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Name | Location | Ownership Interest | Operation | Status of Operations | ||||
Northshore | Minnesota | 100.0% | Iron Ore | Active | ||||
United Taconite | Minnesota | 100.0% | Iron Ore | Active | ||||
Tilden1 | Michigan | 100.0% | Iron Ore | Active | ||||
Empire1 | Michigan | 100.0% | Iron Ore | Indefinitely Idled | ||||
Koolyanobbing | Western Australia | 100.0% | Iron Ore | Active | ||||
1 During the third quarter of 2017, our ownership interest in Tilden and Empire changed. Refer to the Noncontrolling Interests section below for additional information. |
(In Millions) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Remeasurement of short-term intercompany loans | $ | 0.1 | $ | 0.2 | $ | 16.7 | $ | 0.5 | ||||||||
Remeasurement of cash and cash equivalents | (1.1 | ) | (1.1 | ) | (2.8 | ) | 0.3 | |||||||||
Other remeasurement | (1.4 | ) | 0.6 | (2.7 | ) | (2.0 | ) | |||||||||
Net impact of transaction gains (losses) resulting from remeasurement | $ | (2.4 | ) | $ | (0.3 | ) | $ | 11.2 | $ | (1.2 | ) |
($ in Millions) | ||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||
Estimate | ||||||||||||
Financial Statement Line Impacted | As Reported | Adoption of ASU No. 2017-07 | As Adjusted | |||||||||
Cost of goods sold and operating expenses | $ | (1,328.3 | ) | $ | 1.3 | $ | (1,327.0 | ) | ||||
Selling, general and administrative expenses | $ | (77.8 | ) | $ | (5.8 | ) | $ | (83.6 | ) | |||
Miscellaneous - net | $ | 3.0 | $ | (1.2 | ) | $ | 1.8 | |||||
Operating income | $ | 326.2 | $ | (5.7 | ) | $ | 320.5 | |||||
Other non-operating income | $ | 2.3 | $ | 5.7 | $ | 8.0 | ||||||
Net Income (Loss) | $ | 53.2 | $ | — | $ | 53.2 |
|
(In Millions) | |||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
Revenues from product sales and services: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 596.7 | 85 | % | $ | 428.3 | 77 | % | $ | 1,354.2 | 78 | % | $ | 975.5 | 72 | % | |||||||||||
Asia Pacific Iron Ore | 101.7 | 15 | % | 125.0 | 23 | % | 375.1 | 22 | % | 379.5 | 28 | % | |||||||||||||||
Total revenues from product sales and services | $ | 698.4 | 100 | % | $ | 553.3 | 100 | % | $ | 1,729.3 | 100 | % | $ | 1,355.0 | 100 | % | |||||||||||
Sales margin: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 157.2 | $ | 66.5 | $ | 349.8 | $ | 149.7 | |||||||||||||||||||
Asia Pacific Iron Ore | 3.0 | 18.9 | 51.2 | 58.1 | |||||||||||||||||||||||
Sales margin | 160.2 | 85.4 | 401.0 | 207.8 | |||||||||||||||||||||||
Other operating expense | (30.5 | ) | (50.7 | ) | (74.8 | ) | (98.7 | ) | |||||||||||||||||||
Other income (expense) | (116.7 | ) | (66.9 | ) | (266.2 | ) | 8.3 | ||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 13.0 | $ | (32.2 | ) | $ | 60.0 | $ | 117.4 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Income (Loss) | $ | 52.9 | $ | (27.8 | ) | $ | 53.2 | $ | 118.5 | ||||||
Less: | |||||||||||||||
Interest expense, net | (28.9 | ) | (48.7 | ) | (103.1 | ) | (156.2 | ) | |||||||
Income tax benefit | 7.6 | 7.1 | 6.8 | 1.7 | |||||||||||
Depreciation, depletion and amortization | (21.5 | ) | (26.8 | ) | (66.3 | ) | (88.9 | ) | |||||||
EBITDA | $ | 95.7 | $ | 40.6 | $ | 215.8 | $ | 361.9 | |||||||
Less: | |||||||||||||||
Gain (loss) on extinguishment/restructuring of debt | $ | (88.6 | ) | $ | (18.3 | ) | $ | (165.4 | ) | $ | 164.1 | ||||
Foreign exchange remeasurement | (2.4 | ) | (0.3 | ) | 11.2 | (1.2 | ) | ||||||||
Impact of discontinued operations | 32.3 | (2.7 | ) | (13.6 | ) | (0.6 | ) | ||||||||
Severance and contractor termination costs | — | — | — | (0.1 | ) | ||||||||||
Adjusted EBITDA | $ | 154.4 | $ | 61.9 | $ | 383.6 | $ | 199.7 | |||||||
EBITDA | |||||||||||||||
U.S. Iron Ore | $ | 168.9 | $ | 61.1 | $ | 381.8 | $ | 196.6 | |||||||
Asia Pacific Iron Ore | 2.3 | 21.2 | 54.9 | 69.6 | |||||||||||
Other | (75.5 | ) | (41.7 | ) | (220.9 | ) | 95.7 | ||||||||
Total EBITDA | $ | 95.7 | $ | 40.6 | $ | 215.8 | $ | 361.9 | |||||||
Adjusted EBITDA: | |||||||||||||||
U.S. Iron Ore | $ | 174.2 | $ | 65.3 | $ | 399.8 | $ | 208.6 | |||||||
Asia Pacific Iron Ore | 4.9 | 23.7 | 61.7 | 73.2 | |||||||||||
Other | (24.7 | ) | (27.1 | ) | (77.9 | ) | (82.1 | ) | |||||||
Total Adjusted EBITDA | $ | 154.4 | $ | 61.9 | $ | 383.6 | $ | 199.7 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Depreciation, depletion and amortization: | |||||||||||||||
U.S. Iron Ore | $ | 16.5 | $ | 18.8 | $ | 49.6 | $ | 65.1 | |||||||
Asia Pacific Iron Ore | 3.3 | 6.3 | 11.3 | 19.2 | |||||||||||
Other | 1.7 | 1.7 | 5.4 | 4.6 | |||||||||||
Total depreciation, depletion and amortization | $ | 21.5 | $ | 26.8 | $ | 66.3 | $ | 88.9 | |||||||
Capital additions: | |||||||||||||||
U.S. Iron Ore | $ | 19.2 | $ | 25.8 | $ | 70.9 | $ | 39.5 | |||||||
Asia Pacific Iron Ore | 0.8 | 0.2 | 1.6 | 0.2 | |||||||||||
Other | 7.1 | 0.4 | 7.1 | 4.8 | |||||||||||
Total capital additions1 | $ | 27.1 | $ | 26.4 | $ | 79.6 | $ | 44.5 | |||||||
1 Includes cash paid for capital additions of $78.9 million and $45.8 million and an increase in non-cash accruals of $0.7 million and a decrease in non-cash accruals of $1.3 million for the nine months ended September 30, 2017 and 2016, respectively. |
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
U.S. Iron Ore | $ | 1,467.2 | $ | 1,372.5 | |||
Asia Pacific Iron Ore | 139.4 | 155.1 | |||||
Total segment assets | 1,606.6 | 1,527.6 | |||||
Corporate | 316.7 | 396.3 | |||||
Total assets | $ | 1,923.3 | $ | 1,923.9 |
|
(In Millions) | |||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Segment | Finished Goods | Work-in Process | Total Inventory | Finished Goods | Work-in Process | Total Inventory | |||||||||||||||||
U.S. Iron Ore | $ | 151.3 | $ | 18.6 | $ | 169.9 | $ | 124.4 | $ | 12.6 | $ | 137.0 | |||||||||||
Asia Pacific Iron Ore | 29.4 | 8.4 | 37.8 | 23.6 | 17.8 | 41.4 | |||||||||||||||||
Total | $ | 180.7 | $ | 27.0 | $ | 207.7 | $ | 148.0 | $ | 30.4 | $ | 178.4 |
|
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Land rights and mineral rights | $ | 500.7 | $ | 500.5 | |||
Office and information technology | 66.2 | 65.1 | |||||
Buildings | 80.0 | 67.9 | |||||
Mining equipment | 585.4 | 592.2 | |||||
Processing equipment | 607.9 | 552.0 | |||||
Electric power facilities | 57.0 | 49.4 | |||||
Land improvements | 23.7 | 23.5 | |||||
Asset retirement obligation | 19.6 | 19.8 | |||||
Other | 30.4 | 28.1 | |||||
Construction in-progress | 35.4 | 42.8 | |||||
2,006.3 | 1,941.3 | ||||||
Allowance for depreciation and depletion | (1,012.5 | ) | (956.9 | ) | |||
$ | 993.8 | $ | 984.4 |
|
(In Millions) | ||||||||||||||||||
September 30, 2017 | ||||||||||||||||||
Debt Instrument | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Discounts | Total Debt | |||||||||||||
Unsecured Notes | ||||||||||||||||||
$400 Million 5.90% 2020 Senior Notes | 5.98% | $ | 88.9 | $ | (0.2 | ) | $ | (0.2 | ) | $ | 88.5 | |||||||
$500 Million 4.80% 2020 Senior Notes | 4.83% | 122.4 | (0.3 | ) | (0.1 | ) | 122.0 | |||||||||||
$700 Million 4.875% 2021 Senior Notes | 4.89% | 138.4 | (0.3 | ) | (0.1 | ) | 138.0 | |||||||||||
$1.075 Billion 5.75% 2025 Senior Notes | 5.75% | 1,075.0 | (11.2 | ) | (17.0 | ) | 1,046.8 | |||||||||||
$800 Million 6.25% 2040 Senior Notes | 6.34% | 298.4 | (2.4 | ) | (3.4 | ) | 292.6 | |||||||||||
ABL Facility | N/A | 550.0 | N/A | N/A | — | |||||||||||||
Fair Value Adjustment to Interest Rate Hedge | 1.5 | |||||||||||||||||
Long-term debt | $ | 1,689.4 |
(In Millions) | ||||||||||||||||||
December 31, 2016 | ||||||||||||||||||
Debt Instrument | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Undiscounted Interest/ (Unamortized Discounts) | Total Debt | |||||||||||||
Secured Notes | ||||||||||||||||||
$540 Million 8.25% 2020 First Lien Notes | 9.97% | $ | 540.0 | $ | (8.0 | ) | $ | (25.7 | ) | $ | 506.3 | |||||||
$218.5 Million 8.00% 2020 1.5 Lien Notes | N/A | 218.5 | — | 65.7 | 284.2 | |||||||||||||
$544.2 Million 7.75% 2020 Second Lien Notes | 15.55% | 430.1 | (5.8 | ) | (85.2 | ) | 339.1 | |||||||||||
Unsecured Notes | ||||||||||||||||||
$400 Million 5.90% 2020 Senior Notes | 5.98% | 225.6 | (0.6 | ) | (0.5 | ) | 224.5 | |||||||||||
$500 Million 4.80% 2020 Senior Notes | 4.83% | 236.8 | (0.7 | ) | (0.2 | ) | 235.9 | |||||||||||
$700 Million 4.875% 2021 Senior Notes | 4.89% | 309.4 | (1.0 | ) | (0.2 | ) | 308.2 | |||||||||||
$800 Million 6.25% 2040 Senior Notes | 6.34% | 298.4 | (2.5 | ) | (3.4 | ) | 292.5 | |||||||||||
ABL Facility | N/A | 550.0 | N/A | N/A | — | |||||||||||||
Fair Value Adjustment to Interest Rate Hedge | 1.9 | |||||||||||||||||
Total debt | $ | 2,192.6 | ||||||||||||||||
Less current portion | 17.5 | |||||||||||||||||
Long-term debt | $ | 2,175.1 |
(In Millions) | ||||||||||||
Gain (Loss) on Extinguishment1 | ||||||||||||
Debt Extinguished | Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||||||||
Secured Notes | ||||||||||||
$540 Million 8.25% 2020 First Lien Notes | $ | 540.0 | $ | (88.6 | ) | $ | (93.5 | ) | ||||
$218.5 Million 8.00% 2020 1.5 Lien Notes | 218.5 | — | 45.1 | |||||||||
$544.2 Million 7.75% 2020 Second Lien Notes | 430.1 | — | (104.5 | ) | ||||||||
Unsecured Notes | ||||||||||||
$400 Million 5.90% 2020 Senior Notes | 136.7 | — | (7.8 | ) | ||||||||
$500 Million 4.80% 2020 Senior Notes | 114.4 | — | (1.9 | ) | ||||||||
$700 Million 4.875% 2021 Senior Notes | 171.0 | — | (2.8 | ) | ||||||||
$ | 1,610.7 | $ | (88.6 | ) | $ | (165.4 | ) | |||||
1 This includes premiums paid related to the redemption of our notes of $62.4 million and $110.0 million for the three and nine months ended September 30, 2017, respectively. |
(In Millions) | |||
Maturities of Debt | |||
2017 (October 1 - December 31) | $ | — | |
2018 | — | ||
2019 | — | ||
2020 | 211.3 | ||
2021 | 138.4 | ||
2022 | — | ||
2023 and thereafter | 1,373.4 | ||
Total maturities of debt | $ | 1,723.1 |
|
(In Millions) | |||||||||||||||
September 30, 2017 | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 40.0 | $ | 37.0 | $ | — | $ | 77.0 | |||||||
Derivative assets | — | — | 89.5 | 89.5 | |||||||||||
Total | $ | 40.0 | $ | 37.0 | $ | 89.5 | $ | 166.5 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | — | $ | 9.3 | $ | 9.3 | |||||||
Total | $ | — | $ | — | $ | 9.3 | $ | 9.3 |
(In Millions) | |||||||||||||||
December 31, 2016 | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 177.0 | $ | — | $ | — | $ | 177.0 | |||||||
Derivative assets | — | 1.5 | 31.6 | 33.1 | |||||||||||
Total | $ | 177.0 | $ | 1.5 | $ | 31.6 | $ | 210.1 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | — | $ | 0.5 | $ | 0.5 | |||||||
Total | $ | — | $ | — | $ | 0.5 | $ | 0.5 |
Qualitative/Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||
(In Millions) Fair Value at September 30, 2017 | Balance Sheet Location | Valuation Technique | Unobservable Input | Range or Point Estimate (Weighted Average) | ||||||||
Provisional pricing arrangements | $ | 4.7 | Derivative assets | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $61 - $74 ($73) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($625) | |||||||||||
Provisional pricing arrangements | $ | 9.3 | Derivative liabilities | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $61 - $74 ($73) | ||||||
Customer supply agreements | $ | 84.8 | Derivative assets | Market Approach | Customer Hot-Rolled Steel Estimate per net ton | $558 - $622 ($565) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($625) |
(In Millions) | |||||||||||||||
Level 3 Assets | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | 72.5 | $ | 25.8 | $ | 31.6 | $ | 7.8 | |||||||
Total gains (losses) | |||||||||||||||
Included in earnings | 60.6 | 14.6 | 156.0 | 62.6 | |||||||||||
Settlements | (43.6 | ) | (12.0 | ) | (98.1 | ) | (42.0 | ) | |||||||
Ending balance - September 30 | $ | 89.5 | $ | 28.4 | $ | 89.5 | $ | 28.4 | |||||||
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date | $ | 0.1 | $ | 8.2 | $ | 53.4 | $ | 24.7 |
(In Millions) | |||||||||||||||
Level 3 Liabilities | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | (20.9 | ) | $ | (2.6 | ) | $ | (0.5 | ) | $ | (3.4 | ) | |||
Total gains (losses) | |||||||||||||||
Included in earnings | (19.3 | ) | (2.9 | ) | (64.9 | ) | (12.8 | ) | |||||||
Settlements | 30.9 | 2.8 | 56.1 | 13.5 | |||||||||||
Ending balance - September 30 | $ | (9.3 | ) | $ | (2.7 | ) | $ | (9.3 | ) | $ | (2.7 | ) | |||
Total gains (losses) for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date | $ | 6.0 | $ | (2.7 | ) | $ | (14.8 | ) | $ | (2.7 | ) |
(In Millions) | |||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||
Classification | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt: | |||||||||||||||||
Secured Notes | |||||||||||||||||
First Senior Lien Notes —$540 million | Level 1 | $ | — | $ | — | $ | 506.3 | $ | 595.0 | ||||||||
1.5 Senior Lien Notes —$218.5 million | Level 2 | — | — | 284.2 | 229.5 | ||||||||||||
Second Senior Lien Notes —$544.2 million | Level 1 | — | — | 339.1 | 439.7 | ||||||||||||
Unsecured Notes | |||||||||||||||||
Senior Notes—$1.075 billion | Level 1 | 1,046.8 | 1,032.0 | — | — | ||||||||||||
Senior Notes—$400 million | Level 1 | 88.5 | 88.4 | 224.5 | 219.6 | ||||||||||||
Senior Notes—$500 million | Level 1 | 122.0 | 116.9 | 235.9 | 221.1 | ||||||||||||
Senior Notes—$700 million | Level 1 | 138.0 | 132.4 | 308.2 | 283.1 | ||||||||||||
Senior Notes—$800 million | Level 1 | 292.6 | 249.0 | 292.5 | 234.7 | ||||||||||||
ABL Facility | Level 2 | — | — | — | — | ||||||||||||
Fair value adjustment to interest rate hedge | Level 2 | 1.5 | 1.5 | 1.9 | 1.9 | ||||||||||||
Total long-term debt | $ | 1,689.4 | $ | 1,620.2 | $ | 2,192.6 | $ | 2,224.6 |
(In Millions) | ||||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Total Year-to-Date Gains | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans to and accounts receivables from the Canadian Entities | $ | — | $ | — | $ | 51.9 | $ | 51.9 | $ | 3.3 | ||||||||||
Liabilities: | ||||||||||||||||||||
Guarantees | $ | — | $ | — | $ | — | $ | — | $ | 31.4 |
(In Millions) | ||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Total Year-to-Date Gains (Losses) | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans to and accounts receivables from the Canadian Entities | $ | — | $ | — | $ | 48.6 | $ | 48.6 | $ | (17.5 | ) | |||||||||
Liabilities: | ||||||||||||||||||||
Guarantees | $ | — | $ | — | $ | 37.2 | $ | 37.2 | $ | 0.4 |
|
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 3.4 | $ | 4.2 | $ | 12.9 | $ | 13.2 | |||||||
Interest cost | 7.9 | 7.8 | 22.9 | 22.7 | |||||||||||
Expected return on plan assets | (13.8 | ) | (13.6 | ) | (40.9 | ) | (41.0 | ) | |||||||
Amortization: | |||||||||||||||
Prior service costs | 0.6 | 0.5 | 1.9 | 1.6 | |||||||||||
Net actuarial loss | 6.1 | 5.4 | 16.7 | 15.9 | |||||||||||
Net periodic benefit cost | $ | 4.2 | $ | 4.3 | $ | 13.5 | $ | 12.4 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 0.3 | $ | 0.4 | $ | 1.3 | $ | 1.3 | |||||||
Interest cost | 1.9 | 2.3 | 6.2 | 6.8 | |||||||||||
Expected return on plan assets | (4.4 | ) | (4.3 | ) | (13.3 | ) | (12.8 | ) | |||||||
Amortization: | |||||||||||||||
Prior service credits | (0.8 | ) | (0.9 | ) | (2.3 | ) | (2.8 | ) | |||||||
Net actuarial loss | 0.9 | 1.7 | 3.4 | 4.5 | |||||||||||
Net periodic benefit credit | $ | (2.1 | ) | $ | (0.8 | ) | $ | (4.7 | ) | $ | (3.0 | ) |
|
Grant Date | Grant Date Market Price | Average Expected Term (Years) | Expected Volatility | Risk-Free Interest Rate | Dividend Yield | Fair Value | Fair Value (Percent of Grant Date Market Price) | |||||||||||
February 21, 2017 | $ | 11.67 | 2.86 | 92.1% | 1.51% | —% | $ | 19.69 | 168.72% | |||||||||
June 26, 2017 | $ | 6.64 | 2.51 | 92.8% | 1.45% | —% | $ | 10.74 | 161.75% |
|
|
(In Millions) | |||||||
Capital Leases | Operating Leases | ||||||
2017 (October 1 - December 31) | $ | 6.1 | $ | 1.8 | |||
2018 | 19.3 | 5.9 | |||||
2019 | 10.7 | 2.9 | |||||
2020 | 9.7 | 2.9 | |||||
2021 | 9.0 | 3.0 | |||||
2022 and thereafter | 0.7 | — | |||||
Total minimum lease payments | $ | 55.5 | $ | 16.5 | |||
Amounts representing interest | 9.0 | ||||||
Present value of net minimum lease payments1 | $ | 46.5 | |||||
1 The total is comprised of $17.0 million and $29.5 million classified as Other current liabilities and Other liabilities, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at September 30, 2017. |
|
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Environmental | $ | 2.9 | $ | 2.8 | |||
Mine closure | |||||||
U.S. Iron Ore1 | 195.0 | 187.8 | |||||
Asia Pacific Iron Ore | 18.3 | 16.2 | |||||
Total mine closure | 213.3 | 204.0 | |||||
Total environmental and mine closure obligations | 216.2 | 206.8 | |||||
Less current portion | 10.8 | 12.9 | |||||
Long-term environmental and mine closure obligations | $ | 205.4 | $ | 193.9 | |||
1 U.S. Iron Ore includes our active operating mines, our indefinitely idled Empire mine and a closed mine formerly operating as LTVSMC. |
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Asset retirement obligation at beginning of period | $ | 204.0 | $ | 230.4 | |||
Accretion expense | 11.1 | 14.0 | |||||
Remediation payments | (3.2 | ) | (2.2 | ) | |||
Exchange rate changes | 1.4 | (0.2 | ) | ||||
Revision in estimated cash flows | — | (38.0 | ) | ||||
Asset retirement obligation at end of period | $ | 213.3 | $ | 204.0 |
|
(In Millions) | |||||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||
Classification | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Permits | Other non-current assets | $ | 78.9 | $ | (26.1 | ) | $ | 52.8 | $ | 78.4 | $ | (24.6 | ) | $ | 53.8 |
|
(In Millions) | ||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | |||||||||||||||||||||
Derivative Instrument | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||||||
Customer supply agreements | Derivative assets | $ | 84.8 | Derivative assets | $ | 21.3 | $ | — | $ | — | ||||||||||||||
Provisional pricing arrangements | Derivative assets | 4.7 | Derivative assets | 10.3 | Derivative liabilities | 9.3 | Derivative liabilities | 0.5 | ||||||||||||||||
Commodity contracts | — | Derivative assets | 1.5 | — | — | |||||||||||||||||||
Total derivatives not designated as hedging instruments under ASC 815 | $ | 89.5 | $ | 33.1 | $ | 9.3 | $ | 0.5 |
(In Millions) | ||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | Amount of Gain (Loss) Recognized in Income on Derivative | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Customer Supply Agreements | Product revenues | $ | 54.3 | $ | 7.1 | $ | 123.9 | $ | 26.8 | |||||||||
Provisional Pricing Arrangements | Product revenues | (13.1 | ) | 4.5 | (32.9 | ) | 22.9 | |||||||||||
Commodity Contracts | Cost of goods sold and operating expenses | — | — | (1.3 | ) | — | ||||||||||||
Total | $ | 41.2 | $ | 11.6 | $ | 89.7 | $ | 49.7 |
|
|
(In Millions) | |||||||||||
Cliffs Shareholders’ Equity (Deficit) | Noncontrolling Interest (Deficit) | Total Equity (Deficit) | |||||||||
December 31, 2016 | $ | (1,464.3 | ) | $ | 133.8 | $ | (1,330.5 | ) | |||
Comprehensive loss | |||||||||||
Net income (loss) | 57.1 | (3.9 | ) | 53.2 | |||||||
Other comprehensive income | 4.2 | 1.1 | 5.3 | ||||||||
Total comprehensive income (loss) | 61.3 | (2.8 | ) | 58.5 | |||||||
Issuance of common shares | 661.3 | — | 661.3 | ||||||||
Stock and other incentive plans | 13.5 | — | 13.5 | ||||||||
Acquisition of noncontrolling interest | (89.1 | ) | (15.9 | ) | (105.0 | ) | |||||
Distribution of partnership equity | (16.0 | ) | (116.7 | ) | (132.7 | ) | |||||
Distributions to noncontrolling interest | — | 1.8 | 1.8 | ||||||||
September 30, 2017 | $ | (833.3 | ) | $ | 0.2 | $ | (833.1 | ) |
(In Millions) | |||||||||||
Cliffs Shareholders’ Equity (Deficit) | Noncontrolling Interest (Deficit) | Total Equity (Deficit) | |||||||||
December 31, 2015 | $ | (1,981.4 | ) | $ | 169.8 | $ | (1,811.6 | ) | |||
Comprehensive income | |||||||||||
Net income | 95.0 | 23.5 | 118.5 | ||||||||
Other comprehensive income | 16.8 | 2.2 | 19.0 | ||||||||
Total comprehensive income | 111.8 | 25.7 | 137.5 | ||||||||
Issuance of common shares | 315.2 | — | 315.2 | ||||||||
Stock and other incentive plans | 10.1 | — | 10.1 | ||||||||
Distributions of partnership equity | — | (48.8 | ) | (48.8 | ) | ||||||
Distributions to noncontrolling interest | — | (2.9 | ) | (2.9 | ) | ||||||
September 30, 2016 | $ | (1,544.3 | ) | $ | 143.8 | $ | (1,400.5 | ) |
(In Millions) | |||||||||||
Changes in Pension and Other Post-Retirement Benefits, net of tax | Unrealized Net Gain (Loss) on Foreign Currency Translation | Accumulated Other Comprehensive Loss | |||||||||
December 31, 2016 | $ | (260.6 | ) | $ | 239.3 | $ | (21.3 | ) | |||
Other comprehensive income (loss) before reclassifications | 3.3 | (12.7 | ) | (9.4 | ) | ||||||
Net loss reclassified from accumulated other comprehensive loss | 6.4 | — | 6.4 | ||||||||
March 31, 2017 | $ | (250.9 | ) | $ | 226.6 | $ | (24.3 | ) | |||
Other comprehensive loss before reclassifications | (0.1 | ) | (1.5 | ) | (1.6 | ) | |||||
Net loss reclassified from accumulated other comprehensive loss | 6.5 | — | 6.5 | ||||||||
June 30, 2017 | $ | (244.5 | ) | $ | 225.1 | $ | (19.4 | ) | |||
Other comprehensive income (loss) before reclassifications | (18.7 | ) | 0.5 | (18.2 | ) | ||||||
Net loss reclassified from accumulated other comprehensive loss | 6.8 | — | 6.8 | ||||||||
September 30, 2017 | $ | (256.4 | ) | $ | 225.6 | $ | (30.8 | ) |
(In Millions) | |||||||||||||||||||
Changes in Pension and Other Post-Retirement Benefits, net of tax | Unrealized Net Gain (Loss) on Securities, net of tax | Unrealized Net Gain (Loss) on Foreign Currency Translation | Net Unrealized Gain (Loss) on Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | |||||||||||||||
December 31, 2015 | $ | (241.4 | ) | $ | 0.1 | $ | 220.7 | $ | 2.6 | $ | (18.0 | ) | |||||||
Other comprehensive income (loss) before reclassifications | (1.5 | ) | (0.1 | ) | 4.4 | (3.4 | ) | (0.6 | ) | ||||||||||
Net loss reclassified from accumulated other comprehensive loss | 6.3 | — | — | — | 6.3 | ||||||||||||||
March 31, 2016 | $ | (236.6 | ) | $ | — | $ | 225.1 | $ | (0.8 | ) | $ | (12.3 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (0.4 | ) | — | (2.7 | ) | 0.1 | (3.0 | ) | |||||||||||
Net loss reclassified from accumulated other comprehensive loss | 6.3 | — | — | — | 6.3 | ||||||||||||||
June 30, 2016 | $ | (230.7 | ) | $ | — | $ | 222.4 | $ | (0.7 | ) | $ | (9.0 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (0.5 | ) | — | 0.9 | — | 0.4 | |||||||||||||
Net loss reclassified from accumulated other comprehensive income (loss) | 6.7 | — | — | 0.7 | 7.4 | ||||||||||||||
September 30, 2016 | $ | (224.5 | ) | $ | — | $ | 223.3 | $ | — | $ | (1.2 | ) |
(In Millions) | ||||||||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount of (Gain)/Loss Reclassified into Income | Affected Line Item in the Statement of Unaudited Condensed Consolidated Operations | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Amortization of pension and postretirement benefit liability: | ||||||||||||||||||
Prior service credits1 | $ | (0.2 | ) | $ | (0.4 | ) | $ | (0.4 | ) | $ | (1.2 | ) | ||||||
Net actuarial loss1 | 7.0 | 7.1 | 20.1 | 20.4 | ||||||||||||||
Total before taxes | 6.8 | 6.7 | 19.7 | 19.2 | ||||||||||||||
— | — | — | — | Income tax benefit | ||||||||||||||
$ | 6.8 | $ | 6.7 | $ | 19.7 | $ | 19.2 | |||||||||||
Unrealized gain (loss) on derivative financial instruments: | ||||||||||||||||||
Treasury lock | $ | — | $ | 1.2 | $ | — | $ | 1.2 | Gain (loss) on extinguishment/restructuring of debt | |||||||||
— | (0.5 | ) | — | (0.5 | ) | Income tax benefit | ||||||||||||
$ | — | $ | 0.7 | $ | — | $ | 0.7 | Net of taxes | ||||||||||
Total reclassifications for the period, net of tax | $ | 6.8 | $ | 7.4 | $ | 19.7 | $ | 19.9 | ||||||||||
1 These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (credit). Refer to NOTE 7 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information. |
|
Mine | Cleveland-Cliffs Inc. | ArcelorMittal | U.S. Steel | ||||||
Hibbing | 23.0 | % | 62.3 | % | 14.7 | % |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Product revenues from related parties | $ | 265.5 | $ | 223.4 | $ | 602.4 | $ | 568.4 | |||||||
Total product revenues | $ | 627.5 | $ | 508.6 | $ | 1,552.3 | $ | 1,237.0 | |||||||
Related party product revenue as a percent of total product revenue | 42.3 | % | 43.9 | % | 38.8 | % | 45.9 | % |
(In Millions) | |||||||||
Balance Sheet Location | September 30, 2017 | December 31, 2016 | |||||||
Amounts due from related parties | Accounts receivable, net | $ | 4.5 | $ | 46.9 | ||||
Amounts due from related parties | Other current assets | 3.4 | — | ||||||
Customer supply agreements and provisional pricing agreements | Derivative assets | 88.5 | 26.8 | ||||||
Amounts due to related parties | Other current liabilities | (45.3 | ) | (8.7 | ) | ||||
Amounts due to related parties | Derivative liabilities | (5.4 | ) | — | |||||
Amounts due to related parties | Other liabilities | (44.2 | ) | — | |||||
Net amounts due from related parties | $ | 1.5 | $ | 65.0 |
|
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income (Loss) from Continuing Operations | $ | 20.6 | $ | (25.1 | ) | $ | 66.8 | $ | 119.1 | ||||||
Loss (Income) from Continuing Operations Attributable to Noncontrolling Interest | 0.5 | 2.0 | 3.9 | (23.5 | ) | ||||||||||
Net Income (Loss) from Continuing Operations Attributable to Cliffs Shareholders | $ | 21.1 | $ | (23.1 | ) | $ | 70.7 | $ | 95.6 | ||||||
Income (Loss) from Discontinued Operations, net of tax | 32.3 | (2.7 | ) | (13.6 | ) | (0.6 | ) | ||||||||
Net Income (Loss) Attributable to Cliffs Shareholders | $ | 53.4 | $ | (25.8 | ) | $ | 57.1 | $ | 95.0 | ||||||
Weighted Average Number of Shares: | |||||||||||||||
Basic | 296.1 | 206.3 | 285.8 | 186.5 | |||||||||||
Employee Stock Plans | 5.0 | — | 4.7 | 2.0 | |||||||||||
Diluted | 301.1 | 206.3 | 290.5 | 188.5 | |||||||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Basic: | |||||||||||||||
Continuing operations | $ | 0.07 | $ | (0.11 | ) | $ | 0.25 | $ | 0.51 | ||||||
Discontinued operations | 0.11 | (0.01 | ) | (0.05 | ) | — | |||||||||
$ | 0.18 | $ | (0.12 | ) | $ | 0.20 | $ | 0.51 | |||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted: | |||||||||||||||
Continuing operations | $ | 0.07 | $ | (0.11 | ) | $ | 0.24 | $ | 0.51 | ||||||
Discontinued operations | 0.11 | (0.01 | ) | (0.05 | ) | — | |||||||||
$ | 0.18 | $ | (0.12 | ) | $ | 0.19 | $ | 0.51 |
|
|
|
Name | Location | Ownership Interest | Operation | Status of Operations | ||||
Northshore | Minnesota | 100.0% | Iron Ore | Active | ||||
United Taconite | Minnesota | 100.0% | Iron Ore | Active | ||||
Tilden1 | Michigan | 100.0% | Iron Ore | Active | ||||
Empire1 | Michigan | 100.0% | Iron Ore | Indefinitely Idled | ||||
Koolyanobbing | Western Australia | 100.0% | Iron Ore | Active | ||||
1 During the third quarter of 2017, our ownership interest in Tilden and Empire changed. Refer to the Noncontrolling Interests section below for additional information. |
(In Millions) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Remeasurement of short-term intercompany loans | $ | 0.1 | $ | 0.2 | $ | 16.7 | $ | 0.5 | ||||||||
Remeasurement of cash and cash equivalents | (1.1 | ) | (1.1 | ) | (2.8 | ) | 0.3 | |||||||||
Other remeasurement | (1.4 | ) | 0.6 | (2.7 | ) | (2.0 | ) | |||||||||
Net impact of transaction gains (losses) resulting from remeasurement | $ | (2.4 | ) | $ | (0.3 | ) | $ | 11.2 | $ | (1.2 | ) |
($ in Millions) | ||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||
Estimate | ||||||||||||
Financial Statement Line Impacted | As Reported | Adoption of ASU No. 2017-07 | As Adjusted | |||||||||
Cost of goods sold and operating expenses | $ | (1,328.3 | ) | $ | 1.3 | $ | (1,327.0 | ) | ||||
Selling, general and administrative expenses | $ | (77.8 | ) | $ | (5.8 | ) | $ | (83.6 | ) | |||
Miscellaneous - net | $ | 3.0 | $ | (1.2 | ) | $ | 1.8 | |||||
Operating income | $ | 326.2 | $ | (5.7 | ) | $ | 320.5 | |||||
Other non-operating income | $ | 2.3 | $ | 5.7 | $ | 8.0 | ||||||
Net Income (Loss) | $ | 53.2 | $ | — | $ | 53.2 |
|
Name | Location | Ownership Interest | Operation | Status of Operations | ||||
Northshore | Minnesota | 100.0% | Iron Ore | Active | ||||
United Taconite | Minnesota | 100.0% | Iron Ore | Active | ||||
Tilden1 | Michigan | 100.0% | Iron Ore | Active | ||||
Empire1 | Michigan | 100.0% | Iron Ore | Indefinitely Idled | ||||
Koolyanobbing | Western Australia | 100.0% | Iron Ore | Active | ||||
1 During the third quarter of 2017, our ownership interest in Tilden and Empire changed. Refer to the Noncontrolling Interests section below for additional information. |
(In Millions) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Remeasurement of short-term intercompany loans | $ | 0.1 | $ | 0.2 | $ | 16.7 | $ | 0.5 | ||||||||
Remeasurement of cash and cash equivalents | (1.1 | ) | (1.1 | ) | (2.8 | ) | 0.3 | |||||||||
Other remeasurement | (1.4 | ) | 0.6 | (2.7 | ) | (2.0 | ) | |||||||||
Net impact of transaction gains (losses) resulting from remeasurement | $ | (2.4 | ) | $ | (0.3 | ) | $ | 11.2 | $ | (1.2 | ) |
($ in Millions) | ||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||
Estimate | ||||||||||||
Financial Statement Line Impacted | As Reported | Adoption of ASU No. 2017-07 | As Adjusted | |||||||||
Cost of goods sold and operating expenses | $ | (1,328.3 | ) | $ | 1.3 | $ | (1,327.0 | ) | ||||
Selling, general and administrative expenses | $ | (77.8 | ) | $ | (5.8 | ) | $ | (83.6 | ) | |||
Miscellaneous - net | $ | 3.0 | $ | (1.2 | ) | $ | 1.8 | |||||
Operating income | $ | 326.2 | $ | (5.7 | ) | $ | 320.5 | |||||
Other non-operating income | $ | 2.3 | $ | 5.7 | $ | 8.0 | ||||||
Net Income (Loss) | $ | 53.2 | $ | — | $ | 53.2 |
|
(In Millions) | |||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
Revenues from product sales and services: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 596.7 | 85 | % | $ | 428.3 | 77 | % | $ | 1,354.2 | 78 | % | $ | 975.5 | 72 | % | |||||||||||
Asia Pacific Iron Ore | 101.7 | 15 | % | 125.0 | 23 | % | 375.1 | 22 | % | 379.5 | 28 | % | |||||||||||||||
Total revenues from product sales and services | $ | 698.4 | 100 | % | $ | 553.3 | 100 | % | $ | 1,729.3 | 100 | % | $ | 1,355.0 | 100 | % | |||||||||||
Sales margin: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 157.2 | $ | 66.5 | $ | 349.8 | $ | 149.7 | |||||||||||||||||||
Asia Pacific Iron Ore | 3.0 | 18.9 | 51.2 | 58.1 | |||||||||||||||||||||||
Sales margin | 160.2 | 85.4 | 401.0 | 207.8 | |||||||||||||||||||||||
Other operating expense | (30.5 | ) | (50.7 | ) | (74.8 | ) | (98.7 | ) | |||||||||||||||||||
Other income (expense) | (116.7 | ) | (66.9 | ) | (266.2 | ) | 8.3 | ||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 13.0 | $ | (32.2 | ) | $ | 60.0 | $ | 117.4 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Income (Loss) | $ | 52.9 | $ | (27.8 | ) | $ | 53.2 | $ | 118.5 | ||||||
Less: | |||||||||||||||
Interest expense, net | (28.9 | ) | (48.7 | ) | (103.1 | ) | (156.2 | ) | |||||||
Income tax benefit | 7.6 | 7.1 | 6.8 | 1.7 | |||||||||||
Depreciation, depletion and amortization | (21.5 | ) | (26.8 | ) | (66.3 | ) | (88.9 | ) | |||||||
EBITDA | $ | 95.7 | $ | 40.6 | $ | 215.8 | $ | 361.9 | |||||||
Less: | |||||||||||||||
Gain (loss) on extinguishment/restructuring of debt | $ | (88.6 | ) | $ | (18.3 | ) | $ | (165.4 | ) | $ | 164.1 | ||||
Foreign exchange remeasurement | (2.4 | ) | (0.3 | ) | 11.2 | (1.2 | ) | ||||||||
Impact of discontinued operations | 32.3 | (2.7 | ) | (13.6 | ) | (0.6 | ) | ||||||||
Severance and contractor termination costs | — | — | — | (0.1 | ) | ||||||||||
Adjusted EBITDA | $ | 154.4 | $ | 61.9 | $ | 383.6 | $ | 199.7 | |||||||
EBITDA | |||||||||||||||
U.S. Iron Ore | $ | 168.9 | $ | 61.1 | $ | 381.8 | $ | 196.6 | |||||||
Asia Pacific Iron Ore | 2.3 | 21.2 | 54.9 | 69.6 | |||||||||||
Other | (75.5 | ) | (41.7 | ) | (220.9 | ) | 95.7 | ||||||||
Total EBITDA | $ | 95.7 | $ | 40.6 | $ | 215.8 | $ | 361.9 | |||||||
Adjusted EBITDA: | |||||||||||||||
U.S. Iron Ore | $ | 174.2 | $ | 65.3 | $ | 399.8 | $ | 208.6 | |||||||
Asia Pacific Iron Ore | 4.9 | 23.7 | 61.7 | 73.2 | |||||||||||
Other | (24.7 | ) | (27.1 | ) | (77.9 | ) | (82.1 | ) | |||||||
Total Adjusted EBITDA | $ | 154.4 | $ | 61.9 | $ | 383.6 | $ | 199.7 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Depreciation, depletion and amortization: | |||||||||||||||
U.S. Iron Ore | $ | 16.5 | $ | 18.8 | $ | 49.6 | $ | 65.1 | |||||||
Asia Pacific Iron Ore | 3.3 | 6.3 | 11.3 | 19.2 | |||||||||||
Other | 1.7 | 1.7 | 5.4 | 4.6 | |||||||||||
Total depreciation, depletion and amortization | $ | 21.5 | $ | 26.8 | $ | 66.3 | $ | 88.9 | |||||||
Capital additions: | |||||||||||||||
U.S. Iron Ore | $ | 19.2 | $ | 25.8 | $ | 70.9 | $ | 39.5 | |||||||
Asia Pacific Iron Ore | 0.8 | 0.2 | 1.6 | 0.2 | |||||||||||
Other | 7.1 | 0.4 | 7.1 | 4.8 | |||||||||||
Total capital additions1 | $ | 27.1 | $ | 26.4 | $ | 79.6 | $ | 44.5 | |||||||
1 Includes cash paid for capital additions of $78.9 million and $45.8 million and an increase in non-cash accruals of $0.7 million and a decrease in non-cash accruals of $1.3 million for the nine months ended September 30, 2017 and 2016, respectively. |
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
U.S. Iron Ore | $ | 1,467.2 | $ | 1,372.5 | |||
Asia Pacific Iron Ore | 139.4 | 155.1 | |||||
Total segment assets | 1,606.6 | 1,527.6 | |||||
Corporate | 316.7 | 396.3 | |||||
Total assets | $ | 1,923.3 | $ | 1,923.9 |
|
(In Millions) | |||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Segment | Finished Goods | Work-in Process | Total Inventory | Finished Goods | Work-in Process | Total Inventory | |||||||||||||||||
U.S. Iron Ore | $ | 151.3 | $ | 18.6 | $ | 169.9 | $ | 124.4 | $ | 12.6 | $ | 137.0 | |||||||||||
Asia Pacific Iron Ore | 29.4 | 8.4 | 37.8 | 23.6 | 17.8 | 41.4 | |||||||||||||||||
Total | $ | 180.7 | $ | 27.0 | $ | 207.7 | $ | 148.0 | $ | 30.4 | $ | 178.4 |
|
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Land rights and mineral rights | $ | 500.7 | $ | 500.5 | |||
Office and information technology | 66.2 | 65.1 | |||||
Buildings | 80.0 | 67.9 | |||||
Mining equipment | 585.4 | 592.2 | |||||
Processing equipment | 607.9 | 552.0 | |||||
Electric power facilities | 57.0 | 49.4 | |||||
Land improvements | 23.7 | 23.5 | |||||
Asset retirement obligation | 19.6 | 19.8 | |||||
Other | 30.4 | 28.1 | |||||
Construction in-progress | 35.4 | 42.8 | |||||
2,006.3 | 1,941.3 | ||||||
Allowance for depreciation and depletion | (1,012.5 | ) | (956.9 | ) | |||
$ | 993.8 | $ | 984.4 |
|
(In Millions) | ||||||||||||||||||
September 30, 2017 | ||||||||||||||||||
Debt Instrument | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Discounts | Total Debt | |||||||||||||
Unsecured Notes | ||||||||||||||||||
$400 Million 5.90% 2020 Senior Notes | 5.98% | $ | 88.9 | $ | (0.2 | ) | $ | (0.2 | ) | $ | 88.5 | |||||||
$500 Million 4.80% 2020 Senior Notes | 4.83% | 122.4 | (0.3 | ) | (0.1 | ) | 122.0 | |||||||||||
$700 Million 4.875% 2021 Senior Notes | 4.89% | 138.4 | (0.3 | ) | (0.1 | ) | 138.0 | |||||||||||
$1.075 Billion 5.75% 2025 Senior Notes | 5.75% | 1,075.0 | (11.2 | ) | (17.0 | ) | 1,046.8 | |||||||||||
$800 Million 6.25% 2040 Senior Notes | 6.34% | 298.4 | (2.4 | ) | (3.4 | ) | 292.6 | |||||||||||
ABL Facility | N/A | 550.0 | N/A | N/A | — | |||||||||||||
Fair Value Adjustment to Interest Rate Hedge | 1.5 | |||||||||||||||||
Long-term debt | $ | 1,689.4 |
(In Millions) | ||||||||||||||||||
December 31, 2016 | ||||||||||||||||||
Debt Instrument | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Undiscounted Interest/ (Unamortized Discounts) | Total Debt | |||||||||||||
Secured Notes | ||||||||||||||||||
$540 Million 8.25% 2020 First Lien Notes | 9.97% | $ | 540.0 | $ | (8.0 | ) | $ | (25.7 | ) | $ | 506.3 | |||||||
$218.5 Million 8.00% 2020 1.5 Lien Notes | N/A | 218.5 | — | 65.7 | 284.2 | |||||||||||||
$544.2 Million 7.75% 2020 Second Lien Notes | 15.55% | 430.1 | (5.8 | ) | (85.2 | ) | 339.1 | |||||||||||
Unsecured Notes | ||||||||||||||||||
$400 Million 5.90% 2020 Senior Notes | 5.98% | 225.6 | (0.6 | ) | (0.5 | ) | 224.5 | |||||||||||
$500 Million 4.80% 2020 Senior Notes | 4.83% | 236.8 | (0.7 | ) | (0.2 | ) | 235.9 | |||||||||||
$700 Million 4.875% 2021 Senior Notes | 4.89% | 309.4 | (1.0 | ) | (0.2 | ) | 308.2 | |||||||||||
$800 Million 6.25% 2040 Senior Notes | 6.34% | 298.4 | (2.5 | ) | (3.4 | ) | 292.5 | |||||||||||
ABL Facility | N/A | 550.0 | N/A | N/A | — | |||||||||||||
Fair Value Adjustment to Interest Rate Hedge | 1.9 | |||||||||||||||||
Total debt | $ | 2,192.6 | ||||||||||||||||
Less current portion | 17.5 | |||||||||||||||||
Long-term debt | $ | 2,175.1 |
(In Millions) | ||||||||||||
Gain (Loss) on Extinguishment1 | ||||||||||||
Debt Extinguished | Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||||||||
Secured Notes | ||||||||||||
$540 Million 8.25% 2020 First Lien Notes | $ | 540.0 | $ | (88.6 | ) | $ | (93.5 | ) | ||||
$218.5 Million 8.00% 2020 1.5 Lien Notes | 218.5 | — | 45.1 | |||||||||
$544.2 Million 7.75% 2020 Second Lien Notes | 430.1 | — | (104.5 | ) | ||||||||
Unsecured Notes | ||||||||||||
$400 Million 5.90% 2020 Senior Notes | 136.7 | — | (7.8 | ) | ||||||||
$500 Million 4.80% 2020 Senior Notes | 114.4 | — | (1.9 | ) | ||||||||
$700 Million 4.875% 2021 Senior Notes | 171.0 | — | (2.8 | ) | ||||||||
$ | 1,610.7 | $ | (88.6 | ) | $ | (165.4 | ) | |||||
1 This includes premiums paid related to the redemption of our notes of $62.4 million and $110.0 million for the three and nine months ended September 30, 2017, respectively. |
(In Millions) | |||
Maturities of Debt | |||
2017 (October 1 - December 31) | $ | — | |
2018 | — | ||
2019 | — | ||
2020 | 211.3 | ||
2021 | 138.4 | ||
2022 | — | ||
2023 and thereafter | 1,373.4 | ||
Total maturities of debt | $ | 1,723.1 |
|
(In Millions) | |||||||||||||||
September 30, 2017 | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 40.0 | $ | 37.0 | $ | — | $ | 77.0 | |||||||
Derivative assets | — | — | 89.5 | 89.5 | |||||||||||
Total | $ | 40.0 | $ | 37.0 | $ | 89.5 | $ | 166.5 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | — | $ | 9.3 | $ | 9.3 | |||||||
Total | $ | — | $ | — | $ | 9.3 | $ | 9.3 |
(In Millions) | |||||||||||||||
December 31, 2016 | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 177.0 | $ | — | $ | — | $ | 177.0 | |||||||
Derivative assets | — | 1.5 | 31.6 | 33.1 | |||||||||||
Total | $ | 177.0 | $ | 1.5 | $ | 31.6 | $ | 210.1 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | — | $ | 0.5 | $ | 0.5 | |||||||
Total | $ | — | $ | — | $ | 0.5 | $ | 0.5 |
Qualitative/Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||
(In Millions) Fair Value at September 30, 2017 | Balance Sheet Location | Valuation Technique | Unobservable Input | Range or Point Estimate (Weighted Average) | ||||||||
Provisional pricing arrangements | $ | 4.7 | Derivative assets | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $61 - $74 ($73) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($625) | |||||||||||
Provisional pricing arrangements | $ | 9.3 | Derivative liabilities | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $61 - $74 ($73) | ||||||
Customer supply agreements | $ | 84.8 | Derivative assets | Market Approach | Customer Hot-Rolled Steel Estimate per net ton | $558 - $622 ($565) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($625) |
(In Millions) | |||||||||||||||
Level 3 Assets | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | 72.5 | $ | 25.8 | $ | 31.6 | $ | 7.8 | |||||||
Total gains (losses) | |||||||||||||||
Included in earnings | 60.6 | 14.6 | 156.0 | 62.6 | |||||||||||
Settlements | (43.6 | ) | (12.0 | ) | (98.1 | ) | (42.0 | ) | |||||||
Ending balance - September 30 | $ | 89.5 | $ | 28.4 | $ | 89.5 | $ | 28.4 | |||||||
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date | $ | 0.1 | $ | 8.2 | $ | 53.4 | $ | 24.7 |
(In Millions) | |||||||||||||||
Level 3 Liabilities | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | (20.9 | ) | $ | (2.6 | ) | $ | (0.5 | ) | $ | (3.4 | ) | |||
Total gains (losses) | |||||||||||||||
Included in earnings | (19.3 | ) | (2.9 | ) | (64.9 | ) | (12.8 | ) | |||||||
Settlements | 30.9 | 2.8 | 56.1 | 13.5 | |||||||||||
Ending balance - September 30 | $ | (9.3 | ) | $ | (2.7 | ) | $ | (9.3 | ) | $ | (2.7 | ) | |||
Total gains (losses) for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date | $ | 6.0 | $ | (2.7 | ) | $ | (14.8 | ) | $ | (2.7 | ) |
(In Millions) | |||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||
Classification | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt: | |||||||||||||||||
Secured Notes | |||||||||||||||||
First Senior Lien Notes —$540 million | Level 1 | $ | — | $ | — | $ | 506.3 | $ | 595.0 | ||||||||
1.5 Senior Lien Notes —$218.5 million | Level 2 | — | — | 284.2 | 229.5 | ||||||||||||
Second Senior Lien Notes —$544.2 million | Level 1 | — | — | 339.1 | 439.7 | ||||||||||||
Unsecured Notes | |||||||||||||||||
Senior Notes—$1.075 billion | Level 1 | 1,046.8 | 1,032.0 | — | — | ||||||||||||
Senior Notes—$400 million | Level 1 | 88.5 | 88.4 | 224.5 | 219.6 | ||||||||||||
Senior Notes—$500 million | Level 1 | 122.0 | 116.9 | 235.9 | 221.1 | ||||||||||||
Senior Notes—$700 million | Level 1 | 138.0 | 132.4 | 308.2 | 283.1 | ||||||||||||
Senior Notes—$800 million | Level 1 | 292.6 | 249.0 | 292.5 | 234.7 | ||||||||||||
ABL Facility | Level 2 | — | — | — | — | ||||||||||||
Fair value adjustment to interest rate hedge | Level 2 | 1.5 | 1.5 | 1.9 | 1.9 | ||||||||||||
Total long-term debt | $ | 1,689.4 | $ | 1,620.2 | $ | 2,192.6 | $ | 2,224.6 |
(In Millions) | ||||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Total Year-to-Date Gains | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans to and accounts receivables from the Canadian Entities | $ | — | $ | — | $ | 51.9 | $ | 51.9 | $ | 3.3 | ||||||||||
Liabilities: | ||||||||||||||||||||
Guarantees | $ | — | $ | — | $ | — | $ | — | $ | 31.4 |
(In Millions) | ||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Total Year-to-Date Gains (Losses) | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans to and accounts receivables from the Canadian Entities | $ | — | $ | — | $ | 48.6 | $ | 48.6 | $ | (17.5 | ) | |||||||||
Liabilities: | ||||||||||||||||||||
Guarantees | $ | — | $ | — | $ | 37.2 | $ | 37.2 | $ | 0.4 |
|
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 3.4 | $ | 4.2 | $ | 12.9 | $ | 13.2 | |||||||
Interest cost | 7.9 | 7.8 | 22.9 | 22.7 | |||||||||||
Expected return on plan assets | (13.8 | ) | (13.6 | ) | (40.9 | ) | (41.0 | ) | |||||||
Amortization: | |||||||||||||||
Prior service costs | 0.6 | 0.5 | 1.9 | 1.6 | |||||||||||
Net actuarial loss | 6.1 | 5.4 | 16.7 | 15.9 | |||||||||||
Net periodic benefit cost | $ | 4.2 | $ | 4.3 | $ | 13.5 | $ | 12.4 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 0.3 | $ | 0.4 | $ | 1.3 | $ | 1.3 | |||||||
Interest cost | 1.9 | 2.3 | 6.2 | 6.8 | |||||||||||
Expected return on plan assets | (4.4 | ) | (4.3 | ) | (13.3 | ) | (12.8 | ) | |||||||
Amortization: | |||||||||||||||
Prior service credits | (0.8 | ) | (0.9 | ) | (2.3 | ) | (2.8 | ) | |||||||
Net actuarial loss | 0.9 | 1.7 | 3.4 | 4.5 | |||||||||||
Net periodic benefit credit | $ | (2.1 | ) | $ | (0.8 | ) | $ | (4.7 | ) | $ | (3.0 | ) |
|
Grant Date | Grant Date Market Price | Average Expected Term (Years) | Expected Volatility | Risk-Free Interest Rate | Dividend Yield | Fair Value | Fair Value (Percent of Grant Date Market Price) | |||||||||||
February 21, 2017 | $ | 11.67 | 2.86 | 92.1% | 1.51% | —% | $ | 19.69 | 168.72% | |||||||||
June 26, 2017 | $ | 6.64 | 2.51 | 92.8% | 1.45% | —% | $ | 10.74 | 161.75% |
|
(In Millions) | |||||||
Capital Leases | Operating Leases | ||||||
2017 (October 1 - December 31) | $ | 6.1 | $ | 1.8 | |||
2018 | 19.3 | 5.9 | |||||
2019 | 10.7 | 2.9 | |||||
2020 | 9.7 | 2.9 | |||||
2021 | 9.0 | 3.0 | |||||
2022 and thereafter | 0.7 | — | |||||
Total minimum lease payments | $ | 55.5 | $ | 16.5 | |||
Amounts representing interest | 9.0 | ||||||
Present value of net minimum lease payments1 | $ | 46.5 | |||||
1 The total is comprised of $17.0 million and $29.5 million classified as Other current liabilities and Other liabilities, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at September 30, 2017. |
|
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Environmental | $ | 2.9 | $ | 2.8 | |||
Mine closure | |||||||
U.S. Iron Ore1 | 195.0 | 187.8 | |||||
Asia Pacific Iron Ore | 18.3 | 16.2 | |||||
Total mine closure | 213.3 | 204.0 | |||||
Total environmental and mine closure obligations | 216.2 | 206.8 | |||||
Less current portion | 10.8 | 12.9 | |||||
Long-term environmental and mine closure obligations | $ | 205.4 | $ | 193.9 | |||
1 U.S. Iron Ore includes our active operating mines, our indefinitely idled Empire mine and a closed mine formerly operating as LTVSMC. |
(In Millions) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Asset retirement obligation at beginning of period | $ | 204.0 | $ | 230.4 | |||
Accretion expense | 11.1 | 14.0 | |||||
Remediation payments | (3.2 | ) | (2.2 | ) | |||
Exchange rate changes | 1.4 | (0.2 | ) | ||||
Revision in estimated cash flows | — | (38.0 | ) | ||||
Asset retirement obligation at end of period | $ | 213.3 | $ | 204.0 |
|
(In Millions) | |||||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||
Classification | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Permits | Other non-current assets | $ | 78.9 | $ | (26.1 | ) | $ | 52.8 | $ | 78.4 | $ | (24.6 | ) | $ | 53.8 |
|
(In Millions) | ||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | |||||||||||||||||||||
Derivative Instrument | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||||||
Customer supply agreements | Derivative assets | $ | 84.8 | Derivative assets | $ | 21.3 | $ | — | $ | — | ||||||||||||||
Provisional pricing arrangements | Derivative assets | 4.7 | Derivative assets | 10.3 | Derivative liabilities | 9.3 | Derivative liabilities | 0.5 | ||||||||||||||||
Commodity contracts | — | Derivative assets | 1.5 | — | — | |||||||||||||||||||
Total derivatives not designated as hedging instruments under ASC 815 | $ | 89.5 | $ | 33.1 | $ | 9.3 | $ | 0.5 |
(In Millions) | ||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | Amount of Gain (Loss) Recognized in Income on Derivative | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Customer Supply Agreements | Product revenues | $ | 54.3 | $ | 7.1 | $ | 123.9 | $ | 26.8 | |||||||||
Provisional Pricing Arrangements | Product revenues | (13.1 | ) | 4.5 | (32.9 | ) | 22.9 | |||||||||||
Commodity Contracts | Cost of goods sold and operating expenses | — | — | (1.3 | ) | — | ||||||||||||
Total | $ | 41.2 | $ | 11.6 | $ | 89.7 | $ | 49.7 |
|
Mine | Cleveland-Cliffs Inc. | ArcelorMittal | U.S. Steel | ||||||
Hibbing | 23.0 | % | 62.3 | % | 14.7 | % |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Product revenues from related parties | $ | 265.5 | $ | 223.4 | $ | 602.4 | $ | 568.4 | |||||||
Total product revenues | $ | 627.5 | $ | 508.6 | $ | 1,552.3 | $ | 1,237.0 | |||||||
Related party product revenue as a percent of total product revenue | 42.3 | % | 43.9 | % | 38.8 | % | 45.9 | % |
(In Millions) | |||||||||
Balance Sheet Location | September 30, 2017 | December 31, 2016 | |||||||
Amounts due from related parties | Accounts receivable, net | $ | 4.5 | $ | 46.9 | ||||
Amounts due from related parties | Other current assets | 3.4 | — | ||||||
Customer supply agreements and provisional pricing agreements | Derivative assets | 88.5 | 26.8 | ||||||
Amounts due to related parties | Other current liabilities | (45.3 | ) | (8.7 | ) | ||||
Amounts due to related parties | Derivative liabilities | (5.4 | ) | — | |||||
Amounts due to related parties | Other liabilities | (44.2 | ) | — | |||||
Net amounts due from related parties | $ | 1.5 | $ | 65.0 |
|
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income (Loss) from Continuing Operations | $ | 20.6 | $ | (25.1 | ) | $ | 66.8 | $ | 119.1 | ||||||
Loss (Income) from Continuing Operations Attributable to Noncontrolling Interest | 0.5 | 2.0 | 3.9 | (23.5 | ) | ||||||||||
Net Income (Loss) from Continuing Operations Attributable to Cliffs Shareholders | $ | 21.1 | $ | (23.1 | ) | $ | 70.7 | $ | 95.6 | ||||||
Income (Loss) from Discontinued Operations, net of tax | 32.3 | (2.7 | ) | (13.6 | ) | (0.6 | ) | ||||||||
Net Income (Loss) Attributable to Cliffs Shareholders | $ | 53.4 | $ | (25.8 | ) | $ | 57.1 | $ | 95.0 | ||||||
Weighted Average Number of Shares: | |||||||||||||||
Basic | 296.1 | 206.3 | 285.8 | 186.5 | |||||||||||
Employee Stock Plans | 5.0 | — | 4.7 | 2.0 | |||||||||||
Diluted | 301.1 | 206.3 | 290.5 | 188.5 | |||||||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Basic: | |||||||||||||||
Continuing operations | $ | 0.07 | $ | (0.11 | ) | $ | 0.25 | $ | 0.51 | ||||||
Discontinued operations | 0.11 | (0.01 | ) | (0.05 | ) | — | |||||||||
$ | 0.18 | $ | (0.12 | ) | $ | 0.20 | $ | 0.51 | |||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted: | |||||||||||||||
Continuing operations | $ | 0.07 | $ | (0.11 | ) | $ | 0.24 | $ | 0.51 | ||||||
Discontinued operations | 0.11 | (0.01 | ) | (0.05 | ) | — | |||||||||
$ | 0.18 | $ | (0.12 | ) | $ | 0.19 | $ | 0.51 |
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