Ohio
|
|
34-1464672
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
200 Public Square, Cleveland, Ohio
|
|
44114-2315
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
Abbreviation or acronym
|
|
Term
|
A&R 2015 Equity Plan
|
|
Amended and Restated Cliffs Natural Resources Inc. 2015 Equity and Incentive Compensation Plan
|
ABL Facility
|
|
Syndicated Facility Agreement by and among Bank of America, N.A., as Administrative Agent and Australian Security Trustee, the Lenders that are parties hereto, Cliffs Natural Resources Inc., as Parent and a Borrower, and the Subsidiaries of Parent party hereto, as Borrowers dated as of March 30, 2015, as amended
|
ArcelorMittal
|
|
ArcelorMittal (as the parent company of ArcelorMittal Mines Canada, ArcelorMittal USA and ArcelorMittal Dofasco, as well as, many other subsidiaries)
|
ALJ
|
|
Administrative Law Judge
|
ASC
|
|
Accounting Standards Codification
|
ASU
|
|
Accounting Standards Updates
|
Bloom Lake Group
|
|
Bloom Lake General Partner Limited and certain of its affiliates, including Cliffs Quebec Iron Mining ULC
|
Canadian Entities
|
|
Bloom Lake Group, Wabush Group and certain other wholly-owned Canadian subsidiaries
|
CCAA
|
|
Companies' Creditors Arrangement Act (Canada)
|
Dodd-Frank Act
|
|
Dodd-Frank Wall Street Reform and Consumer Protection Act
|
DR-grade
|
|
Direct reduced-grade
|
EBITDA
|
|
Earnings before interest, taxes, depreciation and amortization
|
Empire
|
|
Empire Iron Mining Partnership
|
Exchange Act
|
|
Securities Exchange Act of 1934, as amended
|
FASB
|
|
Financial Accounting Standards Board
|
Fe
|
|
Iron
|
FERC
|
|
Federal Energy Regulatory Commission
|
FMSH Act
|
|
U.S. Federal Mine Safety and Health Act 1977, as amended
|
GAAP
|
|
Accounting principles generally accepted in the United States
|
HBI
|
|
Hot briquetted iron
|
Hibbing
|
|
Hibbing Taconite Company, an unincorporated joint venture
|
Koolyanobbing
|
|
Collective term for the operating deposits at Koolyanobbing, Mount Jackson and Windarling
|
Long ton
|
|
2,240 pounds
|
LTVSMC
|
|
LTV Steel Mining Company
|
MACT
|
|
Maximum achievable control technology
|
Metric ton
|
|
2,205 pounds
|
MISO
|
|
Midcontinent Independent System Operator, Inc.
|
MMBtu
|
|
Million British Thermal Units
|
MSHA
|
|
U.S. Mine Safety and Health Administration
|
Monitor
|
|
FTI Consulting Canada Inc.
|
Net ton
|
|
2,000 pounds
|
Northshore
|
|
Northshore Mining Company
|
OPEB
|
|
Other postretirement employment benefits
|
Platts 62% Price
|
|
Platts IODEX 62% Fe Fines Spot Price
|
SEC
|
|
U.S. Securities and Exchange Commission
|
SG&A
|
|
Selling, general and administrative
|
Securities Act
|
|
Securities Act of 1933, as amended
|
SSR
|
|
System Support Resource
|
Tilden
|
|
Tilden Mining Company L.C.
|
TSR
|
|
Total Shareholder Return
|
United Taconite
|
|
United Taconite LLC
|
U.S.
|
|
United States of America
|
Wabush Group
|
|
Wabush Iron Co. Limited and Wabush Resources Inc., and certain of its affiliates, including Wabush Mines (an unincorporated joint venture of Wabush Iron Co. Limited and Wabush Resources Inc.), Arnaud Railway Company and Wabush Lake Railway Company
|
2015 Equity Plan
|
|
Cliffs Natural Resources Inc. 2015 Equity and Incentive Compensation Plan
|
Item 1.
|
Financial Statements
|
|
(In Millions)
|
||||||
|
June 30,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
321.5
|
|
|
$
|
323.4
|
|
Accounts receivable, net
|
76.7
|
|
|
128.7
|
|
||
Inventories
|
287.6
|
|
|
178.4
|
|
||
Supplies and other inventories
|
83.6
|
|
|
91.4
|
|
||
Loans to and accounts receivable from the Canadian Entities
|
50.1
|
|
|
48.6
|
|
||
Other current assets
|
88.8
|
|
|
54.1
|
|
||
TOTAL CURRENT ASSETS
|
908.3
|
|
|
824.6
|
|
||
PROPERTY, PLANT AND EQUIPMENT, NET
|
999.1
|
|
|
984.4
|
|
||
OTHER NON-CURRENT ASSETS
|
122.7
|
|
|
114.9
|
|
||
TOTAL ASSETS
|
$
|
2,030.1
|
|
|
$
|
1,923.9
|
|
|
(In Millions, Except Per Share Amounts)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
REVENUES FROM PRODUCT SALES AND SERVICES
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
512.0
|
|
|
$
|
452.8
|
|
|
$
|
924.8
|
|
|
$
|
728.4
|
|
Freight and venture partners' cost reimbursements
|
57.3
|
|
|
43.4
|
|
|
106.1
|
|
|
73.3
|
|
||||
|
569.3
|
|
|
496.2
|
|
|
1,030.9
|
|
|
801.7
|
|
||||
COST OF GOODS SOLD AND OPERATING EXPENSES
|
(424.2
|
)
|
|
(404.7
|
)
|
|
(790.1
|
)
|
|
(679.3
|
)
|
||||
SALES MARGIN
|
145.1
|
|
|
91.5
|
|
|
240.8
|
|
|
122.4
|
|
||||
OTHER OPERATING INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
(27.5
|
)
|
|
(22.5
|
)
|
|
(53.2
|
)
|
|
(50.7
|
)
|
||||
Miscellaneous - net
|
(3.0
|
)
|
|
5.7
|
|
|
8.9
|
|
|
2.7
|
|
||||
|
(30.5
|
)
|
|
(16.8
|
)
|
|
(44.3
|
)
|
|
(48.0
|
)
|
||||
OPERATING INCOME
|
114.6
|
|
|
74.7
|
|
|
196.5
|
|
|
74.4
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(31.4
|
)
|
|
(50.7
|
)
|
|
(74.2
|
)
|
|
(107.5
|
)
|
||||
Gain (loss) on extinguishment/restructuring of debt
|
(4.9
|
)
|
|
3.6
|
|
|
(76.8
|
)
|
|
182.4
|
|
||||
Other non-operating income
|
0.8
|
|
|
0.2
|
|
|
1.5
|
|
|
0.3
|
|
||||
|
(35.5
|
)
|
|
(46.9
|
)
|
|
(149.5
|
)
|
|
75.2
|
|
||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
79.1
|
|
|
27.8
|
|
|
47.0
|
|
|
149.6
|
|
||||
INCOME TAX BENEFIT (EXPENSE)
|
(2.6
|
)
|
|
2.1
|
|
|
(0.8
|
)
|
|
(5.4
|
)
|
||||
INCOME FROM CONTINUING OPERATIONS
|
76.5
|
|
|
29.9
|
|
|
46.2
|
|
|
144.2
|
|
||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
|
(46.4
|
)
|
|
(0.4
|
)
|
|
(45.9
|
)
|
|
2.1
|
|
||||
NET INCOME
|
30.1
|
|
|
29.5
|
|
|
0.3
|
|
|
146.3
|
|
||||
LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
1.7
|
|
|
(16.7
|
)
|
|
3.4
|
|
|
(25.5
|
)
|
||||
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
$
|
31.8
|
|
|
$
|
12.8
|
|
|
$
|
3.7
|
|
|
$
|
120.8
|
|
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.26
|
|
|
$
|
0.07
|
|
|
$
|
0.18
|
|
|
$
|
0.67
|
|
Discontinued operations
|
(0.16
|
)
|
|
—
|
|
|
(0.16
|
)
|
|
0.01
|
|
||||
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.68
|
|
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - DILUTED
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.26
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.67
|
|
Discontinued operations
|
(0.15
|
)
|
|
—
|
|
|
(0.16
|
)
|
|
0.01
|
|
||||
|
$
|
0.11
|
|
|
$
|
0.07
|
|
|
$
|
0.01
|
|
|
$
|
0.68
|
|
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Basic
|
296,070
|
|
|
182,330
|
|
|
280,617
|
|
|
177,003
|
|
||||
Diluted
|
300,711
|
|
|
184,557
|
|
|
285,247
|
|
|
178,305
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
$
|
31.8
|
|
|
$
|
12.8
|
|
|
$
|
3.7
|
|
|
$
|
120.8
|
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
||||||||
Changes in pension and other post-retirement benefits, net of tax
|
6.7
|
|
|
6.5
|
|
|
11.4
|
|
|
11.9
|
|
||||
Unrealized net gain (loss) on foreign currency translation
|
(1.4
|
)
|
|
(2.7
|
)
|
|
(14.1
|
)
|
|
1.7
|
|
||||
Unrealized net gain (loss) on derivative financial instruments, net of tax
|
—
|
|
|
0.2
|
|
|
—
|
|
|
(3.3
|
)
|
||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
5.3
|
|
|
4.0
|
|
|
(2.7
|
)
|
|
10.3
|
|
||||
OTHER COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST
|
(0.4
|
)
|
|
(0.7
|
)
|
|
4.6
|
|
|
(1.3
|
)
|
||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
$
|
36.7
|
|
|
$
|
16.1
|
|
|
$
|
5.6
|
|
|
$
|
129.8
|
|
|
(In Millions)
|
||||||
|
Six Months Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
0.3
|
|
|
$
|
146.3
|
|
Adjustments to reconcile net income to net cash provided (used) by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
44.8
|
|
|
62.1
|
|
||
(Gain) loss on extinguishment/restructuring of debt
|
76.8
|
|
|
(182.4
|
)
|
||
(Gain) loss on deconsolidation
|
48.6
|
|
|
(4.1
|
)
|
||
Other
|
(8.3
|
)
|
|
5.2
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables and other assets
|
68.3
|
|
|
103.6
|
|
||
Inventories
|
(106.6
|
)
|
|
(52.2
|
)
|
||
Payables, accrued expenses and other liabilities
|
(56.1
|
)
|
|
(97.8
|
)
|
||
Net cash provided (used) by operating activities
|
67.8
|
|
|
(19.3
|
)
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchase of property, plant and equipment
|
(49.4
|
)
|
|
(20.2
|
)
|
||
Other investing activities
|
1.1
|
|
|
5.9
|
|
||
Net cash used by investing activities
|
(48.3
|
)
|
|
(14.3
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from issuance of senior notes
|
500.0
|
|
|
—
|
|
||
Debt issuance costs
|
(8.5
|
)
|
|
(5.2
|
)
|
||
Net proceeds from issuance of common shares
|
661.3
|
|
|
—
|
|
||
Repurchase of debt
|
(1,154.0
|
)
|
|
—
|
|
||
Distributions of partnership equity
|
(8.7
|
)
|
|
(28.1
|
)
|
||
Repayment of equipment loans
|
—
|
|
|
(95.6
|
)
|
||
Borrowings under credit facilities
|
—
|
|
|
105.0
|
|
||
Repayment under credit facilities
|
—
|
|
|
(105.0
|
)
|
||
Other financing activities
|
(13.9
|
)
|
|
(13.6
|
)
|
||
Net cash used by financing activities
|
(23.8
|
)
|
|
(142.5
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
2.4
|
|
|
(0.9
|
)
|
||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(1.9
|
)
|
|
(177.0
|
)
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
323.4
|
|
|
285.2
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
321.5
|
|
|
$
|
108.2
|
|
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
|
|
Indefinitely Idled
|
Koolyanobbing
|
|
Western Australia
|
|
100.0%
|
|
Iron Ore
|
|
Active
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net Income
|
$
|
30.1
|
|
|
$
|
29.5
|
|
|
$
|
0.3
|
|
|
$
|
146.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(31.4
|
)
|
|
(50.7
|
)
|
|
(74.2
|
)
|
|
(107.5
|
)
|
||||
Income tax benefit (expense)
|
(2.6
|
)
|
|
2.1
|
|
|
(0.8
|
)
|
|
(5.4
|
)
|
||||
Depreciation, depletion and amortization
|
(21.6
|
)
|
|
(26.9
|
)
|
|
(44.8
|
)
|
|
(62.1
|
)
|
||||
EBITDA
|
$
|
85.7
|
|
|
$
|
105.0
|
|
|
$
|
120.1
|
|
|
$
|
321.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on extinguishment/restructuring of debt
|
(4.9
|
)
|
|
3.6
|
|
|
(76.8
|
)
|
|
182.4
|
|
||||
Foreign exchange remeasurement
|
—
|
|
|
0.2
|
|
|
13.6
|
|
|
(0.9
|
)
|
||||
Impact of discontinued operations
|
(46.4
|
)
|
|
(0.4
|
)
|
|
(45.9
|
)
|
|
2.1
|
|
||||
Severance and contractor termination costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Adjusted EBITDA
|
$
|
137.0
|
|
|
$
|
101.6
|
|
|
$
|
229.2
|
|
|
$
|
137.8
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA:
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
155.0
|
|
|
$
|
94.1
|
|
|
$
|
212.9
|
|
|
$
|
135.5
|
|
Asia Pacific Iron Ore
|
1.2
|
|
|
26.1
|
|
|
52.6
|
|
|
48.4
|
|
||||
Other
|
(70.5
|
)
|
|
(15.2
|
)
|
|
(145.4
|
)
|
|
137.4
|
|
||||
Total EBITDA
|
$
|
85.7
|
|
|
$
|
105.0
|
|
|
$
|
120.1
|
|
|
$
|
321.3
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
161.5
|
|
|
$
|
97.2
|
|
|
$
|
225.6
|
|
|
$
|
143.3
|
|
Asia Pacific Iron Ore
|
3.0
|
|
|
26.5
|
|
|
56.8
|
|
|
49.5
|
|
||||
Other
|
(27.5
|
)
|
|
(22.1
|
)
|
|
(53.2
|
)
|
|
(55.0
|
)
|
||||
Total Adjusted EBITDA
|
$
|
137.0
|
|
|
$
|
101.6
|
|
|
$
|
229.2
|
|
|
$
|
137.8
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
Segment
|
Finished Goods
|
|
Work-in Process
|
|
Total Inventory
|
|
Finished Goods
|
|
Work-in
Process
|
|
Total
Inventory
|
||||||||||||
U.S. Iron Ore
|
$
|
238.3
|
|
|
$
|
14.3
|
|
|
$
|
252.6
|
|
|
$
|
124.4
|
|
|
$
|
12.6
|
|
|
$
|
137.0
|
|
Asia Pacific Iron Ore
|
22.7
|
|
|
12.3
|
|
|
35.0
|
|
|
23.6
|
|
|
17.8
|
|
|
41.4
|
|
||||||
Total
|
$
|
261.0
|
|
|
$
|
26.6
|
|
|
$
|
287.6
|
|
|
$
|
148.0
|
|
|
$
|
30.4
|
|
|
$
|
178.4
|
|
|
(In Millions)
|
||||||
|
June 30,
2017 |
|
December 31,
2016 |
||||
Land rights and mineral rights
|
$
|
500.7
|
|
|
$
|
500.5
|
|
Office and information technology
|
66.0
|
|
|
65.1
|
|
||
Buildings
|
71.8
|
|
|
67.9
|
|
||
Mining equipment
|
600.1
|
|
|
592.2
|
|
||
Processing equipment
|
621.5
|
|
|
552.0
|
|
||
Electric power facilities
|
54.0
|
|
|
49.4
|
|
||
Land improvements
|
23.8
|
|
|
23.5
|
|
||
Asset retirement obligation
|
19.7
|
|
|
19.8
|
|
||
Other
|
28.7
|
|
|
28.1
|
|
||
Construction in-progress
|
19.8
|
|
|
42.8
|
|
||
|
2,006.1
|
|
|
1,941.3
|
|
||
Allowance for depreciation and depletion
|
(1,007.0
|
)
|
|
(956.9
|
)
|
||
|
$
|
999.1
|
|
|
$
|
984.4
|
|
(In Millions)
|
||||||||||||||||||
June 30, 2017
|
||||||||||||||||||
Debt Instrument
|
|
Annual Effective Interest Rate
|
|
Total Principal Amount
|
|
Debt Issuance Costs
|
|
Unamortized Discounts
|
|
Total Debt
|
||||||||
Secured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$540 Million 8.25% 2020 First Lien Notes
|
|
9.97%
|
|
$
|
504.4
|
|
|
$
|
(6.3
|
)
|
|
$
|
(20.7
|
)
|
|
$
|
477.4
|
|
Unsecured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 5.90% 2020 Senior Notes
|
|
5.98%
|
|
88.9
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
88.5
|
|
||||
$500 Million 4.80% 2020 Senior Notes
|
|
4.83%
|
|
122.4
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
122.0
|
|
||||
$700 Million 4.875% 2021 Senior Notes
|
|
4.89%
|
|
138.4
|
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
137.9
|
|
||||
$500 Million 5.75% 2025 Senior Notes
|
|
5.75%
|
|
500.0
|
|
|
(8.1
|
)
|
|
—
|
|
|
491.9
|
|
||||
$800 Million 6.25% 2040 Senior Notes
|
|
6.34%
|
|
298.4
|
|
|
(2.5
|
)
|
|
(3.4
|
)
|
|
292.5
|
|
||||
ABL Facility
|
|
N/A
|
|
550.0
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
||||
Fair Value Adjustment to Interest Rate Hedge
|
|
|
|
|
|
|
|
|
|
1.6
|
|
|||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
1,611.8
|
|
(In Millions)
|
||||||||||||||||||
December 31, 2016
|
||||||||||||||||||
Debt Instrument
|
|
Annual Effective Interest Rate
|
|
Total Principal Amount
|
|
Debt Issuance Costs
|
|
Undiscounted Interest/(Unamortized Discounts)
|
|
Total Debt
|
||||||||
Secured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$540 Million 8.25% 2020 First Lien Notes
|
|
9.97%
|
|
$
|
540.0
|
|
|
$
|
(8.0
|
)
|
|
$
|
(25.7
|
)
|
|
$
|
506.3
|
|
$218.5 Million 8.00% 2020 1.5 Lien Notes
|
|
N/A
|
|
218.5
|
|
|
—
|
|
|
65.7
|
|
|
284.2
|
|
||||
$544.2 Million 7.75% 2020 Second Lien Notes
|
|
15.55%
|
|
430.1
|
|
|
(5.8
|
)
|
|
(85.2
|
)
|
|
339.1
|
|
||||
Unsecured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 5.90% 2020 Senior Notes
|
|
5.98%
|
|
225.6
|
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|
224.5
|
|
||||
$500 Million 4.80% 2020 Senior Notes
|
|
4.83%
|
|
236.8
|
|
|
(0.7
|
)
|
|
(0.2
|
)
|
|
235.9
|
|
||||
$700 Million 4.875% 2021 Senior Notes
|
|
4.89%
|
|
309.4
|
|
|
(1.0
|
)
|
|
(0.2
|
)
|
|
308.2
|
|
||||
$800 Million 6.25% 2040 Senior Notes
|
|
6.34%
|
|
298.4
|
|
|
(2.5
|
)
|
|
(3.4
|
)
|
|
292.5
|
|
||||
ABL Facility
|
|
N/A
|
|
550.0
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
||||
Fair Value Adjustment to Interest Rate Hedge
|
|
|
|
|
|
|
|
|
|
1.9
|
|
|||||||
Total debt
|
|
|
|
|
|
|
|
|
|
|
$
|
2,192.6
|
|
|||||
Less current portion
|
|
|
|
|
|
|
|
|
|
17.5
|
|
|||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
2,175.1
|
|
|
(In Millions)
|
||
|
Maturities of Debt
|
||
2017 (July 1 - December 31)
|
$
|
—
|
|
2018
|
—
|
|
|
2019
|
—
|
|
|
2020
|
715.7
|
|
|
2021
|
138.4
|
|
|
2022
|
—
|
|
|
2023 and thereafter
|
798.4
|
|
|
Total maturities of debt
|
$
|
1,652.5
|
|
|
(In Millions)
|
||||||||||||||
|
June 30, 2017
|
||||||||||||||
Description
|
Quoted Prices in Active
Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
40.0
|
|
|
$
|
120.0
|
|
|
$
|
—
|
|
|
$
|
160.0
|
|
Derivative assets
|
—
|
|
|
—
|
|
|
72.5
|
|
|
72.5
|
|
||||
Total
|
$
|
40.0
|
|
|
$
|
120.0
|
|
|
$
|
72.5
|
|
|
$
|
232.5
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.8
|
|
|
$
|
20.8
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.8
|
|
|
$
|
20.8
|
|
|
(In Millions)
|
||||||||||||||
|
December 31, 2016
|
||||||||||||||
Description
|
Quoted Prices in Active
Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
177.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
177.0
|
|
Derivative assets
|
—
|
|
|
1.5
|
|
|
31.6
|
|
|
33.1
|
|
||||
Total
|
$
|
177.0
|
|
|
$
|
1.5
|
|
|
$
|
31.6
|
|
|
$
|
210.1
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
(In Millions)
|
||||||||||||||
|
Level 3 Liabilities
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Beginning balance
|
$
|
(9.1
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(3.4
|
)
|
Total gains (losses)
|
|
|
|
|
|
|
|
||||||||
Included in earnings
|
(36.8
|
)
|
|
(2.8
|
)
|
|
(45.5
|
)
|
|
(8.4
|
)
|
||||
Settlements
|
25.1
|
|
|
6.4
|
|
|
25.2
|
|
|
9.2
|
|
||||
Ending balance - June 30
|
$
|
(20.8
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(20.8
|
)
|
|
$
|
(2.6
|
)
|
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date
|
$
|
(11.7
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(20.8
|
)
|
|
$
|
(2.6
|
)
|
|
|
(In Millions)
|
||||||||||||||||||
|
|
December 31, 2016
|
||||||||||||||||||
Description
|
|
Quoted Prices in Active
Markets for Identical Assets/
Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
|
Total Gains (Losses)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans to and accounts receivables from the Canadian Entities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48.6
|
|
|
$
|
48.6
|
|
|
$
|
(17.5
|
)
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Guarantees
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37.2
|
|
|
$
|
37.2
|
|
|
$
|
0.4
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
4.7
|
|
|
$
|
4.5
|
|
|
$
|
9.5
|
|
|
$
|
9.0
|
|
Interest cost
|
7.5
|
|
|
7.5
|
|
|
15.0
|
|
|
14.9
|
|
||||
Expected return on plan assets
|
(13.6
|
)
|
|
(13.7
|
)
|
|
(27.1
|
)
|
|
(27.4
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Prior service costs
|
0.7
|
|
|
0.5
|
|
|
1.3
|
|
|
1.1
|
|
||||
Net actuarial loss
|
5.3
|
|
|
5.3
|
|
|
10.6
|
|
|
10.5
|
|
||||
Net periodic benefit cost
|
$
|
4.6
|
|
|
$
|
4.1
|
|
|
$
|
9.3
|
|
|
$
|
8.1
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
0.5
|
|
|
$
|
0.4
|
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
Interest cost
|
2.2
|
|
|
2.3
|
|
|
4.3
|
|
|
4.5
|
|
||||
Expected return on plan assets
|
(4.5
|
)
|
|
(4.3
|
)
|
|
(8.9
|
)
|
|
(8.5
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Prior service credits
|
(0.8
|
)
|
|
(0.9
|
)
|
|
(1.5
|
)
|
|
(1.8
|
)
|
||||
Net actuarial loss
|
1.3
|
|
|
1.4
|
|
|
2.5
|
|
|
2.8
|
|
||||
Net periodic benefit credit
|
$
|
(1.3
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(2.1
|
)
|
Grant Date
|
|
Grant Date Market Price
|
|
Average Expected Term (Years)
|
|
Expected Volatility
|
|
Risk-Free Interest Rate
|
|
Dividend Yield
|
|
Fair Value
|
|
Fair Value (Percent of Grant Date Market Price)
|
||||
February 21, 2017
|
|
$
|
11.67
|
|
|
2.86
|
|
92.1%
|
|
1.51%
|
|
—%
|
|
$
|
19.69
|
|
|
168.72%
|
June 26, 2017
|
|
$
|
6.64
|
|
|
2.51
|
|
92.8%
|
|
1.45%
|
|
—%
|
|
$
|
10.74
|
|
|
161.75%
|
|
(In Millions)
|
||||||
|
Capital Leases
|
|
Operating Leases
|
||||
2017 (July 1 - December 31)
|
$
|
11.7
|
|
|
$
|
3.6
|
|
2018
|
18.9
|
|
|
5.8
|
|
||
2019
|
10.5
|
|
|
2.9
|
|
||
2020
|
9.5
|
|
|
2.9
|
|
||
2021
|
8.8
|
|
|
3.0
|
|
||
2022 and thereafter
|
0.6
|
|
|
—
|
|
||
Total minimum lease payments
|
$
|
60.0
|
|
|
$
|
18.2
|
|
Amounts representing interest
|
10.0
|
|
|
|
|||
Present value of net minimum lease payments
1
|
$
|
50.0
|
|
|
|
||
|
|
|
|
||||
1
The total is comprised of $17.4 million and $32.6 million classified as
Other current liabilities
and
Other liabilities
, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at June 30, 2017.
|
|
(In Millions)
|
||||||
|
June 30,
2017 |
|
December 31,
2016 |
||||
Environmental
|
$
|
2.8
|
|
|
$
|
2.8
|
|
Mine closure
|
|
|
|
||||
U.S. Iron Ore
1
|
193.6
|
|
|
187.8
|
|
||
Asia Pacific Iron Ore
|
17.7
|
|
|
16.2
|
|
||
Total mine closure
|
211.3
|
|
|
204.0
|
|
||
Total environmental and mine closure obligations
|
214.1
|
|
|
206.8
|
|
||
Less current portion
|
12.2
|
|
|
12.9
|
|
||
Long-term environmental and mine closure obligations
|
$
|
201.9
|
|
|
$
|
193.9
|
|
|
|
|
|
||||
1
U.S. Iron Ore includes our active operating mines, our indefinitely idled Empire mine and a closed mine formerly operating as LTVSMC.
|
|
(In Millions)
|
||||||
|
June 30,
2017 |
|
December 31, 2016
|
||||
Asset retirement obligation at beginning of period
|
$
|
204.0
|
|
|
$
|
230.4
|
|
Accretion expense
|
7.1
|
|
|
14.0
|
|
||
Remediation payments
|
(0.8
|
)
|
|
(2.2
|
)
|
||
Exchange rate changes
|
1.0
|
|
|
(0.2
|
)
|
||
Revision in estimated cash flows
|
—
|
|
|
(38.0
|
)
|
||
Asset retirement obligation at end of period
|
$
|
211.3
|
|
|
$
|
204.0
|
|
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Classification
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Permits
|
Other non-current assets
|
|
$
|
78.8
|
|
|
$
|
(25.6
|
)
|
|
$
|
53.2
|
|
|
$
|
78.4
|
|
|
$
|
(24.6
|
)
|
|
$
|
53.8
|
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
|
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||
Derivative Instrument
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||||||
Customer supply agreements
|
|
Other current assets
|
|
66.4
|
|
|
Other current assets
|
|
21.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||
Provisional pricing arrangements
|
|
Other current assets
|
|
6.1
|
|
|
Other current assets
|
|
10.3
|
|
|
Other current liabilities
|
|
20.8
|
|
|
Other current liabilities
|
|
0.5
|
|
||||
Commodity contracts
|
|
|
|
—
|
|
|
Other current assets
|
|
1.5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||
Total derivatives not designated as hedging instruments under ASC 815
|
|
|
|
$
|
72.5
|
|
|
|
|
$
|
33.1
|
|
|
|
|
$
|
20.8
|
|
|
|
|
$
|
0.5
|
|
|
(In Millions)
|
||||||||||
|
Cliffs
Shareholders’ Equity (Deficit) |
|
Noncontrolling
Interest (Deficit)
|
|
Total Equity (Deficit)
|
||||||
December 31, 2016
|
$
|
(1,464.3
|
)
|
|
$
|
133.8
|
|
|
$
|
(1,330.5
|
)
|
Comprehensive loss
|
|
|
|
|
|
||||||
Net income (loss)
|
3.7
|
|
|
(3.4
|
)
|
|
0.3
|
|
|||
Other comprehensive income (loss)
|
1.9
|
|
|
(4.6
|
)
|
|
(2.7
|
)
|
|||
Total comprehensive income (loss)
|
5.6
|
|
|
(8.0
|
)
|
|
(2.4
|
)
|
|||
Issuance of common shares
|
661.3
|
|
|
—
|
|
|
661.3
|
|
|||
Stock and other incentive plans
|
8.3
|
|
|
—
|
|
|
8.3
|
|
|||
Distributions to noncontrolling interest
|
—
|
|
|
(3.4
|
)
|
|
(3.4
|
)
|
|||
June 30, 2017
|
$
|
(789.1
|
)
|
|
$
|
122.4
|
|
|
$
|
(666.7
|
)
|
|
(In Millions)
|
||||||||||
|
Cliffs
Shareholders’ Equity (Deficit) |
|
Noncontrolling
Interest (Deficit) |
|
Total Equity (Deficit)
|
||||||
December 31, 2015
|
$
|
(1,981.4
|
)
|
|
$
|
169.8
|
|
|
$
|
(1,811.6
|
)
|
Comprehensive income
|
|
|
|
|
|
||||||
Net income
|
120.8
|
|
|
25.5
|
|
|
146.3
|
|
|||
Other comprehensive income
|
9.0
|
|
|
1.3
|
|
|
10.3
|
|
|||
Total comprehensive income
|
129.8
|
|
|
26.8
|
|
|
156.6
|
|
|||
Issuance of common shares
|
14.4
|
|
|
—
|
|
|
14.4
|
|
|||
Stock and other incentive plans
|
6.5
|
|
|
—
|
|
|
6.5
|
|
|||
Distributions of partnership equity
|
—
|
|
|
(41.4
|
)
|
|
(41.4
|
)
|
|||
Distributions to noncontrolling interest
|
—
|
|
|
(3.4
|
)
|
|
(3.4
|
)
|
|||
June 30, 2016
|
$
|
(1,830.7
|
)
|
|
$
|
151.8
|
|
|
$
|
(1,678.9
|
)
|
|
(In Millions)
|
||||||||||||||||||
|
Changes in Pension and Other Post-Retirement Benefits, net of tax
|
|
Unrealized Net Gain (Loss) on Securities, net of tax
|
|
Unrealized Net Gain (Loss) on Foreign Currency Translation
|
|
Net Unrealized Gain (Loss) on Derivative Financial Instruments, net of tax
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
December 31, 2015
|
$
|
(241.4
|
)
|
|
$
|
0.1
|
|
|
$
|
220.7
|
|
|
$
|
2.6
|
|
|
$
|
(18.0
|
)
|
Other comprehensive income (loss) before reclassifications
|
(1.5
|
)
|
|
(0.1
|
)
|
|
4.4
|
|
|
(3.4
|
)
|
|
(0.6
|
)
|
|||||
Net loss reclassified from accumulated other comprehensive loss
|
6.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
|||||
March 31, 2016
|
$
|
(236.6
|
)
|
|
$
|
—
|
|
|
$
|
225.1
|
|
|
$
|
(0.8
|
)
|
|
$
|
(12.3
|
)
|
Other comprehensive income (loss) before reclassifications
|
(0.4
|
)
|
|
—
|
|
|
(2.7
|
)
|
|
0.1
|
|
|
(3.0
|
)
|
|||||
Net loss reclassified from accumulated other comprehensive loss
|
6.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
|||||
June 30, 2016
|
$
|
(230.7
|
)
|
|
$
|
—
|
|
|
$
|
222.4
|
|
|
$
|
(0.7
|
)
|
|
$
|
(9.0
|
)
|
Mine
|
|
Cliffs Natural Resources
|
|
ArcelorMittal
|
|
U.S. Steel Corporation
|
|||
Empire
|
|
79.0
|
%
|
|
21.0
|
%
|
|
—
|
|
Tilden
|
|
85.0
|
%
|
|
—
|
|
|
15.0
|
%
|
Hibbing
|
|
23.0
|
%
|
|
62.3
|
%
|
|
14.7
|
%
|
|
(In Millions, Except Per Share Amounts)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income from Continuing Operations
|
$
|
76.5
|
|
|
$
|
29.9
|
|
|
$
|
46.2
|
|
|
$
|
144.2
|
|
Loss (Income) from Continuing Operations Attributable to Noncontrolling Interest
|
1.7
|
|
|
(16.7
|
)
|
|
3.4
|
|
|
(25.5
|
)
|
||||
Net Income from Continuing Operations Attributable to Cliffs Shareholders
|
$
|
78.2
|
|
|
$
|
13.2
|
|
|
$
|
49.6
|
|
|
$
|
118.7
|
|
Income (Loss) from Discontinued Operations, net of tax
|
(46.4
|
)
|
|
(0.4
|
)
|
|
(45.9
|
)
|
|
2.1
|
|
||||
Net Income Attributable to Cliffs Shareholders
|
$
|
31.8
|
|
|
$
|
12.8
|
|
|
$
|
3.7
|
|
|
$
|
120.8
|
|
Weighted Average Number of Shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
296.1
|
|
|
182.3
|
|
|
280.6
|
|
|
177.0
|
|
||||
Employee Stock Plans
|
4.6
|
|
|
2.3
|
|
|
4.6
|
|
|
1.3
|
|
||||
Diluted
|
300.7
|
|
|
184.6
|
|
|
285.2
|
|
|
178.3
|
|
||||
Earnings (Loss) per Common Share Attributable to
Cliffs Common Shareholders - Basic: |
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.26
|
|
|
$
|
0.07
|
|
|
$
|
0.18
|
|
|
$
|
0.67
|
|
Discontinued operations
|
(0.16
|
)
|
|
—
|
|
|
(0.16
|
)
|
|
0.01
|
|
||||
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.68
|
|
Earnings (Loss) per Common Share Attributable to
Cliffs Common Shareholders - Diluted: |
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.26
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.67
|
|
Discontinued operations
|
(0.15
|
)
|
|
—
|
|
|
(0.16
|
)
|
|
0.01
|
|
||||
|
$
|
0.11
|
|
|
$
|
0.07
|
|
|
$
|
0.01
|
|
|
$
|
0.68
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net Income
|
$
|
30.1
|
|
|
$
|
29.5
|
|
|
$
|
0.3
|
|
|
$
|
146.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(31.4
|
)
|
|
(50.7
|
)
|
|
(74.2
|
)
|
|
(107.5
|
)
|
||||
Income tax benefit (expense)
|
(2.6
|
)
|
|
2.1
|
|
|
(0.8
|
)
|
|
(5.4
|
)
|
||||
Depreciation, depletion and amortization
|
(21.6
|
)
|
|
(26.9
|
)
|
|
(44.8
|
)
|
|
(62.1
|
)
|
||||
EBITDA
|
$
|
85.7
|
|
|
$
|
105.0
|
|
|
$
|
120.1
|
|
|
$
|
321.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on extinguishment/restructuring of debt
|
$
|
(4.9
|
)
|
|
$
|
3.6
|
|
|
$
|
(76.8
|
)
|
|
$
|
182.4
|
|
Foreign exchange remeasurement
|
—
|
|
|
0.2
|
|
|
13.6
|
|
|
(0.9
|
)
|
||||
Impact of discontinued operations
|
(46.4
|
)
|
|
(0.4
|
)
|
|
(45.9
|
)
|
|
2.1
|
|
||||
Severance and contractor termination costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Adjusted EBITDA
|
$
|
137.0
|
|
|
$
|
101.6
|
|
|
$
|
229.2
|
|
|
$
|
137.8
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA:
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
155.0
|
|
|
$
|
94.1
|
|
|
$
|
212.9
|
|
|
$
|
135.5
|
|
Asia Pacific Iron Ore
|
1.2
|
|
|
26.1
|
|
|
52.6
|
|
|
48.4
|
|
||||
Other
|
(70.5
|
)
|
|
(15.2
|
)
|
|
(145.4
|
)
|
|
137.4
|
|
||||
Total EBITDA
|
$
|
85.7
|
|
|
$
|
105.0
|
|
|
$
|
120.1
|
|
|
$
|
321.3
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
161.5
|
|
|
$
|
97.2
|
|
|
$
|
225.6
|
|
|
$
|
143.3
|
|
Asia Pacific Iron Ore
|
3.0
|
|
|
26.5
|
|
|
56.8
|
|
|
49.5
|
|
||||
Other
|
(27.5
|
)
|
|
(22.1
|
)
|
|
(53.2
|
)
|
|
(55.0
|
)
|
||||
Total Adjusted EBITDA
|
$
|
137.0
|
|
|
$
|
101.6
|
|
|
$
|
229.2
|
|
|
$
|
137.8
|
|
|
|
(In Millions)
|
||||||||||||||||||||||||||
|
|
|
|
Changes due to:
|
|
|
||||||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Revenue
and cost rate
|
|
Sales volume
|
|
Idle cost/production volume variance
|
|
Freight and reimburse-ment
|
|
Total change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|
|||||||||||||||||||
Revenues from product sales and services
|
|
$
|
471.3
|
|
|
$
|
361.7
|
|
|
$
|
87.1
|
|
|
$
|
7.3
|
|
|
$
|
—
|
|
|
$
|
15.2
|
|
|
$
|
109.6
|
|
Cost of goods sold and operating expenses
|
|
(327.1
|
)
|
|
(291.7
|
)
|
|
(32.8
|
)
|
|
(7.0
|
)
|
|
19.6
|
|
|
(15.2
|
)
|
|
(35.4
|
)
|
|||||||
Sales margin
|
|
$
|
144.2
|
|
|
$
|
70.0
|
|
|
$
|
54.3
|
|
|
$
|
0.3
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
74.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended
June 30, |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Per Ton Information
|
|
2017
|
|
2016
|
|
Difference
|
|
Percent change
|
|
|
|
|
|
|
||||||||||||||
Realized product revenue rate
1
|
|
$
|
96.75
|
|
|
$
|
77.81
|
|
|
$
|
18.94
|
|
|
24.3
|
%
|
|
|
|
|
|
|
|||||||
Cash cost of goods sold and operating expense rate
1,2
|
|
59.47
|
|
|
56.25
|
|
|
3.22
|
|
|
5.7
|
%
|
|
|
|
|
|
|
||||||||||
Depreciation, depletion & amortization
|
|
3.87
|
|
|
4.68
|
|
|
(0.81
|
)
|
|
(17.3
|
)%
|
|
|
|
|
|
|
||||||||||
Total cost of goods sold and operating expenses rate
|
|
63.34
|
|
|
60.93
|
|
|
2.41
|
|
|
4.0
|
%
|
|
|
|
|
|
|
||||||||||
Sales margin
|
|
$
|
33.41
|
|
|
$
|
16.88
|
|
|
$
|
16.53
|
|
|
97.9
|
%
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales tons
3
(In thousands)
|
|
4,310
|
|
|
4,146
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Production tons
3
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total
|
|
6,491
|
|
|
5,987
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cliffs’ share of total
|
|
4,691
|
|
|
4,155
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
1
Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin. Revenues and expenses also exclude venture partner cost reimbursements.
|
||||||||||||||||||||||||||||
2
Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. See "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
||||||||||||||||||||||||||||
3
Tons are long tons.
|
•
|
An increase in the average year-to-date realized product revenue rate of
$18.94
per long ton or
24.3%
during the three months ended June 30, 2017, compared to the same period in the previous year, which resulted in an increase of
$87.1 million
. This is primarily a result of:
|
◦
|
An increase in Platts 62% Price, which positively affected the realized revenue rate by $11 per long ton or $48 million; and
|
◦
|
An increase in the average annual daily market price for hot-rolled coil steel, which positively affected the realized revenue rate by $7 per long ton or $30 million.
|
•
|
Higher sales volumes of 164 thousand long tons, which resulted in increased revenue of
$7.3 million
.
|
•
|
Higher profit sharing and benefit costs of $9 million or $2 per long ton, higher energy rates for natural gas, diesel and electricity of $7 million or $2 per long ton, increased repair costs of $3 million or $1 per long ton and increased royalty costs of $3 million or $1 per long ton;
|
•
|
An unfavorable year-to-date standard cost adjustment as a result of higher overall expenses as discussed above for increased costs of $9 million or $2 per long ton; and
|
•
|
Increased sales volumes of 164 thousand long tons, which resulted in increased costs of
$7 million
.
|
•
|
Partially offset by decreased costs of
$20 million
or $5 per long ton due to the idle of the United Taconite and Northshore mines during the prior-year period.
|
|
|
(In Millions)
|
||||||||||||||||||||||||||
|
|
|
|
Changes due to:
|
|
|
||||||||||||||||||||||
|
|
Six Months Ended
June 30, |
|
Revenue
and cost rate
|
|
Sales volume
|
|
Idle cost/production volume variance
|
|
Freight and reimburse-ment
|
|
Total change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|
|||||||||||||||||||
Revenues from product sales and services
|
|
$
|
757.5
|
|
|
$
|
547.2
|
|
|
$
|
77.5
|
|
|
$
|
104.0
|
|
|
$
|
—
|
|
|
$
|
28.8
|
|
|
$
|
210.3
|
|
Cost of goods sold and operating expenses
|
|
(564.9
|
)
|
|
(464.0
|
)
|
|
(38.8
|
)
|
|
(78.4
|
)
|
|
45.1
|
|
|
(28.8
|
)
|
|
(100.9
|
)
|
|||||||
Sales margin
|
|
$
|
192.6
|
|
|
$
|
83.2
|
|
|
$
|
38.7
|
|
|
$
|
25.6
|
|
|
$
|
45.1
|
|
|
$
|
—
|
|
|
$
|
109.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Six Months Ended
June 30, |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Per Ton Information
|
|
2017
|
|
2016
|
|
Difference
|
|
Percent change
|
|
|
|
|
|
|
||||||||||||||
Realized product revenue rate
1
|
|
$
|
89.43
|
|
|
$
|
79.72
|
|
|
$
|
9.71
|
|
|
12.2
|
%
|
|
|
|
|
|
|
|||||||
Cash cost of goods sold and operating expense rate
1,2
|
|
59.05
|
|
|
58.34
|
|
|
0.71
|
|
|
1.2
|
%
|
|
|
|
|
|
|
||||||||||
Depreciation, depletion & amortization
|
|
4.46
|
|
|
7.65
|
|
|
(3.19
|
)
|
|
(41.7
|
)%
|
|
|
|
|
|
|
||||||||||
Total cost of goods sold and operating expenses rate
|
|
63.51
|
|
|
65.99
|
|
|
(2.48
|
)
|
|
(3.8
|
)%
|
|
|
|
|
|
|
||||||||||
Sales margin
|
|
$
|
25.92
|
|
|
$
|
13.73
|
|
|
$
|
12.19
|
|
|
88.8
|
%
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales tons
3
(In thousands)
|
|
7,428
|
|
|
6,056
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Production tons
3
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total
|
|
12,305
|
|
|
10,900
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cliffs’ share of total
|
|
8,968
|
|
|
7,202
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
1
Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin. Revenues and expenses also exclude venture partner cost reimbursements.
|
||||||||||||||||||||||||||||
2
Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. See "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
||||||||||||||||||||||||||||
3
Tons are long tons.
|
•
|
Higher sales volumes of
1.4 million
long tons, which resulted in increased revenues of
$104.0 million
primarily due to:
|
◦
|
Increased demand from a customer during the six months ended June 30, 2017, providing additional sales volume of 1.1 million long tons, following the termination of its contract in the fourth quarter of 2015 that was reinstated and became effective during the first quarter of 2017;
|
◦
|
Increased demand from a customer during the six months ended June 30, 2017, providing additional sales volume of 1.1 million long tons, compared to the prior-year period when the customer had excess inventory volumes due to its idle of one of its facilities and additional contracted suppliers; and
|
◦
|
Increased demand from a customer during the six months ended June 30, 2017, providing additional sales volume of 0.4 million long tons, due to the customer's prior-year inventory levels, timing and vessel availability.
|
◦
|
These increases were offset partially due to engaging in no short-term contracts with two customers during the six months ended June 30, 2017, compared to the prior-year period for a decrease in sales volume of 1.2 million long tons.
|
•
|
The average year-to-date realized product revenue rate increased
$9.71
per long ton or
12.2%
during the six months ended June 30, 2017, compared to the same period in the previous year, which resulted in an increase of
$77.5 million
. This is predominantly due to:
|
◦
|
An increase in Platts 62% Price, which positively affected the realized revenue rate by $8 per long ton or $57 million;
|
◦
|
An increase in the average annual daily market price and customer pricing for hot-rolled coil steel, which positively affected the realized revenue rate by $6 per long ton or $48 million; and
|
◦
|
Higher pellet premiums, which positively affected the realized revenue rate by $3 per long ton or $24 million.
|
◦
|
These increases were offset partially by carryover pricing impacts and changes in customer and contract mix, which negatively affected the realized revenue rate by $7 per long ton or $52 million.
|
•
|
Increased sales volumes as discussed above which resulted in increased costs of
$78.4 million
period-over-period; and
|
•
|
Higher profit sharing and benefit costs of $15 million or $2 per long ton, higher energy rates for natural gas, diesel and electricity of $12 million or $2 per long ton, increased repair costs of $6 million or $1 per long ton and increased royalty costs of $5 million or $1 per long ton.
|
•
|
Partially offset by decreased idle costs of
$45.1 million
or $6 per long ton due to the idle of the United Taconite and Northshore mines during the prior-year period.
|
|
|
(In Millions)
|
||||||||||||||||||||||||||
|
|
|
|
Change due to:
|
|
|
||||||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Revenue
and cost rate
|
|
Sales volume
|
|
Exchange rate
|
|
Freight and reimburse-ment
|
|
Total change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|
|||||||||||||||||||
Revenues from product sales and services
|
|
$
|
98.0
|
|
|
$
|
134.5
|
|
|
$
|
(6.5
|
)
|
|
$
|
(27.9
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(36.5
|
)
|
Cost of goods sold and operating expenses
|
|
(97.1
|
)
|
|
(113.0
|
)
|
|
(7.3
|
)
|
|
22.5
|
|
|
(0.6
|
)
|
|
1.3
|
|
|
15.9
|
|
|||||||
Sales margin
|
|
$
|
0.9
|
|
|
$
|
21.5
|
|
|
$
|
(13.8
|
)
|
|
$
|
(5.4
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
—
|
|
|
$
|
(20.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended
June 30, |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Per Ton Information
|
|
2017
|
|
2016
|
|
Difference
|
|
Percent change
|
|
|
|
|
|
|
||||||||||||||
Realized product revenue rate
1
|
|
$
|
38.23
|
|
|
$
|
41.96
|
|
|
$
|
(3.73
|
)
|
|
(8.9
|
)%
|
|
|
|
|
|
|
|||||||
Cash cost of goods sold and operating expense rate
1,2
|
|
36.52
|
|
|
33.06
|
|
|
3.46
|
|
|
10.5
|
%
|
|
|
|
|
|
|
||||||||||
Depreciation, depletion & amortization
|
|
1.33
|
|
|
1.97
|
|
|
(0.64
|
)
|
|
(32.5
|
)%
|
|
|
|
|
|
|
||||||||||
Total cost of goods sold and operating expenses rate
|
|
37.85
|
|
|
35.03
|
|
|
2.82
|
|
|
8.1
|
%
|
|
|
|
|
|
|
||||||||||
Sales margin
|
|
$
|
0.38
|
|
|
$
|
6.93
|
|
|
$
|
(6.55
|
)
|
|
(94.5
|
)%
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales tons
3
(In thousands)
|
|
2,485
|
|
|
3,103
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Production tons
3
(In thousands)
|
|
2,762
|
|
|
2,800
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
1
The information above excludes revenues and expenses related to freight, which are offsetting and have no impact on sales margin.
|
||||||||||||||||||||||||||||
2
Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. See "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
||||||||||||||||||||||||||||
3
Tons are metric tons.
|
•
|
Decreased sales volume of 618 thousand metric tons, or 19.9%, to 2.5 million metric tons in the second quarter of 2017 compared to the prior-year period. The decrease in tons sold resulted in decreased revenue of
$27.9 million
for the three months ended June 30, 2016 and was due to fewer shipments during the quarter, as a result of the timing of shipments and market conditions, which resulted in the termination of certain spot sales.
|
•
|
Decreased average year-to-date realized product revenue of
$3.73
per metric ton or
8.9%
during the three months ended June 30, 2017, compared to the same period in the previous year, which resulted in a decrease of
$7.3 million
, including the impact of foreign exchange. This decrease is a result of:
|
◦
|
A decrease in revenue rate of $9 per metric ton or $22 million due to price and quality adjustments to meet market conditions and to compensate for varying quality ores and a reduction in iron content; and
|
◦
|
Higher average Australia to Asia freight rates in the second quarter of 2017 compared to the prior-year period, which is a component in the formula pricing, unfavorably affected the revenue rate by $4 per metric ton or $9 million.
|
◦
|
Partially offset by an increase in the Platts 62% Price, which positively affected the realized revenue rate by $7 per metric ton or $17 million; and
|
◦
|
Favorable net timing of contract settlements primarily due to favorable lag pricing compared to the prior year positively affecting the realized revenue rate by $3 per metric ton or $8 million.
|
•
|
Decreased sales volume of 618 thousand metric tons as discussed above decreased costs by
$22.5 million
.
|
•
|
Partially offset by an increase in production costs of
$7.3 million
or $3 per metric ton due to increased mining costs, driven by a change in the overall operating plan resulting in a higher strip ratio.
|
|
|
(In Millions)
|
||||||||||||||||||||||||||
|
|
|
|
Change due to:
|
|
|
||||||||||||||||||||||
|
|
Six Months Ended
June 30, |
|
Revenue
and cost rate
|
|
Sales volume
|
|
Exchange rate
|
|
Freight and reimburse-ment
|
|
Total change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|
|||||||||||||||||||
Revenues from product sales and services
|
|
$
|
273.4
|
|
|
$
|
254.5
|
|
|
$
|
32.9
|
|
|
$
|
(16.9
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
4.0
|
|
|
$
|
18.9
|
|
Cost of goods sold and operating expenses
|
|
(225.2
|
)
|
|
(215.3
|
)
|
|
(13.4
|
)
|
|
13.8
|
|
|
(6.3
|
)
|
|
(4.0
|
)
|
|
(9.9
|
)
|
|||||||
Sales margin
|
|
$
|
48.2
|
|
|
$
|
39.2
|
|
|
$
|
19.5
|
|
|
$
|
(3.1
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
—
|
|
|
$
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Six Months Ended
June 30, |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Per Ton Information
|
|
2017
|
|
2016
|
|
Difference
|
|
Percent change
|
|
|
|
|
|
|
||||||||||||||
Realized product revenue rate
1
|
|
$
|
47.11
|
|
|
$
|
41.58
|
|
|
$
|
5.53
|
|
|
13.3
|
%
|
|
|
|
|
|
|
|||||||
Cash cost of goods sold and operating expense rate
1,2
|
|
36.94
|
|
|
32.76
|
|
|
4.18
|
|
|
12.8
|
%
|
|
|
|
|
|
|
||||||||||
Depreciation, depletion & amortization
|
|
1.45
|
|
|
2.18
|
|
|
(0.73
|
)
|
|
(33.5
|
)%
|
|
|
|
|
|
|
||||||||||
Total cost of goods sold and operating expenses rate
|
|
38.39
|
|
|
34.94
|
|
|
3.45
|
|
|
9.9
|
%
|
|
|
|
|
|
|
||||||||||
Sales margin
|
|
$
|
8.72
|
|
|
$
|
6.64
|
|
|
$
|
2.08
|
|
|
31.3
|
%
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales tons
3
(In thousands)
|
|
5,528
|
|
|
5,906
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Production tons
3
(In thousands)
|
|
5,433
|
|
|
5,607
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
1
The information above excludes revenues and expenses related to freight, which are offsetting and have no impact on sales margin.
|
||||||||||||||||||||||||||||
2
Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. See "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
||||||||||||||||||||||||||||
3
Tons are metric tons.
|
•
|
An increase in the average year-to-date realized product revenue rate of
$5.53
per metric ton or
13.3%
during the six months ended June 30, 2017, compared to the same period in the previous year, which resulted in an increase of
$31.8 million
, including the impact of foreign exchange. This increase is predominantly a result of:
|
◦
|
An increase in the Platts 62% Price which positively affected the realized revenue rate by $21 per metric ton or $118 million;
|
◦
|
Partially offset by a decrease in revenue rate of $10 per metric ton or $56 million due to price adjustments to meet market competition to compensate for varying quality ores and a reduction in iron content;
|
◦
|
Higher average Australia to Asia freight rates during the first six months of 2017 compared to the prior-year period, which is a component in the formula pricing, unfavorably affected the revenue rate by $3 per metric ton or $17 million.
|
•
|
Decreased sales volume of 378 thousand metric tons, or 6.4%, to 5.5 million metric tons during the six months ended June 30, 2017 compared to the prior-year period. The decrease in tons sold resulted in decreased revenue of
$16.9 million
due to fewer shipments as a result of timing and market conditions during the six months ended June 30, 2017 compared to the prior-year period.
|
•
|
An increase in production costs of
$13.4 million
or $2 per metric ton due to increased mining costs driven by a higher strip ratio, partially offset by reductions in rail volumes due to increased port inventory levels at the beginning of the period; and
|
•
|
Unfavorable foreign exchange rate variances of
$6.3 million
or $1 per metric ton.
|
•
|
Partially offset by a decrease in sales volume of 378 thousand metric tons as discussed above which decreased costs by
$13.8 million
;
|
|
(In Millions)
|
||||||
|
June 30,
2017 |
|
December 31,
2016 |
||||
Cash and cash equivalents
|
$
|
321.5
|
|
|
$
|
323.4
|
|
Available borrowing base on ABL Facility
1
|
296.6
|
|
|
333.0
|
|
||
ABL Facility loans drawn
|
—
|
|
|
—
|
|
||
Letter of credit obligations and other commitments
|
(82.5
|
)
|
|
(106.0
|
)
|
||
Borrowing capacity available
|
$
|
214.1
|
|
|
$
|
227.0
|
|
|
|
|
|
||||
1
The ABL Facility has a maximum borrowing base of $550 million, determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.
|
|
|
2017 Outlook Summary
|
||
Per Sales Ton Information
|
U.S. Iron Ore
1
|
|
Asia Pacific Iron Ore
2
|
|
Cost of goods sold and operating expense rate
|
$70 - $75
|
|
$37 - $42
|
|
Less:
|
|
|
|
|
Freight and venture partners' cost reimbursements expense rate
3
|
$11
|
|
$2
|
|
Depreciation, depletion & amortization rate
|
$4
|
|
$1
|
|
Cash cost of goods sold and operating expense rate
|
$55 - $60
|
|
$34 - $39
|
|
|
|
|
|
|
Sales volume (million tons)
|
19.0
|
|
11.0
|
|
Production volume (million tons)
|
19.0
|
|
11.5
|
|
|
||||
1
U.S. Iron Ore tons are reported in long tons of pellets.
|
||||
2
Asia Pacific Iron Ore tons are reported in metric tons of lump and fines.
|
||||
3
The freight and venture partners' cost reimbursements have offsetting amounts in revenue and have no impact on sales margin.
|
|
|
(In Millions)
|
||
|
|
Year Ending
December 31, |
||
|
|
2017
|
||
Net Income
|
|
$
|
310.0
|
|
Less:
|
|
|
||
Interest expense, net
|
|
(135.0
|
)
|
|
Income tax expense
|
|
(0.9
|
)
|
|
Depreciation, depletion and amortization
|
|
(95.0
|
)
|
|
EBITDA
|
|
$
|
540.9
|
|
|
|
|
||
Less*:
|
|
|
||
Impact of discontinued operations
|
|
$
|
(45.9
|
)
|
Loss on extinguishment/restructuring of debt
|
|
(76.8
|
)
|
|
Foreign exchange remeasurement
|
|
13.6
|
|
|
Adjusted EBITDA
|
|
$
|
650.0
|
|
|
|
|
||
*Adjustments to EBITDA are unpredictable by nature and thus cannot be forecasted beyond June 30, 2017.
|
•
|
uncertainty and weaknesses in global economic conditions, including downward pressure on prices caused by oversupply or imported products, the impact of any reduced barriers to trade, the outcomes of recently filed and forthcoming trade cases, reduced market demand and any change to the economic growth rate in China;
|
•
|
continued volatility of iron ore and steel prices and other trends, including the supply approach of the major iron ore producers, affecting our financial condition, results of operations or future prospects, specifically the impact of price-adjustment factors on our sales contracts;
|
•
|
our level of indebtedness could limit cash flow available to fund working capital, capital expenditures, acquisitions and other general corporate purposes or ongoing needs of our business;
|
•
|
availability of capital and our ability to maintain adequate liquidity;
|
•
|
our ability to successfully conclude the CCAA process in a manner that minimizes cash outflows and associated liabilities;
|
•
|
the impact of our customers reducing their steel production due to increased market share of steel produced using other methods or lighter-weight steel alternatives;
|
•
|
uncertainty relating to restructurings in the steel industry and/or affecting the steel industry;
|
•
|
the outcome of any contractual disputes with our customers, joint venture partners or significant energy, material or service providers or any other litigation or arbitration;
|
•
|
the ability of our customers and joint venture partners to meet their obligations to us on a timely basis or at all;
|
•
|
problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, environmental liabilities, employee-benefit costs and other risks of the mining industry;
|
•
|
our ability to reach agreement with our customers regarding any modifications to sales contract provisions, renewals or new arrangements;
|
•
|
our actual levels of capital spending;
|
•
|
our ability to successfully diversify our product mix and add new customers beyond our traditional blast furnace clientele;
|
•
|
our actual economic iron ore reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve;
|
•
|
our ability to cost-effectively achieve planned production rates or levels, including at our HBI production plant;
|
•
|
our ability to successfully identify and consummate any strategic investments or development projects, including our HBI production plant;
|
•
|
our ability to obtain the investments necessary for our HBI production plant;
|
•
|
changes in sales volume or mix;
|
•
|
events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets, as well as any resulting impairment charges;
|
•
|
our ability to maintain appropriate relations with unions and employees;
|
•
|
impacts of existing and increasing governmental regulation and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes;
|
•
|
uncertainties associated with natural disasters, weather conditions, unanticipated geological conditions, supply or price of energy, equipment failures and other unexpected events;
|
•
|
adverse changes in currency values, currency exchange rates, interest rates and tax laws;
|
•
|
risks related to international operations; and
|
•
|
the potential existence of significant deficiencies or material weakness in our internal control over financial reporting.
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
Six Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
U.S. Iron Ore
|
|
Asia Pacific Iron Ore
|
|
Total
|
|
U.S. Iron Ore
|
|
Asia Pacific Iron Ore
|
|
Total
|
||||||||||||
Cost of goods sold and operating expenses
|
|
$
|
(564.9
|
)
|
|
$
|
(225.2
|
)
|
|
$
|
(790.1
|
)
|
|
$
|
(464.0
|
)
|
|
$
|
(215.3
|
)
|
|
$
|
(679.3
|
)
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Freight and reimbursements
|
|
(93.2
|
)
|
|
(13.0
|
)
|
|
(106.2
|
)
|
|
(64.4
|
)
|
|
(8.9
|
)
|
|
(73.3
|
)
|
||||||
Depreciation, depletion & amortization
|
|
(33.1
|
)
|
|
(8.0
|
)
|
|
(41.1
|
)
|
|
(46.3
|
)
|
|
(12.9
|
)
|
|
(59.2
|
)
|
||||||
Cash cost of goods sold and operating expenses
|
|
$
|
(438.6
|
)
|
|
$
|
(204.2
|
)
|
|
$
|
(642.8
|
)
|
|
$
|
(353.3
|
)
|
|
$
|
(193.5
|
)
|
|
$
|
(546.8
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares
(or Units) Purchased
1
|
|
Average Price Paid per Share
(or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
|
|||||
April 1 - 30, 2017
|
|
1,077
|
|
|
$
|
8.06
|
|
|
—
|
|
$
|
—
|
|
May 1 - 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
June 1 - 30, 2017
|
|
9,590
|
|
|
$
|
5.69
|
|
|
—
|
|
$
|
—
|
|
|
|
10,667
|
|
|
$
|
5.93
|
|
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|||||
1
These shares were delivered to us to satisfy tax withholding obligations due upon the vesting or payment of stock awards.
|
Item 4.
|
Mine Safety Disclosures
|
Item 6.
|
Exhibits
|
(a)
|
List of Exhibits — Refer to Exhibit Index on pg.
58
.
|
|
|
|
CLIFFS NATURAL RESOURCES INC.
|
||||
|
|
|
|
|
|||
|
|
|
By:
|
|
/s/ R. Christopher Cebula
|
||
|
|
|
|
|
Name:
|
|
R. Christopher Cebula
|
|
|
|
|
|
Title:
|
|
Vice President, Corporate Controller & Chief Accounting Officer
|
|
|
|
|
|
|
|
|
Date:
|
July 27, 2017
|
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit
|
3.1
|
|
Amendment to Third Amended Articles of Incorporation of Cliffs Natural Resources Inc. (filed as Exhibit 3.1 to Cliffs’ Form 8-K on April 27, 2017 and incorporated herein by reference
|
10.1
|
|
Cliffs Natural Resources Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan (filed as Exhibit 10.1 to Cliffs’ Form 8-K on April 27, 2017 and incorporated herein by reference
|
10.2
|
|
Cliffs Natural Resources Inc. 2017 Executive Management Performance Incentive Plan (filed as Exhibit 10.2 to Cliffs’ Form 8-K on April 27, 2017 and incorporated herein by reference
|
|
* Form of Cliffs Natural Resources Inc. 2015 Equity and Incentive Compensation Plan, as Amended, Performance Share Award Memorandum and Performance Share Award Agreement (filed herewith)
|
|
|
* Form of Cliffs Natural Resources Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan Performance Share Award Memorandum and Performance Share Award Agreement (filed herewith)
|
|
|
* Form of Cliffs Natural Resources Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan Restricted Stock Unit Award Memorandum and Restricted Stock Unit Award Agreement (filed herewith)
|
|
|
Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Lourenco Goncalves as of July 27, 2017 (filed herewith)
|
|
|
Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Timothy K. Flanagan as of July 27, 2017 (filed herewith)
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Lourenco Goncalves, Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc., as of July 27, 2017 (filed herewith)
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Timothy K. Flanagan, Executive Vice President, Chief Financial Officer & Treasurer of Cliffs Natural Resources Inc., as of July 27, 2017 (filed herewith)
|
|
|
Mine Safety Disclosures (filed herewith)
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
*
|
Indicates management contract or other compensatory arrangement.
|
Employee:
|
|
PARTICIPANT NAME
|
Date of Grant:
|
|
GRANT DATE
|
Number of Shares Subject to Award:
|
|
XXXX
|
Performance Metric:
|
|
Relative Total Shareholder Return
|
|
|
|
Incentive Period:
|
|
XXXXX - XXXXX
|
(b)
|
The grant of the Performance Shares is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Shares, or benefits in lieu of Performance Shares, even if Performance Shares have been granted in the past;
|
(c)
|
All decisions with respect to future Performance Shares or other grants, if any, will be at the sole discretion of the Company;
|
(d)
|
The Participant’s participation in the Plan is voluntary;
|
(e)
|
The Performance Share award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any Subsidiary and shall not interfere with the ability of the Company, or any Subsidiary, as applicable, to terminate the Participant’s employment or service relationship (if any);
|
(f)
|
The future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
|
(g)
|
No claim or entitlement to compensation or damages shall arise from forfeiture of any Performance Shares resulting from the Participant ceasing to provide employment or other services to the Company or a Subsidiary (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and in consideration of the grant of the Performance Shares to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any of its Subsidiaries, and the Participant waives his or her ability, if any, to bring
|
(h)
|
Neither the Plan nor the Performance Shares shall be construed to create an employment relationship where any employment relationship did not otherwise already exist;
|
(i)
|
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Performance Shares;
|
(j)
|
The Performance Shares and the Shares subject to the Performance Shares, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
|
(k)
|
The Company reserves the right to impose other requirements on participation in the Performance Shares and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or other applicable rules or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing; and
|
(l)
|
The Performance Shares and any related benefit or compensation under this Agreement is subject to the Company's Clawback Policy (or any other applicable recoupment, recapture, clawback or recovery policy of the Company as adopted by the Board or the Committee and in effect from time to time), a copy of which is available upon request.
|
(m)
|
Notwithstanding anything in this Agreement to the contrary, the Participant acknowledges and agrees that this Performance Share Award, this Agreement and any related benefits or compensation under this Agreement are subject to the terms and conditions of the Company’s clawback policy (if any) as may be in effect from time to time specifically to implement Section 10D of the Exchange Act and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the Common Shares may be traded) (the “
Compensation Recovery Policy
”), and that applicable provisions of this Agreement shall be deemed superseded by and subject to the terms and conditions of the Compensation Recovery Policy from and after the effective date thereof.
|
1.
|
If the stock is listed on an exchange in the U.S. or Canada, then the value on such exchange will be used;
|
2.
|
Otherwise, if the stock is traded in the U.S. as an American Depositary Receipt (“ADR”), then the value of the ADR will be used; or
|
3.
|
Otherwise, the value on the exchange in the country where the company is headquartered will be used.
|
|
|
Performance Level
|
||
Performance Factor
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
Relative TSR
|
less than 25th percentile
|
25th percentile
|
50th percentile
|
75th or greater percentile
|
Payout For Relative TSR
|
0%
|
50%
|
100%
|
200%
|
1.
|
The Total Shareholder Return as defined in Section 1.8 of these terms and conditions for the Incentive Period for the Company shall be compared to the Total Shareholder Return for each of the entities within the Peer Group for the Incentive Period. The results shall be ranked to determine the Company’s Relative Total Shareholder Return percentile ranking compared to the Peer Group.
|
2.
|
The Company’s Relative Total Shareholder Return for the Incentive Period shall be compared to the Relative Total Shareholder Return performance target range established for the Incentive Period.
|
3.
|
The Relative Total Shareholder Return performance target range has been established for the XXXX - XXXX Incentive Period as follows:
|
Performance Level
|
|
XXXX - XXXX
Relative Total Shareholder Return
Percentile Ranking
|
Maximum
|
|
75
th
Percentile
|
Target
|
|
50
th
Percentile
|
Threshold
|
|
25
th
Percentile
|
PARTICIPANT NAME
|
|
ACCEPTANCE DATE
|
Participant Name
|
|
Date
|
ELECTRONIC SIGNATURE
|
|
|
Participant Signature
|
|
|
Employee:
|
|
PARTICIPANT NAME
|
Date of Grant:
|
|
XXXX
|
Number of Shares Subject to Award:
|
|
XXXX
|
Performance Metric:
|
|
Relative Total Shareholder Return
|
Incentive Period:
|
|
XXXX - XXXX
|
(a)
|
The Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
|
(b)
|
The grant of the Performance Shares is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Shares, or benefits in lieu of Performance Shares, even if Performance Shares have been granted in the past;
|
(c)
|
All decisions with respect to future Performance Shares or other grants, if any, will be at the sole discretion of the Company;
|
(d)
|
The Participant’s participation in the Plan is voluntary;
|
(e)
|
The Performance Share award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any Subsidiary and shall not interfere with the ability of the Company, or any Subsidiary, as applicable, to terminate the Participant’s employment or service relationship (if any);
|
(f)
|
The future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
|
(g)
|
No claim or entitlement to compensation or damages shall arise from forfeiture of any Performance Shares resulting from the Participant ceasing to provide employment or other services to the Company or a Subsidiary (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and in consideration of the grant of the Performance Shares to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any of its Subsidiaries, and the Participant waives his or her ability, if any, to bring any such claim, and releases the Company and its Subsidiaries from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;
|
(h)
|
Neither the Plan nor the Performance Shares shall be construed to create an employment relationship where any employment relationship did not otherwise already exist;
|
(i)
|
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Performance Shares;
|
(j)
|
The Performance Shares and the Shares subject to the Performance Shares, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
|
(k)
|
The Company reserves the right to impose other requirements on participation in the Performance Shares and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or other applicable rules or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing; and
|
(l)
|
The Performance Shares and any related benefit or compensation under this Agreement is subject to the Company's Clawback Policy (or any other applicable recoupment, recapture, clawback or recovery policy of the Company as adopted by the Board or the Committee and in effect from time to time), a copy of which is available upon request.
|
(m)
|
Notwithstanding anything in this Agreement to the contrary, the Participant acknowledges and agrees that this Performance Share Award, this Agreement and any related benefits or compensation under this Agreement are subject to the terms and conditions of the Company’s clawback policy (if any) as may be in effect from time to time specifically to implement Section 10D of the Exchange Act and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the Common Shares may be traded) (the “
Compensation Recovery Policy
”), and that applicable provisions of this Agreement shall be deemed superseded by and subject to the terms and conditions of the Compensation Recovery Policy from and after the effective date thereof.
|
1.
|
If the stock is listed on an exchange in the U.S. or Canada, then the value on such exchange will be used;
|
2.
|
Otherwise, if the stock is traded in the U.S. as an American Depositary Receipt (“ADR”), then the value of the ADR will be used; or
|
3.
|
Otherwise, the value on the exchange in the country where the company is headquartered will be used.
|
|
|
Performance Level
|
||
Performance Factor
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
Relative TSR
|
less than 25
th
percentile
|
25
th
percentile
|
50
th
percentile
|
75
th
or greater percentile
|
Payout For Relative TSR
|
0%
|
50%
|
100%
|
200%
|
1.
|
The Total Shareholder Return as defined in Section 1.8 of these terms and conditions for the Incentive Period for the Company shall be compared to the Total Shareholder Return for each of the entities within the Peer Group for the Incentive Period. The results shall be ranked to determine the Company’s Relative Total Shareholder Return percentile ranking compared to the Peer Group.
|
2.
|
The Company’s Relative Total Shareholder Return for the Incentive Period shall be compared to the Relative Total Shareholder Return performance target range established for the Incentive Period.
|
3.
|
The Relative Total Shareholder Return performance target range has been established for the Incentive Period as follows:
|
Performance Level
|
|
XXXX - XXXX
Relative Total Shareholder Return
Percentile Ranking
|
Maximum
|
|
75
th
Percentile
|
Target
|
|
50
th
Percentile
|
Threshold
|
|
25
th
Percentile
|
PARTICIPANT NAME
|
|
ACCEPTANCE DATE
|
Participant Name
|
|
Date
|
ELECTRONIC SIGNATURE
|
|
|
Participant Signature
|
|
|
Employee:
|
|
PARTICIPANT NAME
|
Date of Grant:
|
|
XXXX
|
Grant Price:
|
|
$XXXX
|
Number of Restricted Stock Units (Common Shares) Subject to Award:
|
|
XXXX
|
Vesting Date:
|
|
XXXX
|
(b)
|
The grant of the Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;
|
(c)
|
All decisions with respect to future Restricted Stock Units or other grants, if any, will be at the sole discretion of the Company;
|
(d)
|
The Participant’s participation in the Plan is voluntary;
|
(e)
|
The Restricted Stock Unit Award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any Subsidiary and shall not interfere with the ability of the Company, or any Subsidiary, as applicable, to terminate the Participant’s employment or service relationship (if any);
|
(f)
|
The future value of the underlying Common Shares is unknown, indeterminable and cannot be predicted with certainty;
|
(g)
|
No claim or entitlement to compensation or damages shall arise from forfeiture of any Restricted Stock Units resulting from the Participant ceasing to provide employment or other services to the Company or a Subsidiary (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and in consideration of the grant of the Restricted Stock Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the
|
(h)
|
Neither the Plan nor the Restricted Stock Units shall be construed to create an employment relationship where any employment relationship did not otherwise already exist;
|
(i)
|
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Common Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Restricted Stock Units;
|
(j)
|
The Restricted Stock Units and the Common Shares subject to the Restricted Stock Units, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments; and
|
(k)
|
The Company reserves the right to impose other requirements on participation in the Restricted Stock Units and on any Common Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or other applicable rules or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
|
PARTICIPANT NAME
|
|
ACCEPTANCE DATE
|
Participant Name
|
|
Date
|
ELECTRONIC SIGNATURE
|
|
|
Participant Signature
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Cliffs Natural Resources Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
July 27, 2017
|
|
By:
|
|
/s/ Lourenco Goncalves
|
|
|
|
|
|
Lourenco Goncalves
|
|
|
|
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Cliffs Natural Resources Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
July 27, 2017
|
|
By:
|
|
/s/ Timothy K. Flanagan
|
|
|
|
|
|
Timothy K. Flanagan
|
|
|
|
|
|
Executive Vice President, Chief Financial Officer & Treasurer
|
(1)
|
The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Form 10-Q.
|
Date:
|
|
July 27, 2017
|
|
|
|
|
|
|
|
By:
|
/s/ Lourenco Goncalves
|
|
|
|
Lourenco Goncalves
|
|
|
|
Chairman, President and Chief Executive Officer
|
(1)
|
The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Form 10-Q.
|
Date:
|
|
July 27, 2017
|
|
|
|
|
|
|
|
By:
|
/s/ Timothy K. Flanagan
|
|
|
|
Timothy K. Flanagan
|
|
|
|
Executive Vice President, Chief Financial Officer & Treasurer
|
(A)
|
The total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under section 104 of the FMSH Act (30 U.S.C. 814) for which the operator received a citation from MSHA;
|
(B)
|
The total number of orders issued under section 104(b) of the FMSH Act (30 U.S.C. 814(b));
|
(C)
|
The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of the FMSH Act (30 U.S.C. 814(d));
|
(D)
|
The total number of imminent danger orders issued under section 107(a) of the FMSH Act (30 U.S.C. 817(a));
|
(E)
|
The total dollar value of proposed assessments from MSHA under the FMSH Act (30 U.S.C. 801 et seq.);
|
(F)
|
Legal actions pending before the Federal Mine Safety and Health Review Commission involving such coal or other mine as of the last day of the period;
|
(G)
|
Legal actions initiated before the Federal Mine Safety and Health Review Commission involving such coal or other mine during the period; and
|
(H)
|
Legal actions resolved before the Federal Mine Safety and Health Review Commission involving such coal or other mine during the period.
|
|
|
|
Three Months Ended June 30, 2017
|
|||||||||||||||||||||||
|
|
|
(A)
|
|
(B)
|
|
(C)
|
|
(D)
|
|
(E)
|
|
(F)
|
|
(G)
|
|
(H)
|
|||||||||
Mine Name/ MSHA ID No.
|
Operation
|
|
Section 104 S&S Citations
|
|
Section 104(b) Orders
|
|
Section 104(d) Citations & Orders
|
|
Section 107(a) Orders
|
|
Total Dollar Value of MSHA Proposed Assessments (1)
|
|
Legal Actions Pending as of Last Day of Period
|
|
Legal Actions Initiated During Period
|
|
Legal Actions Resolved During Period
|
|||||||||
Tilden / 2000422
|
Iron Ore
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
36,349
|
|
|
22
|
|
(2)
|
3
|
|
|
1
|
|
Empire / 2001012
|
Iron Ore
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
Northshore Plant / 2100831
|
Iron Ore
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
(3)
|
5
|
|
|
—
|
|
|
Northshore Mine / 2100209
|
Iron Ore
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Hibbing / 2101600
|
Iron Ore
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,154
|
|
|
8
|
|
(4)
|
2
|
|
|
—
|
|
|
United Taconite Plant / 2103404
|
Iron Ore
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,833
|
|
|
5
|
|
(5)
|
1
|
|
|
—
|
|
|
United Taconite Mine / 2103403
|
Iron Ore
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
(6)
|
—
|
|
|
—
|
|
(1)
|
Amounts included under the heading “Total Dollar Value of MSHA Proposed Assessments” are the total dollar amounts for proposed assessments received from MSHA for the three months ended
June 30, 2017
.
|
(2)
|
This number consists of 11 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules, 10 pending legal actions related to contests of citations and orders referenced in Subpart B of FMSH Act's procedural rules, and 1 pending legal action related to complaints of discharge, discrimination, or interference referenced in Subpart E of FMSH Act's procedural rules.
|
(3)
|
This number consists of 7 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules.
|
(4)
|
This number consists of 7 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules, and 1 pending legal action related to contests of citations and orders referenced in Subpart B of FMSH Act's procedural rules.
|
(5)
|
This number consists of 5 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules.
|
(6)
|
This number consists of 1 pending legal action related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules.
|