Annual report pursuant to Section 13 and 15(d)

QUARTERLY RESULTS OF OPERATIONS

v2.4.0.6
QUARTERLY RESULTS OF OPERATIONS
 12 Months Ended
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]  
QUARTERLY RESULTS OF OPERATIONS
NOTE 23 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The sum of quarterly EPS may not equal EPS for the year due to discrete quarterly calculations.
 
(In Millions, Except Per Share Amounts)
2012
Quarters
 
 
First
 
Second
 
Third
 
Fourth
 
Year
Revenues from product sales and services
$
1,212.4

 
$
1,579.5

 
$
1,544.9

 
$
1,535.9

 
$
5,872.7

Sales margin
291.8

 
443.5

 
198.3

 
238.5

 
1,172.1

Net Income (Loss) from Continuing Operations
attributable to Cliffs shareholders
$
370.3

 
$
255.7

 
$
87.8

 
$
(1,649.1
)
 
$
(935.3
)
Income (Loss) and Gain on Sale from
    Discontinued Operations, net of tax
5.5

 
2.3

 
(2.7
)
 
30.8

 
35.9

Net Income (Loss) Attributable to Cliffs Shareholders
$
375.8

 
$
258.0

 
$
85.1

 
$
(1,618.3
)
 
$
(899.4
)
Earnings (loss) per Common Share Attributable to Cliffs
Shareholders - Basic:
 
 
 
 
 
 
 
 
 
Continuing operations
$
2.60

 
$
1.79

 
$
0.62

 
$
(11.58
)
 
$
(6.57
)
Discontinued operations
0.04

 
0.02

 
(0.02
)
 
0.22

 
0.25

 
$
2.64

 
$
1.81

 
$
0.60

 
$
(11.36
)
 
$
(6.32
)
Earnings (loss) per Common Share Attributable to Cliffs
Shareholders - Diluted:
 
 
 
 
 
 
 
 
 
Continuing operations
$
2.59

 
$
1.79

 
$
0.61

 
$
(11.58
)
 
$
(6.57
)
Discontinued operations
0.04

 
0.02

 
(0.02
)
 
0.22

 
0.25

 
$
2.63

 
$
1.81

 
$
0.59

 
$
(11.36
)
 
$
(6.32
)
 
2011
Quarters
 
 
First
 
Second
 
Third
 
Fourth
 
Year
Revenues from product sales and services
$
1,147.9

 
$
1,723.2

 
$
2,089.1

 
$
1,603.7

 
$
6,563.9

Sales margin
588.5

 
699.2

 
843.1

 
480.1

 
2,610.9

Net Income from Continuing Operations attributable to
    Cliffs shareholders
$
419.3

 
$
392.8

 
$
618.0

 
$
168.9

 
$
1,599.0

Income (Loss) and Gain on Sale from
    Discontinued Operations, net of tax
4.1

 
16.3

 
(16.8
)
 
16.5

 
20.1

Net Income Attributable to Cliffs Shareholders
$
423.4

 
$
409.1

 
$
601.2

 
$
185.4

 
$
1,619.1

Earnings (loss) per Common Share Attributable to Cliffs
Shareholders - Basic:
 
 
 
 
 
 
 
 
 
Continuing operations
$
3.09

 
$
2.82

 
$
4.29

 
$
1.19

 
$
11.41

Discontinued operations
0.03

 
0.12

 
(0.12
)
 
0.11

 
0.14

 
$
3.12

 
$
2.94

 
$
4.17

 
$
1.30

 
$
11.55

Earnings (loss) per Common Share Attributable to Cliffs
Shareholders - Diluted:
 
 
 
 
 
 
 
 
 
Continuing operations
$
3.08

 
$
2.80

 
$
4.27

 
$
1.18

 
$
11.34

Discontinued operations
0.03

 
0.12

 
(0.12
)
 
0.12

 
0.14

 
$
3.11

 
$
2.92

 
$
4.15

 
$
1.30

 
$
11.48


Immaterial Errors
In September 2011, we noted an error in the accounting for the 21 percent noncontrolling interest in the Empire mine. In accordance with applicable GAAP, management quantitatively and qualitatively evaluated the materiality of the error and determined the error to be immaterial to the quarterly reports previously filed for the periods ended March 31, 2011 and June 30, 2011 and also immaterial for the quarterly report for the period ended September 30, 2011. Accordingly, all of the resulting adjustments were recorded prospectively in the Statements of Consolidated Operations for the three and nine months ended September 30, 2011 and the Statements of Consolidated Financial Position as of September 30, 2011. The adjustment to record the noncontrolling interest related to the Empire mining venture of $84.0 million resulted in an increase to Income (Loss) from Continuing Operations of $16.1 million, as a result of reductions in income tax expenses and a decrease to Net Income (Loss) Attributable to Cliffs Shareholders of $67.9 million in the Statements of Consolidated Operations for the three and nine months ended September 30, 2011. The adjustments resulted in a decrease to basic and diluted earnings per common share of $0.47 per common share for the three months ended September 30, 2011, and $0.49 and $0.48 per common share for the nine months ended September 30, 2011, respectively. In addition, Retained Earnings was decreased by $67.9 million and Noncontrolling Interest was increased by $84.0 million in the Statements of Consolidated Financial Position as of September 30, 2011.
In addition to the noncontrolling interest adjustment, the application of consolidation accounting for the Empire partnership arrangement also resulted in several financial statement line item reclassifications in the Statements of Consolidated Operations for the three and nine months ended September 30, 2011. Under the captive cost company accounting, we historically recorded the reimbursements for our venture partners' cost through Freight and venture partners' cost reimbursements, with a corresponding offset in Cost of goods sold and operating expenses in the Statements of Consolidated Operations. Accordingly, we reclassified $46.0 million of revenues from Freight and venture partners' cost reimbursements to Product revenues in the Statements of Consolidated Operations for the three and nine months ended September 30, 2011. We also reclassified $54.1 million related to the ArcelorMittal price re-opener settlement recorded during the first quarter of 2011 from Cost of goods sold and operating expenses to Product revenues in the Statements of Consolidated Operations for the three and nine months ended September 30, 2011.
Discontinued Operations
On July 10, 2012, we entered into a definitive share and asset sale agreement to sell our 45 percent economic interest in the Sonoma joint venture coal mine located in Queensland, Australia. Upon completion of the transaction on November 13, 2012, we collected approximately AUD $141.0 million in cash proceeds. The assets sold included our interests in the Sonoma mine along with our ownership of the affiliated washplant. As of September 30, 2012, we began reflecting the results of the Sonoma operations as discontinued operations in the Statements of Consolidated Operations for all periods presented. The Sonoma operations historically were reported as the Asia Pacific Coal operating segment. Refer to NOTE 7 - DISCONTINUED OPERATIONS for additional information.
Fourth Quarter Results
During the fourth quarter of 2012 after performing our annual goodwill impairment test, we determined that $997.3 million and $2.7 million of goodwill associated with our CQIM and Wabush reporting units, respectively, was impaired. We also recorded an asset impairment charge of $49.9 million related to the Wabush mine pelletizing operations during the period. In addition, during the fourth quarter, we recorded tax expense of $314.7 million and $226.4 million related to the MRRT starting base deferred tax asset net valuation allowance and Alternative Minimum Tax credit valuation allowance, respectively.
Refer to NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES, NOTE 5 - PROPERTY, PLANT AND EQUIPMENT and NOTE 15 - INCOME TAXES for further information.