XML 28 R15.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Derivatives and Fair Value Measurements (Notes) | 12 Months Ended
--- | ---
Dec. 31, 2016
Derivatives and Fair Value Measurements [Abstract] |
Derivatives and Fair Value [Text Block] | Derivatives and Fair Value Measurements Risk Management — Corporate Hedging Activities The Company is exposed to several risks in the normal course of business, including (1) foreign currency exchange rate risk for non-U.S. dollar expenditures and balances, (2) price risk on coal produced by, and diesel fuel utilized in, the Company's mining operations and (3) interest rate risk that has been partially mitigated by fixed rates on long-term debt. The Company manages a portion of its price risk related to the sale of coal (excluding coal trading activities) using long-term coal supply agreements (those with terms longer than one year), rather than using derivative instruments. Derivative financial instruments have historically been used to manage the Company's risk exposure to foreign currency exchange rate risk, primarily on Australian dollar expenditures made in its Australian mining platform. This risk was historically managed using forward contracts and options designated as cash flow hedges, with the objective of reducing the variability of cash flows associated with forecasted foreign currency expenditures. The Company has also used derivative instruments to manage its exposure to the variability of diesel fuel prices used in production in the U.S. and Australia with swaps or options, which it has also designated as cash flow hedges, with the objective of reducing the variability of cash flows associated with forecasted diesel fuel purchases. These risk management activities are collectively referred to as "Corporate Hedging" and are actively monitored for compliance with the Company's risk management policies. During the fourth quarter of 2015, the Company performed an assessment of its risk of nonperformance with respect to derivative financial instruments designated as cash flow hedges in light of three rating agencies downgrading the Company's corporate credit rating during 2015 and declining financial results. The Company determined its hedging relationships were expected to be "highly effective" throughout 2015 based on its quarterly assessments. However, as a result of a deterioration in the Company's credit profile, the Company could no longer conclude, as of December 31, 2015, that its hedging relationships were expected to be "highly effective" at offsetting the changes in the anticipated exposure of the hedged item. Therefore, the Company discontinued the application of cash flow hedge accounting subsequent to December 31, 2015 and changes in the fair value of derivative instruments have been recorded as operating costs and expenses in the accompanying consolidated statements of operations after that date. Previous fair value adjustments recorded in "Accumulated other comprehensive loss" were frozen until the underlying transactions impact the Company's earnings. The Company's Bankruptcy Petitions constituted an event of default under the Company's derivative financial instrument contracts and the counterparties terminated the agreements shortly thereafter in accordance with contractual terms. The terminated positions are first-lien obligations under the Company's secured credit agreement dated September 24, 2013 (as amended, the 2013 Credit Facility). The resulting net settlement liability of $257.3 million was accounted for as a prepetition liability subject to compromise without credit valuation adjustments. As of December 31, 2016, the Company had no derivative financial instruments in place in relation to diesel fuel or foreign currency exchange rate. The Company is reevaluating its future Corporate Hedging activities and programs. Based on the previous fair value adjustments of the Company's foreign currency and diesel fuel hedge contracts recorded in "Accumulated other comprehensive loss", the net loss expected to be reclassified from comprehensive income to earnings over the next 12 months is approximately $93 million (which excludes the impact of fresh start reporting rules in connection with emergence from the Chapter 11 Cases). The tables below show the classification and amounts of pre-tax gains and losses related to the Company’s Corporate Hedging derivatives during the years ended December 31, 2016, 2015 and 2014:
|  |  |  | Year Ended December 31, 2016
|  | Income Statement Classification Losses - Realized |  | Total realized loss recognized in income |  | Loss reclassified from other comprehensive income into income (1) |  | (Loss) gain recognized in income on derivatives
Financial Instrument |  |  |  |
|  |  |  | (Dollars in millions)
Commodity swap contracts |  | Operating costs and expenses |  | $ | (98.0 | ) |  | $ | (86.1 | ) |  | $ | (11.9 | )
Commodity swap contracts |  | Reorganization items, net |  | (38.8 | ) |  | — |  |  | (38.8 | )
Foreign currency forward contracts |  | Operating costs and expenses |  | (142.9 | ) |  | (145.6 | ) |  | 2.7 |
Foreign currency forward contracts |  | Reorganization items, net |  | (36.4 | ) |  | — |  |  | (36.4 | )
Total |  |  |  | $ | (316.1 | ) |  | $ | (231.7 | ) |  | $ | (84.4 | )
(1) | Includes the reclassification from "Accumulated other comprehensive loss" into earnings of $13.6 million and $9.0 million of previously unrecognized losses on foreign currency and fuel contracts, respectivley, monetized in first quarter of 2016.
|  |  |  | Year Ended December 31, 2015
|  | Income Statement Classification Losses - Realized |  | Loss recognized in other comprehensive income on derivative (effective portion) |  | Loss reclassified from other comprehensive income into income (effective portion)(1) |  | Loss reclassified from other comprehensive income into income (ineffective portion)
Financial Instrument |  |  |  |
|  |  |  | (Dollars in millions)
Commodity swap contracts |  | Operating costs and expenses |  | $ | (77.0 | ) |  | $ | (122.0 | ) |  | $ | 1.6 |
Foreign currency forward contracts |  | Operating costs and expenses |  | (122.0 | ) |  | (316.4 | ) |  | — |
Total |  |  |  | $ | (199.0 | ) |  | $ | (438.4 | ) |  | $ | 1.6 |
(1) | Includes the reclassification from "Accumulated other comprehensive loss" into earnings of $14.9 million of previously unrecognized gains on foreign currency cash flow hedge contracts monetized in the fourth quarter of 2012.
|  |  |  | Year Ended December 31, 2014
|  | Income Statement Classification Losses - Realized |  | Loss recognized in other comprehensive income on derivative (effective portion) |  | Loss reclassified from other comprehensive income into income (effective portion)(1) |  | Loss reclassified from other comprehensive income into income (ineffective portion)
Financial Instrument |  |  |  |
|  |  |  | (Dollars in millions)
Commodity swap contracts |  | Operating costs and expenses |  | $ | (194.5 | ) |  | $ | (20.6 | ) |  | $ | (1.7 | )
Foreign currency forward contracts |  | Operating costs and expenses |  | (100.9 | ) |  | (27.3 | ) |  | — |
Total |  |  |  | $ | (295.4 | ) |  | $ | (47.9 | ) |  | $ | (1.7 | )
(1) | Includes the reclassification from "Accumulated other comprehensive loss" into earnings of $136.9 million of previously unrecognized gains on foreign currency cash flow hedge contracts monetized in the fourth quarter of 2012.
Cash Flow Presentation. The Company classifies the cash effects of its Corporate Hedging derivatives within the "Cash Flows From Operating Activities" section of the consolidated statements of cash flows. Offsetting and Balance Sheet Presentation The Company's previous Corporate Hedging derivative financial instruments were transacted in over-the-counter (OTC) markets with financial institutions under International Swaps and Derivatives Association (ISDA) Master Agreements. Those agreements contain symmetrical default provisions which allow for the net settlement of amounts owed by either counterparty in the event of default or contract termination. The Company offset its Corporate Hedging asset and liability derivative positions on a counterparty-by-counterparty basis in the consolidated balance sheets, with the fair values of those respective derivatives reflected in “Other current assets,” “Investments and other assets,” “Accounts payable and accrued expenses” and “Other noncurrent liabilities." Though the symmetrical default provisions associated with the Company's Corporate Hedging derivatives existed at the overall counterparty level across its foreign currency and diesel fuel hedging strategy derivative contract portfolios, the Company's accounting policy is to apply counterparty offsetting separately within those derivative contract portfolios for presentation in the consolidated balance sheets because that application is more consistent with the fact that the Company generally net settled its Corporate Hedging derivatives with each counterparty by derivative contract portfolio on a routine basis. The classification and amount of Corporate Hedging derivative financial instruments presented on a gross and net basis as of December 31, 2015 are presented in the table that follows.
| Fair Value of Liabilities Presented in the Consolidated Balance Sheet as of December 31, 2015 (1)
Financial Instrument
| (Dollars in millions)
Current Liabilities: |
Commodity swap contracts | $ | 86.1 |
Foreign currency forward contracts | 145.6 |
Total | $ | 231.7 |
Noncurrent Liabilities: |
Commodity swap contracts | $ | 37.6 |
Foreign currency forward contracts | 55.1 |
Total | $ | 92.7 |
(1) | All commodity swap contracts and foreign currency forward contracts were in a liability position as of December 31, 2015.
See Note 9. "Coal Trading" for information on balance sheet offsetting related to the Company’s coal trading activities. Fair Value Measurements The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1 - inputs are quoted prices in active markets for the identical assets or liabilities; Level 2 - inputs are other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants. Financial Instruments Measured on a Recurring Basis. The following tables set forth the hierarchy of the Company’s net financial (liability) asset positions for which fair value is measured on a recurring basis:
| December 31, 2015
| Level 1 |  | Level 2 |  | Level 3 |  | Total
|  |  | (Dollars in millions) |  |
Investments in debt and equity securities | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commodity swap contracts | — |  |  | — |  |  | (123.7 | ) |  | (123.7 | )
Foreign currency forward contracts | — |  |  | — |  |  | (200.7 | ) |  | (200.7 | )
Total net financial liabilities | $ | — |  |  | $ | — |  |  | $ | (324.4 | ) |  | $ | (324.4 | )
As of December 31, 2016, the Company no longer had any outstanding financial positions. For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker/dealer quotes, published indices, issuer spreads, benchmark securities and other market quotes. In the case of certain debt securities, fair value is provided by a third-party pricing service. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:
• | Commodity swap contracts: valued based on a valuation that is corroborated by the use of market-based pricing (Level 2) except when credit and non-performance risk is considered to be a significant input, then the Company classifies such contracts as Level 3.
• | Foreign currency forward and option contracts: valued utilizing inputs obtained in quoted public markets (Level 2) except when credit and non-performance risk is considered to be a significant input, then the Company classifies such contracts as Level 3.
The following table summarizes the changes related to the Company’s Corporate Hedging derivative financial instruments recurring Level 3 financial liabilities:
|  | Year Ended
|  | December 31, 2016
|  | Commodity Contracts |  | Foreign Currency Contracts |  | Total
| (Dollars in millions)
Beginning of period |  | $ | 123.7 |  |  | $ | 200.7 |  |  | $ | 324.4 |
Total net losses realized/unrealized: |  |  |  |  |  |
Included in earnings |  | 15.7 |  |  | (48.0 | ) |  | (32.3 | )
Settlements / terminations |  | (139.4 | ) |  | (152.7 | ) |  | (292.1 | )
End of period |  | $ | — |  |  | $ | — |  |  | $ | — |
The Company had no transfers between Levels 1, 2 and 3 during the years ended December 31, 2016 or 2015. Transfers into Level 3 of liabilities previously classified in Level 2 during the year ended December 31, 2015 were due to the relative value of unobservable inputs to the total fair value measurement of certain derivative contracts rising above the 10% threshold. The Company’s policy is to value all transfers between levels using the beginning of period valuation. Other Financial Instruments. The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of December 31, 2016 and 2015:
• | Cash and cash equivalents, restricted cash, accounts receivable, including those within the Company’s accounts receivable securitization program, notes receivable and accounts payable have carrying values which approximate fair value due to the short maturity or the liquid nature of these instruments.
• | Long-term debt fair value estimates are based on observed prices for securities with an active trading market when available (Level 2), and otherwise on estimated borrowing rates to discount the cash flows to their present value (Level 3).
The estimated fair value of the Company’s current and long-term debt as of December 31, 2016 is subject to compromise in connection with the Company's Plan and as such has been excluded from the table below. The carrying amount and estimated fair value of the Company's current and long-term debt as of December 31, 2015 are summarized as follows:
| December 31, 2015
| Carrying Amount |  | Estimated Fair Value
| (Dollars in millions)
Current and Long-term debt | $ | 6,241.2 |  |  | $ | 1,373.7 |

X
- Definition Derivatives and Fair Value Measurements [Abstract] + References No definition available. + Details
Name: | btu_DerivativesandFairValueMeasurementsAbstract
Namespace Prefix: | btu_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_DerivativesAndFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration