NOTE 2 - SEGMENT REPORTING
Our continuing operations are organized and managed according to geographic location: U.S. Iron Ore and Asia Pacific Iron Ore. Our U.S. Iron Ore segment is a major supplier of iron ore pellets to the North American steel industry from our mines and pellet plants located in Michigan and Minnesota. 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 revenues in the first nine months of 2016 or 2015.
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, we evaluate segment performance based on the key indicators of 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 impacts of impairment of other long-lived assets, discontinued operations, extinguishment/restructuring of debt, severance and contractor termination costs, foreign currency remeasurement, and intersegment corporate allocations of SG&A costs.Ìý These measures allow management and investors to focus on our ability to service our debt, as well as, illustrate how the business and each operating segment is performing.Ìý Additionally, EBITDA and Adjusted EBITDA assist management and investors in their analysis and forecasting as these measures approximate the cash flows associated with operational earnings.Ìý
The following tables present a summary of our reportable segments for the three and nine months ended SeptemberÌý30, 2016 and 2015, including a reconciliation of segment sales margin to Income (Loss) from Continuing Operations Before Income Taxes 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 |
2016 |
Ìý |
2015 |
Ìý |
2016 |
Ìý |
2015 |
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 |
$ |
428.3 |
|
Ìý |
77 |
% |
Ìý |
$ |
471.0 |
|
Ìý |
79 |
% |
Ìý |
$ |
975.5 |
|
Ìý |
72 |
% |
Ìý |
$ |
1,152.5 |
|
Ìý |
75 |
% |
Asia Pacific Iron Ore |
125.0 |
|
Ìý |
23 |
% |
Ìý |
122.2 |
|
Ìý |
21 |
% |
Ìý |
379.5 |
|
Ìý |
28 |
% |
Ìý |
384.8 |
|
Ìý |
25 |
% |
Total revenues from product sales and services |
$ |
553.3 |
|
Ìý |
100 |
% |
Ìý |
$ |
593.2 |
|
Ìý |
100 |
% |
Ìý |
$ |
1,355.0 |
|
Ìý |
100 |
% |
Ìý |
$ |
1,537.3 |
|
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 |
$ |
66.5 |
|
Ìý |
Ìý |
Ìý |
$ |
48.7 |
|
Ìý |
Ìý |
Ìý |
$ |
149.7 |
|
Ìý |
Ìý |
Ìý |
$ |
177.7 |
|
Ìý |
Ìý |
Asia Pacific Iron Ore |
18.9 |
|
Ìý |
Ìý |
Ìý |
6.4 |
|
Ìý |
Ìý |
Ìý |
58.1 |
|
Ìý |
Ìý |
Ìý |
15.5 |
|
Ìý |
Ìý |
Sales margin |
85.4 |
|
Ìý |
Ìý |
Ìý |
55.1 |
|
Ìý |
Ìý |
Ìý |
207.8 |
|
Ìý |
Ìý |
Ìý |
193.2 |
|
Ìý |
Ìý |
Other operating expense |
(50.7 |
) |
Ìý |
Ìý |
Ìý |
(25.9 |
) |
Ìý |
Ìý |
Ìý |
(98.7 |
) |
Ìý |
Ìý |
Ìý |
(66.4 |
) |
Ìý |
Ìý |
Other income (expense) |
(66.9 |
) |
Ìý |
Ìý |
Ìý |
17.4 |
|
Ìý |
Ìý |
Ìý |
8.3 |
|
Ìý |
Ìý |
Ìý |
221.7 |
|
Ìý |
Ìý |
Income (loss) from continuing operations before income taxes |
$ |
(32.2 |
) |
Ìý |
Ìý |
Ìý |
$ |
46.6 |
|
Ìý |
Ìý |
Ìý |
$ |
117.4 |
|
Ìý |
Ìý |
Ìý |
$ |
348.5 |
|
Ìý |
Ìý |
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|
Ìý |
(In Millions) |
Ìý |
Three Months Ended
September 30, |
Ìý |
Nine Months Ended
September 30, |
Ìý |
2016 |
Ìý |
2015 |
Ìý |
2016 |
Ìý |
2015 |
Net Income (Loss) |
$ |
(27.8 |
) |
Ìý |
$ |
6.0 |
|
Ìý |
$ |
118.5 |
|
Ìý |
$ |
(690.5 |
) |
Less: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Interest expense, net |
(48.7 |
) |
Ìý |
(62.3 |
) |
Ìý |
(156.2 |
) |
Ìý |
(170.7 |
) |
Income tax benefit (expense) |
7.1 |
|
Ìý |
4.8 |
|
Ìý |
1.7 |
|
Ìý |
(167.3 |
) |
Depreciation, depletion and amortization |
(26.8 |
) |
Ìý |
(35.6 |
) |
Ìý |
(88.9 |
) |
Ìý |
(99.1 |
) |
EBITDA |
$ |
40.6 |
|
Ìý |
$ |
99.1 |
|
Ìý |
$ |
361.9 |
|
Ìý |
$ |
(253.4 |
) |
Less: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Impairment of other long-lived assets |
$ |
— |
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$ |
— |
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$ |
— |
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$ |
(3.3 |
) |
Impact of discontinued operations |
(2.7 |
) |
Ìý |
(44.8 |
) |
Ìý |
(0.6 |
) |
Ìý |
(865.9 |
) |
Gain (loss) on extinguishment/restructuring of debt |
(18.3 |
) |
Ìý |
79.2 |
|
Ìý |
164.1 |
|
Ìý |
392.9 |
|
Severance and contractor termination costs |
— |
|
Ìý |
2.2 |
|
Ìý |
(0.1 |
) |
Ìý |
(9.3 |
) |
Foreign exchange remeasurement |
(0.3 |
) |
Ìý |
2.4 |
|
Ìý |
(1.2 |
) |
Ìý |
15.2 |
|
Adjusted EBITDA |
$ |
61.9 |
|
Ìý |
$ |
60.1 |
|
Ìý |
$ |
199.7 |
|
Ìý |
$ |
217.0 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
EBITDA: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
61.1 |
|
Ìý |
$ |
69.2 |
|
Ìý |
$ |
196.6 |
|
Ìý |
$ |
239.6 |
|
Asia Pacific Iron Ore |
21.2 |
|
Ìý |
11.1 |
|
Ìý |
69.6 |
|
Ìý |
38.7 |
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Other |
(41.7 |
) |
Ìý |
18.8 |
|
Ìý |
95.7 |
|
Ìý |
(531.7 |
) |
Total EBITDA |
$ |
40.6 |
|
Ìý |
$ |
99.1 |
|
Ìý |
$ |
361.9 |
|
Ìý |
$ |
(253.4 |
) |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Adjusted EBITDA: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
65.3 |
|
Ìý |
$ |
72.3 |
|
Ìý |
$ |
208.6 |
|
Ìý |
$ |
254.6 |
|
Asia Pacific Iron Ore |
23.7 |
|
Ìý |
9.7 |
|
Ìý |
73.2 |
|
Ìý |
32.8 |
|
Other |
(27.1 |
) |
Ìý |
(21.9 |
) |
Ìý |
(82.1 |
) |
Ìý |
(70.4 |
) |
Total Adjusted EBITDA |
$ |
61.9 |
|
Ìý |
$ |
60.1 |
|
Ìý |
$ |
199.7 |
|
Ìý |
$ |
217.0 |
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|
Ìý |
(In Millions) |
Ìý |
Three Months Ended
September 30, |
Ìý |
Nine Months Ended
September 30, |
Ìý |
2016 |
Ìý |
2015 |
Ìý |
2016 |
Ìý |
2015 |
Depreciation, depletion and amortization: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
18.8 |
|
Ìý |
$ |
27.9 |
|
Ìý |
$ |
65.1 |
|
Ìý |
$ |
71.6 |
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Asia Pacific Iron Ore |
6.3 |
|
Ìý |
6.1 |
|
Ìý |
19.2 |
|
Ìý |
19.1 |
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Other |
1.7 |
|
Ìý |
1.6 |
|
Ìý |
4.6 |
|
Ìý |
5.2 |
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Total depreciation, depletion and amortization |
$ |
26.8 |
|
Ìý |
$ |
35.6 |
|
Ìý |
$ |
88.9 |
|
Ìý |
$ |
95.9 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Capital additions1:
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
25.8 |
|
Ìý |
$ |
15.0 |
|
Ìý |
$ |
39.5 |
|
Ìý |
$ |
35.8 |
|
Asia Pacific Iron Ore |
0.2 |
|
Ìý |
0.3 |
|
Ìý |
0.2 |
|
Ìý |
4.8 |
|
Other |
0.4 |
|
Ìý |
2.4 |
|
Ìý |
4.8 |
|
Ìý |
6.0 |
|
Total capital additions |
$ |
26.4 |
|
Ìý |
$ |
17.7 |
|
Ìý |
$ |
44.5 |
|
Ìý |
$ |
46.6 |
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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,
2016 |
Ìý |
DecemberÌý31,
2015 |
Assets: |
Ìý |
Ìý |
Ìý |
U.S. Iron Ore |
$ |
1,429.0 |
|
Ìý |
$ |
1,476.4 |
|
Asia Pacific Iron Ore |
137.7 |
|
Ìý |
202.5 |
|
Total segment assets |
1,566.7 |
|
Ìý |
1,678.9 |
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Corporate |
206.2 |
|
Ìý |
441.7 |
|
Assets of Discontinued Operations |
— |
|
Ìý |
14.9 |
|
Total assets |
$ |
1,772.9 |
|
Ìý |
$ |
2,135.5 |
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