Annual report pursuant to Section 13 and 15(d)

Lease Obligations

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Lease Obligations
 12 Months Ended
Dec. 31, 2011
Lease Obligations [Abstract]  
Lease Obligations

NOTE 8 — LEASE OBLIGATIONS

We lease certain mining, production and other equipment under operating and capital leases. The leases are for varying lengths, generally at market interest rates and contain purchase and/or renewal options at the end of the terms. Our operating lease expense was $26.3 million, $24.2 million and $25.5 million in 2011, 2010 and 2009, respectively. Capital lease assets were $406.0 million and $283.2 million at December 31, 2011 and 2010, respectively. Corresponding accumulated amortization of capital leases included in respective allowances for depreciation were $110.6 million and $92.7 million at December 31, 2011 and 2010, respectively.

In October 2011, our North American Coal segment entered into the second phase of the sale-leaseback arrangement initially executed in December 2010 for the sale of the new longwall plow system at our Pinnacle mine in West Virginia. The first and second phases of the leaseback arrangement are for a period of five years. The 2010 sale-leaseback arrangement was specific to the assets at the time of the agreement and did not include the longwall plow system assets. Both phases of the leaseback arrangement have been accounted for as a capital lease. We recorded assets and liabilities under the capital lease of $75.9 million, reflecting the lower of the present value of the minimum lease payments or the fair value of the asset.

 

Future minimum payments under capital leases and non-cancellable operating leases at December 31, 2011 are as follows:

 

     (In Millions)  
     Capital
Leases		     Operating
Leases		  

2012

    $ 87.1      $ 24.2   

2013

      60.2        23.9   

2014

      55.2        18.9   

2015

      44.0        12.0   

2016

      28.9        7.8   

2017 and thereafter

      73.4        25.0   
  

 

 

    

 

 

  

Total minimum lease payments

    $ 348.8      $ 111.8   
    

 

 

  

Amounts representing interest

      64.2     
  

 

 

    

Present value of net minimum lease payments

    $ 284.6 (1)   
  

 

 

    

(1) The total is comprised of $71.8 million and $212.8 million classified as Other current liabilities and Other liabilities, respectively, on the Statements of Consolidated Financial Position at December 31, 2011.

Total minimum capital lease payments of $348.8 million include $161.0 million for our Asia Pacific Iron Ore segment, $105.5 million for our Eastern Canadian Iron Ore Segment, $71.6 million for our North American Coal segment, $9.7 million for our U.S. Iron Ore segment and $1.0 million for our Corporate segment, respectively. Total minimum operating lease payments of $111.8 million include $40.4 million for our U.S. Iron Ore segment, $22.0 million for our Asia Pacific Iron Ore segment, $38.7 million for Corporate and $10.7 million for our Eastern Canadian Iron Ore, North American Coal and Other segments.