-
Company Reports 2014 First-Quarter Consolidated
Revenues of $940 Million
-
Year-over-Year Liquidity Improves by 32% to $1.9
Billion, Including $364 Million in Cash and Cash Equivalents
Despite Lower Iron Ore and Metallurgical Coal Pricing
-
Year-over-Year Capital Spending in the Quarter
Decreases 55% to $103 Million
-
Bloom Lake Mine Achieves Record First-Quarter
Production Volume of 1.5 Million Tons
CLEVELAND-April 24,
2014-Cliffs Natural
Resources Inc. (NYSE: CLF) (Paris:
CLF) today reported first-quarter results for the period
ended March 31, 2014. Year-over-year consolidated revenues of
$940 million decreased $201 million, or 18%, from the previous
year. The lower revenues were primarily driven by
significantly decreased market pricing for iron ore and
metallurgical coal, as well as a 2% decrease in global iron ore
sales volumes, much of which was weather related. Cost of goods
sold decreased by 3% to $877 million, primarily driven by favorable
foreign exchange rates and reduced volumes, partially offset by $33
million in incremental lower-cost-or-market adjustments in the
North American Coal and Eastern Canadian Iron Ore business
segments. Lower revenues significantly contributed to a 73%
decrease in consolidated sales margin to $63 million, from $238
million in last year's comparable quarter. The consolidated sales
margin also included the sales margin loss from Wabush Mine of $25
million, which was successfully idled during the first-quarter
2014.
Gary Halverson, Cliffs' President
and Chief Executive Officer, said, "The first-quarter's winter
weather in North America was some of the worst conditions we have
experienced in 30 years. Despite this, we are maintaining our
full-year 2014 sales and production volume guidance, as well as our
cash-cost outlook in all of our North American business segments.
Also, I am pleased with Bloom Lake's record first-quarter
production volume in spite of the harsher weather-related operating
conditions. Our focus on disciplined capital allocation and cost
reductions has significantly improved our liquidity and financial
position year over year."
Cliffs' first-quarter 2014
SG&A and exploration expenses were $55 million and included $5
million in severance-related costs, which were attributed to a 21%
reduction in Cliffs' officer-level executive group since Dec. 31,
2013. Excluding severance-related costs, first-quarter 2014
SG&A and exploration expenses decreased $21 million or 30% when
compared to the year-ago quarter.
During the first quarter of 2014,
miscellaneous - net expense increased to $59 million and included
$39 million in Wabush-related costs. This was largely comprised of
the costs incurred to idle the Wabush facilities. During the
first-quarter 2014, the Company successfully idled Wabush's Scully
mine and processing plant in Newfoundland and Labrador. Wabush
Mine's pellet plant previously was idled at the end of the second
quarter in 2013. Miscellaneous - net expense also included a $16
million penalty incurred from a minimum tonnage rail shipment
contract not being met as a result of the delay in the Bloom Lake
Phase II expansion, as well as an unfavorable impact of $7 million
related to foreign currency exchange re-measurements.
First-quarter 2014 results
included an income tax benefit of $22 million versus a benefit of
$6 million reported in the previous year's comparable quarter. The
increase is mainly attributable to a higher expected full-year
effective tax rate and a decrease in year-over-year net income.
For the first quarter of 2014,
Cliffs recorded a net loss attributable to Cliffs' common
shareholders of $83 million, or $0.54 per diluted share, compared
with a net income of $97 million, or $0.66 per diluted share, in
the first quarter of 2013.
U.S. Iron Ore
|
|
Three Months Ended
March 31, |
|
|
2014 |
|
2013 |
Volumes - In Thousands of Long Tons |
|
|
|
|
Total sales
volume |
|
2,837 |
|
|
3,083 |
|
Total production
volume |
|
4,637 |
|
|
5,126 |
|
Sales Margin - In Millions |
|
|
|
|
Revenues from product
sales and services |
|
$ |
361.3 |
|
|
$ |
410.1 |
|
Cost of goods sold and
operating expenses |
|
266.3 |
|
|
252.8 |
|
Sales margin |
|
$ |
95.0 |
|
|
$ |
157.3 |
|
Sales Margin - Per Long Ton |
|
|
|
|
Revenues from product
sales and services* |
|
$ |
109.02 |
|
|
$ |
119.82 |
|
Cash cost** |
|
65.42 |
|
|
60.17 |
|
Depreciation,
depletion and amortization |
|
10.12 |
|
|
8.63 |
|
Cost of goods sold and
operating expenses* |
|
75.54 |
|
|
68.80 |
|
Sales margin |
|
$ |
33.48 |
|
|
$ |
51.02 |
|
* |
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. |
** |
Cash cost
per ton is defined as cost of goods sold and operating expenses per
ton less depreciation, depletion and amortization per ton, 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 these measures
may be different from non-GAAP financial measures used by other
companies. |
U.S. Iron Ore pellet sales volume
was 2.8 million tons, compared with 3.1 million tons in the first
quarter of 2013. The decrease was primarily driven by the extremely
cold weather experienced across the midwestern United States, which
impacted both production and shipment of product on the Great
Lakes. Despite this weather-related volume shortfall in the first
quarter, the Company is maintaining its full-year 2014 expected
sales volume guidance.
First-quarter 2014 revenues per
ton were $109.02, down 9% from $119.82 in the year-ago quarter. The
decrease was attributed to lower realized pricing from certain
customer contracts, reduced year-over-year market pricing for iron
ore and customer mix.
Cash cost per ton in U.S. Iron Ore
was $65.42, up 9% from $60.17 in the prior year's first quarter.
The increase was primarily driven by higher maintenance activity
and energy costs, which were elevated due to extreme weather
conditions.
Eastern Canadian Iron
Ore
|
|
Three Months Ended
March 31, |
|
|
2014 |
|
2013 |
Volumes - In Thousands of Metric Tons |
|
|
|
|
Total sales
volume |
|
1,608 |
|
|
1,859 |
|
Total production
volume |
|
1,752 |
|
|
2,019 |
|
Sales Margin - In Millions |
|
|
|
|
Revenues from product
sales and services |
|
$ |
158.3 |
|
|
$ |
245.3 |
|
Cost of goods sold and
operating expenses |
|
208.0 |
|
|
225.9 |
|
Sales margin |
|
$ |
(49.7 |
) |
|
$ |
19.4 |
|
Sales Margin - Per Metric Ton |
|
|
|
|
Revenues from product
sales and services |
|
$ |
98.45 |
|
|
$ |
131.95 |
|
Cash cost* |
|
103.73 |
|
|
99.41 |
|
Depreciation,
depletion and amortization |
|
25.62 |
|
|
22.11 |
|
Cost of goods sold and
operating expenses* |
|
129.35 |
|
|
121.52 |
|
Sales margin |
|
$ |
(30.90 |
) |
|
$ |
10.43 |
|
* |
Cash cost per ton is defined as cost of goods sold and
operating expenses per ton less depreciation, depletion and
amortization per ton, 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 these measures may be different from
non-GAAP financial measures used by other companies. |
Eastern Canadian Iron Ore sales
volume was 1.6 million tons, a decrease of 14% versus the prior
year's quarter. This was attributed to Bloom Lake Mine, which sold
1.3 million tons of iron ore concentrate compared to 1.5 million
tons in the prior year. The decrease was primarily driven by a
Chinamax-sized vessel shipment that was delayed due to the adverse
weather-related impact on logistics. The first-quarter 2014 sales
volume also included approximately 350,000 tons from Wabush Mine,
which was slightly lower year over year, reflecting the idling of
the mine.
Revenues per ton in Eastern
Canadian Iron Ore were $98.45, down 25% from $131.95 in the prior
year's first quarter. The lower per-ton revenues were attributed to
a 19% year-over-year decrease in iron ore market pricing and
unfavorable provisional pricing settlements that were a benefit in
the prior year's quarter. Also, revenues per ton were unfavorably
impacted by 23% higher year-over-year freight rates and product
mix. The prior year's first-quarter product mix included iron ore
pellets which sell at a premium compared to iron ore concentrate.
The quarter's revenue decrease was partially offset by favorable
impacts from lag pricing as well as higher-quality premiums of $12
per ton, a 25% increase from the prior year's first quarter.
Cash cost per ton in Eastern
Canadian Iron Ore was $103.73, up 4% from $99.41 in the year-ago
quarter. The per-ton increase was primarily attributed to
lower-cost-or-market inventory adjustments of approximately $13
million, or $8 per ton, that are reported through cash cost of
goods sold. The adjustment is the result of the Company holding
inventory at a higher value than its expected sales rate, which is
largely driven by market pricing. This was partially offset by
improved year-over-year cash costs per ton at Bloom Lake and Wabush
mines.
Bloom Lake Mine's first-quarter
2014 cash costs were $94 per ton and included $7 per ton in a
lower-cost-or-market inventory adjustment. Excluding this, Bloom
Lake Mine's first-quarter 2014 cash cost was $87 per ton, compared
to $89 per ton in the year-ago quarter. The improvement was
primarily driven by favorable foreign currency exchange rates,
partially offset by increased mine development
activities.
Wabush Mine's first-quarter 2014
cash cost was $137 per ton and included $13 per ton in a
lower-cost-or-market inventory adjustment. Excluding this, Wabush
Mine's first-quarter 2014 cash cost was $124 per ton, compared to
$135 per ton in the year-ago quarter. The improvement was primarily
driven by the absence of pelletizing costs that were incurred in
the year-ago quarter and favorable foreign currency exchange
rates.
Asia Pacific Iron
Ore
|
|
Three Months Ended
March 31, |
|
|
2014 |
|
2013 |
Volumes - In Thousands of Metric Tons |
|
|
|
|
Total sales
volume |
|
2,641 |
|
|
2,305 |
|
Total production
volume |
|
2,790 |
|
|
2,672 |
|
Sales Margin - In Millions |
|
|
|
|
Revenues from product
sales and services |
|
$ |
254.2 |
|
|
$ |
270.8 |
|
Cost of goods sold and
operating expenses |
|
187.9 |
|
|
209.5 |
|
Sales margin |
|
$ |
66.3 |
|
|
$ |
61.3 |
|
Sales Margin - Per Metric Ton |
|
|
|
|
Revenues from product
sales and services |
|
$ |
96.25 |
|
|
$ |
117.48 |
|
Cash cost* |
|
56.34 |
|
|
75.10 |
|
Depreciation,
depletion and amortization |
|
14.80 |
|
|
15.79 |
|
Cost of goods sold and
operating expenses |
|
71.14 |
|
|
90.89 |
|
Sales margin |
|
$ |
25.11 |
|
|
$ |
26.59 |
|
* |
Cash cost per ton is defined as cost of goods sold and
operating expenses per ton less depreciation, depletion and
amortization per ton, 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 these measures may be different from
non-GAAP financial measures used by other companies. |
First-quarter 2014 Asia Pacific
Iron Ore sales volume increased 15% to 2.6 million tons, from 2.3
million tons in 2013's first quarter. The increase was attributed
to the timing of vessel shipments.
Revenues per ton for the first
quarter of 2014 decreased 18% to $96.25, from $117.48 in last
year's first quarter. This was primarily driven by a 19%
year-over-year decrease in iron ore market pricing, an unfavorable
foreign exchange hedging loss of $4 per ton and increased freight
rates. This decrease was partially offset by reduced penalties and
increased lump premiums compared to the prior year's first
quarter.
Cash cost per ton in Asia Pacific
Iron Ore decreased 25% to $56.34, from $75.10 in 2013's comparable
quarter. The decrease was due to favorable foreign exchange rate
variances of $9 per ton and less material moved. Also, the
increased sales volumes resulted in improved fixed-cost
leverage.
North
American Coal
|
|
Three Months Ended
March 31, |
|
|
2014 |
|
2013 |
Volumes - In Thousands of Short Tons |
|
|
|
|
Total sales
volume |
|
1,571 |
|
|
1,787 |
|
Total production
volume |
|
1,705 |
|
|
1,730 |
|
Sales Margin - In Millions |
|
|
|
|
Revenues from product
sales and services |
|
$ |
166.2 |
|
|
$ |
214.3 |
|
Cost of goods sold and
operating expenses |
|
214.6 |
|
|
212.5 |
|
Sales margin |
|
$ |
(48.4 |
) |
|
$ |
1.8 |
|
Sales Margin - Per Short Ton |
|
|
|
|
Revenues from product
sales and services* |
|
$ |
88.61 |
|
|
$ |
110.35 |
|
Cash cost** |
|
100.38 |
|
|
91.16 |
|
Depreciation,
depletion and amortization |
|
19.03 |
|
|
18.19 |
|
Cost of goods sold and
operating expenses* |
|
119.41 |
|
|
109.35 |
|
Sales margin |
|
$ |
(30.80 |
) |
|
$ |
1.00 |
|
* |
Excludes revenues and expenses related to domestic freight, which
are offsetting and have no impact on sales margin. |
** |
Cash
cost per ton is defined as cost of goods sold and operating
expenses per ton less depreciation, depletion and amortization per
ton, 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 these
measures may be different from non-GAAP financial measures used by
other companies. |
For the first quarter of 2014,
North American Coal sales volume was 1.6 million tons, a 12%
decrease from 1.8 million tons sold in the prior year's comparable
quarter. The decrease was driven by lower sales to certain
customers due to extended pricing negotiations and adverse
weather-related impacts.
North American Coal's 2014
first-quarter revenues per ton were down 20% to $88.61, versus
$110.35 in the first quarter of 2013. The year-over-year decrease
was primarily driven by lower market pricing for metallurgical coal
products, along with a favorable impact in the prior year's first
quarter related to tons that were priced at a higher rate.
First-quarter 2014 North American
Coal cash costs were $100.38 per ton and included a $14 per ton
lower-cost-or-market inventory adjustment. The prior year's
first-quarter results also included a lower-cost-or-market
inventory adjustment of $1 per ton. Excluding these inventory
adjustments, first-quarter 2014 cash costs per ton decreased 4%, to
$86. This was driven by a continued focus on improving operating
efficiencies.
Cash Flow
and Liquidity
When compared to the first quarter of 2013, the Company increased
its total liquidity by $460 million or 32%. The increase was driven
by a higher year-over-year cash and cash equivalents balance and
lower borrowings on the Company's revolving credit facilities. At
quarter end, Cliffs had $364 million of cash and cash equivalents,
and $3.2 billion in long-term debt, including $225 million drawn
under its existing credit facilities.
For the first quarter, Cliffs used
$82 million in cash from operations, versus using $25 million in
the 2013 comparable quarter. This was primarily driven by lower
commodity pricing and increased Wabush-related idle costs,
partially offset by lower cash tax payments and favorable working
capital adjustments versus the year-ago quarter.
The Company decreased its
first-quarter 2014 capital spending by $127 million, or 55%, to
$103 million and reported depreciation, depletion and amortization
of $141 million.
Outlook
Cliffs is maintaining its full-year sales and production volumes
for all business segments. Demand from the Company's North American
customers is very strong, reflecting lower-than-normal iron ore
inventory stockpiles at Cliffs' customers' facilities. This
dynamic, coupled with increasing economic growth anticipated in the
United States, is expected to provide a healthy demand for the
Company's U.S. Iron Ore products in 2014. In China, Cliffs expects
the economy to expand at a pace near the official government target
rate, primarily driven by fixed asset investment, specifically
infrastructure spending. As a result, increased steel production in
China is expected to require both domestic and imported steelmaking
raw materials to satisfy the demand.
Due to the commodity pricing
volatility for the products that Cliffs sells and for the purpose
of providing a full-year outlook, Cliffs will utilize the
year-to-date average 62% Fe seaborne iron ore spot price as of
March 31, 2014, which was $120 per ton (C.F.R. China), as a base
price assumption for providing its full-year 2014 revenues-per-ton
sensitivities for the Company's iron ore business segments. With
$120 per ton as a base price assumption for full-year 2014,
included in the table below is the expected revenues-per-ton range
for the Company's iron ore business segments and the per-ton
sensitivity for each $10 per ton variance from the base price
assumption.
|
|
2014
Full-Year Realized Revenue Sensitivity Summary (1) |
|
|
|
|
|
U.S.
Iron Ore (2) |
|
Eastern Canadian
Iron Ore (3) |
|
Asia Pacific
Iron Ore (4) |
|
|
Revenues Per Ton |
|
$100 - $105 |
|
$95 - $100 |
|
$95 - $100 |
|
|
Sensitivity Per Ton (+/-
$10) |
|
+/- $1 |
|
+/- $6 |
|
+/- $7 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Based on the average year-to-date 62% Fe seaborne iron ore
fines price (C.F.R. China) of $120 per ton as of March 31,
2014. |
(2) |
U.S. Iron Ore tons are reported in long tons. |
|
(3) |
Eastern Canadian lron Ore tons are reported in metric
tons, F.O.B. Eastern Canada. |
|
(4) |
Asia Pacific Iron Ore tons are reported in metric tons,
F.O.B. the port. |
|
The revenues-per-ton sensitivities
consider various contract provisions and lag-year adjustments
contained in certain supply agreements. Actual realized revenues
per ton for the full year will depend on iron ore price changes,
customer mix, freight rates, production input costs and/or steel
prices (all factors contained in certain of Cliffs' supply
agreements).
U.S. Iron
Ore Outlook (Long Tons)
For 2014, the Company is maintaining its sales and production
volume expectation of 22 - 23 million tons.
The U.S. Iron Ore revenues-per-ton
sensitivity included within the 2014 revenues-sensitivity summary
table above also includes the following assumptions:
Cliffs is maintaining its 2014
full-year U.S. Iron Ore cash-cost-per-ton expectation of $65 - $70,
and depreciation, depletion and amortization expectation of
approximately $7 per ton.
Eastern
Canadian Iron Ore Outlook (Metric Tons, F.O.B. Eastern
Canada)
For 2014, Cliffs is maintaining its full-year sales and production
volume expectations of 6 - 7 million tons. This includes 500,000
tons from Wabush Mine and the remainder from Bloom Lake
Mine.
The Eastern Canadian Iron Ore
revenues-per-ton sensitivity is included within the 2014
revenues-per-ton sensitivity table above. The Company is
maintaining its full-year 2014 cash-cost-per-ton expectation in
Eastern Canadian Iron Ore of $85 - $90, which only includes the
operating cash cost from its Bloom Lake Mine. Depreciation,
depletion and amortization is expected to be approximately $25 per
ton for full-year 2014.
Asia Pacific
Iron Ore Outlook (Metric Tons, F.O.B. the port)
Cliffs is maintaining its full-year 2014 Asia Pacific Iron Ore
expected sales and production volumes of approximately 10 - 11
million tons. The product mix is expected to be approximately half
lump and half fines iron ore.
The Asia Pacific Iron Ore
revenues-per-ton sensitivity is included within the 2014
revenues-per-ton sensitivity table above. Cliffs is maintaining its
2014 full-year Asia Pacific Iron Ore cash-cost-per-ton expectation
of $60 - $65. Depreciation, depletion and amortization is
anticipated to be approximately $14 per ton for the year.
North
American Coal Outlook (Short Tons, F.O.B. the
mine)
The Company is maintaining its full-year 2014 North American Coal
expected sales and production volumes of 7 - 8 million tons. Sales
volume mix is anticipated to be approximately 67% low-volatile
metallurgical coal and 21% high-volatile metallurgical coal, with
thermal coal making up the remainder.
Cliffs is lowering its full-year
2014 North American Coal revenues-per-ton outlook to $80 - $85 from
its previous outlook of $85 - $90. The decrease is primarily
driven by lower market pricing for metallurgical coal products.
Cliffs has approximately 60% of its expected 2014 sales volume
committed and priced at approximately $85 per short ton at the
mine.
Cliffs is maintaining its North
American Coal full-year cash-cost-per-ton expectation of $85 - $90.
Full-year 2014 depreciation, depletion and amortization is expected
to be approximately $15 per ton.
The following table provides a summary of Cliffs'
2014 guidance for its four business segments:
|
|
2014 Outlook Summary |
|
|
U.S.
Iron Ore (1) |
Eastern Canadian
Iron Ore (2) |
Asia Pacific
Iron Ore (3) |
North American
Coal (4) |
Sales volume (million
tons) |
22 - 23 |
|
6 - 7 |
|
10 - 11 |
|
7 - 8 |
Production volume (million
tons) |
22 - 23 |
|
6 - 7 |
|
10 - 11 |
|
7 - 8 |
Cash cost per ton (5) |
$65 - $70 |
|
$85 - $90 |
|
$60 - $65 |
|
$85 - $90 |
DD&A per ton |
$7 |
|
$25 |
|
$14 |
|
$15 |
|
|
|
|
|
|
|
|
|
(1) |
U.S. Iron Ore tons are reported in long tons. |
(2) |
Eastern Canadian lron Ore tons are reported in metric
tons, F.O.B. Eastern Canada. |
(3) |
Asia Pacific Iron Ore tons are reported in metric tons,
F.O.B. the port. |
(4) |
North American Coal tons are reported in short tons,
F.O.B. the mine. |
(5) |
Cash cost per ton is defined as cost of goods sold and
operating expenses per ton less depreciation, depletion and
amortization per ton, 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 these measures may be different from
non-GAAP financial measures used by other companies. |
SG&A
Expenses and Other
Expectations
Cliffs is maintaining its full-year 2014 SG&A expense
expectation of approximately $185 million, which excludes
severance-related costs. Cliffs is also maintaining its full-year
cash outflows expectation for exploration of $15 million.
Also, as previously disclosed,
Cliffs is expecting to incur approximately $100 million in costs
related to the Wabush Mine idle. Full-year 2014 depreciation,
depletion and amortization is expected to be approximately $600
million.
Capital
Budget
Cliffs is maintaining its 2014 capital expenditures budget of
approximately $375 - $425 million. This includes approximately $100
million in cash carryover capital, with the remainder primarily
comprised of sustaining and license-to-operate capital.
Conference
Call Information
Cliffs Natural Resources Inc. will host a conference call tomorrow,
April 25, 2014, 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 an international mining and
natural resources company. The Company is a major global iron ore
producer and a significant producer of high-and low-volatile
metallurgical coal. Cliffs' strategy is to continually achieve
greater scale and diversification in the mining industry through a
focus on serving the world's largest and fastest growing steel
markets. Driven by the core values of social, environmental and
capital stewardship, Cliffs associates across the globe endeavor to
provide all stakeholders operating and financial transparency.
The Company is organized through a
global commercial group responsible for sales and delivery of
Cliffs' products and a global operations group responsible for the
production of the minerals the Company markets. Cliffs operates
iron ore and coal mines in North America and an iron ore mining
complex in Western Australia.
News releases and other information on the Company
are available on the Internet
at: http://www.cliffsnaturalresources.com
Follow Cliffs on Twitter at:
http://twitter.com/CliffsNR.
Forward-Looking
Statements
This release contains forward-looking statements within the meaning
of the federal securities laws. Although the Company believes that
its forward-looking statements are based on reasonable assumptions,
such statements are subject to risks and uncertainties relating to
Cliffs' operations and business environment that are difficult to
predict and may be beyond Cliffs' control. Such uncertainties and
factors may cause actual results to differ materially from those
expressed or implied by forward-looking statements for a variety of
reasons including without limitation: trends affecting our
financial condition, results of operations or future prospects,
particularly the continued volatility of iron ore and coal prices;
uncertainty or weaknesses in global economic conditions, including
downward pressure on prices, reduced market demand and any slowing
of the economic growth rate in China; a currently pending proxy
contest and any other actions of activist shareholders; our ability
to successfully integrate acquired companies into our operations
and achieve post-acquisition synergies, including without
limitation, Cliffs Quebec Iron Mining Limited (formerly
Consolidated Thompson Iron Mining Limited); our ability to
successfully identify and consummate any strategic investments and
complete planned divestitures; 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; our ability to reach agreement with our iron ore customers
regarding any modifications to sales contract provisions; the
impact of price-adjustment factors on our sales contracts; changes
in sales volume or mix; our actual economic iron ore and coal
reserves or reductions in current mineral estimates, including
whether any mineralized material qualifies as a reserve; the impact
of our customers using other methods to produce steel or reducing
their steel production; events or circumstances that could impair
or adversely impact the viability of a mine and the carrying value
of associated assets; 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; availability of capital and our ability to maintain adequate
liquidity and successfully implement our financing plans; our
ability to maintain appropriate relations with unions and employees
and enter into or renew collective bargaining agreements on
satisfactory terms; 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
other factors and risks that are set forth in the Company's most
recently filed reports with the Securities and Exchange Commission.
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.
Important Additional
Information
Cliffs, its directors and certain of its executive
officers may be deemed to be participants in the solicitation of
proxies from Cliffs shareholders in connection with the matters to
be considered at Cliffs' 2014 Annual Meeting. Cliffs intends to
file a proxy statement with the U.S. Securities and Exchange
Commission (the "SEC") in connection with any such solicitation of
proxies from Cliffs' shareholders. CLIFFS SHAREHOLDERS ARE STRONGLY
ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND ACCOMPANYING WHITE
PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. Information regarding the ownership of
Cliffs' directors and executive officers in Cliffs' shares,
restricted shares and options is included in their SEC filings on
Forms 3, 4 and 5. More detailed information regarding the identity
of potential participants, and their direct or indirect interests,
by security holdings or otherwise, will be set forth in the proxy
statement and other materials to be filed with the SEC in
connection with Cliffs' 2014 Annual Meeting. Information can also
be found in Cliffs' Annual Report on Form 10-K for the year ended
Dec. 31, 2013, filed with the SEC on Feb. 14, 2014. Shareholders
will be able to obtain any proxy statement, any amendments or
supplements to the proxy statement and other documents filed by
Cliffs with the SEC for no charge at the SEC's website at
www.sec.gov. Copies will also be available at no charge at Cliffs'
website at www.cliffsnr.com or by contacting James Graham, Vice
President, Chief Legal Officer & Secretary at (216) 694-5504.
Shareholders may also contact D.F. King & Co., Inc., Cliffs'
proxy solicitor, toll-free at (800) 487-4870 or by email at
cliffs@dfking.com.
SOURCE: Cliffs Natural Resources Inc.
INVESTOR RELATIONS AND
GLOBAL COMMUNICATIONS CONTACTS:
Jessica
Moran
Director, Investor Relations
(216) 694-6532 |
|
Patricia
Persico
Director, Global Communications
(216) 694-5316 |
|
|
|
Jordan
Kovler
D.F. King & Co., Inc.
(212) 493-6990 |
|
Joele
Frank, Meaghan Repko or Andrea Rose
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449 |
FINANCIAL TABLES FOLLOW
###
CLIFFS
NATURAL RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF UNAUDITED CONDENSED
CONSOLIDATED OPERATIONS
|
|
(In Millions, Except Per Share
Amounts) |
|
|
Three Months Ended
March 31, |
|
|
2014 |
|
2013 |
REVENUES FROM PRODUCT SALES AND SERVICES |
|
|
|
|
Product |
|
$ |
860.9 |
|
|
$ |
1,082.6 |
|
Freight and venture partners' cost reimbursements |
|
79.1 |
|
|
57.9 |
|
|
|
940.0 |
|
|
1,140.5 |
|
COST
OF GOODS SOLD AND OPERATING EXPENSES |
|
(876.8 |
) |
|
(902.6 |
) |
SALES
MARGIN |
|
63.2 |
|
|
237.9 |
|
OTHER
OPERATING INCOME (EXPENSE) |
|
|
|
|
Selling, general and administrative expenses |
|
(51.1 |
) |
|
(48.4 |
) |
Exploration costs |
|
(4.2 |
) |
|
(22.7 |
) |
Miscellaneous - net |
|
(58.6 |
) |
|
1.5 |
|
|
|
(113.9 |
) |
|
(69.6 |
) |
OPERATING INCOME |
|
(50.7 |
) |
|
168.3 |
|
OTHER
INCOME (EXPENSE) |
|
|
|
|
Interest expense, net |
|
(42.7 |
) |
|
(49.1 |
) |
Other
non-operating income |
|
1.2 |
|
|
1.1 |
|
|
|
(41.5 |
) |
|
(48.0 |
) |
INCOME
(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY
LOSS FROM VENTURES |
|
(92.2 |
) |
|
120.3 |
|
INCOME
TAX BENEFIT |
|
21.8 |
|
|
6.0 |
|
EQUITY
LOSS FROM VENTURES, net of tax |
|
(0.3 |
) |
|
(5.5 |
) |
NET
INCOME (LOSS) |
|
(70.7 |
) |
|
120.8 |
|
LOSS
(INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST |
|
0.4 |
|
|
(13.8 |
) |
NET
INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS |
|
$ |
(70.3 |
) |
|
$ |
107.0 |
|
PREFERRED STOCK DIVIDENDS |
|
(12.8 |
) |
|
(9.9 |
) |
NET
INCOME (LOSS) ATTRIBUTABLE TO CLIFFS COMMON SHAREHOLDERS |
|
$ |
(83.1 |
) |
|
$ |
97.1 |
|
|
|
|
|
|
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS
SHAREHOLDERS - BASIC |
|
$ |
(0.54 |
) |
|
$ |
0.66 |
|
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS
SHAREHOLDERS - DILUTED |
|
$ |
(0.54 |
) |
|
$ |
0.66 |
|
AVERAGE NUMBER OF SHARES (IN THOUSANDS) |
|
|
|
|
Basic |
|
153,040 |
|
|
147,827 |
|
Diluted |
|
153,040 |
|
|
148,081 |
|
CASH
DIVIDENDS DECLARED PER DEPOSITARY SHARE |
|
$ |
0.44 |
|
|
$ |
0.34 |
|
CASH
DIVIDENDS DECLARED PER COMMON SHARE |
|
$ |
0.15 |
|
|
$ |
0.15 |
|
CLIFFS
NATURAL RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL POSITION
|
|
(In Millions) |
|
|
March 31,
2014 |
|
December 31,
2013 |
ASSETS |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash
and cash equivalents |
|
$ |
364.0 |
|
|
$ |
335.5 |
|
Accounts receivable, net |
|
130.6 |
|
|
270.0 |
|
Inventories |
|
609.8 |
|
|
391.4 |
|
Supplies and other inventories |
|
204.9 |
|
|
216.0 |
|
Other
current assets |
|
363.0 |
|
|
347.1 |
|
TOTAL
CURRENT ASSETS |
|
1,672.3 |
|
|
1,560.0 |
|
PROPERTY, PLANT AND EQUIPMENT, NET |
|
11,086.0 |
|
|
11,153.4 |
|
OTHER
ASSETS |
|
|
|
|
Other
non-current assets |
|
444.5 |
|
|
408.5 |
|
TOTAL
OTHER ASSETS |
|
444.5 |
|
|
408.5 |
|
TOTAL
ASSETS |
|
$ |
13,202.8 |
|
|
$ |
13,121.9 |
|
LIABILITIES |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
|
$ |
329.2 |
|
|
$ |
345.5 |
|
Accrued expenses |
|
363.5 |
|
|
392.7 |
|
Short-term and current portion of long-term debt |
|
96.9 |
|
|
20.9 |
|
Other
current liabilities |
|
253.5 |
|
|
326.4 |
|
TOTAL
CURRENT LIABILITIES |
|
1,043.1 |
|
|
1,085.5 |
|
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES |
|
285.0 |
|
|
294.0 |
|
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS |
|
300.7 |
|
|
309.7 |
|
DEFERRED INCOME TAXES |
|
1,195.7 |
|
|
1,146.5 |
|
LONG-TERM DEBT |
|
3,194.8 |
|
|
3,022.6 |
|
OTHER
LIABILITIES |
|
347.9 |
|
|
379.3 |
|
TOTAL
LIABILITIES |
|
6,367.2 |
|
|
6,237.6 |
|
EQUITY |
|
|
|
|
CLIFFS
SHAREHOLDERS' EQUITY |
|
6,019.5 |
|
|
6,069.5 |
|
NONCONTROLLING INTEREST |
|
816.1 |
|
|
814.8 |
|
TOTAL
EQUITY |
|
6,835.6 |
|
|
6,884.3 |
|
TOTAL
LIABILITIES AND EQUITY |
|
$ |
13,202.8 |
|
|
$ |
13,121.9 |
|
CLIFFS
NATURAL RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF UNAUDITED CONDENSED
CONSOLIDATED CASH FLOWS
|
|
(In Millions) |
|
|
Three Months Ended
March 31, |
|
|
2014 |
|
2013 |
OPERATING ACTIVITIES |
|
|
|
|
Net
income (loss) |
|
$ |
(70.7 |
) |
|
$ |
120.8 |
|
Adjustments to reconcile net income to net cash provided (used) by
operating activities: |
|
|
|
|
Depreciation, depletion and amortization |
|
141.1 |
|
|
140.6 |
|
Deferred income taxes |
|
15.1 |
|
|
(46.3 |
) |
Other |
|
3.2 |
|
|
(10.0 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Receivables and other assets |
|
161.5 |
|
|
102.7 |
|
Product inventories |
|
(214.5 |
) |
|
(194.0 |
) |
Payables and accrued expenses |
|
(117.7 |
) |
|
(139.2 |
) |
Net
cash used by operating activities |
|
(82.0 |
) |
|
(25.4 |
) |
INVESTING ACTIVITIES |
|
|
|
|
Purchase of property, plant and equipment |
|
(103.3 |
) |
|
(230.4 |
) |
Other
investing activities |
|
12.6 |
|
|
2.0 |
|
Net
cash used by investing activities |
|
(90.7 |
) |
|
(228.4 |
) |
FINANCING ACTIVITIES |
|
|
|
|
Net
proceeds from issuance of Series A, Mandatory Convertible Preferred
Stock, Class A |
|
- |
|
|
709.4 |
|
Net
proceeds from issuance of common shares |
|
- |
|
|
285.6 |
|
Repayment of term loan |
|
- |
|
|
(847.1 |
) |
Borrowings under credit facilities |
|
225.0 |
|
|
297.0 |
|
Repayment under credit facilities |
|
- |
|
|
(72.0 |
) |
Common
stock dividends |
|
(23.0 |
) |
|
(22.9 |
) |
Preferred stock dividends |
|
(12.8 |
) |
|
- |
|
Other
financing activities |
|
8.7 |
|
|
(4.1 |
) |
Net
cash provided by financing activities |
|
197.9 |
|
|
345.9 |
|
EFFECT
OF EXCHANGE RATE CHANGES ON CASH |
|
3.3 |
|
|
(0.1 |
) |
INCREASE IN CASH AND CASH EQUIVALENTS |
|
28.5 |
|
|
92.0 |
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
335.5 |
|
|
195.2 |
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD |
|
$ |
364.0 |
|
|
$ |
287.2 |
|
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Cliffs Natural Resources Inc via
Globenewswire
HUG#1779879
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