| SEGMENT REPORTING |
NOTE 2 - SEGMENT REPORTING
Our continuing operations are organized and managed according to product category and geographic location: U.S. Iron Ore and Asia Pacific Iron Ore. The U.S. Iron Ore segment is comprised of our interests in five U.S. mines that provide iron ore to the integrated steel industry. The Asia Pacific Iron Ore segment is located in Western Australia and provides iron ore to the seaborne market for Asian steel producers. There were no intersegment product revenues in the first nine months of 2015 or 2014.
We have historically evaluated segment performance based on sales margin, defined as revenues less cost of goods sold, and operating expenses identifiable to each segment. Additionally, beginning in the third quarter of 2014, concurrent with the change in control on July 29, 2014, management began to evaluate segment performance based on EBITDA, defined as net income (loss) before interest, income taxes, depreciation, depletion and amortization, and Adjusted EBITDA, defined as EBITDA excluding certain items such as impairment of goodwill and other long-lived assets, impacts of discontinued operations, extinguishment of debt, severance and contractor termination costs, foreign currency remeasurement, and intersegment corporate allocations of selling, general and administrative costs. Management uses and believes that investors benefit from referring to these measures in evaluating operating and financial results, as well as in planning, forecasting and analyzing future periods as these financial measures approximate the cash flows associated with the operational earnings.
The following tables present a summary of our reportable segments for the three and nine months ended SeptemberÌý30, 2015 and 2014, including a reconciliation of segment sales margin to Income (Loss) from Continuing Operations Before Income Taxes and Equity Loss from Ventures and a reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA:
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|
Ìý |
(In Millions) |
Ìý |
Three Months Ended
September 30, |
Ìý |
Nine Months Ended
September 30, |
Ìý |
2015 |
Ìý |
2014 |
Ìý |
2015 |
Ìý |
2014 |
Revenues from product sales and services: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
471.0 |
|
Ìý |
79 |
% |
Ìý |
$ |
767.4 |
|
Ìý |
78 |
% |
Ìý |
$ |
1,152.5 |
|
Ìý |
75 |
% |
Ìý |
$ |
1,643.3 |
|
Ìý |
70 |
% |
Asia Pacific Iron Ore |
122.2 |
|
Ìý |
21 |
% |
Ìý |
212.3 |
|
Ìý |
22 |
% |
Ìý |
384.8 |
|
Ìý |
25 |
% |
Ìý |
699.6 |
|
Ìý |
30 |
% |
Total revenues from product sales and services |
$ |
593.2 |
|
Ìý |
100 |
% |
Ìý |
$ |
979.7 |
|
Ìý |
100 |
% |
Ìý |
$ |
1,537.3 |
|
Ìý |
100 |
% |
Ìý |
$ |
2,342.9 |
|
Ìý |
100 |
% |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Sales margin: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
48.7 |
|
Ìý |
Ìý |
Ìý |
$ |
219.5 |
|
Ìý |
Ìý |
Ìý |
$ |
177.7 |
|
Ìý |
Ìý |
Ìý |
$ |
461.7 |
|
Ìý |
Ìý |
Asia Pacific Iron Ore |
6.4 |
|
Ìý |
Ìý |
Ìý |
9.1 |
|
Ìý |
Ìý |
Ìý |
15.5 |
|
Ìý |
Ìý |
Ìý |
111.4 |
|
Ìý |
Ìý |
Eliminations with discontinued operations |
— |
|
Ìý |
Ìý |
Ìý |
27.6 |
|
Ìý |
Ìý |
Ìý |
— |
|
Ìý |
Ìý |
Ìý |
56.6 |
|
Ìý |
Ìý |
Sales margin |
55.1 |
|
Ìý |
Ìý |
Ìý |
256.2 |
|
Ìý |
Ìý |
Ìý |
193.2 |
|
Ìý |
Ìý |
Ìý |
629.7 |
|
Ìý |
Ìý |
Other operating expense |
(25.9 |
) |
Ìý |
Ìý |
Ìý |
(399.0 |
) |
Ìý |
Ìý |
Ìý |
(66.4 |
) |
Ìý |
Ìý |
Ìý |
(494.0 |
) |
Ìý |
Ìý |
Other income (expense) |
17.4 |
|
Ìý |
Ìý |
Ìý |
(38.1 |
) |
Ìý |
Ìý |
Ìý |
221.7 |
|
Ìý |
Ìý |
Ìý |
(118.2 |
) |
Ìý |
Ìý |
Income (loss) from continuing operations before income taxes and equity loss from ventures |
$ |
46.6 |
|
Ìý |
Ìý |
Ìý |
$ |
(180.9 |
) |
Ìý |
Ìý |
Ìý |
$ |
348.5 |
|
Ìý |
Ìý |
Ìý |
$ |
17.5 |
|
Ìý |
Ìý |
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Ìý |
(In Millions) |
Ìý |
Three Months Ended
September 30, |
Ìý |
Nine Months Ended
September 30, |
Ìý |
2015 |
Ìý |
2014 |
Ìý |
2015 |
Ìý |
2014 |
Net Income (Loss) |
$ |
6.0 |
|
Ìý |
$ |
(6,887.2 |
) |
Ìý |
$ |
(690.5 |
) |
Ìý |
$ |
(6,943.4 |
) |
Less: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Interest expense, net |
(62.3 |
) |
Ìý |
(47.4 |
) |
Ìý |
(170.7 |
) |
Ìý |
(134.9 |
) |
Income tax benefit (expense) |
4.8 |
|
Ìý |
921.4 |
|
Ìý |
(167.3 |
) |
Ìý |
1,012.3 |
|
Depreciation, depletion and amortization |
(35.6 |
) |
Ìý |
(144.0 |
) |
Ìý |
(99.1 |
) |
Ìý |
(430.4 |
) |
EBITDA |
$ |
99.1 |
|
Ìý |
$ |
(7,617.2 |
) |
Ìý |
$ |
(253.4 |
) |
Ìý |
$ |
(7,390.4 |
) |
Less: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Impairment of goodwill and other long-lived assets |
$ |
— |
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|
$ |
(377.0 |
) |
|
$ |
(3.3 |
) |
|
$ |
(378.6 |
) |
Impact of discontinued operations |
(44.8 |
) |
Ìý |
(7,543.0 |
) |
Ìý |
(865.9 |
) |
Ìý |
(7,737.1 |
) |
Gain on extinguishment of debt |
79.2 |
|
Ìý |
— |
|
Ìý |
392.9 |
|
Ìý |
— |
|
Severance and contractor termination costs |
2.2 |
|
Ìý |
(2.6 |
) |
Ìý |
(9.3 |
) |
Ìý |
(19.3 |
) |
Foreign exchange remeasurement |
2.4 |
|
Ìý |
25.8 |
|
Ìý |
15.2 |
|
Ìý |
8.4 |
|
Adjusted EBITDA |
$ |
60.1 |
|
Ìý |
$ |
279.6 |
|
Ìý |
$ |
217.0 |
|
Ìý |
$ |
736.2 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
EBITDA: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
69.2 |
|
Ìý |
$ |
241.9 |
|
Ìý |
$ |
239.6 |
|
Ìý |
$ |
538.2 |
|
Asia Pacific Iron Ore |
11.1 |
|
Ìý |
(302.2 |
) |
Ìý |
38.7 |
|
Ìý |
(150.8 |
) |
Other |
18.8 |
|
Ìý |
(7,556.9 |
) |
Ìý |
(531.7 |
) |
Ìý |
(7,777.8 |
) |
Total EBITDA |
$ |
99.1 |
|
Ìý |
$ |
(7,617.2 |
) |
Ìý |
$ |
(253.4 |
) |
Ìý |
$ |
(7,390.4 |
) |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Adjusted EBITDA: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
72.3 |
|
Ìý |
$ |
249.5 |
|
Ìý |
$ |
254.6 |
|
Ìý |
$ |
559.1 |
|
Asia Pacific Iron Ore |
9.7 |
|
Ìý |
49.7 |
|
Ìý |
32.8 |
|
Ìý |
225.5 |
|
Other |
(21.9 |
) |
Ìý |
(19.6 |
) |
Ìý |
(70.4 |
) |
Ìý |
(48.4 |
) |
Total Adjusted EBITDA |
$ |
60.1 |
|
Ìý |
$ |
279.6 |
|
Ìý |
$ |
217.0 |
|
Ìý |
$ |
736.2 |
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|
Ìý |
(In Millions) |
Ìý |
Three Months Ended
September 30, |
Ìý |
Nine Months Ended
September 30, |
Ìý |
2015 |
Ìý |
2014 |
Ìý |
2015 |
Ìý |
2014 |
Depreciation, depletion and amortization: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
27.9 |
|
Ìý |
$ |
25.9 |
|
Ìý |
$ |
71.6 |
|
Ìý |
$ |
81.2 |
|
Asia Pacific Iron Ore |
6.1 |
|
Ìý |
42.2 |
|
Ìý |
19.1 |
|
Ìý |
123.6 |
|
Other |
1.6 |
|
Ìý |
2.0 |
|
Ìý |
5.2 |
|
Ìý |
5.9 |
|
Total depreciation, depletion and amortization |
$ |
35.6 |
|
Ìý |
$ |
70.1 |
|
Ìý |
$ |
95.9 |
|
Ìý |
$ |
210.7 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Capital additions1:
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
15.0 |
|
Ìý |
$ |
8.5 |
|
Ìý |
$ |
35.8 |
|
Ìý |
$ |
37.4 |
|
Asia Pacific Iron Ore |
0.3 |
|
Ìý |
3.1 |
|
Ìý |
4.8 |
|
Ìý |
8.3 |
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Other |
2.4 |
|
Ìý |
0.5 |
|
Ìý |
6.0 |
|
Ìý |
3.3 |
|
Total capital additions |
$ |
17.7 |
|
Ìý |
$ |
12.1 |
|
Ìý |
$ |
46.6 |
|
Ìý |
$ |
49.0 |
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1ÌýÌýÌýÌýIncludes capital lease additions and non-cash accruals. Refer to NOTE 17 - CASH FLOW INFORMATION.
A summary of assets by segment is as follows:
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|
Ìý |
(In Millions) |
Ìý |
SeptemberÌý30,
2015 |
Ìý |
DecemberÌý31,
2014 |
Assets: |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
1,498.3 |
|
Ìý |
$ |
1,464.9 |
|
Asia Pacific Iron Ore |
210.5 |
|
Ìý |
274.6 |
|
Other |
26.3 |
|
Ìý |
147.0 |
|
Total segment assets |
1,735.1 |
|
Ìý |
1,886.5 |
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Corporate |
395.0 |
|
Ìý |
546.8 |
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Assets of Discontinued Operations |
141.4 |
|
Ìý |
730.7 |
|
Total assets |
$ |
2,271.5 |
|
Ìý |
$ |
3,164.0 |
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