Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.5.0.2
SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
SEGMENT REPORTING
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.  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.  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. 
The following tables present a summary of our reportable segments for the three and nine months ended September 30, 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:
 
(In Millions)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Revenues from product sales and services:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
428.3

 
77
%
 
$
471.0

 
79
%
 
$
975.5

 
72
%
 
$
1,152.5

 
75
%
Asia Pacific Iron Ore
125.0

 
23
%
 
122.2

 
21
%
 
379.5

 
28
%
 
384.8

 
25
%
Total revenues from product sales and services
$
553.3

 
100
%
 
$
593.2

 
100
%
 
$
1,355.0

 
100
%
 
$
1,537.3

 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
66.5

 
 
 
$
48.7

 
 
 
$
149.7

 
 
 
$
177.7

 
 
Asia Pacific Iron Ore
18.9

 
 
 
6.4

 
 
 
58.1

 
 
 
15.5

 
 
Sales margin
85.4

 
 
 
55.1

 
 
 
207.8

 
 
 
193.2

 
 
Other operating expense
(50.7
)
 
 
 
(25.9
)
 
 
 
(98.7
)
 
 
 
(66.4
)
 
 
Other income (expense)
(66.9
)
 
 
 
17.4

 
 
 
8.3

 
 
 
221.7

 
 
Income (loss) from continuing operations before income taxes
$
(32.2
)
 
 
 
$
46.6

 
 
 
$
117.4

 
 
 
$
348.5

 
 
 
(In Millions)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Net Income (Loss)
$
(27.8
)
 
$
6.0

 
$
118.5

 
$
(690.5
)
Less:
 
 
 
 
 
 
 
Interest expense, net
(48.7
)
 
(62.3
)
 
(156.2
)
 
(170.7
)
Income tax benefit (expense)
7.1

 
4.8

 
1.7

 
(167.3
)
Depreciation, depletion and amortization
(26.8
)
 
(35.6
)
 
(88.9
)
 
(99.1
)
EBITDA
$
40.6

 
$
99.1

 
$
361.9

 
$
(253.4
)
Less:
 
 
 
 
 
 
 
Impairment of other long-lived assets
$
—


$
—


$
—


$
(3.3
)
Impact of discontinued operations
(2.7
)
 
(44.8
)
 
(0.6
)
 
(865.9
)
Gain (loss) on extinguishment/restructuring of debt
(18.3
)
 
79.2

 
164.1

 
392.9

Severance and contractor termination costs
—

 
2.2

 
(0.1
)
 
(9.3
)
Foreign exchange remeasurement
(0.3
)
 
2.4

 
(1.2
)
 
15.2

Adjusted EBITDA
$
61.9

 
$
60.1

 
$
199.7

 
$
217.0

 
 
 
 
 
 
 
 
EBITDA:
 
 
 
 
 
 
 
U.S. Iron Ore
$
61.1

 
$
69.2

 
$
196.6

 
$
239.6

Asia Pacific Iron Ore
21.2

 
11.1

 
69.6

 
38.7

Other
(41.7
)
 
18.8

 
95.7

 
(531.7
)
Total EBITDA
$
40.6

 
$
99.1

 
$
361.9

 
$
(253.4
)
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
U.S. Iron Ore
$
65.3

 
$
72.3

 
$
208.6

 
$
254.6

Asia Pacific Iron Ore
23.7

 
9.7

 
73.2

 
32.8

Other
(27.1
)
 
(21.9
)
 
(82.1
)
 
(70.4
)
Total Adjusted EBITDA
$
61.9

 
$
60.1

 
$
199.7

 
$
217.0

 
(In Millions)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Depreciation, depletion and amortization:
 
 
 
 
 
 
 
U.S. Iron Ore
$
18.8

 
$
27.9

 
$
65.1

 
$
71.6

Asia Pacific Iron Ore
6.3

 
6.1

 
19.2

 
19.1

Other
1.7

 
1.6

 
4.6

 
5.2

Total depreciation, depletion and amortization
$
26.8

 
$
35.6

 
$
88.9

 
$
95.9

 
 
 
 
 
 
 
 
Capital additions1:
 
 
 
 
 
 
 
U.S. Iron Ore
$
25.8

 
$
15.0

 
$
39.5

 
$
35.8

Asia Pacific Iron Ore
0.2

 
0.3

 
0.2

 
4.8

Other
0.4

 
2.4

 
4.8

 
6.0

Total capital additions
$
26.4

 
$
17.7

 
$
44.5

 
$
46.6

                                         
1    Includes capital lease additions and non-cash accruals. Refer to NOTE 17 - CASH FLOW INFORMATION.
A summary of assets by segment is as follows:
 
(In Millions)
 
September 30,
2016
 
December 31,
2015
Assets:
 
 
 
U.S. Iron Ore
$
1,429.0

 
$
1,476.4

Asia Pacific Iron Ore
137.7

 
202.5

Total segment assets
1,566.7

 
1,678.9

Corporate
206.2

 
441.7

Assets of Discontinued Operations
—

 
14.9

Total assets
$
1,772.9

 
$
2,135.5