Market Data 
Markets
Replies to post #4353 on The Rising Influence of Rising Affluence
02/18/12 5:23 PM
From CC:
Income tax expense increased from $11 million in 2010’s final quarter to more than $123 million in 2011’s comparable quarter. During this fourth quarter, our effective tax rate increased to 35% compared with the full-year rate of 19%. This was the result of a re-measurement of our deferred tax liability at Bloom Lake, and the recording of a nonrecurring adjustment related to the Quebec mining duty. Conversely, 2010’s fourth quarter income tax expense was artificially low as we recorded a tax planning benefit related to Amapa. Primarily due to the tax rate change, fourth quarter net income attributable to Cliffs shareholders declined to $185 million or $1.30 million per diluted share compared with last year’s $384 million or $2.82 per diluted share.... We expect a full-year effective [tax] rate of approximately 25% and 2012.
From 10K:
The effective tax rates for FY2011 was 18.7% and for FY2010 was 22.5%.... The difference in the effective tax rate for 2011 compared with 2010 is primarily a result of the inclusion of the remeasurement of foreign deferred tax assets and liabilities related to the Consolidated Thompson acquisition, the non-taxable income related to our noncontrolling interest in partnerships, income not subject to tax and the change in the valuation allowance relating to ordinary losses of certain foreign operations for which utilization is currently uncertain.
...Deferred income taxes arise from temporary differences between tax and financial statement recognition of revenue and expense. .... At December 31, 2011 and 2010, we had a valuation allowance of $223.9 million and $172.7 million, respectively, against our deferred tax assets. Our losses in certain foreign locations in recent periods represented sufficient negative evidence to require a full valuation allowance against certain of our foreign deferred tax assets. We intend to maintain a valuation allowance against our net deferred tax assets until sufficient positive evidence exists to support the realization of such assets.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
(under risk factors):
The proposed Minerals Resource Rent Tax by the Australian Federal Government could affect adversely our results of operations in Australia.
In July 2010, the Australian Federal Government announced its intention to introduce a new MRRT applicable to the mining of iron ore and coal. The MRRT is proposed to apply from July 1, 2012 to existing and future projects at an effective tax rate of 22.5 percent. In December 2010, the Australian government’s taskforce that was charged with recommending design principles for the new taxes delivered its recommendations on the MRRT to the Australian government. The recommendations paper provided detail about key features of the MRRT and includes industry and public input that assisted in final development of the framework. The first release of the government’s exposure draft legislation came out on June 10, 2011. Upon consideration of the public’s comments and recommendations, the second exposure draft was released on September 18, 2011, with a closing date of October 5, 2011 for public consultation. The MRRT bill was introduced into the lower house of Parliament on November 2, 2011 where it was passed on November 23, 2011. The MRRT bill is now scheduled for debate by the Senate in early 2012. This momentum by the Australian government indicates its aim to pass the bill through both houses of Parliament in time for the proposed July 1, 2012 start date. If implemented as proposed, the MRRT may have a significant impact on our financial statements. The impacts of the MRRT will be recorded in the financial period during which the legislation is enacted.
We may have additional tax liabilities if proposed U.S. income tax law changes are adopted.
The Budget Control Act of 2011, which was signed into law by President Obama on August 2, 2011, placed a cap on U.S. Federal Government discretionary spending of $917 billion, raised the debt ceiling and created the Joint Select Committee on Deficit Reduction, the so-called “Supercommittee”. The Supercommittee was to develop a deficit reduction package that would bring about $1.2 trillion in savings over ten years. The President, on September 19, 2011, unveiled the Administration’s plan to reduce the U.S. Federal Government deficit by an additional $3 trillion over the next decade, largely through tax and healthcare policy changes that include many of the revenue offset proposals included in the Administration’s fiscal year 2012 budget proposal, such as international tax reform and repeal of the LIFO method of accounting. The President’s plan also proposed repealing percentage depletion for hard mineral fossil fuels and the ability to claim the domestic manufacturing deduction against income derived from the production of coal and other hard mineral fossil fuels. In as much as the Supercommittee failed to meet its deadline, the passage of any legislation as a result of these proposals or any other similar changes in U.S. federal income tax laws is unclear. However, any changes could eliminate certain tax deductions that are available currently to Cliffs. The loss of these tax deductions would affect adversely our taxable income and without a corresponding reduction in the U.S. statutory rate, would generate additional tax liabilities.
02/29/12 9:52 PM
Two weeks ago, Cliffs' Chief Executive Officer, Joseph Carrabba, said he believed China will increase its steel production by about 7 percent this year to 730 million tons. But analyst Mark Levin, of BB&T Capital Markets, said on Tuesday that Chinese monthly steel production was down 0.2 percent from December to January and was off 13 percent year over year. This equates to an annualized steel production rate of 625 million tons, well below last year's average rate of 695.5 million tons, Levin wrote in a research note.
05/04/12 2:01 PM
AI
