CLIFFS NATURAL RESOURCES INC., 10-K filed on 2/24/2016
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2015
Feb. 22, 2016
Jun. 30, 2015
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, 2015 
 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
180,111,831 
 
Trading Symbol
clf 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 653,133,194 
Statements Of Condensed Consolidated Financial Position (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
CURRENT ASSETS
 
 
Cash and cash equivalents
$ 285.2 
$ 271.3 
Accounts receivable, net
40.2 
122.7 
Inventories
329.6 
260.1 
Supplies and other inventories
110.4 
118.6 
Income tax receivable
5.7 
217.6 
Short-term assets of discontinued operations
14.9 
326.9 
Loans to and accounts receivables from the Canadian Entities
72.9 
0.4 
Insurance coverage receivable
93.5 
Other current assets
30.3 
107.7 
TOTAL CURRENT ASSETS
982.7 
1,425.3 
PROPERTY, PLANT AND EQUIPMENT, NET
1,059.0 
1,070.5 
OTHER ASSETS
 
 
Deferred income taxes
175.5 
Long-term assets of discontinued operations
383.0 
Other non-current assets
93.8 
92.9 
TOTAL OTHER ASSETS
93.8 
651.4 
TOTAL ASSETS
2,135.5 
3,147.2 
CURRENT LIABILITIES
 
 
Accounts payable
106.3 
166.1 
Accrued employment costs
53.0 
73.8 
State and local taxes payable
35.2 
40.7 
Accrued expenses
85.7 
99.4 
Accrued royalties
17.3 
28.5 
Short-term liabilities of discontinued operations
6.9 
399.4 
Guarantees
96.5 
Insured loss
93.5 
Other current liabilities
87.3 
146.6 
TOTAL CURRENT LIABILITIES
581.7 
954.5 
POSTEMPLOYMENT BENEFIT LIABILITIES
 
 
Pensions
209.7 
246.0 
Other postretirement benefits
11.3 
22.3 
TOTAL POSTEMPLOYMENT BENEFIT LIABILITIES
221.0 
268.3 
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
231.2 
165.6 
LONG-TERM DEBT
2,699.4 
2,826.5 
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS
427.5 
OTHER LIABILITIES
213.8 
239.1 
TOTAL LIABILITIES
3,947.1 
4,881.5 
COMMITMENTS AND CONTINGENCIES (SEE NOTE 20)
   
   
CLIFFS SHAREHOLDERS' DEFICIT
 
 
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 (2014 - 731,223)
731.3 
731.3 
Common Shares - par value $0.125 per share, Authorized - 400,000,000 shares (2014 - 400,000,000 shares); Issued - 159,546,224 shares (2014 - 159,546,224) shares); Outstanding - 153,591,930 shares (2014 - 153,246,754) shares)
19.8 
19.8 
Capital in excess of par value of shares
2,298.9 
2,309.8 
Retained deficit
(4,748.4)
(3,960.7)
Cost of 5,954,294 common shares in treasury (2014 - 6,299,470 shares)
(265.0)
(285.7)
Accumulated other comprehensive loss
(18.0)
(245.8)
TOTAL CLIFFS SHAREHOLDERS' DEFICIT
(1,981.4)
(1,431.3)
NONCONTROLLING INTEREST (DEFICIT)
169.8 
(303.0)
TOTAL DEFICIT
(1,811.6)
(1,734.3)
TOTAL LIABILITIES AND DEFICIT
$ 2,135.5 
$ 3,147.2 
Statements Of Condensed Consolidated Financial Position (Parenthetical) (USD $)
Dec. 31, 2015
Dec. 31, 2014
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
153,591,930 
153,246,754 
Common shares in treasury
5,954,294 
6,299,470 
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 
731,223 
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, 2015
Dec. 31, 2014
Dec. 31, 2013
REVENUES FROM PRODUCT SALES AND SERVICES
 
 
 
Product
$ 1,832.4 
$ 3,095.2 
$ 3,631.8 
Freight and venture partners' cost reimbursements
180.9 
278.0 
259.0 
TOTAL REVENUES
2,013.3 
3,373.2 
3,890.8 
COST OF GOODS SOLD AND OPERATING EXPENSES
(1,776.8)
(2,487.5)
(2,406.4)
SALES MARGIN
236.5 
885.7 
1,484.4 
OTHER OPERATING INCOME (EXPENSE)
 
 
 
Selling, general and administrative expenses
(110.0)
(154.7)
(163.8)
Impairment of goodwill and other long-lived assets
(3.3)
(635.5)
(14.3)
Miscellaneous - net
28.1 
34.6 
74.0 
Other operating expense
(85.2)
(755.6)
(104.1)
OPERATING INCOME
151.3 
130.1 
1,380.3 
OTHER INCOME (EXPENSE)
 
 
 
Interest expense, net
(228.5)
(176.7)
(186.4)
Gain on extinguishment of debt
392.9 
16.2 
Other non-operating income (expense)
(2.6)
10.7 
(3.0)
TOTAL OTHER INCOME (EXPENSE)
161.8 
(149.8)
(189.4)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY LOSS FROM VENTURES
313.1 
(19.7)
1,190.9 
INCOME TAX BENEFIT (EXPENSE)
(169.3)
86.0 
(237.6)
EQUITY LOSS FROM VENTURES, net of tax
(0.1)
(9.9)
(74.4)
INCOME FROM CONTINUING OPERATIONS
143.7 
56.4 
878.9 
LOSS FROM DISCONTINUED OPERATIONS, net of tax
(892.1)
(8,368.0)
(517.1)
NET INCOME (LOSS)
(748.4)
(8,311.6)
361.8 
LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST (Year Ended December 31, 2015 - Loss of $7.7 million related to Discontinued Operations, Year Ended December 31, 2014 - Loss of $1,113.3 million and Year Ended December 31, 2013 - Loss of $66.5 million related to Discontinued Operations)
(0.9)
1,087.4 
51.7 
NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
(749.3)
(7,224.2)
413.5 
PREFERRED STOCK DIVIDENDS
(38.4)
(51.2)
(48.7)
NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS COMMON SHAREHOLDERS
$ (787.7)
$ (7,275.4)
$ 364.8 
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
 
 
 
Continuing operations
$ 0.63 
$ (0.14)
$ 5.37 
Discontinued operations
$ (5.77)
$ (47.38)
$ (2.97)
Earnings (loss) per Common Share Attributable to Cliffs Common Shareholders - Basic:
$ (5.14)
$ (47.52)
$ 2.40 
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - DILUTED
 
 
 
Continuing operations
$ 0.63 
$ (0.14)
$ 4.95 
Discontinued operations
$ (5.76)
$ (47.38)
$ (2.58)
Earnings (loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted:
$ (5.13)
$ (47.52)
$ 2.37 
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
 
 
 
Basic
153,230 
153,098 
151,726 
Diluted
153,605 
153,098 
174,323 
CASH DIVIDENDS DECLARED PER DEPOSITARY SHARE
$ 1.32 
$ 1.76 
$ 1.66 
CASH DIVIDENDS DECLARED PER COMMON SHARE
$ 0.00 
$ 0.60 
$ 0.60 
Statements Of Condensed Consolidated Operations (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
$ 7.7 
$ 1,113.3 
$ 66.5 
Statements Of Condensed Consolidated Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$ (749.3)
$ (7,224.2)
$ 413.5 
OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
Pension and OPEB liability, net of tax
45.2 
(91.0)
208.3 
Unrealized net gain (loss) on marketable securities, net of tax
1.7 
(7.2)
3.1 
Unrealized net gain (loss) on foreign currency translation
155.6 
(42.3)
(208.6)
Unrealized net gain (loss) on derivative financial instruments, net of tax
20.7 
2.8 
(29.6)
OTHER COMPREHENSIVE INCOME (LOSS)
223.2 
(137.7)
(26.8)
OTHER COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST
4.6 
4.8 
(30.5)
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$ (521.5)
$ (7,357.1)
$ 356.2 
Statements Of Condensed Consolidated Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
OPERATING ACTIVITIES
 
 
 
Net income (loss)
$ (748.4)
$ (8,311.6)
$ 361.8 
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
 
 
 
Depreciation, depletion and amortization
134.0 
504.0 
593.3 
Impairment of goodwill and other long-lived assets
76.6 
9,029.9 
250.8 
Equity loss in ventures (net of tax)
(0.1)
9.9 
74.4 
Deferred income taxes
159.8 
(1,153.9)
(138.1)
Changes in deferred revenue and below-market sales contracts
(42.6)
(18.0)
(52.8)
Gain on extinguishment of debt
(392.9)
(16.2)
Loss on deconsolidation, net of cash deconsolidated
668.3 
Loss (gain) on sale of North American Coal mines
(9.3)
419.6 
Other
113.1 
(21.5)
(3.3)
Changes in operating assets and liabilities:
 
 
 
Receivables and other assets
369.1 
(82.8)
138.8 
Product inventories
(62.0)
37.8 
30.8 
Payables and accrued expenses
(227.7)
(38.3)
(109.8)
Net cash provided by operating activities
37.9 
358.9 
1,145.9 
INVESTING ACTIVITIES
 
 
 
Purchase of property, plant and equipment
(80.8)
(284.1)
(861.6)
Investments in DIP and prepetition financing
(14.0)
Proceeds (uses) from sale of North American Coal mines
(15.2)
155.0 
Other investing activities
6.8 
25.5 
50.3 
Net cash used in investing activities
(103.2)
(103.6)
(811.3)
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 
Proceeds from first lien notes offering
503.5 
Debt issuance costs
(33.6)
(9.0)
Repayment of term loan
(847.1)
Borrowings under credit facilities
309.8 
1,219.5 
670.5 
Repayment under credit facilities
(309.8)
(1,219.5)
(995.5)
Proceeds from equipment loans
164.8 
Repayments of equipment loans
(45.4)
(20.9)
(3.0)
Repurchase of debt
(225.9)
(28.8)
Contributions (to)/by joint ventures, net
0.1 
(25.7)
23.3 
Distributions of partnership equity
(40.6)
Common stock dividends
(92.5)
(91.9)
Preferred stock dividends
(51.2)
(51.2)
(35.7)
Other financing activities
(45.9)
(60.2)
(52.0)
Net cash provided by (used in) financing activities
61.0 
(288.3)
(171.9)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(1.4)
(11.6)
(22.4)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(5.7)
(44.6)
140.3 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
290.9 
335.5 
195.2 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 285.2 
$ 290.9 
$ 335.5 
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]
Balance, beginning 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, beginning 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)
 
 
 
Stock Issued During Period, Value, New Issues
285.3 
(731.3)
(1.3)
284.0 
 
 
 
 
(709.4)
21.9 
 
Equity offering (in shares)
 
29,300,000 
10,400,000 
 
 
 
 
 
 
 
 
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 
 
 
 
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests
 
 
 
(295.4)
(82.7)
 
 
 
 
 
 
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
 
 
153,200,000 
 
 
 
 
 
 
 
 
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 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
 
 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS)
(748.4)
 
 
 
(749.3)
 
 
0.9 
 
 
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
521.5 
 
 
 
 
 
227.8 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
(4.6)
 
 
 
Other Comprehensive Income (Loss), Net of Tax
223.2 
 
 
 
 
 
 
 
 
 
 
Pension and OPEB liability, net of tax
45.2 
 
 
 
 
 
 
 
 
 
 
Unrealized net loss on marketable securities, net of tax
1.7 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
(525.2)
 
 
 
 
 
 
(3.7)
 
 
 
Undistributed losses to noncontrolling interest to subsidiary
(0.2)
 
 
 
 
 
 
(0.2)
 
 
 
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders
(51.7)
 
 
 
 
 
 
(51.7)
 
 
 
Deconsolidation, Gain (Loss), Amount
528.2 
 
 
 
 
 
 
528.2 
 
 
 
Capital contribution by noncontrolling interest to subsidiary
0.2 
 
 
 
 
 
 
0.2 
 
 
 
Stock and other incentive plans (in shares)
 
 
300,000 
 
 
 
 
 
 
 
 
Stock and other incentive plans
9.8 
 
 
(10.9)
 
20.7 
 
 
 
 
 
Preferred stock dividends ($1.66 per depositary share)
(38.4)
 
 
 
 
 
 
 
 
 
 
Preferred Stock Dividends
(38.4)
 
 
 
(38.4)
 
 
 
 
 
 
Preferred Stock, Shares Outstanding
 
29,300,000 
 
 
 
 
 
 
 
 
 
Balance, end of period at Dec. 31, 2015
$ (1,811.6)
$ 731.3 
$ 19.8 
$ 2,298.9 
$ (4,748.4)
$ (265.0)
$ (18.0)
$ 169.8 
 
 
 
Balance, end of period (in shares) at Dec. 31, 2015
153,591,930 
 
153,500,000 
 
 
 
 
 
 
 
 
Statements of Consolidated Changes in Equity (Parenthetical)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Class of Stock [Line Items]
 
 
 
Common stock dividends per share
$ 0.00 
$ 0.60 
$ 0.60 
Preferred stock dividends per share
$ 1.32 
$ 1.76 
$ 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 a leading mining and natural resources company in the United States. We are a major supplier of iron ore pellets to the North American steel industry from our five iron ore mines and pellet plants located in Michigan and Minnesota. Additionally, Cliffs operates an iron ore mining complex in Western Australia. Our continuing operations are organized according to geography: U.S. Iron Ore and Asia Pacific Iron Ore.
As more fully described in NOTE 14 - DISCONTINUED OPERATIONS, in January 2015, we announced that the Bloom Lake Group commenced restructuring proceedings in Montreal, Quebec under the CCAA. At that time, we had suspended Bloom Lake operations and for several months had been exploring options to sell certain of our Canadian assets, among other initiatives. Effective January 27, 2015, following the CCAA filing of the Bloom Lake Group, we deconsolidated the Bloom Lake Group and certain other wholly-owned subsidiaries comprising substantially all of our Canadian operations. Additionally, on May 20, 2015, the Wabush Group commenced restructuring proceedings in Montreal, Quebec under the CCAA which resulted in the deconsolidation of the remaining Wabush Group entities that were not previously deconsolidated. The Wabush Group was no longer generating revenues and was not able to meet its obligations as they came due. As a result of this action, the CCAA protections granted to the Bloom Lake Group were extended to include the Wabush Group to facilitate the reorganization of each of their businesses and operations. Financial results prior to the respective deconsolidations of the Bloom Lake and Wabush Groups and subsequent expenses directly associated with the Canadian Entities are included in our financial statements and classified within discontinued operations.
Also, for the majority of 2015, we operated two metallurgical coal operations in Alabama and West Virginia. In December 2015, we completed the sale of these two metallurgical coal operations, which marked our exit from the coal business. As of March 31, 2015, management determined that our North American Coal operating segment met the criteria to be classified as held for sale under ASC 205, Presentation of Financial Statements. As such, all current year and historical North American Coal operating segment results are included in our financial statements and classified within discontinued operations. Refer to NOTE 14 - DISCONTINUED OPERATIONS for further discussion of the North American Coal segment discontinued operations.
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 the 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, 2015:
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

Intercompany transactions and balances are eliminated upon consolidation.
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, 2015 and December 31, 2014. Parentheses indicate a net liability.
 
 
 
 
 
 
 
 
(In Millions)
Investment
 
Classification
 
Accounting
Method
 
Ownership Interest
 
December 31,
2015
 
December 31, 2014
Hibbing
 
Other liabilities (1)
 
Equity Method
 
23%
 
$
(2.4
)
 
$
3.1

Other (2)
 
Other non-current assets
 
Equity Method
 
Various
 

 
1.0

 
 
 
 
 
 
 
 
$
(2.4
)
 
$
4.1

                                         
(1)    At December 31, 2014, the classification for Hibbing was Other non-current assets.
(2)    At December 31, 2015, no Other equity method investments remain.
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 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.  However, no contingent deferred consideration was earned upon the two-year anniversary. 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.
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. As discussed above, as of January 27, 2015, we deconsolidated the Bloom Lake Group following the CCAA filing. Financial results prior to the deconsolidation of the Bloom Lake Group and subsequent expenses directly associated with the Canadian Entities are included in our financial statements. See NOTE 14 - DISCONTINUED OPERATIONS for further information.
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 $7.1 million at December 31, 2015. There was no allowance for doubtful accounts at December 31, 2014. There was bad debt expense of $7.1 million for the year ended December 31, 2015. 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 1.3 million tons and 1.4 million tons of finished goods stored at ports and customer facilities on the lower Great Lakes to service customers at December 31, 2015 and 2014, 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.
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 $31.8 million and $16.0 million at December 31, 2015 and 2014, 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, if deemed necessary.
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.
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.
According to our global hedge policy, the policy allows for hedging 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. Full hedge compliance under the policy has been waived through December 31, 2016. The waiver was a result of the evaluation of the potential risk of being over hedged and the uncertainty of the 2015 and 2016 currency exposures. During 2015, we did not enter into any new foreign currency exchange contracts to hedge our foreign currency exposure and we do not expect to enter into any during 2016. In the future, we may enter into additional hedging instruments as needed in order to further hedge our exposure to changes in foreign currency exchange rates.
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 and Tilden 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 are idled temporarily.
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.
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 - USIO
 
Straight line
 
28
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 2015, we recorded no material impairment charges related to long-lived tangible or intangible assets at our continuing operations. During 2014, we recorded a long-lived tangible asset impairment charge of $537.8 million and an intangible asset impairment charge of $13.8 million in our Statements of Consolidated Operations related to our continuing operations. There were no long-lived tangible or intangible asset impairments during 2013 related to our continuing operations.
    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, Fair Value Measurements and Disclosures, 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 views 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, 2015 and 2014 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.
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.
We recognize the funded or unfunded status of our postretirement benefit obligations on our December 31, 2015 and 2014 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. 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, Asset Retirement and Environmental Obligations. 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
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 and Asia Pacific 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 free standing 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 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.
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, 2015 and 2014, installment amounts received in excess of sales totaled $89.9 million and $102.8 million, respectively. As of December 31, 2015, deferred revenue of $12.8 million was recorded in Other current liabilities and $77.1 million was recorded as long term in Other liabilities in the Statements of Consolidated Financial Position. 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.
In 2014, 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 was deferred on the December 31, 2014 Statements of Consolidated Financial Position.
Cost of Goods Sold
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, 2015, 2014 and 2013:
 
 
(In Millions)
 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
Reimbursements for:
 
 
 
 
 
 
Freight
 
$
105.3

 
$
163.0

 
$
177.3

Venture partners’ cost
 
52.0

 
108.0

 
82.2

Total reimbursements
 
$
157.3

 
$
271.0

 
$
259.5


In 2014, we began selling a portion of our Asia Pacific Iron Ore product on a CFR basis. As a result, $23.6 million and $6.9 million of freight was included in Cost of goods sold and operating expenses for the years ended December 31, 2015 and 2014, respectively. 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.
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, Stock Compensation, 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.
Upon vesting of share-based compensation awards, we issue shares from treasury stock before issuing new shares.
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
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 was permitted and we adopted ASU 2014-08 during the three months ended December 31, 2014.
North American Coal Operations
As we execute our strategy to focus on strengthening our U.S. Iron Ore operations, management determined as of March 31, 2015 that our North American Coal operating segment met the criteria to be classified as held for sale under ASC 205, Presentation of Financial Statements and continued to meet the criteria throughout 2015. In December 2015, we completed the sale of our remaining two metallurgical coal operations, Oak Grove and Pinnacle mines, which marked our exit from the coal business. Our plan to sell the Oak Grove and Pinnacle mine assets represented 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. Additionally, the results for the remainder of 2015 were reported as discontinued operations. This also includes our CLCC assets, which were sold during the fourth quarter of 2014. Refer to NOTE 14 - DISCONTINUED OPERATIONS for further discussion of our discontinued operations.
Canadian Operations
As more fully described in NOTE 14 - DISCONTINUED OPERATIONS, in January 2015, we announced that the Bloom Lake Group commenced restructuring proceedings in Montreal, Quebec under the CCAA. At that time, we had suspended Bloom Lake operations and for several months had been exploring options to sell certain of our Canadian assets, among other initiatives. Effective January 27, 2015, following the CCAA filing of the Bloom Lake Group, we deconsolidated the Bloom Lake Group and certain other wholly-owned subsidiaries comprising substantially all of our Canadian operations. Additionally, on May 20, 2015, the Wabush Group commenced restructuring proceedings in Montreal, Quebec under the CCAA which resulted in the deconsolidation of the remaining Wabush Group entities that were not previously deconsolidated. The Wabush Group was no longer generating revenues and was not able to meet its obligations as they came due. As a result of this action, the CCAA protections granted to the Bloom Lake Group were extended to include the Wabush Group to facilitate the reorganization of each of their businesses and 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 respective deconsolidations as well as costs to exit are classified as discontinued operations.
Foreign Currency
Our financial statements are prepared with the U.S. dollar as the reporting currency. The functional currency of our 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. Income taxes generally are not provided for foreign currency translation adjustments. To the extent that monetary assets and liabilities, inclusive of intercompany notes, are recorded in a currency other than the functional currency, these amounts are remeasured each reporting period, with the resulting gain or loss being recorded in the Statements of Consolidated Operations. Transaction gains and losses resulting from remeasurement of short-term intercompany loans are included in Miscellaneous - net in our Statements of Consolidated Operations. For the year ended December 31, 2015, net gains of $16.3 million related to the impact of transaction gains and losses resulting from remeasurement. Of these amounts, for the year ended December 31, 2015, gains of $11.5 million and $1.5 million resulted from remeasurement of short-term intercompany loans and cash and cash equivalents, respectively. For the year ended December 31, 2014, net gains of $29.0 million related to the impact of transaction gains and losses resulting from remeasurement. Of these amounts, for the year ended December 31, 2014, gains of $19.7 million and $10.6 million, resulted from remeasurement of short-term intercompany loans and cash and cash equivalents, respectively. For the year ended December 31, 2013, net gains of $53.2 million related to the impact of transaction gains and losses resulting from remeasurement. Of these amounts, for the year ended December 31, 2013, gains of $33.0 million and $20.4 million, resulted from remeasurement of short-term intercompany loans and cash and cash equivalents, respectively.
Earnings Per Share
We present both basic and diluted earnings per share amounts for continuing operations and discontinued operations. Basic earnings per share amounts are calculated by dividing Net Income (Loss) from Continuing Operations 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) from Continuing Operations 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 July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which specifies that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new standard does not apply to inventory that is measured using LIFO; therefore, it is not applicable to our U.S. Iron Ore inventory values, but does apply to our Asia Pacific Iron Ore inventories which are valued using the average cost method. The update is effective for financial statement periods beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in ASU 2015-11 should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We do not expect the adoption of this pronouncement to have an impact on our financial statements and related disclosures.
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 May 2014, the FASB issued ASU 2014-09, Revenues 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 prepare 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. At issuance, ASU 2014-09 was effective starting in 2017 for calendar-year public entities, and interim periods within that year. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which defers the adoption of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 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.
Issued and Adopted
In October 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update simplifies the presentation of deferred income taxes, by requiring that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods; however, early adoption is permitted. This guidance can also be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We adopted the guidance during the period ended December 31, 2015 and have applied this amended accounting guidance to our deferred tax liabilities and assets for all periods presented. The adoption of ASU 2015-17 did not have an impact on our Statements of Consolidated Operations or Statements of Consolidated Cash Flows.  The impact of the adoption of the guidance resulted in any current deferred tax assets or liabilities being reclassified to non-current deferred tax assets or liabilities on the Statements of Consolidated Financial Position. The current deferred tax assets were $23.7 million at December 31, 2014. The current deferred tax liabilities were $4.0 million at December 31, 2014.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU requires retrospective adoption and will be effective for us beginning in our first quarter of 2016. Early adoption is permitted. We adopted the guidance at December 31, 2015. The new guidance was applied retrospectively for reporting periods ending on or before December 31, 2015. The adoption of ASU 2015-03 did not have an impact on our Statements of Consolidated Operations or Statements of Consolidated Cash Flows.  The impact of the adoption of the guidance resulted in reclassification of the unamortized debt issuance costs on the Statements of Consolidated Financial Position from Other non-current assets to Long-term debt. The unamortized debt issuance costs were $29.1 million and $16.8 million at December 31, 2015 and December 31, 2014, respectively.
SEGMENT REPORTING
SEGMENT REPORTING
NOTE 2 - SEGMENT REPORTING
Our continuing operations are organized and managed according to geographic location: U.S. Iron Ore and Asia Pacific 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. There were no intersegment product revenues in 2015 or 2014. 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 of goodwill and other long-lived assets, impacts of discontinued operations, extinguishment of debt, severance and contractor termination costs and other costs associated with the change in control, foreign currency remeasurement, certain supplies inventory write-offs, and intersegment corporate allocations of selling, general and administrative costs. Management 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, 2015, 2014 and 2013, including a reconciliation of segment sales margin to Income (Loss) from Continuing Operations Before Income Taxes and Equity Loss from Ventures and a reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA:
 
(In Millions)
 
2015
 
2014
 
2013
Revenues from product sales and services:
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
1,525.4

 
76%
 
$
2,506.5

 
74%
 
$
2,667.9

 
69%
Asia Pacific Iron Ore
487.9

 
24%
 
866.7

 
26%
 
1,224.3

 
31%
Other (including inter-segment revenue eliminations)

 
—%
 

 
—%
 
(1.4
)
 
—%
Total revenues from product sales and services
$
2,013.3

 
100%
 
$
3,373.2

 
100%
 
$
3,890.8

 
100%
 
 
 
 
 
 
 
 
 
 
 
 
Sales margin:
 
 
 
 
 
 
 
 
 
 
 
U.S. Iron Ore
$
227.1

 
 
 
$
710.4

 
 
 
$
901.9

 
 
Asia Pacific Iron Ore
9.4

 
 
 
121.7

 
 
 
367.1

 
 
Eliminations with discontinued operations

 
 
 
53.6

 
 
 
217.3

 
 
Other (including inter-segment sales margin eliminations)

 
 
 

 
 
 
(1.9
)
 
 
Sales margin
236.5

 
 
 
885.7

 
 
 
1,484.4

 
 
Other operating income (expense)
(85.2
)
 
 
 
(755.6
)
 
 
 
(104.1
)
 
 
Other income (expense)
161.8

 
 
 
(149.8
)
 
 
 
(189.4
)
 
 
Income (Loss) from Continuing Operations Before Income Taxes and Equity Loss from Ventures
$
313.1

 
 
 
$
(19.7
)
 
 
 
$
1,190.9

 
 
 
(In Millions)
 
2015
 
2014
 
2013
 
 
 
 
 
 
Net Income (Loss)
$
(748.4
)
 
$
(8,311.6
)
 
$
361.8

Less:
 
 
 
 
 
Interest expense, net
(231.4
)

(185.2
)

(179.1
)
Income tax benefit (expense)
(163.3
)

1,302.0


(55.1
)
Depreciation, depletion and amortization
(134.0
)

(504.0
)

(593.3
)
EBITDA
$
(219.7
)
 
$
(8,924.4
)
 
$
1,189.3

Less:
 
 
 
 
 
Impairment of goodwill and other long-lived assets
$
(3.3
)

$
(635.5
)

$
(14.3
)
Impact of discontinued operations
(892.0
)

(9,332.5
)

(398.4
)
Gain on extinguishment of debt
392.9


16.2



Severance and contractor termination costs
(10.2
)

(23.3
)

(16.6
)
Foreign exchange remeasurement
16.3


29.0


53.2

Proxy contest and change in control in SG&A


(26.6
)


Supplies inventory write-off
(16.3
)




Total Adjusted EBITDA
$
292.9

 
$
1,048.3

 
$
1,565.4

 
 
 
 
 
 
EBITDA:
 
 
 
 
 
U.S. Iron Ore
$
317.6


$
805.6


$
1,000.1

Asia Pacific Iron Ore
35.3


(352.9
)

543.0

Other (including discontinued operations)
(572.6
)

(9,377.1
)

(353.8
)
Total EBITDA
$
(219.7
)
 
$
(8,924.4
)
 
$
1,189.3

 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
U.S. Iron Ore
$
352.1


$
833.5


$
1,031.8

Asia Pacific Iron Ore
32.7


252.9


513.1

Other
(91.9
)

(38.1
)

20.5

Total Adjusted EBITDA
$
292.9

 
$
1,048.3

 
$
1,565.4

 
(In Millions)
 
2015
 
2014
 
2013
Depreciation, depletion and amortization:
 
 
 
 
 
U.S. Iron Ore
$
98.9

 
$
107.4

 
$
120.3

Asia Pacific Iron Ore
25.3

 
145.9

 
153.7

Other
6.6

 
7.7

 
10.8

Total depreciation, depletion and amortization
$
130.8

 
$
261.0

 
$
284.8

 
 
 
 
 
 
Capital additions (1):
 
 
 
 
 
U.S. Iron Ore
$
58.2

 
$
48.4

 
$
53.3

Asia Pacific Iron Ore
5.4

 
10.8

 
13.0

Other
8.6

 
6.3

 
4.5

Total capital additions
$
72.2

 
$
65.5

 
$
70.8

                                         
(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,
2015
 
December 31, 2014
 
December 31, 2013
Assets:
 
 
 
 
 
U.S. Iron Ore
$
1,476.4

 
$
1,464.9

 
$
1,537.9

Asia Pacific Iron Ore
202.5

 
306.2

 
1,176.8

Total segment assets
1,678.9

 
1,771.1

 
2,714.7

Corporate
441.7

 
666.2

 
204.2

Assets of Discontinued Operations
14.9

 
709.9

 
10,184.0

Total assets
$
2,135.5

 
$
3,147.2

 
$
13,102.9


Included in the consolidated financial statements are the following amounts relating to geographic location:
 
(In Millions)
 
2015
 
2014
 
2013
Revenue
 
 
 
 
 
United States
$
1,206.4

 
$
1,923.2

 
$
1,543.9

China
370.8

 
662.7

 
1,165.3

Canada
282.4

 
430.5

 
758.5

Other countries
153.7

 
356.8

 
423.1

Total revenue
$
2,013.3

 
$
3,373.2

 
$
3,890.8

Property, Plant and Equipment, Net
 
 
 
 
 
United States
$
1,012.7

 
$
998.1

 
$
1,120.6

Australia
46.3

 
72.4

 
750.2

Total Property, Plant and Equipment, Net
$
1,059.0

 
$
1,070.5

 
$
1,870.8


Concentrations in Revenue
In 2015, 2014 and 2013 three customers accounted for more than 10 percent of our consolidated product revenue. Total product revenue from these customers represents approximately $1.3 billion, $1.9 billion and $1.9 billion of our total consolidated product revenue in 2015, 2014 and 2013, respectively, and is attributable to our U.S. Iron Ore business segment.
The following table represents the percentage of our total revenue contributed by each category of products and services in 2015, 2014, and 2013:
 
 
2015
 
2014
 
2013
Revenue Category
 
 
 
 
 
 
Iron ore
 
91
%
 
92
%
 
93
%
Freight and venture partners’ cost reimbursements
 
9
%
 
8
%
 
7
%
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, 2015 and 2014:
 
(In Millions)
 
December 31, 2015
 
December 31, 2014
Segment
Finished Goods
 
Work-in Process
 
Total Inventory
 
Finished Goods
 
Work-in
Process
 
Total
Inventory
U.S. Iron Ore
$
252.3

 
$
11.7

 
$
264.0

 
$
132.1

 
$
13.5

 
$
145.6

Asia Pacific Iron Ore
20.8

 
44.8

 
65.6

 
26.4

 
88.1

 
114.5

Total
$
273.1

 
$
56.5

 
$
329.6

 
$
158.5

 
$
101.6

 
$
260.1


Asia Pacific Iron Ore had long-term work-in-process stockpiles of $6.8 million classified as Other non-current assets in the Statements of Consolidated Financial Position at December 31, 2015. There were no long-term work-in-process stockpiles as of December 31, 2014.
U.S. Iron Ore
The excess of current cost over LIFO cost of iron ore inventories was $87.8 million and $119.0 million at December 31, 2015 and 2014, respectively. As of December 31, 2015, the product inventory balance for U.S. Iron Ore increased, resulting in a LIFO increment in 2015. The effect of the inventory build was an increase in Inventories of $118.8 million in the Statements of Consolidated Financial Position for the year ended December 31, 2015. 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.
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, 2015 and 2014:
 
(In Millions)
 
December 31,
 
2015
 
2014
Land rights and mineral rights
$
500.5

 
$
500.5

Office and information technology
71.0

 
73.7

Buildings
60.4

 
59.8

Mining equipment
594.0

 
585.1

Processing equipment
516.8

 
510.2

Electric power facilities
46.4

 
46.8

Land improvements
24.8

 
24.7

Asset retirement obligation
87.9

 
26.5

Other
28.2

 
28.5

Construction in-progress
40.3

 
14.4

 
1,970.3

 
1,870.2

Allowance for depreciation and depletion
(911.3
)
 
(799.7
)
 
$
1,059.0

 
$
1,070.5


We recorded depreciation expense of $119.2 million, $173.0 million and $191.5 million in the Statements of Consolidated Operations for the years ended December 31, 2015, 2014 and 2013, respectively.
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 Asia Pacific Iron Ore asset group and other 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 $537.8 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.
Although certain factors indicated that the carrying value of certain asset groups may not be recoverable during 2015, an assessment was performed and no further impairment was indicated for the year ended December 31, 2015.
The net book value of the land rights and mineral rights as of December 31, 2015 and 2014 is as follows:
 
(In Millions)
 
December 31,
 
2015
 
2014
Land rights
$
11.6

 
$
11.6

Mineral rights:

 

Cost
$
488.9

 
$
488.9

Depletion
(108.4
)
 
(101.0
)
Net mineral rights
$
380.5

 
$
387.9


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 $7.4 million, $79.6 million and $84.9 million in the Statements of Consolidated Operations for the years ended December 31, 2015, 2014 and 2013, 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 $297.2 million associated primarily with our Asia Pacific Iron Ore asset group.
DEBT AND CREDIT FACILITIES
DEBT AND CREDIT FACILITIES
NOTE 5 - DEBT AND CREDIT FACILITIES
The following represents a summary of our long-term debt as of December 31, 2015 and 2014:
($ in Millions)
 
December 31, 2015
 
Debt Instrument
 
Type
 
Annual Effective Interest Rate
 
Final Maturity
 
Total Principal Amount
 
Total Debt
 
$700 Million 4.875% 2021 Senior Notes
 
Fixed
 
4.89%
 
2021
 
$
412.5

 
$
410.6

(1)
$1.3 Billion Senior Notes:
 
 
 
 
 
 
 
 
 
 
 
$500 Million 4.80% 2020 Senior Notes
 
Fixed
 
4.83%
 
2020
 
306.7

 
305.2

(2)
$800 Million 6.25% 2040 Senior Notes
 
Fixed
 
6.34%
 
2040
 
492.8

 
482.7

(3)
$400 Million 5.90% 2020 Senior Notes
 
Fixed
 
5.98%
 
2020
 
290.8

 
288.9

(4)
$500 Million 3.95% 2018 Senior Notes
 
Fixed
 
6.30%
 
2018
 
311.2

 
309.1

(5)
$540 Million 8.25% 2020 First Lien Notes
 
Fixed
 
9.97%
 
2020
 
540.0

 
497.4

(6)
$544.2 Million 7.75% 2020 Second Lien Notes
 
Fixed
 
15.55%
 
2020
 
544.2

 
403.2

(7)
$550 Million ABL Facility:
 
 
 
 
 
 
 
 
 
 
 
ABL Facility
 
Variable
 
N/A
 
2020
 
550.0

 

(8)
Fair Value Adjustment to Interest Rate Hedge
 
 
 
 
 
 
 
 
 
2.3

 
Total debt
 
 
 
 
 
 
 
$
3,448.2

 
$
2,699.4

 
($ in Millions)
 
December 31, 2014
 
Debt Instrument
 
Type
 
Annual Effective Interest Rate
 
Final Maturity
 
Total Face Amount
 
Total Debt
 
$700 Million 4.875% 2021 Senior Notes
 
Fixed
 
4.89%
 
2021
 
$
690.0

 
$
686.0

(1)
$1.3 Billion Senior Notes:
 
 
 
 
 
 
 
 
 
 
 
$500 Million 4.80% 2020 Senior Notes
 
Fixed
 
4.83%
 
2020
 
490.0

 
487.2

(2)
$800 Million 6.25% 2040 Senior Notes
 
Fixed
 
6.34%
 
2040
 
800.0

 
783.3

(3)
$400 Million 5.90% 2020 Senior Notes
 
Fixed
 
5.98%
 
2020
 
395.0

 
391.9

(4)
$500 Million 3.95% 2018 Senior Notes
 
Fixed
 
5.17%
 
2018
 
480.0

 
475.3

(5)
$1.125 Billion Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
Revolving Credit Agreement
 
Variable
 
2.94%
 
2017
 
1,125.0

 

(9)
Fair Value Adjustment to Interest Rate Hedge
 
 
 
 
 
 
 
 
 
2.8

 
Long-term debt
 
 
 
 
 
 
 
$
3,980.0

 
$
2,826.5

 
                                        
(1)
During the third quarter of 2015, we purchased $10.7 million of outstanding 4.875 percent senior notes that were trading at 50.0 percent of par which resulted in a gain on extinguishment of $5.3 million. In addition, during the first quarter of 2015, we purchased $58.3 million of outstanding 4.875 percent senior notes that were trading at 52.0 percent of par, which resulted in a gain on extinguishment of $20.0 million. Also during the first quarter, on March 27, 2015, we exchanged as part of a tender offer $208.5 million of the 4.875 percent senior notes for $170.3 million of the 7.75 percent second lien notes at a discount of $46.0 million based on an imputed interest rate of 15.55 percent, resulting in a gain on extinguishment of $83.1 million, net of amounts expensed for unamortized original issue discount and deferred origination fees.
During the fourth quarter of 2014, we purchased $10.0 million of outstanding 4.875 percent senior notes that were trading at a discount of 40.5 percent which resulted in a gain on the extinguishment of debt of $4.1 million.
As of December 31, 2015, the $700.0 million 4.875 percent senior notes were recorded at a par value of $412.5 million less debt issuance costs of $1.7 million and unamortized discounts of $0.2 million, based on an imputed interest rate of 4.89 percent. As of December 31, 2014, the $700.0 million 4.875 percent senior notes were recorded at a par value of $690.0 million less debt issuance costs of $3.5 million and unamortized discounts of $0.5 million, based on an imputed interest rate of 4.89 percent.
(2)
During the third quarter of 2015, we purchased $1.8 million of outstanding 4.80 percent senior notes that were trading at 50.0 percent of par, which resulted in a gain on extinguishment of $0.9 million. In addition, during the first quarter of 2015, we purchased $43.8 million of outstanding 4.80 percent senior notes that were trading at 54.3 percent of par, which resulted in a gain on extinguishment of $15.6 million. Also during the first quarter, on March 27, 2015, we exchanged as part of a tender offer $137.8 million of the 4.80 percent senior notes for $112.9 million of the 7.75 percent second lien notes at a discount of $30.5 million based on an imputed interest rate of 15.55 percent, resulting in a gain on extinguishment of $54.6 million, net of amounts expensed for unamortized original issue discount and deferred origination fees.
During the fourth quarter of 2014, we purchased $10.0 million of outstanding 4.80 percent senior notes that were trading at a discount of 40.25 percent which resulted in a gain on the extinguishment of debt of $4.0 million.
As of December 31, 2015, the $500.0 million 4.80 percent senior notes were recorded at a par value of $306.7 million less debt issuance costs of $1.1 million and unamortized discounts of $0.4 million, based on an imputed interest rate of 4.83 percent. As of December 31, 2014, the $500.0 million 4.80 percent senior notes were recorded at a par value of $490.0 million less debt issuance costs of $2.2 million and unamortized discounts of $0.6 million, based on an imputed interest rate of 4.83 percent.
(3)
During the first quarter of 2015, we purchased $45.9 million of outstanding 6.25 percent senior notes that were trading at 52.5 percent of par, which resulted in a gain on extinguishment of $15.0 million. Also during the first quarter, on March 27, 2015, we exchanged as part of a tender offer $261.3 million of the 6.25 percent senior notes for $203.5 million of the 7.75 percent second lien notes at a discount of $55.0 million based on an imputed interest rate of 15.55 percent, resulting in a gain on extinguishment of $107.3 million, net of amounts expensed for unamortized original issue discount and deferred origination fees.
As of December 31, 2015, the $800.0 million 6.25 percent senior notes were recorded at par value of $492.8 million less debt issuance costs of $4.3 million and unamortized discounts of $5.8 million, based on an imputed interest rate of 6.34 percent. As of December 31, 2014, the $800.0 million 6.25 percent senior notes were recorded at par value of $800.0 million less debt issuance costs of $7.2 million and unamortized discounts of $9.5 million, based on an imputed interest rate of 6.34 percent.
(4)
During the third quarter of 2015, we purchased $36.0 million of outstanding 5.90 percent senior notes that were trading at 50.0 percent of par, which resulted in a gain on extinguishment of $18.0 million. In addition, during the first quarter of 2015, we purchased $1.3 million of outstanding 5.90 percent senior notes that were trading at 58.0 percent of par, which resulted in a gain on extinguishment of $0.3 million. Also during the first quarter, on March 27, 2015, we exchanged as part of a tender offer $67.0 million of the 5.90 percent senior notes for $57.5 million of the 7.75 percent second lien notes at a discount of $15.5 million based on an imputed interest rate of 15.55 percent, resulting in a gain on extinguishment of $24.5 million, net of amounts expensed for unamortized original issue discount and deferred origination fees.
During the fourth quarter of 2014, we purchased $5.0 million of outstanding 5.90 percent senior notes that were trading at a discount of 38.125 percent which resulted in a gain on the extinguishment of debt of $1.9 million.
As of December 31, 2015, the $400.0 million 5.90 percent senior notes were recorded at a par value of $290.8 million less debt issuance costs of $1.1 million and unamortized discounts of $0.8 million, based on an imputed interest rate of 5.98 percent. As of December 31, 2014, the $400.0 million 5.90 percent senior notes were recorded at a par value of $395.0 million less debt issuance costs of $1.8 million and unamortized discounts of $1.3 million, based on an imputed interest rate of 5.98 percent.
(5)
During the third quarter, on August 28, 2015, we purchased for cash as part of a tender offer, $124.8 million of the 3.95 percent senior notes for $68.6 million, resulting in a gain on extinguishment of $54.9 million, net of amounts expensed for reacquisition costs, unamortized original issue discount and deferred origination fees. In addition, during the first quarter of 2015, we purchased $44.0 million of outstanding 3.95 percent senior notes that were trading at 77.5 percent of par, which resulted in a gain on the extinguishment of debt of $7.1 million.
During the fourth quarter of 2014, we purchased $20.0 million of outstanding 3.95 percent senior notes that were trading at a discount of 30.875 percent which resulted in a gain on the extinguishment of debt of $6.2 million.
As of December 31, 2015, the $500.0 million 3.95 percent senior notes were recorded at a par value of $311.2 million less debt issuance cost of $0.9 million and unamortized discounts of $1.2 million, based on an imputed interest rate of 6.30 percent. As of December 31, 2014, the $500.0 million 3.95 percent senior notes were recorded at a par value of $480.0 million less debt issuance costs of $2.1 million and unamortized discounts of $2.6 million, based on an imputed interest rate of 5.17 percent.
(6)
As of December 31, 2015, the $540.0 million 8.25 percent first lien notes were recorded at a par value of $540.0 million less debt issuance costs of $10.5 million and unamortized discounts of $32.1 million, based on an imputed interest rate of 9.97 percent.
(7)
As of December 31, 2015, the $544.2 million 7.75 percent second lien notes were recorded at a par value of $544.2 million less debt issuance costs of $9.5 million and unamortized discounts of $131.5 million, based on an imputed interest rate of 15.55 percent. See NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS for further discussion of unamortized discount as a result of the exchange offers.
(8)
As of December 31, 2015, no loans were drawn under the $550.0 million ABL Facility and we had total availability of $366.0 million as a result of borrowing base limitations. As of December 31, 2015, the principal amount of letter of credit obligations totaled $186.3 million and commodity hedge obligations totaled $0.5 million, thereby further reducing available borrowing capacity on our ABL Facility to $179.2 million.
(9)
As of December 31, 2014, we had no revolving loans drawn under the revolving credit agreement, which had total availability of $1.125 billion as of December 31, 2014. As of December 31, 2014, the principal amount of letter of credit obligations totaled $149.5 million, thereby reducing available borrowing capacity to $975.5 million.
Revolving Credit Facility
As of March 30, 2015, we eliminated the revolving credit agreement which was last amended on January 22, 2015 (Amendment No. 6). The revolving credit agreement was replaced with our ABL Facility.
As of December 31, 2014, we were in compliance with all applicable financial covenants related to the revolving credit agreement.
ABL Facility
On March 30, 2015, we entered into a new senior secured asset-based revolving credit facility with various financial institutions. The ABL Facility will mature upon the earlier of March 30, 2020 or 60 days prior to the maturity of the New First Lien Notes (as defined below) and certain other material debt, and provides for up to $550.0 million in borrowings, comprised of (i) a $450.0 million U.S. tranche, including a $250.0 million sublimit for the issuance of letters of credit and a $100.0 million sublimit for U.S. swingline loans, and (ii) a $100.0 million