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Pension and Savings Plans | 12 Months Ended
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Dec. 31, 2019
Pension and Savings Plans [Abstract] |
Pension and Savings Plans | Pension and Savings Plans One of the Company’s subsidiaries, Peabody Investments Corp. (PIC), sponsors a defined benefit pension plan covering certain U.S. salaried employees and eligible hourly employees at certain PIC subsidiaries (the Peabody Plan). A subsidiary of PIC also has a defined benefit pension plan covering eligible employees who are represented by the UMWA under the Western Surface Agreement (the Western Plan). Prior to April 2, 2017, PIC also sponsored an unfunded supplemental retirement plan to provide senior management with benefits in excess of limits under the federal tax law (collectively, the Pension Plans). Effective May 31, 2008, the Peabody Plan was frozen in its entirety for both participation and benefit accrual purposes. The Company adopted an enhanced savings plan contribution structure in lieu of benefits formerly accrued under the Peabody Plan. In November 2017, the Company purchased a group annuity contract from an insurance company to pay future pension benefits to approximately 1,950 retirees and beneficiaries of the Peabody Plan. As a result of this transaction, the Company settled $71.4 million of its pension obligation, paid from plan assets, and recorded a settlement charge of $2.1 million during the period April 2 through December 31, 2017. Net periodic pension (benefit) cost included the following components:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
Service cost for benefits earned | $ | 2.0 |  |  | $ | 2.3 |  |  | $ | 1.6 |  | $ | 0.6 |
Interest cost on projected benefit obligation | 33.5 |  |  | 31.4 |  |  | 28.0 |  | 9.7 |
Expected return on plan assets | (31.4 | ) |  | (42.8 | ) |  | (33.5 | ) | (11.0 | )
Amortization of prior service cost | — |  |  | — |  |  | — |  | 0.1 |
Amortization of net actuarial losses | — |  |  | — |  |  | — |  | 6.3 |
Settlement charge | — |  |  | — |  |  | 2.1 |  | — |
Net actuarial (gain) loss | (16.6 | ) |  | 4.2 |  |  | (23.5 | ) | — |
Net periodic pension (benefit) cost | $ | (12.5 | ) |  | $ | (4.9 | ) |  | $ | (25.3 | ) | $ | 5.7 |
In connection with fresh start reporting, the Company made a policy election to prospectively record amounts attributable to actuarial valuation changes currently in earnings rather than recording such amounts within accumulated other comprehensive income and amortizing to expense over applicable time periods. The following includes pre-tax amounts recorded in “Accumulated other comprehensive income”:
| Predecessor
| January 1 through April 1, 2017
| (Dollars in millions)
Amortization: |  |
Net actuarial loss | $ | (6.3 | )
Prior service cost | (0.1 | )
Total recorded in “Accumulated other comprehensive income” | $ | (6.4 | )
Prior to April 2, 2017, the Company amortized actuarial gain and loss using a 5% corridor with a five-year amortization period. The following summarizes the change in benefit obligation, change in plan assets and funded status of the Pension Plans:
| December 31,
| 2019 |  | 2018
| (Dollars in millions)
Change in benefit obligation: |  |  |
Projected benefit obligation at beginning of period | $ | 795.9 |  |  | $ | 874.6 |
Service cost | 2.0 |  |  | 2.3 |
Interest cost | 33.5 |  |  | 31.4 |
Benefits paid | (55.6 | ) |  | (55.1 | )
Actuarial loss (gain) | 78.0 |  |  | (57.3 | )
Projected benefit obligation at end of period | 853.8 |  |  | 795.9 |
Change in plan assets: |  |  |
Fair value of plan assets at beginning of period | 764.8 |  |  | 776.6 |
Actual return on plan assets | 126.0 |  |  | (18.7 | )
Employer contributions | 20.0 |  |  | 62.0 |
Benefits paid | (55.6 | ) |  | (55.1 | )
Fair value of plan assets at end of period | 855.2 |  |  | 764.8 |
Funded status at end of period | $ | 1.4 |  |  | $ | (31.1 | )
Amounts recognized in the consolidated balance sheets: |  |  |
Noncurrent asset (included in “Investments and other assets”) | $ | 13.4 |  |  | $ | — |
Noncurrent obligation (included in “Other noncurrent liabilities”) | (12.0 | ) |  | (31.1 | )
Net amount recognized | $ | 1.4 |  |  | $ | (31.1 | )
The weighted-average assumptions used to determine the benefit obligations as of the end of each year were as follows:
| December 31,
| 2019 |  | 2018
Discount rate | 3.40 | % |  | 4.35 | %
Measurement date | December 31, 2019 |  |  | December 31, 2018 |
The weighted-average assumptions used to determine net periodic pension (benefit) cost during each period were as follows:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
Discount rate | 4.35 | % |  | 3.70 | % |  | 4.10 | % | 4.15 | %
Expected long-term return on plan assets | 4.20 | % |  | 5.65 | % |  | 5.90 | % | 5.90 | %
Measurement date | December 31, 2018 |  |  | December 31, 2017 |  |  | April 1, 2017 |  | December 31, 2016 |
The expected rate of return on plan assets is determined by taking into consideration expected long-term returns associated with each major asset class based on long-term historical ranges, inflation assumptions and the expected net value from active management of the assets based on actual results. Effective January 1, 2020, the Company lowered its expected rate of return on plan assets from 4.20% to 3.60% reflecting the impact of the Company’s asset allocation and capital market expectations. The plan assets exceeded the projected benefit obligation and the accumulated benefit obligation for the Peabody Plan as of December 31, 2019. The projected benefit obligation and the accumulated benefit obligation exceeded plan assets for the Western Plan as of December 31, 2019. The projected benefit obligation and the accumulated benefit obligation exceeded plan assets for all plans as of December 31, 2018. The accumulated benefit obligation for all plans was $853.8 million and $795.9 million as of December 31, 2019 and 2018, respectively. Assets of the Pension Plans Assets of the PIC Master Trust (the Master Trust) are invested in accordance with investment guidelines established by the Peabody Plan Retirement Committee and the Peabody Western Plan Retirement Committee (collectively, the Retirement Committees) after consultation with outside investment advisors and actuaries. The asset allocation targets have been set with the expectation that the assets of the Master Trust will be managed with an appropriate level of risk to fund each Pension Plan’s expected liabilities. To determine the appropriate target asset allocations, the Retirement Committees consider the demographics of each Pension Plan’s participants, the funded status of each Pension Plan, the business and financial profile of the Company and other associated risk preferences. These allocation targets are reviewed by the Retirement Committees on a regular basis and revised as necessary. As a result of discretionary contributions made in recent years, the Pension Plans have become nearly fully funded and therefore, as of December 31, 2019 and 2018, the Master Trust investment portfolio reflected the Company’s target asset mix of 100% fixed income investments. Master Trust assets also include investments in various real estate holdings through limited partnerships representing approximately less than 1% and 1% of total Master Trust assets as of December 31, 2019 and 2018, respectively. The Retirement Committees’ intention is to liquidate these real estate holdings when allowable per the terms of the limited partnership agreements. Generally, dissolution and liquidation of the limited partnerships is required before the Master Trust’s real estate holdings can be liquidated and is estimated to occur at various times through 2021. Assets of the Master Trust are under management by third-party investment managers, which are selected and monitored by the Retirement Committees. Specific investment guidelines have been established by the Retirement Committees for each major asset class including performance benchmarks, allowable and prohibited investment types and concentration limits. In general, investment guidelines do not permit leveraging the assets held in the Master Trust. However, investment managers may employ various strategies and derivative instruments in establishing overall portfolio characteristics consistent with the guidelines and investment objectives established by the Retirement Committees for their portfolios. Fixed income investment guidelines only allow for exchange-traded derivatives if the investment manager deems the derivative vehicle to be more attractive than a similar direct investment in an underlying cash market or to manage the duration of the fixed income portfolio. A financial instrument’s level within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation techniques and inputs used for investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy. Corporate bonds. The Master Trust invests in corporate bonds for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly investment-grade corporate bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. Corporate bonds are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the bonds are not traded on a national securities exchange. U.S. government securities. The Master Trust invests in U.S. government securities for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly U.S. government bonds, agency securities and municipal bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. If fair value is based on quoted prices in active markets and traded on a national securities exchange, U.S. government securities are classified within the Level 1 valuation hierarchy; otherwise, U.S. government securities are classified within the Level 2 valuation hierarchy. International government securities. The Master Trust invests in international government securities for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly non-U.S. government bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. International government securities are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the bonds are not traded on a national securities exchange. Asset-backed securities. The Master Trust invests in asset-backed securities for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominately mortgage-backed securities. Asset-backed securities are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the investments are not traded on a national securities exchange. Commercial paper. The Master Trust invests in commercial paper of U.S. corporations to manage liquidity resulting from payment of participant benefits and certain administrative fees. Commercial paper is classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the investments are not traded on a national securities exchange. Cash funds. The Master Trust invests in cash funds to manage liquidity resulting from payment of participant benefits and certain administrative fees. Investment vehicles primarily include a non-interest bearing cash fund with an earnings credit allowance feature, various exchange-traded derivative instruments consisting of futures and interest rate swap agreements used to manage the duration of certain liability-hedging investments. The non-interest bearing cash fund is classified within the Level 1 valuation hierarchy. Exchange traded derivatives, such as options and futures, for which market quotations are readily available, are valued at the last reported sale price or official closing price on the primary market or exchange on which they are traded and are classified within the Level 1 valuation hierarchy. Real estate interests. The Master Trust invests in real estate interests for diversification. Investments in real estate represent interests in several limited partnerships, which invest in various real estate properties. Interests in real estate are valued using various methodologies, including independent third party appraisals; fair value measurements are not developed by the Company. For some investments, little market activity may exist and determination of fair value is then based on the best information available in the circumstances. This involves a significant degree of judgment by taking into consideration a combination of internal and external factors. Accordingly, interests in real estate are classified within the Level 3 valuation hierarchy. Some limited partnerships issue dividends to their investors in the form of cash distributions that the Pension Plans invest elsewhere within the Master Trust. Private mutual funds. The Master Trust invests in mutual funds for growth and diversification. Investment vehicles include an institutional fund that holds a diversified portfolio of long-duration corporate fixed income investments (Corporate Bond Fund). The Corporate Bond Fund is not traded on a national securities exchange and is valued at NAV, the practical expedient to estimate fair value. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. The following tables present the fair value of assets in the Master Trust by asset category and by fair value hierarchy:
| December 31, 2019
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Corporate bonds | $ | — |  |  | $ | 598.3 |  |  | $ | — |  |  | $ | 598.3 |
U.S. government securities | 135.9 |  |  | 19.0 |  |  | — |  |  | 154.9 |
International government securities | — |  |  | 18.2 |  |  | — |  |  | 18.2 |
Asset-backed securities | — |  |  | 3.4 |  |  | — |  |  | 3.4 |
Cash funds | 33.2 |  |  | — |  |  | — |  |  | 33.2 |
Real estate interests | — |  |  | — |  |  | 4.1 |  |  | 4.1 |
Total assets at fair value | $ | 169.1 |  |  | $ | 638.9 |  |  | $ | 4.1 |  |  | 812.1 |
Assets measured at net asset value practical expedient (1) |  |  |  |  |  |  |
Private mutual funds |  |  |  |  |  |  | 43.1 |
Total plan assets |  |  |  |  |  |  | $ | 855.2 |
| December 31, 2018
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Corporate bonds | $ | — |  |  | $ | 466.1 |  |  | $ | — |  |  | $ | 466.1 |
U.S. government securities | 181.5 |  |  | 17.4 |  |  | — |  |  | 198.9 |
International government securities | — |  |  | 12.4 |  |  | — |  |  | 12.4 |
Commercial paper | — |  |  | 2.1 |  |  | — |  |  | 2.1 |
Cash funds | 38.4 |  |  | — |  |  | — |  |  | 38.4 |
Real estate interests | — |  |  | — |  |  | 6.2 |  |  | 6.2 |
Total assets at fair value | $ | 219.9 |  |  | $ | 498.0 |  |  | $ | 6.2 |  |  | 724.1 |
Assets measured at net asset value practical expedient (1) |  |  |  |  |  |  |
Private mutual funds |  |  |  |  |  |  | 40.7 |
Total plan assets |  |  |  |  |  |  | $ | 764.8 |
(1) | In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans.
The table below sets forth a summary of changes in the fair value of the Master Trust’s Level 3 investments:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
Balance, beginning of period | $ | 6.2 |  |  | $ | 11.8 |  |  | $ | 13.8 |  | $ | 14.1 |
Realized (losses) gains | (1.0 | ) |  | 2.6 |  |  | — |  | 0.6 |
Unrealized gains (losses) relating to investments still held at the reporting date | 1.4 |  |  | (2.6 | ) |  | 2.2 |  | (0.6 | )
Purchases, sales and settlements, net | (2.5 | ) |  | (5.6 | ) |  | (4.2 | ) | (0.3 | )
Balance, end of period | $ | 4.1 |  |  | $ | 6.2 |  |  | $ | 11.8 |  | $ | 13.8 |
Contributions Annual contributions to qualified plans are made in accordance with minimum funding standards and the Company’s agreement with the Pension Benefit Guaranty Corporation. Funding decisions also consider certain funded status thresholds defined by the Pension Protection Act of 2006 (generally 80%). As of December 31, 2019, the Company’s qualified plans are expected to be at or above the Pension Protection Act thresholds. Minimum funding standards are legislated by ERISA and are modified by pension funding stabilization provisions included in the Moving Ahead for Progress in the 21st Century Act of 2012, the Highway and Transportation Funding Act of 2014 and the Bipartisan Budget Act of 2015. Based upon minimum funding requirements, the Company is not required to make any payments to its qualified pension plans; however, during the year ended December 31, 2019, the Company made a discretionary contribution of $20.0 million to one of its qualified pension plans. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in connection with the Company’s benefit obligation:
| Pension Benefits
| (Dollars in millions)
2020 | $ | 59.6 |
2021 | 59.3 |
2022 | 58.8 |
2023 | 59.5 |
2024 | 57.1 |
Years 2025-2029 | 268.0 |
Defined Contribution Plans The Company sponsors employee retirement accounts under two 401(k) plans for eligible U.S. employees. The Company matches voluntary contributions to each plan up to specified levels. The expense for these plans was $27.8 million, $30.3 million, $25.5 million and $5.5 million for the years ended December 31, 2019 and 2018, the period April 2 through December 31, 2017 and the period January 1 through April 1, 2017, respectively. A performance contribution feature in one of the plans allows for additional discretionary contributions from the Company. There was no performance contribution granted for the year ended December 31, 2019. Prior performance contributions of $8.9 million and $8.5 million were paid during the years ended December 31, 2019 and 2018, respectively. There were no performance contributions paid during the period April 2 through December 31, 2017 or the period January 1 through April 1, 2017. Superannuation The Company makes superannuation contributions for eligible Australia employees in accordance with the employer contribution rate set by the Government of Australia. The expense related to these contributions was $26.5 million, $31.6 million, $19.9 million and $6.1 million for the years ended December 31, 2019 and 2018, the period April 2 through December 31, 2017 and the period January 1 through April 1, 2017, respectively. A performance contribution feature allows for additional discretionary contributions from the Company. There was no performance contribution granted for the year ended December 31, 2019. Prior performance contributions of approximately $3 million were paid during both of the years ended December 31, 2019 and 2018. There were no discretionary performance contributions paid during the period April 2 through December 31, 2017 or the period January 1 through April 1, 2017.

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