| SEGMENT REPORTING |
NOTE 2 - SEGMENT REPORTING
Our continuing operations are organized and managed according to geographic location: U.S. Iron Ore and Asia Pacific Iron Ore. The U.S. Iron Ore segment is comprised of our interests in five U.S. mines that provide iron ore to the integrated steel industry. The Asia Pacific Iron Ore segment is located in Western Australia and provides iron ore to the seaborne market for Asian steel producers. There were no intersegment product revenues in 2015 or 2014. Inter-segment revenues for 2013 were eliminated in consolidation.
We have historically evaluated segment performance based on sales margin, defined as revenues less cost of goods sold, and operating expenses identifiable to each segment. Additionally, beginning in the third quarter of 2014, concurrent with the change in control on July 29, 2014, management began to evaluate segment performance based on EBITDA, defined as net income (loss) before interest, income taxes, depreciation, depletion and amortization, and Adjusted EBITDA, defined as EBITDA excluding certain items such as impairment of goodwill and other long-lived assets, impacts of discontinued operations, extinguishment of debt, severance and contractor termination costs and other costs associated with the change in control, foreign currency remeasurement, certain supplies inventory write-offs, and intersegment corporate allocations of selling, general and administrative costs. Management believes that investors benefit from referring to these measures in evaluating operating and financial results, as well as in planning, forecasting and analyzing future periods as these financial measures approximate the cash flows associated with the operational earnings.
The following tables present a summary of our reportable segments for the years ended December 31, 2015, 2014 and 2013, including a reconciliation of segment sales margin to Income (Loss) from Continuing Operations Before Income Taxes and Equity Loss from Ventures and a reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA:
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|
|
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|
(In Millions) |
|
2015 |
|
2014 |
|
2013 |
Revenues from product sales and services: |
|
|
|
|
|
|
|
|
|
|
|
U.S. Iron Ore |
$ |
1,525.4 |
|
|
76% |
|
$ |
2,506.5 |
|
|
74% |
|
$ |
2,667.9 |
|
|
69% |
Asia Pacific Iron Ore |
487.9 |
|
|
24% |
|
866.7 |
|
|
26% |
|
1,224.3 |
|
|
31% |
Other (including inter-segment revenue eliminations) |
— |
|
|
—% |
|
— |
|
|
—% |
|
(1.4 |
) |
|
—% |
Total revenues from product sales and services |
$ |
2,013.3 |
|
|
100% |
|
$ |
3,373.2 |
|
|
100% |
|
$ |
3,890.8 |
|
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
Sales margin: |
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|
|
|
|
|
|
U.S. Iron Ore |
$ |
227.1 |
|
|
|
|
$ |
710.4 |
|
|
|
|
$ |
901.9 |
|
|
|
Asia Pacific Iron Ore |
9.4 |
|
|
|
|
121.7 |
|
|
|
|
367.1 |
|
|
|
Eliminations with discontinued operations |
— |
|
|
|
|
53.6 |
|
|
|
|
217.3 |
|
|
|
Other (including inter-segment sales margin eliminations) |
— |
|
|
|
|
— |
|
|
|
|
(1.9 |
) |
|
|
Sales margin |
236.5 |
|
|
|
|
885.7 |
|
|
|
|
1,484.4 |
|
|
|
Other operating income (expense) |
(85.2 |
) |
|
|
|
(755.6 |
) |
|
|
|
(104.1 |
) |
|
|
Other income (expense) |
161.8 |
|
|
|
|
(149.8 |
) |
|
|
|
(189.4 |
) |
|
|
Income (Loss) from Continuing Operations Before Income Taxes and Equity Loss from Ventures |
$ |
313.1 |
|
|
|
|
$ |
(19.7 |
) |
|
|
|
$ |
1,190.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions) |
|
2015 |
|
2014 |
|
2013 |
|
|
|
|
|
|
Net Income (Loss) |
$ |
(748.4 |
) |
|
$ |
(8,311.6 |
) |
|
$ |
361.8 |
|
Less: |
|
|
|
|
|
Interest expense, net |
(231.4 |
) |
|
(185.2 |
) |
|
(179.1 |
) |
Income tax benefit (expense) |
(163.3 |
) |
|
1,302.0 |
|
|
(55.1 |
) |
Depreciation, depletion and amortization |
(134.0 |
) |
|
(504.0 |
) |
|
(593.3 |
) |
EBITDA |
$ |
(219.7 |
) |
|
$ |
(8,924.4 |
) |
|
$ |
1,189.3 |
|
Less: |
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|
|
|
|
Impairment of goodwill and other long-lived assets |
$ |
(3.3 |
) |
|
$ |
(635.5 |
) |
|
$ |
(14.3 |
) |
Impact of discontinued operations |
(892.0 |
) |
|
(9,332.5 |
) |
|
(398.4 |
) |
Gain on extinguishment of debt |
392.9 |
|
|
16.2 |
|
|
— |
|
Severance and contractor termination costs |
(10.2 |
) |
|
(23.3 |
) |
|
(16.6 |
) |
Foreign exchange remeasurement |
16.3 |
|
|
29.0 |
|
|
53.2 |
|
Proxy contest and change in control in SG&A |
— |
|
|
(26.6 |
) |
|
— |
|
Supplies inventory write-off |
(16.3 |
) |
|
— |
|
|
— |
|
Total Adjusted EBITDA |
$ |
292.9 |
|
|
$ |
1,048.3 |
|
|
$ |
1,565.4 |
|
|
|
|
|
|
|
EBITDA: |
|
|
|
|
|
U.S. Iron Ore |
$ |
317.6 |
|
|
$ |
805.6 |
|
|
$ |
1,000.1 |
|
Asia Pacific Iron Ore |
35.3 |
|
|
(352.9 |
) |
|
543.0 |
|
Other (including discontinued operations) |
(572.6 |
) |
|
(9,377.1 |
) |
|
(353.8 |
) |
Total EBITDA |
$ |
(219.7 |
) |
|
$ |
(8,924.4 |
) |
|
$ |
1,189.3 |
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
U.S. Iron Ore |
$ |
352.1 |
|
|
$ |
833.5 |
|
|
$ |
1,031.8 |
|
Asia Pacific Iron Ore |
32.7 |
|
|
252.9 |
|
|
513.1 |
|
Other |
(91.9 |
) |
|
(38.1 |
) |
|
20.5 |
|
Total Adjusted EBITDA |
$ |
292.9 |
|
|
$ |
1,048.3 |
|
|
$ |
1,565.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions) |
|
2015 |
|
2014 |
|
2013 |
Depreciation, depletion and amortization: |
|
|
|
|
|
U.S. Iron Ore |
$ |
98.9 |
|
|
$ |
107.4 |
|
|
$ |
120.3 |
|
Asia Pacific Iron Ore |
25.3 |
|
|
145.9 |
|
|
153.7 |
|
Other |
6.6 |
|
|
7.7 |
|
|
10.8 |
|
Total depreciation, depletion and amortization |
$ |
130.8 |
|
|
$ |
261.0 |
|
|
$ |
284.8 |
|
|
|
|
|
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|
Capital additions (1):
|
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|
U.S. Iron Ore |
$ |
58.2 |
|
|
$ |
48.4 |
|
|
$ |
53.3 |
|
Asia Pacific Iron Ore |
5.4 |
|
|
10.8 |
|
|
13.0 |
|
Other |
8.6 |
|
|
6.3 |
|
|
4.5 |
|
Total capital additions |
$ |
72.2 |
|
|
$ |
65.5 |
|
|
$ |
70.8 |
|
(1) Includes capital lease additions and non-cash accruals. Refer to NOTE 17 - CASH FLOW INFORMATION.
A summary of assets by segment is as follows:
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(In Millions) |
|
December 31,
2015 |
|
December 31, 2014 |
|
December 31, 2013 |
Assets: |
|
|
|
|
|
U.S. Iron Ore |
$ |
1,476.4 |
|
|
$ |
1,464.9 |
|
|
$ |
1,537.9 |
|
Asia Pacific Iron Ore |
202.5 |
|
|
306.2 |
|
|
1,176.8 |
|
Total segment assets |
1,678.9 |
|
|
1,771.1 |
|
|
2,714.7 |
|
Corporate |
441.7 |
|
|
666.2 |
|
|
204.2 |
|
Assets of Discontinued Operations |
14.9 |
|
|
709.9 |
|
|
10,184.0 |
|
Total assets |
$ |
2,135.5 |
|
|
$ |
3,147.2 |
|
|
$ |
13,102.9 |
|
Included in the consolidated financial statements are the following amounts relating to geographic location:
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(In Millions) |
|
2015 |
|
2014 |
|
2013 |
Revenue |
|
|
|
|
|
United States |
$ |
1,206.4 |
|
|
$ |
1,923.2 |
|
|
$ |
1,543.9 |
|
China |
370.8 |
|
|
662.7 |
|
|
1,165.3 |
|
Canada |
282.4 |
|
|
430.5 |
|
|
758.5 |
|
Other countries |
153.7 |
|
|
356.8 |
|
|
423.1 |
|
Total revenue |
$ |
2,013.3 |
|
|
$ |
3,373.2 |
|
|
$ |
3,890.8 |
|
Property, Plant and Equipment, Net |
|
|
|
|
|
United States |
$ |
1,012.7 |
|
|
$ |
998.1 |
|
|
$ |
1,120.6 |
|
Australia |
46.3 |
|
|
72.4 |
|
|
750.2 |
|
Total Property, Plant and Equipment, Net |
$ |
1,059.0 |
|
|
$ |
1,070.5 |
|
|
$ |
1,870.8 |
|
Concentrations in Revenue
In 2015, 2014 and 2013 three customers accounted for more than 10 percent of our consolidated product revenue. Total product revenue from these customers represents approximately $1.3 billion, $1.9 billion and $1.9 billion of our total consolidated product revenue in 2015, 2014 and 2013, respectively, and is attributable to our U.S. Iron Ore business segment.
The following table represents the percentage of our total revenue contributed by each category of products and services in 2015, 2014, and 2013:
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|
2015 |
|
2014 |
|
2013 |
Revenue Category |
|
|
|
|
|
|
Iron ore |
|
91 |
% |
|
92 |
% |
|
93 |
% |
Freight and venture partners’ cost reimbursements |
|
9 |
% |
|
8 |
% |
|
7 |
% |
Total revenue |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|