Arch Resources Annual Report 2021 Form 10-K (NYSE:ARCH) Published: February 12th, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-13105 Graphic Arch Resources, Inc. (Exact name of registrant as specified in its charter) Delaware 43-0921172 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) One CityPlace Drive Suite 300 St. Louis Missouri 63141 (Address of principal executive offices) (Zip code) Registrant’s telephone number, including area code: (314) 994-2700 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Which Title of Each Class Trading Symbol Registered Common Stock, $.01 par value ARCH New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Y es ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes☐ No ☒ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐ 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Ye☐s No ☒ The aggregate market value of the voting stock held by non-affiliates of the registrant (excluding outstanding shares beneficially owned by directors, officers, other affiliates and treasury shares) as of June 30, 2020 was approximately $430.3 million. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐ At January 31, 2021 there were 15,234,899 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the 2021 annual stockholders’ meeting are incorporated by reference into Part III of this Form 10-K. TABLE OF CONTENTS Page PART I ITEM 1. Business 6 ITEM 1A. Risk Factors 37 ITEM 1B. Unresolved Staff Comments 54 ITEM 2. Properties 54 ITEM 3. Legal Proceedings 56 ITEM 4. Mine Safety Disclosures 56 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 60 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 79 ITEM 8. Financial Statements and Supplementary Data 80 ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 80 ITEM 9A. Controls and Procedures 80 ITEM 9B. Other Information 80 PART III ITEM 10. Directors, Executive Officers and Corporate Governance 81 ITEM 11. Executive Compensation 81 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related 81 Stockholder Matter ITEM 13. Certain Relationships and Related Transactions, and Director Independence 81 ITEM 14. Principal Accounting Fees and Services 81 PART IV ITEM 15. Exhibits and Financial Statement Schedules 82 ITEM 16. Form 10-K Summary 82 2 If you are not familiar with any of the mining terms used in this report, we have provided explanations of many of them under the caption “Glossary of Selected Mining Terms” on page 35 of this report. Unless the context otherwise requires, all references in this report to “Arch,” “we,” “us,” or “our” are to Arch Resources, Inc. and its subsidiaries. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION This report contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as our expected future business and financial performance, and are intended to come within the safe harbor protections provided by those sections. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “predicts,” “projects,” “seeks,” “should,” “will” or other comparable words and phrases identify forward-looking statements, which speak only as of the date of this report. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Actual results may vary significantly from those anticipated due to many factors, including: ● changes in the demand for our coal, by the steel industries and electric generation; ● geologic conditions, weather and other inherent risks of coal mining that are beyond our control; ● competition, both within our industry and with producers of competing energy sources, including the effects from any current or future legislation or regulations designed to support, promote or mandate renewable energy sources; ● excess production and production capacity; ● our ability to acquire or develop coal reserves in an economically feasible manner; ● our ability to fund substantial capital expenditures; ● inaccuracies in our estimates of our coal reserves; ● availability and price of mining and other industrial supplies; ● disruptions in the supply of coal from third parties; ● availability of skilled employees and other workforce factors; ● our ability to collect payments from our customers; ● defects in title or the loss of a leasehold interest; ● railroad, barge, truck, ocean vessel and other transportation performance and costs; ● our ability to successfully integrate the operations that we acquire; ● our ability to successfully dispose of the operations that we sell; ● our ability to secure new coal supply arrangements or to renew existing coal supply arrangements; ● our relationships with, and other conditions affecting our customers; ● the loss of, or significant reduction in, purchases by our largest customers; ● our ability to service our outstanding indebtedness and raise funds necessary to repurchase Convertible Notes for cash following a fundamental change or to pay any cash amounts due upon conversion; 3 ● our ability to comply with the restrictions imposed by our Term Loan Debt Facility, Extended Securitization Facility, Inventory Facility, Equipment Financing, Tax Exempt Bonds, Convertible Debt (each as defined below), other financing arrangements or any subsequent financing or credit facilities; ● additional demands for credit support by third parties and decisions by banks, surety bond providers, or other counterparties to reduce or eliminate their exposure to the coal industry; ● access to capital and its associated costs; ● development of future technology to replace coal with hydrogen in the steel making process; ● risks related to operating as an essential service producer during the COVID-19 pandemic; ● impact of COVID-19 on efficiency, costs, and production; ● the availability and cost of surety bonds; including potential collateral requirements; ● our ability to manage the market risks and other risks associated with certain trading and other asset optimization strategies; ● cyber-attacks or other security breaches that disrupt our operations, or that result in the unauthorized release of proprietary or confidential