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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 | ||||
Tilden | Michigan | 85.0% | Iron Ore | Active | ||||
Empire | Michigan | 79.0% | Iron Ore | Indefinitely Idled | ||||
Koolyanobbing | Western Australia | 100.0% | Iron Ore | Active |
(In Millions) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Remeasurement of short-term intercompany loans | $ | 1.5 | $ | (0.1 | ) | $ | 16.6 | $ | 0.2 | |||||||
Remeasurement of cash and cash equivalents | (0.5 | ) | 0.5 | (1.7 | ) | 1.5 | ||||||||||
Other remeasurement | (1.0 | ) | (0.2 | ) | (1.3 | ) | (2.6 | ) | ||||||||
Net impact of transaction gains and (losses) resulting from remeasurement | — | 0.2 | 13.6 | (0.9 | ) |
|
(In Millions) | |||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
Revenues from product sales and services: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 471.3 | 83 | % | $ | 361.7 | 73 | % | $ | 757.5 | 73 | % | $ | 547.2 | 68 | % | |||||||||||
Asia Pacific Iron Ore | 98.0 | 17 | % | 134.5 | 27 | % | 273.4 | 27 | % | 254.5 | 32 | % | |||||||||||||||
Total revenues from product sales and services | $ | 569.3 | 100 | % | $ | 496.2 | 100 | % | $ | 1,030.9 | 100 | % | $ | 801.7 | 100 | % | |||||||||||
Sales margin: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 144.2 | $ | 70.0 | $ | 192.6 | $ | 83.2 | |||||||||||||||||||
Asia Pacific Iron Ore | 0.9 | 21.5 | 48.2 | 39.2 | |||||||||||||||||||||||
Sales margin | 145.1 | 91.5 | 240.8 | 122.4 | |||||||||||||||||||||||
Other operating expense | (30.5 | ) | (16.8 | ) | (44.3 | ) | (48.0 | ) | |||||||||||||||||||
Other income (expense) | (35.5 | ) | (46.9 | ) | (149.5 | ) | 75.2 | ||||||||||||||||||||
Income from continuing operations before income taxes | $ | 79.1 | $ | 27.8 | $ | 47.0 | $ | 149.6 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Income | $ | 30.1 | $ | 29.5 | $ | 0.3 | $ | 146.3 | |||||||
Less: | |||||||||||||||
Interest expense, net | (31.4 | ) | (50.7 | ) | (74.2 | ) | (107.5 | ) | |||||||
Income tax benefit (expense) | (2.6 | ) | 2.1 | (0.8 | ) | (5.4 | ) | ||||||||
Depreciation, depletion and amortization | (21.6 | ) | (26.9 | ) | (44.8 | ) | (62.1 | ) | |||||||
EBITDA | $ | 85.7 | $ | 105.0 | $ | 120.1 | $ | 321.3 | |||||||
Less: | |||||||||||||||
Gain (loss) on extinguishment/restructuring of debt | (4.9 | ) | 3.6 | (76.8 | ) | 182.4 | |||||||||
Foreign exchange remeasurement | — | 0.2 | 13.6 | (0.9 | ) | ||||||||||
Impact of discontinued operations | (46.4 | ) | (0.4 | ) | (45.9 | ) | 2.1 | ||||||||
Severance and contractor termination costs | — | — | — | (0.1 | ) | ||||||||||
Adjusted EBITDA | $ | 137.0 | $ | 101.6 | $ | 229.2 | $ | 137.8 | |||||||
EBITDA: | |||||||||||||||
U.S. Iron Ore | $ | 155.0 | $ | 94.1 | $ | 212.9 | $ | 135.5 | |||||||
Asia Pacific Iron Ore | 1.2 | 26.1 | 52.6 | 48.4 | |||||||||||
Other | (70.5 | ) | (15.2 | ) | (145.4 | ) | 137.4 | ||||||||
Total EBITDA | $ | 85.7 | $ | 105.0 | $ | 120.1 | $ | 321.3 | |||||||
Adjusted EBITDA: | |||||||||||||||
U.S. Iron Ore | $ | 161.5 | $ | 97.2 | $ | 225.6 | $ | 143.3 | |||||||
Asia Pacific Iron Ore | 3.0 | 26.5 | 56.8 | 49.5 | |||||||||||
Other | (27.5 | ) | (22.1 | ) | (53.2 | ) | (55.0 | ) | |||||||
Total Adjusted EBITDA | $ | 137.0 | $ | 101.6 | $ | 229.2 | $ | 137.8 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Depreciation, depletion and amortization: | |||||||||||||||
U.S. Iron Ore | $ | 16.7 | $ | 19.4 | $ | 33.1 | $ | 46.3 | |||||||
Asia Pacific Iron Ore | 3.3 | 6.1 | 8.0 | 12.9 | |||||||||||
Other | 1.6 | 1.4 | 3.7 | 2.9 | |||||||||||
Total depreciation, depletion and amortization | $ | 21.6 | $ | 26.9 | $ | 44.8 | $ | 62.1 | |||||||
Capital additions: | |||||||||||||||
U.S. Iron Ore | $ | 24.6 | $ | 9.2 | $ | 51.7 | $ | 13.7 | |||||||
Asia Pacific Iron Ore | 0.6 | — | 0.8 | — | |||||||||||
Other | — | 2.1 | — | 4.4 | |||||||||||
Total capital additions1 | $ | 25.2 | $ | 11.3 | $ | 52.5 | $ | 18.1 | |||||||
1 Includes cash paid for capital additions of $49.4 million and $20.2 million and an increase in non-cash accruals of $3.1 million and a decrease in non-cash accruals of $2.1 million for the six months ended June 30, 2017 and 2016, respectively. |
(In Millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
U.S. Iron Ore | $ | 1,525.9 | $ | 1,372.5 | |||
Asia Pacific Iron Ore | 157.7 | 155.1 | |||||
Total segment assets | 1,683.6 | 1,527.6 | |||||
Corporate | 346.5 | 396.3 | |||||
Total assets | $ | 2,030.1 | $ | 1,923.9 |
|
(In Millions) | |||||||||||||||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Segment | Finished Goods | Work-in Process | Total Inventory | Finished Goods | Work-in Process | Total Inventory | |||||||||||||||||
U.S. Iron Ore | $ | 238.3 | $ | 14.3 | $ | 252.6 | $ | 124.4 | $ | 12.6 | $ | 137.0 | |||||||||||
Asia Pacific Iron Ore | 22.7 | 12.3 | 35.0 | 23.6 | 17.8 | 41.4 | |||||||||||||||||
Total | $ | 261.0 | $ | 26.6 | $ | 287.6 | $ | 148.0 | $ | 30.4 | $ | 178.4 |
|
(In Millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Land rights and mineral rights | $ | 500.7 | $ | 500.5 | |||
Office and information technology | 66.0 | 65.1 | |||||
Buildings | 71.8 | 67.9 | |||||
Mining equipment | 600.1 | 592.2 | |||||
Processing equipment | 621.5 | 552.0 | |||||
Electric power facilities | 54.0 | 49.4 | |||||
Land improvements | 23.8 | 23.5 | |||||
Asset retirement obligation | 19.7 | 19.8 | |||||
Other | 28.7 | 28.1 | |||||
Construction in-progress | 19.8 | 42.8 | |||||
2,006.1 | 1,941.3 | ||||||
Allowance for depreciation and depletion | (1,007.0 | ) | (956.9 | ) | |||
$ | 999.1 | $ | 984.4 |
|
(In Millions) | ||||||||||||||||||
June 30, 2017 | ||||||||||||||||||
Debt Instrument | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Discounts | Total Debt | |||||||||||||
Secured Notes | ||||||||||||||||||
$540 Million 8.25% 2020 First Lien Notes | 9.97% | $ | 504.4 | $ | (6.3 | ) | $ | (20.7 | ) | $ | 477.4 | |||||||
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 | (0.4 | ) | (0.1 | ) | 137.9 | |||||||||||
$500 Million 5.75% 2025 Senior Notes | 5.75% | 500.0 | (8.1 | ) | — | 491.9 | ||||||||||||
$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 | 1.6 | |||||||||||||||||
Long-term debt | $ | 1,611.8 |
(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 June 30, | Six Months Ended June 30, | ||||||||||
Secured Notes | ||||||||||||
$540 Million 8.25% 2020 First Lien Notes | $ | 35.6 | $ | (4.9 | ) | $ | (4.9 | ) | ||||
$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 | 136.8 | — | (7.8 | ) | ||||||||
$500 Million 4.80% 2020 Senior Notes | 114.4 | — | (1.9 | ) | ||||||||
$700 Million 4.875% 2021 Senior Notes | 171.0 | — | (2.8 | ) | ||||||||
$ | 1,106.4 | $ | (4.9 | ) | $ | (76.8 | ) | |||||
1 Includes write-off of undiscounted interest, unamortized discounts and debt issuance costs. In addition, this includes premiums paid of $2.9 million and $47.6 million related to the redemption of our notes for the three and six months ended June 30, 2017, respectively. |
(In Millions) | |||
Maturities of Debt | |||
2017 (July 1 - December 31) | $ | — | |
2018 | — | ||
2019 | — | ||
2020 | 715.7 | ||
2021 | 138.4 | ||
2022 | — | ||
2023 and thereafter | 798.4 | ||
Total maturities of debt | $ | 1,652.5 |
|
(In Millions) | |||||||||||||||
June 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 | $ | 120.0 | $ | — | $ | 160.0 | |||||||
Derivative assets | — | — | 72.5 | 72.5 | |||||||||||
Total | $ | 40.0 | $ | 120.0 | $ | 72.5 | $ | 232.5 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | — | $ | 20.8 | $ | 20.8 | |||||||
Total | $ | — | $ | — | $ | 20.8 | $ | 20.8 |
(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 June 30, 2017 | Balance Sheet Location | Valuation Technique | Unobservable Input | Range or Point Estimate (Weighted Average) | ||||||||
Provisional pricing arrangements | $ | 6.1 | Other current assets | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $60 - $75 ($72) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($634) | |||||||||||
Provisional pricing arrangements | $ | 20.8 | Other current liabilities | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $60 - $75 ($72) | ||||||
Customer supply agreements | $ | 66.4 | Other current assets | Market Approach | Customer Hot-Rolled Steel Estimate per net ton | $541 - $630 ($578) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($634) |
(In Millions) | |||||||||||||||
Level 3 Assets | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | 59.4 | $ | 9.0 | $ | 31.6 | $ | 7.8 | |||||||
Total gains (losses) | |||||||||||||||
Included in earnings | 53.3 | 34.5 | 95.4 | 45.7 | |||||||||||
Settlements | (40.2 | ) | (17.7 | ) | (54.5 | ) | (27.7 | ) | |||||||
Ending balance - June 30 | $ | 72.5 | $ | 25.8 | $ | 72.5 | $ | 25.8 | |||||||
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date | $ | 20.1 | $ | 21.6 | $ | 53.3 | $ | 21.9 |
(In Millions) | |||||||||||||||
Level 3 Liabilities | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | (9.1 | ) | $ | (6.2 | ) | $ | (0.5 | ) | $ | (3.4 | ) | |||
Total gains (losses) | |||||||||||||||
Included in earnings | (36.8 | ) | (2.8 | ) | (45.5 | ) | (8.4 | ) | |||||||
Settlements | 25.1 | 6.4 | 25.2 | 9.2 | |||||||||||
Ending balance - June 30 | $ | (20.8 | ) | $ | (2.6 | ) | $ | (20.8 | ) | $ | (2.6 | ) | |||
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date | $ | (11.7 | ) | $ | (0.7 | ) | $ | (20.8 | ) | $ | (2.6 | ) |
(In Millions) | |||||||||||||||||
June 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 | $ | 477.4 | $ | 550.0 | $ | 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—$500 million | Level 1 | 491.9 | 473.8 | — | — | ||||||||||||
Senior Notes—$400 million | Level 1 | 88.5 | 86.0 | 224.5 | 219.6 | ||||||||||||
Senior Notes—$1.3 billion | Level 1 | 414.5 | 339.7 | 528.4 | 455.8 | ||||||||||||
Senior Notes—$700 million | Level 1 | 137.9 | 131.6 | 308.2 | 283.1 | ||||||||||||
ABL Facility | Level 2 | — | — | — | — | ||||||||||||
Fair value adjustment to interest rate hedge | Level 2 | 1.6 | 1.6 | 1.9 | 1.9 | ||||||||||||
Total long-term debt | $ | 1,611.8 | $ | 1,582.7 | $ | 2,192.6 | $ | 2,224.6 |
(In Millions) | ||||||||||||||||||||
June 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 Gains | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans to and accounts receivables from the Canadian Entities | $ | — | $ | — | $ | 50.1 | $ | 50.1 | $ | 1.5 | ||||||||||
Liabilities: | ||||||||||||||||||||
Guarantees | $ | — | $ | — | $ | 38.5 | $ | 38.5 | $ | 1.3 |
(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 | Total 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 June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 4.7 | $ | 4.5 | $ | 9.5 | $ | 9.0 | |||||||
Interest cost | 7.5 | 7.5 | 15.0 | 14.9 | |||||||||||
Expected return on plan assets | (13.6 | ) | (13.7 | ) | (27.1 | ) | (27.4 | ) | |||||||
Amortization: | |||||||||||||||
Prior service costs | 0.7 | 0.5 | 1.3 | 1.1 | |||||||||||
Net actuarial loss | 5.3 | 5.3 | 10.6 | 10.5 | |||||||||||
Net periodic benefit cost | $ | 4.6 | $ | 4.1 | $ | 9.3 | $ | 8.1 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 0.5 | $ | 0.4 | $ | 1.0 | $ | 0.9 | |||||||
Interest cost | 2.2 | 2.3 | 4.3 | 4.5 | |||||||||||
Expected return on plan assets | (4.5 | ) | (4.3 | ) | (8.9 | ) | (8.5 | ) | |||||||
Amortization: | |||||||||||||||
Prior service credits | (0.8 | ) | (0.9 | ) | (1.5 | ) | (1.8 | ) | |||||||
Net actuarial loss | 1.3 | 1.4 | 2.5 | 2.8 | |||||||||||
Net periodic benefit credit | $ | (1.3 | ) | $ | (1.1 | ) | $ | (2.6 | ) | $ | (2.1 | ) |
|
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 (July 1 - December 31) | $ | 11.7 | $ | 3.6 | |||
2018 | 18.9 | 5.8 | |||||
2019 | 10.5 | 2.9 | |||||
2020 | 9.5 | 2.9 | |||||
2021 | 8.8 | 3.0 | |||||
2022 and thereafter | 0.6 | — | |||||
Total minimum lease payments | $ | 60.0 | $ | 18.2 | |||
Amounts representing interest | 10.0 | ||||||
Present value of net minimum lease payments1 | $ | 50.0 | |||||
1 The total is comprised of $17.4 million and $32.6 million classified as Other current liabilities and Other liabilities, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at June 30, 2017. |
|
(In Millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Environmental | $ | 2.8 | $ | 2.8 | |||
Mine closure | |||||||
U.S. Iron Ore1 | 193.6 | 187.8 | |||||
Asia Pacific Iron Ore | 17.7 | 16.2 | |||||
Total mine closure | 211.3 | 204.0 | |||||
Total environmental and mine closure obligations | 214.1 | 206.8 | |||||
Less current portion | 12.2 | 12.9 | |||||
Long-term environmental and mine closure obligations | $ | 201.9 | $ | 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) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Asset retirement obligation at beginning of period | $ | 204.0 | $ | 230.4 | |||
Accretion expense | 7.1 | 14.0 | |||||
Remediation payments | (0.8 | ) | (2.2 | ) | |||
Exchange rate changes | 1.0 | (0.2 | ) | ||||
Revision in estimated cash flows | — | (38.0 | ) | ||||
Asset retirement obligation at end of period | $ | 211.3 | $ | 204.0 |
|
(In Millions) | |||||||||||||||||||||||||
June 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 | $ | 78.8 | $ | (25.6 | ) | $ | 53.2 | $ | 78.4 | $ | (24.6 | ) | $ | 53.8 |
|
(In Millions) | ||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||
June 30, 2017 | December 31, 2016 | June 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 | Other current assets | 66.4 | Other current assets | 21.3 | — | — | ||||||||||||||||||
Provisional pricing arrangements | Other current assets | 6.1 | Other current assets | 10.3 | Other current liabilities | 20.8 | Other current liabilities | 0.5 | ||||||||||||||||
Commodity contracts | — | Other current assets | 1.5 | — | — | |||||||||||||||||||
Total derivatives not designated as hedging instruments under ASC 815 | $ | 72.5 | $ | 33.1 | $ | 20.8 | $ | 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 June 30, | Six Months Ended June 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Customer Supply Agreements | Product revenues | 51.9 | 19.5 | 69.6 | 19.9 | |||||||||||||
Provisional Pricing Arrangements | Product revenues | (35.4 | ) | 1.8 | (19.8 | ) | 0.3 | |||||||||||
Commodity Contracts | Cost of goods sold and operating expenses | — | — | (1.3 | ) | — | ||||||||||||
Total | $ | 16.5 | $ | 21.3 | $ | 48.5 | $ | 20.2 |
|
|
(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) | 3.7 | (3.4 | ) | 0.3 | |||||||
Other comprehensive income (loss) | 1.9 | (4.6 | ) | (2.7 | ) | ||||||
Total comprehensive income (loss) | 5.6 | (8.0 | ) | (2.4 | ) | ||||||
Issuance of common shares | 661.3 | — | 661.3 | ||||||||
Stock and other incentive plans | 8.3 | — | 8.3 | ||||||||
Distributions to noncontrolling interest | — | (3.4 | ) | (3.4 | ) | ||||||
June 30, 2017 | $ | (789.1 | ) | $ | 122.4 | $ | (666.7 | ) |
(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 | 120.8 | 25.5 | 146.3 | ||||||||
Other comprehensive income | 9.0 | 1.3 | 10.3 | ||||||||
Total comprehensive income | 129.8 | 26.8 | 156.6 | ||||||||
Issuance of common shares | 14.4 | — | 14.4 | ||||||||
Stock and other incentive plans | 6.5 | — | 6.5 | ||||||||
Distributions of partnership equity | — | (41.4 | ) | (41.4 | ) | ||||||
Distributions to noncontrolling interest | — | (3.4 | ) | (3.4 | ) | ||||||
June 30, 2016 | $ | (1,830.7 | ) | $ | 151.8 | $ | (1,678.9 | ) |
(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 | ) |
(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 | ) |
(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 June 30, | Six Months Ended June 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Amortization of pension and postretirement benefit liability: | ||||||||||||||||||
Prior service credits1 | $ | (0.1 | ) | $ | (0.4 | ) | $ | (0.2 | ) | $ | (0.7 | ) | ||||||
Net actuarial loss1 | 6.6 | 6.7 | 13.1 | 13.3 | ||||||||||||||
Total before taxes | 6.5 | 6.3 | 12.9 | 12.6 | ||||||||||||||
— | — | — | — | Income tax benefit (expense) | ||||||||||||||
Total reclassifications for the period, net of tax | $ | 6.5 | $ | 6.3 | $ | 12.9 | $ | 12.6 | ||||||||||
1 These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (credit). See NOTE 7 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information. |
|
Mine | Cliffs Natural Resources | ArcelorMittal | U.S. Steel Corporation | ||||||
Empire | 79.0 | % | 21.0 | % | — | ||||
Tilden | 85.0 | % | — | 15.0 | % | ||||
Hibbing | 23.0 | % | 62.3 | % | 14.7 | % |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Product revenues from related parties | $ | 227.5 | $ | 241.6 | $ | 336.9 | $ | 345.0 | |||||||
Total product revenues | 512.0 | 452.8 | 924.8 | 728.4 | |||||||||||
Related party product revenue as a percent of total product revenue | 44.4 | % | 53.4 | % | 36.4 | % | 47.4 | % |
(In Millions) | |||||||||
Balance Sheet Location | June 30, 2017 | December 31, 2016 | |||||||
Amounts due from related parties | Accounts receivable, net | $ | 18.8 | $ | 46.9 | ||||
Customer supply agreements and provisional pricing agreements | Other current assets | 68.0 | 26.8 | ||||||
Amounts due to related parties | Other current liabilities | 15.9 | 8.7 |
|
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income from Continuing Operations | $ | 76.5 | $ | 29.9 | $ | 46.2 | $ | 144.2 | |||||||
Loss (Income) from Continuing Operations Attributable to Noncontrolling Interest | 1.7 | (16.7 | ) | 3.4 | (25.5 | ) | |||||||||
Net Income from Continuing Operations Attributable to Cliffs Shareholders | $ | 78.2 | $ | 13.2 | $ | 49.6 | $ | 118.7 | |||||||
Income (Loss) from Discontinued Operations, net of tax | (46.4 | ) | (0.4 | ) | (45.9 | ) | 2.1 | ||||||||
Net Income Attributable to Cliffs Shareholders | $ | 31.8 | $ | 12.8 | $ | 3.7 | $ | 120.8 | |||||||
Weighted Average Number of Shares: | |||||||||||||||
Basic | 296.1 | 182.3 | 280.6 | 177.0 | |||||||||||
Employee Stock Plans | 4.6 | 2.3 | 4.6 | 1.3 | |||||||||||
Diluted | 300.7 | 184.6 | 285.2 | 178.3 | |||||||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Basic: | |||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.07 | $ | 0.18 | $ | 0.67 | |||||||
Discontinued operations | (0.16 | ) | — | (0.16 | ) | 0.01 | |||||||||
$ | 0.10 | $ | 0.07 | $ | 0.02 | $ | 0.68 | ||||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted: | |||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.07 | $ | 0.17 | $ | 0.67 | |||||||
Discontinued operations | (0.15 | ) | — | (0.16 | ) | 0.01 | |||||||||
$ | 0.11 | $ | 0.07 | $ | 0.01 | $ | 0.68 |
|
|
|
Name | Location | Ownership Interest | Operation | Status of Operations | ||||
Northshore | Minnesota | 100.0% | Iron Ore | Active | ||||
United Taconite | Minnesota | 100.0% | Iron Ore | Active | ||||
Tilden | Michigan | 85.0% | Iron Ore | Active | ||||
Empire | Michigan | 79.0% | Iron Ore | Indefinitely Idled | ||||
Koolyanobbing | Western Australia | 100.0% | Iron Ore | Active |
(In Millions) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Remeasurement of short-term intercompany loans | $ | 1.5 | $ | (0.1 | ) | $ | 16.6 | $ | 0.2 | |||||||
Remeasurement of cash and cash equivalents | (0.5 | ) | 0.5 | (1.7 | ) | 1.5 | ||||||||||
Other remeasurement | (1.0 | ) | (0.2 | ) | (1.3 | ) | (2.6 | ) | ||||||||
Net impact of transaction gains and (losses) resulting from remeasurement | — | 0.2 | 13.6 | (0.9 | ) |
|
Name | Location | Ownership Interest | Operation | Status of Operations | ||||
Northshore | Minnesota | 100.0% | Iron Ore | Active | ||||
United Taconite | Minnesota | 100.0% | Iron Ore | Active | ||||
Tilden | Michigan | 85.0% | Iron Ore | Active | ||||
Empire | Michigan | 79.0% | Iron Ore | Indefinitely Idled | ||||
Koolyanobbing | Western Australia | 100.0% | Iron Ore | Active |
(In Millions) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Remeasurement of short-term intercompany loans | $ | 1.5 | $ | (0.1 | ) | $ | 16.6 | $ | 0.2 | |||||||
Remeasurement of cash and cash equivalents | (0.5 | ) | 0.5 | (1.7 | ) | 1.5 | ||||||||||
Other remeasurement | (1.0 | ) | (0.2 | ) | (1.3 | ) | (2.6 | ) | ||||||||
Net impact of transaction gains and (losses) resulting from remeasurement | — | 0.2 | 13.6 | (0.9 | ) |
|
(In Millions) | |||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
Revenues from product sales and services: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 471.3 | 83 | % | $ | 361.7 | 73 | % | $ | 757.5 | 73 | % | $ | 547.2 | 68 | % | |||||||||||
Asia Pacific Iron Ore | 98.0 | 17 | % | 134.5 | 27 | % | 273.4 | 27 | % | 254.5 | 32 | % | |||||||||||||||
Total revenues from product sales and services | $ | 569.3 | 100 | % | $ | 496.2 | 100 | % | $ | 1,030.9 | 100 | % | $ | 801.7 | 100 | % | |||||||||||
Sales margin: | |||||||||||||||||||||||||||
U.S. Iron Ore | $ | 144.2 | $ | 70.0 | $ | 192.6 | $ | 83.2 | |||||||||||||||||||
Asia Pacific Iron Ore | 0.9 | 21.5 | 48.2 | 39.2 | |||||||||||||||||||||||
Sales margin | 145.1 | 91.5 | 240.8 | 122.4 | |||||||||||||||||||||||
Other operating expense | (30.5 | ) | (16.8 | ) | (44.3 | ) | (48.0 | ) | |||||||||||||||||||
Other income (expense) | (35.5 | ) | (46.9 | ) | (149.5 | ) | 75.2 | ||||||||||||||||||||
Income from continuing operations before income taxes | $ | 79.1 | $ | 27.8 | $ | 47.0 | $ | 149.6 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Income | $ | 30.1 | $ | 29.5 | $ | 0.3 | $ | 146.3 | |||||||
Less: | |||||||||||||||
Interest expense, net | (31.4 | ) | (50.7 | ) | (74.2 | ) | (107.5 | ) | |||||||
Income tax benefit (expense) | (2.6 | ) | 2.1 | (0.8 | ) | (5.4 | ) | ||||||||
Depreciation, depletion and amortization | (21.6 | ) | (26.9 | ) | (44.8 | ) | (62.1 | ) | |||||||
EBITDA | $ | 85.7 | $ | 105.0 | $ | 120.1 | $ | 321.3 | |||||||
Less: | |||||||||||||||
Gain (loss) on extinguishment/restructuring of debt | (4.9 | ) | 3.6 | (76.8 | ) | 182.4 | |||||||||
Foreign exchange remeasurement | — | 0.2 | 13.6 | (0.9 | ) | ||||||||||
Impact of discontinued operations | (46.4 | ) | (0.4 | ) | (45.9 | ) | 2.1 | ||||||||
Severance and contractor termination costs | — | — | — | (0.1 | ) | ||||||||||
Adjusted EBITDA | $ | 137.0 | $ | 101.6 | $ | 229.2 | $ | 137.8 | |||||||
EBITDA: | |||||||||||||||
U.S. Iron Ore | $ | 155.0 | $ | 94.1 | $ | 212.9 | $ | 135.5 | |||||||
Asia Pacific Iron Ore | 1.2 | 26.1 | 52.6 | 48.4 | |||||||||||
Other | (70.5 | ) | (15.2 | ) | (145.4 | ) | 137.4 | ||||||||
Total EBITDA | $ | 85.7 | $ | 105.0 | $ | 120.1 | $ | 321.3 | |||||||
Adjusted EBITDA: | |||||||||||||||
U.S. Iron Ore | $ | 161.5 | $ | 97.2 | $ | 225.6 | $ | 143.3 | |||||||
Asia Pacific Iron Ore | 3.0 | 26.5 | 56.8 | 49.5 | |||||||||||
Other | (27.5 | ) | (22.1 | ) | (53.2 | ) | (55.0 | ) | |||||||
Total Adjusted EBITDA | $ | 137.0 | $ | 101.6 | $ | 229.2 | $ | 137.8 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Depreciation, depletion and amortization: | |||||||||||||||
U.S. Iron Ore | $ | 16.7 | $ | 19.4 | $ | 33.1 | $ | 46.3 | |||||||
Asia Pacific Iron Ore | 3.3 | 6.1 | 8.0 | 12.9 | |||||||||||
Other | 1.6 | 1.4 | 3.7 | 2.9 | |||||||||||
Total depreciation, depletion and amortization | $ | 21.6 | $ | 26.9 | $ | 44.8 | $ | 62.1 | |||||||
Capital additions: | |||||||||||||||
U.S. Iron Ore | $ | 24.6 | $ | 9.2 | $ | 51.7 | $ | 13.7 | |||||||
Asia Pacific Iron Ore | 0.6 | — | 0.8 | — | |||||||||||
Other | — | 2.1 | — | 4.4 | |||||||||||
Total capital additions1 | $ | 25.2 | $ | 11.3 | $ | 52.5 | $ | 18.1 | |||||||
1 Includes cash paid for capital additions of $49.4 million and $20.2 million and an increase in non-cash accruals of $3.1 million and a decrease in non-cash accruals of $2.1 million for the six months ended June 30, 2017 and 2016, respectively. |
(In Millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
U.S. Iron Ore | $ | 1,525.9 | $ | 1,372.5 | |||
Asia Pacific Iron Ore | 157.7 | 155.1 | |||||
Total segment assets | 1,683.6 | 1,527.6 | |||||
Corporate | 346.5 | 396.3 | |||||
Total assets | $ | 2,030.1 | $ | 1,923.9 |
|
(In Millions) | |||||||||||||||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Segment | Finished Goods | Work-in Process | Total Inventory | Finished Goods | Work-in Process | Total Inventory | |||||||||||||||||
U.S. Iron Ore | $ | 238.3 | $ | 14.3 | $ | 252.6 | $ | 124.4 | $ | 12.6 | $ | 137.0 | |||||||||||
Asia Pacific Iron Ore | 22.7 | 12.3 | 35.0 | 23.6 | 17.8 | 41.4 | |||||||||||||||||
Total | $ | 261.0 | $ | 26.6 | $ | 287.6 | $ | 148.0 | $ | 30.4 | $ | 178.4 |
|
(In Millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Land rights and mineral rights | $ | 500.7 | $ | 500.5 | |||
Office and information technology | 66.0 | 65.1 | |||||
Buildings | 71.8 | 67.9 | |||||
Mining equipment | 600.1 | 592.2 | |||||
Processing equipment | 621.5 | 552.0 | |||||
Electric power facilities | 54.0 | 49.4 | |||||
Land improvements | 23.8 | 23.5 | |||||
Asset retirement obligation | 19.7 | 19.8 | |||||
Other | 28.7 | 28.1 | |||||
Construction in-progress | 19.8 | 42.8 | |||||
2,006.1 | 1,941.3 | ||||||
Allowance for depreciation and depletion | (1,007.0 | ) | (956.9 | ) | |||
$ | 999.1 | $ | 984.4 |
|
(In Millions) | ||||||||||||||||||
June 30, 2017 | ||||||||||||||||||
Debt Instrument | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Discounts | Total Debt | |||||||||||||
Secured Notes | ||||||||||||||||||
$540 Million 8.25% 2020 First Lien Notes | 9.97% | $ | 504.4 | $ | (6.3 | ) | $ | (20.7 | ) | $ | 477.4 | |||||||
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 | (0.4 | ) | (0.1 | ) | 137.9 | |||||||||||
$500 Million 5.75% 2025 Senior Notes | 5.75% | 500.0 | (8.1 | ) | — | 491.9 | ||||||||||||
$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 | 1.6 | |||||||||||||||||
Long-term debt | $ | 1,611.8 |
(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 June 30, | Six Months Ended June 30, | ||||||||||
Secured Notes | ||||||||||||
$540 Million 8.25% 2020 First Lien Notes | $ | 35.6 | $ | (4.9 | ) | $ | (4.9 | ) | ||||
$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 | 136.8 | — | (7.8 | ) | ||||||||
$500 Million 4.80% 2020 Senior Notes | 114.4 | — | (1.9 | ) | ||||||||
$700 Million 4.875% 2021 Senior Notes | 171.0 | — | (2.8 | ) | ||||||||
$ | 1,106.4 | $ | (4.9 | ) | $ | (76.8 | ) | |||||
1 Includes write-off of undiscounted interest, unamortized discounts and debt issuance costs. In addition, this includes premiums paid of $2.9 million and $47.6 million related to the redemption of our notes for the three and six months ended June 30, 2017, respectively. |
(In Millions) | |||
Maturities of Debt | |||
2017 (July 1 - December 31) | $ | — | |
2018 | — | ||
2019 | — | ||
2020 | 715.7 | ||
2021 | 138.4 | ||
2022 | — | ||
2023 and thereafter | 798.4 | ||
Total maturities of debt | $ | 1,652.5 |
|
(In Millions) | |||||||||||||||
June 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 | $ | 120.0 | $ | — | $ | 160.0 | |||||||
Derivative assets | — | — | 72.5 | 72.5 | |||||||||||
Total | $ | 40.0 | $ | 120.0 | $ | 72.5 | $ | 232.5 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | — | $ | 20.8 | $ | 20.8 | |||||||
Total | $ | — | $ | — | $ | 20.8 | $ | 20.8 |
(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 June 30, 2017 | Balance Sheet Location | Valuation Technique | Unobservable Input | Range or Point Estimate (Weighted Average) | ||||||||
Provisional pricing arrangements | $ | 6.1 | Other current assets | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $60 - $75 ($72) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($634) | |||||||||||
Provisional pricing arrangements | $ | 20.8 | Other current liabilities | Market Approach | Management's Estimate of Platts 62% Price per dry metric ton | $60 - $75 ($72) | ||||||
Customer supply agreements | $ | 66.4 | Other current assets | Market Approach | Customer Hot-Rolled Steel Estimate per net ton | $541 - $630 ($578) | ||||||
Market Hot-Rolled Coil Steel Estimate per net ton | $580 - $660 ($634) |
(In Millions) | |||||||||||||||
Level 3 Assets | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | 59.4 | $ | 9.0 | $ | 31.6 | $ | 7.8 | |||||||
Total gains (losses) | |||||||||||||||
Included in earnings | 53.3 | 34.5 | 95.4 | 45.7 | |||||||||||
Settlements | (40.2 | ) | (17.7 | ) | (54.5 | ) | (27.7 | ) | |||||||
Ending balance - June 30 | $ | 72.5 | $ | 25.8 | $ | 72.5 | $ | 25.8 | |||||||
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date | $ | 20.1 | $ | 21.6 | $ | 53.3 | $ | 21.9 |
(In Millions) | |||||||||||||||
Level 3 Liabilities | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | (9.1 | ) | $ | (6.2 | ) | $ | (0.5 | ) | $ | (3.4 | ) | |||
Total gains (losses) | |||||||||||||||
Included in earnings | (36.8 | ) | (2.8 | ) | (45.5 | ) | (8.4 | ) | |||||||
Settlements | 25.1 | 6.4 | 25.2 | 9.2 | |||||||||||
Ending balance - June 30 | $ | (20.8 | ) | $ | (2.6 | ) | $ | (20.8 | ) | $ | (2.6 | ) | |||
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date | $ | (11.7 | ) | $ | (0.7 | ) | $ | (20.8 | ) | $ | (2.6 | ) |
(In Millions) | |||||||||||||||||
June 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 | $ | 477.4 | $ | 550.0 | $ | 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—$500 million | Level 1 | 491.9 | 473.8 | — | — | ||||||||||||
Senior Notes—$400 million | Level 1 | 88.5 | 86.0 | 224.5 | 219.6 | ||||||||||||
Senior Notes—$1.3 billion | Level 1 | 414.5 | 339.7 | 528.4 | 455.8 | ||||||||||||
Senior Notes—$700 million | Level 1 | 137.9 | 131.6 | 308.2 | 283.1 | ||||||||||||
ABL Facility | Level 2 | — | — | — | — | ||||||||||||
Fair value adjustment to interest rate hedge | Level 2 | 1.6 | 1.6 | 1.9 | 1.9 | ||||||||||||
Total long-term debt | $ | 1,611.8 | $ | 1,582.7 | $ | 2,192.6 | $ | 2,224.6 |
(In Millions) | ||||||||||||||||||||
June 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 Gains | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans to and accounts receivables from the Canadian Entities | $ | — | $ | — | $ | 50.1 | $ | 50.1 | $ | 1.5 | ||||||||||
Liabilities: | ||||||||||||||||||||
Guarantees | $ | — | $ | — | $ | 38.5 | $ | 38.5 | $ | 1.3 |
(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 | Total 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 June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 4.7 | $ | 4.5 | $ | 9.5 | $ | 9.0 | |||||||
Interest cost | 7.5 | 7.5 | 15.0 | 14.9 | |||||||||||
Expected return on plan assets | (13.6 | ) | (13.7 | ) | (27.1 | ) | (27.4 | ) | |||||||
Amortization: | |||||||||||||||
Prior service costs | 0.7 | 0.5 | 1.3 | 1.1 | |||||||||||
Net actuarial loss | 5.3 | 5.3 | 10.6 | 10.5 | |||||||||||
Net periodic benefit cost | $ | 4.6 | $ | 4.1 | $ | 9.3 | $ | 8.1 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 0.5 | $ | 0.4 | $ | 1.0 | $ | 0.9 | |||||||
Interest cost | 2.2 | 2.3 | 4.3 | 4.5 | |||||||||||
Expected return on plan assets | (4.5 | ) | (4.3 | ) | (8.9 | ) | (8.5 | ) | |||||||
Amortization: | |||||||||||||||
Prior service credits | (0.8 | ) | (0.9 | ) | (1.5 | ) | (1.8 | ) | |||||||
Net actuarial loss | 1.3 | 1.4 | 2.5 | 2.8 | |||||||||||
Net periodic benefit credit | $ | (1.3 | ) | $ | (1.1 | ) | $ | (2.6 | ) | $ | (2.1 | ) |
|
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 (July 1 - December 31) | $ | 11.7 | $ | 3.6 | |||
2018 | 18.9 | 5.8 | |||||
2019 | 10.5 | 2.9 | |||||
2020 | 9.5 | 2.9 | |||||
2021 | 8.8 | 3.0 | |||||
2022 and thereafter | 0.6 | — | |||||
Total minimum lease payments | $ | 60.0 | $ | 18.2 | |||
Amounts representing interest | 10.0 | ||||||
Present value of net minimum lease payments1 | $ | 50.0 | |||||
1 The total is comprised of $17.4 million and $32.6 million classified as Other current liabilities and Other liabilities, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at June 30, 2017. |
|
(In Millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Environmental | $ | 2.8 | $ | 2.8 | |||
Mine closure | |||||||
U.S. Iron Ore1 | 193.6 | 187.8 | |||||
Asia Pacific Iron Ore | 17.7 | 16.2 | |||||
Total mine closure | 211.3 | 204.0 | |||||
Total environmental and mine closure obligations | 214.1 | 206.8 | |||||
Less current portion | 12.2 | 12.9 | |||||
Long-term environmental and mine closure obligations | $ | 201.9 | $ | 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) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Asset retirement obligation at beginning of period | $ | 204.0 | $ | 230.4 | |||
Accretion expense | 7.1 | 14.0 | |||||
Remediation payments | (0.8 | ) | (2.2 | ) | |||
Exchange rate changes | 1.0 | (0.2 | ) | ||||
Revision in estimated cash flows | — | (38.0 | ) | ||||
Asset retirement obligation at end of period | $ | 211.3 | $ | 204.0 |
|
(In Millions) | |||||||||||||||||||||||||
June 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 | $ | 78.8 | $ | (25.6 | ) | $ | 53.2 | $ | 78.4 | $ | (24.6 | ) | $ | 53.8 |
|
(In Millions) | ||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||
June 30, 2017 | December 31, 2016 | June 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 | Other current assets | 66.4 | Other current assets | 21.3 | — | — | ||||||||||||||||||
Provisional pricing arrangements | Other current assets | 6.1 | Other current assets | 10.3 | Other current liabilities | 20.8 | Other current liabilities | 0.5 | ||||||||||||||||
Commodity contracts | — | Other current assets | 1.5 | — | — | |||||||||||||||||||
Total derivatives not designated as hedging instruments under ASC 815 | $ | 72.5 | $ | 33.1 | $ | 20.8 | $ | 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 June 30, | Six Months Ended June 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Customer Supply Agreements | Product revenues | 51.9 | 19.5 | 69.6 | 19.9 | |||||||||||||
Provisional Pricing Arrangements | Product revenues | (35.4 | ) | 1.8 | (19.8 | ) | 0.3 | |||||||||||
Commodity Contracts | Cost of goods sold and operating expenses | — | — | (1.3 | ) | — | ||||||||||||
Total | $ | 16.5 | $ | 21.3 | $ | 48.5 | $ | 20.2 |
|
Mine | Cliffs Natural Resources | ArcelorMittal | U.S. Steel Corporation | ||||||
Empire | 79.0 | % | 21.0 | % | — | ||||
Tilden | 85.0 | % | — | 15.0 | % | ||||
Hibbing | 23.0 | % | 62.3 | % | 14.7 | % |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Product revenues from related parties | $ | 227.5 | $ | 241.6 | $ | 336.9 | $ | 345.0 | |||||||
Total product revenues | 512.0 | 452.8 | 924.8 | 728.4 | |||||||||||
Related party product revenue as a percent of total product revenue | 44.4 | % | 53.4 | % | 36.4 | % | 47.4 | % |
(In Millions) | |||||||||
Balance Sheet Location | June 30, 2017 | December 31, 2016 | |||||||
Amounts due from related parties | Accounts receivable, net | $ | 18.8 | $ | 46.9 | ||||
Customer supply agreements and provisional pricing agreements | Other current assets | 68.0 | 26.8 | ||||||
Amounts due to related parties | Other current liabilities | 15.9 | 8.7 |
|
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income from Continuing Operations | $ | 76.5 | $ | 29.9 | $ | 46.2 | $ | 144.2 | |||||||
Loss (Income) from Continuing Operations Attributable to Noncontrolling Interest | 1.7 | (16.7 | ) | 3.4 | (25.5 | ) | |||||||||
Net Income from Continuing Operations Attributable to Cliffs Shareholders | $ | 78.2 | $ | 13.2 | $ | 49.6 | $ | 118.7 | |||||||
Income (Loss) from Discontinued Operations, net of tax | (46.4 | ) | (0.4 | ) | (45.9 | ) | 2.1 | ||||||||
Net Income Attributable to Cliffs Shareholders | $ | 31.8 | $ | 12.8 | $ | 3.7 | $ | 120.8 | |||||||
Weighted Average Number of Shares: | |||||||||||||||
Basic | 296.1 | 182.3 | 280.6 | 177.0 | |||||||||||
Employee Stock Plans | 4.6 | 2.3 | 4.6 | 1.3 | |||||||||||
Diluted | 300.7 | 184.6 | 285.2 | 178.3 | |||||||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Basic: | |||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.07 | $ | 0.18 | $ | 0.67 | |||||||
Discontinued operations | (0.16 | ) | — | (0.16 | ) | 0.01 | |||||||||
$ | 0.10 | $ | 0.07 | $ | 0.02 | $ | 0.68 | ||||||||
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted: | |||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.07 | $ | 0.17 | $ | 0.67 | |||||||
Discontinued operations | (0.15 | ) | — | (0.16 | ) | 0.01 | |||||||||
$ | 0.11 | $ | 0.07 | $ | 0.01 | $ | 0.68 |
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