Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS

v2.4.0.6
ACQUISITIONS
 12 Months Ended
Dec. 31, 2012
Business Combinations [Abstract]  
ACQUISITIONS AND OTHER INVESTMENTS
NOTE 6 - ACQUISITIONS AND OTHER INVESTMENTS
Acquisitions
We allocate the cost of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. Any excess of cost over the fair value of the net assets acquired is recorded as goodwill.
Consolidated Thompson
On May 12, 2011, we completed our acquisition of Consolidated Thompson by acquiring all of the outstanding common shares of Consolidated Thompson for C$17.25 per share in an all-cash transaction, including net debt, pursuant to the terms of an arrangement agreement dated as of January 11, 2011. Upon the acquisition: (a) each outstanding Consolidated Thompson common share was acquired for a cash payment of C$17.25; (b) each outstanding option and warrant that was “in the money” was acquired for cancellation for a cash payment of C$17.25 less the exercise price per underlying Consolidated Thompson common share; (c) each outstanding performance share unit was acquired for cancellation for a cash payment of C$17.25; (d) all outstanding Quinto Mining Corporation rights to acquire common shares of Consolidated Thompson were acquired for cancellation for a cash payment of C$17.25 per underlying Consolidated Thompson common share; and (e) certain Consolidated Thompson management contracts were eliminated that contained certain change of control provisions for contingent payments upon termination. The acquisition date fair value of the consideration transferred totaled $4.6 billion. Our full ownership of Consolidated Thompson has been included in the consolidated financial statements since the acquisition date and the subsidiary CQIM is reported as a component of our Eastern Canadian Iron Ore segment.
The acquisition of Consolidated Thompson reflects our strategy to build scale by owning expandable and exportable steelmaking raw material assets serving international markets. Through our acquisition of Consolidated Thompson, we now own and operate an iron ore mine and processing facility near Bloom Lake in Quebec, Canada that produces iron ore concentrate of high quality. WISCO is a 25 percent partner in the Bloom Lake mine. We also own additional development properties known as Labrador Trough South located in Quebec. All of these properties are in proximity to our existing Canadian operations and will allow us to leverage our port facilities and supply this iron ore to the seaborne market. The acquisition also is expected to further diversify our existing customer base.
The following table summarizes the consideration paid for Consolidated Thompson and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We finalized the purchase price allocation for the acquisition of Consolidated Thompson during the second quarter of 2012.
 
(In Millions)
 
Initial
Allocation
 
Final
Allocation
 
Change
Consideration
 
 
 
 
 
Cash
$
4,554.0

 
$
4,554.0

 
$
—

Fair value of total consideration transferred
$
4,554.0

 
$
4,554.0

 
$
—

Recognized amounts of identifiable assets acquired and
    liabilities assumed
 
 
 
 
 
ASSETS:
 
 
 
 
 
Cash
$
130.6

 
$
130.6

 
$
—

Accounts receivable
102.8

 
102.4

 
(0.4
)
Product inventories
134.2

 
134.2

 
—

Other current assets
35.1

 
35.1

 
—

Mineral rights
4,450.0

 
4,825.6

 
375.6

Property, plant and equipment
1,193.4

 
1,193.4

 
—

Intangible assets
2.1

 
2.1

 
—

Total identifiable assets acquired
6,048.2

 
6,423.4

 
375.2

LIABILITIES:
 
 
 
 
 
Accounts payable
(13.6
)
 
(13.6
)
 
—

Accrued liabilities
(130.0
)
 
(123.8
)
 
6.2

Convertible debentures
(335.7
)
 
(335.7
)
 
—

Other current liabilities
(41.8
)
 
(47.9
)
 
(6.1
)
Long-term deferred tax liabilities
(831.5
)
 
(1,041.8
)
 
(210.3
)
Senior secured notes
(125.0
)
 
(125.0
)
 
—

Capital lease obligations
(70.7
)
 
(70.7
)
 
—

Other long-term liabilities
(25.1
)
 
(32.8
)
 
(7.7
)
Total identifiable liabilities assumed
(1,573.4
)
 
(1,791.3
)
 
(217.9
)
Total identifiable net assets acquired
4,474.8

 
4,632.1

 
157.3

Noncontrolling interest in Bloom Lake
(947.6
)
 
(1,075.4
)
 
(127.8
)
Goodwill
1,026.8

 
997.3

 
(29.5
)
Total net assets acquired
$
4,554.0

 
$
4,554.0

 
$
—


Included in the changes to the initial purchase price allocation for Consolidated Thompson, which was performed during the second quarter of 2011, are changes recorded in the first quarter of 2012, when we further refined the fair value of the assets acquired and liabilities assumed. The acquisition date fair value was adjusted to record a $16.4 million increase related to pre-acquisition date Quebec mining duties tax. We recorded $6.1 million and $10.3 million as increases to current and long-term liabilities, respectively. This resulted in a reduction of our calculated minimum distribution payable to the minority partner by $2.6 million. These adjustments resulted in a net $13.8 million increase to our goodwill during the period. As our fair value estimates remained materially unchanged from December 31, 2011, the immaterial adjustments made to the initial purchase price allocation during the first quarter of 2012 were recorded in that period. All other changes to the initial allocation were recorded retrospectively to the acquisition date. During the second quarter of 2012, no further adjustments were recorded when the allocation was finalized.
During 2011, subsequent to the initial purchase price allocation for Consolidated Thompson, we adjusted the fair values of the assets acquired and liabilities assumed. Based on this process, the acquisition date fair value of the Consolidated Thompson mineral rights, deferred tax liability and noncontrolling interest in Bloom Lake were adjusted to $4,825.6 million, $1,041.8 million and $1,075.4 million, respectively, in the revised purchase price allocation during the fourth quarter of 2011. The change in mineral rights was caused by further refinements to the valuation model, most specifically as it related to potential tax structures that have value from a market participant standpoint and the risk premium used in determining the discount rate. The change in the deferred tax liability primarily was a result of the movement in the mineral rights value and obtaining additional detail of the acquired tax basis in the acquired assets and liabilities. Finally, the change in the noncontrolling interest in Bloom Lake was due to the change in mineral rights and a downward adjustment to the discount for lack of control being used in the valuation. A complete comparison of the initial and final purchase price allocation has been provided in the table above.
The fair value of the noncontrolling interest in the assets acquired and liabilities assumed in Bloom Lake has been allocated proportionately, based upon WISCO’s 25 percent interest in Bloom Lake. We then reduced the allocated fair value of WISCO’s ownership interest in Bloom Lake to reflect the noncontrolling interest discount.
The $997.3 million of goodwill resulting from the acquisition was assigned to our Eastern Canadian Iron Ore business segment through the CQIM reporting unit. The goodwill recognized primarily is attributable to the proximity to our existing Canadian operations and potential for future expansion in Eastern Canada, which would allow us to leverage our port facilities and supply iron ore to the seaborne market. None of the goodwill will be deductible for income tax purposes. After performing our annual goodwill impairment test in the fourth quarter of 2012, we determined that the goodwill resulting from the acquisition was impaired as the carrying value exceeded its fair value. The impairment charge was recorded as Impairment of goodwill and other long-lived assets in the Statements of Consolidated Operations for the year ended December 31, 2012. Refer to NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.
Acquisition-related costs in the amount of $25.4 million have been charged directly to operations and are included within Consolidated Thompson acquisition costs in the Statements of Consolidated Operations for the year ended December 31, 2011. In addition, we recognized $15.7 million of deferred debt issuance costs, net of accumulated amortization of $1.9 million, associated with issuing and registering the debt required to fund the acquisition as of December 31, 2011. Of these costs, $1.7 million and $14.0 million, respectively, have been recorded in Other current assets and Other non-current assets in the Statements of Consolidated Financial Position at December 31, 2011. Upon the termination of the bridge credit facility that we entered into to provide a portion of the financing for Consolidated Thompson, $38.3 million of related debt issuance costs were recognized in Interest expense, net in the Statements of Consolidated Operations for the year ended December 31, 2011.
The Statements of Consolidated Operations for the year ended December 31, 2011 include incremental revenue of $571.0 million and income of $143.7 million related to the acquisition of Consolidated Thompson since the date of acquisition. Income during the period includes the impact of expensing an additional $59.8 million of costs due to stepping up the value of inventory in purchase accounting through Cost of goods sold and operating expenses for the year ended December 31, 2011.
The following unaudited consolidated pro forma information summarizes the results of operations for the years ended December 31, 2011 and 2010, as if the Consolidated Thompson acquisition and the related financing had been completed as of January 1, 2010. The pro forma information gives effect to actual operating results prior to the acquisition. The unaudited consolidated pro forma information does not purport to be indicative of the results that actually would have been obtained if the acquisition of Consolidated Thompson had occurred as of the beginning of the periods presented or that may be obtained in the future.

(In Millions, Except
Per Common Share)

2011
 
2010
REVENUES FROM PRODUCT SALES AND SERVICES
$
6,772.3

 
$
4,784.6

NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
1,612.3

 
$
912.5

EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
$
11.50

 
$
6.74

EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - DILUTED
$
11.43

 
$
6.70


The 2011 pro forma Net Income (Loss) Attributable to Cliffs Shareholders was adjusted to exclude $69.6 million of Cliffs and Consolidated Thompson acquisition-related costs and $59.8 million of non-recurring inventory purchase accounting adjustments incurred during the year ended December 31, 2011. The 2010 pro forma Net Income (Loss) Attributable to Cliffs Shareholders was adjusted to include the $59.8 million of non-recurring inventory purchase accounting adjustments.
Wabush
On February 1, 2010, we acquired entities from our former partners that held their respective interests in Wabush, thereby increasing our ownership interest to 100 percent. Our full ownership of Wabush has been included in the consolidated financial statements since that date. The acquisition date fair value of the consideration transferred totaled $103.0 million, which consisted of a cash purchase price of $88.0 million and a working capital adjustment of $15.0 million. With Wabush’s 5.5 million tons of production capacity, acquisition of the remaining interest increased our Eastern Canadian Iron Ore equity production capacity by approximately 4.0 million tons and added more than 50 million tons of additional reserves in 2010. Furthermore, acquisition of the remaining interest has provided us additional access to the seaborne iron ore markets serving steelmakers in Europe and Asia.
Prior to the acquisition date, we accounted for our 26.8 percent interest in Wabush as an equity-method investment. We initially recognized an acquisition date fair value of the previous equity interest of $39.7 million, and a gain of $47.0 million as a result of remeasuring our prior equity interest in Wabush held before the business combination. The gain was recognized in the first quarter of 2010 and was included in Gain on acquisition of controlling interests in the Statements of Unaudited Condensed Consolidated Operations for the three months ended March 31, 2010.
In the months subsequent to the initial purchase price allocation, we further refined the fair values of the assets acquired and liabilities assumed. Additionally, we also continued to ensure our existing interest in Wabush was incorporating all of the book basis; including amounts recorded in Accumulated other comprehensive income (loss). Based on this process, the acquisition date fair value of the previous equity interest was adjusted to $38.0 million. The changes required to finalize the U.S. and Canadian deferred tax valuations and to incorporate additional information on assumed asset retirement obligations offset to a net decrease of $1.7 million in the fair value of the equity interest from the initial purchase price allocation. Thus, the gain resulting from the remeasurement of our prior equity interest, net of amounts previously recorded in Accumulated other comprehensive income (loss) of $20.3 million, was adjusted to $25.1 million for the period ended December 31, 2010.
Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we retrospectively have recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill and Gain on acquisition of controlling interests, made during the second half of 2010, back to the date of acquisition. We finalized the purchase price allocation for the acquisition of Wabush during the fourth quarter of 2010.
A comparison of the initial and final purchase price allocation has been provided in the following table.
 
(In Millions)
 
Initial
Allocation
 
Final
Allocation
 
Change
Consideration
 
 
 
 
 
Cash
$
88.0

 
$
88.0

 
$
—

Working capital adjustments
15.0

 
15.0

 
—

Fair value of total consideration transferred
103.0

 
103.0

 
—

Fair value of Cliffs’ equity interest in Wabush held prior to
    acquisition of remaining interest
39.7

 
38.0

 
(1.7
)
 
$
142.7

 
$
141.0

 
$
(1.7
)
Recognized amounts of identifiable assets acquired
    and liabilities assumed
 
 
 
 
 
ASSETS:
 
 
 
 
 
In-process inventories
$
21.8

 
$
21.8

 
$
—

Supplies and other inventories
43.6

 
43.6

 
—

Other current assets
13.2

 
13.2

 
—

Mineral rights
85.1

 
84.4

 
(0.7
)
Plant and equipment
146.3

 
147.8

 
1.5

Intangible assets
66.4

 
66.4

 
—

Other assets
16.3

 
19.3

 
3.0

Total identifiable assets acquired
392.7

 
396.5

 
3.8

LIABILITIES:
 
 
 
 
 
Current liabilities
(48.1
)
 
(48.1
)
 
—

Pension and OPEB obligations
(80.6
)
 
(80.6
)
 
—

Mine closure obligations
(39.6
)
 
(53.4
)
 
(13.8
)
Below-market sales contracts
(67.7
)
 
(67.7
)
 
—

Deferred taxes
(20.5
)
 
—

 
20.5

Other liabilities
(8.9
)
 
(8.8
)
 
0.1

Total identifiable liabilities assumed
(265.4
)
 
(258.6
)
 
6.8

Total identifiable net assets acquired
127.3

 
137.9

 
10.6

Goodwill
15.4

 
3.1

 
(12.3
)
Total net assets acquired
$
142.7

 
$
141.0

 
$
(1.7
)

The significant changes to the final purchase price allocation from the initial allocation primarily were due to the allocation of deferred taxes between the existing equity interest in Wabush and the acquired portion, and additional asset retirement obligations noted related to the Wabush operations.
Of the $66.4 million of acquired intangible assets, $54.7 million was assigned to the value of a utility contract that provides favorable rates compared with prevailing market rates and is being amortized on a straight-line basis over the five-year remaining life of the contract. The remaining $11.7 million was assigned to the value of an easement agreement that is anticipated to provide a fee to Wabush for rail traffic moving over Wabush lands and is being amortized over a 30-year period.
The $3.1 million of goodwill resulting from the acquisition was assigned to our Eastern Canadian Iron Ore business segment. The goodwill recognized primarily is attributable to the mine’s port access and proximity to the seaborne iron ore markets. None of the goodwill is expected to be deductible for income tax purposes. After performing our annual goodwill impairment test in the fourth quarter of 2012, we determined that the goodwill resulting from the acquisition was impaired as the carrying value exceeded its fair value. The impairment charge was recorded as Impairment of goodwill and other long-lived assets in the Statements of Consolidated Operations for the year ended December 31, 2012. Refer to NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.
Freewest
During 2009, we acquired 29 million shares, or 12.4 percent, of Freewest, a Canadian-based mineral exploration company focused on acquiring, exploring and developing high-quality chromite, gold and base- metal properties in Canada. On January 27, 2010, we acquired all of the remaining outstanding shares of Freewest for C$1.00 per share, including its interest in the Ring of Fire properties in Northern Ontario Canada, which comprise three premier chromite deposits. As a result of the transaction, our ownership interest in Freewest increased from 12.4 percent as of December 31, 2009 to 100 percent as of the acquisition date. Our full ownership of Freewest has been included in the consolidated financial statements since the acquisition date. The acquisition of Freewest is consistent with our strategy to broaden our geographic and mineral diversification and allows us to apply our expertise in open-pit mining and mineral processing to a chromite ore mineralization that could form the foundation of North America’s only ferrochrome production operation. Total purchase consideration for the remaining interest in Freewest was approximately $185.9 million, comprised of the issuance of 0.0201 of our common shares for each Freewest share, representing a total of 4.2 million common shares or $173.1 million, and $12.8 million in cash. The acquisition date fair value of the consideration transferred was determined based upon the closing market price of our common shares on the acquisition date.
Prior to the acquisition date, we accounted for our 12.4 percent interest in Freewest as an available-for-sale equity security. The acquisition date fair value of the previous equity interest was $27.4 million, which was determined based upon the closing market price of the 29 million previously owned shares on the acquisition date. We recognized a gain of $13.6 million in the first quarter of 2010 as a result of remeasuring our ownership interest in Freewest held prior to the business acquisition. The gain is included in Gain on acquisition of controlling interests in the Statements of Consolidated Operations for the year ended December 31, 2010.
The following table summarizes the consideration paid for Freewest and the fair values of the assets acquired and liabilities assumed at the acquisition date. We finalized the purchase price allocation in the fourth quarter of 2010. Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we retrospectively have recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill, made during the fourth quarter of 2010, back to the date of acquisition. We adjusted the initial purchase price allocation for the acquisition of Freewest in the fourth quarter of 2010 as follows:
 
(In Millions)
 
Initial
Allocation
 
Final
Allocation
 
Change
Consideration
 
 
 
 
 
Equity instruments (4.2 million Cliffs common shares)
$
173.1

 
$
173.1

 
$
—

Cash
12.8

 
12.8

 
—

Fair value of total consideration transferred
185.9

 
185.9

 
—

Fair value of Cliffs’ ownership interest in Freewest held
    prior to acquisition of remaining interest
27.4

 
27.4

 
—

 
$
213.3

 
$
213.3

 
$
—

Recognized amounts of identifiable assets acquired and
    liabilities assumed
 
 
 
 
 
ASSETS:
 
 
 
 
 
Cash
$
7.7

 
$
7.7

 
$
—

Other current assets
1.4

 
1.4

 
—

Mineral rights
252.8

 
244.0

 
(8.8
)
Marketable securities
12.1

 
12.1

 
—

Total identifiable assets acquired
274.0

 
265.2

 
(8.8
)
LIABILITIES:
 
 
 
 
 
Accounts payable
(3.3
)
 
(3.3
)
 
—

Long-term deferred tax liabilities
(57.4
)
 
(54.3
)
 
3.1

Total identifiable liabilities assumed
(60.7
)
 
(57.6
)
 
3.1

Total identifiable net assets acquired
213.3

 
207.6

 
(5.7
)
Goodwill
—

 
5.7

 
5.7

Total net assets acquired
$
213.3

 
$
213.3

 
$
—


The significant changes to the final purchase price allocation from the initial allocation primarily were due to changes to the fair value adjustment for mineral rights that resulted from the finalization of certain assumptions used in the valuation models utilized to determine the fair values.
The $5.7 million of goodwill resulting from the finalization of the purchase price allocation was assigned to our Ferroalloys operating segment. The goodwill recognized primarily is attributable to obtaining a controlling interest in Freewest. None of the goodwill is expected to be deductible for income tax purposes. Refer to NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.
Spider
During the second quarter of 2010, we commenced a formal cash offer to acquire all of the outstanding common shares of Spider, a Canadian-based mineral exploration company, for C$0.19 per share. As of June 30, 2010, we held 27.4 million shares of Spider, representing approximately four percent of its issued and outstanding shares. On July 6, 2010, all of the conditions to acquire the remaining common shares of Spider had been satisfied or waived, and we consequently acquired all of the common shares that validly were tendered as of that date. When combined with our prior ownership interest, the additional shares acquired increased our ownership percentage to 52 percent on the date of acquisition, representing a majority of the common shares outstanding on a fully diluted basis. Our 52 percent ownership of Spider was included in the consolidated financial statements since the July 6, 2010 acquisition date, and Spider was included as a component of our Ferroalloys operating segment. The acquisition date fair value of the consideration transferred totaled a cash purchase price of $56.9 million. Subsequent to the acquisition date, we extended the cash offer to permit additional shares to be tendered and taken up, thereby increasing our ownership percentage in Spider to 85 percent as of July 26, 2010. Effective October 6, 2010, we completed the acquisition of the remaining shares of Spider through an amalgamation, bringing our ownership percentage to 100 percent as of December 31, 2010. As noted above, through our acquisition of Freewest during the first quarter of 2010, we acquired an interest in the Ring of Fire properties in Northern Ontario, which comprise three premier chromite deposits. The Spider acquisition allowed us to obtain majority ownership of the “Big Daddy” chromite deposit, based on Spider’s ownership percentage in this deposit of 26.5 percent at the time of the closing acquisition date.
Prior to the July 6, 2010 acquisition date, we accounted for our four percent interest in Spider as an available-for-sale equity security. The acquisition date fair value of the previous equity interest was $4.9 million, which was determined based upon the closing market price of the 27.4 million previously owned shares on the acquisition date. The acquisition date fair value of the 48 percent noncontrolling interest in Spider was estimated to be $51.9 million, which was determined based upon the closing market price of the 290.5 million shares of noncontrolling interest on the acquisition date.
The following table summarizes the consideration paid for Spider and the fair values of the assets acquired and liabilities assumed at the acquisition date. We finalized the purchase price allocation in the fourth quarter of 2010. Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we retrospectively have recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill, made during the fourth quarter of 2010, back to the date of acquisition. We adjusted the initial purchase price allocation for the acquisition of Spider in the fourth quarter of 2010 as follows:
 
(In Millions)
 
Initial
Allocation
 
Final
Allocation
 
Change
Consideration
 
 
 
 
 
Cash
$
56.9

 
$
56.9

 
$
—

Fair value of total consideration transferred
56.9

 
56.9

 
—

Fair value of Cliffs’ ownership interest in Spider held prior
    to acquisition of remaining interest
4.9

 
4.9

 
—

 
$
61.8

 
$
61.8

 
$
—

Recognized amounts of identifiable assets acquired and
    liabilities assumed
 
 
 
 
 
ASSETS:
 
 
 
 
 
Cash
$
9.0

 
$
9.0

 
$
—

Other current assets
4.5

 
4.5

 
—

Mineral rights
31.0

 
35.3

 
4.3

Total identifiable assets acquired
44.5

 
48.8

 
4.3

LIABILITIES:
 
 
 
 
 
Other current liabilities
(5.2
)
 
(5.2
)
 
—

Long-term deferred tax liabilities
(2.7
)
 
(5.1
)
 
(2.4
)
Total identifiable liabilities assumed
(7.9
)
 
(10.3
)
 
(2.4
)
Total identifiable net assets acquired
36.6

 
38.5

 
1.9

Goodwill
77.1

 
75.2

 
(1.9
)
Noncontrolling interest in Spider
(51.9
)
 
(51.9
)
 
—

Total net assets acquired
$
61.8

 
$
61.8

 
$
—


The significant changes to the final purchase price allocation from the initial allocation primarily were due to changes to the fair value adjustment for mineral rights that resulted from the finalization of certain assumptions used in the valuation models utilized to determine the fair values.
The $75.2 million of goodwill resulting from the acquisition was assigned to our Ferroalloys operating segment. The goodwill recognized primarily is attributable to obtaining majority ownership of the “Big Daddy” chromite deposit. When combined with the interest we acquired in the Ring of Fire properties through our acquisition of Freewest, we now control three premier chromite deposits in Northern Ontario, Canada. None of the goodwill is expected to be deductible for income tax purposes. Refer to NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.
CLCC
On July 30, 2010, we acquired the coal operations of privately owned INR and since that date, the operations acquired from INR have been conducted through our wholly owned subsidiary known as CLCC. Our full ownership of CLCC has been included in the consolidated financial statements since the acquisition date, and the subsidiary is reported as a component of our North American Coal segment. The acquisition date fair value of the consideration transferred totaled $775.9 million, which consisted of a cash purchase price of $757.0 million and a working capital adjustment of $18.9 million.
CLCC is a producer of high-volatile metallurgical and thermal coal located in southern West Virginia. CLCC’s operations include two underground continuous mining method metallurgical coal mines and one open surface thermal coal mine. The acquisition includes a metallurgical and thermal coal mining complex with a coal preparation and processing facility as well as a large, long-life reserve base with an estimated 59 million tons of metallurgical coal and 62 million tons of thermal coal. This reserve base increases our total global reserve base to over 166 million tons of metallurgical coal and over 67 million tons of thermal coal. This acquisition represented an opportunity for us to add complementary high-quality coal products and provided certain advantages, including among other things, long-life mine assets, operational flexibility and new equipment.
The following table summarizes the consideration paid for CLCC and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We finalized the purchase price allocation in the second quarter of 2011. Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we retrospectively have recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill back to the date of acquisition. We adjusted the initial purchase price allocation for the acquisition of CLCC as follows:
 
(In Millions)
 
Initial
Allocation
 
Final
Allocation
 
Change
Consideration
 
 
 
 
 
Cash
$
757.0

 
$
757.0

 
—

Working capital adjustments
17.5

 
18.9

 
1.4

Fair value of total consideration transferred
$
774.5

 
$
775.9

 
$
1.4

Recognized amounts of identifiable assets acquired and liabilities assumed
 
 
 
 
 
ASSETS:
 
 
 
 
 
Product inventories
$
20.0

 
$
20.0

 
$
—

Other current assets
11.8

 
11.8

 
—

Land and mineral rights
640.3

 
639.3

 
(1.0
)
Plant and equipment
111.1

 
112.3

 
1.2

Deferred taxes
16.5

 
15.9

 
(0.6
)
Intangible assets
7.5

 
7.5

 
—

Other non-current assets
0.8

 
0.8

 
—

Total identifiable assets acquired
808.0

 
807.6

 
(0.4
)
LIABILITIES:
 
 
 
 
 
Current liabilities
(22.8
)
 
(24.1
)
 
(1.3
)
Mine closure obligations
(2.8
)
 
(2.8
)
 
—

Below-market sales contracts
(32.6
)
 
(32.6
)
 
—

Total identifiable liabilities assumed
(58.2
)
 
(59.5
)
 
(1.3
)
Total identifiable net assets acquired
749.8

 
748.1

 
(1.7
)
Goodwill
24.7

 
27.8

 
3.1

Total net assets acquired
$
774.5

 
$
775.9

 
$
1.4


As our fair value estimates remain materially unchanged from 2010, there were no significant changes to the purchase price allocation from the initial allocation reported during the third quarter of 2010.
Of the $7.5 million of acquired intangible assets, $5.4 million was assigned to the value of in-place permits and will be amortized on a straight-line basis over the life of the mine. The remaining $2.1 million was assigned to the value of favorable mineral leases and will be amortized on a straight-line basis over the corresponding mine life.
The $27.8 million of goodwill resulting from the acquisition was assigned to our North American Coal business segment. The goodwill recognized primarily is attributable to the addition of complementary high-quality coal products to our existing operations and operational flexibility. None of the goodwill was expected to be deductible for income tax purposes. After performing our annual goodwill impairment test in the fourth quarter of 2011, we determined that the goodwill resulting from the acquisition was impaired as the carrying value exceeded its fair value. The impairment charge was recorded as Impairment of goodwill and other long-lived assets in the Statements of Consolidated Operations for the year ended December 31, 2011. NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.
With regard to each of the 2010 acquisitions discussed above, pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to our consolidated results of operations.