XML 129 R20.htm IDEA: XBRL DOCUMENT
v2.4.1.9

DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS | 3 Months Ended
--- | ---
Mar. 31, 2015
Discontinued Operations and Disposal Groups [Abstract] |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | NOTE 14 - DISCONTINUED OPERATIONS The information below sets forth selected financial information related to operating results of our businesses classified as discontinued operations. While the reclassification of revenues and expenses related to discontinued operations from prior periods have no impact upon previously reported net income, the Statements of Unaudited Condensed Consolidated Operations present the revenues and expenses that were reclassified from the specified line items to discontinued operations and the Statements of Unaudited Condensed Consolidated Financial Position present the assets and liabilities that were reclassified from the specified line items to assets and liabilities of discontinued operations. The chart below provides an asset group breakout for each financial statement line impacted by discontinued operations.
|  |  |  | Canadian Operations |  |  |
|  | North American Coal |  | Eastern Canadian Iron Ore | Other | Total Canadian Operations |  | Total of Discontinued Operations
Statements of Unaudited Condensed Consolidated Operations
Loss from Discontinued Operations, net of tax | YTD March 31, 2015 | $ | (75.7 | ) |  | $ | (852.7 | ) | $ | (0.1 | ) | $ | (852.8 | ) |  | $ | (928.5 | )
Loss from Discontinued Operations, net of tax | YTD March 31, 2014 | $ | (46.3 | ) |  | $ | (91.2 | ) | $ | (2.9 | ) | $ | (94.1 | ) |  | $ | (140.4 | )
Statements of Unaudited Condensed Consolidated Financial Position
Short-term assets of discontinued operations | As of March 31, 2015 | $ | 188.6 |  |  | $ | 8.6 |  | $ | — |  | $ | 8.6 |  |  | $ | 197.2 |
Long-term assets of discontinued operations | As of March 31, 2015 | $ | — |  |  | $ | — |  | $ | — |  | $ | — |  |  | $ | — |
Short-term liabilities of discontinued operations | As of March 31, 2015 | $ | 197.7 |  |  | $ | 67.3 |  | $ | — |  | $ | 67.3 |  |  | $ | 265.0 |
Long-term liabilities of discontinued operations | As of March 31, 2015 | $ | — |  |  | $ | 125.2 |  | $ | — |  | $ | 125.2 |  |  | $ | 125.2 |
Short-term assets of discontinued operations | As of December 31, 2014 | $ | 143.8 |  |  | $ | 183.5 |  | $ | 3.3 |  | $ | 186.8 |  |  | $ | 330.6 |
Long-term assets of discontinued operations | As of December 31, 2014 | $ | 130.4 |  |  | $ | 256.0 |  | $ | 13.7 |  | $ | 269.7 |  |  | $ | 400.1 |
Short-term liabilities of discontinued operations | As of December 31, 2014 | $ | 81.3 |  |  | $ | 316.3 |  | $ | 3.0 |  | $ | 319.3 |  |  | $ | 400.6 |
Long-term liabilities of discontinued operations | As of December 31, 2014 | $ | 125.9 |  |  | $ | 304.6 |  | $ | 5.6 |  | $ | 310.2 |  |  | $ | 436.1 |
Non-Cash Operating and Investing Activities
Depreciation, depletion and amortization: | YTD March 31, 2015 | $ | 3.2 |  |  | $ | — |  | $ | — |  | $ | — |  |  | $ | 3.2 |
Purchase of property, plant and equipment | YTD March 31, 2015 | $ | 2.5 |  |  | $ | — |  | $ | — |  | $ | — |  |  | $ | 2.5 |
Impairment of long-lived assets | YTD March 31, 2015 | $ | 73.4 |  |  | $ | — |  | $ | — |  | $ | — |  |  | $ | 73.4 |
Depreciation, depletion and amortization: | YTD March 31, 2014 | $ | 29.9 |  |  | $ | 41.2 |  | $ | 0.1 |  | $ | 41.3 |  |  | $ | 71.2 |
Purchase of property, plant and equipment | YTD March 31, 2014 | $ | 10.0 |  |  | $ | 75.6 |  | $ | — |  | $ | 75.6 |  |  | $ | 85.6 |
Impairment of long-lived assets | YTD March 31, 2014 | $ | — |  |  | $ | — |  | $ | — |  | $ | — |  |  | $ | — |
North American Coal Operations Background As we continue to refine our strategy to one that focuses on strengthening our U.S. Iron Ore operations, management has determined that our North American Coal operating segment as of March 31, 2015 met the criteria to be classified as held for sale under ASC 205 - Presentation of Financial Statements. As such, all current and historical North American Coal operating segment results are included in our financial statement and classified within discontinued operations. Consistent with our strategy to extract maximum value from our current assets, we plan to sell the North American Coal assets within the current year. In the first quarter of 2015, as part of the held for sale classification assigned to North American Coal, an impairment of $73.4 million was recorded. The impairment charge was to reduce the assets to their estimated fair value which was determined based on potential sales scenarios. Loss on Discontinued Operations Our planned sale of the Oak Grove and Pinnacle mine assets represents a strategic shift in our business. For this reason, our previously reported North American Coal operating segment results for all periods, prior to the March 31, 2015 held for sale determination, are classified as discontinued operations. This includes our CLCC assets, which were sold during the fourth quarter of 2014.
|  | (In Millions)
|  | Three Months Ended March 31,
Loss from Discontinued Operations |  | 2015 |  | 2014
REVENUES FROM PRODUCT SALES AND SERVICES |  | $ | 116.6 |  |  | $ | 166.2 |
COST OF GOODS SOLD AND OPERATING EXPENSES |  | (107.3 | ) |  | (214.6 | )
SALES MARGIN |  | 9.3 |  |  | (48.4 | )
OTHER OPERATING EXPENSE |  | (11.3 | ) |  | (4.5 | )
OTHER EXPENSE |  | (0.4 | ) |  | (0.6 | )
LOSS FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES |  | (2.4 | ) |  | (53.5 | )
IMPAIRMENT OF LONG-LIVED ASSETS |  | (73.4 | ) |  | — |
INCOME TAX BENEFIT |  | 0.1 |  |  | 7.2 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax |  | $ | (75.7 | ) |  | $ | (46.3 | )
Items Measured at Fair Value on a Non-Recurring Basis The following table presents information about the impairment charge on non-financial assets that was measured on a fair value basis at March 31, 2015. The tables also indicate the fair value hierarchy of the valuation techniques used to determine such fair value.
|  | (In Millions)
|  | March 31, 2015
Description |  | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total |  | Total Losses
Assets: |  |  |  |  |  |  |  |  |  |
Other long-lived assets - Property, plant and equipment and Mineral rights: North American Coal operating unit |  | $ | — |  |  | $ | — |  |  | $ | 20.4 |  |  | $ | 20.4 |  |  | $ | (73.4 | )
|  | $ | — |  |  | $ | — |  |  | $ | 20.4 |  |  | $ | 20.4 |  |  | $ | (73.4 | )
We determined the fair value and recoverability of our North American Coal operating segment by comparing the estimated fair value of the underlying assets and liabilities to the estimated sales price of the operating segment held for sale. Recorded Assets and Liabilities
|  | (In Millions)
Assets and Liabilities of Discontinued Operations |  | March 31, 2015 |  | December 31, 2014
Accounts receivable, net |  | $ | 42.7 |  |  | $ | 44.8 |
Inventories |  | 59.7 |  |  | 50.3 |
Supplies and other inventories |  | 28.4 |  |  | 28.2 |
Other current assets |  | 29.4 |  |  | 20.5 |
Property, plant and equipment, net |  | 20.4 |  |  | 94.7 |
Other non-current assets |  | 8.0 |  |  | 35.7 |
Total assets of discontinued operations |  | $ | 188.6 |  |  | $ | 274.2 |
Accounts payable |  | $ | 23.3 |  |  | $ | 22.4 |
Accrued liabilities |  | 16.7 |  |  | 27.9 |
Other current liabilities |  | 34.7 |  |  | 31.0 |
Pension and postemployment benefit liabilities 1 |  | 56.7 |  |  | 55.8 |
Environmental and mine closure obligations |  | 34.4 |  |  | 33.9 |
Other liabilities |  | 31.9 |  |  | 36.2 |
Total liabilities of discontinued operations |  | $ | 197.7 |  |  | $ | 207.2 |
1 This does not include a liability of approximately $330 million, which is the most recent estimate of Pinnacle and Oak Grove’s combined share of the underfunded liability under the UMWA 1974 Pension Plan.
Income Taxes We have recognized a tax benefit of $0.1 million in discontinued operations, which primarily relates to a loss on our North American Coal investments. Canadian Operations Background On November 30, 2013, we suspended indefinitely our Chromite Project in Northern Ontario. The Chromite Project remained suspended throughout 2014. Our Wabush Scully iron ore mine in Newfoundland and Labrador was idled by the end of the first quarter of 2014 and subsequently began to commence permanent closure in the fourth quarter of 2014. During 2014, we also limited exploration spending on the Labrador Trough South property in Québec. In November 2014, we announced that we were pursuing exit options for our Eastern Canadian Iron Ore operations. In December 2014, iron ore production at the Bloom Lake mine was suspended and the Bloom Lake mine was placed in "care-and-maintenance" mode. Together, the suspension of exploration efforts, shutdown of the Wabush Scully mine and the cessation of operations at our Bloom Lake mine represent a complete curtailment of our Canadian operations. On January 27, 2015, we announced that the Bloom Lake Group commenced restructuring proceedings (the "Filing") under the CCAA with the Québec Superior Court (Commercial Division) in Montreal (the “Court”). The Bloom Lake Group was no longer generating any revenues and was not able to meet its obligations as they came due. The Filing addressed the Bloom Lake Group's immediate liquidity issues and permits the Bloom Lake Group to preserve and protect its assets for the benefit of all stakeholders while restructuring and sale options are explored. As part of the CCAA process, the Court approved the appointment of a monitor and certain other financial advisors. As a result of the Filing, we no longer have a controlling interest in the Bloom Lake Group. For this reason, we deconsolidated the Bloom Lake Group and certain other wholly-owned subsidiaries (collectively, the "Canadian Entities") effective January 27, 2015, which resulted in a pretax impairment loss on deconsolidation and other charges, totaling $818.7 million. The pretax loss on deconsolidation includes the derecognition of the carrying amounts of the Canadian Entities assets, liabilities and accumulated other comprehensive loss and the recording of our remaining interests at fair value. Subsequent to deconsolidation, we utilized the cost method to account for our investment in the Canadian Entities, which has been reflected as zero in our Statements of Unaudited Condensed Consolidated Financial Position at March 31, 2015 based on the estimated fair value of the Canadian Entities' net assets. Loans to and accounts receivable from the Canadian Entities are recorded at an estimated fair value of $112.1 million classified as Other current assets in the Statements of Unaudited Condensed Consolidated Financial Position at March 31, 2015. Loss on Discontinued Operations Our Canadian exit represents a strategic shift in our business. For this reason, our previously reported Eastern Canadian Iron Ore and Ferroalloys operating segment results for all periods prior to the January 27, 2015 deconsolidation as well as costs to exit are classified as discontinued operations.
|  | (In Millions)
|  | Three Months Ended March 31,
Loss from Discontinued Operations |  | 2015 |  | 2014
REVENUES FROM PRODUCT SALES AND SERVICES |  | $ | 11.3 |  |  | $ | 158.3 |
COST OF GOODS SOLD AND OPERATING EXPENSES |  | (11.1 | ) |  | (208.0 | )
ELIMINATIONS WITH CONTINUING OPERATIONS |  | — |  |  | (28.7 | )
SALES MARGIN |  | 0.2 |  |  | (78.4 | )
OTHER OPERATING EXPENSE |  | (33.3 | ) |  | (58.6 | )
OTHER EXPENSE |  | (1.0 | ) |  | (1.4 | )
LOSS FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES |  | (34.1 | ) |  | (138.4 | )
PRETAX EXIT COSTS |  | (818.7 | ) |  | — |
INCOME TAX BENEFIT |  | — |  |  | 44.3 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax |  | $ | (852.8 | ) |  | $ | (94.1 | )
The first quarter Canadian Entities pretax exit costs totaled $818.7 million and included the following:
|  | (In Millions)
|  | Three Months Ended March 31,
Pretax Exit Costs |  | 2015
Investment Impairment on Deconsolidation |  | $ | (476.0 | )
Contingent Liabilities |  | (342.7 | )
Total Pretax Exit Costs |  | $ | (818.7 | )
Investments in the Canadian Entities Cliffs continues to indirectly own a majority of the interest in the Canadian Entities but has deconsolidated those entities because Cliffs no longer has a controlling interest. At the date of deconsolidation, January 27, 2015, we adjusted our investment in the Canadian Entities to fair value with a corresponding charge to LOSS FROM DISCONTINUED OPERATIONS, net of tax. As the estimated amount of the Canadian Entities' liabilities exceeded the estimated fair value of the assets available for distribution to its creditors, the fair value of Cliffs’ equity investment is approximately zero. Amounts Receivable from the Canadian Entities Prior to deconsolidation, various Cliffs wholly-owned entities made loans to the Canadian Entities for the purpose of funding its operations and had accounts receivable generated in the ordinary course of business. The loans, corresponding interest and the accounts receivable were considered intercompany transactions and eliminated in our consolidated financial statements. As of the deconsolidation date, the loans, associated interest and accounts receivable are considered related party transactions and have been recognized in our consolidated financial statements at their estimated fair value of $112.1 million classified as Other current assets in the Statements of Unaudited Condensed Consolidated Financial Position at March 31, 2015. Contingent Liabilities Certain liabilities consisting primarily of equipment loans and capital leases of the Bloom Lake Group were secured through corporate guarantees and standby letters of credit. Upon the filing of CCAA and subsequent to the deconsolidation, we recorded liabilities of $166.1 million in our consolidated results, classified as Other current liabilities in the Statements of Unaudited Condensed Consolidated Financial Position at March 31, 2015. Additionally, certain liabilities of subsidiaries of the Canadian Entities for which we have joint and several liability were recorded in our consolidated results to reflect obligations of deconsolidated entities which did not file in CCAA but do not have the ability to fund their share of liabilities. As such, subsequent to deconsolidation we recorded liabilities of $51.4 million and $125.2 million classified as Short-term liabilities of discontinued operations and Long-term liabilities of discontinued operations, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at March 31, 2015. Contingencies The recorded expenses include an accrual for the estimated probable loss related to claims that may be asserted against us, primarily under guarantees of certain debt arrangements and leases. The beneficiaries of those guarantees may seek damages or other related relief as a result of our exit from Canada. Our probable loss estimate is based on the expectation that claims will be asserted against us and negotiated settlements will be reached, and not on any determination that it is probable we would be found liable were these claims to be litigated. Given the early stage of our exit and the Filing, our estimates involve significant judgment and are based on currently available information, an assessment of the validity of certain claims and estimated payments by the Canadian Entities. We are not able to reasonably estimate a range of possible losses in excess of the accrual because there are significant factual and legal issues to be resolved. We believe that it is reasonably possible that future changes to our estimates of loss and the ultimate amount paid on these claims could be material to our results of operations in future periods. Any such losses would be reported in discontinued operations. Items Measured at Fair Value on a Non-Recurring Basis The following table presents information about the financial assets and liabilities that was measured on a fair value basis at March 31, 2015. The tables also indicate the fair value hierarchy of the valuation techniques used to determine such fair value.
|  | (In Millions)
|  | March 31, 2015
Description |  | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total |  | Total Losses
Assets: |  |  |  |  |  |  |  |  |  |
Loans to and accounts receivables from the Canadian Entities |  | $ | — |  |  | $ | — |  |  | $ | 112.1 |  |  | $ | 112.1 |  |  | $ | (476.0 | )
Liabilities: |  |  |  |  |  |  |  |  |  |
Contingent liabilities and joint and several liabilities |  | $ | — |  |  | $ | — |  |  | $ | 342.7 |  |  | $ | 342.7 |  |  | $ | (342.7 | )
We determined the fair value and recoverability of our Canadian investments by comparing the estimated fair value of the underlying assets of the Canadian Entities to estimated liabilities at the time of the Filing. We recorded the contingent liabilities and joint and several liabilities at the historical book value which best approximated fair value. Outstanding liabilities include accounts payable and other liabilities, forward commitments, unsubordinated related party payables, lease liabilities and other potential claims. Potential claims include an accrual for the estimated probable loss related to claims that may be asserted against the Bloom Lake Group under certain contracts. Claimants may seek damages or other related relief as a result of the Bloom Lake Group's exit from Canada. Based on our estimates, the fair value of liabilities exceeds the fair value of assets. To assess the fair value and recoverability of the amounts receivable from the Canadian Entities, we estimated the fair value of the underlying net assets of the Canadian Entities available for distribution to their creditors in relation to the estimated creditor claims and the priority of those claims. Our estimates involve significant judgment and are based on currently available information, an assessment of the validity of certain claims and estimated payments made by the Canadian Entities. Our ultimate recovery is subject to the final liquidation value of the Canadian Entities. Further, the final liquidation value and ultimate recovery of the creditors of the Canadian Entities, including Cliffs Natural Resources and various subsidiaries, may impact our estimates of contingent liability exposure described previously. Recorded Assets and Liabilities
|  | (In Millions)
Assets and Liabilities of Discontinued Operations |  | March 31, 2015
Accounts receivable, net |  | $ | 3.0 |
Income tax receivable |  | 1.8 |
Other non-current assets |  | 3.8 |
Total Assets |  | $ | 8.6 |
Accounts payable |  | $ | 0.5 |
Accrued expenses |  | 51.1 |
Other liabilities |  | 140.9 |
Total Liabilities |  | $ | 192.5 |
|  | (In Millions)
Assets and Liabilities of Discontinued Operations |  | December 31, 2014
Cash and cash equivalents |  | $ | 19.7 |
Accounts receivable, net |  | 37.9 |
Inventories |  | 16.3 |
Supplies and other inventories |  | 48.5 |
Income tax receivable |  | 20.1 |
Other current assets |  | 44.3 |
Property, plant and equipment, net |  | 249.8 |
Other non-current assets |  | 19.9 |
Total Assets |  | $ | 456.5 |
Accounts payable |  | $ | 83.6 |
Accrued expenses |  | 200.0 |
Other current liabilities |  | 35.7 |
Pension and postemployment benefit liabilities |  | 79.8 |
Environmental and mine closure obligations |  | 56.5 |
Other liabilities |  | 173.9 |
Total Liabilities |  | $ | 629.5 |
Income Taxes Canadian deferred tax assets relating to both historical and current year net operating losses were included in our equity investment in the Canada Subsidiaries that has been reduced to zero. Due to the valuation allowance position in all jurisdictions, there is no income tax benefit related to the deconsolidation charges recognized in the consolidated financials dated March 31, 2015.

X
- Details
Name: | us-gaap_DiscontinuedOperationsAndDisposalGroupsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 + Details
Name: | us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration