Recently Adopted Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Cost (“new benefit cost standard”), which requires separate presentation of service costs and all other components of net benefit costs in the Consolidated Statements of Operations. Under this ASU, service cost is included in the same line item as other compensation costs arising from services rendered by employees during the period, with all other components of net benefit costs in the Consolidated Statements of Operations (unaudited) outside of Operating loss. The amendments in this update require retrospective application. Prior to the adoption of the new benefit cost standard, the service cost portion of net periodic benefit cost from pension and postretirement medical benefit were presented in Cost of sales (exclusive of depreciation, depletion and amortization, shown separately) and Selling and administrative while the remaining components of net period benefit cost were included in Selling and administrative and Heritage health benefit expenses.

The Company adopted the new benefit cost standard effective January 1, 2018, at which point all of the service cost portion of net periodic benefit cost from pension and postretirement medical benefit are presented in Cost of sales (exclusive of depreciation, depletion and amortization, shown separately) with the remaining components of net periodic benefit cost are presented in Other expense outside of Operating loss. Refer to "Impacts to Previously Reported Results" below for the impact of adoption of the new benefit cost standard on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“new cash flows standard”), which requires all entities that have restricted cash or restricted cash equivalents to explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents in the Consolidated Statements of Cash Flows. As a result, amounts generally described as restricted cash and restricted cash equivalents that are included in other financial statement captions of the Consolidated Balance Sheets should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the Consolidated Statements of Cash Flows. The ASU should be adopted using a retrospective transition method to each period presented. The Company adopted the new cash flows standard effective January 1, 2018 and applied the ASU retrospectively to the periods presented in the Company's Consolidated Statements of Cash Flows (unaudited). Refer to “Impacts to Previously Reported Results” below for the impact of adoption of the new cash flows standard on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“new revenue standard”), which supersedes all previously existing revenue recognition guidance. Under this guidance, an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard allows for initial application to be performed retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. During 2016, the FASB clarified the implementation guidance on principal versus agent, identifying performance obligations and licensing, practical expedients, and made technical corrections on various topics.

The Company adopted the new revenue standard effective January 1, 2018 using the full retrospective method. Accordingly, certain prior period balances have been restated to reflect the financial results of the Company in accordance with the new standard. This includes the cumulative effect of the adoption reflected as an adjustment to the opening balance of Accumulated deficit for the earliest balance sheet period presented.

As a result of the adoption of the new revenue standard, the timing of the recognition of revenue related to certain long-term coal supply agreements that contain provisions for future payments from customers to reimburse our costs incurred during final reclamation is accelerated as compared to the recognition pattern under the previous revenue standard. The contract asset created from the accelerated recognition of revenue related to customer payments related to final reclamation is classified as Unbilled revenues and Unbilled revenues, less current portion in the Consolidated Balance Sheets (unaudited). See Note 2 - Revenue for a more detailed description of accounting for customer payments related to final reclamation.

Additionally, upon adoption of the new revenue standard we revised the recognition period of certain deferred revenues from customer up-front payments that were previously being amortized to revenue over the full term of their respective coal supply agreements. Under the new revenue standard, we concluded that these payments provided the customer with a material right for a period shorter in duration than the full term of the coal supply agreements.

Refer to "Impacts to Previously Reported Results" below for the impact of adoption of the new revenue standard on our consolidated financial statements (unaudited).

Impacts to Previously Reported Results

The adoption of the new benefit cost standard, new cash flows standard and new revenue standard resulted in the following adjustments to previously reported results, with no change to the Consolidated Statement of Comprehensive Loss for the three months ended June 30, 2017:

Consolidated Balance Sheet as of December 31, 2017



	As Reported			Adjustments for New Revenue Standard			Additional Reclassifications			As Adjusted
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	103,247		$	—		$	—		$	103,247
Receivables:
Trade	103,611			—			(14,300		)	89,311
Other	17,697			—			—			17,697
Total receivables	121,308			—			(14,300		)	107,008
Inventories	106,795			—			—			106,795
Unbilled revenues	—			49,574			14,300			63,874
Other current assets	11,517			—			—			11,517
Total current assets	342,867			49,574			—			392,441
Land, mineral rights, property, plant and equipment	1,665,740			—			—			1,665,740
Less accumulated depreciation, depletion and amortization	923,905			—			—			923,905
Net land, mineral rights, property, plant and equipment	741,835			—			—			741,835
Advanced coal royalties	21,404			—			—			21,404
Restricted investments, reclamation deposits and bond collateral	200,194			—			—			200,194
Unbilled revenues, less current portion	—			225,245			—			225,245
Investment in joint venture	27,763			—			—			27,763
Other assets	55,036			—			—			55,036
Total Assets	$	1,389,099		$	274,819		$	—		$	1,663,918

Liabilities and Shareholders’ Deficit
Current liabilities:
Current installments of long-term debt	$	983,427		$	—		$	—		$	983,427
Accounts payable and accrued expenses:
Trade and other accrued liabilities	121,489			—			—			121,489
Interest payable	22,840			—			—			22,840
Production taxes	41,688			—			—			41,688
Postretirement medical benefits	14,734			—			—			14,734
Deferred revenue	5,068			(1,867		)	—			3,201
Asset retirement obligations	48,429			—			—			48,429
Other current liabilities	9,401			—			—			9,401
Total current liabilities	1,247,076			(1,867		)	—			1,245,209
Long-term debt, less current installments	64,980			—			—			64,980
Postretirement medical benefits, less current portion	317,407			—			—			317,407
Pension and SERP obligations, less current portion	43,585			—			—			43,585
Deferred revenue, less current portion	1,984			(1,984		)	—			—
Asset retirement obligations, less current portion	426,038			—			—			426,038
Other liabilities	31,477			—			—			31,477
Total liabilities	2,132,547			(3,851		)	—			2,128,696
Shareholders’ deficit:
Common stock of $0.01 par value: Authorized 30,000,000 shares; Issued and outstanding 18,771,643 shares at December 31, 2017	188			—			—			188
Other paid-in capital	250,494			—			—			250,494
Accumulated other comprehensive loss	(160,525		)	1,826			—			(158,699		)
Accumulated deficit	(829,107		)	276,844			—			(552,263		)
Total shareholders’ deficit	(738,950		)	278,670			—			(460,280		)
Noncontrolling interests in consolidated subsidiaries	(4,498		)	—			—			(4,498		)
Total deficit	(743,448		)	278,670			—			(464,778		)
Total Liabilities and Shareholders' Deficit	$	1,389,099		$	274,819		$	—		$	1,663,918

Consolidated Statement of Operations for the three months ended June 30, 2017



	As Reported			Adjustments for New Revenue Standard		Adjustments for New Net Periodic Benefit Cost Standard			As Adjusted
	(In thousands, except per share data)
Revenues	$	323,025		$	4,289	$	—		$	327,314
Cost, expenses and other:
Cost of sales (exclusive of depreciation, depletion and amortization, shown separately)	271,909			—		408			272,317
Depreciation, depletion and amortization	39,497			—		—			39,497
Selling and administrative	30,166			—		(1,839		)	28,327
Heritage health benefit expenses	3,306			—		(2,305		)	1,001
Loss on sale/disposal of assets	133			—		—			133
Derivative loss	481			—		—			481
Income from equity affiliates	(1,400		)	—		—			(1,400		)
	344,092			—		(3,736		)	340,356
Operating loss	(21,067		)	4,289		3,736			(13,042		)
Other (expense) income:
Interest expense	(30,109		)	—		—			(30,109		)
Interest income	1,038			—		—			1,038
Loss on foreign exchange	(1,185		)	48		—			(1,137		)
Other income (expense)	302			—		(3,736		)	(3,434		)
	(29,954		)	48		(3,736		)	(33,642		)
Loss before income taxes	(51,021		)	4,337		—			(46,684		)
Income tax benefit	(501		)	99		—			(402		)
Net loss	(50,520		)	4,238		—			(46,282		)
Less net loss attributable to noncontrolling interest	(138		)	—		—			(138		)
Net loss applicable to common shareholders	$	(50,382	)	$	4,238	$	—		$	(46,144	)

Net loss per share applicable to common shareholders:
Basic and diluted	$	(2.69	)	$	0.22	$	—		$	(2.47	)
Weighted average number of common shares outstanding:
Basic and diluted	18,700			—		—			18,700

Consolidated Statement of Operations for the six months ended June 30, 2017



	As Reported			Adjustments for New Revenue Standard		Adjustments for New Net Periodic Benefit Cost Standard			As Adjusted
	(In thousands, except per share data)
Revenues	$	662,762		$	11,564	$	—		$	674,326
Cost, expenses and other:
Cost of sales (exclusive of depreciation, depletion and amortization, shown separately)	556,513			—		824			557,337
Depreciation, depletion and amortization	76,064			—		—			76,064
Selling and administrative	60,592			—		(3,690		)	56,902
Heritage health benefit expenses	6,604			—		(4,609		)	1,995
Gain on sale/disposal of assets	(34		)	—		—			(34		)
Derivative gain	(1,904		)	—		—			(1,904		)
Income from equity affiliates	(2,919		)	—		—			(2,919		)
	694,916			—		(7,475		)	687,441
Operating loss	(32,154		)	11,564		7,475			(13,115		)
Other (expense) income:
Interest expense	(59,371		)	—		—			(59,371		)
Interest income	1,931			—		—			1,931
Loss on foreign exchange	(1,652		)	50		—			(1,602		)
Other income (expense)	2,460			—		(7,475		)	(5,015		)
	(56,632		)	50		(7,475		)	(64,057		)
Loss before income taxes	(88,786		)	11,614		—			(77,172		)
Income tax benefit	(965		)	191		—			(774		)
Net loss	(87,821		)	11,423		—			(76,398		)
Less net loss attributable to noncontrolling interest	(637		)	—		—			(637		)
Net loss applicable to common shareholders	$	(87,184	)	$	11,423	$	—		$	(75,761	)

Net loss per share applicable to common shareholders:
Basic and diluted	$	(4.68	)	$	0.61	$	—		$	(4.07	)
Weighted average number of common shares outstanding:
Basic and diluted	18,636			—		—			18,636

Consolidated Statement of Comprehensive Loss for the six months ended June 30, 2017



	As Reported			Adjustments for New Revenue Standard			As Adjusted
	(In thousands)
Net loss	$	(87,821	)	$	11,423		$	(76,398	)
Other comprehensive income (loss)
Pension and other postretirement plans:
Amortization of accumulated actuarial gains and prior service costs, pension	1,177			—			1,177
Adjustments to accumulated actuarial gains and transition obligations, pension	301			—			301
Amortization of accumulated actuarial gains, transition obligations, and prior service costs, postretirement medical benefits	1,929			—			1,929
Tax effect of other comprehensive income	(1,819		)	(386		)	(2,205		)
Foreign currency translation adjustment gains	8,029			—			8,029
Unrealized and realized gains on available-for-sale debt securities	1,196			—			1,196
Other comprehensive income, net of income taxes	10,813			(386		)	10,427
Comprehensive loss	(77,008		)	11,037			(65,971		)
Less: Comprehensive loss attributable to noncontrolling interest	(637		)	—			(637		)
Comprehensive loss attributable to common shareholders	$	(76,371	)	$	11,037		$	(65,334	)

Consolidated Statement of Cash Flows for the six months ended June 30, 2017



	As Reported			Adjustments for New Revenue Standard			Adjustments for New Cash Flows Standard			As Adjusted
	(In thousands)
Cash flows from operating activities:
Net loss	$	(87,821	)	$	11,423		$	—		$	(76,398	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization	76,064			—			—			76,064
Accretion of asset retirement obligation	22,437			—			—			22,437
Share-based compensation	2,480			—			—			2,480
Non-cash interest expense	4,639			—			—			4,639
Amortization of deferred financing costs	5,193			—			—			5,193
Gain on derivative instruments	(1,904		)	—			—			(1,904		)
Loss on foreign exchange	1,652			(50		)	—			1,602
Income from equity affiliates	(2,919		)	—			—			(2,919		)
Distributions from equity affiliates	3,403			—			—			3,403
Deferred income tax benefit	(965		)	191			—			(774		)
Other	(1,752		)	—			—			(1,752		)
Changes in operating assets and liabilities:
Receivables	11,360			—			—			11,360
Inventories	7,706			—			—			7,706
Accounts payable and accrued expenses	(20,919		)	—			—			(20,919		)
Interest payable	532			—			—			532
Deferred revenue	(5,809		)	885			—			(4,924		)
Unbilled revenues	—			(12,449		)	—			(12,449		)
Other assets and liabilities	17,596			—			—			17,596
Asset retirement obligations	(20,819		)	—			—			(20,819		)
Net cash used in operating activities	10,154			—			—			10,154
Cash flows from investing activities:
Additions to property, plant and equipment	(13,104		)	—			—			(13,104		)
Proceeds from sales of restricted investments	21,605			—			—			21,605
Purchases of restricted investments	(23,614		)	—			(1,117		)	(24,731		)
Cash payments related to acquisitions and other	(3,580		)	—			—			(3,580		)
Proceeds from sales of assets	783			—			—			783
Receipts from loan and lease receivables	50,488			—			—			50,488
Other	(969		)	—			—			(969		)
Net cash provided by investing activities	31,609			—			(1,117		)	30,492
Cash flows from financing activities:
Repayments of long-term debt	(44,324		)	—			—			(44,324		)
Borrowings on revolving lines of credit	113,200			—			—			113,200
Repayments on revolving lines of credit	(113,200		)	—			—			(113,200		)
Other	(364		)	—			—			(364		)
Net cash used in financing activities	(44,688		)	—			—			(44,688		)
Effect of exchange rate changes on cash	463			—			—			463
Net decrease in cash and cash equivalents, including restricted cash	(2,462		)	—			(1,117		)	(3,579		)
Cash and cash equivalents, including restricted cash, beginning of period	60,082			—			69,533			129,615
Cash and cash equivalents, including restricted cash, end of period	$	57,620		$	—		$	68,416		$	126,036
Supplemental disclosures of cash flow information:
Cash paid for interest	$	48,931		$	—		$	—		$	48,931
Non-cash transactions:
Accrued purchases of property and equipment	$	1,009		$	—		$	—		$	1,009
Capital leases and other financing sources	480			—			—			480

Recently Issued Accounting Pronouncements

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 provides an option to reclassify stranded tax effects within accumulated other comprehensive loss to retained earnings due to the change in the U.S. federal tax rate in the Tax Cuts and Jobs Act of 2017. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods therein with early adoption permitted. The Company is currently in the process of analyzing the standard, but does not expect the adoption to have a material impact to our financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires companies leasing assets to recognize on their balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on contracts longer than one year. The new guidance is effective for fiscal years beginning after December 15, 2018, using a modified retrospective approach, with early adoption permitted.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842):Targeted Improvements, which includes two main provisions. The first is an additional optional transition method to adopt the new leasing standard at the adoption date through recognition of a cumulative-effect adjustment to the opening balance of retaining earnings in the period of adoption. The second provides lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component, if certain criteria are met.

The Company has established an implementation team to execute a multi-phase plan to adopt the requirements of the new standard. The team is in the process of finalizing its conclusions on how the guidance will be applied to all identified leases. The team is also evaluating the expanded disclosures required by the new standard and reviewing our system capabilities, processes and internal controls over financial reporting to ensure the appropriate information will be available for these disclosures. We will adopt the new guidance in the first quarter of 2019.