| Segment Reporting Disclosure [Text Block] |
NOTE 3 - SEGMENT REPORTING
We operate in one reportable segment – U.S. Iron Ore. U.S. Iron Ore is a major supplier of iron ore pellets to the North American steel industry from our mines and pellet plants located in Michigan and Minnesota.
We evaluate segment performance based on sales margin, defined as revenues less cost of goods sold and operating expenses identifiable to each segment. Additionally, we evaluate performance on a segment basis, as well as a consolidated basis, based on EBITDA and Adjusted EBITDA. These measures allow management and investors to focus on our ability to service our debt as well as illustrate how the business and each operating segment are performing. Additionally, EBITDA and Adjusted EBITDA assist management and investors in their analysis and forecasting as these measures approximate the cash flows associated with operational earnings.
The following tables present a summary of our reportable segment including a reconciliation of segment sales margin to Income from Continuing Operations Before Income Taxes and a reconciliation of Net Income to EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions) |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues from product sales and services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Iron Ore |
$ |
741.8 |
|
|
100 |
% |
|
$ |
596.7 |
|
|
100 |
% |
|
$ |
1,636.1 |
|
|
100 |
% |
|
$ |
1,354.2 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales margin |
$ |
261.6 |
|
|
|
|
$ |
157.8 |
|
|
|
|
$ |
607.6 |
|
|
|
|
$ |
351.5 |
|
|
|
Other operating expense |
(36.1 |
) |
|
|
|
(29.1 |
) |
|
|
|
(97.6 |
) |
|
|
|
(74.2 |
) |
|
|
Other expense |
(25.2 |
) |
|
|
|
(113.6 |
) |
|
|
|
(79.8 |
) |
|
|
|
(256.9 |
) |
|
|
Income from continuing operations before income taxes |
$ |
200.3 |
|
|
|
|
$ |
15.1 |
|
|
|
|
$ |
430.2 |
|
|
|
|
$ |
20.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions) |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net Income |
$ |
437.8 |
|
|
$ |
52.9 |
|
|
$ |
518.6 |
|
|
$ |
53.2 |
|
Less: |
|
|
|
|
|
|
|
Interest expense, net |
(29.7 |
) |
|
(28.9 |
) |
|
(95.5 |
) |
|
(103.1 |
) |
Income tax benefit (expense) |
(0.5 |
) |
|
7.6 |
|
|
(14.4 |
) |
|
6.8 |
|
Depreciation, depletion and amortization |
(19.2 |
) |
|
(21.5 |
) |
|
(68.6 |
) |
|
(66.3 |
) |
EBITDA |
$ |
487.2 |
|
|
$ |
95.7 |
|
|
$ |
697.1 |
|
|
$ |
215.8 |
|
Less: |
|
|
|
|
|
|
|
Impact of discontinued operations |
$ |
238.2 |
|
|
$ |
34.8 |
|
|
$ |
120.4 |
|
|
$ |
41.3 |
|
Foreign exchange remeasurement |
(0.2 |
) |
|
(1.3 |
) |
|
(0.7 |
) |
|
14.0 |
|
Gain (loss) on extinguishment of debt |
— |
|
|
(88.6 |
) |
|
0.2 |
|
|
(165.4 |
) |
Impairment of long-lived assets |
(1.1 |
) |
|
— |
|
|
(1.1 |
) |
|
— |
|
Adjusted EBITDA |
$ |
250.3 |
|
|
$ |
150.8 |
|
|
$ |
578.3 |
|
|
$ |
325.9 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
U.S. Iron Ore |
$ |
273.1 |
|
|
$ |
168.9 |
|
|
$ |
641.6 |
|
|
$ |
381.8 |
|
Corporate and Other1
|
214.1 |
|
|
(73.2 |
) |
|
55.5 |
|
|
(166.0 |
) |
Total EBITDA |
$ |
487.2 |
|
|
$ |
95.7 |
|
|
$ |
697.1 |
|
|
$ |
215.8 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
U.S. Iron Ore |
$ |
279.5 |
|
|
$ |
174.2 |
|
|
$ |
657.9 |
|
|
$ |
399.8 |
|
Corporate and Other1
|
(29.2 |
) |
|
(23.4 |
) |
|
(79.6 |
) |
|
(73.9 |
) |
Total Adjusted EBITDA |
$ |
250.3 |
|
|
$ |
150.8 |
|
|
$ |
578.3 |
|
|
$ |
325.9 |
|
|
|
|
|
|
|
|
|
1Corporate and Other includes activity from discontinued operations and immaterial costs related to the HBI project.
|
The following table summarizes our depreciation, depletion and amortization expense and capital additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions) |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Depreciation, depletion and amortization: |
|
|
|
|
|
|
|
U.S. Iron Ore |
$ |
17.8 |
|
|
$ |
16.5 |
|
|
$ |
49.2 |
|
|
$ |
49.6 |
|
Corporate and Other |
1.4 |
|
|
1.7 |
|
|
4.2 |
|
|
5.4 |
|
Total depreciation, depletion and amortization |
$ |
19.2 |
|
|
$ |
18.2 |
|
|
$ |
53.4 |
|
|
$ |
55.0 |
|
|
|
|
|
|
|
|
|
Capital additions1:
|
|
|
|
|
|
|
|
U.S. Iron Ore |
$ |
51.8 |
|
|
$ |
19.2 |
|
|
$ |
97.2 |
|
|
$ |
70.9 |
|
Corporate and Other2
|
40.8 |
|
|
7.1 |
|
|
144.7 |
|
|
7.1 |
|
Total capital additions |
$ |
92.6 |
|
|
$ |
26.3 |
|
|
$ |
241.9 |
|
|
$ |
78.0 |
|
|
|
|
|
|
|
|
|
1 Includes cash paid for capital additions of $194.6 million, including deposits of $83.3 million, lease additions of $7.6 million, and an increase in non-cash accruals of $42.2 million, partially offset by governmental grants received of $2.5 million for the nine months ended September 30, 2018, compared to cash paid for capital additions of $77.4 million, including deposits of $16.2 million, and an increase in non-cash accruals of $0.6 million for the nine months ended September 30, 2017.
|
2 Includes capital additions related to our HBI project.
|
A summary of assets by segment is as follows:
|
|
|
|
|
|
|
|
|
|
(In Millions) |
|
September 30,
2018 |
|
December 31,
2017 |
Assets: |
|
|
|
U.S. Iron Ore |
$ |
1,798.8 |
|
|
$ |
1,500.6 |
|
Corporate and Other1
|
1,310.1 |
|
|
1,314.0 |
|
Assets of Discontinued Operations |
16.1 |
|
|
138.8 |
|
Total assets |
$ |
3,125.0 |
|
|
$ |
2,953.4 |
|
|
1Corporate and Other includes assets related to the HBI project.
|
|