Cliffs Warns of $2 Billion in Charges to Upcoming Earnings

On Thursday, Cliffs Natural Resources (NYSE: CLF  ) warned that in its upcoming fourth-quarter earnings report, due out after market-close on Feb. 13, it will be taking a $1 billion non-cash charge for goodwill impairment on its 2011 purchase of Thompson Iron Mines Limited. The company blamed "anticipated lower long-term volumes and higher capital and operating costs" at Thompson for most of the need to take the charge, but it added that a previously announced delay in phase 2 expansion of its Bloom Lake mine contributed to this impairment.

The company is recording additional charges to earnings as well, including:

  • A $365 million loss on the sale of its stake in Amapa.
  • $542 million in "valuation allowances" related to two deferred tax assets.
  • $100 million to $150 million worth of "other charges related to its Eastern Canadian Iron Ore business segment."

In all, the charges add up to at least $2 billion, and perhaps as much as $2.06 billion. Divided among the company's 142.5 million shares outstanding, the charges should amount to approximately $14.40 per share. And speaking of shares, Cliffs closed the day down 3.1% on the news, at $36.04.


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