CLIFFS NATURAL RESOURCES INC., 10-K filed on 2/25/2015
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2014
Feb. 23, 2015
Jun. 30, 2014
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
CLIFFS NATURAL RESOURCES INC. 
 
 
Entity Central Index Key
0000764065 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
153,279,552 
 
Trading Symbol
clf 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 2,397,182,297 
Statements Of Condensed Consolidated Financial Position (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
CURRENT ASSETS
 
 
Cash and cash equivalents
$ 290.9 
$ 335.5 
Accounts receivable, net
205.6 
270.0 
Inventories
326.7 
391.4 
Supplies and other inventories
195.2 
216.0 
Income tax receivable
237.7 
74.1 
Other current assets
192.8 
273.0 
TOTAL CURRENT ASSETS
1,448.9 
1,560.0 
PROPERTY, PLANT AND EQUIPMENT, NET
1,414.9 
11,153.4 
OTHER ASSETS
 
 
Deferred income taxes
156.4 
41.5 
Other non-current assets
143.8 
367.0 
TOTAL OTHER ASSETS
300.2 
408.5 
TOTAL ASSETS
3,164.0 
13,121.9 
CURRENT LIABILITIES
 
 
Accounts payable
272.1 
345.5 
Accrued employment costs
99.5 
129.0 
Income taxes payable
1.0 
55.6 
State and local taxes payable
52.5 
61.7 
Current portion of debt
21.8 
20.9 
Accrued expenses
255.3 
206.4 
Accrued royalties
31.2 
57.3 
Current portion of capital leases
74.5 
49.0 
Other current liabilities
150.7 
160.1 
TOTAL CURRENT LIABILITIES
958.6 
1,085.5 
POSTEMPLOYMENT BENEFIT LIABILITIES
 
 
Pensions
275.4 
197.5 
Other postretirement benefits
119.8 
96.5 
TOTAL POSTEMPLOYMENT BENEFIT LIABILITIES
395.2 
294.0 
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
256.0 
309.7 
DEFERRED INCOME TAXES
51.3 
1,146.5 
LONG-TERM DEBT
2,962.3 
3,022.6 
OTHER LIABILITIES
274.9 
379.3 
TOTAL LIABILITIES
4,898.3 
6,237.6 
COMMITMENTS AND CONTINGENCIES (SEE NOTE 20)
   
   
CLIFFS SHAREHOLDERS' EQUITY
 
 
Preferred Stock - no par value, Class A - 3,000,000 shares authorized, 7 % Series A Mandatory Convertible, Class A, no par value and $1,000 per share liquidation preference (See Note 15), Issued and Outstanding - 731,223 shares (2013 - 731,250)
731.3 
731.3 
Common Shares - par value $0.125 per share, Authorized - 400,000,000 shares (2013 - 400,000,000 shares); Issued - 159,546,224 shares (2013 - 159,546,224) shares); Outstanding - 153,246,754 shares (2013 - 153,126,291) shares)
19.8 
19.8 
Capital in excess of par value of shares
2,309.8 
2,329.5 
Retained earnings (Accumulated deficit)
(3,960.7)
3,407.3 
Cost of 6,299,470 common shares in treasury (2013 - 6,419,933 shares)
(285.7)
(305.5)
Accumulated other comprehensive loss
(245.8)
(112.9)
TOTAL CLIFFS SHAREHOLDERS' EQUITY (DEFICIT)
(1,431.3)
6,069.5 
NONCONTROLLING INTEREST (DEFICIT)
(303.0)
814.8 
TOTAL EQUITY (DEFICIT)
(1,734.3)
6,884.3 
TOTAL LIABILITIES AND EQUITY (DEFICIT)
$ 3,164.0 
$ 13,121.9 
Statements Of Condensed Consolidated Financial Position (Parenthetical) (USD $)
Dec. 31, 2014
Dec. 31, 2013
Class of Stock [Line Items]
 
 
Preferred stock, par value
$ 0 
$ 0 
Cumulative Mandatory Convertible
7.00% 
7.00% 
Common shares, par value
$ 0.125 
$ 0.125 
Common shares, authorized (in shares)
400,000,000 
400,000,000 
Common shares, issued (in shares)
159,546,224 
159,546,224 
Common shares, outstanding
153,246,754 
153,126,291 
Common shares in treasury
6,299,470 
6,419,133 
Preferred Class A [Member]
 
 
Class of Stock [Line Items]
 
 
Preferred Stock, Liquidation Preference Per Share
$ 1,000 
$ 1,000 
Preferred stock, shares authorized (in shares)
3,000,000 
3,000,000 
Preferred Shares, Issued and Outstanding, Shares
731,223 
731,250 
Preferred Class B [Member]
 
 
Class of Stock [Line Items]
 
 
Preferred stock, shares authorized (in shares)
4,000,000 
4,000,000 
Statements Of Condensed Consolidated Operations (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
REVENUES FROM PRODUCT SALES AND SERVICES
 
 
 
Product
$ 4,230.8 
$ 5,346.6 
$ 5,520.9 
Reimbursement Revenue
392.9 
344.8 
351.8 
TOTAL REVENUES
4,623.7 
5,691.4 
5,872.7 
COST OF GOODS SOLD AND OPERATING EXPENSES
(4,172.3)
(4,542.1)
(4,700.6)
SALES MARGIN
451.4 
1,149.3 
1,172.1 
OTHER OPERATING INCOME (EXPENSE)
 
 
 
Selling, general and administrative expenses
(208.7)
(231.6)
(282.5)
Exploration costs
(8.8)
(59.0)
(142.8)
Impairment of goodwill and other long-lived assets
(9,029.9)
(250.8)
(1,049.9)
Gain (loss) on disposal of other assets
(423.0)
16.7 
1.2 
Miscellaneous - net
(226.3)
46.4 
(6.9)
Other operating expense
(9,896.7)
(478.3)
(1,480.9)
OPERATING INCOME (LOSS)
(9,445.3)
671.0 
(308.8)
OTHER INCOME (EXPENSE)
 
 
 
Interest expense, net
(185.2)
(179.1)
(195.6)
Other non-operating income (expense)
26.8 
(2.6)
2.6 
TOTAL OTHER INCOME (EXPENSE)
(158.4)
(181.7)
(193.0)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY INCOME (LOSS) FROM VENTURES
(9,603.7)
489.3 
(501.8)
INCOME TAX BENEFIT (EXPENSE)
1,302.0 
(55.1)
(255.9)
EQUITY LOSS FROM VENTURES, net of tax
(9.9)
(74.4)
(404.8)
INCOME (LOSS) FROM CONTINUING OPERATIONS
(8,311.6)
359.8 
(1,162.5)
INCOME and GAIN ON SALE FROM DISCONTINUED OPERATIONS, net of tax
2.0 
35.9 
NET INCOME (LOSS)
(8,311.6)
361.8 
(1,126.6)
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
1,087.4 
51.7 
227.2 
NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
(7,224.2)
413.5 
(899.4)
PREFERRED STOCK DIVIDENDS
(51.2)
(48.7)
NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS COMMON SHAREHOLDERS
$ (7,275.4)
$ 364.8 
$ (899.4)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
 
 
 
Continuing operations
$ (47.52)
$ 2.39 
$ (6.57)
Discontinued operations
$ 0.00 
$ 0.01 
$ 0.25 
Earnings (loss) per Common Share Attributable to Cliffs Common Shareholders - Basic:
$ (47.52)
$ 2.40 
$ (6.32)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - DILUTED
 
 
 
Continuing operations
$ (47.52)
$ 2.36 
$ (6.57)
Discontinued operations
$ 0.00 
$ 0.01 
$ 0.25 
Earnings (loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted:
$ (47.52)
$ 2.37 
$ (6.32)
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
 
 
 
Basic
153,098 
151,726 
142,351 
Diluted
153,098 
174,323 
142,351 
Statements Of Condensed Consolidated Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$ (7,224.2)
$ 413.5 
$ (899.4)
OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
Pension and OPEB liability, net of tax
(91.0)
208.3 
33.8 
Unrealized net gain (loss) on marketable securities, net of tax
(7.2)
3.1 
(0.5)
Unrealized net gain (loss) on foreign currency translation
(42.3)
(208.6)
3.8 
Unrealized net gain (loss) on derivative financial instruments, net of tax
2.8 
(29.6)
7.5 
OTHER COMPREHENSIVE INCOME (LOSS)
(137.7)
(26.8)
44.6 
OTHER COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST
4.8 
(30.5)
(7.6)
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$ (7,357.1)
$ 356.2 
$ (862.4)
Statements Of Condensed Consolidated Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
OPERATING ACTIVITIES
 
 
 
Net income (loss)
$ (8,311.6)
$ 361.8 
$ (1,126.6)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
 
 
 
Depreciation, depletion and amortization
504.0 
593.3 
525.8 
Impairment of goodwill and other long-lived assets
9,029.9 
250.8 
1,049.9 
Equity loss in ventures (net of tax)
9.9 
74.4 
404.8 
Deferred income taxes
(1,153.9)
(138.1)
127.0 
Changes in deferred revenue and below-market sales contracts
(18.0)
(52.8)
(24.5)
Loss on sale of Cliffs Logan County Coal
419.6 
Other
(37.7)
(3.3)
(40.9)
Changes in operating assets and liabilities:
 
 
 
Receivables and other assets
(82.8)
138.8 
(74.8)
Product inventories
37.8 
30.8 
39.9 
Payables and accrued expenses
(38.3)
(109.8)
(366.1)
Net cash provided by operating activities
358.9 
1,145.9 
514.5 
INVESTING ACTIVITIES
 
 
 
Purchase of property, plant and equipment
(284.1)
(861.6)
(1,127.5)
Proceeds from sale of Cliffs Logan County Coal
155.0 
Proceeds from sale of Sonoma
152.6 
Other investing activities
25.5 
50.3 
13.1 
Net cash used in investing activities
(103.6)
(811.3)
(961.8)
FINANCING ACTIVITIES
 
 
 
Net proceeds from issuance of Series A, Mandatory Convertible Preferred Stock, Class A
709.4 
Net proceeds from issuance of common shares
285.3 
Net proceeds from issuance of senior notes
497.0 
Repayment of term loan
(847.1)
(124.8)
Borrowings under credit facilities
1,219.5 
670.5 
1,012.0 
Repayment under credit facilities
(1,219.5)
(995.5)
(687.0)
Proceeds from equipment loans
164.8 
Repayments of equipment loans
(20.9)
(3.0)
Repayment of senior notes
(325.0)
Repurchase of debt
(28.8)
Contributions (to)/by joint ventures, net
(25.7)
23.3 
95.4 
Common stock dividends
(92.5)
(91.9)
(307.2)
Preferred stock dividends
(51.2)
(35.7)
Other financing activities
(69.2)
(52.0)
(40.8)
Net cash (used in) provided by financing activities
(288.3)
(171.9)
119.6 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(11.6)
(22.4)
1.3 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(44.6)
140.3 
(326.4)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
335.5 
195.2 
521.6 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 290.9 
$ 335.5 
$ 195.2 
Statements of Consolidated Changes in Equity (USD $)
In Millions, except Share data, unless otherwise specified
Total
USD ($)
Depositary Shares [Member]
USD ($)
Common Stock [Member]
USD ($)
Capital in Excess of Par Value of Shares [Member]
USD ($)
Retained Earnings [Member]
USD ($)
Common Shares in Treasury [Member]
USD ($)
Accumulated Other Comprehensive Income (Loss) [Member]
USD ($)
Noncontrolling Interest [Member]
USD ($)
Depositary Shares [Member]
USD ($)
Depositary Shares [Member]
Capital in Excess of Par Value of Shares [Member]
USD ($)
Common Stock [Member]
Common Stock [Member]
Capital in Excess of Par Value of Shares [Member]
USD ($)
Balance, beginning of period at Dec. 31, 2011
$ 7,039.7 
 
$ 18.5 
$ 1,770.8 
$ 4,424.3 
$ (336.0)
$ (92.6)
$ 1,254.7 
 
 
 
 
Balance, beginning of period (in shares) at Dec. 31, 2011
 
 
142,000,000 
 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS)
(1,126.6)
 
 
 
(899.4)
 
 
(227.2)
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
862.4 
 
 
 
 
 
37.0 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
7.6 
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
44.6 
 
 
 
 
 
 
 
 
 
 
 
Pension and OPEB liability, net of tax
33.8 
 
 
 
 
 
 
 
 
 
 
 
Unrealized net loss on marketable securities, net of tax
(0.5)
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
(1,082.0)
 
 
 
 
 
 
(219.6)
 
 
 
 
Purchase of subsidiary shares from noncontrolling interest
(2.1)
 
 
 
 
 
 
(2.1)
 
 
 
 
Undistributed losses to noncontrolling interest to subsidiary
0.4 
 
 
 
 
 
 
0.4 
 
 
 
 
Capital contribution by noncontrolling interest to subsidiary
104.4 
 
 
1.6 
 
 
 
102.8 
 
 
 
 
Stock Issued During Period, Value, Acquisitions
(8.0)
 
 
 
 
 
 
(8.0)
 
 
 
 
Stock and other incentive plans (in shares)
 
 
500,000 
 
 
 
 
 
 
 
 
 
Stock and other incentive plans
15.7 
 
 
2.3 
 
13.4 
 
 
 
 
 
 
Common stock dividends ($0.60 per share)
(307.2)
 
 
 
(307.2)
 
 
 
 
 
 
 
Preferred stock dividends ($1.66 per depositary share)
 
 
 
 
 
 
 
 
 
 
 
Balance, end of period at Dec. 31, 2012
5,760.9 
 
18.5 
1,774.7 
3,217.7 
(322.6)
(55.6)
1,128.2 
 
 
 
 
Balance, end of period (in shares) at Dec. 31, 2012
 
 
142,500,000 
 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS)
361.8 
 
 
 
413.5 
 
 
(51.7)
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
(356.2)
 
 
 
 
 
(57.3)
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
30.5 
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
(26.8)
 
 
 
 
 
 
 
 
 
 
 
Pension and OPEB liability, net of tax
208.3 
 
 
 
 
 
 
 
 
 
 
 
Unrealized net loss on marketable securities, net of tax
3.1 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
335.0 
 
 
 
 
 
 
(21.2)
 
 
 
 
Equity offering (in shares)
 
29,300,000 
10,400,000 
 
 
 
 
 
 
 
 
 
Equity offering
285.3 
731.3 
1.3 
 
 
 
 
 
709.4 
(21.9)
 
284.0 
Purchase of subsidiary shares from noncontrolling interest
 
 
 
295.4 
(82.7)
 
 
 
 
 
 
 
Undistributed losses to noncontrolling interest to subsidiary
17.0 
 
 
 
 
 
 
17.0 
 
 
 
 
Capital contribution by noncontrolling interest to subsidiary
5.2 
 
 
0.2 
(0.6)
 
 
5.6 
 
 
 
 
Stock Issued During Period, Value, Acquisitions
(102.1)
 
 
 
 
 
 
(314.8)
 
 
 
 
Stock and other incentive plans (in shares)
 
 
300,000 
 
 
 
 
 
 
 
 
 
Stock and other incentive plans
14.2 
 
 
(2.9)
 
17.1 
 
 
 
 
 
 
Common stock dividends ($0.60 per share)
(91.9)
 
 
 
(91.9)
 
 
 
 
 
 
 
Preferred stock dividends ($1.66 per depositary share)
(48.7)
 
 
 
(48.7)
 
 
 
 
 
 
 
Preferred Stock, Shares Outstanding
 
29,300,000 
 
 
 
 
 
 
 
 
 
 
Balance, end of period at Dec. 31, 2013
6,884.3 
731.3 
19.8 
2,329.5 
3,407.3 
(305.5)
(112.9)
814.8 
 
 
 
 
Balance, end of period (in shares) at Dec. 31, 2013
153,126,291 
 
153,200,000 
 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS)
(8,311.6)
 
 
 
(7,224.2)
 
 
(1,087.4)
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
7,357.1 
 
 
 
 
 
(132.9)
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
(4.8)
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
(137.7)
 
 
 
 
 
 
 
 
 
 
 
Pension and OPEB liability, net of tax
(91.0)
 
 
 
 
 
 
 
 
 
 
 
Unrealized net loss on marketable securities, net of tax
(7.2)
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
(8,449.3)
 
 
 
 
 
 
(1,092.2)
 
 
 
 
Undistributed losses to noncontrolling interest to subsidiary
(25.5)
 
 
 
 
 
 
(25.5)
 
 
 
 
Capital contribution by noncontrolling interest to subsidiary
(0.1)
 
 
 
 
 
 
(0.1)
 
 
 
 
Stock and other incentive plans
0.1 
 
 
(19.7)
 
19.8 
 
 
 
 
 
 
Common stock dividends ($0.60 per share)
(92.5)
 
 
 
(92.5)
 
 
 
 
 
 
 
Preferred stock dividends ($1.66 per depositary share)
(51.2)
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock Dividends
(51.3)
 
 
 
(51.3)
 
 
 
 
 
 
 
Preferred Stock, Shares Outstanding
 
29,300,000 
 
 
 
 
 
 
 
 
 
 
Balance, end of period at Dec. 31, 2014
(1,734.3)
731.3 
19.8 
2,309.8 
(3,960.7)
(285.7)
(245.8)
(303.0)
 
 
 
 
Balance, end of period (in shares) at Dec. 31, 2014
153,246,754 
 
153,200,000 
 
 
 
 
 
 
 
 
 
Balance, beginning of period at Sep. 30, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends ($1.66 per depositary share)
(12.8)
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock, Shares Outstanding
 
29,300,000 
 
 
 
 
 
 
 
 
 
 
Balance, end of period at Dec. 31, 2014
$ (1,734.3)
$ 731.3 
$ 19.8 
 
 
 
 
 
 
 
 
 
Balance, end of period (in shares) at Dec. 31, 2014
153,246,754 
 
153,200,000 
 
 
 
 
 
 
 
 
 
Statements of Consolidated Changes in Equity (Parenthetical)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Class of Stock [Line Items]
 
 
 
Common stock dividends per share
$ 0.60 
$ 0.60 
$ 2.16 
Preferred stock dividends per share
$ 1.75 
$ 1.66 
 
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business Summary
We are an international mining and natural resources company, a major global iron ore producer and a producer of low-volatile metallurgical coal. In the U.S., we operate five iron ore mines in Michigan and Minnesota, and two low-volatile metallurgical coal operations located in Alabama and West Virginia. In the fourth quarter of 2014, we sold our CLCC assets, which consisted of two high-volatile metallurgical coal mines and one thermal coal mine. The sale was completed on December 31, 2014. As such, our results include the CLCC results through the day of the sale completion. As of December 31, 2014, our Asia Pacific operations consist solely of our Koolyanobbing iron ore mining complex in Western Australia. We also own two iron ore mines in Eastern Canada. In the first quarter of 2014, Wabush Scully mine in Newfoundland and Labrador was idled and subsequently moved to permanent closure during the fourth quarter. 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. Our operations are organized according to product category and geographic location: U.S. Iron Ore, Asia Pacific Iron Ore, North American Coal and Eastern Canadian Iron Ore.
Significant Accounting Policies
We consider the following policies to be beneficial in understanding the judgments that are involved in the preparation of our consolidated financial statements and the uncertainties that could impact our financial condition, results of operations and cash flows.
Use of Estimates
The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions related to mineral reserves future realizable cash flow; environmental, reclamation and closure obligations; valuation of long-lived assets and investments; valuation of inventory; valuation of post-employment, post-retirement and other employee benefit liabilities; valuation of tax assets; reserves for contingencies and litigation; and the fair value of derivative instruments. Actual results could differ from estimates. On an ongoing basis, management reviews estimates. Changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods.
Basis of Consolidation
The consolidated financial statements include our accounts and the accounts of our wholly owned and majority-owned subsidiaries, including the following operations at December 31, 2014:
Name
 
Location
 
Ownership Interest
 
Operation
 
Status of Operations
Northshore
 
Minnesota
 
100.0%
 
Iron Ore
 
Active
United Taconite
 
Minnesota
 
100.0%
 
Iron Ore
 
Active
Tilden
 
Michigan
 
85.0%
 
Iron Ore
 
Active
Empire
 
Michigan
 
79.0%
 
Iron Ore
 
Active
Koolyanobbing
 
Western Australia
 
100.0%
 
Iron Ore
 
Active
Pinnacle
 
West Virginia
 
100.0%
 
Coal
 
Active
Oak Grove
 
Alabama
 
100.0%
 
Coal
 
Active
CLCC
 
West Virginia
 
100.0%
 
Coal
 
Assets sold as of December 31, 2014
Wabush
 
Newfoundland and Labrador/ Québec, Canada
 
100.0%
 
Iron Ore
 
Permanent closure
Bloom Lake
 
Québec, Canada
 
82.8%
 
Iron Ore
 
Care-and-maintenance
Cliffs Chromite Ontario - Black Label Deposit
 
Ontario, Canada
 
100.0%
 
Chromite
 
Suspended
Cliffs Chromite Ontario - Black Thor Deposit
 
Ontario, Canada
 
100.0%
 
Chromite
 
Suspended
Cliffs Chromite Ontario & Cliffs Chromite Far North - Big Daddy Deposit
 
Ontario, Canada
 
70.0%
 
Chromite
 
Suspended

Intercompany transactions and balances are eliminated upon consolidation.
Noncontrolling Interests
During the fourth quarter of 2013, CQIM’s interest in Bloom Lake increased by an aggregate of 7.8 percent after CQIM paid both its own and WISCO’s proportionate shares of the cash call for the first half of 2013.  As a result of our cash call payments, CQIM was issued a total of 457,556 new Bloom Lake units, increasing our interest to 82.8 percent in Bloom Lake and diluting WISCO’s interest to 17.2 percent.  The new unit issuance decreased equity attributable to WISCO by $314.8 million for the year ended December 31, 2013 by decreasing WISCO’s interest in Bloom Lake’s accumulated deficit.   We accounted for the increase in ownership as an equity transaction, which resulted in a $314.8 million increase to equity attributable to Cliffs’ shareholders.
Immaterial Error
In connection with our acquisition of Consolidated Thompson in May 2011, the Company acquired a 75 percent controlling interest in Bloom Lake. For financial reporting purposes, the Company fully consolidates Bloom Lake in the accompanying financial statements and allocates a portion of its consolidated results of operations and shareholders’ equity, which is reported as Loss attributable to noncontrolling interest in the Statements of Consolidated Operations and Noncontrolling interest in the Statements of Consolidated Financial Position.
As a result of the application of ASC 805, Business Combinations, we allocated the purchase price to the assets, liabilities and noncontrolling interest at the acquisition date of May 11, 2011 based on their fair values. These fair value adjustments were recorded in the opening balance sheet and consolidated results of operations; however, subsequent effects of the amortization of these fair value adjustments were not allocated to the noncontrolling interest.
In accordance with U.S. GAAP, management has quantitatively and qualitatively evaluated the materiality of the error and has determined that the misstatement was immaterial to the interim and annual financial statements previously filed from June 30, 2011 through December 31, 2013. Accordingly, the adjustment was recorded prospectively in the Statements of Consolidated Operations for the period ended December 31, 2013 and in the Statements of Consolidated Financial Position as of December 31, 2013. The adjustment to noncontrolling interest related to Bloom Lake was approximately $45.1 million and resulted in an increase to Net Income (Loss) Attributable to Cliffs Shareholders and a reduction of Loss attributable to noncontrolling interest and corresponding decrease to Noncontrolling interest in the Statements of Consolidated Financial Position for the year end and as of December 31, 2013. The adjustments also resulted in an increase to basic and diluted earnings per common share of $0.30 and $0.26, respectively, for the year ended December 31, 2013. No other financial statement line items were impacted by this adjustment. The prior period amounts included within the accompanying Consolidated Financial Statements have not been retrospectively adjusted for this impact due to management's materiality assessment as discussed above. The impact of the prospective adjustments in the Statements of Consolidated Operations would have resulted in an increase to basic and diluted earnings per common share of $0.25 and $0.07 for the years ended December 31, 2012 and 2011, respectively.
Cash Equivalents
Cash and cash equivalents include cash on hand and on deposit as well as all short-term securities held for the primary purpose of general liquidity. We consider investments in highly liquid debt instruments with an original maturity of three months or less from the date of acquisition to be cash equivalents. We routinely monitor and evaluate counterparty credit risk related to the financial institutions by which our short-term investment securities are held.
Trade Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in Cliffs' existing accounts receivable. We establish provisions for losses on accounts receivable when it is probable that all or part of the outstanding balance will not be collected. We regularly review our accounts receivable balances and establish or adjust the allowance as necessary using the specific identification method. The allowance for doubtful accounts was $8.1 million at December 31, 2014 and 2013. There was $9.0 million of bad debt expense for the year ended December 31, 2012. There was no bad debt expense for the years ended December 31, 2014 and 2013.
Inventories
U.S. Iron Ore
U.S. Iron Ore product inventories are stated at the lower of cost or market. Cost of iron ore inventories is determined using the LIFO method.
We had approximately 1.4 million tons and 1.2 million tons of finished goods stored at ports and customer facilities on the lower Great Lakes to service customers at December 31, 2014 and 2013, respectively. We maintain ownership of the inventories until title has transferred to the customer, usually when payment is received. Maintaining ownership of the iron ore products at ports on the lower Great Lakes reduces risk of non-payment by customers.
Asia Pacific Iron Ore
Asia Pacific Iron Ore product inventories are stated at the lower of cost or market. Costs of inventories are being valued on a weighted average cost basis. We maintain ownership of the inventories until title has transferred to the customer, which generally is when the product is loaded into the vessel.
North American Coal
North American Coal product inventories are stated at the lower of cost or market. Cost of coal inventories is calculated using the weighted average cost. We maintain ownership until coal is loaded into rail cars at the mine for domestic sales and until loaded in the vessels at the terminal for export sales.
Eastern Canadian Iron Ore
Iron ore pellet inventories are stated at the lower of cost or market. Cost is determined using the LIFO method. We maintain ownership of the inventories until title has transferred to the customer, which is generally when the product is loaded into the vessel.    
Iron ore concentrate inventories are stated at the lower of cost or market. The cost of iron ore concentrate inventories is determined using weighted average cost. We maintain ownership of the inventories until title has transferred to the customer, which generally is when the product is loaded into the vessel.
Supplies and Other Inventories
Supply inventories include replacement parts, fuel, chemicals and other general supplies, which are expected to be used or consumed in normal operations. Supply inventories also include critical spares. Critical spares are replacement parts for equipment that is critical for the continued operation of the mine or processing facilities.
Supply inventories are stated at the lower of cost or market using average cost, less an allowance for obsolete and surplus items. The allowance for obsolete and surplus items was $68.2 million and $63.4 million at December 31, 2014 and 2013, respectively.
Derivative Financial Instruments and Hedging Activities
We are exposed to certain risks related to the ongoing operations of our business, including those caused by changes in commodity prices, interest rates and foreign currency exchange rates. We have established policies and procedures, including the use of certain derivative instruments, to manage such risks.
Derivative financial instruments are recognized as either assets or liabilities in the Statements of Consolidated Financial Position and measured at fair value. On the date a derivative instrument is entered into, we generally designate a qualifying derivative instrument as a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability or forecasted transaction (cash flow hedge). We formally document all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific firm commitments or forecasted transactions. We also formally assess both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the related hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively and record all future changes in fair value in the period of the instrument's earnings or losses. The policy allows for not more than 75 percent, but not less than 40 percent for up to 12 months and not less than 10 percent for up to 15 months, of forecasted net currency exposures that are probable to occur.
For derivative instruments that have been designated as cash flow hedges, the effective portion of the changes in fair value are recorded in accumulated other comprehensive income (loss) and any portion that is ineffective is recorded in current period earnings or losses. Amounts recorded in accumulated other comprehensive income (loss) are reclassified to earnings or losses in the period the underlying hedged transaction affects earnings or when the underlying hedged transaction is no longer reasonably possible of occurring.
For derivative instruments that have not been designated as cash flow hedges, changes in fair value are recorded in the period of the instrument's earnings or losses.
Refer to NOTE 13 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.
Property, Plant and Equipment
Our properties are stated at the lower of cost less accumulated depreciation or fair value. Depreciation of plant and equipment is computed principally by the straight-line method based on estimated useful lives, not to exceed the mine lives. The Northshore, United Taconite, Empire, Tilden and Wabush operations use the double-declining balance method of depreciation for certain mining equipment. The Asia Pacific Iron Ore operation uses the production output method for certain mining equipment. Depreciation is provided over the following estimated useful lives:
Asset Class
 
Basis
 
Life
Buildings
 
Straight line
 
45 Years
Mining equipment
 
Straight line/Double declining balance
 
3 to 20 Years
Processing equipment
 
Straight line
 
10 to 45 Years
Electric power facilities
 
Straight line
 
10 to 45 years
Land improvements
 
Straight line
 
20 to 45 years
Office and information technology
 
Straight line
 
3 to 15 Years

Depreciation continues to be recognized when operations temporarily are idled.
Our Asia Pacific Iron Ore, Bloom Lake, Wabush, and United Taconite operations' interests in iron ore reserves and mineralized materials were valued when acquired using a discounted cash flow method. The fair value was estimated based upon the present value of the expected future cash flows from iron ore operations over the economic lives of the respective mines.
Our North American Coal operation leases coal mining rights from third parties through lease agreements. The lease agreements are for varying terms and extend through the earlier of their lease termination date or until all merchantable and mineable coal has been extracted. Our interest in coal reserves and non-reserve coal was valued when acquired using a discounted cash flow method. The fair value was estimated based upon the present value of the expected future cash flows from coal operations over the life of the reserves acquired.
Refer to NOTE 4 - PROPERTY, PLANT AND EQUIPMENT for further information.
Capitalized Stripping Costs
During the development phase, stripping costs are capitalized as a part of the depreciable cost of building, developing and constructing a mine. These capitalized costs are amortized over the productive life of the mine using the units of production method. The production phase does not commence until the removal of more than a de minimis amount of saleable mineral material occurs in conjunction with the removal of overburden or waste material for purposes of obtaining access to an ore body. The stripping costs incurred in the production phase of a mine are variable production costs included in the costs of the inventory produced (extracted) during the period that the stripping costs are incurred.
Stripping costs related to expansion of a mining asset of proven and probable reserves are variable production costs that are included in the costs of the inventory produced during the period that the stripping costs are incurred.
Equity Method Investments
Investments in unconsolidated ventures that we have the ability to exercise significant influence over, but not control, are accounted for under the equity method. The following table presents the detail of our investments in unconsolidated ventures and where those investments are classified in the Statements of Consolidated Financial Position as of December 31, 2014 and December 31, 2013. Parentheses indicate a net liability.
 
 
 
 
 
 
 
 
(In Millions)
Investment
 
Classification
 
Accounting
Method
 
Ownership Interest
 
December 31,
2014
 
December 31, 2013
Hibbing
 
Other non-current assets 1
 
Equity Method
 
23%
 
$
3.1

 
(3.9
)
Other
 
Other non-current assets
 
Equity Method
 
Various
 
3.9

 
34.7

 
 
 
 
 
 
 
 
$
7.0

 
$
30.8


1 At December 31, 2013, the classification for Hibbing was Other liabilities.
During the year ended December 31, 2014, an impairment charge of $21.5 million was recorded related to joint ventures investments and is recognized in Impairment of goodwill and other long-lived assets in the Statements of Consolidated Operations.
Hibbing
Our share of equity income (loss) is eliminated against consolidated product inventory upon production, and against Cost of goods sold and operating expenses when sold. This effectively reduces our cost for our share of the mining ventures' production cost, reflecting the cost-based nature of our participation in unconsolidated ventures.
Amapá
On December 27, 2012, our Board of Directors authorized the sale of our 30 percent interest in Amapá. Per this original agreement, together with Anglo, we were to sell our respective interest in a 100 percent sale transaction to Zamin. The carrying value of our investment was in excess of the net proceeds expected from the sale, which approximated fair value, resulting in a $365.4 million impairment charge, which was recorded through Equity loss from ventures, net of tax in the Statements of Consolidated Operations for the year ended December 31, 2012.
On March 28, 2013, an unknown event caused the Santana port shiploader to collapse into the Amazon River, preventing further ship loading by the mine operator, Anglo. In light of the March 28, 2013 collapse of the Santana port shiploader and subsequent evaluation of the effect that this event had on the carrying value of our investment in Amapá as of June 30, 2013, we recorded an impairment charge of $67.6 million in the second quarter of 2013.
On August 28, 2013, we entered into additional agreements to sell our 30 percent interest in Amapá to Anglo for nominal cash consideration, plus the right to certain contingent deferred consideration upon the two-year anniversary of the closing.  The closing was conditional on obtaining certain regulatory approvals and the additional agreement provided Anglo with an option to request that we transfer our interest in Amapá directly to Zamin.  Anglo exercised this option and the transfer to Zamin was completed in the fourth quarter of 2013.
         Cockatoo Island
On July 31, 2012, we entered into a definitive asset sale agreement with our joint venture partner, HWE Cockatoo Pty Ltd., to sell our beneficial interest in the mining tenements and certain infrastructure of Cockatoo Island to Pluton Resources, which was amended on August 31, 2012. On September 7, 2012, the closing date, Pluton Resources paid a nominal sum of AUD $4.00 and assumed ownership of the assets and responsibility for the environmental rehabilitation obligations and other assumed liabilities not inherently attached to the tenements acquired. The rehabilitation obligations and assumed liabilities that are inherently attached to the tenements were transferred to Pluton Resources upon registration by the Department of Mining and Petroleum denoting Pluton Resources as the tenement holder. Upon final settlement of the sale, which was completed during the second quarter of 2013, we extinguished approximately $18.6 million related to the estimated cost of the rehabilitation.
Goodwill
Goodwill represents the excess purchase price paid over the fair value of the net assets of acquired companies. We had goodwill of $2.0 million and $74.5 million recorded in the Statements of Consolidated Financial Position at December 31, 2014 and 2013, respectively. In accordance with the provisions of ASC 350, we compare the fair value of the respective reporting unit to its carrying value on an annual basis (or more frequently if necessary as discussed below) to determine if there is potential goodwill impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied value of the goodwill within the reporting unit is less than the carrying value of its goodwill.
During the third quarter of 2014, a goodwill impairment charge of $73.5 million was recorded for our Asia Pacific Iron Ore reporting unit within the Asia Pacific Iron Ore operating segment. The impairment charge was a result of downward long-term pricing estimates as determined through management's long-range planning process.
After performing our annual goodwill impairment test in the fourth quarter of 2013, we determined that $80.9 million of goodwill associated with our Ferroalloys operating segment was impaired. The impairment charge was primarily a result of the decision made in the fourth quarter of 2013 to indefinitely suspend the Chromite Project and to not allocate additional capital for the project given the uncertain timeline and risks associated with the development of necessary infrastructure to bring the project online.
During the fourth quarter of 2012, upon performing our annual goodwill impairment test, a goodwill impairment charge of $997.3 million was recorded for our CQIM reporting unit within the Eastern Canadian Iron Ore operating segment. The impairment charge for our CQIM reporting unit was driven by the project’s lower than anticipated long-term profitability coupled with delays in achieving full operational capacity and higher capital and operating costs. Additionally, the announced delay of the Phase II expansion of the Bloom Lake mine also contributed to the impairment.
Refer to NOTE 12 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES and NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS for further information.
Other Intangible Assets and Liabilities
Other intangible assets are subject to periodic amortization on a straight-line basis over their estimated useful lives as follows:
Intangible Assets
 
Basis
 
Useful Life (years)
Permits - Asia Pacific Iron Ore
 
Units of production
 
Life of mine
Permits - All Other
 
Straight line
 
15 - 40
Utility Contracts
 
Straight line
 
5
Leases - North American Coal
 
Units of production
 
Life of mine
Leases - All Other
 
Straight line
 
4.5 - 17.5
Asset Impairment
Long-Lived Tangible and Intangible Assets
We monitor conditions that may affect the carrying value of our long-lived tangible and intangible assets when events and circumstances indicate that the carrying value of the asset groups may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available ("asset group"). An impairment loss exists when projected undiscounted cash flows are less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach.
As a result of these assessments during 2014, we determined that the cash flows associated with our Eastern Canadian Iron Ore, Asia Pacific Iron Ore, North American Coal and Ferroalloys asset groups were not sufficient to support the recoverability of the carrying value of these productive assets. Accordingly, during 2014, we recorded a long-lived tangible asset impairment charge of $8,839.0 million and an intangible asset impairment charge of $15.5 million in our Statements of Consolidated Operations. At December 31, 2013, we determined there were long-lived tangible and intangible asset impairments related to the Wabush operations within our Eastern Canadian Iron Ore operating segment that resulted in impairment charges of $145.1 million and $9.5 million, respectively. At December 31, 2012, we determined there was a long-lived asset impairment related to the Wabush mine's pelletizing operations that resulted in an impairment charge of $49.9 million.
    Refer to NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NOTE 12 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES and NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS for further information.
Fair Value Measurements
Valuation Hierarchy
ASC 820 establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below:
Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Valuation methodologies used for assets and liabilities measured at fair value are as follows:
Cash Equivalents
Where quoted prices are available in an active market, cash equivalents are classified within Level 1 of the valuation hierarchy. Cash equivalents classified in Level 1 at December 31, 2014 and 2013 include money market funds. Valuation of these instruments is determined using a market approach and is based upon unadjusted quoted prices for identical assets in active markets.
Marketable Securities
Where quoted prices are available in an active market, marketable securities are classified within Level 1 of the valuation hierarchy. Marketable securities classified in Level 1 at December 31, 2014 and 2013 include available-for-sale securities. The valuation of these instruments is determined using a market approach and is based upon unadjusted quoted prices for identical assets in active markets.
Derivative Financial Instruments
Derivative financial instruments valued using financial models that use as their basis readily observable market parameters are classified within Level 2 of the valuation hierarchy. Such derivative financial instruments include substantially all of our foreign currency exchange contracts and derivative financial instruments that are valued based upon published pricing settlements realized by other companies in the industry. Derivative financial instruments that are valued based upon models with significant unobservable market parameters and are normally traded less actively, are classified within Level 3 of the valuation hierarchy.
Refer to NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS and NOTE 7 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.
Pensions and Other Postretirement Benefits
We offer defined benefit pension plans, defined contribution pension plans and other postretirement benefit plans, primarily consisting of retiree healthcare benefits, to most employees in North America as part of a total compensation and benefits program. We do not have employee pension or post-retirement benefit obligations at our Asia Pacific Iron Ore operations or our Bloom Lake mine operations within our Eastern Canadian Iron Ore segment.
We recognize the funded or unfunded status of our postretirement benefit obligations on our December 31, 2014 and 2013 Statements of Consolidated Financial Position based on the difference between the market value of plan assets and the actuarial present value of our retirement obligations on that date, on a plan-by-plan basis. If the plan assets exceed the retirement obligations, the amount of the surplus is recorded as an asset; if the retirement obligations exceed the plan assets, the amount of the underfunded obligations are recorded as a liability. Year-end balance sheet adjustments to postretirement assets and obligations are recorded as Accumulated other comprehensive loss.
The actuarial estimates of the PBO and APBO retirement obligations incorporate various assumptions including the discount rates, the rates of increases in compensation, healthcare cost trend rates, mortality, retirement timing and employee turnover. For the U.S. and Canadian plans, the discount rate is determined based on the prevailing year-end rates for high-grade corporate bonds with a duration matching the expected cash flow timing of the benefit payments from the various plans. The remaining assumptions are based on our estimates of future events by incorporating historical trends and future expectations. The amount of net periodic cost that is recorded in the Statements of Consolidated Operations consists of several components including service cost, interest cost, expected return on plan assets, and amortization of previously unrecognized amounts. Service cost represents the value of the benefits earned in the current year by the participants. Interest cost represents the cost associated with the passage of time. Certain items, such as plan amendments, gains and/or losses resulting from differences between actual and assumed results for demographic and economic factors affecting the obligations and assets of the plans, and changes in other assumptions are subject to deferred recognition for income and expense purposes. The expected return on plan assets is determined utilizing the weighted average of expected returns for plan asset investments in various asset categories based on historical performance, adjusted for current trends. See NOTE 7 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.
Asset Retirement Obligations
Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The fair value of the liability is determined as the discounted value of the expected future cash flow. The asset retirement obligation is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and amortized over the life of the related asset. Reclamation costs are adjusted periodically to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs. We review, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site in accordance with the provisions of ASC 410. We perform an in-depth evaluation of the liability every three years in addition to routine annual assessments.
Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised. See NOTE 11 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.
Environmental Remediation Costs
We have a formal policy for environmental protection and restoration. Our mining and exploration activities are subject to various laws and regulations governing protection of the environment. We conduct our operations to protect the public health and environment and believe our operations are in compliance with applicable laws and regulations in all material respects. Our environmental liabilities, including obligations for known environmental remediation exposures at active and closed mining operations and other sites, have been recognized based on the estimated cost of investigation and remediation at each site. If the cost only can be estimated as a range of possible amounts with no point in the range being more likely, the minimum of the range is accrued. Future expenditures are not discounted unless the amount and timing of the cash disbursements reasonably can be estimated. It is possible that additional environmental obligations could be incurred, the extent of which cannot be assessed. Potential insurance recoveries have not been reflected in the determination of the liabilities. See NOTE 11 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.
Revenue Recognition
U.S. Iron Ore, Asia Pacific Iron Ore and Eastern Canadian Iron Ore
We sell our products pursuant to comprehensive supply agreements negotiated and executed with our customers. Revenue is recognized from a sale when persuasive evidence of an arrangement exists, the price is fixed or determinable, the product is delivered in accordance with F.O.B. terms, title and risk of loss have transferred to the customer in accordance with the specified provisions of each supply agreement and collection of the sales price reasonably is assured. Our U.S. Iron Ore, Asia Pacific Iron Ore and Eastern Canadian Iron Ore supply agreements provide that title and risk of loss transfer to the customer either upon loading of the vessel, shipment or, as is the case with some of our U.S. Iron Ore supply agreements, when payment is received. Under certain term supply agreements, we ship the product to ports on the lower Great Lakes or to the customers’ facilities prior to the transfer of title. Our rationale for shipping iron ore products to certain customers and retaining title until payment is received for these products is to minimize credit risk exposure.
Iron ore sales are recorded at a sales price specified in the relevant supply agreements resulting in revenue and a receivable at the time of sale. Upon revenue recognition for provisionally priced sales, a freestanding derivative is created for the difference between the sales price used and expected future settlement price. The derivative, which does not qualify for hedge accounting, is adjusted to fair value through Product revenues as a revenue adjustment each reporting period based upon current market data and forward-looking estimates determined by management until the final sales price is determined. The principal risks associated with recognition of sales on a provisional basis include iron ore price fluctuations between the date initially recorded and the date of final settlement. For revenue recognition, we estimate the future settlement rate; however, if significant changes in iron ore prices occur between the provisional pricing date and the final settlement date, we might be required to either return a portion of the sales proceeds received or bill for the additional sales proceeds due based on the provisional sales price. Refer to NOTE 13 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.
In addition, certain supply agreements with one customer include provisions for supplemental revenue or refunds based on the customer’s annual steel pricing for the year the product is consumed in the customer’s blast furnaces. We account for this provision as a derivative instrument at the time of sale and record this provision at fair value until the year the product is consumed and the amounts are settled as an adjustment to revenue. Refer to NOTE 13 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.
Revenue from product sales also includes reimbursement for freight charges paid on behalf of customers and freight costs to move product from the Upper Great Lakes to ports in Québec to use for exports and from the port of Esperance to ports in China, which are included in Freight and venture partners' cost reimbursements separate from Product revenues. Revenue is recognized for the expected reimbursement of services when the services are performed.
North American Coal
We sell our products pursuant to supply agreements negotiated and executed with our customers. Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, the product is delivered in accordance with F.O.B. terms, title and risk of loss have transferred to the customer in accordance with the specified provisions of each supply agreement and collection of the sales price reasonably is assured. Delivery on our coal sales is determined to be complete for revenue recognition purposes when title and risk of loss has passed to the customer in accordance with stated contractual terms and there are no other future obligations related to the shipment. For domestic shipments, title and risk of loss generally passes as the coal is loaded into transport carriers for delivery to the customer. For international shipments, title generally passes at the time coal is loaded onto the shipping vessel. Revenue from product sales in 2014, 2013 and 2012 included reimbursement for freight charges paid to move coal from the mine to port locations of $115.0 million, $85.8 million and $101.0 million, respectively, and is recorded in Freight and venture partners' cost reimbursements on the Statements of Consolidated Operations.
Deferred Revenue
The terms of one of our U.S. Iron Ore pellet supply agreements required supplemental payments to be paid by the customer during the period 2009 through 2012, with the option to defer a portion of the 2009 monthly amount in exchange for interest payments until the deferred amount was repaid in 2013. Installment amounts received under this arrangement in excess of sales are classified as deferred revenue in the Statements of Consolidated Financial Position upon receipt of payment. Revenue is recognized over the life of the supply agreement, which extends until 2022, in equal annual installments. As of December 31, 2014 and 2013, installment amounts received in excess of sales totaled $102.8 million and $115.6 million, respectively. As of December 31, 2014, deferred revenue of $12.8 million was recorded in Other current liabilities and $90.0 million was recorded as long term in Other liabilities in the Statements of Consolidated Financial Position. As of December 31, 2013, deferred revenue of $12.8 million was recorded in Other current liabilities and $102.8 million was recorded as long term in Other liabilities in the Statements of Consolidated Financial Position.
In 2014 and 2013, due to the payment terms and the timing of cash receipts near year-end, cash receipts exceeded shipments. The shipments were completed early in the subsequent years. We considered whether revenue should be recognized on these sales under the “bill and hold” guidance provided by the SEC Staff; however, based upon the assessment performed, revenue recognition on these transactions totaling $29.3 million and $13.5 million, respectively, was deferred on the December 31, 2014 and December 31, 2013 Statements of Consolidated Financial Position.
Cost of Goods Sold
U.S. Iron Ore, Asia Pacific Iron Ore and Eastern Canadian Iron Ore
Cost of goods sold and operating expenses represents all direct and indirect costs and expenses applicable to the sales and revenues of our mining operations. Operating expenses primarily represent the portion of the Tilden mining venture costs for which we do not own; that is, the costs attributable to the share of the mine’s production owned by the other joint venture partner in the Tilden mine. The mining venture functions as a captive cost company; it supplies product only to its owners effectively for the cost of production. Accordingly, the noncontrolling interests’ revenue amounts are stated at cost of production and are offset by an equal amount included in Cost of goods sold and operating expenses resulting in no sales margin reflected for the noncontrolling partner participant. As we are responsible for product fulfillment, we act as a principal in the transaction and, accordingly, record revenue under these arrangements on a gross basis.
The following table is a summary of reimbursements in our U.S. Iron Ore operations for the years ended December 31, 2014, 2013 and 2012:
 
 
(In Millions)
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Reimbursements for:
 
 
 
 
 
 
Freight
 
$
163.0

 
$
177.3

 
$
142.0

Venture partners’ cost
 
108.0

 
82.2

 
108.8

Total reimbursements
 
$
271.0

 
$
259.5

 
$
250.8


In 2014, we began selling a portion of its Asia Pacific Iron Ore product on a CFR basis. As a result, $6.9 million of freight was included in Cost of goods sold and operating expenses. There was no freight for the year ended December 31, 2013.
Where we have joint ownership of a mine, our contracts entitle us to receive royalties and/or management fees, which we earn as the pellets are produced.
North American Coal
Cost of goods sold and operating expenses represent all direct and indirect costs and expenses applicable to the sales and revenues of our mining operations.
Repairs and Maintenance
Repairs, maintenance and replacement of components are expensed as incurred. The cost of major equipment overhauls is capitalized and depreciated over the estimated useful life, which is the period until the next scheduled overhaul, generally five years. All other planned and unplanned repairs and maintenance costs are expensed when incurred.
Share-Based Compensation
The fair value of each performance share grant is estimated on the date of grant using a Monte Carlo simulation to forecast relative TSR performance. Consistent with the guidelines of ASC 718, a correlation matrix of historic and projected stock prices was developed for both the Company and its predetermined peer group of mining and metals companies. The fair value assumes that performance goals will be achieved.
The expected term of the grant represents the time from the grant date to the end of the service period for each of the three plan-year agreements. We estimated the volatility of our common shares and that of the peer group of mining and metals companies using daily price intervals for all companies. The risk-free interest rate is the rate at the grant date on zero-coupon government bonds, with a term commensurate with the remaining life of the performance plans.
The fair value of stock options is estimated on the date of grant using a Black-Scholes model using the grant date price of our common shares and option exercise price, and assumptions regarding the option’s expected term, the volatility of our common shares, the risk-free interest rate, and the dividend yield over the option’s expected term.

Refer to NOTE 8 - STOCK COMPENSATION PLANS for additional information.
    
Income Taxes
Income taxes are based on income for financial reporting purposes, calculated using tax rates by jurisdiction, and reflect a current tax liability or asset for the estimated taxes payable or recoverable on the current year tax return and expected annual changes in deferred taxes. Any interest or penalties on income tax are recognized as a component of income tax expense.
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial results of operations.
Accounting for uncertainty in income taxes recognized in the financial statements requires that a tax benefit from an uncertain tax position be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.
See NOTE 9 - INCOME TAXES for further information.
Discontinued Operations
On July 10, 2012, we entered into a definitive share and asset sale agreement to sell our 45 percent economic interest in the Sonoma joint venture coal mine located in Queensland, Australia. Upon completion of the transaction on November 12, 2012, we collected approximately AUD $141.0 million in net cash proceeds. The assets sold included our interests in the Sonoma mine along with our ownership of the affiliated washplant. The Sonoma operations previously were included in Other within our reportable segments.
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for reporting discontinued operations and requires additional disclosures about discontinued operations. The standard requires that an entity report as a discontinued operation only a disposal that represents a strategic shift in operations that has a major effect on its operations and financial results. ASU 2014-08 is effective prospectively for new disposals that occur within annual periods beginning on or after December 15, 2014. Early adoption is permitted and we adopted ASU 2014-08 during the three months ended December 31, 2014. Both Wabush and CLCC did not qualify as discontinued operations as determined under the new guidance. Neither the closure of Wabush nor the sale of the CLCC assets was considered a strategic shift in operations that had a major effect on our operations. Refer to NOTE 14 - DISCONTINUED OPERATIONS for further discussion of our adoption of ASU 2014-08.
Foreign Currency
Our financial statements are prepared with the U.S. dollar as the reporting currency. The functional currency of the Company’s Australian subsidiaries is the Australian Dollar. The functional currency of all other international subsidiaries is the U.S. dollar. The financial statements of international subsidiaries are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted average exchange rate for each period for revenues, expenses, gains and losses. Where the local currency is the functional currency, translation adjustments are recorded as Accumulated other comprehensive loss. Where the U.S. dollar is the functional currency, translation adjustments are recorded in the Statements of Consolidated Operations. Income taxes generally are not provided for foreign currency translation adjustments.
Earnings Per Share
We present both basic and diluted earnings per share amounts. Basic earnings per share amounts are calculated by dividing Net Income (Loss) Attributable to Cliffs Shareholders less any paid or declared but unpaid dividends on our depositary shares by the weighted average number of common shares outstanding during the period presented. Diluted earnings per share amounts are calculated by dividing Net Income (Loss) Attributable to Cliffs Shareholders by the weighted average number of common shares, common share equivalents under stock plans using the treasury stock method and the number of common shares that would be issued under an assumed conversion of our outstanding depositary shares, each representing a 1/40th interest in a share of our Series A Mandatory Convertible Preferred Stock, Class A, under the if-converted method. Our outstanding depositary shares are convertible into common shares based on the volume weighted average of closing prices of our common shares over the 20 consecutive trading day period ending on the third day immediately preceding the end of the reporting period. Common share equivalents are excluded from EPS computations in the periods in which they have an anti-dilutive effect. See NOTE 19 - EARNINGS PER SHARE for further information.
Recent Accounting Pronouncements
Issued and Not Effective
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term "substantial doubt" and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for all entities in the first annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Earlier adoption is permitted. We are currently evaluating the impact the adoption of the guidance will have on the Statements of Consolidated Financial Position, Statements of Consolidated Operations or Statements of Consolidated Cash Flows.
In June 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers.  The new revenue guidance broadly replaces the revenue guidance provided throughout the Codification.  The core principle of the revenue guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.  The new revenue guidance also requires the capitalization of certain contract acquisition costs.  Reporting entities must provide new disclosures providing qualitative and quantitative information on the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.  New disclosures also include qualitative and quantitative information on significant judgments, changes in judgments, and contract acquisition assets.  The update is effective for annual periods and interim periods within those annual periods beginning after December 15, 2016 and may be adopted either retrospectively or retrospectively with the cumulative effect.  Earlier adoption is not permitted. We are still evaluating the impact of the updated guidance on the Statements of Consolidated Financial Position, Statements of Consolidated Operations or Statements of Consolidated Cash Flows.
SEGMENT REPORTING
SEGMENT REPORTING
NOTE 2 - SEGMENT REPORTING
Our Company’s operations are organized and managed according to product category and geographic location: U.S. Iron Ore, Asia Pacific Iron Ore, North American Coal and Eastern Canadian Iron Ore. The U.S. Iron Ore segment is comprised of our interests in five U.S. mines that provide iron ore to the integrated steel industry. The Asia Pacific Iron Ore segment is located in Western Australia and provides iron ore to the seaborne market for Asian steel producers. The North American Coal segment as of December 31, 2014 is comprised of our two low-volatile metallurgical coal operations that provide metallurgical coal primarily to the integrated steel industry. Effective December 31, 2014, we sold our CLCC assets, which consisted of two high-volatile metallurgical coal mines and one thermal coal mine. As such, the results below include the CLCC results through the day of the sale completion. The Eastern Canadian Iron Ore segment is comprised of two Eastern Canadian mines that primarily provided iron ore to the seaborne market for Asian steel producers. Refer to NOTE 21 - SUBSEQUENT EVENTS for further discussion of our Bloom Lake mine, which is in the Eastern Canadian Iron Ore segment. There were no intersegment revenues in 2014 or 2012. Inter-segment revenues for 2013 were eliminated in consolidation.
We have historically evaluated segment performance based on sales margin, defined as revenues less cost of goods sold, and operating expenses identifiable to each segment. Additionally, beginning in the third quarter of 2014, concurrent with the change in control on July 29, 2014, management began to evaluate segment performance based on EBITDA, defined as Net Income (Loss) before interest, income taxes, depreciation, depletion and amortization, and Adjusted EBITDA, defined as EBITDA excluding certain items such as impairment charges, impacts of permanently idled, closed or sold facilities, foreign currency remeasurement, severance and other costs associated with the acceleration of vesting and payout of outstanding equity grants due to the majority change in our Board of Directors, litigation judgments and intersegment corporate allocations of SG&A costs. Management uses and believes that investors benefit from referring to these measures in evaluating operating and financial results, as well as in planning, forecasting and analyzing future periods as these financial measures approximate the cash flows associated with the operational earnings.
The following tables present a summary of our reportable segments for the years ended December 31, 2014, 2013 and 2012, including a reconciliation of segment sales margin to Income (Loss) from Continuing Operations Before Income Taxes and Equity Income (Loss) from Ventures and a reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA:
 
(In Millions)
 
2014
 
2013
 
2012
Revenues from product sales and services:
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
2,506.5

 
54%
 
$
2,667.9

 
47%
 
$
2,723.3

 
46%
Asia Pacific Iron Ore
866.7

 
19%
 
1,224.3

 
22%
 
1,259.3

 
22%
North American Coal
687.1

 
15%
 
821.9

 
14%
 
881.1

 
15%
Eastern Canadian Iron Ore
563.4

 
12%
 
978.7

 
17%
 
1,008.9

 
17%
Other (including inter-segment revenue eliminations)

 
—%
 
(1.4
)
 
—%
 
0.1

 
—%
Total revenues from product sales and services
$
4,623.7

 
100%
 
$
5,691.4

 
100%
 
$
5,872.7

 
100%
 
 
 
 
 
 
 
 
 
 
 
 
Sales margin:
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
710.4

 
 
 
$
901.9

 
 
 
$
976.2

 
 
Asia Pacific Iron Ore
121.7

 
 
 
367.1

 
 
 
311.0

 
 
North American Coal
(135.8
)
 
 
 
(14.5
)
 
 
 
(1.8
)
 
 
Eastern Canadian Iron Ore
(244.9
)
 
 
 
(103.3
)
 
 
 
(121.4
)
 
 
Other (including inter-segment sales margin eliminations)

 
 
 
(1.9
)
 
 
 
8.1

 
 
Sales margin
451.4

 
 
 
1,149.3

 
 
 
1,172.1

 
 
Other operating income (expense)
(9,896.7
)
 
 
 
(478.3
)
 
 
 
(1,480.9
)
 
 
Other income (expense)
(158.4
)
 
 
 
(181.7
)
 
 
 
(193.0
)
 
 
Income (loss) from continuing operations before income taxes and equity income (loss) from ventures
$
(9,603.7
)
 
 
 
$
489.3

 
 
 
$
(501.8
)
 
 
 
(In Millions)
 
2014
 
2013
 
2012
 
 
 
 
 
 
Net Income (Loss)
$
(8,311.6
)
 
$
361.8

 
$
(1,126.6
)
Less:
 
 
 
 
 
Interest expense, net
(185.2
)
 
(179.1
)
 
(195.6
)
Income tax benefit (expense)
1,302.0

 
(55.1
)
 
(255.9
)
Depreciation, depletion and amortization
(504.0
)
 
(593.3
)
 
(525.8
)
EBITDA
$
(8,924.4
)
 
$
1,189.3

 
$
(149.3
)
Less:
 
 
 
 
 
Impairment of goodwill and other long-lived assets
$
(9,029.9
)
 
$
(250.8
)
 
$
(1,049.9
)
Impairment of equity method investment

 

 
(365.4
)
Loss on sale of Cliffs Logan County Coal
(419.6
)
 

 

Wabush mine impact
(158.7
)
 
(72.7
)
 
(30.1
)
Bloom Lake mine impact
(137.9
)
 
46.5

 
6.4

Foreign exchange remeasurement
30.7

 
64.0

 
(3.2
)
Proxy contest and change in control costs in SG&A
(26.6
)
 

 

Litigation judgment
(96.3
)
 
(9.6
)
 

Severance in SG&A
(15.8
)
 
(16.4
)
 

Total Adjusted EBITDA
$
929.7

 
$
1,428.3

 
$
1,292.9

 
 
 
 
 
 
EBITDA:
 
 
 
 
 
U.S. Iron Ore
$
805.6

 
$
1,000.1

 
$
1,045.3

Asia Pacific Iron Ore
(369.8
)
 
500.4

 
387.3

North American Coal
(1,326.8
)
 
129.5

 
74.0

Eastern Canadian Iron Ore
(7,673.9
)
 
(192.8
)
 
(1,103.3
)
Other
(359.5
)
 
(247.9
)
 
(552.6
)
Total EBITDA
$
(8,924.4
)
 
$
1,189.3

 
$
(149.3
)
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
U.S. Iron Ore
$
831.2

 
$
1,030.8

 
$
1,085.6

Asia Pacific Iron Ore
264.6

 
525.7

 
402.1

North American Coal
(28.5
)
 
154.0

 
106.7

Eastern Canadian Iron Ore

 

 

Other
(137.6
)
 
(282.2
)
 
(301.5
)
Total Adjusted EBITDA
$
929.7

 
$
1,428.3

 
$
1,292.9

 
(In Millions)
 
2014
 
2013
 
2012
Depreciation, depletion and amortization:
 
 
 
 
 
U.S. Iron Ore
$
107.4

 
$
120.3

 
$
100.9

Asia Pacific Iron Ore
145.9

 
153.7

 
151.9

North American Coal
106.9

 
128.9

 
98.2

Eastern Canadian Iron Ore
135.6

 
178.5

 
160.2

Other
8.2

 
11.9

 
14.6

Total depreciation, depletion and amortization
$
504.0

 
$
593.3

 
$
525.8

 
 
 
 
 
 
Capital additions1:
 
 
 
 
 
U.S. Iron Ore
$
48.4

 
$
53.3

 
$
168.8

Asia Pacific Iron Ore
10.8

 
13.0

 
87.7

North American Coal
28.8

 
55.0

 
144.1

Eastern Canadian Iron Ore
141.2

 
625.5

 
865.2

Other
6.3

 
5.5

 
69.5

Total capital additions
$
235.5

 
$
752.3

 
$
1,335.3

                                         
1 Includes capital lease additions and non-cash accruals. Refer to NOTE 17 - CASH FLOW INFORMATION.
A summary of assets by segment is as follows:
 
(In Millions)
 
December 31,
2014
 
December 31, 2013
 
December 31, 2012
Assets:
 
 
 
 
 
U.S. Iron Ore
$
1,598.3

 
$
1,671.6

 
$
1,735.1

Asia Pacific Iron Ore
274.6

 
1,078.4

 
1,506.3

North American Coal
274.2

 
1,841.8

 
1,877.8

Eastern Canadian Iron Ore
305.8

 
7,915.5

 
7,605.1

Other
164.3

 
455.6

 
570.9

Total segment assets
2,617.2

 
12,962.9

 
13,295.2

Corporate
546.8

 
159.0

 
279.7

Total assets
$
3,164.0

 
$
13,121.9

 
$
13,574.9


Included in the consolidated financial statements are the following amounts relating to geographic location:
 
(In Millions)
 
2014
 
2013
 
2012
Revenue
 
 
 
 
 
United States
$
2,139.4

 
$
1,857.6

 
$
2,108.5

China
1,049.0

 
1,909.4

 
2,008.2

Canada
439.1

 
871.2

 
728.1

Other countries
996.2

 
1,053.2

 
1,027.9

Total revenue
$
4,623.7

 
$
5,691.4

 
$
5,872.7

Property, Plant and Equipment, Net
 
 
 
 
 
United States
$
1,093.7

 
$
2,721.6

 
$
2,795.3

Australia
72.4

 
751.0

 
1,042.4

Canada
248.8

 
7,680.8

 
7,369.6

Total Property, Plant and Equipment, Net
$
1,414.9

 
$
11,153.4

 
$
11,207.3


Concentrations in Revenue
In 2014, two customers accounted for more than 10 percent of our consolidated product revenue. In 2013 and 2012, one customer in each year individually accounted for more than 10 percent of our consolidated product revenue. Total revenue from these customers accounted for more than 10 percent of our consolidated product revenues and represents approximately $1.6 billion, $1.0 billion and $0.9 billion of our total consolidated product revenue in 2014, 2013 and 2012, respectively, and is attributable to our U.S. Iron Ore, North American Coal and Eastern Canadian Iron Ore business segments.
The following table represents the percentage of our total revenue contributed by each category of products and services in 2014, 2013, and 2012:
 
 
2014
 
2013
 
2012
Revenue Category
 
 
 
 
 
 
Iron ore
 
78
%
 
80
%
 
81
%
Coal
 
12
%
 
13
%
 
13
%
Freight and venture partners’ cost reimbursements
 
10
%
 
7
%
 
6
%
Total revenue
 
100
%
 
100
%
 
100
%
INVENTORIES
Inventories
NOTE 3 - INVENTORIES
The following table presents the detail of our Inventories in the Statements of Consolidated Financial Position as of December 31, 2014 and 2013:
 
(In Millions)
 
December 31, 2014
 
December 31, 2013
Segment
Finished Goods
 
Work-in Process
 
Total Inventory
 
Finished Goods
 
Work-in
Process
 
Total
Inventory
U.S. Iron Ore
$
132.1

 
$
13.5

 
$
145.6

 
$
92.1

 
$
13.0

 
$
105.1

Asia Pacific Iron Ore
26.4

 
88.1

 
114.5

 
39.7

 
50.6

 
90.3

North American Coal
33.1

 
17.2

 
50.3

 
59.4

 
23.2

 
82.6

Eastern Canadian Iron Ore
16.3

 

 
16.3

 
65.3

 
48.1

 
113.4

Total
$
207.9

 
$
118.8

 
$
326.7

 
$
256.5

 
$
134.9

 
$
391.4


U.S. Iron Ore
The excess of current cost over LIFO cost of iron ore inventories was $119.0 million and $115.3 million at December 31, 2014 and 2013, respectively. As of December 31, 2014, the product inventory balance for U.S. Iron Ore increased, resulting in a LIFO increment in 2014. The effect of the inventory build was an increase in Inventories of $44.8 million in the Statements of Consolidated Financial Position for the year ended December 31, 2014. As of December 31, 2013, the product inventory balance for U.S. Iron Ore declined, resulting in liquidation of a LIFO layer in 2013. The effect of the inventory reduction was a decrease in Cost of goods sold and operating expenses of $7.4 million in the Statements of Consolidated Operations for the year ended December 31, 2013.
North American Coal
We recorded LCM inventory charges of $44.5 million, $11.1 million and $24.4 million in Cost of goods sold and operating expenses in the Statements of Consolidated Operations for the years ended December 31, 2014, 2013 and 2012, respectively, for our North American Coal operations. The charges in 2014 were a result of market pricing declines. The charges in 2013 and 2012 were a result of market pricing declines and costs associated with operational and geological issues.
Eastern Canadian Iron Ore
We recorded LCM inventory charges of $38.9 million in Cost of goods sold and operating expenses in the Statements of Consolidated Operations for the year ended December 31, 2014, for our Eastern Canadian Iron Ore operations. During 2014, we recorded $10.4 million and $17.5 million of LCM inventory charges related to work-in process inventory and finished goods inventory, respectively, for Bloom Lake. Additionally, we recorded $4.9 million and $6.1 million of LCM inventory charges related to work-in process inventory and finished goods inventory, respectively, for Wabush. The charges at Eastern Canadian Iron Ore were primarily a result of declines in Platts 62 percent Fe fines spot pricing and the increased cost of production. At the end of March 2014, we idled our Wabush Scully mine in Newfoundland and Labrador and began to implement the permanent closure plan for the mine. 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.
For the year ended December 31, 2013, the LCM concentrate and pellet inventory charges recorded were $13.2 million and $11.1 million, respectively, which were recorded in Cost of goods sold and operating expenses in the Statements of Consolidated Operations for our Eastern Canadian Iron Ore operations. Additionally, we recorded unsaleable inventory impairment charges of $10.6 million and $7.9 million, respectively, relating to Wabush pellets and concentrate inventory. Both of these charges were recorded in Cost of goods sold and operating expenses during 2013 and included in the Statements of Consolidated Operations for the year ended December 31, 2013 for our Eastern Canadian Iron Ore operations.
No LCM inventory adjustments were recorded for the year ended December 31, 2012 within the Eastern Canadian Iron Ore operating segment results.
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
The following table indicates the value of each of the major classes of our consolidated depreciable assets as of December 31, 2014 and 2013:
 
(In Millions)
 
December 31,
 
2014
 
2013
Land rights and mineral rights
$
590.2

 
$
7,819.6

Office and information technology
75.5

 
125.7

Buildings
65.6

 
255.2

Mining equipment
732.6

 
1,819.3

Processing equipment
567.4

 
2,148.6

Electric power facilities
48.8

 
114.3

Land improvements
25.5

 
69.3

Other
60.8

 
227.6

Construction in-progress
51.3

 
991.3

 
2,217.7

 
13,570.9

Allowance for depreciation and depletion
(802.8
)
 
(2,417.5
)
 
$
1,414.9

 
$
11,153.4


We recorded depreciation expense of $320.6 million, $366.9 million and $293.5 million in the Statements of Consolidated Operations for the years ended December 31, 2014, 2013 and 2012, respectively.
At December 31, 2014, there was no accumulated amount of capitalized interest included within construction-in-progress. At December 31, 2013, $31.4 million of capitalized interest was included within construction in-progress, of which $17.4 million was capitalized during 2013.
During the second half of 2014, due to lower than previously expected profits as a result of decreased iron ore pricing expectations and increased costs, we determined that indicators of impairment with respect to certain of our long-lived assets or asset groups existed. Our asset groups generally consist of the assets and liabilities of one or more mines, preparation plants and associated reserves for which the lowest level of identifiable cash flows largely are independent of cash flows of other mines, preparation plants and associated reserves.
As a result of these assessments during 2014, we determined that the future cash flows associated with our Eastern Canadian Iron Ore, Asia Pacific Iron Ore, North American Coal and Ferroalloys asset groups were not sufficient to support the recoverability of the carrying value of these productive assets. Accordingly, during 2014, an other long-lived asset impairment charge of $8,839.0 million was recorded as Impairment of goodwill and other long-lived assets in the Statements of Consolidated Operations related to property, plant and equipment. The fair value estimates were calculated using income and market approaches. Refer to NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS for further discussion of these impairments and related fair value estimates.
During the fourth quarter of 2013, we experienced higher than expected production costs and operational inefficiencies at our Wabush operations within our Eastern Canadian Iron Ore operating segment that resulted in continued declines in our profitability of that business, which represented an asset group for purposes of testing our long-lived assets for recoverability. Upon completion of an impairment analysis, it was determined the fair value was less than the carrying value of the asset group, which resulted in an other long-lived asset impairment charge of tangible property, plant and equipment of $140.1 million as Impairment of goodwill and other long-lived assets in the Statements of Consolidated Operations for the year ended December 31, 2013. The fair value estimate was calculated using a market approach.
The net book value of the land rights and mineral rights as of December 31, 2014 and 2013 is as follows:
 
(In Millions)
 
December 31,
 
2014
 
2013
Land rights
$
31.9

 
$
46.3

Mineral rights:

 

Cost
$
558.3

 
$
7,773.3

Depletion
(101.3
)
 
(942.6
)
Net mineral rights
$
457.0

 
$
6,830.7


Accumulated depletion relating to mineral rights, which was recorded using the unit-of-production method, is included in Cost of goods sold and operating expenses. We recorded depletion expense of $173.0 million, $206.5 million and $209.8 million in the Statements of Consolidated Operations for the years ended December 31, 2014, 2013 and 2012, respectively. As discussed above, during 2014 we performed impairment assessments with respect to certain of our long-lived assets or asset groups. As a result of these assessments, we recorded an other long-lived asset impairment charge related to mineral rights of $5,772.7 million associated with our Eastern Canadian Iron Ore, Asia Pacific Iron Ore, North American Coal and Ferroalloys asset groups.
DEBT AND CREDIT FACILITIES
DEBT AND CREDIT FACILITIES
NOTE 5 - DEBT AND CREDIT FACILITIES
The following represents a summary of our long-term debt as of December 31, 2014 and 2013:
($ in Millions)
 
December 31, 2014
 
Debt Instrument
 
Type
 
Annual Effective Interest Rate
 
Final Maturity
 
Total Principal Amount
 
Total Debt
 
$700 Million 4.875% 2021 Senior Notes
 
Fixed
 
4.88%
 
2021
 
$
690.0

 
$
689.5

(1)
$1.3 Billion Senior Notes: