CLEVELAND, Oct. 29, 2015 /PRNewswire/ --
- Earnings of $0.19 per diluted
share from continuing operations driven by significant
year-over-year cost savings
- U.S. Iron Ore cash production costs3 decrease 16
percent to $49 per ton
- Asia Pacific Iron Ore cash production costs3
decrease 49 percent to $27 per
ton
- Capital expenditures decrease 66 percent to $24 million
- SG&A expense decreases 55 percent to $22 million
Cliffs Natural Resources Inc. (NYSE: CLF) today reported
third-quarter results for the period ended September 30, 2015.
Third-quarter 2015 consolidated revenues of $593 million decreased 39 percent from the prior
year's third-quarter revenues of $980
million. Cost of goods sold decreased by 26 percent to
$538 million compared to $724 million reported in the third quarter of
2014.
For the third quarter of 2015, the Company recorded net income
of $6 million compared to a net loss
of $6.9 billion recorded in the
prior-year quarter. The Company recorded a net loss attributable to
Cliffs' common shareholders of $15
million, or $0.10 per diluted
share, compared to a net loss attributable to Cliffs' common
shareholders of $5.9 billion, or
$38.49 per diluted share recorded in
the third quarter of 2014.
Lourenco Goncalves, Cliffs'
Chairman, President and Chief Executive Officer, said, "Our
performance this past quarter illustrates how far we have come in
our turnaround story. We have been able to deliver significant cost
reductions in all areas of the business through disciplined
execution of the strategy instituted last year." Mr. Goncalves
added, "We expect the domestic steel market to improve in 2016 as
trade actions reduce the pressure of imports and firm up steel
pricing. Our solid cost position coupled with stronger demand from
the mills should drive better profitability for Cliffs."
For the third quarter of 2015, adjusted EBITDA1 was
$60 million. Cliffs noted that this
figure includes idle expenses of $33
million related to previously announced production
curtailments. Excluding these idle expenses primarily associated
with the Empire and United Taconite mines, Cliffs' adjusted
EBITDA1 would have been $93
million.
|
|
|
Adjusted
EBITDA1 by Segment (in millions)
|
|
|
U.S.
Iron Ore
|
|
Asia Pacific
Iron Ore
|
|
Corporate/
Other
|
|
Total
|
Q3 2015 Adjusted
EBITDA1 (in millions)
|
|
$
|
72.3
|
|
|
$
|
9.7
|
|
|
$
|
(21.9)
|
|
|
$
|
60.1
|
|
YTD 2015 Adjusted
EBITDA1 (in millions)
|
|
$
|
254.6
|
|
|
$
|
32.8
|
|
|
$
|
(70.4)
|
|
|
$
|
217.0
|
|
Cliffs' third-quarter 2015 SG&A expenses were $22 million, a 55 percent decrease when compared
to the third-quarter 2014 expense of $50
million. Although the decrease is primarily attributable to
the previous year's proxy contest as well as change in control and
severance-related expenses that were not repeated this year,
overall SG&A expenses were further decreased by lower staff
costs and reduced external services spending.
Cliffs' third-quarter 2015 interest expense was $62 million, a 35 percent increase when compared
to a third-quarter 2014 expense of $46
million. The increase was primarily driven by the issuance
of secured notes during the first quarter of 2015. The Company
noted that of the $62 million
recorded, $53 million is a cash
expense and the remaining $9 million
is a non-cash expense.
U.S. Iron Ore
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Volumes - In
Thousands of Long Tons
|
|
|
|
|
|
|
|
|
Total sales
volume
|
|
5,600
|
|
|
6,848
|
|
|
12,791
|
|
|
14,022
|
|
Total production
volume
|
|
4,099
|
|
|
5,814
|
|
|
14,978
|
|
|
16,256
|
|
Sales Margin - In
Millions
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
471.0
|
|
|
$
|
767.4
|
|
|
$
|
1,152.5
|
|
|
$
|
1,643.3
|
|
Cost of goods sold
and operating expenses
|
|
422.3
|
|
|
547.9
|
|
|
974.8
|
|
|
1,181.6
|
|
Sales
margin
|
|
$
|
48.7
|
|
|
$
|
219.5
|
|
|
$
|
177.7
|
|
|
$
|
461.7
|
|
Sales Margin - Per
Long Ton
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
76.52
|
|
|
$
|
100.70
|
|
|
$
|
80.85
|
|
|
$
|
104.27
|
|
Cash production
cost3
|
|
48.99
|
|
|
58.38
|
|
|
57.25
|
|
|
65.63
|
|
Non-production cash
cost3
|
|
13.85
|
|
|
6.49
|
|
|
4.11
|
|
|
(0.08)
|
|
Cash
cost3
|
|
62.84
|
|
|
64.87
|
|
|
61.36
|
|
|
65.55
|
|
Depreciation,
depletion and amortization
|
|
4.98
|
|
|
3.78
|
|
|
5.60
|
|
|
5.79
|
|
Cost of goods sold
and operating expenses*
|
|
67.82
|
|
|
68.65
|
|
|
66.96
|
|
|
71.34
|
|
Sales
margin
|
|
$
|
8.70
|
|
|
$
|
32.05
|
|
|
$
|
13.89
|
|
|
$
|
32.93
|
|
|
|
|
|
|
|
|
|
|
* Excludes revenues
and expenses related to domestic freight, which are offsetting and
have no impact on sales margin. Revenues per ton also exclude
venture partner cost reimbursements.
|
U.S. Iron Ore pellet sales volume in the third quarter of 2015
was 5.6 million tons, an 18 percent decrease when compared to the
third quarter of 2014. The decrease was driven by lower U.S. steel
mill demand.
Cash production cost per ton3 in U.S. Iron Ore was
$48.99, down 16 percent from
$58.38 in the prior year's third
quarter. The decrease was driven by salaried workforce reductions
and overall lower employment costs; reduced maintenance and repair
costs based on cost reduction and predictive maintenance
initiatives; and year-over-year lower energy rates.
Non-production cash cost per ton3 of $13.85 included $33
million of idle costs.
Asia Pacific Iron Ore
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Volumes - In
Thousands of Metric Tons
|
|
|
|
|
|
|
|
|
Total sales
volume
|
|
2,926
|
|
|
3,075
|
|
|
8,710
|
|
|
8,616
|
|
Total production
volume
|
|
2,928
|
|
|
2,789
|
|
|
8,655
|
|
|
8,310
|
|
Sales Margin - In
Millions
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
122.2
|
|
|
$
|
212.3
|
|
|
$
|
384.8
|
|
|
$
|
699.6
|
|
Cost of goods sold
and operating expenses
|
|
115.8
|
|
|
203.2
|
|
|
369.3
|
|
|
588.2
|
|
Sales
margin
|
|
$
|
6.4
|
|
|
$
|
9.1
|
|
|
$
|
15.5
|
|
|
$
|
111.4
|
|
Sales Margin - Per
Metric Ton
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
39.00
|
|
|
$
|
69.04
|
|
|
$
|
42.01
|
|
|
$
|
81.20
|
|
Cash production
cost3
|
|
26.87
|
|
|
52.58
|
|
|
32.62
|
|
|
51.59
|
|
Non-production cash
cost3
|
|
7.85
|
|
|
(0.22)
|
|
|
5.42
|
|
|
2.33
|
|
Cash
cost3
|
|
34.72
|
|
|
52.36
|
|
|
38.04
|
|
|
53.92
|
|
Depreciation,
depletion and amortization
|
|
2.08
|
|
|
13.72
|
|
|
2.19
|
|
|
14.35
|
|
Cost of goods sold
and operating expenses*
|
|
36.80
|
|
|
66.08
|
|
|
40.23
|
|
|
68.27
|
|
Sales
margin
|
|
$
|
2.20
|
|
|
$
|
2.96
|
|
|
$
|
1.78
|
|
|
$
|
12.93
|
|
|
|
|
|
|
|
|
|
|
*Excludes revenues
and expenses related to freight, which are offsetting and have no
impact on sales margin.
|
Third-quarter 2015 Asia Pacific Iron Ore sales volume decreased
5 percent to 2.9 million tons, from 3.1 million tons in 2014's
third quarter. The volume decrease was driven by the timing of
shipments related to port maintenance activities.
Cash production cost per ton3 in Asia Pacific Iron
Ore was $26.87, down 49 percent from
$52.58 in the prior year's third
quarter. The decrease was driven by reduced mining and
administrative costs, as well as favorable exchange rate variances,
the latter of which was approximately $12 per ton.
Debt and Cash Flow
Total debt at the end of the third quarter of 2015 was
$2.7 billion, versus a comparable
$3.1 billion at the end of the
prior-year quarter. Cash and cash equivalents were $270 million, compared to $244 million at the end of the prior-year
quarter.
At the end of the third quarter of 2015, Cliffs had net
debt4 of $2.5 billion,
compared to $2.9 billion of net
debt4 at the end of the third quarter of 2014. There
were no borrowings on the Company's asset-based lending facility at
the end of the third quarter of 2015. The reduction in net
debt4 was a consequence of several actions including
asset sales, exchange offers and open-market bond repurchases
during the prior twelve months, including $48 million in open market purchases made in July
and a $125 million tender offer
completed in August 2015, which
captured combined discounts totaling $79
million.
Capital expenditures during the quarter, including the
discontinued coal operations, were $24
million, which is a 66 percent decrease compared to
$69 million in the third quarter of
2014. Cliffs also reported depreciation, depletion and amortization
of $36 million in the third quarter
of 2015.
Outlook
Cliffs provides full-year expected revenues-per-ton ranges based
on different assumptions of seaborne iron ore prices. Cliffs
indicated that each different pricing assumption holds all other
assumptions constant, including customer mix, as well as industrial
commodity prices, freight rates, energy prices, production input
costs and/or hot-band steel prices (all factors contained in
certain of Cliffs' supply agreements).
The table below provides certain Platts IODEX averages for the
remaining three months of 2015 and the corresponding full-year
realization for the U.S. Iron Ore and Asia Pacific Iron Ore
segments. The estimates consider actual Platts IODEX rates and
Cliffs' revenue realizations for the first nine months of 2015.
Cliffs previously furnished 2015 pricing expectations on
July 29, 2015. Due primarily to
improved customer mix partially offset by decreased hot-band steel
price assumptions, Cliffs has increased its revenues-per-ton
expectations for U.S. Iron Ore. At a fourth-quarter Platts IODEX
assumption of $55 - $60 per ton, the
full-year expected range of realizations has increased to
$80 - $85 per ton from the previous
expectation of $75 - $80 per ton.
Expectations of revenue realizations for Asia Pacific Iron Ore
have not changed significantly since the end of the second quarter.
Cliffs noted that over the past year, Asia Pacific Iron Ore price
realizations have ranged between a $15 and
$20 per ton discount to the average Platts IODEX price on a
quarterly basis.
2015 Full-Year
Realized Revenues-Per-Ton Range Summary
|
Oct. - Dec.
Platts IODEX (1)
|
|
U.S. Iron Ore
(2)
|
|
Asia Pacific Iron
Ore (3)
|
$30
|
|
$75 - $80
|
|
$35 - $40
|
$35
|
|
$75 - $80
|
|
$35 - $40
|
$40
|
|
$75 - $80
|
|
$35 - $40
|
$45
|
|
$75 - $80
|
|
$35 - $40
|
$50
|
|
$75 - $80
|
|
$40 - $45
|
$55
|
|
$80 - $85
|
|
$40 - $45
|
$60
|
|
$80 - $85
|
|
$40 - $45
|
$65
|
|
$80 - $85
|
|
$40 - $45
|
$70
|
|
$80 - $85
|
|
$40 - $45
|
$75
|
|
$80 - $85
|
|
$45 - $50
|
$80
|
|
$80 - $85
|
|
$45 - $50
|
(1)
|
The Platts IODEX is
the benchmark assessment based on a standard specification of iron
ore fines with 62% iron content (C.F.R. China).
|
(2)
|
U.S. Iron Ore tons
are reported in long tons of pellets.
|
(3)
|
Asia Pacific Iron Ore
tons are reported in metric tons of lump and fines, F.O.B. the
port.
|
|
|
|
U.S. Iron Ore Outlook (Long Tons)
For 2015, the Company is lowering its full-year sales volume
expectation by 1.5 million tons to 17.5 million tons of iron ore
pellets, primarily reflecting the termination of the Essar Algoma
Pellet Sale and Purchase Agreement in October. The Company bases
this outlook on current nominations and, due to this contract
termination, has excluded all previously nominated sales to this
customer from its forecast.
Cliffs is maintaining its previous cash production cost per
ton3 expectation of $55 -
$60 and the previous cash cost of goods sold per
ton3 expectation of $60 -
$65. The cash cost of goods sold per ton3
expectation includes expected idle costs.
The Company remains in active negotiations with the United
Steelworkers and is committed to reaching a fair and equitable
agreement. The current contract has been extended by mutual
agreement of both parties. The contract extension covers
approximately 2,200 USW-represented workers at
Cliffs' Empire and Tilden mines
in Michigan, and its United Taconite and Hibbing Taconite
mines in Minnesota.
Cliffs anticipates depreciation, depletion and amortization to
be approximately $6 per ton for
full-year 2015.
Asia Pacific Iron Ore Outlook (Metric Tons, F.O.B. the
port)
Cliffs is increasing its full-year 2015 Asia Pacific Iron Ore
expected sales and production volumes to approximately 11.5 million
tons from its previous expectation of 11 million tons. The product
mix is expected to contain 50 percent lump and 50 percent
fines.
Based on a fourth-quarter average exchange rate of $0.70 U.S. Dollar to Australian Dollar, the
Company is maintaining its full-year 2015 Asia Pacific Iron Ore
cash production cost per ton3 expectation of
$30 - $35. Cliffs' cash cost of goods
sold per ton3 expectation of $35
- $40 is also maintained.
Cliffs anticipates depreciation, depletion and amortization to
be approximately $2 per ton for
full-year 2015.
The following table provides a summary of Cliffs' 2015 guidance
for its two continuing business segments:
|
|
2015 Outlook
Summary
|
|
|
U.S. Iron Ore
(A)
|
Asia
Pacific
Iron Ore
(B)
|
Sales volume
(million tons)
|
17.5
|
|
11.5
|
|
Production volume
(million tons)
|
*
|
|
11.5
|
|
Cash production
cost per ton3
|
$55 -
$60
|
|
$30 -
$35
|
|
Cash cost of goods
sold per ton3
|
$60 -
$65
|
|
$35 -
$40
|
|
DD&A per
ton
|
$6
|
|
$2
|
|
|
|
|
|
|
|
(A)
|
U.S. Iron Ore tons
are reported in long tons of pellets.
|
(B)
|
Asia Pacific Iron Ore
tons are reported in metric tons of lumps and fines.
|
*
|
Subject to
fourth-quarter and 2016 pellet demand and customer
nominations.
|
|
|
|
|
|
SG&A Expenses and Other Expectations
Cliffs is lowering its full-year 2015 SG&A expenses
expectation to $110 million, from its
previous expectation of $120 million.
The reduction is primarily driven by reduced headcount and external
services spend.
The Company expects full-year 2015 interest expense to be
approximately $235 million, of which
approximately $205 million is cash
interest. Consolidated full-year 2015 depreciation, depletion and
amortization is expected to be approximately $135 million.
Capital Budget Update
Cliffs is lowering its full-year 2015 capital expenditures
budget to the range of $85 - $95
million, from its previous expectation of $100 - $125 million. The spending range includes
outflows related to North American Coal and assumes no additional
asset divestitures. The reduction is driven by spending discipline
exhibited across the business.
Conference Call Information
Cliffs Natural Resources Inc. will host a conference call this
morning, October 29, 2015, at
10 a.m. ET. The call will be
broadcast live and archived on Cliffs' website:
www.cliffsnaturalresources.com.
About Cliffs Natural Resources Inc.
Cliffs Natural Resources Inc. is a leading mining and natural
resources company in the United
States. The Company is a major supplier of iron ore pellets
to the North American steel industry from its mines and pellet
plants located in Michigan and
Minnesota. Cliffs also operates an
iron ore mining complex in Western
Australia. Additionally, Cliffs produces low-volatile
metallurgical coal in the U.S. from its mines located in
Alabama and West Virginia. Driven by the core values of
safety, social, environmental and capital stewardship, Cliffs'
employees endeavor to provide all stakeholders operating and
financial transparency. News releases and other information on the
Company are available at:
http://www.cliffsnaturalresources.com.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. As a general matter, forward-looking statements
relate to anticipated trends and expectations rather than
historical matters. Forward-looking statements are subject to
uncertainties and factors relating to Cliffs' operations and
business environment that are difficult to predict and may be
beyond our control. Such uncertainties and factors may cause
actual results to differ materially from those expressed or implied
by the forward-looking statements. These statements speak only as
of the date of this release, and we undertake no ongoing
obligation, other than that imposed by law, to update these
statements. Uncertainties and risk factors that could affect
Cliffs' future performance and cause results to differ from the
forward-looking statements in this release include, but are
not limited to: trends affecting our financial condition, results
of operations or future prospects, particularly the continued
volatility of iron ore and coal prices; availability of
capital and our ability to maintain adequate liquidity; uncertainty
or weaknesses in global economic conditions, including downward
pressure on prices caused by oversupply or imported products,
reduced market demand and any change to the economic growth rate in
China; our ability to reach
agreement with our iron ore customers regarding any modifications
to sales contract provisions, renewals or new arrangements; our
ability to maintain appropriate relations with unions and employees
and enter into or renew collective bargaining agreements on
satisfactory terms; the impact of our customers reducing their
steel production or using other methods to produce steel; our
ability to successfully execute an exit option for our Canadian
Entities that minimizes the cash outflows and associated
liabilities of such entities, including the CCAA process; our
ability to successfully identify and consummate any strategic
investments and complete planned divestitures, including with
respect to our North American Coal operating segment; our ability
to successfully diversify our product mix and add new customers
beyond our traditional blast furnace clientele; the outcome of any
contractual disputes with our customers, joint venture partners or
significant energy, material or service providers or any other
litigation or arbitration; the ability of our customers and joint
venture partners to meet their obligations to us on a timely basis
or at all; the impact of price-adjustment factors on our sales
contracts; changes in sales volume or mix; our actual levels of
capital spending; our actual economic iron ore and coal reserves or
reductions in current mineral estimates, including whether any
mineralized material qualifies as a reserve; events or
circumstances that could impair or adversely impact the viability
of a mine and the carrying value of associated assets, as well as
any resulting impairment charges; the results of prefeasibility and
feasibility studies in relation to projects; impacts of existing
and increasing governmental regulation and related costs and
liabilities, including failure to receive or maintain required
operating and environmental permits, approvals, modifications or
other authorization of, or from, any governmental or regulatory
entity and costs related to implementing improvements to ensure
compliance with regulatory changes; our ability to cost-effectively
achieve planned production rates or levels; uncertainties
associated with natural disasters, weather conditions,
unanticipated geological conditions, supply or price of energy,
equipment failures and other unexpected events; adverse changes in
currency values, currency exchange rates, interest rates and tax
laws; risks related to international operations; availability of
capital equipment and component parts; the potential existence of
significant deficiencies or material weakness in our internal
control over financial reporting; problems or uncertainties with
productivity, tons mined, transportation, mine-closure obligations,
environmental liabilities, employee-benefit costs and other risks
of the mining industry; and the risk factors identified in Part I -
Item 1A of our Annual Report on Form 10-K for the year ended
December 31, 2014. The information
contained herein speaks as of the date of this release and may be
superseded by subsequent events. Except as may be required by
applicable securities laws, we do not undertake any obligation to
revise or update any forward-looking statements contained in this
release.
FINANCIAL TABLES FOLLOW
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED OPERATIONS
|
|
|
|
(In Millions,
Except Per Share Amounts)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
REVENUES FROM PRODUCT
SALES AND SERVICES
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
542.5
|
|
|
$
|
901.9
|
|
|
$
|
1,399.9
|
|
|
$
|
2,161.7
|
|
Freight and venture
partners' cost reimbursements
|
|
50.7
|
|
|
77.8
|
|
|
137.4
|
|
|
181.2
|
|
|
|
593.2
|
|
|
979.7
|
|
|
1,537.3
|
|
|
2,342.9
|
|
COST OF GOODS SOLD
AND OPERATING EXPENSES
|
|
(538.1)
|
|
|
(723.5)
|
|
|
(1,344.1)
|
|
|
(1,713.2)
|
|
SALES
MARGIN
|
|
55.1
|
|
|
256.2
|
|
|
193.2
|
|
|
629.7
|
|
OTHER OPERATING
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(22.4)
|
|
|
(49.7)
|
|
|
(82.2)
|
|
|
(131.1)
|
|
Impairment of
goodwill and other long-lived assets
|
|
—
|
|
|
(377.0)
|
|
|
(3.3)
|
|
|
(378.6)
|
|
Miscellaneous -
net
|
|
(3.5)
|
|
|
27.7
|
|
|
19.1
|
|
|
15.7
|
|
|
|
(25.9)
|
|
|
(399.0)
|
|
|
(66.4)
|
|
|
(494.0)
|
|
OPERATING INCOME
(EXPENSE)
|
|
29.2
|
|
|
(142.8)
|
|
|
126.8
|
|
|
135.7
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(61.7)
|
|
|
(45.8)
|
|
|
(168.2)
|
|
|
(128.3)
|
|
Gain on
extinguishment of debt
|
|
79.2
|
|
|
—
|
|
|
392.9
|
|
|
—
|
|
Other non-operating
income (expense)
|
|
(0.1)
|
|
|
7.7
|
|
|
(3.0)
|
|
|
10.1
|
|
|
|
17.4
|
|
|
(38.1)
|
|
|
221.7
|
|
|
(118.2)
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY LOSS FROM
VENTURES
|
|
46.6
|
|
|
(180.9)
|
|
|
348.5
|
|
|
17.5
|
|
INCOME TAX BENEFIT
(EXPENSE)
|
|
3.4
|
|
|
(84.1)
|
|
|
(169.9)
|
|
|
(121.3)
|
|
EQUITY LOSS FROM
VENTURES, NET OF TAX
|
|
(0.1)
|
|
|
(9.2)
|
|
|
(0.1)
|
|
|
(9.8)
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS
|
|
49.9
|
|
|
(274.2)
|
|
|
178.5
|
|
|
(113.6)
|
|
LOSS FROM
DISCONTINUED OPERATIONS, NET OF TAX
|
|
(43.9)
|
|
|
(6,613.0)
|
|
|
(869.0)
|
|
|
(6,829.8)
|
|
NET INCOME
(LOSS)
|
|
6.0
|
|
|
(6,887.2)
|
|
|
(690.5)
|
|
|
(6,943.4)
|
|
LOSS ATTRIBUTABLE TO
NONCONTROLLING INTEREST
|
|
4.6
|
|
|
1,007.6
|
|
|
1.5
|
|
|
1,004.4
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
|
$
|
10.6
|
|
|
$
|
(5,879.6)
|
|
|
$
|
(689.0)
|
|
|
$
|
(5,939.0)
|
|
PREFERRED STOCK
DIVIDENDS
|
|
(25.6)
|
|
|
(12.8)
|
|
|
(38.4)
|
|
|
(38.4)
|
|
NET LOSS ATTRIBUTABLE
TO CLIFFS COMMON SHAREHOLDERS
|
|
$
|
(15.0)
|
|
|
$
|
(5,892.4)
|
|
|
$
|
(727.4)
|
|
|
$
|
(5,977.4)
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.19
|
|
|
$
|
(1.89)
|
|
|
$
|
0.87
|
|
|
$
|
(1.14)
|
|
Discontinued
operations
|
|
(0.29)
|
|
|
(36.60)
|
|
|
(5.62)
|
|
|
(37.91)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
|
|
$
|
(0.10)
|
|
|
$
|
(38.49)
|
|
|
$
|
(4.75)
|
|
|
$
|
(39.05)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS -
DILUTED
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.19
|
|
|
$
|
(1.89)
|
|
|
$
|
0.87
|
|
|
$
|
(1.14)
|
|
Discontinued
operations
|
|
(0.29)
|
|
|
(36.60)
|
|
|
(5.62)
|
|
|
(37.91)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS -
DILUTED
|
|
$
|
(0.10)
|
|
|
$
|
(38.49)
|
|
|
$
|
(4.75)
|
|
|
$
|
(39.05)
|
|
AVERAGE NUMBER OF
SHARES (IN THOUSANDS)
|
|
|
|
|
|
|
|
|
Basic
|
|
153,237
|
|
|
153,108
|
|
|
153,213
|
|
|
153,085
|
|
Diluted
|
|
153,237
|
|
|
153,108
|
|
|
153,213
|
|
|
153,085
|
|
CASH DIVIDENDS
DECLARED PER DEPOSITARY SHARE
|
|
$
|
0.88
|
|
|
$
|
0.44
|
|
|
$
|
1.32
|
|
|
$
|
1.32
|
|
CASH DIVIDENDS
DECLARED PER COMMON SHARE
|
|
$
|
—
|
|
|
$
|
0.15
|
|
|
$
|
—
|
|
|
$
|
0.45
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL POSITION
|
|
|
|
(In
Millions)
|
|
|
September 30,
2015
|
|
December 31,
2014
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
270.2
|
|
|
$
|
271.3
|
|
Accounts receivable,
net
|
|
53.4
|
|
|
122.7
|
|
Inventories
|
|
351.7
|
|
|
260.1
|
|
Supplies and other
inventories
|
|
118.0
|
|
|
118.6
|
|
Income tax
receivable
|
|
3.1
|
|
|
217.6
|
|
Short-term assets of
discontinued operations
|
|
141.4
|
|
|
330.6
|
|
Other current
assets
|
|
138.1
|
|
|
128.0
|
|
TOTAL CURRENT
ASSETS
|
|
1,075.9
|
|
|
1,448.9
|
|
PROPERTY, PLANT AND
EQUIPMENT, NET
|
|
1,052.6
|
|
|
1,070.5
|
|
OTHER
ASSETS
|
|
|
|
|
Long-term assets of
discontinued operations
|
|
—
|
|
|
400.1
|
|
Other non-current
assets
|
|
143.0
|
|
|
244.5
|
|
TOTAL OTHER
ASSETS
|
|
143.0
|
|
|
644.6
|
|
TOTAL
ASSETS
|
|
$
|
2,271.5
|
|
|
$
|
3,164.0
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable
|
|
$
|
102.3
|
|
|
$
|
166.1
|
|
Accrued
expenses
|
|
149.8
|
|
|
201.7
|
|
Short-term
liabilities of discontinued operations
|
|
182.2
|
|
|
400.6
|
|
Other current
liabilities
|
|
235.6
|
|
|
190.2
|
|
TOTAL CURRENT
LIABILITIES
|
|
669.9
|
|
|
958.6
|
|
PENSION AND
POSTEMPLOYMENT BENEFIT LIABILITIES
|
|
209.1
|
|
|
259.7
|
|
ENVIRONMENTAL AND
MINE CLOSURE OBLIGATIONS
|
|
211.9
|
|
|
165.6
|
|
LONG-TERM
DEBT
|
|
2,721.6
|
|
|
2,843.3
|
|
LONG-TERM LIABILITIES
OF DISCONTINUED OPERATIONS
|
|
—
|
|
|
436.1
|
|
OTHER
LIABILITIES
|
|
218.5
|
|
|
235.0
|
|
TOTAL
LIABILITIES
|
|
4,031.0
|
|
|
4,898.3
|
|
EQUITY
|
|
|
|
|
CLIFFS SHAREHOLDERS'
DEFICIT
|
|
(1,932.0)
|
|
|
(1,431.3)
|
|
NONCONTROLLING
INTEREST (DEFICIT)
|
|
172.5
|
|
|
(303.0)
|
|
TOTAL
DEFICIT
|
|
(1,759.5)
|
|
|
(1,734.3)
|
|
TOTAL LIABILITIES AND
DEFICIT
|
|
$
|
2,271.5
|
|
|
$
|
3,164.0
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED CASH FLOWS
|
|
|
|
(In
Millions)
|
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net loss
|
|
$
|
(690.5)
|
|
|
$
|
(6,943.4)
|
|
Adjustments to
reconcile net loss to net cash provided (used) by operating
activities:
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
99.1
|
|
|
430.4
|
|
Impairment of
goodwill and other long-lived assets
|
|
76.6
|
|
|
7,773.1
|
|
Deferred income
taxes
|
|
160.0
|
|
|
(1,080.7)
|
|
Gain on
extinguishment of debt
|
|
(392.9)
|
|
|
—
|
|
Loss on
deconsolidation, net of cash deconsolidated
|
|
654.8
|
|
|
—
|
|
Other
|
|
52.7
|
|
|
(22.6)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Receivables and other
assets
|
|
293.1
|
|
|
98.9
|
|
Product
inventories
|
|
(76.2)
|
|
|
(129.2)
|
|
Payables, accrued
expenses and other current liabilities
|
|
(236.2)
|
|
|
(22.5)
|
|
Net cash provided
(used) by operating activities
|
|
(59.5)
|
|
|
104.0
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(57.9)
|
|
|
(233.2)
|
|
Other investing
activities
|
|
0.7
|
|
|
25.3
|
|
Net cash used by
investing activities
|
|
(57.2)
|
|
|
(207.9)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Proceeds from first
lien notes offering
|
|
503.5
|
|
|
—
|
|
Debt issuance
costs
|
|
(33.6)
|
|
|
(2.1)
|
|
Repurchase of
debt
|
|
(225.9)
|
|
|
—
|
|
Borrowings under
credit facilities
|
|
309.8
|
|
|
918.5
|
|
Repayment under
credit facilities
|
|
(309.8)
|
|
|
(705.1)
|
|
Repayment of
equipment loans
|
|
(36.9)
|
|
|
(15.7)
|
|
Distributions of
partnership equity
|
|
(31.7)
|
|
|
—
|
|
Common stock
dividends
|
|
—
|
|
|
(69.5)
|
|
Preferred stock
dividends
|
|
(38.4)
|
|
|
(38.4)
|
|
Other financing
activities
|
|
(38.8)
|
|
|
(70.3)
|
|
Net cash provided by
financing activities
|
|
98.2
|
|
|
17.4
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
(2.2)
|
|
|
(5.0)
|
|
DECREASE IN CASH AND
CASH EQUIVALENTS
|
|
(20.7)
|
|
|
(91.5)
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
|
290.9
|
|
|
335.5
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
|
$
|
270.2
|
|
|
$
|
244.0
|
|
1 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION -
EBITDA AND ADJUSTED EBITDA
In addition to the consolidated financial statements presented
in accordance with U.S. GAAP, the Company has presented EBITDA and
adjusted EBITDA on both a consolidated basis and on a segment
basis, which are non-GAAP financial measures that management uses
in evaluating operating performance. The presentation of these
measures is not intended to be considered in isolation from, as a
substitute for, or as superior to, the financial information
prepared and presented in accordance with U.S. GAAP. The
presentation of these measures may be different from non-GAAP
financial measures used by other companies. A reconciliation of
these measures on a segment basis is provided on page 2 of the news
release. A reconciliation of these consolidated measures to their
most directly comparable GAAP measures is provided in the table
below.
|
|
(In
Millions)
|
|
(In
Millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Income
(Loss)
|
|
$
|
6.0
|
|
|
$
|
(6,887.2)
|
|
|
$
|
(690.5)
|
|
|
$
|
(6,943.4)
|
|
Less:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(62.3)
|
|
|
(47.4)
|
|
|
(170.7)
|
|
|
(134.9)
|
|
Income tax benefit
(expense)
|
|
4.8
|
|
|
921.4
|
|
|
(167.3)
|
|
|
1,012.3
|
|
Depreciation,
depletion and amortization
|
|
(35.6)
|
|
|
(144.0)
|
|
|
(99.1)
|
|
|
(430.4)
|
|
EBITDA
|
|
$
|
99.1
|
|
|
$
|
(7,617.2)
|
|
|
$
|
(253.4)
|
|
|
$
|
(7,390.4)
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
Impairment of
goodwill and other long-lived assets
|
|
$
|
—
|
|
|
$
|
(377.0)
|
|
|
$
|
(3.3)
|
|
|
$
|
(378.6)
|
|
Impact of
discontinued operations
|
|
(44.8)
|
|
|
(7,543.0)
|
|
|
(865.9)
|
|
|
(7,737.1)
|
|
Gain on
extinguishment of debt
|
|
79.2
|
|
|
—
|
|
|
392.9
|
|
|
—
|
|
Foreign exchange
remeasurement
|
|
2.4
|
|
|
25.8
|
|
|
15.2
|
|
|
8.4
|
|
Severance and
contractor termination costs
|
|
2.2
|
|
|
(2.6)
|
|
|
(9.3)
|
|
|
(19.3)
|
|
Adjusted
EBITDA*
|
|
$
|
60.1
|
|
|
$
|
279.6
|
|
|
$
|
217.0
|
|
|
$
|
736.2
|
|
|
*Excluding idle
expenses primarily associated with the Empire and United Taconite
mines, Cliffs' adjusted EBITDA would have been $93
million.
|
2 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION -
ADJUSTED EARNINGS
In addition to the consolidated financial statements presented
in accordance with U.S. GAAP, the Company has presented Adjusted
Net Income attributable to Cliffs' shareholders, which is a
non-GAAP financial measure that management uses in evaluating
operating performance. The presentation of this measure is not
intended to be considered in isolation from, as a substitute for,
or as superior to, the financial information prepared and presented
in accordance with U.S. GAAP. The presentation of this measure may
be different from non-GAAP financial measures used by other
companies. A reconciliation of this measure to its most directly
comparable GAAP measure is provided in the table below.
|
|
(In
Millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Income (Loss) from
Continuing Operations
|
|
$
|
49.9
|
|
|
$
|
(274.2)
|
|
|
$
|
178.5
|
|
|
$
|
(113.6)
|
|
Loss (Income) from
Continuing Operations Attributable to Noncontrolling
Interest
|
|
4.6
|
|
|
(2.5)
|
|
|
(6.2)
|
|
|
(22.4)
|
|
Net Income (Loss)
from Continuing Operations Attributable to Cliffs
Shareholders
|
|
$
|
54.5
|
|
|
$
|
(276.7)
|
|
|
$
|
172.3
|
|
|
$
|
(136.0)
|
|
Loss from
Discontinued Operations, net of tax
|
|
(43.9)
|
|
|
(5,602.9)
|
|
|
(861.3)
|
|
|
(5,803.0)
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
|
$
|
10.6
|
|
|
$
|
(5,879.6)
|
|
|
$
|
(689.0)
|
|
|
$
|
(5,939.0)
|
|
PREFERRED STOCK
DIVIDENDS
|
|
(25.6)
|
|
|
(12.8)
|
|
|
(38.4)
|
|
|
(38.4)
|
|
NET LOSS ATTRIBUTABLE
TO CLIFFS COMMON SHAREHOLDERS
|
|
$
|
(15.0)
|
|
|
$
|
(5,892.4)
|
|
|
$
|
(727.4)
|
|
|
$
|
(5,977.4)
|
|
Less:
|
|
|
|
|
|
|
|
|
Impairment of
goodwill and other long-lived assets
|
|
$
|
—
|
|
|
$
|
(377.0)
|
|
|
$
|
(3.3)
|
|
|
$
|
(378.6)
|
|
Gain on
extinguishment of debt
|
|
79.2
|
|
|
—
|
|
|
392.9
|
|
|
—
|
|
Foreign exchange
remeasurement
|
|
2.4
|
|
|
25.8
|
|
|
15.2
|
|
|
8.4
|
|
Severance and
contractor termination costs
|
|
2.2
|
|
|
(2.6)
|
|
|
(9.3)
|
|
|
(19.3)
|
|
Tax effect of
adjustments
|
|
(1.6)
|
|
|
(14.3)
|
|
|
(7.7)
|
|
|
(8.4)
|
|
Income tax valuation
allowances
|
|
—
|
|
|
—
|
|
|
(165.8)
|
|
|
—
|
|
NET INCOME (LOSS)
FROM CONTINUING OPERATIONS ATTRIBUTABLE TO CLIFFS COMMON
SHAREHOLDERS - ADJUSTED
|
|
$
|
(53.3)
|
|
|
$
|
78.6
|
|
|
$
|
(88.1)
|
|
|
$
|
223.5
|
|
Weighted Average
Number of Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
153.2
|
|
|
153.1
|
|
|
153.2
|
|
|
153.1
|
|
Depositary
Shares
|
|
—
|
|
|
25.2
|
|
|
—
|
|
|
—
|
|
Employee Stock
Plans
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.9
|
|
Diluted
|
|
153.2
|
|
|
178.8
|
|
|
153.2
|
|
|
154.0
|
|
Earnings (Loss) per
Common Share Attributable to
Cliffs Common Shareholders - Basic:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.35)
|
|
|
$
|
0.51
|
|
|
$
|
(0.58)
|
|
|
$
|
1.46
|
|
Discontinued
operations
|
|
(0.29)
|
|
|
(36.60)
|
|
|
(5.62)
|
|
|
(37.91)
|
|
|
|
$
|
(0.64)
|
|
|
$
|
(36.09)
|
|
|
$
|
(6.20)
|
|
|
$
|
(36.45)
|
|
Earnings (Loss) per
Common Share Attributable to
Cliffs Common Shareholders - Diluted:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.35)
|
|
|
$
|
0.51
|
|
|
$
|
(0.58)
|
|
|
$
|
1.45
|
|
Discontinued
operations
|
|
(0.29)
|
|
|
(31.34)
|
|
|
(5.62)
|
|
|
(37.68)
|
|
|
|
$
|
(0.64)
|
|
|
$
|
(30.83)
|
|
|
$
|
(6.20)
|
|
|
$
|
(36.23)
|
|
3 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
EXPLANATIONS
Cash production cost, non-production cash cost, and cash cost
per ton are non-GAAP financial measures that management uses in
evaluating operating performance. The presentation of these
measures is not intended to be considered in isolation from, as a
substitute for, or as superior to, the financial information
prepared and presented in accordance with U.S. GAAP. The
presentation of these measures may be different from non-GAAP
financial measures used by other companies.
- Cash production cost per ton is defined as cost of goods sold
and operating expenses per ton less depreciation, depletion and
amortization; as well as period costs, costs of services and
inventory effects per ton.
- Non-production cash cost per ton is defined as the sum of idle
costs, period costs (including royalties), costs of services, and
inventory effects per ton.
- Cash cost per ton is defined as cost of goods sold and operating
expenses per ton less depreciation, depletion and amortization per
ton.
4 NET DEBT
RECONCILIATION
Net debt is a non-GAAP financial measure that management uses in
evaluating financial position. The presentation of this measure is
not intended to be considered in isolation from, as a substitute
for, or as superior to, the financial information prepared and
presented in accordance with U.S. GAAP. The presentation of this
measure may be different from non-GAAP financial measures used by
other companies. Net debt is defined as long-term debt plus the
current portion of short term debt, less cash and cash equivalents.
A reconciliation of this consolidated measure to its most directly
comparable GAAP measures is provided in the table below.
|
|
(In
Millions)
|
|
|
September
30,
2015
|
|
September
30,
2014
|
Long-term
debt
|
|
$
|
2,721.6
|
|
|
$
|
2,887.9
|
|
Short-term debt and
current portion of long-term debt
|
|
—
|
|
|
213.2
|
|
Total Debt
|
|
$
|
2,721.6
|
|
|
$
|
3,101.1
|
|
Less:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
270.2
|
|
|
$
|
244.0
|
|
Net Debt
|
|
$
|
2,451.4
|
|
|
$
|
2,857.1
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cliffs-natural-resources-inc-reports-third-quarter-2015-results-300168474.html
SOURCE Cliffs Natural Resources Inc.