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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to

Commission File Number 001-38735
AMR-20210930_G1.JPG
ALPHA METALLURGICAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 81-3015061
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
340 Martin Luther King Jr. Blvd.
Bristol, Tennessee 37620
(Address of principal executive offices, zip code)
(423) 573-0300
(Registrant’s telephone number, including area code)

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. x Yes   ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.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). x Yes   ¨ No

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.
Large accelerated filer ¨ Accelerated filer
Non-accelerated filer x Smaller reporting company
Emerging growth 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.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes   x No

Securities registered pursuant to Section 12(b) of the Act:



Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock AMR New York Stock Exchange

Number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of October 31, 2021: 18,400,443






TABLE OF CONTENTS
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3

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements.” These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies. We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should” and similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements but these terms and phrases are not the exclusive means of identifying such statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

the effects of the COVID-19 pandemic on our operations and the world economy;
the financial performance of the company;
our liquidity, results of operations and financial condition;
our ability to generate sufficient cash or obtain financing to fund our business operations;
depressed levels or declines in coal prices;
worldwide market demand for coal, steel, and electricity, including demand for U.S. coal exports, and competition in coal markets;
changes in domestic or international environmental laws and regulations, and court decisions, including those directly affecting our coal mining and production, and those affecting our customers’ coal usage, including potential climate change initiatives;
our ability to obtain financing and other services, and the form and degree of these services available to us, which may be significantly limited by the lending, investment and similar policies of financial institutions and insurance companies regarding carbon energy producers and the environmental impacts of coal combustion;
our ability to obtain or renew surety bonds on acceptable terms or maintain our current bonding status;
our ability to meet collateral requirements;
the imposition or continuation of barriers to trade, such as tariffs;
reductions or increases in customer coal inventories and the timing of those changes;
our production capabilities and costs;
inherent risks of coal mining beyond our control;
changes in the ownership of our equity may significantly further reduce the annual amount of the net operating loss and other carryforwards available to be utilized;
changes in, interpretations of, or implementations of domestic or international tax or other laws and regulations, including the Tax Cuts and Jobs Act and its related regulations;
our ability to self-insure certain of our black lung obligations without a significant increase in required collateral;
our relationships with, and other conditions affecting, our customers, including the inability to collect payments from our customers if their creditworthiness declines;
changes in, renewal or acquisition of, terms of and performance of customers under coal supply arrangements and the refusal by our customers to receive coal under agreed-upon contract terms;
our ability to obtain, maintain or renew any necessary permits or rights, and our ability to mine properties due to defects in title on leasehold interests;
attracting and retaining key personnel and other employee workforce factors, such as labor relations;
funding for and changes in employee benefit obligations;
cybersecurity attacks or failures, threats to physical security, extreme weather conditions or other natural disasters;
reclamation and mine closure obligations;
utilities switching to alternative energy sources such as natural gas, renewables and coal from basins where we do not operate;
our assumptions concerning economically recoverable coal reserve estimates;
disruptions in delivery or changes in pricing from third-party vendors of key equipment and materials that are necessary for our operations, such as diesel fuel, steel products, explosives, tires and purchased coal;
failures in performance, or non-performance, of services by third-party contractors, including contract mining and reclamation contractors;
inflationary pressures on supplies and labor and significant or rapid increases in commodity prices;
railroad, barge, truck and other transportation availability, performance and costs;
4

disruption in third-party coal supplies;
the consummation of financing or refinancing transactions, acquisitions or dispositions and the related effects on our business and financial position;
our indebtedness and potential future indebtedness; and
other factors, including the other factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of this Report and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2020.

The factors identified above are not exhaustive. We caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. When considering these forward-looking statements, you should keep in mind the cautionary statements in this report. We do not undertake any responsibility to publicly revise these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report.

5

Part I - Financial Information

Item 1. Financial Statements

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
Revenues:      
Coal revenues $ 647,129  $ 335,189  $ 1,426,039  $ 1,089,764 
Other revenues 1,712  403  4,330  2,572 
Total revenues 648,841  335,592  1,430,369  1,092,336 
Costs and expenses:        
Cost of coal sales (exclusive of items shown separately below) 488,169  309,693  1,182,360  979,180 
Depreciation, depletion and amortization 24,519  49,236  80,261  143,921 
Accretion on asset retirement obligations 6,674  6,737  19,970  19,945 
Amortization of acquired intangibles, net 2,980  2,074  9,402  4,466 
Asset impairment and restructuring —  (226) (561) 53,981 
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above) 15,264  14,501  44,891  42,010 
Total other operating loss (income):
Mark-to-market adjustment for acquisition-related obligations 11,676  3,624  18,009  (13,425)
Other income (457) (1,310) (5,290) (2,023)
Total costs and expenses 548,825  384,329  1,349,042  1,228,055 
Income (loss) from operations 100,016  (48,737) 81,327  (135,719)
Other (expense) income:        
Interest expense (17,338) (18,746) (53,290) (56,238)
Interest income 54  376  322  6,874 
Equity loss in affiliates (643) (1,295) (1,161) (3,085)
Miscellaneous income (loss), net 1,812  (131) 5,425  (452)
Total other expense, net (16,115) (19,796) (48,704) (52,901)
Income (loss) from continuing operations before income taxes 83,901  (68,533) 32,623  (188,620)
Income tax (expense) benefit (208) 45  (211) 2,200 
Net income (loss) from continuing operations 83,693  (68,488) 32,412  (186,420)
Discontinued operations:
Loss from discontinued operations before income taxes (429) (149) (1,067) (160,326)
Loss from discontinued operations (429) (149) (1,067) (160,326)
Net income (loss) $ 83,264  $ (68,637) $ 31,345  $ (346,746)
Basic income (loss) per common share:
Income (loss) from continuing operations $ 4.54  $ (3.74) $ 1.76  $ (10.19)
Loss from discontinued operations (0.03) (0.01) (0.06) (8.77)
Net income (loss) $ 4.51  $ (3.75) $ 1.70  $ (18.96)
6

Diluted income (loss) per common share:
Income (loss) from continuing operations $ 4.43  $ (3.74) $ 1.73  $ (10.19)
Loss from discontinued operations (0.03) (0.01) (0.06) (8.77)
Net income (loss) $ 4.40  $ (3.75) $ 1.67  $ (18.96)
Weighted average shares – basic
18,445,709  18,319,947  18,426,639  18,290,346 
Weighted average shares – diluted
18,913,352  18,319,947  18,783,643  18,290,346 

Refer to accompanying Notes to Condensed Consolidated Financial Statements.
7

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Amounts in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income (loss) $ 83,264  $ (68,637) $ 31,345  $ (346,746)
Other comprehensive income (loss), net of tax:
Employee benefit plans:
Amortization of and adjustments to employee benefit costs $ 1,413  $ 1,133  $ 13,077  $ (9,998)
Income tax expense —  —  —  — 
Total other comprehensive income (loss), net of tax $ 1,413  $ 1,133  $ 13,077  $ (9,998)
Total comprehensive income (loss) $ 84,677  $ (67,504) $ 44,422  $ (356,744)
Refer to accompanying Notes to Condensed Consolidated Financial Statements.

8

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands, except share and per share data)
September 30, 2021 December 31, 2020
Assets    
Current assets:    
Cash and cash equivalents $ 78,283  $ 139,227 
Trade accounts receivable, net of allowance for doubtful accounts of $325 and $293 as of September 30, 2021 and December 31, 2020
335,287  145,670 
Inventories, net 124,534  108,051 
Prepaid expenses and other current assets 31,723  106,252 
Current assets - discontinued operations 1,391  10,935 
Total current assets 571,218  510,135 
Property, plant, and equipment, net of accumulated depreciation and amortization of $436,205 and $382,423 as of September 30, 2021 and December 31, 2020
356,305  363,620 
Owned and leased mineral rights, net of accumulated depletion and amortization of $48,968 and $35,143 as of September 30, 2021 and December 31, 2020
449,901  463,250 
Other acquired intangibles, net of accumulated amortization of $31,349 and $25,700 as of September 30, 2021 and December 31, 2020
78,547  88,196 
Long-term restricted cash 84,001  96,033 
Other non-current assets 126,502  149,382 
Non-current assets - discontinued operations 9,477  9,473 
Total assets $ 1,675,951  $ 1,680,089 
Liabilities and Stockholders’ Equity    
Current liabilities:    
Current portion of long-term debt $ 7,976  $ 28,830 
Trade accounts payable 90,335  58,413 
Acquisition-related obligations – current
26,266  19,099 
Accrued expenses and other current liabilities 160,732  140,406 
Current liabilities - discontinued operations 7,095  12,306 
Total current liabilities 292,404  259,054 
Long-term debt 497,191  553,697 
Acquisition-related obligations - long-term 18,966  20,768 
Workers’ compensation and black lung obligations 228,858  230,081 
Pension obligations 191,888  218,671 
Asset retirement obligations 141,925  140,074 
Deferred income taxes 479  480 
Other non-current liabilities 29,403  28,072 
Non-current liabilities - discontinued operations 26,740  29,090 
Total liabilities 1,427,854  1,479,987 
Commitments and Contingencies (Note 16)
Stockholders’ Equity
Preferred stock - par value $0.01, 5.0 million shares authorized, none issued
—  — 
Common stock - par value $0.01, 50.0 million shares authorized, 20.8 million issued and 18.4 million outstanding at September 30, 2021 and 20.6 million issued and 18.3 million outstanding at December 31, 2020
208  206 
Additional paid-in capital 783,781  779,424 
Accumulated other comprehensive loss (98,908) (111,985)
Treasury stock, at cost: 2.4 million shares at September 30, 2021 and 2.3 million shares at December 31, 2020
(107,800) (107,014)
9

Accumulated deficit (329,184) (360,529)
Total stockholders’ equity 248,097  200,102 
Total liabilities and stockholders’ equity $ 1,675,951  $ 1,680,089 

Refer to accompanying Notes to Condensed Consolidated Financial Statements.
10

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
Nine Months Ended September 30,
2021 2020
Operating activities:
Net income (loss) $ 31,345  $ (346,746)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 80,261  154,466 
Amortization of acquired intangibles, net 9,402  5,180 
Accretion of acquisition-related obligations discount 1,004  2,882 
Amortization of debt issuance costs and accretion of debt discount 9,351  11,087 
Mark-to-market adjustment for acquisition-related obligations 18,009  (13,425)
Gain on disposal of assets (5,342) (2,179)
Asset impairment and restructuring (561) 221,453 
Accretion on asset retirement obligations 19,970  23,806 
Employee benefit plans, net 6,685  15,135 
Deferred income taxes (1) 33,011 
Stock-based compensation 4,351  4,200 
Equity loss in affiliates 1,161  3,085 
Other, net (4,381) (5,356)
Changes in operating assets and liabilities (100,681) (33,566)
Net cash provided by operating activities 70,573  73,033 
Investing activities:
Capital expenditures (60,386) (118,896)
Proceeds on disposal of assets 7,471  3,131 
Purchases of investment securities (15,474) (18,618)
Maturity of investment securities 10,508  12,678 
Capital contributions to equity affiliates (4,473) (3,196)
Other, net 52  68 
Net cash used in investing activities (62,302) (124,833)
Financing activities:
Proceeds from borrowings on long-term debt —  57,500 
Repurchases of long-term debt (18,415) — 
Principal repayments of long-term debt (61,869) (58,315)
Principal repayments of financing lease obligations (1,527) (2,291)
Debt issuance costs (319) — 
Common stock repurchases and related expenses (786) (171)
Net cash used in financing activities (82,916) (3,277)
Net decrease in cash and cash equivalents and restricted cash (74,645) (55,077)
Cash and cash equivalents and restricted cash at beginning of period 244,571  347,680 
Cash and cash equivalents and restricted cash at end of period $ 169,926  $ 292,603 
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.
11

As of September 30,
  2021 2020
Cash and cash equivalents $ 78,283  $ 161,434 
Short-term restricted cash (included in prepaid expenses and other current assets) 7,642  7,104 
Long-term restricted cash 84,001  124,065 
Total cash and cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 169,926  $ 292,603 

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

12

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Amounts in thousands)
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Treasury Stock at Cost Retained Earnings (Deficit) Total Stockholders’ Equity
Balances, December 31, 2019 $ 205  $ 775,707  $ (58,616) $ (107,984) $ 86,810  $ 696,122 
Net loss —  —  —  —  (39,808) (39,808)
Credit losses cumulative-effect adjustment —  —  —  —  (440) (440)
Other comprehensive loss, net —  —  (4,010) —  —  (4,010)
Stock-based compensation and net issuance of common stock for share vesting —  900  —  —  —  900 
Common stock reissuances, repurchases and related expenses —  —  —  1,071  —  1,071 
Balances, March 31, 2020 $ 205  $ 776,607  $ (62,626) $ (106,913) $ 46,562  $ 653,835 
Net loss —  —  —  —  (238,301) (238,301)
Other comprehensive loss, net —  —  (7,121) —  —  (7,121)
Stock-based compensation and net issuance of common stock for share vesting 1,043  —  —  —  1,044 
Common stock repurchases and related expenses —  —  —  (42) —  (42)
Balances, June 30, 2020 $ 206  $ 777,650  $ (69,747) $ (106,955) $ (191,739) $ 409,415 
Net loss —  —  —  —  (68,637) (68,637)
Other comprehensive income, net —  —  1,133  —  —  1,133 
Stock-based compensation and net issuance of common stock for share vesting —  1,078  —  —  —  1,078 
Common stock repurchases and related expenses —  —  —  (21) —  (21)
Balances, September 30, 2020 $ 206  $ 778,728  $ (68,614) $ (106,976) $ (260,376) $ 342,968 
Balances, December 31, 2020 $ 206  $ 779,424  $ (111,985) $ (107,014) $ (360,529) $ 200,102 
Net loss —  —  —  —  (32,928) (32,928)
Other comprehensive income, net —  —  1,484  —  —  1,484 
Stock-based compensation and net issuance of common stock for share vesting 2,182  —  —  —  2,183 
Common stock repurchases and related expenses —  —  —  (680) —  (680)
Balances, March 31, 2021 $ 207  $ 781,606  $ (110,501) $ (107,694) $ (393,457) $ 170,161 
Net loss —  —  —  —  (18,991) (18,991)
Other comprehensive income, net —  —  10,180  —  —  10,180 
Stock-based compensation and net issuance of common stock for share vesting 980  —  —  —  981 
Balances, June 30, 2021 $ 208  $ 782,586  $ (100,321) $ (107,694) $ (412,448) $ 162,331 
Net income —  —  —  —  83,264  83,264 
Other comprehensive income, net —  —  1,413  —  —  1,413 
Stock-based compensation and net issuance of common stock for share vesting —  1,189  —  —  —  1,189 
13

Common stock repurchases and related expenses —  —  —  (106) —  (106)
Warrant exercises —  —  —  — 
Balances, September 30, 2021 $ 208  $ 783,781  $ (98,908) $ (107,800) $ (329,184) $ 248,097 
Refer to accompanying Notes to Condensed Consolidated Financial Statements.
14

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)

(1) Business and Basis of Presentation
Business

Alpha Metallurgical Resources, Inc. (“Alpha” or the “Company”) is a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Alpha is a leading U.S. supplier of metallurgical products for the steel industry.

Basis of Presentation

Together, the condensed consolidated statements of operations, comprehensive loss, balance sheets, cash flows and stockholders’ equity for the Company are referred to as the “Condensed Consolidated Financial Statements.” The Condensed Consolidated Financial Statements are also referenced across periods as “Condensed Consolidated Statements of Operations,” “Condensed Consolidated Statements of Comprehensive Loss,” “Condensed Consolidated Balance Sheets,” “Condensed Consolidated Statements of Cash Flows,” and “Condensed Consolidated Statements of Stockholders’ Equity.” The Company’s former Northern Appalachia (“NAPP”) operations results of operations and financial position are reported as discontinued operations in the Condensed Consolidated Financial Statements. The historical information in the accompanying Notes to the Condensed Consolidated Financial Statements has been restated to reflect the effects of the Company’s former NAPP operations being reported as discontinued operations in the Condensed Consolidated Financial Statements. Refer to Note 2 for further information on discontinued operations.
The Condensed Consolidated Financial Statements include all wholly-owned subsidiaries’ results of operations for the three and nine months ended September 30, 2021 and 2020. All significant intercompany transactions have been eliminated in consolidation.

The accompanying interim Condensed Consolidated Financial Statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for Form 10-Q. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP as long as the financial statements are not misleading. In the opinion of management, these interim Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or any other period. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Reclassifications

Certain amounts in the prior year Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation.
Liquidity Risks and Uncertainties

The Company believes it will have sufficient liquidity to meet its working capital requirements, anticipated capital expenditures, debt service requirements, acquisition-related obligations, and reclamation obligations for the 12 months subsequent to the issuance of these financial statements. However, the Company may need to raise additional funds if market conditions deteriorate and may not be able to do so in a timely fashion, or at all. The Company relies on a number of assumptions in budgeting for future activities. These include the costs for mine development to sustain capacity of its operating mines, cash flows from operations, effects of regulation and taxes by governmental agencies, mining technology improvements and reclamation costs. These assumptions are inherently subject to significant business, political, economic, regulatory, environmental and competitive uncertainties, pending and existing climate-related initiatives, contingencies and risks, all of which are difficult to predict and many of which are beyond the Company’s control. Therefore, the Company’s cash on hand and from future operations will be subject to any significant changes in these assumptions.

COVID-19 Pandemic
15

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)

In the first quarter of 2020, the COVID-19 virus was declared a pandemic by the World Health Organization. The COVID-19 pandemic has had negative impacts on the Company’s business, results of operations, financial condition and cash flows. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on its customers and suppliers and the range of governmental and community reactions to the pandemic, which are still uncertain and still cannot be fully predicted.

Recently Adopted Accounting Guidance

Presentation of Financial Statements: In August 2021, the FASB issued ASU 2021-06, Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946) (“ASU 2021-06”). This update amends certain SEC paragraphs from the Codification in response to the issuance of SEC Final Rule Nos. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses, and 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants. For all entities, the update is effective immediately. The Company adopted ASU 2021-06 during the third quarter of 2021. The adoption of this ASU did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.

Leases: In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842) Lessors—Certain Leases with Variable Lease Payments (“ASU 2021-05”). The amendments in this update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate (“variable payments”) and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. The amendments in this update address stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840 by requiring a lessor to classify a lease with variable payments as an operating lease on the commencement date of the lease if specified criteria are met. The amendments are effective for fiscal years beginning after December 15, 2021, for all entities, and interim periods within those fiscal years for public business entities with early application permitted. The Company adopted ASU 2021-05 during the third quarter of 2021. The adoption of this ASU did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.

Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options: In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”). The amendments in this update provide final guidance that requires issuers to account for modifications or exchanges of freestanding equity-classified written call options, such as the Company’s outstanding Series A warrants, that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. This ASU addresses the diversity in practice in issuers’ accounting by providing a principles-based framework to determine whether an issuer should recognize the modification or exchange as 1) an adjustment to equity and, if so, the related earnings per share effects, if any, or 2) an expense and, if so, the manner and pattern of recognition. For all entities, the standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2021-04 during the second quarter of 2021. The adoption of this ASU did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.

Reference Rate Reform: In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. For all entities, the standard is effective immediately. The Company adopted ASU 2021-01 during the first quarter of 2021. The adoption of this ASU did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.

Convertible Debt and Contracts in Entity’s Own Equity: In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity, such as the Company’s outstanding Series A warrants. For public business entities, the standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2020-06 during the first quarter of 2021. The adoption of this ASU did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.

16

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
(2) Discontinued Operations

Discontinued operations consist of activity related to the Company’s former NAPP operations.

On December 10, 2020, the Company closed on a transaction to sell its thermal coal mining operations located in Pennsylvania consisting primarily of its Cumberland mining complex and related property to a third party purchaser, Iron Senergy Holdings, LLC (“Iron Senergy”). The mining permits associated with the Cumberland operations were obtained by Iron Senergy at closing. During the second quarter of 2021, nearly all of the Company’s remaining surety bonds were released and Iron Senergy’s replacement bonds were accepted through the administrative process with only $30 remaining as of September 30, 2021, which are expected to be released in the short-term.

Major Financial Statement Components of Discontinued Operations

The loss from discontinued operations before income taxes for the three and nine months ended September 30, 2021 was $429 and $1,067, respectively. The major components of loss from discontinued operations before income taxes in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 are as follows:

Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020 (1)
Revenues:  
Total revenues $ 65,100  $ 190,654 
Costs and expenses:
Cost of coal sales (exclusive of items shown separately below) 57,398  167,663 
Depreciation, depletion and amortization 1,503  10,545 
Accretion on asset retirement obligations 2,390  3,861 
Selling, general and administrative expenses (2)
186  1,573 
Asset impairment and restructuring (3)
3,797  167,472 
Other non-major income items, net (25) (134)
Loss from discontinued operations before income taxes $ (149) $ (160,326)
(1) Includes minor residual activity related to the Company’s former Powder River Basin (“PRB”) operations.
(2) Represents professional and legal fees.
(3) Refer to Note 7 for additional information on asset impairment and restructuring during the periods.

Refer to the Condensed Consolidated Statements of Operations and Note 5 for loss per share information related to discontinued operations.

The major components of assets and liabilities that are classified as discontinued operations in the Condensed Consolidated Balance Sheets are as follows:

September 30, 2021 December 31, 2020
Assets:
Trade accounts receivable, net of allowance for doubtful accounts $ —  $ 7,504 
Prepaid expenses and other current assets $ 1,391  $ 3,431 
Other non-current assets (1)
$ 9,477  $ 9,473 
Liabilities:
Trade accounts payable, accrued expenses and other current liabilities $ 7,095  $ 12,306 
Workers’ compensation and black lung obligations, non-current $ 25,449  $ 27,799 
Other non-current liabilities $ 1,291  $ 1,291 
17

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
(1) Primarily comprised of workers’ compensation insurance receivable and long-term restricted investments collateralizing workers’ compensation obligations.

The major components of cash flows related to discontinued operations are as follows:
Nine Months Ended September 30, 2020
Depreciation, depletion and amortization $ 10,545 
Capital expenditures $ 28,468 
Other significant operating non-cash items related to discontinued operations:
Accretion on asset retirement obligations $ 3,861 
Asset impairment and restructuring $ 167,472 

(3) Revenue

Disaggregation of Revenue from Contracts with Customers

The Company earns revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties. The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities.

The Company has disaggregated revenue between met coal and thermal coal and export and domestic revenues which depicts the pricing and contract differences between the two. Export revenue generally is derived by spot or short term contracts with pricing determined at the time of shipment or based on a market index; whereas domestic revenue is characterized by contracts that typically have a term of one year or longer and typically the pricing is fixed. The following tables disaggregate the Company’s coal revenues by product category and by market to depict how the nature, amount, timing, and uncertainty of the Company’s coal revenues and cash flows are affected by economic factors:
Three Months Ended September 30, 2021
Met Coal Thermal Coal Total
Export coal revenues $ 503,566  $ 13,311  $ 516,877 
Domestic coal revenues 92,115  38,137  130,252 
Total coal revenues $ 595,681  $ 51,448  $ 647,129 

Three Months Ended September 30, 2020
Met Coal Thermal Coal Total
Export coal revenues $ 198,869  $ 6,707  $ 205,576 
Domestic coal revenues 84,675  44,938  129,613 
Total coal revenues $ 283,544  $ 51,645  $ 335,189 

Nine Months Ended September 30, 2021
Met Thermal Total
Export coal revenues $ 996,642  $ 20,035  $ 1,016,677 
Domestic coal revenues 297,592  111,770  409,362 
Total coal revenues $ 1,294,234  $ 131,805  $ 1,426,039 

18

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Nine Months Ended September 30, 2020
Met Thermal Total
Export coal revenues $ 673,233  $ 24,459  $ 697,692 
Domestic coal revenues 282,266  109,806  392,072 
Total coal revenues $ 955,499  $ 134,265  $ 1,089,764 

Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of September 30, 2021:
Remainder of 2021 2022 2023 2024 2025 Total
Estimated coal revenues $ 35,932  $ 53,500  $ 10,413  $ —  $ —  $ 99,845 

(4) Accumulated Other Comprehensive Loss
The following tables summarize the changes to accumulated other comprehensive loss during the nine months ended September 30, 2021 and 2020:
Balance January 1, 2021
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive loss
Balance September 30, 2021
Employee benefit costs $ (111,985) $ 8,838  $ 4,239  $ (98,908)

Balance January 1, 2020
Other comprehensive loss before reclassifications
Amounts reclassified from accumulated other comprehensive loss
Balance September 30, 2020
Employee benefit costs $ (58,616) $ (14,154) $ 4,156  $ (68,614)

The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the Condensed Consolidated Statements of Operations line items affected by the reclassification during the three and nine months ended September 30, 2021 and 2020:
Details about accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in the Condensed Consolidated Statements of Operations
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Employee benefit costs:
Amortization of net actuarial loss (1)
$ 1,413  $ 1,101  $ 4,239  $ 2,829  Miscellaneous income (loss), net
Settlement (1)
—  32  —  1,327  Miscellaneous income (loss), net
Total before income tax $ 1,413  $ 1,133  $ 4,239  $ 4,156 
Income tax —  —  —  —  Income tax (expense) benefit
Total, net of income tax $ 1,413  $ 1,133  $ 4,239  $ 4,156 
(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs for certain employee benefit plans. Refer to Note 14.

(5) Net Income (Loss) Per Share
19

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
The number of shares used to calculate basic net income (loss) per common share is based on the weighted average number of the Company’s outstanding common shares during the respective period. The number of shares used to calculate diluted net income (loss) per common share is based on the number of common shares used to calculate basic net income (loss) per common share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during the period, and the Company’s outstanding Series A warrants. The dilutive effect of outstanding stock-based instruments is determined by application of the treasury stock method. The warrants become dilutive for diluted net income (loss) per common share calculations when the market price of the Company’s common stock exceeds the exercise price. As discussed below, dilutive securities are not included in the computation of diluted net loss per common share for the three and nine months ended September 30, 2020 as the impact would be anti-dilutive.

For the three months ended September 30, 2021 and 2020, 942,408 and 1,243,866 warrants, stock options, and other stock-based instruments, respectively, were excluded from the computation of dilutive net income (loss) per common share because they would have been anti-dilutive. For the nine months ended September 30, 2021 and 2020, 948,351 and 1,380,076 warrants, stock options, and other stock-based instruments, respectively, were excluded from the computation of dilutive net income (loss) per common share because they would have been anti-dilutive. When applying the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share are higher than the Company’s average stock price during an applicable period.

Anti-dilution also occurs in periods of a net loss, and the dilutive impact of all share-based compensation awards are excluded. For the three months ended September 30, 2020 the weighted average share impact of other stock-based instruments that were excluded from the calculation of diluted shares due to the Company incurring a net loss for the period was 31,665. For the nine months ended September 30, 2020, the weighted average share impact of stock options and other stock-based instruments that were excluded from the calculation of diluted shares due to the Company incurring a net loss for the period was 38,648.

The following table presents the net income (loss) per common share for the three and nine months ended September 30, 2021 and 2020:

20

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income (loss)
Income (loss) from continuing operations $ 83,693  $ (68,488) $ 32,412  $ (186,420)
Loss from discontinued operations (429) (149) (1,067) (160,326)
Net income (loss) $ 83,264  $ (68,637) $ 31,345  $ (346,746)
Basic
Weighted average common shares outstanding - basic 18,445,709  18,319,947  18,426,639  18,290,346 
Basic income (loss) per common share:
Income (loss) from continuing operations $ 4.54  $ (3.74) $ 1.76  $ (10.19)
Loss from discontinued operations (0.03) (0.01) (0.06) (8.77)
Net income (loss) $ 4.51  $ (3.75) $ 1.70  $ (18.96)
Diluted
Weighted average common shares outstanding - basic 18,445,709  18,319,947  18,426,639  18,290,346 
Diluted effect of stock options 1,938  —  1,654  — 
Diluted effect of other stock-based instruments 465,705  —  355,350  — 
Weighted average common shares outstanding - diluted 18,913,352  18,319,947  18,783,643  18,290,346 
Diluted income (loss) per common share:
Income (loss) from continuing operations $ 4.43  $ (3.74) $ 1.73  $ (10.19)
Loss from discontinued operations (0.03) (0.01) (0.06) (8.77)
Net income (loss) $ 4.40  $ (3.75) $ 1.67  $ (18.96)

(6) Inventories, net
Inventories, net consisted of the following: 
  September 30, 2021 December 31, 2020
Raw coal $ 21,025  $ 15,084 
Saleable coal 74,948  69,262 
Materials, supplies and other, net
28,561  23,705 
Total inventories, net $ 124,534  $ 108,051 

(7) Asset Impairment and Restructuring
Long-lived Asset Impairment
During the nine months ended September 30, 2021, long-lived asset impairment of $60 was recorded in the All Other category to reduce the carrying value of property, plant, and equipment, net, due to capital spending during the period at previously impaired locations requiring the impairment of certain additional assets not considered recoverable.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
In connection with the preparation of the Company’s financial statements for the quarter ended September 30, 2020, the Company determined forecasted margins at certain locations continued to fall below amounts necessary for full recoverability and therefore indicators of impairment were present for three long-lived asset groups within its Met reporting segment and four long-lived asset groups within its All Other reporting segment. The Company therefore performed impairment testing on these assets and determined that, as of August 31, 2020, the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values. The Company estimated the fair value of these asset groups generally using a discounted cash flow analysis utilizing market-participant assumptions.

During the second quarter of 2020, as a result of the weakening coal market conditions due in part to the impact of the global COVID-19 pandemic, the Company announced that it would take certain strategic actions with respect to two of its thermal coal mining complexes in an effort to strengthen its financial performance and improve forecasted liquidity. The Company announced that an underground mine and preparation plant located in West Virginia would be idled during the third quarter of 2020. In addition, the Company decided not to move forward with the construction of a new refuse impoundment at its Cumberland mine in Pennsylvania and would therefore no longer spend the significant capital required in connection with the project. As a result, the Cumberland mine was expected to cease production by the end of 2022. On December 10, 2020, the Company sold its Cumberland mining operations. Refer to Note 2 for further details.

In connection with the preparation of the Company’s financial statements for the quarter ended June 30, 2020, the Company determined that the strategic actions taken by the Company during the three months ended June 30, 2020, discussed above, shortened the lives of two mining complexes, and that continued weakening in metallurgical and thermal coal pricing had resulted in forecasted margins at certain locations falling below amounts necessary for full recoverability. As a result of these determinations, the Company assessed that indicators of impairment were present for three long-lived asset groups within its Met reporting segment and four long-lived asset groups within its All Other category. The Company therefore performed impairment testing on these assets and determined that, as of May 31, 2020, the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values. The Company estimated the fair value of these asset groups generally using a discounted cash flow analysis utilizing market-participant assumptions.

During the first quarter of 2020, due to declines in metallurgical and thermal coal pricing which reduced forecasted margins at certain locations to amounts below those required for full recoverability, the Company determined that indicators of impairment were present for four long-lived asset groups within its Met reporting segment and three long-lived asset groups within its All Other category and performed impairment testing as of February 29, 2020. At February 29, 2020, the Company determined that the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values. The Company estimated the fair value of these asset groups generally using a discounted cash flow analysis utilizing market-participant assumptions.

The following tables present the details of the long-lived asset impairment during the three and nine months ended September 30, 2020:

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Continuing operations:
Met
$ —  $ 32,951 
All Other
219  18,367 
Total from continuing operations $ 219  $ 51,318 
Discontinued operations: $ 3,297  $ 147,645 
Total long-lived asset impairment: $ 3,516  $ 198,963 



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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Continuing operations:
Mineral rights, net
$ —  $ 24,066 
Property, plant, and equipment, net
219  12,781 
Acquired mine permits, net —  14,471 
Total from continuing operations $ 219  $ 51,318 
Discontinued operations:
Mineral rights, net
$ —  $ 16,364 
Property, plant, and equipment, net
3,297  131,281 
Total from discontinued operations $ 3,297  $ 147,645 
Total long-lived asset impairment:
Mineral rights, net
$ —  $ 40,430 
Property, plant, and equipment, net
3,516  144,062 
Acquired mine permits, net —  14,471 
Total long-lived asset impairment $ 3,516  $ 198,963 

Restructuring

As a result of the strategic actions announced in the second quarter of 2020 and subsequent changes to severance and employee-related benefits, the Company recorded restructuring expense of ($621) in the All Other category during the nine months ended September 30, 2021.

As a result of the strategic actions discussed above, the Company recorded restructuring expense during the three and nine months ended September 30, 2020 as follows:
Three Months Ended September 30, 2020
Total Restructuring
Continuing Operations (2)
Discontinued Operations
Severance and employee-related benefits (1)
$ 55  $ (445) $ 500 
Total restructuring expense $ 55  $ (445) $ 500 

Nine Months Ended September 30, 2020
Total Restructuring
Continuing Operations (4)
Discontinued Operations
Severance and employee-related benefits (1)
$ 20,608  $ 1,856  $ 18,752 
Other costs (3)
1,882  807  1,075 
Total restructuring expense $ 22,490  $ 2,663  $ 19,827 
(1) Severance and employee-related benefits were considered probable and estimable based on provisions of contractual agreements and existing employee benefit plans.
(2) Total restructuring expense from continuing operations of ($445) was recorded within the All Other category and affected Accrued expenses and other current liabilities.
(3) Includes accelerated amortization of deferred longwall move expenses of $668, allowance for advanced mining royalties of $407, and allowance for obsolete materials and supplies inventory of $807.
(4) Total restructuring expense from continuing operations of $2,663 was recorded within the All Other category and affected Accrued expenses and other current liabilities, Other non-current liabilities, and Inventories, net.

23

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
(8) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

 
September 30, 2021 December 31, 2020
Wages and benefits $ 53,746  $ 40,330 
Workers’ compensation 10,355  10,355 
Black lung 6,784  6,784 
Taxes other than income taxes 24,202  21,540 
Current portion of asset retirement obligations 30,735  24,990 
Accrued interest and fees 16,102  15,902 
Deferred revenue 942  13,197 
Freight accrual 13,231  2,610 
Other 4,635  4,698 
Total accrued expenses and other current liabilities $ 160,732  $ 140,406 

(9) Long-Term Debt
Long-term debt consisted of the following: 
  September 30, 2021 December 31, 2020
Term Loan Credit Facility - due June 2024 $ 499,435  $ 553,373 
ABL Facility - due April 2022 —  3,350 
LCC Note Payable 2,300  27,500 
LCC Water Treatment Obligation 5,625  6,875 
Other (1)
6,083  8,475 
Debt discount and issuance costs (8,276) (17,046)
Total long-term debt 505,167  582,527 
Less current portion (7,976) (28,830)
Long-term debt, net of current portion $ 497,191  $ 553,697 
(1) Includes financing leases.

Term Loan Credit Facility - due June 2024
As of September 30, 2021, the borrowings made under the senior secured term loan facility with a maturity date of June 14, 2024 (the “Term Loan Credit Facility”) were comprised of Eurocurrency Rate Loans (as defined therein) with an interest rate of 10.00%, calculated as the Eurocurrency rate during the period plus an applicable rate of 8.00%. As of September 30, 2021, the carrying value of the Term Loan Credit Facility was $492,092, all of which was classified as long-term within the Condensed Consolidated Balance Sheets. As of December 31, 2020, the carrying value of the Term Loan Credit Facility was $540,643, with $5,618 classified as current within the Condensed Consolidated Balance Sheets.

During the three months ending September 30, 2021, the Company repurchased and permanently retired, through privately negotiated transactions, $18,724 of outstanding principal borrowings under the Term Loan Credit Facility. These borrowings were repurchased at a discount resulting in an aggregate purchase price of $18,415. As the participating lenders were existing shareholders (related parties) of the Company as of the repurchase date, the Company analyzed various factors regarding each of the transactions and concluded such repurchases were at a reasonable market rate and reflected the terms of an arm’s length transaction per the requirements of the Term Loan Credit Facility. Additionally, on September 30, 2021, the Company made a voluntary prepayment of $31,000 of outstanding principal borrowings under the Term Loan Credit Facility. As a result of the prepayment, no further amortization payments under the Term Loan Credit Facility are required prior to maturity.

24

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
All obligations under the Term Loan Credit Facility are guaranteed by substantially all of Alpha’s direct and indirect subsidiaries. Certain obligations under the Term Loan Facility are secured by a senior lien, subject to certain exceptions (including the ABL Priority Collateral described below), by substantially all of Alpha’s assets and the assets of Alpha’s subsidiary guarantors (“Term Loan Priority Collateral”), in each case subject to exceptions. The obligations under the Term Loan Credit Facility are also secured by a junior lien, again subject to certain exceptions, against the ABL Priority Collateral. The Term Loan Facility contains negative and affirmative covenants including certain financial covenants that are more flexible than the covenants in the Amended and Restated Credit Agreement dated November 9, 2018. The Company was in compliance with all covenants under this agreement as of September 30, 2021.

Amended and Restated Asset-Based Revolving Credit Agreement

The Amended and Restated Asset-Based Revolving Credit Agreement includes a senior secured asset-based revolving credit facility (the “ABL Facility”). Under the ABL Facility, the Company may borrow cash or obtain letters of credit, on a revolving basis with any borrowings having a maturity date of April 3, 2022. As of September 30, 2021, the Company is in the process of refinancing the ABL Facility and expects that process to be completed prior to the maturity date. The Company anticipates a reduction in the size of the ABL Facility with borrowing capacity expected to be approximately $150,000 for the new facility. The Company expects the new facility to have sufficient availability to support the Company’s outstanding letters of credit under the current ABL Facility; however, there can be no assurance that the Company will be able to refinance the ABL Facility in a timely manner, or at all. As of September 30, 2021, there were no outstanding borrowings under the ABL Facility. As of December 31, 2020, the carrying value of the ABL Facility was $3,350, all of which was classified as long-term within the Condensed Consolidated Balance Sheets. As of September 30, 2021 and December 31, 2020, the Company had $120,037 and $123,108 letters of credit outstanding under the ABL Facility, respectively.

The Amended and Restated Asset-Based Revolving Credit Agreement provides that a specified percentage of billed, unbilled and approved foreign receivables and raw and clean inventory meeting certain criteria are eligible to be counted for purposes of collateralizing the amount of financing available, subject to certain terms and conditions. Availability under the ABL Facility is calculated on a monthly basis and fluctuates based on qualifying amounts of coal inventory and trade accounts receivable (the “Borrowing Base”) and the facility's covenant limitations related to the Fixed Charge Coverage Ratio (as defined therein). In accordance with terms of the ABL Facility, the Company may be required to collateralize the ABL Facility to the extent outstanding borrowings and letters of credit under the ABL Facility exceed the Borrowing Base after considering covenant limitations.

The ABL Facility is guaranteed by substantially all of Alpha’s direct and indirect subsidiaries (together with Alpha, the “Loan Parties”) and secured by all or substantially all assets of the Loan Parties, including equity in Alpha’s direct domestic subsidiaries and first-tier foreign subsidiaries, as collateral for the obligations under the ABL Facility. The ABL Facility has a first lien on ABL Priority Collateral (as defined therein) and a second lien on Term Loan Priority Collateral. The Amended and Restated Asset-Based Revolving Credit Agreement, as amended, and related documents contain negative and affirmative covenants including certain financial covenants. The Company is in compliance with all covenants under these agreements as of September 30, 2021.

LCC Note Payable

As a result of the Merger, the Company assumed a note payable to Lexington Coal Company (“LCC”) in the aggregate amount of $62,500 (the “LCC Note Payable”) and with a maturity date of July 26, 2022. The LCC Note Payable has no stated interest rate and an imputed interest rate of 12.45%. Principal repayments of $17,500 were due each July during 2019, 2020 and 2021, with the final principal payment of $10,000 due on the maturity date. On July 26, 2021, the Company prepaid $7,700 of the final principal payment. As a result of the prepayment, $13,982 of surety collateral was returned. As of September 30, 2021, the remaining $2,300 was expected to be paid in July of 2022.

The carrying value of the LCC Note Payable was $2,066 and $24,423, with $2,066 and $17,500 reported within the current portion of long-term debt as of September 30, 2021 and December 31, 2020, respectively.

(10) Acquisition-Related Obligations
Acquisition-related obligations consisted of the following:
25

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
September 30, 2021 December 31, 2020
Contingent Revenue Obligation $ 35,580  $ 28,967 
Environmental Settlement Obligations 8,139  10,391 
UMWA Funds Settlement Liability 2,000  2,000 
Discount (487) (1,491)
Total acquisition-related obligations 45,232  39,867 
Less current portion (26,266) (19,099)
Acquisition-related obligations, net of current portion $ 18,966  $ 20,768 

Contingent Revenue Obligation

As of September 30, 2021 and December 31, 2020, the carrying value of the Contingent Revenue Obligation was $35,580 and $28,967, with $16,614 and $11,393 classified as current, respectively, classified as an acquisition-related obligation in the Condensed Consolidated Balance Sheets. Refer to Note 12 for further disclosures related to the fair value assignment and methods used.

During the second quarter of 2021, the Company paid $11,396 pursuant to the terms of the Contingent Revenue Obligation.

(11) Asset Retirement Obligations

The following table summarizes the changes in asset retirement obligations for the nine months ended September 30, 2021:
Total asset retirement obligations at December 31, 2020 $ 165,064 
Accretion for the period 19,970 
Sites added during the period 756 
Revisions in estimated cash flows (500)
Expenditures for the period (12,630)
Total asset retirement obligations at September 30, 2021 172,660 
Less current portion (1)
(30,735)
Long-term portion $ 141,925 
(1)    Included within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets. Refer to Note 8.

(12) Fair Value of Financial Instruments and Fair Value Measurements
The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision.
The carrying amounts for cash and cash equivalents, trade accounts receivable, net, prepaid expenses and other current assets, short-term and long-term restricted cash, short-term and long-term deposits, trade accounts payable, and accrued expenses and other current liabilities approximate fair value as of September 30, 2021 and December 31, 2020 due to the short maturity of these instruments.
26

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
The following tables set forth by level, within the fair value hierarchy, the Company’s long-term debt at fair value as of September 30, 2021 and December 31, 2020:
September 30, 2021
Carrying
     Amount (1)
Total Fair Value Quoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Term Loan Credit Facility - due June 2024 $ 492,092  $ 494,753  $ —  $ 494,753  $ — 
LCC Note Payable 2,066  2,054  —  —  2,054 
LCC Water Treatment Obligation 4,926  4,902  —  —  4,902 
Total long-term debt $ 499,084  $ 501,709  $ —  $ 494,753  $ 6,956 

December 31, 2020
Carrying
     Amount (1)
Total Fair Value Quoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Term Loan Credit Facility - due June 2024 $ 540,643  $ 379,614  $ —  $ 379,614  $ — 
ABL Facility - due April 2022 3,350  3,057  —  —  3,057 
LCC Note Payable 24,423  20,328  —  —  20,328 
LCC Water Treatment Obligation 5,636  4,281  —  —  4,281 
Total long-term debt $ 574,052  $ 407,280  $ —  $ 379,614  $ 27,666 
(1) Net of debt discounts and debt issuance costs.

The following tables set forth by level, within the fair value hierarchy, the Company’s acquisition-related obligations at fair value as of September 30, 2021 and December 31, 2020:
  September 30, 2021
Carrying
     Amount (1)
Total Fair Value Quoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
UMWA Funds Settlement Liability $ 1,910  $ 1,934  $ —  $ —  $ 1,934 
Environmental Settlement Obligations 7,742  7,723  —  —  7,723 
Total acquisition-related obligations $ 9,652  $ 9,657  $ —  $ —  $ 9,657 

  December 31, 2020
Carrying
     Amount (1)
Total Fair Value Quoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
UMWA Funds Settlement Liability $ 1,662  $ 1,426  $ —  $ —  $ 1,426 
Environmental Settlement Obligations 9,237  7,760  —  —  7,760 
Total acquisition-related obligations $ 10,899  $ 9,186  $ —  $ —  $ 9,186 
(1) Net of discounts.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2021 and December 31, 2020. Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the determination of fair value for assets and liabilities and their placement
27

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
within the fair value hierarchy levels.
  September 30, 2021
Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Contingent Revenue Obligation $ 35,580  $ —  $ —  $ 35,580 
Trading securities $ 28,695  $ 27,074  $ 1,621  $ — 

  December 31, 2020
Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Contingent Revenue Obligation $ 28,967  $ —  $ —  $ 28,967 
Trading securities $ 22,498  $ 20,092  $ 2,406  $ — 

The following tables present a reconciliation of the financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis and that were categorized within Level 3 of the fair value hierarchy:
December 31, 2020 Payments
Loss (Gain) Recognized in Earnings (1)
Transfer In (Out) of Level 3 Fair Value Hierarchy September 30, 2021
Contingent Revenue Obligation $ 28,967  $ (11,396) $ 18,009  $ —  $ 35,580 
(1) The loss recognized in earnings resulted primarily from an increase in forecasted future revenue as of September 30, 2021.

December 31, 2019
Payments
Loss (Gain) Recognized in Earnings (1)
Transfer In (Out) of Level 3 Fair Value Hierarchy September 30, 2020
Contingent Revenue Obligation $ 52,427  $ (14,710) $ (13,425) $ —  $ 24,292 
(1) The gain recognized in earnings resulted primarily from a change in the forecasted future revenue associated with this obligation and an increase in annualized volatility as of September 30, 2020.

The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the tables above:
Level 1 Fair Value Measurements
Trading Securities - Includes money market funds and other cash equivalents. The fair value is based on observable market data.

Level 2 Fair Value Measurements
Term Loan Credit Facility - due June 2024 - The fair value is based on the average between bid and ask prices provided by a third-party. As the fair value is based on observable market inputs and due to limited trading volume in the Term Loan Credit Facility, the Company has classified the fair value within Level 2 of the fair value hierarchy.

Trading Securities - Includes certificates of deposit, mutual funds, corporate debt securities and U.S. treasury and agency securities. The fair values of the Company’s trading securities are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The Company classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value.

28

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Level 3 Fair Value Measurements

ABL Facility - due April 2022 - Observable transactions are not available to aid in determining the fair value of this item. Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for credit risk (discount rate of approximately 9% as of December 31, 2020).

LCC Note Payable, LCC Water Treatment Obligation, UMWA Funds Settlement Liability and Environmental Settlement Obligations - Observable transactions are not available to aid in determining the fair value of these items. Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for credit risk (discount rates of approximately 14% and 34% as of September 30, 2021 and December 31, 2020, respectively).

Contingent Revenue Obligation - The fair value of the contingent revenue obligation was estimated using a Black-Scholes pricing model and is marked to market at each reporting period with changes in value reflected in earnings. The inputs included in the Black-Scholes pricing model are the Company's forecasted future revenue, the stated royalty rate, the remaining periods in the obligation, annual risk-free interest rate based on the U.S. Constant Maturity Treasury Curve and annualized volatility. The annualized volatility was calculated by observing volatilities for comparable companies with adjustments for the Company's size and leverage. The range of significant unobservable inputs used to value the contingent revenue obligation as of September 30, 2021 and December 31, 2020, are set forth in the following table:
  September 30, 2021 December 31, 2020
Forecasted future revenue
$1.4 - $2.0 billion
$0.9 - $1.1 billion
Stated royalty rate
1.0% - 1.5%
1.0% - 1.5%
Annualized volatility
19.6% - 37.9% (34.2%)
19.4% - 52.1% (28.0%)

(13) Income Taxes

For the nine months ended September 30, 2021, the Company recorded income tax expense of $211 on income from continuing operations before income taxes of $32,623. The income tax expense differs from the expected statutory amount primarily due to the decrease in the valuation allowance and the permanent impact of percentage depletion deductions, partially offset by the impact of state income taxes, net of federal impact. As of September 30, 2021, the Company anticipates that no current federal income tax liability will be generated in 2021. For the nine months ended September 30, 2020, the Company recorded income tax benefit of $2,200 on a loss from continuing operations before income taxes of $188,620. The income tax benefit differs from the expected statutory amount primarily due to the increase in valuation allowance, partially offset by the permanent impact of percentage depletion deductions, the impact of state income taxes, net of federal tax impact, and the recording of a discrete tax benefit related to the refundability of previously sequestered AMT Credits.

As a result of generating income before income taxes during the nine months ended September 30, 2021, the Company recorded a decrease of $12,701 to its deferred tax asset valuation allowance recorded as of September 30, 2021. The decrease in the valuation allowance results from a decrease in deferred tax assets since the prior reporting date of December 31, 2020. The valuation allowance associated with those deferred tax assets was released during the nine months ended September 30, 2021. The Company currently is relying primarily on the reversal of taxable temporary differences, along with consideration of taxable income via carryback to prior years and tax planning strategies, to support the realization of deferred tax assets. For each reporting period, the Company updates its assessment regarding the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. The valuation allowance recorded represents the portion of deferred tax assets for which the Company is unable to support realization through the methods described above.

During the quarter ended September 30, 2021, the Internal Revenue Service (“IRS”) concluded its audit of the Company’s 2016 federal income tax return and associated net operating loss (“NOL”) carryback claim. The audit conclusion did not result in any material impact to the financial statements or related disclosures. Following the conclusion of the audit, the Company received the $64,160 carryback claim tax refund and $5,425 of accrued interest. The tax refund and accrued interest were
29

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
included in prior financial statements as part of “Prepaid expenses and other current assets” balance sheet line item.

(14) Employee Benefit Plans
The components of net periodic (benefit) expense other than the service cost component for the employee benefit plan obligations below are included in the line item miscellaneous income (loss), net in the Condensed Consolidated Statements of Operations.
Pension

The following table details the components of the net periodic benefit for pension obligations:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Interest cost $ 3,392  $ 4,670  $ 10,176  $ 14,061 
Expected return on plan assets (7,183) (6,752) (21,549) (20,312)
Amortization of net actuarial loss 804  511  2,413  1,501 
Settlement —  —  —  1,230 
Net periodic benefit $ (2,987) $ (1,571) $ (8,960) $ (3,520)

During the three months ended June 30, 2021, an annual census data actuarial revaluation of pension obligations was performed, which resulted in a decrease in the liability for pension obligations of approximately $8,838 with the offset to accumulated other comprehensive gain and a slight increase in net periodic benefit to be recognized subsequent to the revaluation date.

As a result of the recent funding relief granted under the American Rescue Plan Act, estimated contributions requirements to the pension plans were reduced relative to the Company’s previous estimates. The Company contributed $6,571 to the pension plans during the nine months ended September 30, 2021 and is not required to make additional contributions in the remainder of 2021.

Black Lung

The following table details the components of the net periodic expense for black lung obligations:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Service cost $ 739  $ 499  $ 2,217  $ 1,479 
Interest cost 607  678  1,821  2,275 
Expected return on plan assets (14) (13) (42) (40)
Amortization of net actuarial loss 522  426  1,566  927 
Net periodic expense $ 1,854  $ 1,590  $ 5,562  $ 4,641 

Defined Contribution and Profit-Sharing Plans

During the second quarter of 2020, the Company’s matching contributions under the Alpha Metallurgical Resources (formerly Contura Energy) 401(k) Retirement Savings Plan (the “Plan”) were suspended due to weak market conditions at that time. Effective in June 2021, the Company’s matching contributions under the Plan were reinstated.

(15) Related Party Transactions
During the three months ending September 30, 2021, the Company repurchased at a discount certain outstanding principal borrowings made under the Term Loan Credit Facility from existing shareholders through privately negotiated transactions. Refer to Note 9 for additional disclosures on long-term debt.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
There were no other material related party transactions for the nine months ended September 30, 2021 or 2020.

(16) Commitments and Contingencies
(a) General
Estimated losses from loss contingencies are accrued by a charge to income when information available indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.
If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the Condensed Consolidated Financial Statements when it is at least reasonably possible that a loss may be incurred and that the loss could be material.
(b) Commitments and Contingencies
Commitments
The Company leases coal mining and other equipment under long-term financing and operating leases with varying terms. In addition, the Company leases mineral interests and surface rights from landowners under various terms and royalty rates.

Other Commitments

As of September 30, 2021, the Company has obligations under certain coal transportation agreements that contain minimum quantities to be shipped during contract periods from 2021 through 2022 with estimated obligations based on remaining tons to be shipped totaling $14,905 in 2022. The Company also has obligations under certain coal purchase agreements that contain minimum quantities to be purchased in the remainder of 2021 totaling an estimated $22,647, which includes an estimated $3,016 related to contractually committed fixed priced tons from vendors with historical performance resulting in less than 20% of the committed tonnage being delivered.

Contingencies

Extensive regulation of the impacts of mining on the environment and of maintaining workplace safety has had, and is expected to continue to have, a significant effect on the Company’s costs of production and results of operations. Further regulations, legislation or litigation in these areas may also cause the Company’s sales or profitability to decline by increasing costs or by hindering the Company’s ability to continue mining at existing operations or to permit new operations.
During the normal course of business, contract-related matters arise between the Company and its customers. When a loss related to such matters is considered probable and can reasonably be estimated, the Company records a liability.
As of September 30, 2021, per terms of the Cumberland Back-to-Back Coal Supply Agreements, the Company is required to purchase and sell 722 and 2,581 tons of coal in the remainder of 2021 and 2022 totaling $28,207 and $100,619, respectively. For the three and nine months ended September 30, 2021, the Company purchased and sold 514 and 1,974 tons, respectively, totaling $19,948 and $76,501, respectively, under the Cumberland Back-to-Back Coal Supply Agreements. Cumberland Back-to-Back Coal Supply Agreements are scheduled to be fully performed by December 31, 2022.
(c) Guarantees and Financial Instruments with Off-Balance Sheet Risk
In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as bank letters of credit, performance or surety bonds, and other guarantees and indemnities related to the obligations of affiliated entities which are not reflected in the Company’s Condensed Consolidated Balance Sheets. However, the underlying liabilities that they secure, such as asset retirement obligations, workers’ compensation liabilities, and royalty obligations, are reflected in the Company’s Condensed Consolidated Balance Sheets.
The Company is required to provide financial assurance in order to perform the post-mining reclamation required by its mining permits, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations. In order to provide the required financial assurance, the Company generally uses
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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
surety bonds for post-mining reclamation and workers’ compensation obligations. The Company can also use bank letters of credit to collateralize certain obligations.

As of September 30, 2021, the Company had $120,037 letters of credit outstanding under the Amended and Restated Asset-Based Revolving Credit Agreement. Additionally, as of September 30, 2021, the Company had $613 letters of credit outstanding under the Credit and Security Agreement dated June 30, 2017, and related amendments, between ANR, Inc. and First Tennessee Bank National Association. On March 31, 2021, the Amended and Restated Letter of Credit Agreement dated November 9, 2018 between ANR, Inc. and Citibank, N.A. was terminated.

As of September 30, 2021, the Company had outstanding surety bonds with a total face amount of $176,909 to secure various obligations and commitments, including $30 attributable to discontinued operations. To secure the Company’s reclamation-related obligations, the Company has $37,164 of collateral supporting these obligations as of September 30, 2021.

The Company meets frequently with its surety providers and has discussions with certain providers regarding the extent of and the terms of their participation in the program. These discussions may cause the Company to shift surety bonds between providers or to alter the terms of their participation in our program. To the extent that surety bonds become unavailable or the Company’s surety bond providers require additional collateral, the Company would seek to secure its obligations with letters of credit, cash deposits or other suitable forms of collateral. The Company’s failure to maintain, or inability to acquire, surety bonds or to provide a suitable alternative would have a material adverse effect on its liquidity. These failures could result from a variety of factors including lack of availability, higher cost or unfavorable market terms of new surety bonds, and the exercise by third-party surety bond issuers of their right to refuse to renew the surety.

Amounts included in restricted cash represent cash deposits primarily invested in interest bearing accounts that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf:
  September 30, 2021 December 31, 2020
Workers' compensation and black lung obligations $ 66,488  $ 69,725 
Reclamation-related obligations 10,580  8,445 
Financial payments and other performance obligations 6,933  17,863 
Contingent revenue obligation escrow 7,642  9,311 
Total restricted cash 91,643  105,344 
Less current portion (1)
(7,642) (9,311)
Restricted cash, net of current portion $ 84,001  $ 96,033 
(1) Included within prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheets.

Restricted investments consist of Federal Deposit Insurance Company (“FDIC”) insured certificates of deposit, mutual funds, and U.S. treasury bills that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf:
  September 30, 2021 December 31, 2020
Workers' compensation obligations $ 211  $ 51 
Reclamation-related obligations 26,467  22,233 
Financial payments and other performance obligations 2,017  1,484 
Total restricted investments (1), (2)
$ 28,695  $ 23,768 
(1) Included within other non-current assets on the Company’s Condensed Consolidated Balance Sheets.
(2) As of September 30, 2021 and December 31, 2020, respectively, $28,695 and $22,498 are classified as trading securities and $0 and $1,270 are classified as held-to-maturity securities.

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral to secure the following obligations which have been written on the Company’s behalf:
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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
  September 30, 2021 December 31, 2020
Reclamation-related obligations $ 117  $ 25,633 
Financial payments and other performance obligations 403  1,596 
Other operating agreements 881  1,018 
Total deposits (1)
$ 1,401  $ 28,247 
(1) Included within prepaid expenses and other current assets and other non-current assets on the Company’s Condensed Consolidated Balance Sheets.

DCMWC Reauthorization Process

In July 2019, the U.S. Department of Labor (Division of Coal Mine Workers’ Compensation or “DCMWC”) began implementing a new authorization process for all self-insured coal mine operators. As requested by the DCMWC, the Company filed an application and supporting documentation for reauthorization to self-insure certain of its black lung obligations in October 2019. As a result of this application, the DCMWC notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations for a period of one-year from February 21, 2020. The DCMWC reauthorization is contingent, however, upon the Company’s providing collateral of $65,700 to secure certain of its black lung obligations. This proposed collateral requirement is an increase from the approximate $2,600 in collateral that the Company currently provides to secure these self-insured black lung obligations. The reauthorization process provided the Company with the right to appeal the security determination in writing within 30 days of the date of the notification, which appeal period the DCMWC agreed to extend to May 22, 2020. The Company exercised this right of appeal in connection with the substantial increase in the amount of required collateral. However, there has been no substantive activity under the appeal since its filing. In February 2021, the U.S. Department of Labor withdrew its Federal Register notice seeking comments on its bulletin describing its new method of calculating collateral requirements. The Department removed the bulletin from its website in May 2021. If the Company’s appeal is unsuccessful, the Company may be required to provide additional letters of credit to receive the self-insurance reauthorization from the DCMWC or alternatively insure these black lung obligations through a third party provider that would likely also require the Company to provide additional collateral. Either of these outcomes could potentially reduce the Company’s liquidity.

(d) Legal Proceedings 

The Company is party to legal proceedings from time to time. These proceedings, as well as governmental examinations, could involve various business units and a variety of claims including, but not limited to, contract disputes, personal injury claims, property damage claims (including those resulting from blasting, trucking and flooding), environmental and safety issues, securities-related matters and employment matters. While some legal matters may specify the damages claimed by the plaintiffs, many seek an unquantified amount of damages. Even when the amount of damages claimed against the Company or its subsidiaries is stated, (i) the claimed amount may be exaggerated or unsupported; (ii) the claim may be based on a novel legal theory or involve a large number of parties; (iii) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (iv) there may be uncertainty as to the outcome of pending appeals or motions; and/or (v) there may be significant factual issues to be resolved. As a result, if such legal matters arise in the future, the Company may be unable to estimate a range of possible loss for matters that have not yet progressed sufficiently through discovery and development of important factual information and legal issues. The Company records accruals based on an estimate of the ultimate outcome of these matters, but these estimates can be difficult to determine and involve significant judgment.

(17) Segment Information
The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities. The Company conducts mining operations only in the United States with mines in Central Appalachia (“CAPP”). The Company has one reportable segment: Met, which consists of five active mines and two preparation plants in Virginia, thirteen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines. Prior to the first quarter of 2021, the Company had two reportable segments: CAPP - Met and CAPP - Thermal. As a result of the Company’s continued strategic focus on the production of metallurgical coal and the reduction of thermal mining operations, the Company re-evaluated its previous conclusions with respect to its segment reporting during the first quarter of 2021. To conform to the current period reportable segments presentation, the prior periods have been restated to reflect the change in reportable segments.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
In addition to the one reportable segment, the All Other category includes general corporate overhead and corporate assets and liabilities, the former CAPP - Thermal operations consisting of one active mine and one preparation plant in West Virginia, and the elimination of certain intercompany activity, as well as expenses associated with certain idled/closed mines.

Reportable segment operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is the Chief Executive Officer of the Company.

Segment operating results and capital expenditures for the three months ended September 30, 2021 and 2020 were as follows: 
Three Months Ended September 30, 2021
Met All Other Consolidated
Total revenues $ 626,103  $ 22,738  $ 648,841 
Depreciation, depletion, and amortization $ 23,181  $ 1,338  $ 24,519 
Amortization of acquired intangibles, net $ 3,063  $ (83) $ 2,980 
Adjusted EBITDA $ 155,456  $ (7,234) $ 148,222 
Capital expenditures $ 21,882  $ 465  $ 22,347 
 
Three Months Ended September 30, 2020
Met All Other Consolidated
Total revenues $ 295,381  $ 40,211  $ 335,592 
Depreciation, depletion, and amortization $ 41,178  $ 8,058  $ 49,236 
Amortization of acquired intangibles, net $ 2,535  $ (461) $ 2,074 
Adjusted EBITDA $ 17,772  $ (5,412) $ 12,360 
Capital expenditures $ 22,668  $ 839  $ 23,507 

Segment operating results and capital expenditures for the nine months ended September 30, 2021 and 2020 were as follows: 
Nine Months Ended September 30, 2021
Met All Other Consolidated
Total revenues $ 1,363,918  $ 66,451  $ 1,430,369 
Depreciation, depletion, and amortization $ 75,403  $ 4,858  $ 80,261 
Amortization of acquired intangibles, net $ 9,749  $ (347) $ 9,402 
Adjusted EBITDA $ 234,824  $ (17,801) $ 217,023 
Capital expenditures $ 59,408  $ 978  $ 60,386 

Nine Months Ended September 30, 2020
Met All Other Consolidated
Total revenues $ 974,674  $ 117,662  $ 1,092,336 
Depreciation, depletion, and amortization $ 121,679  $ 22,242  $ 143,921 
Amortization of acquired intangibles, net $ 7,875  $ (3,409) $ 4,466 
Adjusted EBITDA $ 104,408  $ (28,406) $ 76,002 
Capital expenditures $ 83,449  $ 6,979  $ 90,428 


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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
The following tables present a reconciliation of net income (loss) to Adjusted EBITDA for the three months ended September 30, 2021 and 2020:
Three Months Ended