CONTENTS
 
 
Page
 
Exhibits and Financial Statement Schedules

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2016 Form 10-K/A
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Table of Contents

PART II
Item 6.     Selected Financial Data.
This item presents selected financial and other data about us for the most recent five fiscal years.
The table that follows and the discussion of our results of operations in 2016, 2015 and 2014 in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes references to and analysis of Adjusted EBITDA which is a financial measure not recognized in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These financial measures are not intended to serve as alternatives to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
Adjusted EBITDA is used by management as the primary metric to measure our segments’ operating performance. We also believe non-U.S. GAAP performance measures are used by investors to measure our operating performance and lenders to measure our ability to incur and service debt. Adjusted EBITDA is defined as (loss) income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense, depreciation, depletion and amortization and reorganization items, net. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments' operating performance, as displayed in the reconciliation. A reconciliation of income (loss) from continuing operations, net of income taxes to Adjusted EBITDA is included on page 52 of this report. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
The selected financial data for all periods presented reflect the classification as discontinued operations of certain operations previously divested (by sale or otherwise).
We have derived the selected historical financial data as of and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012 from our audited financial statements, adjusted retrospectively for items subsequently classified as discontinued operations and the implementation of certain accounting literature, and for the revisions described in the section entitled Correction of Prior Period Financial Information in Note 1 of the 2016 audited financial statements. Also, all share and per share data have been retroactively restated to reflect the September 30, 2015 1-for-15 reverse stock split. The following table should be read in conjunction with the accompanying financial statements, including the related notes to those financial statements, and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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The results of operations for the historical periods included in the following table are not necessarily indicative of the results to be expected for future periods. In addition, Part I, Item 1A. “Risk Factors” of this report includes a discussion of risk factors that could impact our future results of operations.
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
 
(In millions, except per share data)
Results of Operations Data
 

 
 

 
 

 
 

 
 

Total revenues
$
4,715.3

 
$
5,609.2

 
$
6,792.2

 
$
7,013.7

 
$
8,077.5

Costs and expenses
4,992.2

 
7,074.0

 
6,927.3

 
7,338.5

 
7,905.0

Operating (loss) profit
(276.9
)
 
(1,464.8
)
 
(135.1
)
 
(324.8
)
 
172.5

Interest expense, net
322.4

 
525.5

 
412.8

 
409.5

 
381.1

Reorganization items, net
159.0

 

 

 

 

Loss from continuing operations before income taxes
(758.3
)
 
(1,990.3
)
 
(547.9
)
 
(734.3
)
 
(208.6
)
Income tax (benefit) provision
(94.5
)
 
(207.1
)
 
147.4

 
(197.0
)
 
262.3

Loss from continuing operations, net of income taxes
(663.8
)
 
(1,783.2
)
 
(695.3
)
 
(537.3
)
 
(470.9
)
Loss from discontinued operations, net of income taxes
(57.6
)
 
(175.0
)
 
(28.2
)
 
(226.6
)
 
(104.2
)
Net loss
(721.4
)
 
(1,958.2
)
 
(723.5
)
 
(763.9
)
 
(575.1
)
Less: Net income attributable to noncontrolling interests
7.9

 
7.1

 
9.7

 
12.3

 
10.6

Net loss attributable to common stockholders
$
(729.3
)
 
$
(1,965.3
)
 
$
(733.2
)
 
$
(776.2
)
 
$
(585.7
)
 
 
 
 
 
 
 
 
 
 
Basic and diluted EPS - Loss from continuing operations
$
(36.72
)
 
$
(98.65
)
 
$
(39.51
)
 
$
(30.91
)
 
$
(26.95
)
Weighted average shares used in calculating basic and diluted EPS
18.3

 
18.1

 
17.9

 
17.8

 
17.9

Dividends declared per share
$

 
$
0.075

 
$
5.100

 
$
5.100

 
$
5.100

Other Data
 

 
 

 
 

 
 

 
 

Tons produced
175.6

 
208.7

 
227.2

 
218.4

 
225.4

Tons sold
186.8

 
228.8

 
249.8

 
251.7

 
248.5

Net cash provided by (used in) continuing operations:
 

 
 

 
 

 
 

 
 

Operating activities
$
(22.9
)
 
$
18.9

 
$
441.0

 
$
780.1

 
$
1,599.8

Investing activities
(244.1
)
 
(290.0
)
 
(314.5
)
 
(514.2
)
 
(1,070.1
)
Financing activities
907.9

 
267.7

 
(168.1
)
 
(321.5
)
 
(663.3
)
Adjusted EBITDA
492.2

 
434.6

 
814.0

 
1,047.2

 
1,836.5

Balance Sheet Data (at period end)
 

 
 

 
 

 
 

 
 

Total assets
$
11,777.7

 
$
10,946.9

 
$
13,126.4

 
$
14,069.5

 
$
15,721.7

Total long-term debt (including capital leases)
7,791.4

 
6,241.2

 
5,922.1

 
5,938.5

 
6,156.6

Total stockholders’ equity
181.5

 
751.7

 
2,529.0

 
3,696.6

 
4,938.8










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Table of Contents

Adjusted EBITDA is calculated as follows:
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
 
 
 
(Dollars in millions)
 
 
Loss from continuing operations, net of income taxes
$
(663.8
)
 
$
(1,783.2
)
 
$
(695.3
)
 
$
(537.3
)
 
$
(470.9
)
Depreciation, depletion and amortization
465.4

 
572.2

 
655.7

 
740.3

 
663.4

Asset retirement obligation expenses
41.8

 
45.5

 
81.0

 
66.5

 
67.0

Asset impairment and mine closure costs
247.9

 
1,277.8

 
154.4

 
528.3

 
929.0

Selling and administrative expenses related to debt restructuring
21.5

 

 

 

 

Settlement charges related to the Patriot bankruptcy reorganization

 

 

 
30.6

 

Change in deferred tax asset valuation allowance related to equity affiliates
(7.5
)
 
(1.0
)
 
52.3

 

 

Amortization of basis difference related to equity affiliates

 
4.9

 
5.7

 
6.3

 
4.6

Interest expense, net
322.4

 
525.5

 
412.8

 
409.5

 
381.1

Reorganization items, net
159.0

 

 

 

 

Income tax (benefit) provision
(94.5
)
 
(207.1
)
 
147.4

 
(197.0
)
 
262.3

Adjusted EBITDA
$
492.2

 
$
434.6

 
$
814.0

 
$
1,047.2

 
$
1,836.5


Item 7.      Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
In 2016, we produced and sold 175.6 million and 186.8 million tons of coal, respectively, from continuing operations. During that period, 76% of our total sales (by volume) were to U.S. electricity generators, 21% were to customers outside the U.S. and 3% were to the U.S. industrial sector, with approximately 86% of our worldwide sales (by volume) delivered under long-term contracts.
The principal business of our mining segments in the U.S. is the mining, preparation and sale of thermal coal, sold primarily to electric utilities in the U.S. under long-term contracts, with a portion sold into the seaborne markets as market conditions warrant. Our Powder River Basin Mining operations consist of our mines in Wyoming. The mines in that segment are characterized by surface mining extraction processes, coal with a lower sulfur content and Btu and higher customer transportation costs (due to longer shipping distances). Our Midwestern U.S. Mining operations include our Illinois and Indiana mining operations, which are characterized by a mix of surface and underground mining extraction processes, coal with a higher sulfur content and Btu and lower customer transportation costs (due to shorter shipping distances). Our Western U.S. Mining operations reflect the aggregation of the New Mexico, Arizona and Colorado mining operations. The mines in that segment are characterized by a mix of surface and underground mining extraction processes, coal with a mid-range sulfur content and Btu. Geologically, our Powder River Basin Mining operations mine sub-bituminous coal deposits, our Midwestern U.S. Mining operations mine bituminous coal deposits and our Western U.S. Mining operations mine both bituminous and sub-bituminous coal deposits.

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The business of our Australian operating platform is primarily export focused with customers spread across several countries, while a portion of our 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. Our Australian Metallurgical Mining operations consist of mines in Queensland and one in New South Wales, Australia. The mines in that segment are characterized by both surface and underground extraction processes used to mine various qualities of metallurgical coal (low-sulfur, high Btu coal). The metallurgical coal qualities include hard coking coal, semi-hard coking coal, semi-soft coking coal and pulverized coal injection (PCI) coal. Our Australian Thermal Mining operations consist of mines in New South Wales, Australia. The mines in that segment are characterized by both surface and underground extraction processes used to mine low-sulfur, high Btu thermal coal. We classify our Australian mines within the Australian Metallurgical Mining or Australian Thermal Mining segments based on the primary customer base and coal reserve type of each mining operation. A small portion of the coal mined by the Australian Metallurgical Mining segment is of a thermal grade. Similarly, a small portion of the coal mined by the Australian Thermal Mining segment is of a metallurgical grade. Additionally, we may market some of our metallurgical coal products as a thermal coal product from time to time depending on market conditions.
Our Trading and Brokerage segment engages in the direct and brokered trading of coal and freight-related contracts through our trading and business offices. Coal brokering is conducted both as principal and agent in support of various coal production-related activities that may involve coal produced from our mines, coal sourcing arrangements with third-party mining companies or offtake agreements with other coal producers. Our Trading and Brokerage segment also provides transportation-related services, which involves both financial derivative contracts and physical contracts. Collectively, coal and freight-related hedging activities include both economic hedging and, from time to time, cash flow hedging in support of our coal trading strategy.
Our Corporate and Other segment includes selling and administrative expenses, corporate hedging activities, mining and export/transportation joint ventures, restructuring charges and activities associated with the optimization of our coal reserve and real estate holdings, minimum charges on certain transportation-related contracts, the closure of inactive mining sites and certain energy-related commercial matters.
Filing Under Chapter 11 of the United States Bankruptcy Code
On April 13, 2016, Peabody and a majority of its wholly owned domestic subsidiaries as well as one international subsidiary in Gibraltar (the Filing Subsidiaries, and together with Peabody, the Debtors) filed voluntary petitions for reorganization (the Bankruptcy Petitions) under Chapter 11 of Title 11 of the U.S. Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Eastern District of Missouri (the Bankruptcy Court). The Company's Australian operations and other international subsidiaries are not included in the filings. The Debtors continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtors-in-possession, the Debtors are authorized under Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.
The filings of the Bankruptcy Petitions constituted an event of default under our prepetition credit agreement as well as the indentures governing certain of our debt instruments, as further described in Note 14. "Current and Long-term Debt" to the accompanying consolidated financial statements, and all unpaid principal and accrued and unpaid interest due thereunder became immediately due and payable. Any efforts to enforce such payment obligations are automatically stayed as a result of the Bankruptcy Petitions and the creditors' rights of enforcement are subject to the applicable provisions of the Bankruptcy Code.
In August 2016, we outlined a business plan intended to form the basis for our plan of reorganization, as further described below. As a result of our reorganization, we expect to emerge from the Chapter 11 Cases with the competitive cost structure necessary to improve our financial position and provide long-term stability for our stakeholders in the face of potentially volatile market conditions. Important aspects of our emergence business strategy include (i) a continued focus on safe, cost-disciplined mining operations and reclamation activities, (ii) maximization of the most profitable elements of our asset base and potential divestiture of non-strategic assets, (iii) investment return-driven capital discipline, and (iv) a reduction of overall debt and fixed charges.

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In order to successfully emerge from our Chapter 11 Cases, the Debtors must propose and obtain confirmation from the Bankruptcy Court of a plan of reorganization that satisfies the requirements of the Bankruptcy Code. On January 27, 2017, the Debtors filed with the Bankruptcy Court the Second Amended Joint Plan of Reorganization of Debtors and Debtors in Possession (as further modified, the Plan) and the Second Amended Disclosure Statement with Respect to Second Amended Joint Plan of Reorganization of Debtors and Debtors in Possession (previous versions of the Plan and Disclosure Statement were filed with the Bankruptcy Court on December 22, 2016, January 25, 2017 and January 27, 2017). Subsequently, the Debtors solicited votes on the Plan. On March 15, 2017, the Debtors filed a revised version of the Plan. On March 16, 2017, the Bankruptcy Court held a hearing to determine whether the Plan should be confirmed. On March 17, 2017, the Bankruptcy Court entered an order confirming the Plan. The Plan provides for, among other things, (1) classification and treatment of various claims and equity interests, (2) a reduction of our debt upon emergence, and (3) recapitalization through a rights offering and private placement for equity securities of the reorganized company. For additional details regarding the Bankruptcy Petitions and the Debtors' plan of reorganization, refer to Note 1. "Summary of Significant Accounting Policies" to the accompanying consolidated financial statements.
As discussed more fully in Part I, Item 1A. “Risk Factors,” our results of operations in the near term could be negatively impacted by our indebtedness and our ability to consummate the Plan pursuant to the Bankruptcy Code, the price of coal, cost of competing fuels, availability of transportation for coal shipments, labor relations, weather conditions, unforeseen geologic conditions or equipment problems at mining locations and adverse changes in economic conditions in the regions in which we sell coal. On a long-term basis, our results of operations could be impacted by our ability to secure or acquire high-quality coal reserves, find replacement buyers for coal under contracts with comparable terms to existing contracts, competition from other fuel sources or the passage of new or expanded regulations that could limit our ability to mine, increase our mining costs or limit our customers’ ability to utilize coal as fuel for electricity generation. In the past, we have achieved production levels that are relatively consistent with our projections. We may adjust our future production levels in response to changes in market demand.
Results of Operations
Reverse Stock Split
Pursuant to the authorization provided at a special meeting of our stockholders held on September 16, 2015, we completed a 1-for-15 reverse stock split of the shares of our common stock on September 30, 2015 (the Reverse Stock Split). As a result of the Reverse Stock Split, every 15 shares of issued and outstanding common stock were combined into one issued and outstanding share of Common Stock, without any change in the par value per share. Our common stock began trading on a reverse stock split-adjusted basis on October 1, 2015. All share and per share data included in this report has been retroactively restated to reflect the Reverse Stock Split.
Non-U.S. GAAP Financial Measures
The following discussion of our results of operations includes references to and analysis of Adjusted EBITDA, which is a financial measure not recognized in accordance with U.S. GAAP. Adjusted EBITDA is used by management as the primary metric to measure our segments’ operating performance. We believe non-U.S. GAAP performance measures are used by investors to measure our operating performance and lenders to measure our ability to incur and service debt.
Adjusted EBITDA is defined as (loss) income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense, depreciation, depletion and amortization and reorganization items, net. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing our segments' operating performance, as displayed in the reconciliation. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
A reconciliation of Adjusted EBITDA to its most comparable measure under U.S. GAAP is included in Note 29. "Segment and Geographic Information" of the consolidated financial statements, which information is incorporated herein by reference.

Peabody Energy Corporation
2016 Form 10-K/A
6

Table of Contents

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Summary
Demand for seaborne metallurgical coal for the year ended December 31, 2016 increased compared to 2015, driven by stronger demand in China following policy measures reducing domestic coal production and on stronger China steel production. Worldwide steel production increased by 0.8% in 2016, according to data recently published by the World Steel Association (WSA), with China's crude steel production up 1.2% compared to 2015. International seaborne metallurgical and thermal coal prices increased sharply in the second half of 2016, reaching multi-year highs driven by tightening coal supply and improved coal import demand from China. Benchmark pricing for premium low-vol hard coking coal (Premium HCC) and premium low-vol pulverized coal injection (Premium PCI) coal for 2016 and 2015 were as follows (on a per tonne basis):
Contract Commencement Month:
 
Premium HCC
 
Price (Decrease) Increase
 
Premium PCI Coal
 
Price (Decrease) Increase
 
2016
 
2015
 
%
 
2016
 
2015
 
%
January
 
$
81.00

 
$
117.00

 
(31
)%
 
$
69.00

 
$
99.00

 
(30
)%
April
 
$
84.00

 
$
109.50

 
(23
)%
 
$
73.00

 
$
92.50

 
(21
)%
July
 
$
92.50

 
$
93.00

 
(1
)%
 
$
75.00

 
$
73.00

 
3
 %
October
 
$
200.00

 
$
89.00

 
125
 %
 
$
133.00

 
$
71.00

 
87
 %
Spot pricing for Premium HCC, Premium PCI coal, and Newcastle index thermal coal, and prompt month pricing for Powder River Basin (PRB) 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the year ended December 31, 2016 is set forth in the table below. While these prices are related to our primary operating segments, (with the exception of our Western U.S. Mining segment, for which there is no similar spot or prompt pricing data available) such pricing is not necessarily indicative of the pricing we realized during the year since we generally sell coal under long-term contracts where pricing is determined based on various factors. Such long-term contracts may vary significantly 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. Competition from other coal producers and alternative fuels such as natural gas may also impact our realized pricing.
 
 
High
 
Low
 
Average
 
December 31, 2016
Premium HCC
 
$
300.00

 
$
73.25

 
$
143.24

 
$
230.00

Premium PCI coal
 
$
188.65

 
$
65.65

 
$
97.23

 
$
112.10

Newcastle index thermal coal
 
$
114.75

 
$
48.80

 
$
65.65

 
$
88.40

PRB 8,800 Btu/Lb coal
 
$
12.10

 
$
8.48

 
$
10.19

 
$
12.10

Illinois Basin 11,500 Btu/Lb coal
 
$
37.00

 
$
28.50

 
$
31.39

 
$
35.00

In the U.S., electricity generation from coal decreased 9% during the year ended December 31, 2016 compared to 2015, according to the U.S. Energy Information Administration (EIA). U.S. electricity generation from coal was unfavorably affected during that period by coal-to-gas switching due to comparatively low natural gas prices during the first half of 2016, high coal stockpiles and lower heating-degree days due to mild weather. During the first half of 2016 coal and natural gas accounted for 28% and 33%, respectively, of the electricity generation mix. During the second half of 2016, coal increased its relative share of the generation mix, as coal and natural gas accounted for approximately 32% and 34%, respectively, of electricity generation.
Our revenues decreased during the year ended December 31, 2016 compared to the prior year ($893.9 million) primarily due to lower realized pricing in the U.S. and internationally and lower sales volumes driven by the demand and production factors mentioned above.
To mitigate the impact of lower coal pricing, we have continued to drive operational efficiencies, optimize production across our mining platform and control expenses at all operational and administrative levels of the organization, which has contributed to year-over-year decreases in our operating costs and expenses ($900.1 million) and selling and administrative expenses ($23.0 million). Also included in operating results for the year ended December 31, 2016 were aggregate restructuring charges of $15.5 million, recognized in connection with certain actions initiated to reduce headcount and costs across our operating segments and administrative functions, which are expected to better align our workforce with our near-term outlook and improve our cost position moving forward.

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2016 Form 10-K/A
7

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Net loss attributable to common stockholders was $729.3 million for the year ended December 31, 2016, a decrease of $1,236.0 million compared to the net loss attributable to common stockholders of $1,965.3 million in the prior year. Overall, Adjusted EBITDA of $492.2 million for the year ended December 31, 2016 reflected a year-over-year increase of $57.6 million. In addition to higher Adjusted EBITDA, the results were favorably impacted by lower asset impairment charges and decreased interest expense. These factors were partially offset by reorganization items recorded in connection with our Chapter 11 Cases.
As of December 31, 2016, our available liquidity was approximately $0.9 billion consisting of cash and cash equivalents. Refer to the "Liquidity and Capital Resources" section contained within this Item 7 for further discussion of factors affecting our available liquidity.
Tons Sold
The following table presents tons sold by operating segment for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
(Decrease) Increase
to Tons Sold
 
2016
 
2015
 
Tons
 
%
 
(Tons in millions)
 
 
Australian Metallurgical Mining
13.4

 
15.7

 
(2.3
)
 
(14.6
)%
Australian Thermal Mining
21.3

 
20.1

 
1.2

 
6.0
 %
Powder River Basin Mining
113.1

 
138.8

 
(25.7
)
 
(18.5
)%
Western U.S. Mining
13.7

 
17.9

 
(4.2
)
 
(23.5
)%
Midwestern U.S. Mining
18.3

 
21.2

 
(2.9
)
 
(13.7
)%
Total tons sold from mining segments
179.8

 
213.7

 
(33.9
)
 
(15.9
)%
Trading and Brokerage
7.0

 
15.1

 
(8.1
)
 
(53.6
)%
Total tons sold
186.8

 
228.8

 
(42.0
)
 
(18.4
)%

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2016 Form 10-K/A
8

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Supplemental Financial Data
The following table presents supplemental financial data by operating segment for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
Increase (Decrease)
 
2016
 
2015
 
$
 
%
 
 
 
 
 
 
 
 
Revenues per Ton - Mining Operations
 
 
 
 
 
 
 
Australian Metallurgical
$
81.41

 
$
75.04

 
$
6.37

 
8
 %
Australian Thermal
38.79

 
41.00

 
(2.21
)
 
(5
)%
Powder River Basin
13.02

 
13.45

 
(0.43
)
 
(3
)%
Western U.S.
38.30

 
38.09

 
0.21

 
1
 %
Midwestern U.S.
43.39

 
46.18

 
(2.79
)
 
(6
)%
Operating Costs per Ton - Mining Operations (1)
 
 
 
 
 
 
 
Australian Metallurgical
$
82.63

 
$
76.20

 
$
6.43

 
8
 %
Australian Thermal
28.56

 
31.36

 
(2.80
)
 
(9
)%
Powder River Basin
9.66

 
9.97

 
(0.31
)
 
(3
)%
Western U.S.
30.90

 
27.78

 
3.12

 
11
 %
Midwestern U.S.
31.49

 
33.49

 
(2.00
)
 
(6
)%
Gross Margin per Ton - Mining Operations (1)
 
 
 
 
 
 
 
Australian Metallurgical
$
(1.22
)
 
$
(1.16
)
 
$
(0.06
)
 
(5
)%
Australian Thermal
10.23

 
9.64

 
0.59

 
6
 %
Powder River Basin
3.36

 
3.48

 
(0.12
)
 
(3
)%
Western U.S.
7.40

 
10.31

 
(2.91
)
 
(28
)%
Midwestern U.S.
11.90

 
12.69

 
(0.79
)
 
(6
)%
(1) 
Includes revenue-based production taxes and royalties; excludes depreciation, depletion and amortization; asset retirement obligation expenses; selling and administrative expenses; restructuring and pension settlement charges; asset impairment; and certain other costs related to post-mining activities. Gross margin per ton is approximately equivalent to segment Adjusted EBITDA divided by segment tons sold.
Revenues
The following table presents revenues by reporting segment for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
(Decrease) Increase
to Revenues
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Australian Metallurgical Mining
$
1,090.4

 
$
1,181.9

 
$
(91.5
)
 
(7.7
)%
Australian Thermal Mining
824.9

 
823.5

 
1.4

 
0.2
 %
Powder River Basin Mining
1,473.3

 
1,865.9

 
(392.6
)
 
(21.0
)%
Western U.S. Mining
526.0

 
682.3

 
(156.3
)
 
(22.9
)%
Midwestern U.S. Mining
792.5

 
981.2

 
(188.7
)
 
(19.2
)%
Trading and Brokerage
(10.9
)
 
42.8

 
(53.7
)
 
(125.5
)%
Corporate and Other
19.1

 
31.6

 
(12.5
)
 
(39.6
)%
Total revenues
$
4,715.3

 
$
5,609.2

 
$
(893.9
)
 
(15.9
)%
Australia Metallurgical Mining. The decrease in our Australian Metallurgical Mining segment revenues for the year ended December 31, 2016 compared to the prior year was driven by unfavorable volume and mix variances ($186.9 million), partially offset by higher realized coal prices ($95.4 million). The volume decrease reflected lower sales volumes from Queensland mines due to weather impacts and lower production at our North Goonyella Mine resulting from a longwall move and a significant geological event which resulted in the cessation of the current longwall top coal caving system.

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9

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Australia Thermal Mining. The slight increase in our Australian Thermal Mining segment revenues for the year ended December 31, 2016 compared to the prior year was primarily driven by higher volumes ($47.6 million) offset by lower realized coal prices ($46.2 million). The increase in tons sold was primarily driven by increased production at our Wilpinjong Mine as the result of receiving temporary approval during 2016 to ship tons in excess of its government mandated limit.
Powder River Basin Mining. The decrease in our Powder River Basin Mining segment revenues for the year ended December 31, 2016 compared to the prior year was largely driven by lower volume ($335.7 million) and lower realized coal prices ($56.9 million). The decline in volume across all mines in the segment reflected the impacts on customer demand of lower natural gas prices during the first half of 2016 and mild winter weather.
Western U.S. Mining. The decrease in our Western U.S. Mining segment revenues for the year ended December 31, 2016 compared to the prior year was primarily driven by an unfavorable volume and mix variance ($146.4 million). The volume decrease reflected lower sales volumes at our Twentymile Mine due to lower production resulting from longwall moves (including an extended move to a new seam) and geological issues. The volume decrease was also driven by the litigation with Arizona Public Service Company and PacifiCorp that is further described in Note 26. "Commitments and Contingencies" of our consolidated financial statements.
Midwestern U.S. Mining. Revenues from our Midwestern U.S. Mining segment decreased during the year ended December 31, 2016 compared to the prior year due to lower volume ($146.7 million) driven by the impacts on customer demand of lower natural gas prices. Revenues for the segment were also impacted by lower realized coal prices ($42.0 million) that resulted from the repricing of certain long-term supply contracts.
Trading and Brokerage. The decline in Trading and Brokerage segment revenues for the year ended December 31, 2016 compared to the prior year reflected lower physical volumes shipped due to the impact of depressed coal pricing and unfavorable mark-to-market earnings from financial contract trading activities. We expect a significant portion of the unfavorable mark-to-market earnings to be offset in future periods upon the delivery of physical shipments which economically hedge the financial positions that related to the losses.
Loss From Continuing Operations Before Income Taxes
The following table presents loss from continuing operations before income taxes for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
Increase (Decrease) to Income
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Loss from continuing operations before income taxes
$
(758.3
)
 
$
(1,990.3
)
 
$
1,232.0

 
61.9
 %
Depreciation, depletion and amortization
(465.4
)
 
(572.2
)
 
106.8

 
18.7
 %
Asset retirement obligation expenses
(41.8
)
 
(45.5
)
 
3.7

 
8.1
 %
Selling and administrative expenses related to debt restructuring
(21.5
)
 

 
(21.5
)
 
n.m.

Asset impairment
(247.9
)
 
(1,277.8
)
 
1,029.9

 
80.6
 %
Change in deferred tax asset valuation allowance related to equity affiliates
7.5

 
1.0

 
6.5

 
650.0
 %
Amortization of basis difference related to equity affiliates

 
(4.9
)
 
4.9

 
100.0
 %
Interest expense
(298.6
)
 
(465.4
)
 
166.8

 
35.8
 %
Loss on early debt extinguishment
(29.5
)
 
(67.8
)
 
38.3

 
56.5
 %
Interest income
5.7

 
7.7

 
(2.0
)
 
(26.0
)%
Reorganization items, net
(159.0
)
 

 
(159.0
)
 
n.m.

Adjusted EBITDA
$
492.2

 
$
434.6

 
$
57.6

 
13.3
 %
Results from continuing operations before income taxes for the year ended December 31, 2016 increased compared to the prior year primarily due to asset impairment charges recorded during the year ended December 31, 2015, improved Adjusted EBITDA, decreased interest expense and decreased depreciation, depletion and amortization expenses. Those factors were partially offset by reorganization items, net recorded during the year ended December 31, 2016.

Peabody Energy Corporation
2016 Form 10-K/A
10

Table of Contents

Adjusted EBITDA
The following table presents Adjusted EBITDA for each of our reporting segments for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
Increase (Decrease) to
Adjusted EBITDA
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Australian Metallurgical Mining
$
(16.3
)
 
$
(18.2
)
 
$
1.9

 
10.4
 %
Australian Thermal Mining
217.6

 
193.6

 
24.0

 
12.4
 %
Powder River Basin Mining
379.9

 
482.9

 
(103.0
)
 
(21.3
)%
Western U.S. Mining
101.6

 
184.6

 
(83.0
)
 
(45.0
)%
Midwestern U.S. Mining
217.3

 
269.7

 
(52.4
)
 
(19.4
)%
Trading and Brokerage
(72.2
)
 
27.0

 
(99.2
)
 
(367.4
)%
Corporate and Other
(335.7
)
 
(705.0
)
 
369.3

 
52.4
 %
Adjusted EBITDA
$
492.2

 
$
434.6

 
$
57.6

 
13.3
 %
Australian Metallurgical Mining. The improvement in Australian Metallurgical Mining segment Adjusted EBITDA during the year ended December 31, 2016 compared to the prior year reflected higher coal pricing (driven by fourth quarter price settlements), net of sales-related costs ($88.9 million), offset by lower volume across the segment caused by the impact of longwall moves and geological issues at our North Goonyella Mine and the impact of wet weather at certain mines ($79.7 million).
Australian Thermal Mining. The increase in Australian Thermal Mining segment Adjusted EBITDA during the year ended December 31, 2016 compared to the prior year reflected production efficiencies attributable to mine sequencing and lower port costs ($41.7 million), an increase in volume ($25.6 million), partially offset by lower coal pricing, net of sales-related costs ($42.6 million).
Powder River Basin Mining. The decrease in Powder River Basin Mining segment Adjusted EBITDA during the year ended December 31, 2016 compared to the prior year was due to lower volume driven by lower natural gas prices, particularly in the first half of 2016 ($87.4 million), lower coal pricing, net of sales-related costs ($38.5 million) and the impact of mine sequencing, primarily at our North Antelope Rochelle Mine ($21.6 million). These factors were partially offset by reductions in materials, services and repairs resulting from our ongoing cost containment initiatives ($32.4 million) and lower diesel fuel and explosives pricing ($11.1 million).
Western U.S. Mining. The decrease in Western U.S. Mining segment Adjusted EBITDA during the year ended December 31, 2016 compared to the prior year was driven by longwall move costs at our Twentymile Mine ($38.5 million), a decline in volume driven by the contract litigation with Arizona Public Service Company and PacifiCorp that is further described in Note 26. "Commitments and Contingencies" of our consolidated financial statements ($33.0 million) and the unfavorable impact of mine sequencing, primarily at our El Segundo Mine ($12.2 million).
Midwestern U.S. Mining. The decrease in Midwestern U.S. Mining segment Adjusted EBITDA for the year ended December 31, 2016 compared to the prior year was due to lower volume driven by lower natural gas prices, particularly in the first half of 2016 ($50.1 million) and lower coal pricing, net of sales-related costs ($38.6 million), partially offset by favorable materials, services and repairs costs ($15.2 million) and reductions in labor and overhead charges ($11.4 million) resulting from our ongoing cost containment initiatives and favorable pricing and usage of fuel and explosives ($9.5 million).
Trading and Brokerage. The decrease in Trading and Brokerage segment Adjusted EBITDA during the year ended December 31, 2016 compared to the prior year reflected the impact of decreased revenues described above and the impact of damages awarded in 2015 relating to the Eagle Mining, LLC (Eagle) arbitration and the settlement of the matter. Refer to Note 26. "Commitments and Contingencies" to the accompanying consolidated financial statements for additional information related to the Eagle matter.

Peabody Energy Corporation
2016 Form 10-K/A
11

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Corporate and Other Adjusted EBITDA. The following table presents a summary of the components of Corporate and Other Adjusted EBITDA for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
(Decrease) Increase
to Income
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Resource management activities (1)
$
19.0

 
$
32.2

 
$
(13.2
)
 
(41.0
)%
Selling and administrative expenses (excluding debt restructuring)
(131.9
)
 
(176.4
)
 
44.5

 
25.2
 %
Restructuring charges
(15.5
)
 
(23.5
)
 
8.0

 
34.0
 %
Corporate hedging
(241.0
)
 
(436.8
)
 
195.8

 
44.8
 %
UMWA VEBA Settlement
68.1

 

 
68.1

 
n.m.

Other items, net (2)
(34.4
)
 
(100.5
)
 
66.1

 
65.8
 %
Corporate and Other Adjusted EBITDA
$
(335.7
)
 
$
(705.0
)
 
$
369.3

 
52.4
 %
(1) 
Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenues.
(2) 
Includes results from equity affiliates (before the impact of related changes in deferred tax asset valuation allowance and amortization of basis difference), costs associated with post mining activities, certain coal royalty expenses, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts and expenses related to our other commercial activities.
The increase associated with corporate hedging results, which includes foreign currency and commodity hedging, was due to lower hedge realizations. During the year ended December 31, 2016, a gain of $68.1 million was recognized for the voluntary employee beneficiary association (VEBA) settlement with the United Mine Workers of America (UMWA) as further described in Note 27. "Matters Related to the Bankruptcy of Patriot Coal Corporation" of our consolidated financial statements. The significant reduction in selling and administrative expenses during the year ended December 31, 2016 compared to the prior year largely reflected the impact of our ongoing cost containment initiatives, including past restructuring activities. The increase associated with "Other items, net" is primarily attributable to lower charges on certain transportation-related contracts as compared to prior year and improved Middlemount results driven by favorable pricing in the fourth quarter of 2016. Restructuring charges decreased during the year ended December 31, 2016 compared to the prior year due to the larger staffing reductions at corporate and regional offices during the first half of 2015. Resource management results decreased during the year ended December 31, 2016 compared to the prior year due to increased gains from the disposal of non-core assets, primarily from surplus lands in the Midwestern U.S. during 2015.
Depreciation, Depletion and Amortization. The following table presents a summary of depreciation, depletion and amortization expense by segment for the years ended December 31, 2016 and 2015:
 
 
 
Increase
 
Year Ended December 31,
 
to Income
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Australian Metallurgical Mining
$
(118.7
)
 
$
(178.9
)
 
$
60.2

 
33.7
%
Australian Thermal Mining
(102.5
)
 
(108.0
)
 
5.5

 
5.1
%
Powder River Basin Mining
(123.4
)
 
(138.5
)
 
15.1

 
10.9
%
Western U.S. Mining
(45.2
)
 
(55.3
)
 
10.1

 
18.3
%
Midwestern U.S. Mining
(56.2
)
 
(69.0
)
 
12.8

 
18.6
%
Trading and Brokerage
(0.2
)
 
(0.6
)
 
0.4

 
66.7
%
Corporate and Other
(19.2
)
 
(21.9
)
 
2.7

 
12.3
%
Total
$
(465.4
)
 
$
(572.2
)
 
$
106.8

 
18.7
%

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2016 Form 10-K/A
12

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Additionally, the following table presents a summary of our weighted-average depletion rate per ton for active mines in each of our mining segments for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
2016
 
2015
Australian Metallurgical Mining
$
4.36

 
$
5.27

Australian Thermal Mining
2.53

 
2.51

Powder River Basin Mining
0.71

 
0.69

Western U.S. Mining
0.92

 
0.93

Midwestern U.S. Mining
0.53

 
0.45

The decrease in depreciation, depletion and amortization expense during the year ended December 31, 2016 compared to the prior year reflected lower sales volumes from our mining platform. Depreciation, depletion and amortization was also impacted compared to the prior year by a reduction in the carrying value at certain of our Australian Metallurgical mines due to impairment charges recognized during 2015.
Selling and Administrative Expenses Related to Debt Restructuring. The general and administrative expenses related to debt restructuring recorded during the year ended December 31, 2016 related primarily to legal and other professional fees incurred in connection with debt restructuring initiatives prior to the Debtors' filing of the Bankruptcy Petitions.
Asset Impairment. We recognized $247.9 million and $1,277.8 million in aggregate asset impairment charges during the years ended December 31, 2016 and 2015, respectively. Refer to Note 4. "Asset Impairment" to the accompanying consolidated financial statements for further information regarding the nature and composition of those charges, which information is incorporated herein by reference.
Interest Expense. The decrease in interest expense for the year ended December 31, 2016 compared to the prior year is primarily due to the impact of our filing of the Bankruptcy Petitions, specifically only accruing adequate protection payments subsequent to the Petition Date to certain secured lenders and other parties in accordance with Section 502(b)(2) of the Bankruptcy Code, partially offset by increased interest recorded in connection with additional prepetition borrowings under the 2013 Revolver and increased expense related to additional letters of credit issued in support of various obligations.
Loss on Early Debt Extinguishment. The decrease in loss on early debt extinguishment charges for the year ended December 31, 2016 as compared to prior year was driven by higher charges recorded during the year ended December 31, 2015 related to the repurchase of $566.9 million aggregate principal amount of our 2016 Notes compared to the charges recorded during the year ended December 31, 2016 related to the repayment of our DIP Term Loan Facility.
Reorganization Items, Net. The reorganization items recorded during the year ended December 31, 2016 related to expenses in connection with our Chapter 11 Cases. Refer to Note 2. "Reorganization Items, Net" to the accompanying consolidated financial statements for further information regarding our reorganization items.
Loss from Continuing Operations, Net of Income Taxes
The following table presents loss from continuing operations, net of income taxes, for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
Increase (Decrease)
to Income
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Loss from continuing operations before income taxes
$
(758.3
)
 
$
(1,990.3
)
 
$
1,232.0

 
61.9
 %
Income tax benefit
(94.5
)
 
(207.1
)
 
(112.6
)
 
(54.4
)%
Loss from continuing operations, net of income taxes
$
(663.8
)
 
$
(1,783.2
)
 
$
1,119.4

 
62.8
 %
Results from continuing operations, net of income taxes, increased for the year ended December 31, 2016 compared to the prior year due to the effect of higher before-tax earnings, partially offset by the unfavorable effect of income taxes.

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2016 Form 10-K/A
13

Table of Contents

Income Tax Benefit. The year-over-year unfavorable effect of income taxes was driven by higher benefits recorded in 2015 as compared to 2016 for the tax allocation to continuing operations related to the tax effects of items credited directly to "Accumulated other comprehensive loss", the release of reserves related to uncertain tax positions and the election to carry back specified liability losses ten years. These unfavorable factors were partially offset by lower expense in Australia due to reduced before-tax earnings in 2016 as compared to 2015. Refer to Note 12. "Income Taxes" to the accompanying consolidated financial statements for additional information.
Net Loss Attributable to Common Stockholders
The following table presents net loss attributable to common stockholders for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
Increase (Decrease)
to Income
 
2016
 
2015
 
$
 
%
 
(Dollars in millions)
 
 
Loss from continuing operations, net of income taxes
$
(663.8
)
 
$
(1,783.2
)
 
$
1,119.4

 
62.8
 %
Loss from discontinued operations, net of income taxes
(57.6
)
 
(175.0
)
 
117.4

 
67.1
 %
Net loss
(721.4
)
 
(1,958.2
)
 
1,236.8

 
63.2
 %
Net income attributable to noncontrolling interests
7.9

 
7.1

 
(0.8
)
 
(11.3
)%
Net loss attributable to common stockholders
$
(729.3
)
 
$
(1,965.3
)
 
$
1,236.0

 
62.9
 %
Net results attributable to common stockholders increased during the year ended December 31, 2016 compared to the prior year largely due to the favorable change in results from continuing operations, net of income taxes, as discussed above, and the favorable impact of changes in results from discontinued operations.
Loss from Discontinued Operations, Net of Income Taxes. The improved results from discontinued operations for the year ended December 31, 2016 compared to the prior year was driven primarily by Patriot bankruptcy related charges associated with black lung liabilities and the UMWA Combined Benefit Fund totaling $132.5 million recognized during 2015. Results for the year ended December 31, 2015 also reflected a $34.7 million charge related to credit support that we provided to Patriot and a charge of $9.7 million associated with the Queensland Bulk Handling Pty Ltd. litigation. These costs were partially offset by charges of $54.3 million recorded during the year ended December 31, 2016 associated with the UMWA 1974 Pension Plan settlement. Those matters are discussed further in Note 26. "Commitments and Contingencies" and Note 27. "Matters Related to the Bankruptcy of Patriot Coal Corporation" to the accompanying consolidated financial statements.
Diluted EPS
The following table presents diluted EPS for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
Increase
to EPS
 
2016
 
2015
 
$
 
%
Diluted EPS attributable to common stockholders:
 
 
 
 
 
 
 
Loss from continuing operations
$
(36.72
)
 
$
(98.65
)
 
$
61.93

 
62.8
%
Loss from discontinued operations
(3.15
)
 
(9.64
)
 
6.49

 
67.3
%
Net loss
$
(39.87
)
 
$
(108.29
)
 
$
68.42

 
63.2
%
Diluted EPS increased in the year ended December 31, 2016 compared to the prior year commensurate with the favorable change in results from continuing and discontinued operations between those periods.
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Summary
Demand for seaborne metallurgical coal for the year ended December 31, 2015 was adversely impacted by a 2.5% decrease in worldwide steel production compared to the prior year, according to data published by the WSA. Policy measures in China aimed toward supporting the domestic coal industry also limited imports into China during 2015. Such measures, along with a lack of growth in global electricity generation from coal also hampered demand for seaborne thermal coal in 2015.

Peabody Energy Corporation
2016 Form 10-K/A
14

Table of Contents

These adverse demand factors and the impact of excess metallurgical and thermal supply continued to weigh on international coal prices. Benchmark pricing Premium HCC and Premium PCI coal for 2015 and 2014 were as follows (on a per tonne basis):
Contract Commencement Month:
 
Premium HCC
 
Price Decrease
 
Premium PCI Coal
 
Price Decrease
 
2015
 
2014
 
 
2015
 
2014
 
January
 
$
117.00

 
$
143.00

 
(18
)%
 
$
99.00

 
$
116.00

 
(15
)%
April
 
$
109.50

 
$
120.00

 
(9
)%
 
$
92.50

 
$
100.00

 
(8
)%
July
 
$
93.00

 
$
120.00

 
(23
)%
 
$
73.00

 
$
100.00

 
(27
)%
October
 
$
89.00

 
$
119.00

 
(25
)%
 
$
71.00

 
$
99.00

 
(28
)%
Spot pricing for Premium HCC, Premium PCI coal, and Newcastle index thermal coal, and prompt month pricing for Powder River Basin (PRB) 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the year ended December 31, 2015 is set forth in the table below. While these prices are related to our primary operating segments, (with the exception of our Western U.S. Mining segment, for which there is no similar spot or prompt pricing data available) such pricing is not necessarily indicative of the pricing we realized during the year since we generally sell coal under long-term contracts where pricing is determined based on various factors. Such long-term contracts may vary significantly 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. Competition from other coal producers and alternative fuels such as natural gas may also impact our realized pricing.
 
 
High
 
Low
 
Average
 
December 31, 2015
Premium HCC
 
$
110.05

 
$
72.00

 
$
87.07

 
$
76.45

Premium PCI coal
 
$
94.10

 
$
61.65

 
$
73.48

 
$
67.95

Newcastle index thermal coal
 
$
71.10

 
$
50.60

 
$
58.94

 
$
50.60

PRB 8,800 Btu/Lb coal
 
$
12.27

 
$
9.43

 
$
10.44

 
$
10.36

Illinois Basin 11,500 Btu/Lb coal
 
$
36.00

 
$
29.50

 
$
31.49

 
$
31.60

In the U.S., electricity generation from coal decreased 13% during the year ended December 31, 2015 compared to 2014, according to the U.S. EIA. U.S. electricity generation from coal was unfavorably affected during that period by coal-to-gas switching due to relatively lower natural gas prices and lower heating-degree days due to mild winter weather. Production in the U.S. Powder River Basin was also impacted by higher-than-average rainfall in the second quarter of 2015, which further contributed, along with the above factors, to a decrease in sales volumes in our total U.S. mining platform of 7% for the year ended December 31, 2015 compared to the prior year.
Our revenues decreased during the year ended December 31, 2015 compared to the prior year ($1,183.0 million) primarily due to lower realized pricing and lower sales volumes driven by the demand and production factors mentioned above.
To mitigate the impact of lower coal pricing, we continued to drive operational efficiencies, optimize production across our mining platform and control expenses at all operational and administrative levels of the organization, which led to year-over-year decreases in our operating costs and expenses ($709.2 million) and selling and administrative expenses ($50.7 million). Also included in operating results for the year ended December 31, 2015 were aggregate restructuring charges of $23.5 million, recognized in connection with certain actions initiated to reduce headcount and costs at several operating sites in Australia and to amend our administrative organizational structure.
Net loss attributable to common stockholders was $1,965.3 million for the year ended December 31, 2015, an increase of $1,209.0 million compared to the net loss attributable to common stockholders of $733.2 million in the prior year. The increased loss reflected an adverse impact from asset impairment charges, a year-over-year decrease in Adjusted EBITDA and unfavorable results from discontinued operations. Those factors were partially offset by a favorable income tax variance.
As mentioned above, we recognized material impairments during the year ended December 31, 2015 ($1,277.8 million). Additional information surrounding those charges may be found in Note 4. "Asset Impairment" to the accompanying consolidated financial statements.

Peabody Energy Corporation
2016 Form 10-K/A
15

Table of Contents

Tons Sold
The following table presents tons sold by operating segment for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
Decrease
to Tons Sold
 
2015
 
2014
 
Tons
 
%
 
(Tons in millions)
 
 
Australian Metallurgical Mining
15.7

 
17.2

 
(1.5
)
 
(8.7
)%
Australian Thermal Mining
20.1

 
21.0

 
(0.9
)
 
(4.3
)%
Powder River Basin Mining
138.8

 
142.6

 
(3.8
)
 
(2.7
)%
Western U.S. Mining
17.9

 
23.8

 
(5.9
)
 
(24.8
)%
Midwestern U.S. Mining
21.2

 
25.0

 
(3.8
)
 
(15.2
)%
Total tons sold from mining segments
213.7

 
229.6

 
(15.9
)
 
(6.9
)%
Trading and Brokerage
15.1

 
20.2

 
(5.1
)
 
(25.2
)%
Total tons sold
228.8

 
249.8

 
(21.0
)
 
(8.4
)%

Peabody Energy Corporation
2016 Form 10-K/A
16

Table of Contents

Supplemental Financial Data
The following table presents supplemental financial data by operating segment for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
(Decrease) Increase
 
2015
 
2014
 
$
 
%
 
 
 
 
 
 
 
 
Revenues per Ton - Mining Operations
 
 
 
 
 
 
 
Australian Metallurgical
$
75.04

 
$
93.81

 
$
(18.77
)
 
(20
)%
Australian Thermal
41.00

 
50.46

 
(9.46
)
 
(19
)%
Powder River Basin
13.45

 
13.49

 
(0.04
)
 
 %
Western U.S.
38.09

 
37.90

 
0.19

 
1
 %
Midwestern U.S.
46.18

 
47.99

 
(1.81
)
 
(4
)%
Operating Costs per Ton - Mining Operations (1)


 
 
 
 
 
 
Australian Metallurgical
$
76.20

 
$
102.60

 
$
(26.40
)
 
(26
)%
Australian Thermal
31.36

 
37.87

 
(6.51
)
 
(17
)%
Powder River Basin
9.97

 
9.92

 
0.05

 
1
 %
Western U.S.
27.78

 
26.69

 
1.09

 
4
 %
Midwestern U.S.
33.49

 
35.70

 
(2.21
)
 
(6
)%
Gross Margin per Ton - Mining Operations (1)


 
 
 
 
 
 
Australian Metallurgical
$
(1.16
)
 
$
(8.79
)
 
$
7.63

 
87
 %
Australian Thermal
9.64

 
12.59

 
(2.95
)
 
(23
)%
Powder River Basin
3.48

 
3.57

 
(0.09
)
 
(3
)%
Western U.S.
10.31

 
11.21

 
(0.90
)
 
(8
)%
Midwestern U.S.
12.69

 
12.29

 
0.40

 
3
 %
(1) 
Includes revenue-based production taxes and royalties; excludes depreciation, depletion and amortization; asset retirement obligation expenses; selling and administrative expenses; restructuring and pension settlement charges; asset impairment; and certain other costs related to post-mining activities. Gross margin per ton is approximately equivalent to segment Adjusted EBITDA divided by segment tons sold.
Revenues
The following table presents revenues by reporting segment for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
Decrease
to Revenues
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Australian Metallurgical Mining
$
1,181.9

 
$
1,613.8

 
$
(431.9
)
 
(26.8
)%
Australian Thermal Mining
823.5

 
1,058.0

 
(234.5
)
 
(22.2
)%
Powder River Basin Mining
1,865.9

 
1,922.9

 
(57.0
)
 
(3.0
)%
Western U.S. Mining
682.3

 
902.8

 
(220.5
)
 
(24.4
)%
Midwestern U.S. Mining
981.2

 
1,198.1

 
(216.9
)
 
(18.1
)%
Trading and Brokerage
42.8

 
58.4

 
(15.6
)
 
(26.7
)%
Corporate and Other
31.6

 
38.2

 
(6.6
)
 
(17.3
)%
Total revenues
$
5,609.2

 
$
6,792.2

 
$
(1,183.0
)
 
(17.4
)%
Australia Metallurgical Mining. The decrease in our Australian Metallurgical Mining segment revenues for the year ended December 31, 2015 compared to the prior year was driven by lower realized coal prices ($279.9 million) and the unfavorable impact of changes in volume and mix ($152.0 million). The volume decrease reflected lower sales volumes from our Burton Mine due to an amended agreement with the contract miner reached in the second half of 2014 that provided for reduced production from the site and the exhaustion of reserves at our Eaglefield Mine in the fourth quarter of 2014. Those negative volume drivers were partially offset by increased production and yield at our Millennium and North Goonyella Mines.

Peabody Energy Corporation
2016 Form 10-K/A
17

Table of Contents

Australia Thermal Mining. The decrease in our Australian Thermal Mining segment revenues for the year ended December 31, 2015 compared to the prior year was primarily driven by lower realized coal prices ($176.0 million) and the unfavorable impact of changes in volume and mix ($58.5 million) as demand for seaborne thermal coal declined. The decrease in tons sold reflected the unfavorable production impact of weather-related adverse mining conditions and mine sequencing at our surface operations.
Powder River Basin Mining. The decrease in Powder River Basin Mining segment revenues for the year ended December 31, 2015 compared to the prior year was largely driven by a 3.8 million ton reduction in sales volume as realized coal prices were flat. The decline in volume reflected the impacts on customer demand of low natural gas prices and a decrease in heating-degree days during the winter months, as well as production difficulties caused by severe rains and pit flooding, primarily in the second quarter.
Western U.S. Mining. The decrease in Western U.S. Mining segment revenues for the year ended December 31, 2015 compared to the prior year was driven by an unfavorable volume and mix variance ($232.7 million) primarily due to lower coal demand and a lack of export opportunities at current coal pricing. The effect of lower volumes was partially offset by slightly higher realized coal pricing ($12.2 million) on improved customer mix.
Midwestern U.S. Mining. Revenues from our Midwestern U.S. Mining segment were adversely impacted during the year ended December 31, 2015 compared to the prior year by unfavorable volume and mix variance ($180.1 million) driven by coal demand due to lower natural gas prices and transition of production from our Gateway Mine to our then new Gateway North Mine in the fourth quarter of 2015. Revenues for the segment were also impacted by lower realized coal pricing ($36.8 million) due to the effect of contract price re-openers and the renewal of sales contracts at less favorable prices.
Trading and Brokerage. The decline in Trading and Brokerage segment revenues for the year ended December 31, 2015 compared to the prior year reflected lower physical volumes shipped due to the opportunity-limiting impact of depressed coal pricing, partially offset by improved mark-to-market earnings from financial contract trading.
Loss From Continuing Operations Before Income Taxes
The following table presents loss from continuing operations before income taxes for the years ended December 31, 2015 and 2014:
 
 
 
 
 
(Decrease) Increase
 
Year Ended December 31,
 
to Income
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Loss from continuing operations before income taxes
$
(1,990.3
)
 
$
(547.9
)
 
$
(1,442.4
)
 
(263.3
)%
Depreciation, depletion and amortization
(572.2
)
 
(655.7
)
 
83.5

 
12.7
 %
Asset retirement obligation expenses
(45.5
)
 
(81.0
)
 
35.5

 
43.8
 %
Asset impairment
(1,277.8
)
 
(154.4
)
 
(1,123.4
)
 
(727.6
)%
Change in deferred tax asset valuation allowance related to equity affiliates
1.0

 
(52.3
)
 
53.3

 
101.9
 %
Amortization of basis difference related to equity affiliates
(4.9
)
 
(5.7
)
 
0.8

 
14.0
 %
Interest expense
(465.4
)
 
(426.6
)
 
(38.8
)
 
(9.1
)%
Loss on early debt extinguishment
(67.8
)
 
(1.6
)
 
(66.2
)
 
(4,137.5
)%
Interest income
7.7

 
15.4

 
(7.7
)
 
(50.0
)%
Adjusted EBITDA
$
434.6

 
$
814.0

 
$
(379.4
)
 
(46.6
)%
Results from continuing operations before income taxes for the year ended December 31, 2015 declined compared to the prior year primarily due to higher asset impairment charges and lower Adjusted EBITDA (discussed below). Refer to Note 4. "Asset Impairment" to the accompanying consolidated financial statements for further information regarding the nature and composition of impairment charges.

Peabody Energy Corporation
2016 Form 10-K/A
18

Table of Contents

Adjusted EBITDA
The following table presents Adjusted EBITDA for each of our reporting segments for the years ended December 31, 2015 and 2014:
 
 
 
 
 
Increase (Decrease) to
 
Year Ended December 31,
 
Adjusted EBITDA
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Australian Metallurgical Mining
$
(18.2
)
 
$
(151.1
)
 
$
132.9

 
88.0
 %
Australian Thermal Mining
193.6

 
264.1

 
(70.5
)
 
(26.7
)%
Powder River Basin Mining
482.9

 
509.0

 
(26.1
)
 
(5.1
)%
Western U.S. Mining
184.6

 
266.9

 
(82.3
)
 
(30.8
)%
Midwestern U.S. Mining
269.7

 
306.9

 
(37.2
)
 
(12.1
)%
Trading and Brokerage
27.0

 
14.9

 
12.1

 
81.2
 %
Corporate and Other
(705.0
)
 
(396.7
)
 
(308.3
)
 
77.7
 %
Adjusted EBITDA
$
434.6

 
$
814.0

 
$
(379.4
)
 
(46.6
)%
Australian Metallurgical Mining. The improvement in Australian Metallurgical Mining segment Adjusted EBITDA during the year ended December 31, 2015 compared to the prior year reflected (1) the impact of exchange rate movements ($239.5 million), (2) favorable cost performance from our surface mining operations driven by an amended agreement with the contract miner at the Burton Mine reached in the second half of 2014 and the owner-operator conversion of our Moorvale Mine completed at the end of the third quarter of 2014 ($81.2 million), (3) lower diesel fuel prices ($49.8 million), and (4) improved longwall performance from our underground mines driven by longwall top coal caving technology issues experienced at our North Goonyella Mine in the prior year ($41.1 million). The above factors were partially offset by lower coal pricing, net of sales-related costs ($260.3 million).
Australian Thermal Mining. The decrease in Australian Thermal Mining segment Adjusted EBITDA during the year ended December 31, 2015 compared to the prior year reflected lower coal pricing, net of sales-related costs ($161.5 million) and lower production due to mine sequencing at our Wilpinjong Mine ($67.7 million). Those adverse factors were partially offset by the net impact of exchange rate movements ($133.0 million) and lower fuel pricing ($21.5 million).
Powder River Basin Mining. The decrease in Powder River Basin Mining segment Adjusted EBITDA during the year ended December 31, 2015 compared to the prior year was driven by a decline in sales volume ($42.8 million) and costs associated with higher overburden ratios due to mine sequencing ($11.0 million). Those negative factors were partially offset by the favorable net impact from the pricing and usage of fuel and explosives ($31.4 million).
Western U.S. Mining. The decrease in Western U.S. Mining segment Adjusted EBITDA during the year ended December 31, 2015 compared to the prior year was driven by a decline in volume ($88.7 million) and costs associated with higher overburden ratios due to mine sequencing ($8.3 million), partially offset by favorable fuel pricing ($13.6 million).
Midwestern U.S. Mining. The decrease in Midwestern U.S. Mining segment Adjusted EBITDA for the year ended December 31, 2015 compared to the prior year was driven by a decline in volumes ($60.8 million), lower realized coal prices, net of sales-related costs ($34.2 million), and costs associated with higher overburden ratios at certain of our surface mines due to mine sequencing ($15.2 million). These adverse factors were partially offset by lower fuel pricing ($38.8 million) and reduced year-over-year expenditures related to materials and supplies, labor and other operations support spending from ongoing cost containment initiatives ($33.3 million).
Trading and Brokerage. The increase in Trading and Brokerage segment Adjusted EBITDA during the year ended December 31, 2015 compared to the prior year reflected the impact of damages awarded in the first quarter of 2014 relating to the Eagle arbitration and the settlement of the matter reached in the third quarter of 2015, in addition to improved mark-to-market earnings on financial contract trading. Refer to Note 26. "Commitments and Contingencies" to the accompanying consolidated financial statements for additional information related to the Eagle matter.

Peabody Energy Corporation
2016 Form 10-K/A
19

Table of Contents

Corporate and Other Adjusted EBITDA. The following table presents a summary of the components of Corporate and Other Adjusted EBITDA for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
Increase (Decrease)
to Income
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Resource management activities (1)
$
32.2

 
$
30.9

 
$
1.3

 
4.2
 %
Selling and administrative expenses
(176.4
)
 
(227.1
)
 
50.7

 
22.3
 %
Restructuring and pension settlement charges
(23.5
)
 
(26.0
)
 
2.5

 
9.6
 %
Corporate hedging
(436.8
)
 
(49.6
)
 
(387.2
)
 
(780.6
)%
Other items, net (2)
(100.5
)
 
(124.9
)
 
24.4

 
19.5
 %
Corporate and Other Adjusted EBITDA
$
(705.0
)
 
$
(396.7
)
 
$
(308.3
)
 
(77.7
)%
(1) 
Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenues.
(2) 
Includes results from equity affiliates (before the impact of related changes in deferred tax asset valuation allowance and amortization of basis difference), costs associated with post mining activities, certain coal royalty expenses, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts and expenses related to our other commercial activities.
Resource management results increased slightly during the year ended December 31, 2015 compared to the prior year due to increased gains from the disposal of non-core assets, primarily from surplus lands in the Midwestern U.S. The significant reduction in selling and administrative expenses during the year ended December 31, 2015 compared to the prior year largely reflected the impact of our cost containment efforts. The decrease in restructuring and pension settlement charges during the year ended December 31, 2015 compared to the prior year was driven by a lump sum payout option offered to certain qualifying participants of one of our plans in 2014, partially offset by an increase in voluntary and involuntary workforce reduction activity in 2015 related to our repositioning efforts to appropriately align our cost structure relative to prevailing global coal industry conditions. The unfavorable variance associated with corporate hedging results, which includes foreign currency and commodity hedging, resulted from the year-over-year weakening of the Australian dollar and decrease in fuel prices. The improvement in "Other items, net" during the year ended 2015 compared to the prior year reflected improved Middlemount results, as lower foreign currency rates and operational improvements at the mine more than outpaced the effect of lower coal pricing, offset by higher minimum charges on certain transportation-related contracts.
Depreciation, Depletion and Amortization. The following table presents a summary of depreciation, depletion and amortization expense by segment for the years ended December 31, 2015 and 2014:
 
 
 
Increase
 
Year Ended December 31,
 
to Income
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Australian Metallurgical Mining
$
(178.9
)
 
$
(221.5
)
 
$
42.6

 
19.2
%
Australian Thermal Mining
(108.0
)
 
(118.9
)
 
10.9

 
9.2
%
Powder River Basin Mining
(138.5
)
 
(146.4
)
 
7.9

 
5.4
%
Western U.S. Mining
(55.3
)
 
(66.6
)
 
11.3

 
17.0
%
Midwestern U.S. Mining
(69.0
)
 
(69.6
)
 
0.6

 
0.9
%
Trading and Brokerage
(0.6
)
 
(1.2
)
 
0.6

 
50.0
%
Corporate and Other
(21.9
)
 
(31.5
)
 
9.6

 
30.5
%
Total
$
(572.2
)
 
$
(655.7
)
 
$
83.5

 
12.7
%
Additionally, the following table presents a summary of our weighted-average depletion rate per ton for active mines in each of our mining segments for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
2015
 
2014
Australian Metallurgical Mining
$
5.27

 
$
4.86

Australian Thermal Mining
2.51

 
3.09

Powder River Basin Mining
0.69

 
0.70

Western U.S. Mining
0.93

 
0.94

Midwestern U.S. Mining
0.45

 
0.46


Peabody Energy Corporation
2016 Form 10-K/A
20

Table of Contents

The decrease in depreciation, depletion and amortization expense during the year ended December 31, 2015 compared to the prior year reflected lower sales volumes from our mining platform. Depreciation, depletion and amortization was also impacted compared to the prior year by a reduction in the asset bases at several of our mines due to impairment charges recognized during the second quarter of 2015 and the fourth quarter of 2014. Refer to Note 4. "Asset Impairment" to the accompanying consolidated financial statements for further information regarding these impairments. These factors were slightly offset by additional depreciation related to assets placed into service in the fourth quarter of 2015 in connection with our then new Gateway North Mine.
Asset Retirement Obligation Expenses. The decrease in asset retirement obligation expenses during the year ended December 31, 2015 compared to the prior year was driven by an asset retirement obligation liability of $22.2 million recorded in the fourth quarter of 2014 due to the nonperformance of a contract miner at a coal reserve property in the Eastern U.S. Because mining operations had ceased at that operation, a corresponding charge for the full amount of the liability was recorded to “Asset retirement obligation expenses” in the consolidated statement of operations during 2014. The year-over-year decrease in 2015 also reflected lower amortization that resulted from an overall decrease in tons sold across our mining segments and lower expense for ongoing reclamation in certain U.S. regions due to a reduction in affected acreage.
Asset Impairment. We recognized $1,277.8 million and $154.4 million in aggregate asset impairment charges during the years ended December 31, 2015 and 2014, respectively. Refer to Note 4. "Asset Impairment" to the accompanying consolidated financial statements for further information regarding the nature and composition of those charges, which information is incorporated herein by reference.
Change in Deferred Tax Asset Valuation Allowance Related to Equity Affiliates. During the year ended December 31, 2014, we recognized a $52.3 million charge for our pro-rata share of a valuation allowance on Middlemount's Australian net deferred tax assets. Based on available sources of taxable income, we determined that the net deferred tax assets were no longer considered more likely than not of being realized. That conclusion was driven by a then recent history of operating losses, as sustained weakness in seaborne metallurgical coal prices had more than offset a successful owner-operator conversion completed in 2013 and an ongoing series of operational efficiency initiatives conducted at the site that had improved the mine's cost structure.
Interest Expense. The increase in interest expense for the year ended December 31, 2015 compared to the prior year reflected higher interest rates, as compared with previously outstanding debt, related to the $1.0 billion aggregate principal amount of 10.00% Senior Secured Second Lien Notes due March 2022 issued in March 2015 and higher overall debt levels and costs associated with additional letters of credit that were issued in 2015. Those factors were partially offset by lower interest charges recognized in 2015 for litigation matters primarily due to charges recorded in the third quarter of 2014 related to the Sumiseki Materials Co. Ltd. litigation.
Loss on Early Debt Extinguishment. The loss on early debt extinguishment charges recorded during the year ended December 31, 2015 related to the repurchase of our 2016 Senior Notes. Refer to Note 14. "Current and Long-term Debt" to the accompanying consolidated financial statements for additional information related to the repurchase.
Loss from Continuing Operations, Net of Income Taxes
The following table presents loss from continuing operations, net of income taxes, for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
(Decrease) Increase
to Income
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Loss from continuing operations before income taxes
$
(1,990.3
)
 
$
(547.9
)
 
$
(1,442.4
)
 
(263.3
)%
Income tax (benefit) provision
(207.1
)
 
147.4

 
354.5

 
240.5
 %
Loss from continuing operations, net of income taxes
$
(1,783.2
)
 
$
(695.3
)
 
$
(1,087.9
)
 
(156.5
)%
Results from continuing operations, net of income taxes, declined for the year ended December 31, 2015 compared to the prior year due to the effect lower before-tax earnings, partially offset by the favorable effect of income taxes.

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2016 Form 10-K/A
21

Table of Contents

Income Tax (Benefit) Provision. The year-over-year favorable effect of income taxes was driven by the tax effect of lower earnings, the tax allocation to continuing operations related to the tax effects of items credited directly to "Accumulated other comprehensive loss", the election to carry back specified liability losses ten years, and a lower foreign valuation allowance in 2015 compared to 2014. These favorable factors were partially offset by a lower 2015 release of reserves related to uncertain tax positions compared to similar releases in 2014. Refer to Note 12. "Income Taxes" to the accompanying consolidated financial statements for additional information.
Net Loss Attributable to Common Stockholders
The following table presents net loss attributable to common stockholders for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
(Decrease) Increase
to Income
 
2015
 
2014
 
$
 
%
 
(Dollars in millions)
 
 
Loss from continuing operations, net of income taxes
$
(1,783.2
)
 
$
(695.3
)
 
$
(1,087.9
)
 
(156.5
)%
Loss from discontinued operations, net of income taxes
(175.0
)
 
(28.2
)
 
(146.8
)
 
(520.6
)%
Net loss
(1,958.2
)
 
(723.5
)
 
(1,234.7
)
 
(170.7
)%
Net income attributable to noncontrolling interests
7.1

 
9.7

 
2.6

 
26.8
 %
Net loss attributable to common stockholders
$
(1,965.3
)
 
$
(733.2
)
 
$
(1,232.1
)
 
(168.0
)%
Net results attributable to common stockholders declined during the year ended December 31, 2015 compared to the prior year largely due to the unfavorable change in results from continuing operations, net of income taxes, as discussed above, and the unfavorable impact of changes in results from discontinued operations.
Loss from Discontinued Operations, Net of Income Taxes. The unfavorable change in results from discontinued operations for the year ended December 31, 2015 compared to the prior year was driven by Patriot bankruptcy related charges associated with black lung liabilities and the UMWA Combined Benefit Fund totaling $132.5 million. Results for the year ended December 31, 2015 also reflected a $34.7 million charge related to credit support that we provide to Patriot and a contingent loss accrual of $9.7 million associated with the Queensland Bulk Handling Pty Ltd. litigation. Those matters are discussed further in Note 27. "Matters Related to the Bankruptcy of Patriot Coal Corporation" and Note 26. "Commitments and Contingencies" to the accompanying consolidated financial statements.
Diluted EPS
The following table presents diluted EPS for the years ended December 31, 2015 and 2014:
 
Year Ended December 31,
 
Decrease
to EPS
 
2015
 
2014
 
$
 
%
Diluted EPS attributable to common stockholders:
 
 
 
 
 
 
 
Loss from continuing operations
$
(98.65
)
 
$
(39.51
)
 
$
(59.14
)
 
(149.7
)%
Loss from discontinued operations
(9.64
)
 
(1.57
)
 
(8.07
)
 
(514.0
)%
Net loss
$
(108.29
)
 
$
(41.08
)
 
$
(67.21
)
 
(163.6
)%
Diluted EPS declined in the year ended December 31, 2015 compared to the prior year commensurate with the unfavorable change in results from continuing and discontinued operations between those periods.
Outlook
Our near-term outlook is intended to coincide with the next 12 to 24 months, with subsequent periods addressed in our long-term outlook.
Near-Term Outlook
U.S. Thermal Coal. U.S. domestic electricity generation increased as a result of above-average cooling degree days, which along with increasing natural gas prices since March, positively impacted utility coal consumption and resulted in larger than normal stockpile drawdowns.  U.S. coal prices have strengthened with prompt Powder River Basin (PRB) 8,800 Btu/Lb coal prices reaching $12.10 per ton as of December 31, 2016, up 17% year-to-date.  As of March 16, 2017, the PRB 8,800 Btu/Lb coal prompt price was $11.35.

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2016 Form 10-K/A
22

Table of Contents

Peabody projects U.S. utility coal consumption to increase approximately 50 to 70 million tons in 2017 versus 2016, driven by higher natural gas prices and improved competitiveness of coal-fired electric generation. Peabody expects U.S. thermal coal supply and demand to continue to rebalance in 2017 as natural gas prices increase, coal consumption grows, exports stabilize and stockpile drawdowns continue. If natural gas prices are lower than projected in 2017, coal consumption will likely decrease relative to expectations.
Seaborne Thermal Coal. Seaborne thermal coal demand rose in the second half of 2016 resulting from increased import demand from China but has declined in recent months as China production increased following the government’s easing of production policy restrictions. Newcastle index thermal coal spot pricing reached its highest level since early 2012 at $114.75 in November, and was $88.40 per tonne as of December 31, 2016, up $37.80 per tonne (75%) year-over-year. Higher China import demand was primarily the result of stronger electricity generation, improved industrial demand and reduced domestic coal supply largely driven by restrictive policies. Seaborne demand growth outside of China has been relatively weak, as evidenced by reduced imports into India. As of March 16, 2017, the Newcastle index thermal coal spot price was $81.10.
Following the strong surge in prices, China relaxed production restrictions multiple times. In addition, recent price levels have incentivized exporting producers to increase production and export supply. A key driver for future seaborne thermal coal supply and demand balance is the outlook for China import demand, which remains uncertain and is expected to be dependent in part on the sustainability and enforcement of China’s domestic production policy.
Seaborne Metallurgical Coal. Supply tightness and increased seaborne import demand have resulted in sharply higher seaborne high quality hard coking coal prices in the second half of 2016. Domestic supply declines in China accelerated during the year largely due to policy restrictions, which along with reduced coal supplies from Australia and other key exporting countries drove spot pricing to $310 per tonne in November, its highest level since May 2011. Hard coking coal spot pricing was at $230 per tonne on December 31, 2016, up 201% year-to-date. Seaborne metallurgical coal prices for high quality hard coking coal and low-vol PCI settled at $285 and $180 per tonne, respectively, for quarterly contracts commencing in January 2017, increasing 43% and 35% percent, respectively, versus prior-quarter price levels. As of March 16, 2017, the hard coking coal and low-vol PCI coal spot prices were $159.75 and $107.75, respectively.
Similar to thermal, China’s domestic metallurgical coal production is expected to increase due to relaxed policy on production curtailments. While the impact remains uncertain, such policy changes could lead to reduced coal imports by China.
Long-Term Outlook
As part of its normal planning and forecasting process, Peabody utilizes a bottom-up approach to develop macroeconomic assumptions for key variables, including country level GDP, industrial production, fixed asset investment and third-party inputs, driving detailed supply and demand projections. This includes key demand centers for coal, generation and steel, while cost curves concentrate on major supply regions/countries that impact the regions in which the Company operates.
Our estimates involve risks and uncertainties and are subject to change based on various factors.
Seaborne Fundamentals
In 2016, seaborne coal prices rose from multi-year lows in the first half of the year to multi-year highs in later months as supply and demand fundamentals improved on strong import demand in China. During 2016, China thermal coal imports increased approximately 22% as compared to 2015, while metallurgical coal imports increased approximately 25% as compared to 2015, driven by domestic production policy restrictions and increased steel production.
Looking ahead, Peabody projects seaborne coal fundamentals to trend higher through 2021. In seaborne metallurgical coal, demand is forecast by Peabody to increase 30 to 35 million tonnes, or 10% – 15%, from 2016 to 2021. Growth in metallurgical coal demand is expected to be led by India, with an increase of approximately 25 million tonnes, which we expect could become the largest importer of seaborne metallurgical coal over this period. Longer-term metallurgical coal pricing is expected by Peabody to retreat to more stable levels, driven by expected China policies restricting supply and the response from seaborne suppliers.
In seaborne thermal coal, demand is expected by Peabody to rise modestly by 25 to 35 million tonnes from 2016 through 2021 as new generation capacity comes on line. Approximately 375 gigawatts of new gross coal capacity are expected by Peabody to be added by 2021. More than 85% of this projected increase is expected to be concentrated in the Asia-Pacific region as Association of Southeast Asian Nations capacity is forecasted by Peabody to surge approximately 75% over the period. Approximately 180 gigawatts are expected by Peabody to be added in China, 64 gigawatts added in India, 72 gigawatts added in other Asian countries and the remainder across the rest of the world. The majority of new capacity is projected by Peabody to be ultra or supercritical boiler types as part of a transition to a lower carbon-emitting coal fleet. Peabody expects a shift toward enhanced boilers to result in stronger demand for higher quality coal.

Peabody Energy Corporation
2016 Form 10-K/A
23

Table of Contents

We believe Australia is well positioned to supply increased demand for both metallurgical and thermal coal, while Colombia is also positioned to grow thermal coal exports. Due to the cyclical nature of the coal industry, supply and demand fundamentals are subject to extreme fluctuations over time.
U.S. Fundamentals
In the U.S., coal demand rebounded in the second half of 2016 as natural gas prices rose sharply from the lowest levels in approximately 15 years. Peabody expects 2017 coal consumption to rebound from 2016 levels on higher natural gas prices. As a result, coal is projected by Peabody to fuel over 30% of U.S. electricity generation in 2017.
Longer term, Peabody forecasts U.S. coal consumption will decline 5 to 15 million tons between 2016 and 2021 as expected coal plant retirements are largely offset by higher capacity utilization at remaining plants. Approximately 50 gigawatts of plant retirements are expected by Peabody over the period, and competition for coal in electric generation from natural gas is expected to continue given low natural gas production costs and sufficient reserves.
By 2021, Peabody expects coal to supply an estimated 29% of U.S. electricity generation, down from approximately 30% in 2016. Coal from the PRB and Illinois Basin (ILB) is expected to remain most competitive on average against natural gas based on delivered fuel costs. By 2021, the PRB and ILB are projected by Peabody to supply nearly 55% of U.S. coal compared to approximately 51% in 2016. In addition, we believe PRB coal prices will improve over the period while ILB prices will stabilize. Key variables impacting stockpiles and prices included GDP, weather, renewables and gas exports. The economics of coal pricing and volume remain highly sensitive to natural gas prices.
Liquidity and Capital Resources
Overview
Our primary sources of cash are proceeds from the sale of our coal production to customers. We have also generated cash from the sale of non-strategic assets, including coal reserves and surface lands. Our primary uses of cash include the cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs, capital and operating lease payments, postretirement plans, take-or-pay obligations and post-mining retirement obligations. Historically, we have also generated cash from borrowings under our credit facilities and, from time to time, the issuance of securities.
Total Indebtedness. Our total indebtedness as of December 31, 2016 and 2015 consisted of the following:
 
December 31,
 
2016
 
2015
 
(Dollars in millions)
2013 Revolver
$
1,558.1

 
$