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
|
|
Amended and Restated Syndicated Facility Agreement by and among Bank of America, N.A., as Administrative Agent and Australian Security Trustee, the Lenders that are parties hereto, as the Lenders, Cleveland-Cliffs Inc., as Parent and a Borrower, and the Subsidiaries of Parent party hereto, as Borrowers dated as of March 30, 2015, and Amended and Restated as of February 28, 2018
|
Adjusted EBITDA
|
|
EBITDA excluding certain items such as impacts of discontinued operations, foreign currency exchange remeasurement, extinguishment of debt and intersegment corporate allocations of SG&A costs.
|
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
|
AMT
|
|
Alternative Minimum Tax
|
ASC
|
|
Accounting Standards Codification
|
ASU
|
|
Accounting Standards Update
|
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)
|
Compensation Committee
|
|
Compensation and Organization Committee of the Board of Directors
|
Dodd-Frank Act
|
|
Dodd-Frank Wall Street Reform and Consumer Protection Act
|
DR-grade
|
|
Direct Reduction-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
|
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.
|
Topic 606
|
|
ASC Topic 606, Revenue from Contracts with Customers
|
TSR
|
|
Total Shareholder Return
|
United Taconite
|
|
United Taconite LLC
|
U.S.
|
|
United States of America
|
U.S. Steel
|
|
U.S Steel Corporation and all subsidiaries
|
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
|
Item 1.
|
Financial Statements
|
|
(In Millions)
|
||||||
|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
802.5
|
|
|
$
|
978.3
|
|
Accounts receivable, net
|
152.6
|
|
|
106.7
|
|
||
Inventories
|
256.4
|
|
|
138.4
|
|
||
Supplies and other inventories
|
88.6
|
|
|
88.8
|
|
||
Derivative assets
|
174.7
|
|
|
37.9
|
|
||
Current assets of discontinued operations
|
45.3
|
|
|
118.5
|
|
||
Loans to and accounts receivable from the Canadian Entities
|
—
|
|
|
51.6
|
|
||
Other current assets
|
26.8
|
|
|
24.4
|
|
||
TOTAL CURRENT ASSETS
|
1,546.9
|
|
|
1,544.6
|
|
||
PROPERTY, PLANT AND EQUIPMENT, NET
|
1,081.3
|
|
|
1,033.8
|
|
||
OTHER ASSETS
|
|
|
|
||||
Deposits for property, plant and equipment
|
85.7
|
|
|
17.8
|
|
||
Income tax receivable
|
219.9
|
|
|
235.3
|
|
||
Non-current assets of discontinued operations
|
—
|
|
|
20.3
|
|
||
Other non-current assets
|
117.7
|
|
|
101.6
|
|
||
TOTAL OTHER ASSETS
|
423.3
|
|
|
375.0
|
|
||
TOTAL ASSETS
|
$
|
3,051.5
|
|
|
$
|
2,953.4
|
|
|
(In Millions, Except Per Share Amounts)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
REVENUES FROM PRODUCT SALES AND SERVICES
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
672.0
|
|
|
$
|
417.0
|
|
|
$
|
841.2
|
|
|
$
|
664.3
|
|
Freight and venture partners' cost reimbursements
|
42.3
|
|
|
54.3
|
|
|
53.1
|
|
|
93.2
|
|
||||
|
714.3
|
|
|
471.3
|
|
|
894.3
|
|
|
757.5
|
|
||||
COST OF GOODS SOLD AND OPERATING EXPENSES
|
(429.8
|
)
|
|
(326.6
|
)
|
|
(548.3
|
)
|
|
(563.8
|
)
|
||||
SALES MARGIN
|
284.5
|
|
|
144.7
|
|
|
346.0
|
|
|
193.7
|
|
||||
OTHER OPERATING INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
(26.2
|
)
|
|
(26.6
|
)
|
|
(51.3
|
)
|
|
(51.7
|
)
|
||||
Miscellaneous – net
|
(4.1
|
)
|
|
(2.9
|
)
|
|
(10.2
|
)
|
|
6.6
|
|
||||
|
(30.3
|
)
|
|
(29.5
|
)
|
|
(61.5
|
)
|
|
(45.1
|
)
|
||||
OPERATING INCOME
|
254.2
|
|
|
115.2
|
|
|
284.5
|
|
|
148.6
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(31.2
|
)
|
|
(30.1
|
)
|
|
(63.6
|
)
|
|
(71.5
|
)
|
||||
Gain (loss) on extinguishment of debt
|
0.2
|
|
|
(4.9
|
)
|
|
0.2
|
|
|
(76.8
|
)
|
||||
Other non-operating income
|
4.4
|
|
|
2.5
|
|
|
8.8
|
|
|
5.0
|
|
||||
|
(26.6
|
)
|
|
(32.5
|
)
|
|
(54.6
|
)
|
|
(143.3
|
)
|
||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
227.6
|
|
|
82.7
|
|
|
229.9
|
|
|
5.3
|
|
||||
INCOME TAX BENEFIT (EXPENSE)
|
1.8
|
|
|
1.1
|
|
|
(13.9
|
)
|
|
—
|
|
||||
INCOME FROM CONTINUING OPERATIONS
|
229.4
|
|
|
83.8
|
|
|
216.0
|
|
|
5.3
|
|
||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
|
(64.3
|
)
|
|
(53.7
|
)
|
|
(135.2
|
)
|
|
(5.0
|
)
|
||||
NET INCOME
|
165.1
|
|
|
30.1
|
|
|
80.8
|
|
|
0.3
|
|
||||
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
—
|
|
|
1.7
|
|
|
—
|
|
|
3.4
|
|
||||
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
$
|
165.1
|
|
|
$
|
31.8
|
|
|
$
|
80.8
|
|
|
$
|
3.7
|
|
INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS – BASIC
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.77
|
|
|
$
|
0.28
|
|
|
$
|
0.73
|
|
|
$
|
0.03
|
|
Discontinued operations
|
(0.22
|
)
|
|
(0.18
|
)
|
|
(0.46
|
)
|
|
(0.01
|
)
|
||||
|
$
|
0.55
|
|
|
$
|
0.10
|
|
|
$
|
0.27
|
|
|
$
|
0.02
|
|
INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS – DILUTED
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.76
|
|
|
$
|
0.28
|
|
|
$
|
0.72
|
|
|
$
|
0.03
|
|
Discontinued operations
|
(0.21
|
)
|
|
(0.18
|
)
|
|
(0.45
|
)
|
|
(0.02
|
)
|
||||
|
$
|
0.55
|
|
|
$
|
0.10
|
|
|
$
|
0.27
|
|
|
$
|
0.01
|
|
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Basic
|
297,618
|
|
|
296,070
|
|
|
297,442
|
|
|
280,617
|
|
||||
Diluted
|
301,275
|
|
|
300,711
|
|
|
301,143
|
|
|
285,247
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
$
|
165.1
|
|
|
$
|
31.8
|
|
|
$
|
80.8
|
|
|
$
|
3.7
|
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
||||||||
Changes in pension and other post-retirement benefits, net of tax
|
6.7
|
|
|
6.7
|
|
|
13.4
|
|
|
11.4
|
|
||||
Unrealized net gain (loss) on foreign currency translation
|
2.2
|
|
|
(1.4
|
)
|
|
2.9
|
|
|
(14.1
|
)
|
||||
Unrealized net gain on derivative financial instruments, net of tax
|
0.2
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
9.1
|
|
|
5.3
|
|
|
16.8
|
|
|
(2.7
|
)
|
||||
OTHER COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
4.6
|
|
||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
$
|
174.2
|
|
|
$
|
36.7
|
|
|
$
|
97.6
|
|
|
$
|
5.6
|
|
|
(In Millions)
|
||||||
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
80.8
|
|
|
$
|
0.3
|
|
Adjustments to reconcile net income to net cash provided (used) by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
49.4
|
|
|
44.8
|
|
||
Loss (gain) on extinguishment of debt
|
(0.2
|
)
|
|
76.8
|
|
||
Loss on deconsolidation
|
—
|
|
|
48.6
|
|
||
Gain on derivatives
|
(123.5
|
)
|
|
(19.1
|
)
|
||
Other
|
12.6
|
|
|
10.8
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables and other assets
|
61.8
|
|
|
68.3
|
|
||
Inventories
|
(125.6
|
)
|
|
(106.6
|
)
|
||
Payables, accrued expenses and other liabilities
|
(4.6
|
)
|
|
(56.1
|
)
|
||
Net cash provided (used) by operating activities
|
(49.3
|
)
|
|
67.8
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchase of property, plant and equipment
|
(42.1
|
)
|
|
(44.3
|
)
|
||
Deposits for property, plant and equipment
|
(72.3
|
)
|
|
(5.1
|
)
|
||
Proceeds on sales of assets
|
14.6
|
|
|
1.1
|
|
||
Net cash used by investing activities
|
(99.8
|
)
|
|
(48.3
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from issuance of debt
|
—
|
|
|
500.0
|
|
||
Debt issuance costs
|
(1.5
|
)
|
|
(8.5
|
)
|
||
Net proceeds from issuance of common shares
|
—
|
|
|
661.3
|
|
||
Repurchase of debt
|
(15.3
|
)
|
|
(1,154.0
|
)
|
||
Distributions of partnership equity
|
—
|
|
|
(8.7
|
)
|
||
Other financing activities
|
(8.9
|
)
|
|
(13.9
|
)
|
||
Net cash used by financing activities
|
(25.7
|
)
|
|
(23.8
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(1.0
|
)
|
|
2.4
|
|
||
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
|
(175.8
|
)
|
|
(1.9
|
)
|
||
LESS: INCREASE IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
|
—
|
|
|
40.5
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(175.8
|
)
|
|
(42.4
|
)
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
978.3
|
|
|
312.8
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
802.5
|
|
|
$
|
270.4
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net Income
|
$
|
165.1
|
|
|
$
|
30.1
|
|
|
$
|
80.8
|
|
|
$
|
0.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(32.3
|
)
|
|
(31.4
|
)
|
|
(65.8
|
)
|
|
(74.2
|
)
|
||||
Income tax benefit (expense)
|
1.8
|
|
|
(2.6
|
)
|
|
(13.9
|
)
|
|
(0.8
|
)
|
||||
Depreciation, depletion and amortization
|
(25.5
|
)
|
|
(21.6
|
)
|
|
(49.4
|
)
|
|
(44.8
|
)
|
||||
EBITDA
|
$
|
221.1
|
|
|
$
|
85.7
|
|
|
$
|
209.9
|
|
|
$
|
120.1
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Impact of discontinued operations
|
$
|
(54.7
|
)
|
|
$
|
(45.4
|
)
|
|
$
|
(117.8
|
)
|
|
$
|
6.5
|
|
Foreign exchange remeasurement
|
(0.1
|
)
|
|
0.5
|
|
|
(0.5
|
)
|
|
15.3
|
|
||||
Gain (loss) on extinguishment of debt
|
0.2
|
|
|
(4.9
|
)
|
|
0.2
|
|
|
(76.8
|
)
|
||||
Adjusted EBITDA
|
$
|
275.7
|
|
|
$
|
135.5
|
|
|
$
|
328.0
|
|
|
$
|
175.1
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
296.0
|
|
|
$
|
155.0
|
|
|
$
|
368.5
|
|
|
$
|
212.9
|
|
Corporate and Other
1
|
(74.9
|
)
|
|
(69.3
|
)
|
|
(158.6
|
)
|
|
(92.8
|
)
|
||||
Total EBITDA
|
$
|
221.1
|
|
|
$
|
85.7
|
|
|
$
|
209.9
|
|
|
$
|
120.1
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
301.3
|
|
|
$
|
161.5
|
|
|
$
|
378.4
|
|
|
$
|
225.6
|
|
Corporate and Other
1
|
(25.6
|
)
|
|
(26.0
|
)
|
|
(50.4
|
)
|
|
(50.5
|
)
|
||||
Total Adjusted EBITDA
|
$
|
275.7
|
|
|
$
|
135.5
|
|
|
$
|
328.0
|
|
|
$
|
175.1
|
|
|
|
|
|
|
|
|
|
||||||||
1
Corporate and Other includes immaterial costs related to the HBI project.
|
|
|
(In Millions)
|
||||||
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Finished Goods
|
|
$
|
232.5
|
|
|
$
|
127.1
|
|
Work-in-Process
|
|
23.9
|
|
|
11.3
|
|
||
Total Inventories
|
|
$
|
256.4
|
|
|
$
|
138.4
|
|
|
(In Millions)
|
||||||
|
June 30,
2018 |
|
December 31,
2017 |
||||
Land rights and mineral rights
|
$
|
549.6
|
|
|
$
|
549.6
|
|
Office and information technology
|
65.1
|
|
|
65.8
|
|
||
Buildings
|
84.0
|
|
|
85.2
|
|
||
Mining equipment
|
531.2
|
|
|
533.9
|
|
||
Processing equipment
|
616.0
|
|
|
610.9
|
|
||
Electric power facilities
|
56.9
|
|
|
56.9
|
|
||
Land improvements
|
24.2
|
|
|
23.7
|
|
||
Asset retirement obligation
|
16.9
|
|
|
16.9
|
|
||
Other
|
25.2
|
|
|
25.2
|
|
||
Construction in-progress
|
102.2
|
|
|
32.6
|
|
||
|
2,071.3
|
|
|
2,000.7
|
|
||
Allowance for depreciation and depletion
|
(990.0
|
)
|
|
(966.9
|
)
|
||
|
$
|
1,081.3
|
|
|
$
|
1,033.8
|
|
(In Millions)
|
||||||||||||||||||
June 30, 2018
|
||||||||||||||||||
Debt Instrument
|
|
Annual Effective
Interest Rate
|
|
Total Principal Amount
|
|
Debt Issuance Costs
|
|
Unamortized Discounts
|
|
Total Debt
|
||||||||
Secured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 4.875% 2024 Senior Notes
|
|
5.00%
|
|
$
|
400.0
|
|
|
$
|
(6.3
|
)
|
|
$
|
(2.4
|
)
|
|
$
|
391.3
|
|
Unsecured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 5.90% 2020 Senior Notes
|
|
5.98%
|
|
88.4
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
88.1
|
|
||||
$500 Million 4.80% 2020 Senior Notes
|
|
4.83%
|
|
122.3
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
122.0
|
|
||||
$700 Million 4.875% 2021 Senior Notes
|
|
4.89%
|
|
125.2
|
|
|
(0.3
|
)
|
|
—
|
|
|
124.9
|
|
||||
$316.25 Million 1.50% 2025 Convertible Senior Notes
|
|
6.26%
|
|
316.3
|
|
|
(6.0
|
)
|
|
(80.6
|
)
|
|
229.7
|
|
||||
$1.075 Billion 5.75% 2025 Senior Notes
|
|
6.01%
|
|
1,073.3
|
|
|
(10.6
|
)
|
|
(15.6
|
)
|
|
1,047.1
|
|
||||
$800 Million 6.25% 2040 Senior Notes
|
|
6.34%
|
|
298.4
|
|
|
(2.3
|
)
|
|
(3.4
|
)
|
|
292.7
|
|
||||
ABL Facility
|
|
N/A
|
|
450.0
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
||||
Fair Value Adjustment to Interest Rate Hedge
|
|
|
|
|
|
|
|
|
|
1.2
|
|
|||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
2,297.0
|
|
(In Millions)
|
||||||||||||||||||
December 31, 2017
|
||||||||||||||||||
Debt Instrument
|
|
Annual Effective
Interest Rate
|
|
Total Principal Amount
|
|
Debt Issuance Costs
|
|
Unamortized Discounts
|
|
Total Debt
|
||||||||
Secured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 4.875% 2024 Senior Notes
|
|
5.00%
|
|
$
|
400.0
|
|
|
$
|
(7.1
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
390.3
|
|
Unsecured Notes
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 5.90% 2020 Senior Notes
|
|
5.98%
|
|
88.9
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
88.6
|
|
||||
$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
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
138.0
|
|
||||
$316.25 Million 1.50% 2025 Convertible Senior Notes
|
|
6.26%
|
|
316.3
|
|
|
(6.6
|
)
|
|
(85.6
|
)
|
|
224.1
|
|
||||
$1.075 Billion 5.75% 2025 Senior Notes
|
|
6.01%
|
|
1,075.0
|
|
|
(11.3
|
)
|
|
(16.5
|
)
|
|
1,047.2
|
|
||||
$800 Million 6.25% 2040 Senior Notes
|
|
6.34%
|
|
298.4
|
|
|
(2.4
|
)
|
|
(3.4
|
)
|
|
292.6
|
|
||||
ABL Facility
|
|
N/A
|
|
550.0
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
||||
Fair Value Adjustment to Interest Rate Hedge
|
|
|
|
|
|
|
|
|
|
1.4
|
|
|||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
2,304.2
|
|
|
|
(In Millions)
|
||
|
|
Maturities of Debt
|
||
2018
|
|
$
|
—
|
|
2019
|
|
—
|
|
|
2020
|
|
210.7
|
|
|
2021
|
|
125.2
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
2024 and thereafter
|
|
2,088.0
|
|
|
Total maturities of debt
|
|
$
|
2,423.9
|
|
|
(In Millions)
|
||||||||||||||
|
June 30, 2018
|
||||||||||||||
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
|
$
|
10.5
|
|
|
$
|
546.5
|
|
|
$
|
—
|
|
|
$
|
557.0
|
|
Derivative assets
|
—
|
|
|
0.1
|
|
|
174.6
|
|
|
174.7
|
|
||||
Total
|
$
|
10.5
|
|
|
$
|
546.6
|
|
|
$
|
174.6
|
|
|
$
|
731.7
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
3.0
|
|
|
$
|
3.1
|
|
Total
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
3.0
|
|
|
$
|
3.1
|
|
|
(In Millions)
|
||||||||||||||
|
December 31, 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
|
$
|
66.3
|
|
|
$
|
550.6
|
|
|
$
|
—
|
|
|
$
|
616.9
|
|
Derivative assets
|
—
|
|
|
—
|
|
|
37.9
|
|
|
37.9
|
|
||||
Total
|
$
|
66.3
|
|
|
$
|
550.6
|
|
|
$
|
37.9
|
|
|
$
|
654.8
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
1.7
|
|
|
$
|
2.0
|
|
Total
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
1.7
|
|
|
$
|
2.0
|
|
|
(In Millions)
|
||||||||||||||
|
Level 3 Liabilities
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Beginning balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.7
|
)
|
|
$
|
—
|
|
Total losses
|
|
|
|
|
|
|
|
||||||||
Included in earnings
|
(3.7
|
)
|
|
(20.2
|
)
|
|
(4.3
|
)
|
|
(20.2
|
)
|
||||
Settlements
|
0.7
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
||||
Ending balance - June 30
|
$
|
(3.0
|
)
|
|
$
|
(20.2
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
(20.2
|
)
|
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date
|
$
|
(3.0
|
)
|
|
$
|
(20.2
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
(20.2
|
)
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost
|
$
|
4.6
|
|
|
$
|
4.7
|
|
|
$
|
9.3
|
|
|
$
|
9.5
|
|
Interest cost
|
7.5
|
|
|
7.5
|
|
|
15.1
|
|
|
15.0
|
|
||||
Expected return on plan assets
|
(15.0
|
)
|
|
(13.6
|
)
|
|
(30.0
|
)
|
|
(27.1
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Prior service costs
|
0.6
|
|
|
0.7
|
|
|
1.1
|
|
|
1.3
|
|
||||
Net actuarial loss
|
5.3
|
|
|
5.3
|
|
|
10.6
|
|
|
10.6
|
|
||||
Net periodic benefit cost
|
$
|
3.0
|
|
|
$
|
4.6
|
|
|
$
|
6.1
|
|
|
$
|
9.3
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
1.0
|
|
|
$
|
1.0
|
|
Interest cost
|
2.0
|
|
|
2.2
|
|
|
4.1
|
|
|
4.3
|
|
||||
Expected return on plan assets
|
(4.6
|
)
|
|
(4.5
|
)
|
|
(9.2
|
)
|
|
(8.9
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Prior service credits
|
(0.7
|
)
|
|
(0.8
|
)
|
|
(1.5
|
)
|
|
(1.5
|
)
|
||||
Net actuarial loss
|
1.3
|
|
|
1.3
|
|
|
2.5
|
|
|
2.5
|
|
||||
Net periodic benefit credit
|
$
|
(1.5
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(3.1
|
)
|
|
$
|
(2.6
|
)
|
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, 2018
|
|
$
|
7.53
|
|
|
2.86
|
|
86.8%
|
|
2.42%
|
|
—%
|
|
$
|
11.93
|
|
|
158.43%
|
|
(In Millions)
|
||||||
|
Capital Leases
|
|
Operating Leases
|
||||
2018 (July 1 - December 31)
|
$
|
1.4
|
|
|
$
|
1.3
|
|
2019
|
2.8
|
|
|
1.9
|
|
||
2020
|
2.4
|
|
|
1.8
|
|
||
2021
|
1.8
|
|
|
1.8
|
|
||
2022
|
1.4
|
|
|
1.8
|
|
||
2023 and thereafter
|
—
|
|
|
7.5
|
|
||
Total minimum lease payments
|
$
|
9.8
|
|
|
$
|
16.1
|
|
Amounts representing interest
|
1.0
|
|
|
|
|||
Present value of net minimum lease payments
1
|
$
|
8.8
|
|
|
|
||
|
|
|
|
||||
1
The total is comprised of $2.4 million and $6.4 million classified as
Other current liabilities
and
Other liabilities
, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position as of June 30, 2018.
|
|
(In Millions)
|
||||||
|
June 30,
2018 |
|
December 31,
2017 |
||||
Environmental
|
$
|
3.2
|
|
|
$
|
2.9
|
|
Mine closure
1
|
172.8
|
|
|
168.4
|
|
||
Total environmental and mine closure obligations
|
176.0
|
|
|
171.3
|
|
||
Less current portion
|
3.7
|
|
|
3.6
|
|
||
Long-term environmental and mine closure obligations
|
$
|
172.3
|
|
|
$
|
167.7
|
|
|
|
|
|
||||
1
Includes our active operating mines, our indefinitely idled Empire mine and a closed mine formerly operating as LTVSMC.
|
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Classification
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Permits
|
Other non-current assets
|
|
$
|
72.2
|
|
|
$
|
(22.9
|
)
|
|
$
|
49.3
|
|
|
$
|
72.2
|
|
|
$
|
(22.5
|
)
|
|
$
|
49.7
|
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||
Derivative Instrument
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||||||
Derivatives designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity Contracts
|
|
Derivative assets
|
|
$
|
0.1
|
|
|
|
|
$
|
—
|
|
|
Other current liabilities
|
|
$
|
0.1
|
|
|
Other current liabilities
|
|
$
|
0.3
|
|
Derivatives not designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer supply agreement
|
|
Derivative assets
|
|
$
|
169.4
|
|
|
Derivative assets
|
|
$
|
37.9
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
Provisional pricing arrangements
|
|
Derivative assets
|
|
5.2
|
|
|
|
|
—
|
|
|
Other current liabilities
|
|
3.0
|
|
|
Other current liabilities
|
|
1.7
|
|
||||
Total derivatives not designated as hedging instruments under ASC 815
|
|
|
|
$
|
174.6
|
|
|
|
|
$
|
37.9
|
|
|
|
|
$
|
3.0
|
|
|
|
|
$
|
1.7
|
|
Total derivatives
|
|
|
|
$
|
174.7
|
|
|
|
|
$
|
37.9
|
|
|
|
|
$
|
3.1
|
|
|
|
|
$
|
2.0
|
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
June 30,
2018 |
|
December 31,
2017 |
||||||||||||||||||||
|
|
Asia Pacific Iron Ore
|
|
North American Coal
|
|
Total
|
|
Asia Pacific Iron Ore
|
|
North American Coal
|
|
Total
|
||||||||||||
Current assets of discontinued operations
|
|
$
|
45.3
|
|
|
$
|
—
|
|
|
$
|
45.3
|
|
|
$
|
118.5
|
|
|
$
|
—
|
|
|
$
|
118.5
|
|
Non-current assets of discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.3
|
|
|
$
|
—
|
|
|
$
|
20.3
|
|
Current liabilities of discontinued operations
|
|
$
|
114.4
|
|
|
$
|
2.9
|
|
|
$
|
117.3
|
|
|
$
|
71.8
|
|
|
$
|
3.2
|
|
|
$
|
75.0
|
|
Non-current liabilities of discontinued operations
|
|
$
|
10.3
|
|
|
$
|
—
|
|
|
$
|
10.3
|
|
|
$
|
52.2
|
|
|
$
|
—
|
|
|
$
|
52.2
|
|
|
|
(In Millions)
|
||||||
|
|
Six Months Ended
June 30, |
||||||
|
|
2018
|
|
2017
|
||||
Net cash provided (used) by operating activities
|
|
|
|
|
||||
Asia Pacific Iron Ore
|
|
$
|
(31.7
|
)
|
|
$
|
92.2
|
|
Canadian Operations
|
|
(14.6
|
)
|
|
—
|
|
||
|
|
$
|
(46.3
|
)
|
|
$
|
92.2
|
|
|
|
|
|
|
||||
Net cash provided (used) by investing activities
|
|
|
|
|
||||
Asia Pacific Iron Ore
|
|
$
|
14.1
|
|
|
$
|
(0.8
|
)
|
|
|
$
|
14.1
|
|
|
$
|
(0.8
|
)
|
|
|
(In Millions)
|
||||||
Assets and Liabilities of Discontinued Operations
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Cash and cash equivalents
|
|
$
|
29.4
|
|
|
$
|
29.4
|
|
Accounts receivable, net
|
|
12.5
|
|
|
33.9
|
|
||
Inventories
|
|
—
|
|
|
45.0
|
|
||
Supplies and other inventories
|
|
—
|
|
|
5.1
|
|
||
Other current assets
|
|
3.4
|
|
|
5.1
|
|
||
Total current assets of discontinued operations
|
|
45.3
|
|
|
118.5
|
|
||
Property, plant and equipment, net
|
|
—
|
|
|
17.2
|
|
||
Other non-current assets
|
|
—
|
|
|
3.1
|
|
||
Total assets of discontinued operations
|
|
$
|
45.3
|
|
|
$
|
138.8
|
|
|
|
|
|
|
||||
Accounts payable
|
|
$
|
74.3
|
|
|
$
|
28.2
|
|
Accrued liabilities
|
|
21.1
|
|
|
28.0
|
|
||
Other current liabilities
|
|
19.0
|
|
|
15.6
|
|
||
Total current liabilities of discontinued operations
|
|
114.4
|
|
|
71.8
|
|
||
Environmental and mine closure obligations
|
|
10.3
|
|
|
28.8
|
|
||
Other liabilities
|
|
—
|
|
|
23.4
|
|
||
Total liabilities of discontinued operations
|
|
$
|
124.7
|
|
|
$
|
124.0
|
|
|
(In Millions)
|
||||||||||
|
Cliffs
Shareholders’ Equity (Deficit) |
|
Noncontrolling
Interest |
|
Total Equity
(Deficit) |
||||||
December 31, 2017
|
$
|
(444.3
|
)
|
|
$
|
0.2
|
|
|
$
|
(444.1
|
)
|
Adoption of accounting standard (REFER TO NOTE 2)
|
34.0
|
|
|
—
|
|
|
34.0
|
|
|||
Comprehensive income
|
|
|
|
|
|
||||||
Net income
|
80.8
|
|
|
—
|
|
|
80.8
|
|
|||
Other comprehensive income
|
16.8
|
|
|
—
|
|
|
16.8
|
|
|||
Total comprehensive income
|
97.6
|
|
|
—
|
|
|
97.6
|
|
|||
Stock and other incentive plans
|
6.4
|
|
|
—
|
|
|
6.4
|
|
|||
Distributions to noncontrolling interest
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||
June 30, 2018
|
$
|
(306.3
|
)
|
|
$
|
—
|
|
|
$
|
(306.3
|
)
|
|
(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)
|
||||||||||
|
Changes in Pension and OPEB, net of tax
|
|
Unrealized Net Gain (Loss) on Foreign Currency Translation
|
|
Accumulated Other Comprehensive Loss
|
||||||
December 31, 2016
|
$
|
(260.6
|
)
|
|
$
|
239.3
|
|
|
$
|
(21.3
|
)
|
Other comprehensive income (loss) before reclassifications
|
3.3
|
|
|
(12.7
|
)
|
|
(9.4
|
)
|
|||
Net loss reclassified from accumulated other comprehensive loss
|
6.4
|
|
|
—
|
|
|
6.4
|
|
|||
March 31, 2017
|
$
|
(250.9
|
)
|
|
$
|
226.6
|
|
|
$
|
(24.3
|
)
|
Other comprehensive loss before reclassifications
|
(0.1
|
)
|
|
(1.5
|
)
|
|
(1.6
|
)
|
|||
Net loss reclassified from accumulated other comprehensive loss
|
6.5
|
|
|
—
|
|
|
6.5
|
|
|||
June 30, 2017
|
$
|
(244.5
|
)
|
|
$
|
225.1
|
|
|
$
|
(19.4
|
)
|
Mine
|
|
Cleveland-Cliffs Inc.
|
|
ArcelorMittal
|
|
U.S. Steel
|
|||
Hibbing
|
|
23.0
|
%
|
|
62.3
|
%
|
|
14.7
|
%
|
|
(In Millions, Except Per Share Amounts)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income from Continuing Operations
|
$
|
229.4
|
|
|
$
|
83.8
|
|
|
$
|
216.0
|
|
|
$
|
5.3
|
|
Loss from Continuing Operations Attributable to Noncontrolling Interest
|
—
|
|
|
1.7
|
|
|
—
|
|
|
3.4
|
|
||||
Net Income from Continuing Operations Attributable to Cliffs Shareholders
|
$
|
229.4
|
|
|
$
|
85.5
|
|
|
$
|
216.0
|
|
|
$
|
8.7
|
|
Loss from Discontinued Operations, net of tax
|
(64.3
|
)
|
|
(53.7
|
)
|
|
(135.2
|
)
|
|
(5.0
|
)
|
||||
Net Income Attributable to Cliffs Shareholders
|
$
|
165.1
|
|
|
$
|
31.8
|
|
|
$
|
80.8
|
|
|
$
|
3.7
|
|
Weighted Average Number of Shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
297.6
|
|
|
296.1
|
|
|
297.4
|
|
|
280.6
|
|
||||
Employee Stock Plans
|
3.7
|
|
|
4.6
|
|
|
3.7
|
|
|
4.6
|
|
||||
Diluted
|
301.3
|
|
|
300.7
|
|
|
301.1
|
|
|
285.2
|
|
||||
Income (Loss) per Common Share Attributable to
Cliffs Common Shareholders - Basic: |
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.77
|
|
|
$
|
0.28
|
|
|
$
|
0.73
|
|
|
$
|
0.03
|
|
Discontinued operations
|
(0.22
|
)
|
|
(0.18
|
)
|
|
(0.46
|
)
|
|
(0.01
|
)
|
||||
|
$
|
0.55
|
|
|
$
|
0.10
|
|
|
$
|
0.27
|
|
|
$
|
0.02
|
|
Income (Loss) per Common Share Attributable to
Cliffs Common Shareholders - Diluted: |
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.76
|
|
|
$
|
0.28
|
|
|
$
|
0.72
|
|
|
$
|
0.03
|
|
Discontinued operations
|
(0.21
|
)
|
|
(0.18
|
)
|
|
(0.45
|
)
|
|
(0.02
|
)
|
||||
|
$
|
0.55
|
|
|
$
|
0.10
|
|
|
$
|
0.27
|
|
|
$
|
0.01
|
|
Unaudited Condensed Consolidating Statement of Financial Position
|
|||||||||||||||||||
As of June 30, 2018
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
798.4
|
|
|
$
|
1.6
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
802.5
|
|
Accounts receivable, net
|
8.0
|
|
|
148.2
|
|
|
0.1
|
|
|
(3.7
|
)
|
|
152.6
|
|
|||||
Inventories
|
—
|
|
|
256.4
|
|
|
—
|
|
|
—
|
|
|
256.4
|
|
|||||
Supplies and other inventories
|
—
|
|
|
88.6
|
|
|
—
|
|
|
—
|
|
|
88.6
|
|
|||||
Derivative assets
|
0.1
|
|
|
174.6
|
|
|
—
|
|
|
—
|
|
|
174.7
|
|
|||||
Current assets of discontinued operations
|
—
|
|
|
—
|
|
|
45.3
|
|
|
—
|
|
|
45.3
|
|
|||||
Other current assets
|
15.9
|
|
|
7.7
|
|
|
3.2
|
|
|
—
|
|
|
26.8
|
|
|||||
TOTAL CURRENT ASSETS
|
822.4
|
|
|
677.1
|
|
|
51.1
|
|
|
(3.7
|
)
|
|
1,546.9
|
|
|||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
15.5
|
|
|
966.2
|
|
|
99.6
|
|
|
—
|
|
|
1,081.3
|
|
|||||
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits for property, plant and equipment
|
—
|
|
|
3.8
|
|
|
81.9
|
|
|
—
|
|
|
85.7
|
|
|||||
Income tax receivable
|
219.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
219.9
|
|
|||||
Investment in subsidiaries
|
1,299.9
|
|
|
32.8
|
|
|
—
|
|
|
(1,332.7
|
)
|
|
—
|
|
|||||
Long-term intercompany notes
|
—
|
|
|
—
|
|
|
227.4
|
|
|
(227.4
|
)
|
|
—
|
|
|||||
Other non-current assets
|
8.7
|
|
|
107.3
|
|
|
1.7
|
|
|
—
|
|
|
117.7
|
|
|||||
TOTAL OTHER ASSETS
|
1,528.5
|
|
|
143.9
|
|
|
311.0
|
|
|
(1,560.1
|
)
|
|
423.3
|
|
|||||
TOTAL ASSETS
|
$
|
2,366.4
|
|
|
$
|
1,787.2
|
|
|
$
|
461.7
|
|
|
$
|
(1,563.8
|
)
|
|
$
|
3,051.5
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
5.2
|
|
|
$
|
88.8
|
|
|
$
|
28.7
|
|
|
$
|
(3.7
|
)
|
|
$
|
119.0
|
|
Accrued expenses
|
13.6
|
|
|
71.0
|
|
|
0.5
|
|
|
—
|
|
|
85.1
|
|
|||||
Accrued interest
|
43.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.1
|
|
|||||
Partnership distribution payable
|
—
|
|
|
44.2
|
|
|
—
|
|
|
—
|
|
|
44.2
|
|
|||||
Current liabilities of discontinued operations
|
—
|
|
|
—
|
|
|
117.3
|
|
|
—
|
|
|
117.3
|
|
|||||
Other current liabilities
|
1.8
|
|
|
62.7
|
|
|
1.7
|
|
|
—
|
|
|
66.2
|
|
|||||
TOTAL CURRENT LIABILITIES
|
63.7
|
|
|
266.7
|
|
|
148.2
|
|
|
(3.7
|
)
|
|
474.9
|
|
|||||
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES
|
65.9
|
|
|
428.4
|
|
|
(249.3
|
)
|
|
—
|
|
|
245.0
|
|
|||||
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
|
—
|
|
|
145.3
|
|
|
27.0
|
|
|
—
|
|
|
172.3
|
|
|||||
LONG-TERM DEBT
|
2,297.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,297.0
|
|
|||||
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
10.3
|
|
|||||
LONG-TERM INTERCOMPANY NOTES
|
227.4
|
|
|
—
|
|
|
—
|
|
|
(227.4
|
)
|
|
—
|
|
|||||
OTHER LIABILITIES
|
18.7
|
|
|
139.0
|
|
|
0.6
|
|
|
—
|
|
|
158.3
|
|
|||||
TOTAL LIABILITIES
|
2,672.7
|
|
|
979.4
|
|
|
(63.2
|
)
|
|
(231.1
|
)
|
|
3,357.8
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
TOTAL CLIFFS SHAREHOLDERS' DEFICIT
|
(306.3
|
)
|
|
807.8
|
|
|
524.9
|
|
|
(1,332.7
|
)
|
|
(306.3
|
)
|
|||||
TOTAL DEFICIT
|
(306.3
|
)
|
|
807.8
|
|
|
524.9
|
|
|
(1,332.7
|
)
|
|
(306.3
|
)
|
|||||
TOTAL LIABILITIES AND DEFICIT
|
$
|
2,366.4
|
|
|
$
|
1,787.2
|
|
|
$
|
461.7
|
|
|
$
|
(1,563.8
|
)
|
|
$
|
3,051.5
|
|
Unaudited Condensed Consolidating Statement of Financial Position
|
|||||||||||||||||||
As of December 31, 2017
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
948.9
|
|
|
$
|
2.1
|
|
|
$
|
27.3
|
|
|
$
|
—
|
|
|
$
|
978.3
|
|
Accounts receivable, net
|
4.5
|
|
|
102.9
|
|
|
—
|
|
|
(0.7
|
)
|
|
106.7
|
|
|||||
Inventories
|
—
|
|
|
138.4
|
|
|
—
|
|
|
—
|
|
|
138.4
|
|
|||||
Supplies and other inventories
|
—
|
|
|
88.8
|
|
|
—
|
|
|
—
|
|
|
88.8
|
|
|||||
Derivative assets
|
—
|
|
|
37.9
|
|
|
—
|
|
|
—
|
|
|
37.9
|
|
|||||
Current assets of discontinued operations
|
—
|
|
|
—
|
|
|
118.5
|
|
|
—
|
|
|
118.5
|
|
|||||
Loans to and accounts receivable from the Canadian Entities
|
44.7
|
|
|
6.9
|
|
|
—
|
|
|
—
|
|
|
51.6
|
|
|||||
Other current assets
|
16.4
|
|
|
7.5
|
|
|
0.5
|
|
|
—
|
|
|
24.4
|
|
|||||
TOTAL CURRENT ASSETS
|
1,014.5
|
|
|
384.5
|
|
|
146.3
|
|
|
(0.7
|
)
|
|
1,544.6
|
|
|||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
17.5
|
|
|
959.0
|
|
|
57.3
|
|
|
—
|
|
|
1,033.8
|
|
|||||
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits for property, plant and equipment
|
—
|
|
|
1.3
|
|
|
16.5
|
|
|
—
|
|
|
17.8
|
|
|||||
Income tax receivable
|
235.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235.3
|
|
|||||
Non-current assets of discontinued operations
|
—
|
|
|
—
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
|||||
Investment in subsidiaries
|
1,024.3
|
|
|
29.9
|
|
|
—
|
|
|
(1,054.2
|
)
|
|
—
|
|
|||||
Long-term intercompany notes
|
—
|
|
|
—
|
|
|
242.0
|
|
|
(242.0
|
)
|
|
—
|
|
|||||
Other non-current assets
|
7.8
|
|
|
91.7
|
|
|
2.1
|
|
|
—
|
|
|
101.6
|
|
|||||
TOTAL OTHER ASSETS
|
1,267.4
|
|
|
122.9
|
|
|
280.9
|
|
|
(1,296.2
|
)
|
|
375.0
|
|
|||||
TOTAL ASSETS
|
$
|
2,299.4
|
|
|
$
|
1,466.4
|
|
|
$
|
484.5
|
|
|
$
|
(1,296.9
|
)
|
|
$
|
2,953.4
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
7.1
|
|
|
$
|
89.7
|
|
|
$
|
3.4
|
|
|
$
|
(0.7
|
)
|
|
$
|
99.5
|
|
Accrued expenses
|
19.0
|
|
|
59.9
|
|
|
0.2
|
|
|
—
|
|
|
79.1
|
|
|||||
Accrued interest
|
31.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31.4
|
|
|||||
Contingent claims
|
55.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55.6
|
|
|||||
Partnership distribution payable
|
—
|
|
|
44.2
|
|
|
—
|
|
|
—
|
|
|
44.2
|
|
|||||
Current liabilities of discontinued operations
|
—
|
|
|
—
|
|
|
75.0
|
|
|
—
|
|
|
75.0
|
|
|||||
Other current liabilities
|
2.1
|
|
|
63.5
|
|
|
1.8
|
|
|
—
|
|
|
67.4
|
|
|||||
TOTAL CURRENT LIABILITIES
|
115.2
|
|
|
257.3
|
|
|
80.4
|
|
|
(0.7
|
)
|
|
452.2
|
|
|||||
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES
|
66.4
|
|
|
430.6
|
|
|
(239.3
|
)
|
|
—
|
|
|
257.7
|
|
|||||
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
|
—
|
|
|
140.6
|
|
|
27.1
|
|
|
—
|
|
|
167.7
|
|
|||||
LONG-TERM DEBT
|
2,304.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,304.2
|
|
|||||
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
52.2
|
|
|
—
|
|
|
52.2
|
|
|||||
LONG-TERM INTERCOMPANY NOTES
|
242.0
|
|
|
—
|
|
|
—
|
|
|
(242.0
|
)
|
|
—
|
|
|||||
OTHER LIABILITIES
|
15.7
|
|
|
147.2
|
|
|
0.6
|
|
|
—
|
|
|
163.5
|
|
|||||
TOTAL LIABILITIES
|
2,743.5
|
|
|
975.7
|
|
|
(79.0
|
)
|
|
(242.7
|
)
|
|
3,397.5
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
TOTAL CLIFFS SHAREHOLDERS' DEFICIT
|
(444.1
|
)
|
|
490.7
|
|
|
563.3
|
|
|
(1,054.2
|
)
|
|
(444.3
|
)
|
|||||
NONCONTROLLING INTEREST
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||||
TOTAL DEFICIT
|
(444.1
|
)
|
|
490.7
|
|
|
563.5
|
|
|
(1,054.2
|
)
|
|
(444.1
|
)
|
|||||
TOTAL LIABILITIES AND DEFICIT
|
$
|
2,299.4
|
|
|
$
|
1,466.4
|
|
|
$
|
484.5
|
|
|
$
|
(1,296.9
|
)
|
|
$
|
2,953.4
|
|
Unaudited Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the Six Months Ended June 30, 2018
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided (used) by operating activities
|
$
|
(82.1
|
)
|
|
$
|
86.8
|
|
|
$
|
(54.0
|
)
|
|
$
|
—
|
|
|
$
|
(49.3
|
)
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property, plant and equipment
|
(0.3
|
)
|
|
(24.9
|
)
|
|
(16.9
|
)
|
|
—
|
|
|
(42.1
|
)
|
|||||
Deposits for property, plant and equipment
|
—
|
|
|
(3.6
|
)
|
|
(68.7
|
)
|
|
—
|
|
|
(72.3
|
)
|
|||||
Intercompany investing
|
(35.2
|
)
|
|
(5.5
|
)
|
|
14.6
|
|
|
26.1
|
|
|
—
|
|
|||||
Proceeds on sale of assets
|
—
|
|
|
0.4
|
|
|
14.2
|
|
|
—
|
|
|
14.6
|
|
|||||
Net cash used by investing activities
|
(35.5
|
)
|
|
(33.6
|
)
|
|
(56.8
|
)
|
|
26.1
|
|
|
(99.8
|
)
|
|||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||||
Repurchase of debt
|
(15.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.3
|
)
|
|||||
Intercompany financing
|
(14.6
|
)
|
|
(52.7
|
)
|
|
93.4
|
|
|
(26.1
|
)
|
|
—
|
|
|||||
Other financing activities
|
(1.5
|
)
|
|
(1.0
|
)
|
|
(6.4
|
)
|
|
—
|
|
|
(8.9
|
)
|
|||||
Net cash used by financing activities
|
(32.9
|
)
|
|
(53.7
|
)
|
|
87.0
|
|
|
(26.1
|
)
|
|
(25.7
|
)
|
|||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|||||
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
|
(150.5
|
)
|
|
(0.5
|
)
|
|
(24.8
|
)
|
|
—
|
|
|
(175.8
|
)
|
|||||
LESS: INCREASE IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(150.5
|
)
|
|
(0.5
|
)
|
|
(24.8
|
)
|
|
—
|
|
|
(175.8
|
)
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
948.9
|
|
|
2.1
|
|
|
27.3
|
|
|
—
|
|
|
978.3
|
|
|||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
798.4
|
|
|
$
|
1.6
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
802.5
|
|
Unaudited Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the Six Months Ended June 30, 2017
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided (used) by operating activities
|
$
|
(128.8
|
)
|
|
$
|
106.3
|
|
|
$
|
90.3
|
|
|
$
|
—
|
|
|
$
|
67.8
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property, plant and equipment
|
(0.8
|
)
|
|
(42.7
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
(44.3
|
)
|
|||||
Deposits for property, plant and equipment
|
—
|
|
|
(5.1
|
)
|
|
—
|
|
|
—
|
|
|
(5.1
|
)
|
|||||
Intercompany investing
|
43.5
|
|
|
(1.1
|
)
|
|
(45.0
|
)
|
|
2.6
|
|
|
—
|
|
|||||
Proceeds on sales of assets
|
—
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
Net cash provided (used) by investing activities
|
42.7
|
|
|
(47.8
|
)
|
|
(45.8
|
)
|
|
2.6
|
|
|
(48.3
|
)
|
|||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net proceeds from issuance of common shares
|
661.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
661.3
|
|
|||||
Proceeds from issuance of debt
|
500.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500.0
|
|
|||||
Debt issuance costs
|
(8.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.5
|
)
|
|||||
Repurchase of debt
|
(1,154.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,154.0
|
)
|
|||||
Distributions of partnership equity
|
—
|
|
|
(8.7
|
)
|
|
—
|
|
|
—
|
|
|
(8.7
|
)
|
|||||
Intercompany financing
|
45.0
|
|
|
(44.3
|
)
|
|
1.9
|
|
|
(2.6
|
)
|
|
—
|
|
|||||
Other financing activities
|
(0.6
|
)
|
|
(5.0
|
)
|
|
(8.3
|
)
|
|
—
|
|
|
(13.9
|
)
|
|||||
Net cash used by financing activities
|
43.2
|
|
|
(58.0
|
)
|
|
(6.4
|
)
|
|
(2.6
|
)
|
|
(23.8
|
)
|
|||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
2.4
|
|
|||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
|
(42.9
|
)
|
|
0.5
|
|
|
40.5
|
|
|
—
|
|
|
(1.9
|
)
|
|||||
LESS: INCREASE IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
40.5
|
|
|
—
|
|
|
40.5
|
|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(42.9
|
)
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
283.4
|
|
|
2.5
|
|
|
26.9
|
|
|
—
|
|
|
312.8
|
|
|||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
240.5
|
|
|
$
|
3.0
|
|
|
$
|
26.9
|
|
|
$
|
—
|
|
|
$
|
270.4
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
(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
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
|
|
|
|||||||||||||||||||
Revenues from product sales and services
|
|
$
|
714.3
|
|
|
$
|
471.3
|
|
|
$
|
94.5
|
|
|
$
|
160.6
|
|
|
$
|
—
|
|
|
$
|
(12.1
|
)
|
|
$
|
243.0
|
|
Cost of goods sold and operating expenses
|
|
(429.8
|
)
|
|
(326.6
|
)
|
|
(11.9
|
)
|
|
(104.1
|
)
|
|
0.7
|
|
|
12.1
|
|
|
(103.2
|
)
|
|||||||
Sales margin
|
|
$
|
284.5
|
|
|
$
|
144.7
|
|
|
$
|
82.6
|
|
|
$
|
56.5
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
139.8
|
|
|
|
Three Months Ended
June 30, |
|
|
|
|
|||||||||
Per Ton Information
|
|
2018
|
|
2017
|
|
Difference
|
|
Percent change
|
|||||||
Realized product revenue rate
1
|
|
$
|
112.60
|
|
|
$
|
96.75
|
|
|
$
|
15.85
|
|
|
16.4
|
%
|
Cash cost of goods sold and operating expense rate
1,2
|
|
62.32
|
|
|
59.30
|
|
|
3.02
|
|
|
5.1
|
%
|
|||
Depreciation, depletion & amortization
|
|
2.61
|
|
|
3.87
|
|
|
(1.26
|
)
|
|
(32.6
|
)%
|
|||
Total cost of goods sold and operating expenses rate
|
|
64.93
|
|
|
63.17
|
|
|
1.76
|
|
|
2.8
|
%
|
|||
Sales margin
|
|
$
|
47.67
|
|
|
$
|
33.58
|
|
|
$
|
14.09
|
|
|
42.0
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Sales tons
3
(In thousands)
|
|
5,968
|
|
|
4,310
|
|
|
|
|
|
|||||
Production tons
3
(In thousands)
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
6,970
|
|
|
6,491
|
|
|
|
|
|
|||||
Cliffs’ share of total
|
|
5,512
|
|
|
4,691
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
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. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
|||||||||||||||
3
Tons are long tons.
|
•
|
Higher sales volume of
1.7 million
long tons, which resulted in increased revenue of
$161 million
. This is predominantly due to:
|
◦
|
The adoption of Topic 606 resulted in an increase of 0.9 million long tons during the three months ended June 30, 2018 by adding a third shipping month as a result of the timing of sales recognition compared to the prior-year period, which, under the previous accounting guidance, had two shipping months; and
|
◦
|
Increased demand from two customers resulting in two additional contracts that started during the current year, providing additional sales volume of 0.6 million long tons, compared to the prior-year period.
|
•
|
An increase in the average year-to-date realized product revenue rate of
$16
per long ton or
16.4%
during the three months ended
June 30, 2018
, compared to the same period in the previous year, which resulted in an increase of
$95 million
. This is predominantly due to:
|
◦
|
An increase in the estimated average annual daily market price for hot-rolled coil steel positively affected the realized revenue rate for current-year sales. Additionally, the increase in the estimated average annual daily market price for hot-rolled coil steel positively impacted supplemental revenue associated with prior-year period sales tons that will be consumed during 2018 and ultimately priced at the final full-year 2018 rate. These increases affected the realized revenue rate by $15 per long ton or $90 million during the second quarter of 2018; and
|
◦
|
Higher pellet premiums, which positively affected the realized revenue rate by $6 per long ton or $37 million.
|
◦
|
These increases were offset partially by a lower full-year estimated Platts 62% Price as of June 30, 2018, compared to the prior full-year estimated Platts 62% Price, which negatively affected the realized revenue rate by $4 per long ton or $23 million; and
|
◦
|
Higher index freight rates, a component in some of our contract pricing formulas, which negatively affected the realized revenue rate by $2 per long ton or $13 million.
|
|
|
Six Months Ended
June 30, |
|
|
|
|
|||||||||
Per Ton Information
|
|
2018
|
|
2017
|
|
Difference
|
|
Percent change
|
|||||||
Realized product revenue rate
1
|
|
$
|
110.99
|
|
|
$
|
89.43
|
|
|
$
|
21.56
|
|
|
24.1
|
%
|
Cash cost of goods sold and operating expense rate
1,2
|
|
61.20
|
|
|
58.90
|
|
|
2.30
|
|
|
3.9
|
%
|
|||
Depreciation, depletion & amortization
|
|
4.14
|
|
|
4.46
|
|
|
(0.32
|
)
|
|
(7.2
|
)%
|
|||
Total cost of goods sold and operating expenses rate
|
|
65.34
|
|
|
63.36
|
|
|
1.98
|
|
|
3.1
|
%
|
|||
Sales margin
|
|
$
|
45.65
|
|
|
$
|
26.07
|
|
|
$
|
19.58
|
|
|
75.1
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Sales tons
3
(In thousands)
|
|
7,579
|
|
|
7,428
|
|
|
|
|
|
|||||
Production tons
3
(In thousands)
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
12,860
|
|
|
12,305
|
|
|
|
|
|
|||||
Cliffs’ share of total
|
|
10,012
|
|
|
8,968
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
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, where applicable.
|
|||||||||||||||
2
Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. Refer to "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
$22
per long ton or
24.1%
during the six months ended June 30, 2018, compared to the same period in the previous year, which resulted in an increase of
$163 million
. This is predominantly due to:
|
◦
|
An increase in the estimated average annual daily market price for hot-rolled coil steel, which positively affected the realized revenue rate for current-year sales. Additionally, the increase in the estimated average annual daily market price for hot-rolled coil steel positively impacted supplemental revenue associated with prior-period sales tons that will be consumed during 2018 and ultimately priced at the final full-year 2018 rate. These increases affected the realized revenue rate by $15 per long ton or $114 million during the first six months of 2018; and
|
◦
|
Higher pellet premiums, which positively affected the realized revenue rate by $6 per long ton or $42 million; and
|
◦
|
Changes in customer and contract mix, which positively affected the realized revenue rate by $5 per long ton or $37 million.
|
◦
|
These increases were offset partially by a lower full-year estimated Platts 62% Price as of June 30, 2018, compared to the prior full-year estimated Platts 62% Price, which negatively affected the realized revenue rate by $3 per long ton or $20 million; and
|
◦
|
An increase in index freight rates, a component in some of our contract pricing formulas, which negatively affected the realized revenue rate by $2 per long ton or $17 million.
|
•
|
Unfavorable change in the full-year standard cost driven by higher spending on repairs, maintenance and supply and commodity usage of $10 million or $1 per long ton, higher employment-related and profit sharing of $8 million or $1 per long ton and increased royalties of $7 million or $1 per long ton;
|
•
|
These increases were offset partially by a favorable impact to the full-year standard cost as a result of an expected LIFO layer liquidation of $9 million or $1 per long ton; and
|
•
|
An increase in sales volume of
0.2 million
long tons, which resulted in increased costs of
$10 million
period-over-period.
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net Income
|
$
|
165.1
|
|
|
$
|
30.1
|
|
|
$
|
80.8
|
|
|
$
|
0.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(32.3
|
)
|
|
(31.4
|
)
|
|
(65.8
|
)
|
|
(74.2
|
)
|
||||
Income tax benefit (expense)
|
1.8
|
|
|
(2.6
|
)
|
|
(13.9
|
)
|
|
(0.8
|
)
|
||||
Depreciation, depletion and amortization
|
(25.5
|
)
|
|
(21.6
|
)
|
|
(49.4
|
)
|
|
(44.8
|
)
|
||||
EBITDA
|
$
|
221.1
|
|
|
$
|
85.7
|
|
|
$
|
209.9
|
|
|
$
|
120.1
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Impact of discontinued operations
|
$
|
(54.7
|
)
|
|
$
|
(45.4
|
)
|
|
$
|
(117.8
|
)
|
|
$
|
6.5
|
|
Foreign exchange remeasurement
|
(0.1
|
)
|
|
0.5
|
|
|
(0.5
|
)
|
|
15.3
|
|
||||
Gain (loss) on extinguishment of debt
|
0.2
|
|
|
(4.9
|
)
|
|
0.2
|
|
|
(76.8
|
)
|
||||
Adjusted EBITDA
|
$
|
275.7
|
|
|
$
|
135.5
|
|
|
$
|
328.0
|
|
|
$
|
175.1
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
296.0
|
|
|
$
|
155.0
|
|
|
$
|
368.5
|
|
|
$
|
212.9
|
|
Corporate and Other
|
(74.9
|
)
|
|
(69.3
|
)
|
|
(158.6
|
)
|
|
(92.8
|
)
|
||||
Total EBITDA
|
$
|
221.1
|
|
|
$
|
85.7
|
|
|
$
|
209.9
|
|
|
$
|
120.1
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
U.S. Iron Ore
|
$
|
301.3
|
|
|
$
|
161.5
|
|
|
$
|
378.4
|
|
|
$
|
225.6
|
|
Corporate and Other
|
(25.6
|
)
|
|
(26.0
|
)
|
|
(50.4
|
)
|
|
(50.5
|
)
|
||||
Total Adjusted EBITDA
|
$
|
275.7
|
|
|
$
|
135.5
|
|
|
$
|
328.0
|
|
|
$
|
175.1
|
|
|
|
2018 Outlook Summary
|
Per Long Ton Information
|
U.S. Iron Ore
|
|
Revenues from product sales and services
1
|
$105 - $110
|
|
|
|
|
Cost of goods sold and operating expense rate
|
$68 - $73
|
|
Less:
|
|
|
Freight expense rate
2
|
$7
|
|
Depreciation, depletion & amortization rate
|
$3
|
|
Cash cost of goods sold and operating expense rate
2
|
$58 - $63
|
|
|
|
|
Sales volume (million long tons)
|
21.0
|
|
Production volume (million long tons)
|
20.0
|
|
1
This expectation is based on the assumption that iron ore prices, steel prices, and pellet premiums will average for the remainder of 2018 their respective year-to-date averages.
|
||
2
Freight has an offsetting amount in revenue and has no impact on sales margin.
|
•
|
The Toledo HBI Project spend expectation was reduced by $25 million to $200 million due to further development and refined timing of the project spending plan;
|
•
|
The sustaining capital expectation was reduced by $10 million to $75 million; and
|
•
|
The Northshore Mine upgrade spend expectation of $50 million is being maintained.
|
•
|
uncertainty and weaknesses in global economic conditions, including downward pressure on prices caused by oversupply or imported products, reduced market demand and risks related to U.S. government actions with respect to Section 232 of the Trade Expansion Act (as amended by the Trade Act of 1974), the North American Free Trade Agreement and/or other trade agreements, treaties or policies;
|
•
|
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 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;
|
•
|
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;
|
•
|
risks related to former international operations, including our ability to successfully conclude the CCAA process in Canada and to close our Asia Pacific business in a manner that minimizes cash outflows and associated liabilities, including, among other things, our ability to successfully complete the sale of the assets of our Asia Pacific Iron Ore business and our ability to reach negotiated settlements with other third parties in Australia;
|
•
|
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 maintain appropriate relations with unions and employees;
|
•
|
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 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;
|
•
|
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;
|
•
|
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; and
|
•
|
the potential existence of significant deficiencies or material weakness in our internal control over financial reporting.
|
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, 2018
|
|
1,293
|
|
|
$
|
6.96
|
|
|
—
|
|
$
|
—
|
|
May 1 - 31, 2018
|
|
6,070
|
|
|
$
|
8.23
|
|
|
—
|
|
$
|
—
|
|
June 1 - 30, 2018
|
|
84,078
|
|
|
$
|
7.21
|
|
|
—
|
|
$
|
—
|
|
|
|
91,441
|
|
|
$
|
7.27
|
|
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|||||
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 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Exhibit
|
|
*Form of Restricted Shares Agreement for Nonemployee Directors (filed herewith)
|
|
|
*Form of Deferred Shares Agreement for Nonemployee Directors (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 24, 2018 (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 24, 2018 (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 Cleveland-Cliffs Inc., as of July 24, 2018 (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 of Cleveland-Cliffs Inc., as of July 24, 2018 (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
|
|
|
|
CLEVELAND-CLIFFS INC.
|
||||
|
|
|
|
|
|||
|
|
|
By:
|
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/s/ R. Christopher Cebula
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Name:
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R. Christopher Cebula
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Title:
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Vice President, Corporate Controller & Chief Accounting Officer
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Date:
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7/24/2018
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Participant:
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XXXXXX
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Date of Grant:
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XXXXXX
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Participant:
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XXXXX
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Date of Grant:
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XXXXX
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1.
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I have reviewed this quarterly report on Form 10-Q of Cleveland-Cliffs Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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7/24/2018
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By:
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/s/ Lourenco Goncalves
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Lourenco Goncalves
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Chairman, President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Cleveland-Cliffs Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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7/24/2018
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By:
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/s/ Timothy K. Flanagan
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Timothy K. Flanagan
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Executive Vice President, Chief Financial Officer
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(1)
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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
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(2)
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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.
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Date:
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7/24/2018
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By:
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/s/ Lourenco Goncalves
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Lourenco Goncalves
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Chairman, President and Chief Executive Officer
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(1)
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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
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(2)
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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.
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Date:
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7/24/2018
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By:
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/s/ Timothy K. Flanagan
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Timothy K. Flanagan
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Executive Vice President, Chief Financial Officer
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(A)
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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;
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(B)
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The total number of orders issued under section 104(b) of the FMSH Act (30 U.S.C. 814(b));
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(C)
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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));
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(D)
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The total number of imminent danger orders issued under section 107(a) of the FMSH Act (30 U.S.C. 817(a));
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(E)
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The total dollar value of proposed assessments from MSHA under the FMSH Act (30 U.S.C. 801 et seq.);
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(F)
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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;
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(G)
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Legal actions initiated before the Federal Mine Safety and Health Review Commission involving such coal or other mine during the period; and
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(H)
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Legal actions resolved before the Federal Mine Safety and Health Review Commission involving such coal or other mine during the period.
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Three Months Ended June 30, 2018
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(A)
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(B)
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(C)
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(D)
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(E)
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(F)
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(G)
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(H)
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Mine Name/ MSHA ID No.
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Operation
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Section 104 S&S Citations
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Section 104(b) Orders
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Section 104(d) Citations & Orders
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Section 107(a) Orders
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Total Dollar Value of MSHA Proposed Assessments (1)
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Legal Actions Pending as of Last Day of Period
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Legal Actions Initiated During Period
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Legal Actions Resolved During Period
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Tilden / 2000422
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Iron Ore
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5
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—
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—
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—
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$
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36,038
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9
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(2)
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1
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1
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Empire / 2001012
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Iron Ore
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—
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—
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—
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—
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—
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—
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—
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—
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Northshore Plant / 2100831
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Iron Ore
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6
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—
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—
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—
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$
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40,009
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8
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(3)
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2
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—
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Northshore Mine / 2100209
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Iron Ore
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—
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—
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—
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—
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—
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—
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—
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—
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Hibbing / 2101600
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Iron Ore
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14
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—
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2
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—
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$
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12,261
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3
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(4)
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2
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1
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United Taconite Plant / 2103404
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Iron Ore
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1
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—
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—
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—
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$
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6,079
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—
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—
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—
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United Taconite Mine / 2103403
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Iron Ore
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—
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—
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—
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—
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—
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—
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—
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—
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(1)
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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, 2018
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(2)
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This number consists of 8 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 complaints of discharge, discrimination, or interference referenced in Subpart E of FMSH Act's procedural rules.
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(3)
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This number consists of 8 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules.
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(4)
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This number consists of 3 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules.
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