Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v2.4.0.8
SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
SEGMENT REPORTING
NOTE 2 - SEGMENT REPORTING
Our Company’s primary operations are organized and managed according to product category and geographic location: U.S. Iron Ore, Eastern Canadian Iron Ore, Asia Pacific Iron Ore, North American Coal, Ferroalloys and our Global Exploration Group. 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 Eastern Canadian Iron Ore segment is comprised of two Eastern Canadian mines that primarily provide iron ore to the seaborne market for Asian steel producers. The Asia Pacific Iron Ore segment is located in Western Australia and provides iron ore to the seaborne market for Asian steel producers. The North American Coal segment is comprised of our four metallurgical coal mines and one thermal coal mine that provide metallurgical coal primarily to the integrated steel industry and thermal coal primarily to the energy industry. There were no intersegment revenues in the first nine months of 2014 or 2013.
The Ferroalloys operating segment is comprised of our interests in chromite deposits held in northern Ontario, Canada and the Global Exploration Group is focused on early involvement in exploration activities to identify new projects for future development or projects that add significant value to existing operations. The Ferroalloys and Global Exploration Group operating segments do not meet reportable segment disclosure requirements and, therefore, are not reported separately. In alignment with our capital allocation strategy, we anticipate decreased levels of exploration spending in our Global Exploration Group and Ferroalloys operation segments throughout 2014 and beyond.
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 charges, impacts of permanently idled or closed facilities, foreign currency remeasurement, severance and other costs associated with the change in control, litigation judgments and intersegment corporate allocations of SG&A 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 September 30, 2014 and 2013, 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:
 
(In Millions)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Revenues from product sales and services:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
767.4

 
59
%
 
$
782.4

 
51
%
 
$
1,643.3

 
49
%
 
$
1,894.2

 
45
%
Eastern Canadian Iron Ore
148.0

 
11
%
 
284.2

 
18
%
 
480.3

 
15
%
 
743.4

 
18
%
Asia Pacific Iron Ore
212.3

 
17
%
 
301.7

 
20
%
 
699.6

 
21
%
 
899.5

 
22
%
North American Coal
170.5

 
13
%
 
178.3

 
11
%
 
515.8

 
15
%
 
638.5

 
15
%
Total revenues from product sales and services
$
1,298.2

 
100
%
 
$
1,546.6

 
100
%
 
$
3,339.0

 
100
%
 
$
4,175.6

 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
219.5

 
 
 
$
273.5

 
 
 
$
461.7

 
 
 
$
647.1

 
 
Eastern Canadian Iron Ore
(76.8
)
 
 
 
(22.0
)
 
 
 
(165.0
)
 
 
 
(52.3
)
 
 
Asia Pacific Iron Ore
9.1

 
 
 
99.0

 
 
 
111.4

 
 
 
255.3

 
 
North American Coal
(24.3
)
 
 
 
(1.8
)
 
 
 
(125.4
)
 
 
 
6.6

 
 
Other
—

 
 
 
—

 
 
 
—

 
 
 
(1.9
)
 
 
Sales margin
127.5

 
 
 
348.7

 
 
 
282.7

 
 
 
854.8

 
 
Other operating expense
(7,886.6
)
 
 
 
(124.7
)
 
 
 
(8,104.2
)
 
 
 
(200.5
)
 
 
Other expense
(40.3
)
 
 
 
(45.9
)
 
 
 
(124.4
)
 
 
 
(137.4
)
 
 
Income (loss) from continuing operations before income taxes and equity loss from ventures
$
(7,799.4
)
 
 
 
$
178.1

 
 
 
$
(7,945.9
)
 
 
 
$
516.9

 
 
 
(In Millions)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
$
(6,887.2
)
 
 
 
$
113.9

 
 
 
$
(6,943.4
)
 
 
 
$
376.0

 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(47.4
)
 
 
 
(44.7
)
 
 
 
(134.9
)
 
 
 
(134.5
)
 
 
Income tax benefit (expense)
921.4

 
 
 
(65.7
)
 
 
 
1,012.3

 
 
 
(69.0
)
 
 
Depreciation, depletion and amortization
(144.0
)
 
 
 
(153.1
)
 
 
 
(430.4
)
 
 
 
(438.0
)
 
 
EBITDA
$
(7,617.2
)
 
 
 
$
377.4

 
 
 
$
(7,390.4
)
 
 
 
$
1,017.5

 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of goodwill and other long-lived assets
$
(7,769.1
)
 
 
 
$
—

 
 
 
$
(7,773.1
)
 
 
 
$
—

 
 
Wabush related costs
(64.0
)
 
 
 
(13.0
)
 
 
 
(122.3
)
 
 
 
(2.3
)
 
 
Wabush sales margin
(20.0
)
 
 
 
(1.3
)
 
 
 
(47.5
)
 
 
 
(44.2
)
 
 
Foreign exchange remeasurement
26.4

 
 
 
(14.1
)
 
 
 
8.4

 
 
 
36.5

 
 
Proxy contest and change in control costs in SG&A
(21.9
)
 
 
 
—

 
 
 
(26.2
)
 
 
 
—

 
 
Litigation judgment
—

 
 
 
(9.6
)
 
 
 
—

 
 
 
(9.6
)
 
 
Severance in SG&A
(1.9
)
 
 
 
(8.1
)
 
 
 
(12.6
)
 
 
 
(8.1
)
 
 
Adjusted EBITDA
$
233.3

 
 
 
$
423.5

 
 
 
$
582.9

 
 
 
$
1,045.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
242.1

 
 
 
$
296.9

 
 
 
$
538.4

 
 
 
$
715.9

 
 
Eastern Canadian Iron Ore
(6,423.2
)
 
 
 
(43.8
)
 
 
 
(6,537.6
)
 
 
 
(9.6
)
 
 
Asia Pacific Iron Ore
(330.9
)
 
 
 
138.1

 
 
 
(148.7
)
 
 
 
367.6

 
 
North American Coal
(827.5
)
 
 
 
31.0

 
 
 
(875.6
)
 
 
 
85.4

 
 
Other
(277.7
)
 
 
 
(44.8
)
 
 
 
(366.9
)
 
 
 
(141.8
)
 
 
Total EBITDA
$
(7,617.2
)
 
 
 
$
377.4

 
 
 
$
(7,390.4
)
 
 
 
$
1,017.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
248.7

 
 
 
$
305.0

 
 
 
$
556.1

 
 
 
$
738.0

 
 
Eastern Canadian Iron Ore
(33.2
)
 
 
 
(8.6
)
 
 
 
(49.3
)
 
 
 
50.0

 
 
Asia Pacific Iron Ore
46.1

 
 
 
140.9

 
 
 
234.5

 
 
 
375.5

 
 
North American Coal
6.1

 
 
 
37.4

 
 
 
(32.2
)
 
 
 
103.2

 
 
Other
(34.4
)
 
 
 
(51.2
)
 
 
 
(126.2
)
 
 
 
(221.5
)
 
 
Total Adjusted EBITDA
$
233.3

 
 
 
$
423.5

 
 
 
$
582.9

 
 
 
$
1,045.2

 
 
 
(In Millions)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Depreciation, depletion and amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
25.9

 
 
 
$
27.3

 
 
 
$
81.2

 
 
 
$
82.3

 
 
Eastern Canadian Iron Ore
43.6

 
 
 
46.8

 
 
 
127.2

 
 
 
130.3

 
 
Asia Pacific Iron Ore
42.2

 
 
 
38.0

 
 
 
123.6

 
 
 
116.1

 
 
North American Coal
30.3

 
 
 
38.8

 
 
 
92.2

 
 
 
99.7

 
 
Other
2.0

 
 
 
2.2

 
 
 
6.2

 
 
 
9.6

 
 
Total depreciation, depletion and amortization
$
144.0

 
 
 
$
153.1

 
 
 
$
430.4

 
 
 
$
438.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital additions1:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
8.5

 
 
 
$
15.2

 
 
 
$
37.4

 
 
 
$
39.1

 
 
Eastern Canadian Iron Ore
37.9

 
 
 
181.5

 
 
 
112.2

 
 
 
535.3

 
 
Asia Pacific Iron Ore
3.1

 
 
 
10.4

 
 
 
8.3

 
 
 
8.6

 
 
North American Coal
4.6

 
 
 
2.0

 
 
 
24.8

 
 
 
37.2

 
 
Other
0.5

 
 
 
2.2

 
 
 
3.3

 
 
 
4.9

 
 
Total capital additions
$
54.6

 
 
 
$
211.3

 
 
 
$
186.0

 
 
 
$
625.1

 
 
                                         
1    Includes capital lease additions and non-cash accruals. Refer to NOTE 19 - CASH FLOW INFORMATION.
A summary of assets by segment is as follows:
 
(In Millions)
 
September 30,
2014
 
December 31, 2013
Assets:
 
 
 
U.S. Iron Ore
$
1,715.8

 
$
1,671.6

Eastern Canadian Iron Ore
1,113.2

 
7,915.5

Asia Pacific Iron Ore
577.2

 
1,078.4

North American Coal
904.0

 
1,841.8

Other
217.0

 
455.6

Total segment assets
4,527.2

 
12,962.9

Corporate
284.0

 
159.0

Total assets
$
4,811.2

 
$
13,121.9