QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
TABLE OF CONTENTS | |||||
Page Number | |||||
DEFINITIONS | |||||
PART I - FINANCIAL INFORMATION | |||||
Item 1. | Financial Statements | ||||
Statements of Unaudited Condensed Consolidated Financial Position as of March 31, 2020 and December 31, 2019 | |||||
Statements of Unaudited Condensed Consolidated Operations for the Three Months Ended March 31, 2020 and 2019 | |||||
Statements of Unaudited Condensed Consolidated Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019 | |||||
Statements of Unaudited Condensed Consolidated Cash Flows for the Three Months Ended March 31, 2020 and 2019 | |||||
Statements of Unaudited Condensed Consolidated Changes in Equity for the Three Months Ended March 31, 2020 and 2019 | |||||
Notes to Unaudited Condensed Consolidated Financial Statements | |||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||
Item 4. | Controls and Procedures | ||||
PART II - OTHER INFORMATION | |||||
Item 1. | Legal Proceedings | ||||
Item 1A. | Risk Factors | ||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||
Item 4. | Mine Safety Disclosures | ||||
Item 5. | Other Information | ||||
Item 6. | Exhibits | ||||
Signatures | |||||
Abbreviation or acronym | Term | |
A&R 2015 Equity Plan | Cliffs Natural Resources Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan | |
ABL Facility | Asset-Based Revolving Credit Agreement, by and among Bank of America, N.A., as Agent, the Lenders that are parties thereto, as the Lenders, and Cleveland-Cliffs Inc., as Parent and a Borrower, dated as of March 13, 2020, as amended | |
Adjusted EBITDA | EBITDA excluding certain items such as EBITDA of noncontrolling interests, impacts of discontinued operations, extinguishment of debt, severance, acquisition costs, amortization of inventory step-up and intersegment corporate allocations of selling, general and administrative costs | |
AK Coal | AK Coal Resources, Inc., an indirect, wholly owned subsidiary of AK Steel, and related coal mining operations | |
AK Steel | AK Steel Holding Corporation and its consolidated subsidiaries, including AK Steel Corporation, its direct, wholly owned subsidiary, collectively, unless stated otherwise or the context indicates otherwise | |
AK Tube | AK Tube LLC, an indirect, wholly owned subsidiary of AK Steel | |
AMT | Alternative Minimum Tax | |
AOCI | Accumulated Other Comprehensive Income | |
ArcelorMittal USA | ArcelorMittal USA LLC (including many of its United States affiliates, subsidiaries and representatives. References to ArcelorMittal USA comprise all such relationships unless a specific ArcelorMittal USA entity is referenced) | |
ASC | Accounting Standards Codification | |
Atlantic Basin pellet premium | Platts Atlantic Basin Blast Furnace 65% Fe pellet premium | |
Board | The Board of Directors of Cleveland-Cliffs Inc. | |
CARES Act | Coronavirus Aid, Relief, and Economic Security Act | |
CECL | Current Expected Credit Losses | |
CERCLA | Comprehensive Environmental Response, Compensation and Liability Act | |
Compensation Committee | Compensation and Organization Committee of the Board | |
COVID-19 | A novel strain of coronavirus that the World Health Organization declared a global pandemic in March 2020 | |
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act | |
DR-grade | Direct Reduction-grade | |
DRI | Direct Reduced Iron | |
EAF | Electric Arc Furnace | |
EBITDA | Earnings before interest, taxes, depreciation and amortization | |
Empire | Empire Iron Mining Partnership | |
EPA | U.S. Environmental Protection Agency | |
ERISA | Employee Retirement Income Security Act of 1974, as amended | |
ERM | Enterprise Risk Management | |
Exchange Act | Securities Exchange Act of 1934, as amended | |
Fe | Iron | |
Former ABL Facility | Amended and Restated Syndicated Facility Agreement by and among Bank of America, N.A., as Administrative Agent, the Lenders that are parties thereto, as the Lenders, Cleveland-Cliffs Inc., as Parent and a Borrower, and the Subsidiaries of Parent party thereto, as Borrowers, dated as of March 30, 2015, as amended and restated as of February 28, 2018, and as further amended | |
GAAP | Accounting principles generally accepted in the United States | |
HBI | Hot briquetted iron | |
Hibbing | Hibbing Taconite Company, an unincorporated joint venture | |
Hot-rolled coil steel price | Estimated average annual daily market price for hot-rolled coil steel | |
IRBs | Industrial Revenue Bonds | |
LIBOR | London Interbank Offered Rate | |
LIFO | Last-in, first-out | |
Long ton | 2,240 pounds | |
Merger | The merger of Merger Sub with and into AK Steel, with AK Steel surviving the merger as a wholly owned subsidiary of Cliffs, subject to the terms and conditions set forth in the Merger Agreement, effective as of March 13, 2020 | |
Merger Agreement | Agreement and Plan of Merger, dated as of December 2, 2019, among Cliffs, AK Steel and Merger Sub | |
Merger Sub | Pepper Merger Sub Inc., a direct, wholly owned subsidiary of Cliffs prior to the Merger | |
Metric ton | 2,205 pounds | |
MMBtu | Million British Thermal Units | |
MSHA | U.S. Mine Safety and Health Administration | |
Net ton | 2,000 pounds | |
Northshore | Northshore Mining Company | |
OPEB | Other postretirement benefits | |
Platts 62% Price | Platts IODEX 62% Fe Fines cost and freight North China | |
PPI | Producer Price Indices | |
Precision Partners | PPHC Holdings, LLC, an indirect, wholly owned subsidiary of AK Steel | |
RCRA | Resource Conservation and Recovery Act | |
SEC | U.S. Securities and Exchange Commission |
Abbreviation or acronym | Term | |
Section 232 | Section 232 of the Trade Expansion Act of 1962, as amended | |
Securities Act | Securities Act of 1933, as amended | |
SunCoke Middletown | Middletown Coke Company, LLC, a subsidiary of SunCoke Energy, Inc. | |
Tilden | Tilden Mining Company L.C. | |
Topic 805 | ASC Topic 805, Business Combinations | |
Topic 815 | ASC Topic 815, Derivatives and Hedging | |
TSR | Total shareholder return | |
United Taconite | United Taconite LLC | |
U.S. | United States of America | |
U.S. Steel | Ontario Hibbing Company, a subsidiary of United States Steel Corporation and a participant in Hibbing | |
USMCA | United States-Mexico-Canada Agreement | |
USW | United Steelworkers | |
VIE | Variable Interest Entity |
Item 1. | Financial Statements |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net | |||||||
Inventories | |||||||
Income tax receivable, current | |||||||
Other current assets | |||||||
Total current assets | |||||||
Non-current assets: | |||||||
Property, plant and equipment, net | |||||||
Goodwill | |||||||
Intangible assets, net | |||||||
Income tax receivable, non-current | |||||||
Deferred income taxes | |||||||
Right-of-use asset, operating lease | |||||||
Other non-current assets | |||||||
TOTAL ASSETS | $ | $ | |||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued liabilities | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Non-current liabilities: | |||||||
Long-term debt | |||||||
Operating lease liability, non-current | |||||||
Intangible liability, net | |||||||
Pension and OPEB liabilities | |||||||
Asset retirement obligations | |||||||
Other non-current liabilities | |||||||
TOTAL LIABILITIES | |||||||
Commitments and contingencies (See Note 20) | |||||||
Equity: | |||||||
Common shares - par value $0.125 per share | |||||||
Authorized - 600,000,000 shares (2019 - 600,000,000 shares); | |||||||
Issued - 428,645,866 shares (2019 - 301,886,794 shares); | |||||||
Outstanding - 398,587,083 shares (2019 - 270,084,005 shares) | |||||||
Capital in excess of par value of shares | |||||||
Retained deficit | ( | ) | ( | ) | |||
Cost of 30,058,783 common shares in treasury (2019 - 31,802,789 shares) | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total Cliffs shareholders' equity | |||||||
Noncontrolling interest | |||||||
TOTAL EQUITY | |||||||
TOTAL LIABILITIES AND EQUITY | $ | $ |
(In Millions, Except Per Share Amounts) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues | $ | $ | |||||
Realization of deferred revenue | |||||||
Operating costs: | |||||||
Cost of goods sold | ( | ) | ( | ) | |||
Selling, general and administrative expenses | ( | ) | ( | ) | |||
Acquisition-related costs | ( | ) | |||||
Miscellaneous – net | ( | ) | ( | ) | |||
Total operating costs | ( | ) | ( | ) | |||
Operating loss | ( | ) | ( | ) | |||
Other income (expense): | |||||||
Interest expense, net | ( | ) | ( | ) | |||
Other non-operating income | |||||||
Total other expense | ( | ) | ( | ) | |||
Loss from continuing operations before income taxes | ( | ) | ( | ) | |||
Income tax benefit | |||||||
Loss from continuing operations | ( | ) | ( | ) | |||
Income from discontinued operations, net of tax | |||||||
Net loss | ( | ) | ( | ) | |||
Income attributable to noncontrolling interest | ( | ) | |||||
Net loss attributable to Cliffs shareholders | $ | ( | ) | $ | ( | ) | |
Loss per common share attributable to Cliffs shareholders - basic | |||||||
Continuing operations | $ | ( | ) | $ | ( | ) | |
Discontinued operations | |||||||
$ | ( | ) | $ | ( | ) | ||
Loss per common share attributable to Cliffs shareholders - diluted | |||||||
Continuing operations | $ | ( | ) | $ | ( | ) | |
Discontinued operations | |||||||
$ | ( | ) | $ | ( | ) | ||
Average number of shares (in thousands) | |||||||
Basic | |||||||
Diluted |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Other comprehensive income (loss): | |||||||
Changes in pension and OPEB, net of tax | |||||||
Changes in foreign currency translation | ( | ) | |||||
Changes in derivative financial instruments, net of tax | ( | ) | |||||
Total other comprehensive income | |||||||
Comprehensive loss | ( | ) | ( | ) | |||
Comprehensive income attributable to noncontrolling interests | ( | ) | |||||
Comprehensive loss attributable to Cliffs shareholders | $ | ( | ) | $ | ( | ) |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
OPERATING ACTIVITIES | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net loss to net cash used by operating activities: | |||||||
Depreciation, depletion and amortization | |||||||
Deferred income taxes | ( | ) | ( | ) | |||
Loss (gain) on derivatives | ( | ) | |||||
Other | ( | ) | |||||
Changes in operating assets and liabilities, net of business combination: | |||||||
Receivables and other assets | |||||||
Inventories | ( | ) | ( | ) | |||
Payables, accrued expenses and other liabilities | ( | ) | ( | ) | |||
Net cash used by operating activities | ( | ) | ( | ) | |||
INVESTING ACTIVITIES | |||||||
Purchase of property, plant and equipment | ( | ) | ( | ) | |||
Acquisition of AK Steel, net of cash acquired | ( | ) | |||||
Other investing activities | ( | ) | |||||
Net cash used by investing activities | ( | ) | ( | ) | |||
FINANCING ACTIVITIES | |||||||
Repurchase of common shares | ( | ) | |||||
Dividends paid | ( | ) | ( | ) | |||
Proceeds from issuance of debt | |||||||
Debt issuance costs | ( | ) | |||||
Repurchase of debt | ( | ) | ( | ) | |||
Borrowings under credit facilities | |||||||
Other financing activities | ( | ) | ( | ) | |||
Net cash provided (used) by financing activities | ( | ) | |||||
Decrease in cash and cash equivalents, including cash classified within other current assets related to discontinued operations | ( | ) | ( | ) | |||
Less: increase (decrease) in cash and cash equivalents from discontinued operations, classified within other current assets | ( | ) | |||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | |||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ |
(In Millions) | ||||||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Deficit | Common Shares in Treasury | AOCI (Loss) | Non-controlling Interests | Total | |||||||||||||||||||||||
December 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
Stock and other incentive plans | — | ( | ) | — | — | — | ||||||||||||||||||||||||
Acquisition of AK Steel | — | — | — | |||||||||||||||||||||||||||
Common stock dividends ($0.06 per share) | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||
March 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ |
(In Millions) | ||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Deficit | Common Shares in Treasury | AOCI (Loss) | Total | ||||||||||||||||||||
December 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
Comprehensive income (loss) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Stock and other incentive plans | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
Common stock repurchases | ( | ) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
March 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(In Millions) | |||||||||||||||
Deferred Revenue (Current) | Deferred Revenue (Long-Term) | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Opening balance as of January 1 | $ | $ | $ | $ | |||||||||||
Decrease | ( | ) | ( | ) | ( | ) | |||||||||
Closing balance as of March 31 | $ | $ | $ | $ |
Asset Class | Basis | Life | ||
Land, land improvements and mineral rights | ||||
Land and mineral rights | Units of production | Life of mine | ||
Land improvements | Straight line | 20 to 45 years | ||
Buildings | Straight line | 40 to 45 years | ||
Mining and Pelletizing equipment | Straight line/Double declining balance | 3 to 20 years | ||
Steel and Manufacturing equipment | Straight line/Double declining balance | 3 to 20 years |
Type | Basis | Useful Life | ||
Intangible assets, net | ||||
Customer relationships | Straight line | |||
Developed technology | Straight line | |||
Trade names and trademarks | Straight line | |||
Mining permits | Straight line | Life of mine | ||
Intangible liability, net | ||||
Above-market supply contract | Straight line |
Investee | Segment Reported Within | Equity Ownership Percentage | ||
Combined Metals of Chicago, LLC | Steel and Manufacturing | |||
Hibbing Taconite Company | Mining and Pelletizing | |||
Spartan Steel Coating, LLC | Steel and Manufacturing |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Steel and Manufacturing: | |||||||
Automotive | $ | $ | |||||
Infrastructure and manufacturing | |||||||
Distributors and converters | |||||||
Total Steel and Manufacturing | |||||||
Mining and Pelletizing: | |||||||
Steel producers1 | |||||||
Total revenues | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Steel and Manufacturing: | |||||||
Carbon steel | $ | $ | |||||
Stainless and electrical steel | |||||||
Tubular products, components and other | |||||||
Total Steel and Manufacturing | |||||||
Mining and Pelletizing: | |||||||
Iron ore1 | |||||||
Freight | |||||||
Total Mining and Pelletizing | |||||||
Total revenues | $ | $ |
(In Millions) | |||||||
March 31, 2020 | March 31, 2019 | ||||||
Allowance for credit losses at beginning of period | $ | $ | |||||
Increase in allowance | |||||||
Allowance for credit losses at end of period | $ | $ |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Product inventories | |||||||
Finished and semi-finished goods | $ | $ | |||||
Work-in-process | |||||||
Raw materials | |||||||
Total product inventories | |||||||
Manufacturing supplies and critical spares | |||||||
Inventories | $ | $ |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Accrued employment costs | $ | $ | |||||
Accrued interest | |||||||
Accrued dividends | |||||||
Other | |||||||
Accrued liabilities | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Capital additions | $ | $ | |||||
Less: | |||||||
Non-cash accruals | ( | ) | ( | ) | |||
Right-of-use assets - finance leases | |||||||
Grants | ( | ) | |||||
Cash paid for capital expenditures including deposits | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Taxes paid on income | $ | $ | |||||
Income tax refunds | ( | ) | |||||
Interest paid on debt obligations net of capitalized interest1 |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Fair value of common shares issued for consideration for business combination | $ | $ | |||||
Fair value of equity awards assumed from AK Steel acquisition | |||||||
Dividends declared |
(In Millions, Except Per Share Amounts) | |||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ | ||
Fair value of replacement equity awards | |||
Fair value of AK Steel debt | |||
Total transaction consideration | $ |
(In Millions, Except Per Share Amounts) | |||
Number of shares of AK Steel common stock issued and outstanding | |||
Exchange ratio | |||
Shares of Cliffs common shares issued to AK Steel stockholders | |||
Price per share of Cliffs common shares | $ | ||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ |
(In Millions) | |||
Credit Facility | $ | ||
7.50% Senior Secured Notes due July 2023 | |||
Fair value of debt included in consideration | $ |
(In Millions) | |||
Cash and cash equivalents | $ | ||
Accounts receivable | |||
Inventories | |||
Other current assets | |||
Property, plant and equipment | |||
Intangible assets | |||
Right-of-use asset, operating lease | |||
Other non-current assets | |||
Accounts payable | ( | ) | |
Accrued liabilities | ( | ) | |
Other current liabilities | ( | ) | |
Long-term debt | ( | ) | |
Deferred income taxes | ( | ) | |
Operating lease liability, non-current | ( | ) | |
Intangible liability | ( | ) | |
Pension and OPEB liabilities | ( | ) | |
Asset retirement obligations | ( | ) | |
Other non-current liabilities | ( | ) | |
Net identifiable assets acquired | $ | ||
Goodwill | |||
Total net assets acquired | $ |
(In Millions) | Weighted Average Life (In Years) | ||||
Intangible assets: | |||||
Customer relationships | $ | ||||
Developed technology | |||||
Trade names and trademarks | |||||
Total identifiable intangible assets | $ | ||||
Intangible liability: | |||||
Above-market supply contract | $ | ( | ) |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues | $ | $ | |||||
Net loss attributable to Cliffs shareholders | $ | ( | ) | $ | ( | ) |
1. | The elimination of intercompany revenues between Cliffs and AK Steel of $ |
2. | The 2020 pro forma net income was adjusted to exclude $ |
3. | The elimination of nonrecurring transaction costs incurred by Cliffs and AK Steel in connection with the Merger of $ |
4. | Total other pro forma adjustments included income of $ |
5. | The income tax impact of pro forma transaction adjustments that affect Net loss attributable to Cliffs shareholders at a statutory rate of |
(In Millions, Except Sales Tons) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Sales volume (in thousands): | |||||||
Steel and Manufacturing consolidated sales (net tons) | |||||||
Mining and Pelletizing sales (long tons) | |||||||
Less: Intercompany sales (long tons) | ( | ) | |||||
Mining and Pelletizing consolidated sales (long tons) | |||||||
Revenues: | |||||||
Steel and Manufacturing consolidated revenues | $ | $ | |||||
Mining and Pelletizing1 | |||||||
Less: Intercompany revenues | ( | ) | |||||
Mining and Pelletizing consolidated revenues | |||||||
Revenues | $ | $ | |||||
Adjusted EBITDA: | |||||||
Steel and Manufacturing | $ | ( | ) | $ | ( | ) | |
Mining and Pelletizing | |||||||
Corporate and eliminations | ( | ) | ( | ) | |||
Total Adjusted EBITDA | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Less: | |||||||
Interest expense, net | ( | ) | ( | ) | |||
Income tax benefit | |||||||
Depreciation, depletion and amortization | ( | ) | ( | ) | |||
Total EBITDA | $ | ( | ) | $ | |||
Less: | |||||||
EBITDA of noncontrolling interests1 | $ | $ | |||||
Severance costs | ( | ) | ( | ) | |||
Acquisition costs | ( | ) | |||||
Amortization of inventory step-up | ( | ) | |||||
Gain (loss) on extinguishment of debt | ( | ) | |||||
Impact of discontinued operations | |||||||
Total Adjusted EBITDA | $ | $ |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets: | |||||||
Steel and Manufacturing | $ | $ | |||||
Mining and Pelletizing | |||||||
Total segment assets | |||||||
Corporate and Other (including discontinued operations) | |||||||
Total assets | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Capital additions1: | |||||||
Steel and Manufacturing | $ | $ | |||||
Mining and Pelletizing | |||||||
Corporate and Other (including discontinued operations) | |||||||
Total capital additions | $ | $ |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Land, land improvements and mineral rights | $ | $ | |||||
Buildings | |||||||
Mining and Pelletizing equipment | |||||||
Steel and Manufacturing equipment | |||||||
Other | |||||||
Construction-in-progress | |||||||
Total property, plant and equipment1 | |||||||
Allowance for depreciation and depletion | ( | ) | ( | ) | |||
Property, plant and equipment, net | $ | $ |
(In Millions) | |||||||||||||
Classification | Gross Amount | Accumulated Amortization | Net Amount | ||||||||||
As of March 31, 2020 | |||||||||||||
Intangible assets: | |||||||||||||
Customer relationships | Intangible assets, net | $ | $ | ( | ) | $ | |||||||
Developed technology | Intangible assets, net | ( | ) | ||||||||||
Trade names and trademarks | Intangible assets, net | ( | ) | ||||||||||
Mining permits | Intangible assets, net | ( | ) | ||||||||||
Total intangible assets | $ | $ | ( | ) | $ | ||||||||
Intangible liability: | |||||||||||||
Above-market supply contract | Intangible liability, net | $ | ( | ) | $ | $ | ( | ) | |||||
As of December 31, 2019 | |||||||||||||
Intangible assets: | |||||||||||||
Mining permits | Intangible assets, net | $ | $ | ( | ) | $ |
(In Millions) | ||||
Years ending December 31, | ||||
2020 (remaining period of the year) | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 |
(In Millions) | ||||
Years ending December 31, | ||||
2020 (remaining period of the year) | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 |
(In Millions) | ||||||||||||||||||||
March 31, 2020 | ||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Premiums (Discounts) | Total Debt | ||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||
4.875% 2024 Senior Secured Notes | Cliffs | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
6.75% 2026 Senior Secured Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
Senior Unsecured Notes: | ||||||||||||||||||||
7.625% 2021 AK Senior Notes | AK Steel | |||||||||||||||||||
7.50% 2023 AK Senior Notes | AK Steel | |||||||||||||||||||
6.375% 2025 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
6.375% 2025 AK Senior Notes | AK Steel | ( | ) | |||||||||||||||||
1.50% 2025 Convertible Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
5.75% 2025 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
7.00% 2027 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
7.00% 2027 AK Senior Notes | AK Steel | ( | ) | |||||||||||||||||
5.875% 2027 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
6.25% 2040 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
IRBs due 2020 to 2028 | AK Steel | Various | ||||||||||||||||||
ABL Facility | Cliffs2 | — | — | |||||||||||||||||
Total long-term debt | $ | |||||||||||||||||||
1 Unless otherwise noted, references in this column to "Cliffs" are to Cleveland-Cliffs Inc., and references to "AK Steel" are to AK Steel Corporation. | ||||||||||||||||||||
2 Refers to Cleveland-Cliffs Inc. as borrower under our ABL Facility. |
(In Millions) | ||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Discounts | Total Debt | ||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||
4.875% 2024 Senior Notes | Cliffs | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Senior Unsecured Notes: | ||||||||||||||||||||
1.50% 2025 Convertible Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
5.75% 2025 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
5.875% 2027 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
6.25% 2040 Senior Notes | Cliffs | ( | ) | ( | ) | |||||||||||||||
Former ABL Facility | Cliffs2 | N/A | N/A | N/A | ||||||||||||||||
Total long-term debt | $ | |||||||||||||||||||
1 Unless otherwise noted, references in this column to "Cliffs" are to Cleveland-Cliffs Inc. | ||||||||||||||||||||
2 Refers to Cleveland-Cliffs Inc. and certain of its subsidiaries as borrowers under our Former ABL Facility. |
Redemption Period | Redemption Price1 | Restricted Amount | |||
Prior to March 15, 2022 - using proceeds of equity issuance | % | Up to 35% of original aggregate principal | |||
Prior to March 15, 20222 | |||||
Beginning on March 15, 2022 | |||||
Beginning on March 15, 2023 | |||||
Beginning on March 15, 2024 | |||||
Beginning on March 15, 2025 and thereafter | |||||
1 Plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. | |||||
2 Plus a "make-whole" premium. |
Redemption Period | Redemption Price1 | Restricted Amount | |||
Prior to October 15, 2020 - using proceeds of equity issuance | % | Up to 35% of original aggregate principal | |||
Prior to October 15, 20202 | |||||
Beginning on October 15, 2020 | |||||
Beginning on October 15, 2021 | |||||
Beginning on October 15, 2022 and thereafter | |||||
1 Plus accrued and unpaid interest, if any, up to but excluding the redemption date. | |||||
2 Plus a "make-whole" premium. |
Redemption Period | Redemption Price1 | ||
Prior to March 15, 20222 | % | ||
Beginning on March 15, 2022 | |||
Beginning on March 15, 2023 | |||
Beginning on March 15, 2024 | |||
Beginning on March 15, 2025 and thereafter | |||
1 Plus accrued and unpaid interest, if any, up to but excluding the redemption date. | |||
2 Plus a "make-whole" premium. |
Redemption Period | Redemption Price1 | ||
Prior to July 15, 2020 | % | ||
Beginning on July 15, 2020 | |||
Beginning on July 15, 2021 and thereafter | |||
1 Plus accrued and unpaid interest, if any, up to but excluding the redemption date. |
Redemption Period | Redemption Price1 | ||
Prior to October 15, 20202 | % | ||
Beginning on October 15, 2020 | |||
Beginning on October 15, 2021 | |||
Beginning on October 15, 2022 and thereafter | |||
1 Plus accrued and unpaid interest, if any, up to but excluding the redemption date. | |||
2 Plus a "make-whole" premium. |
Redemption Period | Redemption Price1 | ||
Prior to March 15, 20222 | % | ||
Beginning on March 15, 2022 | |||
Beginning on March 15, 2023 | |||
Beginning on March 15, 2024 | |||
Beginning on March 15, 2025 and thereafter | |||
1 Plus accrued and unpaid interest, if any, up to but excluding the redemption date. | |||
2 Plus a "make-whole" premium. |
(In Millions) | ||||||||
Three Months Ended March 31, 2020 | ||||||||
Debt Instrument | Debt Extinguished | Gain on Extinguishment1 | ||||||
7.625% 2021 AK Senior Notes | $ | $ | ||||||
7.50% 2023 AK Senior Notes | ||||||||
$ | $ | |||||||
1 The gain on extinguishment relates to the March 27, 2020 purchases. |
(In Millions) | ||||||||
Three Months Ended March 31, 2019 | ||||||||
Debt Instrument | Debt Extinguished | (Loss) on Extinguishment | ||||||
4.875% 2021 Senior Notes | $ | $ | ( | ) | ||||
$ | $ | ( | ) |
(In Millions) | ||||
March 31, 2020 | ||||
Available borrowing base on ABL Facility1 | $ | |||
Borrowings | ( | ) | ||
Letter of credit obligations2 | ( | ) | ||
Borrowing capacity available | $ |
(In Millions) | ||||
Maturities of Debt | ||||
2020 (remaining period of year)1 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total maturities of debt | $ | |||
1 Amounts maturing in 2020 are classified as Long-term debt based on our ability and intent to refinance on a long-term basis. |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Operating leases | $ | $ | |||||
Finance leases: | |||||||
Amortization of lease cost | |||||||
Interest on lease liabilities | |||||||
Short-term leases | |||||||
Variable lease costs | |||||||
Total | $ | $ |
(Dollars In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Cash paid for amounts included in measurement of lease liabilities: | |||||||
Operating leases within cash flows from operating activities | $ | $ | |||||
Finance leases within cash flows from operating activities | $ | $ | |||||
Finance leases within cash flows from financing activities | $ | $ | |||||
Right-of-use assets obtained in exchange for new finance lease liabilities1 | $ | $ | |||||
Weighted-average remaining lease term - operating leases (in years) | |||||||
Weighted-average remaining lease term - finance leases (in years) | |||||||
Weighted-average discount rate - operating leases | % | % | |||||
Weighted-average discount rate - finance leases | % | % |
(In Millions) | |||||||
Finance Leases | Operating Leases | ||||||
2020 (remaining period of the year) | $ | $ | |||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
2024 | |||||||
Thereafter | |||||||
Total future minimum lease payments | |||||||
Less imputed interest | |||||||
Total lease payments | |||||||
Less current portion of lease liabilities | |||||||
Long-term lease liabilities | $ | $ |
(In Millions) | |||||||||||||||
March 31, 2020 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Assets: | |||||||||||||||
Other current assets: | |||||||||||||||
Commodity contracts | $ | $ | $ | $ | |||||||||||
Customer supply agreement | — | — | |||||||||||||
Provisional pricing arrangement | — | — | |||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Other current liabilities: | |||||||||||||||
Commodity contracts | $ | $ | $ | $ | |||||||||||
Foreign exchange contracts | — | — | |||||||||||||
Other non-current liabilities: | |||||||||||||||
Commodity contracts | — | — | |||||||||||||
Foreign exchange contracts | — | — | |||||||||||||
Total | $ | $ | $ | $ |
(In Millions) | |||||||||||||||
December 31, 2019 | |||||||||||||||
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 - Commercial paper | $ | $ | $ | $ | |||||||||||
Other current assets: | |||||||||||||||
Customer supply agreement | — | ||||||||||||||
Provisional pricing arrangement | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Other current liabilities: | |||||||||||||||
Commodity contracts | $ | $ | $ | $ | |||||||||||
Provisional pricing arrangement | |||||||||||||||
Total | $ | $ | $ | $ |
Qualitative/Quantitative Information About Level 3 Fair Value Measurements | |||||||||||||
Fair Value at March 31, 2020 (In Millions) | Balance Sheet Location | Valuation Technique | Unobservable Input | Point Estimate | |||||||||
Customer supply agreement | $ | Other current assets | Market Approach | Management's estimate of hot-rolled coil steel price per net ton | $ | ||||||||
Provisional pricing arrangements | $ | Other current assets | Market Approach | PPI Estimates |
(In Millions) | |||||||
Level 3 Assets | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Beginning balance - January 1 | $ | $ | |||||
Total gains (losses) included in earnings | ( | ) | |||||
Ending balance - March 31 | $ | $ | |||||
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date | $ | ( | ) | $ |
(In Millions) | |||||||
Level 3 Liabilities | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Beginning balance - January 1 | $ | ( | ) | $ | |||
Total losses included in earnings | ( | ) | ( | ) | |||
Settlements | |||||||
Ending balance - March 31 | $ | $ | ( | ) | |||
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date | $ | $ | ( | ) |
(In Millions) | |||||||||||||||||
March 31, 2020 | December 31, 2019 | ||||||||||||||||
Classification | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt: | |||||||||||||||||
Senior Notes | Level 1 | $ | $ | $ | $ | ||||||||||||
IRBs due 2020 to 2028 | Level 1 | ||||||||||||||||
ABL Facility - outstanding balance | Level 2 | ||||||||||||||||
Total long-term debt | $ | $ | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Service cost | $ | $ | |||||
Interest cost | |||||||
Expected return on plan assets | ( | ) | ( | ) | |||
Amortization: | |||||||
Prior service costs | |||||||
Net actuarial loss | |||||||
Net periodic benefit cost | $ | $ |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Service cost | $ | $ | |||||
Interest cost | |||||||
Expected return on plan assets | ( | ) | ( | ) | |||
Amortization: | |||||||
Prior service credits | ( | ) | ( | ) | |||
Net actuarial loss | |||||||
Net periodic benefit credit | $ | ( | ) | $ | ( | ) |
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) | |||||||||||
March 13, 2020 | $ | $ |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Asset retirement obligations1 | $ | $ | |||||
Less current portion | |||||||
Long-term asset retirement obligations | $ | $ |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Asset retirement obligation at beginning of period | $ | $ | |||||
Increase from AK Steel acquisition | |||||||
Accretion expense | |||||||
Remediation payments | ( | ) | ( | ) | |||
Revision in estimated cash flows | ( | ) | |||||
Asset retirement obligation at end of period | $ | $ |
Derivatives designated as hedging instruments under Topic 815: | Derivatives not designated as hedging instruments under Topic 815: | |||||||||||||||
Derivative Asset (Liability) | March 31, 2020 | December 31, 2019 | March 31, 2020 | December 31, 2019 | ||||||||||||
Other current assets: | ||||||||||||||||
Customer supply agreement | $ | — | $ | — | $ | $ | ||||||||||
Provisional pricing arrangements | — | — | ||||||||||||||
Commodity contracts | ||||||||||||||||
Other current liabilities: | ||||||||||||||||
Provisional pricing arrangements | ( | ) | ||||||||||||||
Commodity contracts | ( | ) | ( | ) | ( | ) | ||||||||||
Foreign exchange contracts | ( | ) | — | — | ||||||||||||
Other non-current liabilities: | ||||||||||||||||
Commodity contracts | ( | ) | ( | ) | ||||||||||||
Foreign exchange contracts | ( | ) | — | — |
(In Millions) | |||||||||||
March 31, 2020 | December 31, 2019 | ||||||||||
Unit of Measure | Maturity Dates | Notional Amount | Notional Amount | ||||||||
Commodity contracts: | |||||||||||
Natural gas | MMBtu | April 2020 - December 2021 | |||||||||
Diesel | Gallons | — | |||||||||
Zinc | Pounds | April 2020 - December 2021 | |||||||||
Electricity | Megawatt hours | April 2020 - December 2021 | |||||||||
Foreign exchange contracts: | |||||||||||
Canadian dollars | CAD | April 2020 - December 2021 | C$ | C$ |
(In Millions) | ||||
Hedge: | Estimated Losses | |||
Natural gas | $ | ( | ) | |
Zinc | ( | ) | ||
Electricity | ( | ) | ||
Canadian dollars | ( | ) |
(In Millions) | ||||||||||
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||||
Customer supply agreements | Revenues | $ | ( | ) | $ | |||||
Provisional pricing arrangements | Revenues | ( | ) | ( | ) | |||||
Foreign exchange contracts | Other non-operating income | ( | ) | |||||||
Commodity contracts | Cost of goods sold | ( | ) | |||||||
Total | $ | ( | ) | $ |
Declaration Date | Record Date | Payment Date | Dividend Declared per Common Share1 | |||||
2/18/2020 | 4/3/2020 | 4/15/2020 | $ | |||||
12/2/2019 | 1/3/2020 | 1/15/2020 | $ | |||||
9/3/2019 | 10/4/2019 | 10/15/2019 | $ | |||||
5/31/2019 | 7/5/2019 | 7/15/2019 | $ | |||||
2/19/2019 | 4/5/2019 | 4/15/2019 | $ | |||||
10/18/2018 | 1/4/2019 | 1/15/2019 | $ |
(In Millions) | |||||||||||||||
Postretirement Benefit Liability, net of tax | Foreign Currency Translation | Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||
December 31, 2019 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Other comprehensive loss before reclassifications | ( | ) | ( | ) | ( | ) | |||||||||
Net loss reclassified from accumulated other comprehensive loss | |||||||||||||||
March 31, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(In Millions) | |||||||||||
Postretirement Benefit Liability, net of tax | Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | |||||||||
December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income before reclassifications | |||||||||||
Net loss reclassified from accumulated other comprehensive loss | |||||||||||
March 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(In Millions) | ||||||||||
Details about Accumulated Other Comprehensive Loss Components | Amount of (Gain)/Loss Reclassified into Income, Net of Tax | Affected Line Item in the Statement of Unaudited Condensed Consolidated Operations | ||||||||
Three Months Ended March 31, | ||||||||||
2020 | 2019 | |||||||||
Amortization of pension and OPEB liability: | ||||||||||
Prior service credits | $ | ( | ) | $ | ( | ) | Other non-operating income | |||
Net actuarial loss | Other non-operating income | |||||||||
Total before taxes | ||||||||||
( | ) | ( | ) | Income tax benefit | ||||||
$ | $ | Net of taxes | ||||||||
Unrealized loss (gain) on derivative financial instruments: | ||||||||||
Commodity contracts | $ | $ | Cost of goods sold | |||||||
( | ) | ( | ) | Income tax benefit | ||||||
$ | $ | Net of taxes | ||||||||
Total reclassifications for the period, net of tax | $ | $ |
Mine | Cleveland-Cliffs Inc. | ArcelorMittal USA | U.S. Steel | |||
Hibbing |
(In Millions) | ||||||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Revenue from related parties | $ | $ | ||||||
Revenues1 | $ | $ | ||||||
Related party revenues as a percent of Revenues1 | % | % | ||||||
Purchases from related parties | $ | $ |
(In Millions) | ||||||||
Balance Sheet Location | March 31, 2020 | December 31, 2019 | ||||||
Accounts receivable, net | $ | $ | ||||||
Other current assets | $ | $ | ||||||
Accounts payable | $ | ( | ) | $ | ||||
Other current liabilities | $ | ( | ) | $ | ( | ) |
(In Millions) | |||
March 31, 2020 | |||
Cash and cash equivalents | $ | ||
Inventories | |||
Property, plant and equipment, net | |||
Accounts payable | |||
Other assets (liabilities), net | ( | ) | |
Noncontrolling interests |
(In Millions, Except Per Share Amounts) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Loss from continuing operations | $ | ( | ) | $ | ( | ) | |
Income from continuing operations attributable to noncontrolling interest | ( | ) | |||||
Net loss from continuing operations attributable to Cliffs shareholders | ( | ) | ( | ) | |||
Income from discontinued operations, net of tax | |||||||
Net loss attributable to Cliffs shareholders | $ | ( | ) | $ | ( | ) | |
Weighted average number of shares: | |||||||
Basic | |||||||
Convertible senior notes | |||||||
Employee stock plans | |||||||
Diluted | |||||||
Loss per common share attributable to Cliffs shareholders - basic: | |||||||
Continuing operations | $ | ( | ) | $ | ( | ) | |
Discontinued operations | |||||||
$ | ( | ) | $ | ( | ) | ||
Loss per common share attributable to Cliffs shareholders - diluted: | |||||||
Continuing operations | $ | ( | ) | $ | ( | ) | |
Discontinued operations | |||||||
$ | ( | ) | $ | ( | ) |
(In Millions) | |||||
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
Convertible senior notes | |||||
Employee stock plans | |||||
Total number of anti-dilutive shares |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Environmental obligations | $ | $ | |||||
Less current portion | |||||||
Long-term environmental obligations | $ | $ |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
• | Variable costs (approximately 75% of total) largely eliminated at idled facilities; |
• | Ability to reduce/defer annual capital expenditures by approximately $200 million; |
• | Run rate synergy achievement of $120 million per year related to the acquisition of AK Steel accelerated to October 2020 (previously March 2021); |
• | Working capital release from reduction of finished pellet inventories related to idle of Northshore and Tilden mines; |
• | Suspended future dividends (pro forma cash obligation of approximately $100 million per year); and |
• | 10-40% pay decreases for the salaried workforce, depending on band. |
(In Millions, Except Sales Tons) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Sales volume (in thousands): | |||||||
Steel and Manufacturing (net tons) | 199 | — | |||||
Mining and Pelletizing sales (long tons) | 2,134 | 1,550 | |||||
Less: Intercompany sales (long tons) | (783 | ) | — | ||||
Mining and Pelletizing consolidated sales (long tons) | 1,351 | 1,550 | |||||
Revenues: | |||||||
Steel and Manufacturing consolidated revenues | $ | 217.5 | $ | — | |||
Mining and Pelletizing1 | 229.4 | 157.0 | |||||
Less: Intercompany revenues | (87.8 | ) | — | ||||
Mining and Pelletizing consolidated revenues | 141.6 | 157.0 | |||||
— | |||||||
$ | 359.1 | $ | 157.0 | ||||
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. |
(In Millions) | |||||||||||
Three Months Ended March 31, | |||||||||||
2020 | 2019 | Variance Favorable/ (Unfavorable) | |||||||||
Cost of goods sold | $ | (356.0 | ) | $ | (126.1 | ) | $ | (229.9 | ) | ||
Selling, general and administrative expenses | (26.1 | ) | (27.3 | ) | 1.2 | ||||||
Acquisition-related costs | (42.5 | ) | — | (42.5 | ) | ||||||
Miscellaneous – net: | |||||||||||
Empire idle costs | (3.3 | ) | (4.0 | ) | 0.7 | ||||||
HBI production plant startup costs | (7.9 | ) | (0.8 | ) | (7.1 | ) | |||||
Other | (2.1 | ) | 0.4 | (2.5 | ) | ||||||
Total Miscellaneous – net | (13.3 | ) | (4.4 | ) | (8.9 | ) | |||||
$ | (437.9 | ) | $ | (157.8 | ) | $ | (280.1 | ) |
(In Millions) | |||||||||||
Three Months Ended March 31, | |||||||||||
2020 | 2019 | Variance Favorable/ (Unfavorable) | |||||||||
Interest expense, net | $ | (31.0 | ) | $ | (25.1 | ) | $ | (5.9 | ) | ||
Other non-operating income (expense): | |||||||||||
Gain (loss) on extinguishment of debt | 3.2 | (0.3 | ) | 3.5 | |||||||
Net periodic benefit credits other than service cost component | 5.5 | — | 5.5 | ||||||||
Other | 0.5 | 0.4 | 0.1 | ||||||||
$ | (21.8 | ) | $ | (25.0 | ) | $ | 3.2 |
(In Millions, Except Percentages) | |||||||||||
Three Months Ended March 31, | |||||||||||
2020 | 2019 | Variance | |||||||||
Income tax benefit | $ | 51.4 | $ | 3.7 | $ | 47.7 | |||||
Effective tax rate | 51.1 | % | 14.3 | % | 36.8 | % |
(In Millions) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net loss | $ | (48.6 | ) | $ | (22.1 | ) | |
Less: | |||||||
Interest expense, net | (31.1 | ) | (25.1 | ) | |||
Income tax benefit | 51.4 | 3.7 | |||||
Depreciation, depletion and amortization | (34.4 | ) | (19.9 | ) | |||
EBITDA | $ | (34.5 | ) | $ | 19.2 | ||
Less: | |||||||
EBITDA of noncontrolling interests1 | $ | 4.6 | $ | — | |||
Severance costs | (19.3 | ) | (1.7 | ) | |||
Acquisition costs | (23.2 | ) | — | ||||
Amortization of inventory step-up | (23.2 | ) | — | ||||
Gain (loss) on extinguishment of debt | 3.2 | (0.3 | ) | ||||
Impact of discontinued operations | 0.7 | — | |||||
Adjusted EBITDA | $ | 22.7 | $ | 21.2 | |||
Adjusted EBITDA: | |||||||
Steel and Manufacturing | $ | (11.1 | ) | $ | (0.8 | ) | |
Mining and Pelletizing | 81.8 | 47.5 | |||||
Corporate and eliminations | (48.0 | ) | (25.5 | ) | |||
Total Adjusted EBITDA | $ | 22.7 | $ | 21.2 | |||
1 Includes $3.5 million of income attributable to noncontrolling interests and $1.1 million of depreciation, depletion and amortization for the three months ended March 31, 2020. |
Three Months Ended | ||||
March 31, 2020 | ||||
Volumes - In Thousands of Net Tons | ||||
Flat-rolled steel shipments | 199 | |||
Operating Results - In Millions | ||||
Revenues | $ | 217.5 | ||
Cost of goods sold | $ | (246.6 | ) | |
Adjusted EBITDA1 | $ | (11.1 | ) | |
Selling Price - Per Net Ton | ||||
Average net selling price per net ton of flat-rolled steel | $ | 997 | ||
Revenues Attributable to International Customers | ||||
Revenues to customers outside the United States (In Millions) | $ | 18.9 | ||
Revenues to customers outside the United States as a percent of total revenues | 8.7 | % | ||
1 We had negative Adjusted EBITDA for the three months ended March 31, 2019, of $0.8 million for costs incurred at our HBI facility. |
Three Months Ended | |||
Market | March 31, 2020 | ||
Automotive | 55 | % | |
Infrastructure and Manufacturing | 20 | % | |
Distributors and Converters | 25 | % |
(In Millions) | |||||||||||||||
Three Months Ended March 31, | |||||||||||||||
2020 | 2019 | Change | Percent change | ||||||||||||
Volumes - In Thousands of Long Tons1,2 | |||||||||||||||
Sales tons | 2,134 | 1,550 | 584 | 37.7 | % | ||||||||||
Production tons | 4,832 | 4,401 | 431 | 9.8 | % | ||||||||||
Operating Results - In Millions2 | |||||||||||||||
Revenues3 | $ | 229.4 | $ | 157.0 | $ | 72.4 | 46.1 | % | |||||||
Cost of goods sold | $ | (167.3 | ) | $ | (126.1 | ) | $ | (41.2 | ) | 32.7 | % | ||||
Adjusted EBITDA | $ | 81.8 | $ | 47.5 | $ | 34.3 | 72.2 | % | |||||||
1 Includes Cliffs' 23% share of the Hibbing mine production. | |||||||||||||||
2 Includes intercompany sales to our Steel and Manufacturing segment of 783 thousand long tons, for the three months ended March 31, 2020. | |||||||||||||||
3 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. |
Three Months Ended March 31, | |||||||||||||||
Per Ton Information | 2020 | 2019 | Change | Percent change | |||||||||||
Realized product revenue rate1,3 | $ | 99.53 | $ | 93.81 | $ | 5.72 | 6.1 | % | |||||||
Cash cost of goods sold rate1,2 | $ | 61.67 | $ | 61.94 | $ | (0.27 | ) | (0.4 | )% | ||||||
Depreciation, depletion & amortization | 8.76 | 11.94 | (3.18 | ) | (26.6 | )% | |||||||||
Total cost of goods sold | $ | 70.43 | $ | 73.88 | $ | (3.45 | ) | (4.7 | )% | ||||||
1 Excludes revenues and expenses related to freight, which are offsetting. | |||||||||||||||
2 Cash cost of goods sold rate is a non-GAAP financial measure. Refer to "–Non-GAAP Reconciliation" for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP. | |||||||||||||||
3 Includes Realization of deferred revenue of $34.6 million, or $16.21 per long ton, for the three months ended March 31, 2020. |
• | Higher sales volume of 0.6 million long tons, primarily due to increased intercompany sales as a result of the acquisition of AK Steel, which resulted in increased revenue of $55 million. |
• | An increase in the average year-to-date realized product revenue rate of $5.72 per long ton, or 6.1%, during the three months ended March 31, 2020, compared to the prior-year period, which resulted in an increase |
◦ | The Realization of deferred revenue of $35 million, or $16 per long ton, as a result of the termination of the AK Steel iron ore pellet sales agreement. |
◦ | This increase was offset partially by a decrease in the hot-rolled coil steel price, which negatively affected the realized revenue rate by $14 per long ton, or $30 million, during the three months ended March 31, 2020. |
(In Millions) | |||
March 31, 2020 | |||
Cash and cash equivalents | $ | 186.9 | |
Cash and cash equivalents from discontinued operations, included within other current assets | 9.6 | ||
Less: Cash and cash equivalents from variable interest entities | (0.9 | ) | |
Total cash and cash equivalents | $ | 195.6 | |
Available borrowing base on ABL Facility1 | $ | 1,789.3 | |
Borrowings | (800.0 | ) | |
Letter of credit obligations | (199.3 | ) | |
Borrowing capacity available | $ | 790.0 | |
1 As of March 31, 2020, the ABL Facility has a maximum borrowing base of $2.0 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Current assets | $ | 2,864.4 | $ | 891.0 | |||
Non-current assets | 5,035.4 | 2,381.8 | |||||
Current liabilities | 1,002.2 | 392.9 | |||||
Non-current liabilities | 6,288.0 | 2,791.7 |
(In Millions) | |||
Three Months Ended | |||
March 31, 2020 | |||
Revenues1 | $ | 348.9 | |
Cost of goods sold | (352.9 | ) | |
Loss from continuing operations | (57.2 | ) | |
Net loss | (56.8 | ) | |
Net loss attributable to Cliffs shareholders | (56.8 | ) | |
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. |
(In Millions) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Balances with non-Guarantor subsidiaries: | |||||||
Accounts receivable, net | $ | 0.9 | $ | — | |||
Accounts payable | (0.5 | ) | — | ||||
Balances with other related parties: | |||||||
Accounts receivable, net | $ | 18.7 | $ | 31.1 | |||
Other current assets | 19.0 | 44.5 | |||||
Accounts payable | (5.3 | ) | — | ||||
Other current liabilities | (0.3 | ) | (2.0 | ) |
Positive or Negative Effect on Pre-tax Income (In Millions) | ||||||||
Commodity Derivative | 10% Increase or Decrease | 25% Increase or Decrease | ||||||
Natural gas | $ | 10.8 | $ | 27.1 | ||||
Electricity | $ | 3.5 | $ | 8.6 | ||||
Zinc | $ | 1.9 | $ | 4.7 | ||||
Other | $ | 0.9 | $ | 0.8 |
• | severe financial hardship, bankruptcy, temporary or permanent shutdowns or operational challenges, due to the ongoing COVID-19 pandemic or otherwise, of one or more of our major customers, including customers in the automotive market, key suppliers or contractors, which, among other adverse effects, could lead to reduced demand for our products, increased difficulty collecting receivables, and customers and/or suppliers asserting force majeure or other reasons for not performing their contractual obligations to us; |
• | uncertainty and weaknesses in global economic conditions, including downward pressure on prices caused by the COVID-19 pandemic, oversupply of imported products, reduced market demand and risks related to U.S. government actions with respect to Section 232, the USMCA and/or other trade agreements, treaties or policies; |
• | uncertainties associated with the highly competitive and highly cyclical steel industry and reliance on the demand for steel from the automotive industry; |
• | continued volatility of steel and iron ore prices and other trends, which may impact the price-adjustment calculations under certain of our sales contracts; |
• | our ability to successfully diversify our product mix and add new customers for our Mining and Pelletizing segment beyond our traditional blast furnace clientele; |
• | our ability to cost-effectively achieve planned production rates or levels, including at our HBI production plant once we restart construction activities, and to resume full operations at certain facilities that are temporarily idled due to the COVID-19 pandemic; |
• | our ability to successfully identify and consummate any strategic investments or development projects, including our HBI production plant; |
• | the impact of our steelmaking customers reducing their steel production due to the COVID-19 pandemic, or increased market share of steel produced using methods other than those used by our customers, or increased market share of lighter-weight steel alternatives, including aluminum; |
• | our ability to maintain adequate liquidity, our level of indebtedness and the availability of capital could limit cash flow available to fund working capital, planned capital expenditures, acquisitions, and other general corporate purposes or ongoing needs of our business; |
• | our actual economic iron ore reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve; |
• | 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; |
• | problems or uncertainties with sales volume or mix, productivity, transportation, environmental liabilities, employee-benefit costs and other risks of the steel and mining industries; |
• | 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; |
• | our ability to maintain appropriate relations with unions and employees; |
• | the ability of our customers, joint venture partners and third-party service providers to meet their obligations to us on a timely basis or at all; |
• | events or circumstances that could impair or adversely impact the viability of a production plant or mine and the carrying value of associated assets, as well as any resulting impairment charges; |
• | uncertainties associated with natural disasters, weather conditions, unanticipated geological conditions, supply or price of energy, equipment failures, infectious disease outbreaks and other unexpected events; |
• | adverse changes in interest rates, foreign currency rates and tax laws; |
• | the potential existence of significant deficiencies or material weakness in our internal control over financial reporting; |
• | our ability to realize the anticipated benefits of the Merger and to successfully integrate the businesses of AK Steel into our existing businesses, including uncertainties associated with maintaining relationships with customers, vendors and employees, as well as realizing the estimated future synergies; |
• | additional debt we assumed or issued in connection with the Merger, as well as additional debt we incurred in connection with enhancing our liquidity during the COVID-19 pandemic, may negatively impact our credit profile and limit our financial flexibility; |
• | changes in the cost of raw materials and supplies; |
• | supply chain disruptions or poor quality of raw materials or supplies, including scrap, coal, coke and alloys; |
• | disruptions in, or failures of, our information technology systems, including those related to cybersecurity; and |
• | unanticipated costs associated with healthcare, pension and OPEB obligations. |
(In Millions) | ||||||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cost of goods sold | $ | 167.3 | $ | 126.1 | ||||
Less: | ||||||||
Freight | 17.0 | 11.6 | ||||||
Depreciation, depletion & amortization | 18.7 | 18.5 | ||||||
Cash cost of goods sold | $ | 131.6 | $ | 96.0 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | preserving the assets of the project during the temporary shutdown period; |
• | maintaining required federal, state and local permits; |
• | completing construction work, commissioning and integration of all of the systems comprising our HBI production plant; |
• | negotiating sales contracts for our planned production; and |
• | other factors, many of which are beyond our control. |
• | adverse changes in market conditions; |
• | commodity prices for steel and iron ore; |
• | production levels; |
• | operating results; |
• | competitive conditions; |
• | laws and regulations affecting the steel and iron ore businesses; |
• | capital expenditure obligations; |
• | higher than expected integration costs; |
• | lower than expected synergies; and |
• | general economic conditions. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares (or Units) Purchased1 | 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 | ||||||||||
January 1 - 31, 2020 | 904,492 | $ | 7.45 | — | $ | — | ||||||||
February 1 - 29, 2020 | 1,018 | $ | 8.40 | — | $ | — | ||||||||
March 1 - 31, 2020 | 1,305 | $ | 8.45 | — | $ | — | ||||||||
Total | 906,815 | $ | 7.45 | — | ||||||||||
1 All 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 | |
Indenture, dated as of March 13, 2020, by and among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as trustee and first lien notes collateral agent (relating to Cleveland-Cliffs Inc.’s 6.75% Senior Secured Notes due 2026) (including Form of Note) (filed herewith). | ||
Fifth Supplemental Indenture, dated as of March 13, 2020, by and among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (relating to Cleveland-Cliffs Inc.’s 5.75% Senior Notes due 2025) (filed herewith). | ||
Second Supplemental Indenture, dated as of March 13, 2020, by and among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as trustee and first lien notes collateral agent (relating to Cleveland-Cliffs Inc.’s 4.875% Senior Secured Notes due 2024) (filed herewith). | ||
First Supplemental Indenture, dated as of March 13, 2020, by and among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (relating to Cleveland-Cliffs Inc.’s 5.875% Senior Guaranteed Notes due 2027) (filed herewith). | ||
Indenture, dated as of March 16, 2020, by and among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (relating to Cleveland-Cliffs Inc.’s 6.375% Senior Notes due 2025) (including Form of Note) (filed herewith). | ||
Registration Rights Agreement, dated March 16, 2020, among Cleveland-Cliffs Inc., as issuer, the guarantors party thereto and Credit Suisse Securities (USA) LLC, as dealer manager, with respect to Cleveland-Cliffs Inc.’s 6.375% Senior Notes due 2025 (filed herewith). | ||
Indenture, dated as of March 16, 2020, by and among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as Trustee (relating to Cleveland-Cliffs Inc.’s 7.00% Senior Notes due 2027) (including Form of Note) (filed herewith). | ||
Registration Rights Agreement, dated March 16, 2020, among Cleveland-Cliffs Inc., as issuer, the guarantors party thereto and Credit Suisse Securities (USA) LLC, as dealer manager, with respect to Cleveland-Cliffs Inc.’s 7.00% Senior Notes due 2027 (filed herewith). | ||
Asset-Based Revolving Credit Agreement, dated as of March 13, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent (filed herewith). | ||
First Amendment to Asset-Based Revolving Credit Agreement, dated as of March 27, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent (filed herewith). | ||
Schedule of the obligated group, including the parent and issuer and the subsidiary guarantors that have guaranteed the obligations under the 4.875% 2024 Senior Secured Notes, the 5.75% 2025 Senior Notes, the 6.375% 2025 Senior Notes, the 6.75% 2026 Senior Secured Notes, the 5.875% 2027 Senior Notes, the 7.00% 2027 Senior Notes and the 9.875% 2025 Senior Secured Notes issued by Cleveland-Cliffs Inc. (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 May 11, 2020 (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 Keith A. Koci as of May 11, 2020 (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 May 11, 2020 (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 Keith A. Koci, Executive Vice President, Chief Financial Officer of Cleveland-Cliffs Inc., as of May 11, 2020 (filed herewith). | ||
Mine Safety Disclosures (filed herewith). | ||
101 | The following financial information from Cleveland-Cliffs Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Statements of Unaudited Condensed Consolidated Financial Position, (ii) the Statements of Unaudited Condensed Consolidated Operations, (iii) the Statements of Unaudited Condensed Consolidated Comprehensive Income, (iv) the Statements of Unaudited Condensed Consolidated Cash Flows, (v) the Statements of Unaudited Condensed Consolidated Changes in Equity, and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements. | |
104 | The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL. |
CLEVELAND-CLIFFS INC. | |||||||
By: | /s/ Kimberly A. Floriani | ||||||
Name: | Kimberly A. Floriani | ||||||
Title: | Vice President, Corporate Controller & Chief Accounting Officer | ||||||
Date: | May 11, 2020 |
TABLE OF CONTENTS | ||
PAGE |
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE | |||
Section | 1.01 | Definitions | |
Section | 1.02 | Other Definitions | |
Section | 1.03 | Incorporation by Reference of Trust Indenture Act | |
Section | 1.04 | Rules of Construction | |
ARTICLE 2 THE NOTES | |||
Section | 2.01 | Form, Dating and Terms | |
Section | 2.02 | Execution and Authentication | |
Section | 2.03 | Registrar and Paying Agent | |
Section | 2.04 | Paying Agent to Hold Money in Trust | |
Section | 2.05 | Holder Lists | |
Section | 2.06 | Transfer and Exchange | |
Section | 2.07 | [Intentionally Omitted] | |
Section | 2.08 | [Intentionally Omitted] | |
Section | 2.09 | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S | |
Section | 2.10 | Mutilated, Destroyed, Lost or Stolen Notes | |
Section | 2.11 | Outstanding Notes | |
Section | 2.12 | Temporary Notes | |
Section | 2.13 | Cancellation | |
Section | 2.14 | Payments of Interest; Defaulted Interest | |
Section | 2.15 | Computation of Interest | |
Section | 2.16 | CUSIP, Common Code and ISIN Numbers | |
ARTICLE 3 COVENANTS | |||
Section | 3.01 | Payment of Notes | |
Section | 3.02 | Limitation on Asset Dispositions of Notes Collateral | |
Section | 3.03 | Restrictions on Liens | |
Section | 3.04 | Restrictions on Sale and Leaseback Transactions | |
Section | 3.05 | [Intentionally Omitted] | |
Section | 3.06 | Change of Control Triggering Event | |
Section | 3.07 | Reports to Holders | |
Section | 3.08 | Additional Guarantees | |
Section | 3.09 | [Intentionally Omitted] | |
Section | 3.10 | Corporate Existence | |
Section | 3.11 | Compliance Certificate | |
Section | 3.12 | Further Instruments and Acts | |
Section | 3.13 | Stay, Extension and Usury Laws | |
ARTICLE 4 SUCCESSOR COMPANY | |||
Section | 4.01 | Consolidation, Merger or Sale of Assets | |
ARTICLE 5 REDEMPTION AND PREPAYMENT | |||
Section | 5.01 | Notices to Trustee | |
Section | 5.02 | Selection of Notes to Be Redeemed or Purchased |
TABLE OF CONTENTS | ||
PAGE |
Section | 5.03 | Notice of Redemption | |
Section | 5.04 | Effect of Notice of Redemption | |
Section | 5.05 | Deposit of Redemption or Purchase Price | |
Section | 5.06 | Notes Redeemed or Purchased in Part | |
Section | 5.07 | Optional Redemption | |
Section | 5.08 | Mandatory Redemption | |
ARTICLE 6 DEFAULTS AND REMEDIES | |||
Section | 6.01 | Events of Default | |
Section | 6.02 | Acceleration | |
Section | 6.03 | Other Remedies | |
Section | 6.04 | Waiver of Past Defaults | |
Section | 6.05 | Control by Majority | |
Section | 6.06 | Limitation on Suits | |
Section | 6.07 | Rights of Holders to Receive Payment | |
Section | 6.08 | Collection Suit by Trustee | |
Section | 6.09 | Trustee May File Proofs of Claim | |
Section | 6.10 | Priorities | |
Section | 6.11 | Undertaking for Costs | |
ARTICLE 7 TRUSTEE | |||
Section | 7.01 | Duties of Trustee | |
Section | 7.02 | Rights of Trustee | |
Section | 7.03 | Individual Rights of Trustee | |
Section | 7.04 | Trustee's Disclaimer | |
Section | 7.05 | Notice of Defaults | |
Section | 7.06 | Reports by Trustee to Holders | |
Section | 7.07 | Compensation and Indemnity | |
Section | 7.08 | Replacement of Trustee | |
Section | 7.09 | Successor Trustee by Merger | |
Section | 7.10 | Eligibility; Disqualification | |
Section | 7.11 | Collateral Documents | |
Section | 7.12 | Preferential Collection of Claims Against the Company | |
Section | 7.13 | Trustee and First Lien Notes Collateral Agent in Other Capacities | |
Section | 7.14 | USA Patriot Act | |
Section | 7.15 | Calculations in Respect of the Notes | |
Section | 7.16 | Brokerage Confirmations | |
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE | |||
Section | 8.01 | Option to Effect Legal Defeasance or Covenant Defeasance: Defeasance | |
Section | 8.02 | Legal Defeasance and Discharge | |
Section | 8.03 | Covenant Defeasance | |
Section | 8.04 | Conditions to Legal or Covenant Defeasance | |
Section | 8.05 | Deposited Money and U.S. Government Obligations to be Held in Trust: Other Miscellaneous Provisions | |
Section | 8.06 | Repayment to the Company |
TABLE OF CONTENTS | ||
PAGE |
Section | 8.07 | Reinstatement | |
ARTICLE 9 AMENDMENTS | |||
Section | 9.01 | Without Consent of Holders | |
Section | 9.02 | With Consent of Holders | |
Section | 9.03 | [Intentionally Omitted] | |
Section | 9.04 | Revocation and Effect of Consents and Waivers | |
Section | 9.05 | Notation on or Exchange of Notes | |
Section | 9.06 | Trustee to Sign Amendments | |
ARTICLE 10 GUARANTEE | |||
Section | 10.01 | Guarantee | |
Section | 10.02 | Limitation on Liability; Termination; Release and Discharge | |
Section | 10.03 | Right of Contribution | |
Section | 10.04 | No Subrogation | |
Section | 10.05 | Execution and Delivery of a Guarantee | |
ARTICLE 11 COLLATERAL AND SECURITY | |||
Section | 11.01 | The Collateral | |
Section | 11.02 | Further Assurances | |
Section | 11.03 | Additional Property | |
Section | 11.04 | Impairment of Security Interest | |
Section | 11.05 | Post-Closing Collateral Documents | |
Section | 11.06 | Release of Liens on the Collateral | |
Section | 11.07 | Authorization of Actions to be Taken by the Trustee or the First Lien Notes Collateral Agent Under the Collateral Documents | |
Section | 11.08 | Collateral Accounts | |
Section | 11.09 | Appointment and Authorization of U.S. Bank National Association as First Lien Notes Collateral Agent | |
ARTICLE 12 SATISFACTION AND DISCHARGE | |||
Section | 12.01 | Satisfaction and Discharge | |
Section | 12.02 | Application of Trust Money | |
ARTICLE 13 MISCELLANEOUS | |||
Section | 13.01 | Reserved | |
Section | 13.02 | Notices | |
Section | 13.03 | Communication by Holders With Other Holders | |
Section | 13.04 | Certificate and Opinion as to Conditions Precedent | |
Section | 13.05 | Statements Required in Certificate or Opinion | |
Section | 13.06 | [Intentionally Omitted] | |
Section | 13.07 | Rules by Trustee, Paying Agent and Registrar | |
Section | 13.08 | Business Days | |
Section | 13.09 | GOVERNING LAW | |
Section | 13.10 | No Recourse Against Others | |
Section | 13.11 | Successors | |
Section | 13.12 | Multiple Originals |
TABLE OF CONTENTS | ||
PAGE |
EXHIBIT A | Form of Initial Note |
EXHIBIT B | Form of Indenture Supplement to Add Guarantors |
EXHIBIT C | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S |
TIA Section | Indenture Section |
310(a)(1) | 7.10 |
(a)(2) | 7.10 |
(a)(3) | N.A. |
(a)(4) | N.A. |
(a)(5) | 7.10 |
(b) | 7.08, 7.10 |
(c) | 7.10 |
311(a) | 7.12 |
(b) | 7.12 |
(c) | N.A. |
312(a) | 2.06 |
(b) | 13.03 |
(c) | 13.03 |
313(a) | 7.06 |
(b)(1) | 7.06 |
(b)(2) | 7.06 |
(c) | 7.06 |
(d) | 7.06 |
314(a) | 3.07, 3.11, 13.05 |
(c)(1) | 13.04 |
(c)(2) | 13.04 |
(c)(3) | N.A. |
(d) | 11.06(c) |
(e) | 13.05 |
315(a) | 7.01 |
(b) | 7.05, 13.02 |
(c) | 7.01 |
(d) | 7.01 |
(e) | 6.11 |
316(a)(last sentence) | N.A. |
(a)(1)(A) | 6.05 |
(a)(1)(B) | 6.04 |
(a)(2) | N.A. |
(b) | 6.07 |
(c) | 6.05 |
317(a)(1) | 6.08 |
(a)(2) | 6.09 |
(b) | 2.05 |
318(a) | 13.01 |
(a) | the sale, lease, conveyance or other disposition of any assets other than in the ordinary course of business; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole will be governed by Section 3.06 and/or Section 4.01 and not by Section 3.02; and |
(b) | the issuance of Capital Stock in any of the Company’s Subsidiaries or the sale of Capital Stock in any of its Subsidiaries (other than directors’ qualifying shares or nominal shares required to be held by applicable law to be held by a Person other than the Company or any of its Subsidiaries). |
(i) | any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $50.0 million; |
(ii) | a transfer of assets between or among the Company and the Guarantors; |
(iii) | an issuance of Capital Stock by a Subsidiary of the Company to the Company or to a Subsidiary of the Company; |
(iv) | the sale or lease of inventory, products or services in the ordinary course of business; |
(v) | the sale of accounts receivable in the ordinary course of business in connection with the compromise or collection thereof; |
(vi) | any transfer of property or assets that consists of grants by the Company or its Subsidiaries in the ordinary course of business of licenses or sub-licenses, including with respect to intellectual property rights; |
(vii) | (a) the sale or other disposition of damaged, obsolete, unusable or worn out equipment that is no longer needed in the conduct of the business of the Company and its Subsidiaries, (b) the sale or other disposition of inventory, used or surplus equipment or reserves and dispositions related to the burn-off of mines or (c) the abandonment or allowance to lapse or expire or other disposition of intellectual property no longer needed in the conduct of business of the Company and its Subsidiaries; |
(ix) | operating leases entered into in the ordinary course of business; |
(x) | the granting of a Lien otherwise permitted under this Indenture; |
(xi) | the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; and |
(1) | United States dollars; |
(2) | securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government, Canada or any member of the European Union (provided that the full faith and credit of the United States, Canada or such member of the European Commission is pledged in support of those securities) having maturities of not more than twelve months from the date of acquisition; |
(3) | certificates of deposit and Eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding twelve months from the date of acquisition, and overnight bank deposits, in each case, with any lender party to the ABL Facility or any affiliate thereof or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better; |
(4) | repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; |
(5) | commercial paper having one of the two highest ratings obtainable from Moody’s or S&P, in each case, maturing within twelve months after the date of acquisition; |
(6) | money market funds, substantially all of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; and |
(7) | marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s. |
(1) | Excluded Equity; |
(2) | motor vehicles (excluding, for the avoidance of doubt, Mobile Equipment), the perfection of a security interest in which cannot be accomplished by filing a UCC financing statement in the central filing office in which the Company or the Guarantor that owns such property is located; |
(3) | (i) any individual parcel of Real Property with a Fair Market Value (as reasonably determined by the Company) not to exceed $25.0 million; provided that such parcel is not necessary to operate the relevant complex or facility associated with such parcel (as reasonably determined by the Company), (ii) any Real Property or interest therein used or held in connection with a mine owned by a joint venture of which the Company or a Guarantor is a party, to the extent that the joint venture agreement or other relevant agreement with the relevant joint venture partner prohibits (or requires the consent of a party other than the Company or a Guarantor or any of their respective Subsidiaries) the creation of a security interest therein, except to the extent that such term in such contract, license, lease, agreement, instrument, general intangible or other document or shareholder, joint venture or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; and (iii) any leasehold interest in the office headquarters of the Company located at 200 Public Square, Cleveland, Ohio 44114; |
(4) | any Principal Property and Principal Subsidiary Interests to the extent that the Obligations secured by any Principal Property or Principal Subsidiary Interests (together with any other CNTA Covered Debt) would exceed, at any time that any CNTA Covered Debt is incurred, the CNTA Limit at such time; |
(5) | any property to the extent that the grant of a security interest therein (x) is prohibited by any applicable law or regulation, requires a consent not obtained of any governmental authority pursuant to any applicable law or regulation, or (y) is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, lease, license, agreement, instrument, general intangible or other document evidencing or giving rise to such property or creating or governing a Permitted Lien applicable to such property or, in the case of any Capital Stock, any applicable shareholder, joint venture or similar agreement (for the avoidance of doubt, whether applying to any joint venture or parent of any joint venture), except to the extent that such law or regulation or the term in such contract, license, lease, agreement, instrument, general intangible or other document or shareholder, joint venture or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; provided that in the case of clause (y), such contractual obligation (other than any such contractual obligation entered into in the ordinary course of business) existed on the Issue Date or, with respect to any Subsidiary acquired after the Issue Date (and so long as such contractual obligation was not incurred in contemplation of such acquisition), on the date such Subsidiary is so acquired; |
(6) | any United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law, provided that upon submission and acceptance by the PTO of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor provision), such intent-to-use trademark application shall be considered Collateral; |
(7) | any timber to be cut, the perfection of a security interest in which cannot be accomplished by the filing of an initial financing statement; |
(8) | any property as to which the First Lien Notes Collateral Agent and the Company reasonably agree in writing that the cost of creating or perfecting a security interest in such property is excessive in relation to the benefit afforded thereby; |
Term | Section |
“Additional Restricted Notes” | 2.01(b) |
“Agent Members” | 2.01(e)(iii) |
“Authenticating Agent” | 2.02 |
“Change of Control Offer” | 3.06(a) |
“Change of Control Payment” | 3.06(a) |
“Change of Control Payment Date” | 3.06(b) |
“Clearstream” | 2.01(b) |
“Collateral Disposition Offer” | 3.02(e) |
“Company Order” | 2.02 |
“Covenant Defeasance” | 8.03 |
“Defaulted Interest” | 2.14 |
“Euroclear” | 2.01(b) |
“Event of Default” | 6.01 |
“Excess Collateral Proceeds” | 3.02(e) |
“Global Notes” | 2.01(b) |
“Guaranteed Obligations” | 10.01 |
“Intercreditor Agreement Order” | 11.09(n) |
“Legal Defeasance” | 8.02 |
“Notes Register” | 2.03 |
“Notice of Change of Control Offer” | 3.06(b) |
“Optional Collateral Disposition Offer” | 3.02(e) |
“Paying Agent” | 2.03 |
“Payment Default” | 6.01(f) |
“Permanent Regulation S Global Note” | 2.01(b) |
“Permitted Refinancing Lien” | 1.01 |
“Post-Closing Collateral Documents” | 11.05 |
“protected purchaser” | 2.10 |
“Refinanced Lien” | 1.01 |
“Registrar” | 2.03 |
“Regulation S Global Note” | 2.01(b) |
“Regulation S Notes” | 2.01(b) |
“Restricted Period” | 2.01(b) |
“Rule 144A Global Note” | 2.01(b) |
“Rule 144A Notes” | 2.01(b) |
“Security Document Order” | 11.09(m) |
“Special Interest Payment Date” | 2.14(a) |
“Special Record Date” | 2.14(a) |
“successor person” | 4.01(a) |
“Temporary Regulation S Global Note” | 2.01(b) |
Period | Redemption price |
March 15, 2022 | 105.063% |
March 15, 2023 | 103.375% |
March 15, 2024 | 101.688% |
March 15, 2025 and thereafter | 100.000% |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title: Executive Vice President, Chief Financial Officer | |
AH MANAGEMENT, INC. AK STEEL PROPERTIES, INC. AK TUBE LLC AKS INVESTMENTS, INC. CLIFFS MINNESOTA MINING COMPANY CLIFFS TIOP, INC. CLIFFS UTAC HOLDING LLC IRONUNITS LLC LAKE SUPERIOR & ISHPEMING RAILROAD COMPANY MOUNTAIN STATE CARBON, LLC PPHC HOLDINGS, LLC SILVER BAY POWER COMPANY SNA CARBON, LLC UNITED TACONITE LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Secretary |
CLIFFS TIOP HOLDING, LLC CLIFFS TIOP II, LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: General Counsel and Secretary |
CLIFFS MINING COMPANY NORTHSHORE MINING COMPANY THE CLEVELAND-CLIFFS IRON COMPANY TILDEN MINING COMPANY L.C. By: The Cleveland-Cliffs Iron Company, as its manager | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer & Secretary |
AK STEEL CORPORATION AK STEEL HOLDING CORPORATION | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Vice President, General Counsel and Corporate Secretary |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: U.S. Bank National Association | |
By: | /s/ Elizabeth A. Thuning |
Name: Elizabeth A. Thuning | |
Title: Vice President |
No. [ ] | Principal Amount $[ ] |
CUSIP NO. [ ] | |
CLEVELAND-CLIFFS INC. 6.75% Senior Secured Note due 2026 Cleveland-Cliffs Inc., an Ohio corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ]), [, as revised by the Schedule of Increases and Decreases in Global Note attached hereto,]1 on March 15, 2026. Interest Payment Dates: March 15 and September 15 Record Dates: March 1 and September 1 Additional provisions of this Note are set forth on the other side of this Note. |
1 Include only if the Note is issued in global form. | ||||
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | |
Name: Elizabeth A. Thuning Title: Vice President |
1. | Interest |
2. | Method of Payment |
3. | Paying Agent and Registrar |
2 Insert the Interest Payment Date immediately preceding the date of issuance of the applicable Additional Notes, or if the date of issuance of such Additional Notes is an Interest Payment Date, such date of issuance. | ||||
4. | Indenture |
5. | Redemption and Prepayment |
Period | Redemption price |
March 15, 2022 | 105.063% |
March 15, 2023 | 103.375% |
March 15, 2024 | 101.688% |
March 15, 2025 and thereafter | 100.000% |
6. | Change of Control Triggering Event |
7. | Denominations; Transfer; Exchange |
8. | Persons Deemed Owners |
9. | Unclaimed Money |
10. | Defeasance |
11. | Amendment, Supplement, Waiver |
12. | Defaults and Remedies |
13. | Trustee Dealings with the Company |
14. | No Recourse Against Others |
15. | Authentication |
16. | Abbreviations |
17. | CUSIP, Common Code and ISIN Numbers |
18. | Governing Law |
19. | USA Patriot Act |
To assign this Note, fill in the form below: I or we assign and transfer this Note to: |
(Print or type assignee’s name, address and zip code) |
(Insert assignee’s social security or tax I.D. No.) |
and irrevocably appoint __________________agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. |
Date: | Your Signature: | ||||
Signature Guarantee: | |||||
(Signature must be guaranteed) | |||||
Sign exactly as your name appears on the other side of this Note. |
Signature Guarantee: | Signature | |
(Signature must be guaranteed) | Signature |
Date of Exchange | Amount of decrease in Principal Amount of this Global Note | Amount of increase in Principal Amount of this Global Note | Principal Amount of this Global Note following such decrease or increase | Signature of authorized signatory of Trustee of Notes Custodian |
¨ 3.02 | ¨ 3.06 |
Date: | |||
Your Signature | |||
(Sign exactly as your name appears on the other side of this Note) | |||
Signature Guarantee: | |||
(Signature must be guaranteed) | |||
Sign exactly as your name appears on the other side of this Note. |
[SUBSIDIARY GUARANTOR], as a Guarantor | |
By: | |
Name: | |
Title: |
[Address] | |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | |
Name: | |
Title: |
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: |
c/o | U.S. Bank National Association |
Re: | 6.75% Senior Secured Notes due 2026 (the “Notes”) |
Very truly yours, | |
[Name of Transferor] | |
By: | |
Authorized Signature |
AH Management, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AKS Investments, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Corporation | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Holding Corporation | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Properties, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Tube LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
Mountain State Carbon, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
PPHC Holdings, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
SNA Carbon, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary |
AH MANAGEMENT INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
AKS INVESTMENTS, INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer | |
AK STEEL CORPORATION, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Treasurer |
AK STEEL HOLDING CORPORATION, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Treasurer |
AK STEEL PROPERTIES, INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
AK TUBE LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
MOUNTAIN STATE CARBON, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Controller and Treasurer |
PPHC HOLDINGS, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
SNA CARBON, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title:Executive Vice President, Chief Financial Officer |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | /s/ Elizabeth A. Thuning |
Name: Elizabeth A. Thuning | |
Title: Vice President |
AH Management, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AKS Investments, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Corporation | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Holding Corporation | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Properties, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Tube LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
Mountain State Carbon, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
PPHC Holdings, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
SNA Carbon, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary |
AH MANAGEMENT INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
AKS INVESTMENTS, INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer | |
AK Steel Corporation, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Treasurer |
AK STEEL HOLDING CORPORATION, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Treasurer |
AK STEEL PROPERTIES, INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
AK TUBE LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
MOUNTAIN STATE CARBON, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Controller and Treasurer |
PPHC HOLDINGS, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
SNA CARBON, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title:Executive Vice President, Chief Financial Officer |
U.S. BANK NATIONAL ASSOCIATION, as Trustee and First Lien Notes Collateral Agent | |
By: | /s/ Elizabeth A. Thuning |
Name: Elizabeth A. Thuning | |
Title: Vice President |
AH Management, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AKS Investments, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Corporation | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Holding Corporation | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Steel Properties, Inc. | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
AK Tube LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
Mountain State Carbon, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary |
PPHC Holdings, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary | |
SNA Carbon, LLC | |
c/o | Cleveland-Cliffs Inc. |
200 Public Square, Suite 3300 | |
Cleveland, Ohio 44114 | |
Attention: James Graham, Executive Vice President, Chief Legal Officer & Secretary |
AH MANAGEMENT INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
AKS INVESTMENTS, INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer | |
AK Steel Corporation, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Treasurer |
AK STEEL HOLDING CORPORATION, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Treasurer |
AK STEEL PROPERTIES, INC., as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
AK TUBE LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
MOUNTAIN STATE CARBON, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Vice President, Controller and Treasurer |
PPHC HOLDINGS, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
SNA CARBON, LLC, as a Guarantor | |
By: | /s/ Celso L. Goncalves, Jr. |
Name: Celso L. Goncalves, Jr. | |
Title: Treasurer |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title:Executive Vice President, Chief Financial Officer |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | /s/ Elizabeth A. Thuning |
Name: Elizabeth A. Thuning | |
Title: Vice President |
Page | ||
ARTICLE 1 DEFINITION AND INCORPORATION BY REFERENCE | ||
Section 1.01. | Definitions | |
Section 1.02. | Other Definitions | |
Section 1.03. | Incorporation by Reference of Trust Indenture Act | |
Section 1.04. | Rules of Construction | |
ARTICLE 2 THE NOTES | ||
Section 2.01. | Form, Dating and Terms | |
Section 2.02. | Execution and Authentication | |
Section 2.03. | Registrar and Paying Agent | |
Section 2.04. | Paying Agent to Hold Money in Trust | |
Section 2.05. | Holder Lists | |
Section 2.06. | Transfer and Exchange | |
Section 2.07. | [Intentionally Omitted] | |
Section 2.08. | [Intentionally Omitted] | |
Section 2.09. | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S | |
Section 2.10. | Mutilated, Destroyed, Lost or Stolen Notes | |
Section 2.11. | Outstanding Notes | |
Section 2.12. | Temporary Notes | |
Section 2.13. | Cancellation | |
Section 2.14. | Payment of Interest; Defaulted Interest | |
Section 2.15. | Computation of Interest | |
Section 2.16. | CUSIP, Common Code and ISIN Numbers | |
ARTICLE 3 COVENANTS | ||
Section 3.01. | Payment of Notes | |
Section 3.02. | [Intentionally Omitted] | |
Section 3.03. | Restrictions on Liens | |
Section 3.04. | Restrictions on Sale and Leaseback Transactions | |
Section 3.05. | [Intentionally Omitted] | |
Section 3.06. | Change of Control Triggering Event | |
Section 3.07. | Reports to Holders | |
Section 3.08. | Additional Guarantees | |
Section 3.09. | [Intentionally Omitted] | |
Section 3.10. | Corporate Existence | |
Section 3.11. | Compliance Certificate | |
Section 3.12. | Further Instruments and Acts | |
Section 3.13. | Stay, Extension and Usury Laws | |
Section 3.14. | Additional Interest Notice | |
ARTICLE 4 SUCCESSOR COMPANY | ||
Section 4.01. | Consolidation, Merger or Sale of Assets | |
ARTICLE 5 REDEMPTION AND PREPAYMENT | ||
Section 5.01. | Notices to Trustee | |
Section 5.02. | Selection of Notes to Be Redeemed or Purchased |
Section 5.03. | Notice of Redemption | |
Section 5.04. | Effect of Notice of Redemption | |
Section 5.05. | Deposit of Redemption or Purchase Price | |
Section 5.06. | Notes Redeemed or Purchased in Part | |
Section 5.07. | Optional Redemption | |
Section 5.08. | Mandatory Redemption | |
ARTICLE 6 DEFAULTS AND REMEDIES | ||
Section 6.01. | Events of Default | |
Section 6.02. | Acceleration | |
Section 6.03. | Other Remedies | |
Section 6.04. | Waiver of Past Defaults | |
Section 6.05. | Control by Majority | |
Section 6.06. | Limitation on Suits | |
Section 6.07. | Rights of Holders to Receive Payment | |
Section 6.08. | Collection Suit by Trustee | |
Section 6.09. | Trustee May File Proofs of Claim | |
Section 6.10. | Priorities | |
Section 6.11. | Undertaking for Costs | |
ARTICLE 7 TRUSTEE | ||
Section 7.01. | Duties of Trustee | |
Section 7.02. | Rights of Trustee | |
Section 7.03. | Individual Rights of Trustee | |
Section 7.04. | Trustee's Disclaimer | |
Section 7.05. | Notice of Defaults | |
Section 7.06. | Reports by Trustee to Holders | |
Section 7.07. | Compensation and Indemnity | |
Section 7.08. | Replacement of Trustee | |
Section 7.09. | Successor Trustee by Merger | |
Section 7.10. | Eligibility; Disqualification | |
Section 7.11. | [Intentionally Omitted] | |
Section 7.12. | Preferential Collection of Claims Against the Company | |
Section 7.13. | Trustee in Other Capacities | |
Section 7.14. | USA Patriot Act | |
Section 7.15. | Calculations in Respect of the Notes | |
Section 7.16. | Brokerage Confirmations | |
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE | ||
Section 8.01. | Option to Effect Legal Defeasance or Covenant Defeasance: Defeasance | |
Section 8.02. | Legal Defeasance and Discharge | |
Section 8.03. | Covenant Defeasance | |
Section 8.04. | Conditions to Legal or Covenant Defeasance | |
Section 8.05. | Deposited Money and U.S. Government Obligations to be Held in Trust: Other Miscellaneous Provisions | |
Section 8.06. | Repayment to the Company | |
Section 8.07. | Reinstatement |
ARTICLE 9 AMENDMENTS | ||
Section 9.01. | Without Consent of Holders | |
Section 9.02. | WIth Consent of Holders | |
Section 9.03. | [Intentionally Omitted] | |
Section 9.04. | Revocation and Effect of Consents and Waivers | |
Section 9.05. | Notation on or Exchange of Notes | |
Section 9.06. | Trustee to Sign Amendments | |
ARTICLE 10 GUARANTEE | ||
Section 10.01. | Guarantee | |
Section 10.02. | Limitation on Liability; Termination; Release and Discharge | |
Section 10.03. | Right of Contribution | |
Section 10.04. | No Subrogation | |
Section 10.05. | Execution and Delivery of a Guarantee | |
ARTICLE 11 [INTENTIONALLY OMITTED] | ||
ARTICLE 12 SATISFACTION AND DISCHARGE | ||
Section 12.01. | Satisfaction and Discharge | |
Section 12.02. | Application of Trust Money | |
ARTICLE 13 MISCELLANEOUS | ||
Section 13.01. | Reserved | |
Section 13.02. | Notices | |
Section 13.03. | Communication by Holders With Other Holders | |
Section 13.04. | Certificate and Opinion as to Conditions Precedent | |
Section 13.05. | Statements Required in Certificate or Opinion | |
Section 13.06. | [Intentionally Omitted] | |
Section 13.07. | Rules by Trustee, Paying Agent and Registrar | |
Section 13.08. | Business Days | |
Section 13.09. | GOVERNING LAW | |
Section 13.10. | No Recourse Against Others | |
Section 13.11. | Successors | |
Section 13.12. | Multiple Originals | |
Section 13.13. | Table of Contents; Headings | |
Section 13.14. | WAIVERS OF JURY TRIAL | |
Section 13.15. | [Intentionally Omitted] | |
Section 13.16. | Force Majeure | |
Section 13.17. | Severability |
EXHIBIT A | Form of Initial Note |
EXHIBIT B | Form of Indenture Supplement to Add Guarantors |
EXHIBIT C | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S |
TIA Section | Indenture Section | |
310(a)(1) | 7.10 | |
(a)(2) | 7.10 | |
(a)(3) | N.A. | |
(a)(4) | N.A. | |
(a)(5) | 7.10 | |
(b) | 7.08, 7.10 | |
(b)(1) | 7.10 | |
(c) | N.A. | |
311(a) | 7.12 | |
(b) | 7.12 | |
(c) | N.A. | |
312(a) | N.A. | |
(b) | 13.03 | |
(c) | 13.03 | |
313(a) | 7.06 | |
(b) | 7.06 | |
(c) | 7.06 | |
(d) | 7.06 | |
314(a) | N.A. | |
(c)(1) | N.A. | |
(c)(2) | N.A. | |
(c)(3) | N.A. | |
(e) | N.A. | |
315(a) | N.A. | |
(b) | N.A. | |
(c) | N.A. | |
(d) | N.A. | |
(e) | N.A. | |
316(a)(last sentence) | N.A. | |
(a)(1)(A) | N.A. | |
(a)(1)(B) | N.A. | |
(a)(2) | N.A. | |
(b) | N.A. | |
(c) | N.A. | |
317(a)(1) | N.A. | |
(a)(2) | N.A. | |
(b) | N.A. | |
N.A. means Not Applicable | ||
Note: The Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. |
Term | Section |
“Additional Interest Notice” | 3.14 |
“Additional Restricted Notes” | 2.01(b) |
“Agent Members” | 2.01(e)(iii) |
“Authenticating Agent” | 2.02 |
“Change of Control Offer” | 3.06(a) |
“Change of Control Payment” | 3.06(a) |
“Change of Control Payment Date” | 3.06(b) |
“Clearstream” | 2.01(b) |
“Company Order” | 2.02 |
“Covenant Defeasance” | 8.03 |
“Defaulted Interest” | 2.14 |
“Euroclear” | 2.01(b) |
“Event of Default” | 6.01 |
“Global Notes” | 2.01(b) |
“Guaranteed Obligations” | 10.01 |
“Legal Defeasance” | 8.02 |
“Notes Register” | 2.03 |
“Notice of Change of Control Offer” | 3.06(b) |
“Paying Agent” | 2.03 |
“Payment Default” | 6.01(e) |
“Permanent Regulation S Global Note” | 2.01(b) |
“Permitted Refinancing Lien" | 1.01 |
“protected purchaser” | 2.10 |
“Refinanced Lien” | 1.01 |
“Registrar” | 2.03 |
“Regulation S Global Note” | 2.01(b) |
“Regulation S Notes” | 2.01(b) |
“Resale Restriction Termination Date” | 2.06(b) |
“Restricted Period” | 2.01(b) |
“Rule 144A Global Note” | 2.01(b) |
“Rule 144A Notes” | 2.01(b) |
“Special Record Date” | 2.14(a) |
“Successor Company” | 4.01(a) |
“successor person” | 4.01(a) |
“Temporary Regulation S Global Note” | 2.01(b) |
Period | Redemption price |
October 15, 2020 | 103.188% |
October 15, 2021 | 101.594% |
October 15, 2022 | 100.000% |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title: Executive Vice President, Chief Financial Officer |
AK MANAGEMENT, INC. | |
AK STEEL PROPERTIES, INC. | |
AK TUBE LLC | |
AKS INVESTMENTS, INC. | |
CLIFFS MINNESOTA MINING COMPANY | |
CLIFFS TIOP, INC. | |
CLIFFS UTAC HOLDING LLC | |
IRONUNITS LLC | |
LAKE SUPERIOR & ISHPEMING RAILROAD COMPANY | |
MOUNTAIN STATE CARBON, LLC | |
PPHC HOLDINGS, LLC | |
SILVER BAY POWER COMPANY | |
SNA CARBON, LLC | |
UNITED TACONITE LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Secretary |
CLIFFS TIOP HOLDING, LLC | |
CLIFFS TIOP II, LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: General Counsel and Secretary |
CLIFFS MINING COMPANY | |
NORTHSHORE MINING COMPANY | |
THE CLEVELAND-CLIFFS IRON COMPANY | |
TILDEN MINING COMPANY L.C. By: The Cleveland-Cliffs Iron Company, as its manager | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer & Secretary |
AK STEEL CORPORATION | |
AK STEEL HOLDING CORPORATION | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Vice President, General Counsel and Secretary |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | /s/ Elizabeth Thuning |
Name: Elizabeth Thuning | |
Title: Vice President |
No. [ ] | Principal Amount $[ ] |
CUSIP NO. [ ] |
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | |
Name: Title: |
Period | Redemption price |
October 15, 2020 | 103.188% |
October 15, 2021 | 101.594% |
October 15, 2022 | 100% |
(Print or type assignee’s name, address and zip code) |
(Insert assignee’s social security or tax I.D. No.) |
Date: | Your Signature: | ||||
Signature Guarantee: | |||||
(Signature must be guaranteed) | |||||
Sign exactly as your name appears on the other side of this Note. |
Signature Guarantee: | Signature | |
(Signature must be guaranteed) | Signature |
Date of Exchange | Amount of decrease in Principal Amount of this Global Note | Amount of increase in Principal Amount of this Global Note | Principal Amount of this Global Note following such decrease or increase | Signature of authorized signatory of Trustee of Notes Custodian |
o | 3.06 |
Date: | |||
Your Signature | |||
(Sign exactly as your name appears on the other side of this Note) | |||
Signature Guarantee: | |||
(Signature must be guaranteed) | |||
Sign exactly as your name appears on the other side of this Note. |
[SUBSIDIARY GUARANTOR], as a Guarantor | |
By: | |
Name: | |
Title: |
[Address] | |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | |
Name: | |
Title: |
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: |
c/o | U.S. Bank National Association |
Re: | 6.375% Senior Guaranteed Notes due 2025 (the “Notes”) |
Very truly yours, | |
[Name of Transferor] | |
By: | |
Authorized Signature |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title: Executive Vice President, Chief Financial Officer |
AK MANAGEMENT, INC. | |
AK STEEL PROPERTIES, INC. | |
AK TUBE LLC | |
AKS INVESTMENTS, INC. | |
CLIFFS MINNESOTA MINING COMPANY | |
CLIFFS TIOP, INC. | |
CLIFFS UTAC HOLDING LLC | |
IRONUNITS LLC | |
LAKE SUPERIOR & ISHPEMING RAILROAD COMPANY | |
MOUNTAIN STATE CARBON, LLC | |
PPHC HOLDINGS, LLC | |
SILVER BAY POWER COMPANY | |
SNA CARBON, LLC | |
UNITED TACONITE LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Secretary |
CLIFFS TIOP HOLDING, LLC | |
CLIFFS TIOP II, LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: General Counsel and Secretary |
CLIFFS MINING COMPANY | |
NORTHSHORE MINING COMPANY | |
THE CLEVELAND-CLIFFS IRON COMPANY | |
TILDEN MINING COMPANY L.C. By: The Cleveland-Cliffs Iron Company, as its manager | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer & Secretary |
AK STEEL CORPORATION | |
AK STEEL HOLDING CORPORATION | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Vice President, General Counsel and Secretary |
CREDIT SUISSE SECURITIES (USA) LLC as the Dealer Manager | |
By: | /s/ Jonathan Singer |
Name: Jonathan Singer | |
Title: Managing Director |
Page | ||
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE | ||
Section 1.01. | Definitions | |
Section 1.02. | Other Definitions | |
Section 1.03. | Incorporation by Reference of Trust Indenture Act | |
Section 1.04. | Rules of Construction | |
ARTICLE 2 THE NOTES | ||
Section 2.01. | Form, Dating and Terms | |
Section 2.02. | Execution and Authentication | |
Section 2.03. | Registrar and Paying Agent | |
Section 2.04. | Paying Agent to Hold Money in Trust | |
Section 2.05. | Holder Lists | |
Section 2.06. | Transfer and Exchange | |
Section 2.07. | [Intentionally Omitted] | |
Section 2.08. | [Intentionally Omitted] | |
Section 2.09. | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S | |
Section 2.10. | Mutilated, Destroyed, Lost or Stolen Notes | |
Section 2.11. | Outstanding Notes | |
Section 2.12. | Temporary Notes | |
Section 2.13. | Cancellation | |
Section 2.14. | Payment of Interest; Defaulted Interest | |
Section 2.15. | Computation of Interest | |
Section 2.16. | CUSIP, Common Code and ISIN Numbers | |
ARTICLE 3 COVENANTS | ||
Section 3.01. | Payment of Notes | |
Section 3.02. | [Intentionally Omitted] | |
Section 3.03. | Restrictions on Liens | |
Section 3.04. | Restrictions on Sale and Leaseback Transactions | |
Section 3.05. | [Intentionally Omitted] | |
Section 3.06. | Change of Control Triggering Event | |
Section 3.07. | Reports to Holders | |
Section 3.08. | Additional Guarantees | |
Section 3.09. | [Intentionally Omitted] | |
Section 3.10. | Corporate Existence | |
Section 3.11. | Compliance Certificate | |
Section 3.12. | Further Instruments and Acts | |
Section 3.13. | Stay, Extension and Usury Laws | |
Section 3.14. | Additional Interest Notice | |
ARTICLE 4 SUCCESSOR COMPANY | ||
Section 4.01. | Consolidation, Merger or Sale of Assets | |
ARTICLE 5 REDEMPTION AND PREPAYMENT | ||
Section 5.01. | Notices to Trustee | |
Section 5.02. | Selection of Notes to Be Redeemed or Purchased |
Section 5.03. | Notice of Redemption | |
Section 5.04. | Effect of Notice of Redemption | |
Section 5.05. | Deposit of Redemption or Purchase Price | |
Section 5.06. | Notes Redeemed or Purchased in Part | |
Section 5.07. | Optional Redemption | |
Section 5.08. | Mandatory Redemption | |
ARTICLE 6 DEFAULTS AND REMEDIES | ||
Section 6.01. | Events of Default | |
Section 6.02. | Acceleration | |
Section 6.03. | Other Remedies | |
Section 6.04. | Waiver of Past Defaults | |
Section 6.05. | Control by Majority | |
Section 6.06. | Limitation on Suits | |
Section 6.07. | Rights of Holders to Receive Payment | |
Section 6.08. | Collection Suit by Trustee | |
Section 6.09. | Trustee May File Proofs of Claim | |
Section 6.10. | Priorities | |
Section 6.11. | Undertaking for Costs | |
ARTICLE 7 TRUSTEE | ||
Section 7.01. | Duties of Trustee | |
Section 7.02. | Rights of Trustee | |
Section 7.03. | Individual Rights of Trustee | |
Section 7.04. | Trustee's Disclaimer | |
Section 7.05. | Notice of Defaults | |
Section 7.06. | Reports by Trustee to Holders | |
Section 7.07. | Compensation and Indemnity | |
Section 7.08. | Replacement of Trustee | |
Section 7.09. | Successor Trustee by Merger | |
Section 7.10. | Eligibility; Disqualification | |
Section 7.11. | [Intentionally Omitted] | |
Section 7.12. | Preferential Collection of Claims Against the Company | |
Section 7.13. | Trustee in Other Capacities | |
Section 7.14. | USA Patriot Act | |
Section 7.15. | Calculations in Respect of the Notes | |
Section 7.16. | Brokerage Confirmations | |
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE | ||
Section 8.01. | Option to Effect Legal Defeasance or Covenant Defeasance: Defeasance | |
Section 8.02. | Legal Defeasance and Discharge | |
Section 8.03. | Covenant Defeasance | |
Section 8.04. | Conditions to Legal or Covenant Defeasance | |
Section 8.05. | Deposited Money and U.S. Government Obligations to be Held in Trust: Other Miscellaneous Provisions | |
Section 8.06. | Repayment to the Company | |
Section 8.07. | Reinstatement |
ARTICLE 9 AMENDMENTS | ||
Section 9.01. | Without Consent of Holders | |
Section 9.02. | WIth Consent of Holders | |
Section 9.03. | [Intentionally Omitted] | |
Section 9.04. | Revocation and Effect of Consents and Waivers | |
Section 9.05. | Notation on or Exchange of Notes | |
Section 9.06. | Trustee to Sign Amendments | |
ARTICLE 10 GUARANTEE | ||
Section 10.01. | Guarantee | |
Section 10.02. | Limitation on Liability; Termination; Release and Discharge | |
Section 10.03. | Right of Contribution | |
Section 10.04. | No Subrogation | |
Section 10.05. | Execution and Delivery of a Guarantee | |
ARTICLE 11 [INTENTIONALLY OMITTED] | ||
ARTICLE 12 SATISFACTION AND DISCHARGE | ||
Section 12.01. | Satisfaction and Discharge | |
Section 12.02. | Application of Trust Money | |
ARTICLE 13 MISCELLANEOUS | ||
Section 13.01. | Reserved | |
Section 13.02. | Notices | |
Section 13.03. | Communication by Holders With Other Holders | |
Section 13.04. | Certificate and Opinion as to Conditions Precedent | |
Section 13.05. | Statements Required in Certificate or Opinion | |
Section 13.06. | [Intentionally Omitted] | |
Section 13.07. | Rules by Trustee, Paying Agent and Registrar | |
Section 13.08. | Business Days | |
Section 13.09. | GOVERNING LAW | |
Section 13.10. | No Recourse Against Others | |
Section 13.11. | Successors | |
Section 13.12. | Multiple Originals | |
Section 13.13. | Table of Contents; Headings | |
Section 13.14. | WAIVERS OF JURY TRIAL | |
Section 13.15. | [Intentionally Omitted] | |
Section 13.16. | Force Majeure | |
Section 13.17. | Severability |
EXHIBIT A | Form of Initial Note |
EXHIBIT B | Form of Indenture Supplement to Add Guarantors |
EXHIBIT C | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S |
TIA Section | Indenture Section | |
310(a)(1) | 7.10 | |
(a)(2) | 7.10 | |
(a)(3) | N.A. | |
(a)(4) | N.A. | |
(a)(5) | 7.10 | |
(b) | 7.08, 7.10 | |
(b)(1) | 7.10 | |
(c) | N.A. | |
311(a) | 7.12 | |
(b) | 7.12 | |
(c) | N.A. | |
312(a) | N.A. | |
(b) | 13.03 | |
(c) | 13.03 | |
313(a) | 7.06 | |
(b) | 7.06 | |
(c) | 7.06 | |
(d) | 7.06 | |
314(a) | N.A. | |
(c)(1) | N.A. | |
(c)(2) | N.A. | |
(c)(3) | N.A. | |
(e) | N.A. | |
315(a) | N.A. | |
(b) | N.A. | |
(c) | N.A. | |
(d) | N.A. | |
(e) | N.A. | |
316(a)(last sentence) | N.A. | |
(a)(1)(A) | N.A. | |
(a)(1)(B) | N.A. | |
(a)(2) | N.A. | |
(b) | N.A. | |
(c) | N.A. | |
317(a)(1) | N.A. | |
(a)(2) | N.A. | |
(b) | N.A. | |
N.A. means Not Applicable | ||
Note: The Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. |
Term | Section |
“Additional Interest Notice” | 3.14 |
“Additional Restricted Notes” | 2.01(b) |
“Agent Members” | 2.01(e)(iii) |
“Authenticating Agent” | 2.02 |
“Change of Control Offer” | 3.06(a) |
“Change of Control Payment” | 3.06(a) |
“Change of Control Payment Date” | 3.06(b) |
“Clearstream” | 2.01(b) |
“Company Order” | 2.02 |
“Covenant Defeasance” | 8.03 |
“Defaulted Interest” | 2.14 |
“Euroclear” | 2.01(b) |
“Event of Default” | 6.01 |
“Global Notes” | 2.01(b) |
“Guaranteed Obligations” | 10.01 |
“Legal Defeasance” | 8.02 |
“Notes Register” | 2.03 |
“Notice of Change of Control Offer” | 3.06(b) |
“Paying Agent” | 2.03 |
“Payment Default” | 6.01(e) |
“Permanent Regulation S Global Note” | 2.01(b) |
“Permitted Refinancing Lien" | 1.01 |
“protected purchaser” | 2.10 |
“Refinanced Lien” | 1.01 |
“Registrar” | 2.03 |
“Regulation S Global Note” | 2.01(b) |
“Regulation S Notes” | 2.01(b) |
“Resale Restriction Termination Date” | 2.06(b) |
“Restricted Period” | 2.01(b) |
“Rule 144A Global Note” | 2.01(b) |
“Rule 144A Notes” | 2.01(b) |
“Special Record Date” | 2.14(a) |
“Successor Company” | 4.01(a) |
“successor person” | 4.01(a) |
“Temporary Regulation S Global Note” | 2.01(b) |
Period | Redemption price |
March 15, 2022 | 103.500% |
March 15, 2023 | 102.333% |
March 15, 2024 | 101.167% |
March 15, 2025 | 100.000% |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title: Executive Vice President, Chief Financial Officer |
AK MANAGEMENT, INC. | |
AK STEEL PROPERTIES, INC. | |
AK TUBE LLC | |
AKS INVESTMENTS, INC. | |
CLIFFS MINNESOTA MINING COMPANY | |
CLIFFS TIOP, INC. | |
CLIFFS UTAC HOLDING LLC | |
IRONUNITS LLC | |
LAKE SUPERIOR & ISHPEMING RAILROAD COMPANY | |
MOUNTAIN STATE CARBON, LLC | |
PPHC HOLDINGS, LLC | |
SILVER BAY POWER COMPANY | |
SNA CARBON, LLC | |
UNITED TACONITE LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Secretary |
CLIFFS TIOP HOLDING, LLC | |
CLIFFS TIOP II, LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: General Counsel and Secretary |
CLIFFS MINING COMPANY | |
NORTHSHORE MINING COMPANY | |
THE CLEVELAND-CLIFFS IRON COMPANY | |
TILDEN MINING COMPANY L.C. By: The Cleveland-Cliffs Iron Company, as its manager | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer & Secretary |
AK STEEL CORPORATION | |
AK STEEL HOLDING CORPORATION | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Vice President, General Counsel and Secretary |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | /s/ Elizabeth Thuning |
Name: Elizabeth Thuning | |
Title: Vice President |
No. [ ] | Principal Amount $[ ] |
CUSIP NO. [ ] |
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | |
Name: Title: |
Period | Redemption price |
March 15, 2022 | 103.500% |
March 15, 2023 | 102.333% |
March 15, 2024 | 101.167% |
March 15, 2025 | 100.000% |
(Print or type assignee’s name, address and zip code) |
(Insert assignee’s social security or tax I.D. No.) |
Date: | Your Signature: | ||||
Signature Guarantee: | |||||
(Signature must be guaranteed) | |||||
Sign exactly as your name appears on the other side of this Note. |
Signature Guarantee: | Signature | |
(Signature must be guaranteed) | Signature |
Date of Exchange | Amount of decrease in Principal Amount of this Global Note | Amount of increase in Principal Amount of this Global Note | Principal Amount of this Global Note following such decrease or increase | Signature of authorized signatory of Trustee of Notes Custodian |
o | 3.06 |
Date: | |||
Your Signature | |||
(Sign exactly as your name appears on the other side of this Note) | |||
Signature Guarantee: | |||
(Signature must be guaranteed) | |||
Sign exactly as your name appears on the other side of this Note. |
[SUBSIDIARY GUARANTOR], as a Guarantor | |
By: | |
Name: | |
Title: |
[Address] | |
U.S. BANK NATIONAL ASSOCIATION, as Trustee | |
By: | |
Name: | |
Title: |
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: |
c/o | U.S. Bank National Association |
Re: | 7.00% Senior Guaranteed Notes due 2027 (the “Notes”) |
Very truly yours, | |
[Name of Transferor] | |
By: | |
Authorized Signature |
CLEVELAND-CLIFFS INC. | |
By: | /s/ Keith A. Koci |
Name: Keith A. Koci | |
Title: Executive Vice President, Chief Financial Officer |
AK MANAGEMENT, INC. | |
AK STEEL PROPERTIES, INC. | |
AK TUBE LLC | |
AKS INVESTMENTS, INC. | |
CLIFFS MINNESOTA MINING COMPANY | |
CLIFFS TIOP, INC. | |
CLIFFS UTAC HOLDING LLC | |
IRONUNITS LLC | |
LAKE SUPERIOR & ISHPEMING RAILROAD COMPANY | |
MOUNTAIN STATE CARBON, LLC | |
PPHC HOLDINGS, LLC | |
SILVER BAY POWER COMPANY | |
SNA CARBON, LLC | |
UNITED TACONITE LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Secretary |
CLIFFS TIOP HOLDING, LLC | |
CLIFFS TIOP II, LLC | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: General Counsel and Secretary |
CLIFFS MINING COMPANY | |
NORTHSHORE MINING COMPANY | |
THE CLEVELAND-CLIFFS IRON COMPANY | |
TILDEN MINING COMPANY L.C. By: The Cleveland-Cliffs Iron Company, as its manager | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer & Secretary |
AK STEEL CORPORATION | |
AK STEEL HOLDING CORPORATION | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Vice President, General Counsel and Secretary |
CREDIT SUISSE SECURITIES (USA) LLC as the Dealer Manager | |
By: | /s/ Jonathan Singer |
Name: Jonathan Singer | |
Title: Managing Director |
Page | |||
1 | DEFINITIONS AND CONSTRUCTION | ||
1.1 | Definitions | ||
1.2 | Accounting Terms | ||
1.3 | Limited Condition Transaction | ||
1.4 | Construction | ||
1.5 | Time References | ||
1.6 | Schedules and Exhibits | ||
1.7 | Dollar Equivalent | ||
1.8 | LIBOR Rate | ||
2 | REVOLVING LOANS AND TERMS OF PAYMENT | ||
2.1 | Revolving Loans | ||
2.2 | Additional Borrowers | ||
2.3 | Borrowing Procedures and Settlements | ||
2.4 | Payments; Reductions of Commitments; Prepayments | ||
2.5 | Promise to Pay; Promissory Notes | ||
2.6 | Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations | ||
2.7 | Crediting Payments | ||
2.8 | Designated Accounts | ||
2.9 | Maintenance of Loan Account; Statements of Obligations | ||
2.10 | Fees | ||
2.11 | Letters of Credit | ||
2.12 | [Reserved] | ||
2.13 | LIBOR Option | ||
2.14 | Capital Requirements | ||
2.15 | Joint and Several Liability | ||
2.16 | Incremental Borrowings | ||
2.17 | Tranche B Exchange Offer | ||
2.18 | Tranche A Exchange Offer | ||
3 | CONDITIONS; TERM OF AGREEMENT | ||
3.1 | Conditions Precedent to the Closing Date | ||
3.2 | [Reserved] | ||
3.3 | Conditions Precedent to all Extensions of Credit | ||
3.4 | Maturity | ||
3.5 | Effect of Maturity | ||
3.6 | Early Termination by Borrowers | ||
3.7 | Conditions Subsequent | ||
4 | REPRESENTATIONS AND WARRANTIES | ||
4.1 | Due Organization and Qualification; Subsidiaries | ||
4.2 | Due Authorization; No Conflict | ||
4.3 | Governmental Consents | ||
4.4 | Binding Obligations; Perfected Liens | ||
4.5 | Title to Assets; No Encumbrances | ||
4.6 | Litigation | ||
4.7 | Compliance with Laws | ||
4.8 | Financial Statements; No Material Adverse Effect |
Page | |||
4.9 | Solvency | ||
4.10 | Employee Benefits | ||
4.11 | Environmental Condition | ||
4.12 | Complete Disclosure | ||
4.13 | Sanctions, PATRIOT Act, and FCPA | ||
4.14 | [Reserved.] | ||
4.15 | Payment of Taxes | ||
4.16 | Margin Stock | ||
4.17 | Governmental Regulation | ||
4.18 | OFAC | ||
4.19 | Employee and Labor Matters | ||
4.20 | [Reserved.] | ||
4.21 | [Reserved.] | ||
4.22 | Eligible Accounts | ||
4.23 | Eligible Inventory and Eligible Equipment | ||
4.24 | Material Contracts | ||
4.25 | Inventory and Equipment Records | ||
4.26 | EEA Financial Institutions | ||
5 | AFFIRMATIVE COVENANTS | ||
5.1 | Financial Statements, Reports, Certificates | ||
5.2 | Reporting | ||
5.3 | Existence | ||
5.4 | Maintenance of Properties | ||
5.5 | Taxes | ||
5.6 | Insurance | ||
5.7 | Inspection | ||
5.8 | Compliance with Laws | ||
5.9 | Environmental | ||
5.10 | [Reserved.] | ||
5.11 | Formation of Subsidiaries | ||
5.12 | Further Assurances | ||
5.13 | Lender Meetings | ||
5.14 | [Reserved] | ||
5.15 | Compliance with ERISA and the IRC | ||
5.16 | Cash Management | ||
6 | NEGATIVE COVENANTS | ||
6.1 | Indebtedness | ||
6.2 | Liens | ||
6.3 | Restrictions on Fundamental Changes | ||
6.4 | Disposal of Assets | ||
6.5 | Nature of Business | ||
6.6 | Prepayments and Amendments | ||
6.7 | Restricted Payments | ||
6.8 | Accounting Methods | ||
6.9 | Investments |
Page | |||
6.10 | Transactions with Affiliates | ||
6.11 | Use of Proceeds | ||
7 | FINANCIAL COVENANT | ||
8 | EVENTS OF DEFAULT | ||
8.1 | Payments | ||
8.2 | Covenants | ||
8.3 | Judgments | ||
8.4 | Voluntary Bankruptcy, etc. | ||
8.5 | Involuntary Bankruptcy, etc. | ||
8.6 | Default Under Other Agreements | ||
8.7 | Representations, etc. | ||
8.8 | Security Documents | ||
8.9 | Loan Documents | ||
8.10 | Change in Control | ||
8.11 | ERISA and Pension Events | ||
9 | RIGHTS AND REMEDIES | ||
9.1 | Rights and Remedies | ||
9.2 | Remedies Cumulative | ||
10 | WAIVERS; INDEMNIFICATION | ||
10.1 | Demand; Protest; etc. | ||
10.2 | The Lender Group's Liability for Collateral | ||
10.3 | Indemnification | ||
11 | NOTICES | ||
12 | CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION | ||
13 | ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS | ||
13.1 | Assignments and Participations | ||
13.2 | Successors | ||
14 | AMENDMENTS; WAIVERS | ||
14.1 | Amendments and Waivers | ||
14.2 | Replacement of Certain Lenders | ||
14.3 | No Waivers; Cumulative Remedies | ||
15 | AGENT | ||
15.1 | Appointment; Authority and Duties of Agent | ||
15.2 | Liability of Agent | ||
15.3 | Reliance by Agent | ||
15.4 | Notice of Default or Event of Default | ||
15.5 | Due Diligence and Non-Reliance | ||
15.6 | Indemnification | ||
15.7 | Individual Capacities | ||
15.8 | Successor Agent | ||
15.9 | Agreements Regarding Collateral and Borrower Materials | ||
15.10 | Ratable Sharing | ||
15.11 | Remittance of Payments and Collections | ||
15.12 | Titles | ||
15.13 | Bank of Product Providers |
Page | |||
15.14 | No Third Party Beneficiaries | ||
16 | [Reserved] | ||
17 | WITHHOLDING TAXES | ||
17.1 | Payments | ||
17.2 | Exemptions | ||
17.3 | Reductions | ||
17.4 | Refunds | ||
18 | GENERAL PROVISIONS | ||
18.1 | Effectiveness | ||
18.2 | Section Headings | ||
18.3 | Interpretation | ||
18.4 | Severability of Provisions | ||
18.5 | Bank Product Providers | ||
18.6 | Debtor-Creditor Relationship | ||
18.7 | Counterparts; Electronic Execution | ||
18.8 | Revival and Reinstatement of Obligations; Certain Waivers | ||
18.9 | Confidentiality | ||
18.10 | Survival | ||
18.11 | Patriot Act | ||
18.12 | Integration | ||
18.13 | Parent as Agent for Borrowers | ||
18.14 | Judgment Currency | ||
18.15 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | ||
18.16 | Certain ERISA Matters | ||
18.17 | Acknowledgement Regarding Any Supported QFCs | ||
18.18 | Application of Sanctions Provisions to the Loan Parties | ||
19 | INTERCREDITOR AGREEMENT |
Exhibit A-1 | Form of Assignment and Acceptance |
Exhibit B-1 | Form of Borrowing Base Certificate |
Exhibit B-2 | Form of Bank Product Provider Agreement |
Exhibit C-1 | Form of Compliance Certificate |
Exhibit D-1 | Form of Solvency Certificate |
Exhibit L-1 | Form of LIBOR Notice |
Schedule 1.1 | Definitions |
Schedule A-1 | [Reserved] |
Schedule C-1 | Revolver Commitments |
Schedule E-1 | Existing Hedge Obligations |
Schedule E-2 | Existing Letters of Credit |
Schedule E-3 | Excluded Subsidiary Indebtedness |
Schedule I-1 | Immaterial Subsidiaries |
Schedule J-1 | Joint Ventures |
Schedule P-1 | Permitted Investments |
Schedule P-2 | Permitted Liens |
Schedule P-3 | [Reserved] |
Schedule P-4 | Permitted Indebtedness |
Schedule 3.1 | Conditions Precedent to Closing Date |
Schedule 3.7 | Conditions Subsequent |
Schedule 4.1(b) | Capitalization of Borrowers |
Schedule 4.1(c) | Capitalization of Borrowers’ Subsidiaries |
Schedule 4.1(d) | Subscriptions, Options, Warrants, Calls |
Schedule 4.6 | Litigation |
Schedule 4.11 | Environmental Conditions |
Schedule 5.1 | Financial Statements, Reports, Certificates |
Schedule 5.2 | Collateral Reporting |
Schedule 5.16 | Deposit Accounts |
If to any Borrower: | c/o CLEVELAND-CLIFFS INC. 200 Public Square #3300 Cleveland, Ohio 44114 Attn: James Graham Email: james.graham@clevelandcliffs.com |
With a copy to: | |
Cleveland-Cliffs Inc. 200 Public Square #3300 Cleveland, Ohio 44114 Attn: Keith Koci Email: Keith.Koci@clevelandcliffs.com | |
If to Agent: | BANK OF AMERICA, N.A. 135 S. LaSalle St., Suite 925 Chicago, IL 60604 Attn: Thomas Herron Tel no.: 312-992-6107 Email: thomas.h.herron@baml.com |
If to Issuing Bank: | To Agent |
If to any Lender: | At such address as such Lender may designate in writing to the Agent from time to time or via the Platform |
CLEVELAND-CLIFFS INC. | |
/s/ James D. Graham | |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer and Secretary |
BANK OF AMERICA, N.A., as Agent and as a Lender | |
By: | /s/ Thomas H. Herron |
Name: | Thomas H. Herron |
Title: | Senior Vice President |
Wells Fargo Bank, National Association, as a Lender | |
By: | /s/ Sarah Raybon |
Name: | Sarah Raybon |
Title: | Authorized Signatory |
JPMORGAN CHASE BANK, N.A., as a Lender | |
By: | /s/ Eric B. Bergeson |
Name: | Eric B. Bergeson |
Title: | Authorized Officer |
PNC Bank, National Association, as a Lender | |
By: | /s/ Robert T. Brown |
Name: | Robert T. Brown |
Title: | Vice President |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender | |
By: | /s/ Mikhail Faybusovich |
Name: | Mikhail Faybusovich |
Title: | Authorized Signatory |
By: | /s/ Komal Shah |
Name: | Komal Shah |
Title: | Authorized Signatory |
Deutsche Bank AG New York Branch, as a Lender | |
By: | /s/ Michael Strobel |
Name: | Michael Strobel |
Title: | Vice President |
If second signature is needed: | |
By: | /s/ Susan Onal |
Name: | Susan Onal |
Title: | Associate |
GOLDMAN SACHS BANK USA, as a Lender | |
By: | /s/ Thomas M. Manning |
Name: | Thomas M. Manning |
Title: | Authorized Signatory |
Regions Bank, as a Lender | |
By: | /s/ Stephen J. McGreevy |
Name: | Stephen J. McGreevy |
Title: | Managing Director |
FIFTH THIRD BANK, NATIONAL ASSOCIATION, as a Lender | |
By: | /s/ Paul Vitti |
Name: | Paul Vitti |
Title: | Managing Director |
Citibank, N.A., as a Lender | |
By: | /s/ David L. Smith |
Name: | David L. Smith |
Title: | Vice President and Director |
Citizens Bank N.A., as a Lender | |
By: | /s/ James G. Zamborsky |
Name: | James G. Zamborsky |
Title: | Vice President |
BARCLAYS BANK PLC, as a Lender | |
By: | /s/ Craig Malloy |
Name: | Craig Malloy |
Title: | Director |
The Huntington National Bank, as a Lender | |
By: | /s/ Paul Weybrecht |
Name: | Paul Weybrecht |
Title: | Senior Vice President |
BMO Harris Bank N.A., as a Lender | |
By: | /s/ Quinn Heiden |
Name: | Quinn Heiden |
Title: | Managing Director |
U.S. BANK NATIONAL ASSOCIATION, as a Lender | |
By: | /s/ Matthew Kasper |
Name: | Matthew Kasper |
Title: | Senior Vice President |
Truist Bank, as a Lender | |
By: | /s/ Amanda Watkins |
Name: | Amanda Watkins |
Title: | Director |
NYCB SPECIALTY FINANCE COMPANY, LLC, a wholly owned subsidiary of New York Community Bank, as a Lender | |
By: | /s/ Willard D. Dickerson, Jr. |
Name: | Willard D. Dickerson, Jr. |
Title: | Senior Vice President |
Siemens Financial Services, Inc., as a Lender | |
By: | /s/ Jeffrey B. Iervese |
Name: | Jeffrey B. Iervese |
Title: | Vice President |
By: | /s/ William Pope |
Name: | William Pope |
Title: | Sr. Loan Closer |
ING CAPITAL LLC | |
By: | /s/ Jean Grasso |
Name: | Jean Grasso |
Title: | Managing Director |
If second signature is needed: | |
By: | /s/ Tyler Bowman |
Name: | Tyler Bowman |
Title: | Vice President |
ROYAL BANK OF CANADA, as a Lender | |
By: | /s/ Alexandre Camerlain |
Name: | Alexandre Camerlain |
Title: | Authorized Signatory |
(a) | If to Assignee, to the following address (or to such other address as Assignee may designate from time to time): |
(b) | If to Assignor, to the following address (or to such other address as Assignor may designate from time to time): |
[NAME OF ASSIGNOR] as Assignor | |
By: | |
Name: | |
Title: |
[NAME OF ASSIGNEE] as Assignee | |
By: | |
Name: | |
Title: |
[NAME OF ASSIGNOR] as Assignor | |
By: | |
Name: | |
Title: |
[NAME OF ASSIGNEE] as Assignee | |
By: | |
Name: | |
Title: |
[BANK OF AMERICA, N.A., as Agent]¹ | |
By: | |
Name: | |
Title: |
[[ISSUING BANK], as Issuing Bank]² | |
By: | |
Name: | |
Title: |
CLEVELAND-CLIFFS INC., an Ohio corporation, as Parent | |
By: | |
Name: | |
Title: |
By |
CLEVELAND-CLIFFS INC., an Ohio corporation, as Parent | |
By: | |
Name: | |
Title: |
1. | Fixed Charge Coverage Ratio |
(a) | EBITDA8 for the Relevant Period ended on the Computation Date | $_____ |
(b) | Capital Expenditures made (except (x) any amounts related to capitalized interest with respect thereto, (y) any Capital Expenditures made or incurred after the Closing Date but on or prior to September 30, 2020 in an aggregate amount not to exceed $250,000,000 in connection with the Toledo, Ohio hot briquetted iron production plant or (z) those financed with Indebtedness (other than Revolving Loans) or proceeds of an equity issuance of Parent to the extent such proceeds are applied to finance such Capital Expenditures within one hundred eighty (180) days) | $_____ |
(c) | Federal, state and local income Taxes paid in cash during the Relevant Period (net of federal, state and local Tax refunds received in cash during such period) | $_____ |
(d) | Result of line (a) minus line (b) minus line (c) | $_____ |
(e) | Fixed Charges9 for thee Relevant Period10 | $_____ |
(f) | Ratio of line (d) to line (e) | Actual: _____:1.00 Required: ≥ 1.00:1.0011 |
2. | EBITDA |
(a) | Parent’s consolidated net earnings (or loss), | $_____ |
(b) | minus (without duplication) the sum of items (i) through (iii) below of Parent for the Relevant Period to the extent included in determining consolidated net earnings (or loss) for such period: | $_____ |
i. | any extraordinary, unusual or non-recurring gains, | $_____ |
ii. | interest income, | $_____ |
iii. | exchange, translation or performance gains relating to any hedging transactions or foreign currency fluctuations, and | $_____ |
(c) | plus (without duplication), the sum of the following items (i) through (xiv) of Parent for the Relevant Period to the extent included in determining consolidated net earnings (or loss) for such period | $_____ |
i. | any non-cash extraordinary, unusual, or non-recurring losses, | $_____ |
ii. | the aggregate of the interest expense of Parent for the Relevant Period, determined on a consolidated basis in accordance with GAAP but subject to Section 1.2 of the Credit Agreement (“Interest Expense”, | $_____ |
iii. | Tax expense based on income, profits or capital, including federal, foreign, state, franchise and similar Taxes (and for the avoidance of doubt, specifically excluding any sales Taxes or any other Taxes held in trust for a Governmental Authority), | $_____ |
iv. | depreciation and amortization for such period, | $_____ |
v. | (A) with respect to any Permitted Acquisition after the Closing Date, costs, fees, charges, or expenses consisting of out-of-pocket expenses owed by Parent or any of its Subsidiaries to any Person for services performed by such Person in connection with such Permitted Acquisition incurred within 180 days of the consummation of such Permitted Acquisition, up to an aggregate amount (for all such items in this clause (v)) for such Permitted Acquisition not to exceed the greater of (x) $5,000,000 and (y) 5.00% of the Purchase Price of such Permitted Acquisition, and (B) with respect to the Transactions, costs, fees, charges, or expenses consisting of expenses owed by Parent or any of its Subsidiaries to any Person in connection with or resulting from the Transactions or the transactions related thereto, | $_____ |
vi. | (A) purchase accounting adjustments, including, without limitation, a dollar for dollar adjustment for that portion of revenue that would have been recorded in the relevant period had the balance of deferred revenue (unearned income) recorded on the closing balance sheet and before application of purchase accounting not been adjusted downward to fair value to be recorded on the opening balance sheet in accordance with GAAP purchase accounting rules; and (B) non-cash adjustments in accordance with GAAP purchase accounting rules under Statement of Financial Accounting Standards No. 805, in the event that such an adjustment is required by Parent’s independent auditors, in each case, as determined in accordance with GAAP, | $_____ |
vii. | costs and expenses incurred during such period in connection with the restructuring of APIO, in an aggregate amount for all such costs and expenses incurred during such period not to exceed $10,000,000 for such period, | $_____ |
viii. | non-cash compensation expense (including deferred non-cash compensation expense), or other non-cash expenses or charges, arising from the sale or issuance of Equity Interests, the granting of stock options, and the granting of stock appreciation rights and similar arrangements (including any repricing, amendment, modification, substitution, or change of any such Equity Interests, stock option, stock appreciation rights, or similar arrangements) minus the amount of any such expenses or charges when paid in cash to the extent not deducted in the computation of net earnings (or loss), | $_____ |
ix. | one-time non-cash restructuring charges, | $_____ |
x. | non-cash exchange, translation, or performance losses relating to any hedging transactions or foreign currency fluctuations, | $_____ |
xi. | non-cash losses on sales of fixed assets or write-downs of fixed or intangible assets (excluding ABL Priority Collateral), | $_____ |
xii. | any non-cash loss, charge or expense (but only to the extent not relating to the ABL Priority Collateral), | $_____ |
xiii. | financing fees, costs, accruals, payments and expenses (including rationalization, legal, Tax, structuring and other costs and expenses and non-operating or non-recurring professional fees, costs and expenses related thereto), related to, to the extent permitted under this Agreement, any Permitted Investments, Permitted Dispositions (other than in the ordinary course of business), issuances of Equity Interests and issuances, amendments, modifications, refinancings or repayments of Permitted Indebtedness (in each case, regardless of whether or not consummated), and | $_____ |
xiv. | any severance, relocation, consolidation, closing, integration, facilities opening, business optimization, transition or restructuring costs, charges or expenses (including any costs or expenses associated with any expatriate), any signing, retention or completion bonuses; provided that the amount of costs, charges or expenses added back in reliance on this clause (c)(xiv) in any period may not exceed, together with Expected Cost Savings added back in reliance on clause (d) in such period, an amount equal to 20% of EBITDA for such period (calculated before giving effect to such add-backs or adjustments pursuant to this clause (c)(xiv) and clause (d)), | $_____ |
(d) | the full pro forma “run rate” cost savings, operating expense reductions, operational improvements and synergies (net of actual amounts realized) that are reasonably identifiable and factually supportable (in the good faith determination of Parent, as certified by a Responsible Officer of Parent) related to the Transactions, any Permitted Investment, Permitted Disposition, operating improvement, restructuring, cost savings initiative and/or any similar initiative (any such Permitted Investment, Permitted Disposition operating improvement, restructuring, cost savings initiative and/or similar initiative, a “Cost Saving Initiative”), in each case, prior to, on or after the Closing Date; provided, that with respect to Cost Saving Initiatives under this clause (d), (1) substantial steps toward the action necessary to realize any such cost savings, operating expense reduction, operating improvement and/or synergy added back in reliance on this clause (d) with respect to the Transactions, any Permitted Investment, Permitted Disposition, operating improvement, restructuring, cost savings initiative and/or any similar initiative are expected to be taken within 18 months following the date on which Parent determines to take such action and (2) the amount of such Expected Cost Savings added back in reliance on clause (d) in any period shall not exceed, together with costs, charges or expenses added back in reliance on clause (xiv) in such period, an amount equal to 20.0% of EBITDA for such period (calculated before giving effect to such add-backs or adjustments pursuant to this clause (d) and clause (c)(xiv)), | $_____ |
(e) | EBITDA: (a) - (b) + (c) + (d) = | $_____ |
3. | Fixed Charges |
(a) | Interest Expense accrued (other than (x) interest paid-in-kind, amortization of financing fees, and other non-cash Interest Expense and (y) make-whole payments, premiums or similar payments related to the prepayment or extinguishment of Indebtedness) during such period to the extent required to be paid in cash, plus | $_____ |
(b) | Scheduled principal payments in respect of all Indebtedness for borrowed money or letters of credit of Parent, determined on a consolidated basis in accordance with GAAP (“Funded Indebtedness”) that are required to be paid in cash during such period (excluding, for the avoidance of doubt, (w) any payments made with the proceeds of an equity issuance of Parent to the extent such proceeds are applied to any such principal payments in respect of Funded Indebtedness within one hundred eighty (180) days, (x) any mandatory or voluntary prepayments, (y) any payments made at the maturity of such Funded Indebtedness or (z) any payments made in connection with the Transactions or any Refinancing of such Funded Indebtedness), plus | $_____ |
(c) | All Restricted Payments paid in cash pursuant to Section 6.7(a) or (e) of the Credit Agreement during the Relevant Period, plus | $_____ |
(d) | All cash payments in connection with pensions or other post-retirement benefit obligations (only to the extent not otherwise deducted in the calculation of clause (a) of EBITDA as an expense on the Parent’s income statement) in excess of $50,000,000 | |
(e) | Fixed Charges: without duplication, the sum of: (a) + (b) + (c) + (d) | $_____ |
[l] | |
By: | |
Name: | |
Title: [Chief Financial Officer] [title of other comparable financial officer] |
12 Borrowers may only exercise the LIBOR Option for proposed LIBOR Rate Loans of at least $1,000,000 (and integral multiples of $500,000 in excess thereof). | ||
13 If agreed to by all Lenders, such shorter or longer period. | ||
14 Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall have not more than ten (10) LIBOR Rate Loans in effect at any given time. |
Dated: | CLEVELAND-CLIFFS INC., an Ohio corporation, as Parent | ||
By: | |||
Name: | |||
Title: |
Acknowledged by: BANK OF AMERICA, N.A., as Agent | |
By: | |
Name: | |
Title: |
Level | Average Daily Aggregate Excess Availability | Applicable Margin Relative to Base Rate Loans (the “Base Rate Margin”) | Applicable Margin Relative to LIBOR Rate Loans (the “LIBOR Rate Margin”) |
I | ≥ 66 2/3% of the Tranche A Line Cap | 0.25% | 1.25% |
II | < 66 2/3% of Tranche A Line Cap | 0.50% | 1.50% |
Level | Average Tranche A Revolver Usage | Applicable Unused Line Fee Percentage |
I | ≥ 50% of the Maximum Revolver Amount | 0.250% |
II | < 50% of the Maximum Revolver Amount | 0.300% |
Level | Average Tranche B Revolver Usage | Applicable Unused Line Fee Percentage |
I | ≥ 50% of the Maximum Revolver Amount | 0.250% |
II | < 50% of the Maximum Revolver Amount | 0.300% |
1. | this Agreement executed by each Borrower, Agent and each Lender; |
2. | the Guaranty and Security Agreement executed by the Loan Parties (including the Target Loan Parties); |
3. | the Copyright Security Agreement, the Patent Security Agreement and the Trademark Security Agreement, in each case, executed by the applicable Loan Parties (including the Target Loan Parties); |
4. | the Intercompany Subordination Agreement executed by the Loan Parties (including the Target Loan Parties) and the Agent; |
5. | a supplement to the Intercreditor Agreement designating this Agreement as an “ABL Credit Agreement” for the purposes of the Intercreditor Agreement executed by the Agent and the Borrowers; |
6. | an Additional Fixed Asset Designation and an Additional Fixed Asset Joinder (each as defined in the Intercreditor Agreement) with respect to the 2026 Senior Secured Notes; and |
7. | an Acknowledgement to the Intercreditor Agreement executed by the Target Loan Parties; |
Debtor | Secured Party | Initial Filing Number | Filing Date | Jurisdiction |
AK Steel Corporation | Air Liquide Industrial U.S. LP | 2016 3034137 | 5/20/2016 | DE |
AK Steel Corporation | Air Liquide Industrial U.S. LP | 2016 4172803 | 7/11/2016 | DE |
AK Steel Corporation | Air Liquide Industrial U.S. LP | 2016 4322374 | 7/18/2016 | DE |
within 45 days after the end of each Parent's fiscal quarters, | (a) an unaudited consolidated balance sheet, income statement, statement of cash flow, and statement of shareholder’s equity covering Parent’s and its Subsidiaries’ operations during such period and compared to the prior period and plan, together with a corresponding discussion and analysis of results from management (or notice to the Administrative Agent that such discussion and analysis is in the Parent’s Form 10-Q), and (b) a Compliance Certificate along with the underlying calculations, including the calculations to arrive at EBITDA and Fixed Charge Coverage Ratio (whether or not required to be tested). |
within 90 days after the end of each of Parent’s fiscal years, | (c) consolidated financial statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants of national standing or otherwise reasonably acceptable to Agent and accompanied by an unqualified opinion (as defined in Section 1.2 of the Agreement), of such accountants to the effect that such audited financial statements have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, statement of cash flow, and statement of shareholder’s equity, and, if prepared, such accountants’ final letter to management), (d) unaudited consolidating financial statements of Parent and the other Loan Parties for each such fiscal year, and (e) a Compliance Certificate along with the underlying calculations, including the calculations to arrive at EBITDA and Fixed Charge Coverage Ratio (whether or not required to be tested). |
within 60 days after the end of each of Parent’s fiscal years, | (f) copies of Parent’s Projections, in a form reasonably satisfactory to Agent, in its Permitted Discretion, for the forthcoming three (3) years, year by year, and for the forthcoming fiscal year, fiscal quarter by fiscal quarter, certified by the chief financial officer or other senior financial officer of Parent as being prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed to be reasonable by Parent at the time made and at the time so furnished. |
if and when filed by Parent, | (g) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (h) any other filings made by Parent with the SEC, and (i) any other information that is provided by Parent to its shareholders generally. |
within five (5) Business Days after any Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default, | (j) notice of such event or condition and a statement of the curative action that Borrowers propose to take with respect thereto. |
within five (5) Business Days after any Borrower has knowledge thereof, | (k) notice of all actions, suits, or proceedings brought by or against any Borrower or any of its Restricted Subsidiaries before any Governmental Authority which would reasonably be expected to result in a Material Adverse Effect. |
promptly and in any event within 30 days after the filing thereof with the United States Department of Labor or other Governmental Authority, | (l) copies of each Schedule SB (Actuarial Information) to the Annual Report (Form 5500 Series) including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information with respect to each Pension Plan. |
promptly upon the request of Agent, | (m)(i) written notice of the commencement of any Environmental Action or receipt of any written notice that an Environmental Action will be filed against a Borrower or its Subsidiaries, in each case, to the extent such Environmental Action would reasonably be expected to result in a Material Adverse Effect, and (ii) written notice of a violation, citation, or other administrative order from a Governmental Authority, to the extent such violation, citation, or other administrative order would reasonably be expected to result in a Material Adverse Effect. (n) any other information reasonably requested relating to the financial condition of any Borrower or its Restricted Subsidiaries. |
promptly after any Borrower has knowledge thereof, | (o) any loss of ABL Priority Collateral exceeding $50,000,000 covered by a Borrower’s or a Borrower’s Subsidiary’s casualty or business interruption insurance; provided that during the continuance of an Event of Default or a Cash Dominion Trigger Period, the threshold included in this sentence shall be $25,000,000. |
monthly, within 20 days after the end of each fiscal month during each of Parent’s fiscal years, or during any Increased Borrowing Base Reporting Period (as defined below), weekly (no later than Wednesday of each week as of and for the immediately preceding week), | (a) an executed Borrowing Base Certificate, (b) a detailed aging, by total, of Loan Parties’ Accounts, together with a reconciliation and supporting documentation for any reconciling items noted, (c) a monthly Account roll-forward, in a format reasonably acceptable to Agent in its Permitted Discretion, tied to the beginning and ending account receivable balances of Loan Parties’ general ledger, (d) notice of all material claims, offsets, or disputes asserted by Account Debtors with respect to Loan Parties’ Accounts, (e) Inventory system/perpetual reports specifying the cost and the wholesale market value and Net Orderly Liquidation Value of each Loan Party’s Inventory, by category, with additional detail showing additions to and deletions therefrom, (f) Equipment reports specifying the Net Book Value and Net Orderly Liquidation Value of each Loan Party’s Mobile Equipment, with reasonable additional detail showing additions to and deletions therefrom, (g) a detailed calculation of Inventory and Equipment categories that are not eligible for the Borrowing Base, (h) a summary aging, by vendor, of Loan Parties and their Subsidiaries’ accounts payable and any book overdraft and an aging, by vendor, of any held checks, and (i) a detailed report regarding Loan Parties’ and their Subsidiaries' cash and Cash Equivalents, including an indication of which amounts constitute Qualified Cash (items (a) - (i) are referred to as the “Borrowing Base Materials”). |
promptly upon the request of Agent, | (j) other reasonably requested supporting documentation related to the Borrowing Base Materials. |
monthly, within 30 days after the end of each fiscal month during each of Parent’s fiscal years, | (k) a reconciliation of Accounts, trade accounts payable, Inventory and Mobile Equipment of Loan Parties’ general ledger accounts to their monthly financial statements including any book reserves related to each category. |
quarterly, within 45 days after the end of each fiscal quarter during each of Parent’s fiscal years, | (l) a report regarding each Loan Party’s and its Subsidiaries’ accrued, but unpaid, ad valorem taxes. (m) a report setting forth the current location of Loan Parties’ Inventory and Mobile Equipment included in the most recent Borrowing Base Certificate. |
promptly, upon the reasonable request by Agent (but no more frequently than semi-annually), | (n) copies of material purchase orders and invoices for Inventory and Equipment of any Loan Party or its Subsidiaries and/or corresponding shipping and delivery documents and credit memos, in each case, together with corresponding supporting documentation. (o) such other reports as to the Collateral or the financial condition of any Loan Party and its Subsidiaries, as Agent may request in its Permitted Discretion, including intra-quarter updates as to the locations of Inventory and Mobile Equipment included in the most recent Borrowing Base Certificate. |
CLEVELAND-CLIFFS INC. | |
By: | /s/ James D. Graham |
Name: James D. Graham | |
Title: Executive Vice President, Chief Legal Officer and Secretary |
Bank of America, N.A., as Agent, a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Thomas H. Herron |
Name: | Thomas H. Herron |
Title: | Senior Vice President |
Wells Fargo Bank, National Association, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Daniel J. Manella |
Name: | Daniel J. Manella |
Title: | Authorized Signatory |
JPMORGAN CHASE BANK, N.A., as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Jamie Whiteman |
Name: | Jamie Whiteman |
Title: | Authorized Officer |
PNC Bank, National Association, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Robert T. Brown |
Name: | Robert T. Brown |
Title: | Vice President |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Mikhail Faybusovich |
Name: | Mikhail Faybusovich |
Title: | Authorized Signatory |
By: | /s/ Komal Shah |
Name: | Komal Shah |
Title: | Authorized Signatory |
Deutsche Bank AG New York Branch, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Alicia Schug |
Name: | Alicia Schug |
Title: | Vice President |
By: | /s/ Philip Tancorra |
Name: | Philip Tancorra |
Title: | Associate |
GOLDMAN SACHS BANK USA, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Jacob Elder |
Name: | Jacob Elder |
Title: | Authorized Signatory |
REGIONS BANK, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Stephen J. McGreevy |
Name: | Stephen J. McGreevy |
Title: | Managing Director |
FIFTH THIRD BANK, NATIONAL ASSOCIATION, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Paul Vitti |
Name: | Paul Vitti |
Title: | Managing Director |
CITIBANK, N.A., as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Brendan Mackay |
Name: | Brendan Mackay |
Title: | Director |
Citizens Bank, N.A., as a Consenting Lender | |
By: | /s/ Debra L. McAllonis |
Name: | Debra L. McAllonis |
Title: | Senior Vice President |
BARCLAYS BANK PLC, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Craig Malloy |
Name: | Craig Malloy |
Title: | Director |
THE HUNTINGTON NATIONAL BANK, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Paul Weybrecht |
Name: | Paul Weybrecht |
Title: | Senior Vice President |
BMO HARRIS BANK N.A., as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Quinn Heiden |
Name: | Quinn Heiden |
Title: | Managing Director |
U.S. BANK, N.A., as a Consenting Lender | |
By: | /s/ Rod Swenson |
Name: | Rod Swenson |
Title: | Vice President |
TRUIST BANK, as a Tranche B Revolving Lender and a Consenting Lender | |
By: | /s/ Mark Bohntinsky |
Name: | Mark Bohntinsky |
Title: | Managing Director |
SIEMENS FINANCIAL SERVICES, INC., as a Consenting Lender | |
By: | /s/ Mark Schafer |
Name: | Mark Schafer |
Title: | Vice President |
By: | /s/ Maria Levy |
Name: | Maria Levy |
Title: | Vice President |
ING Capital LLC, a Consenting Lender | |
By: | /s/ Jean Grasso |
Name: | Jean Grasso |
Title: | Managing Director |
By: | /s/ Michael Chen |
Name: | Michael Chen |
Title: | Director |
ROYAL BANK OF CANADA as a Consenting Lender | |
By: | /s/ Strati Georgopoulos |
Name: | Strati Georgopoulos |
Title: | Authorized Signatory |
Page | |||
1 | DEFINITIONS AND CONSTRUCTION | ||
1.1 | Definitions | ||
1.2 | Accounting Terms | ||
1.3 | Limited Condition Transaction | ||
1.4 | Construction | ||
1.5 | Time References | ||
1.6 | Schedules and Exhibits | ||
1.7 | Dollar Equivalent | ||
1.8 | LIBOR Rate | ||
2 | REVOLVING LOANS AND TERMS OF PAYMENT | ||
2.1 | Revolving Loans | ||
2.2 | Additional Borrowers | ||
2.3 | Borrowing Procedures and Settlements | ||
2.4 | Payments; Reductions of Commitments; Prepayments | ||
2.5 | Promise to Pay; Promissory Notes | ||
2.6 | Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations | ||
2.7 | Crediting Payments | ||
2.8 | Designated Accounts | ||
2.9 | Maintenance of Loan Account; Statements of Obligations | ||
2.10 | Fees | ||
2.11 | Letters of Credit | ||
2.12 | [Reserved] | ||
2.13 | LIBOR Option | ||
2.14 | Capital Requirements | ||
2.15 | Joint and Several Liability | ||
2.16 | Incremental Borrowings | ||
2.17 | Tranche B Exchange Offer | ||
2.18 | Tranche A Exchange Offer | ||
3 | CONDITIONS; TERM OF AGREEMENT | ||
3.1 | Conditions Precedent to the Closing Date | ||
3.2 | [Reserved] | ||
3.3 | Conditions Precedent to all Extensions of Credit | ||
3.4 | Maturity | ||
3.5 | Effect of Maturity | ||
3.6 | Early Termination by Borrowers | ||
3.7 | Conditions Subsequent | ||
4 | REPRESENTATIONS AND WARRANTIES | ||
4.1 | Due Organization and Qualification; Subsidiaries | ||
4.2 | Due Authorization; No Conflict | ||
4.3 | Governmental Consents | ||
4.4 | Binding Obligations; Perfected Liens | ||
4.5 | Title to Assets; No Encumbrances | ||
4.6 | Litigation | ||
4.7 | Compliance with Laws | ||
4.8 | Financial Statements; No Material Adverse Effect |
Page | |||
4.9 | Solvency | ||
4.10 | Employee Benefits | ||
4.11 | Environmental Condition | ||
4.12 | Complete Disclosure | ||
4.13 | Sanctions, PATRIOT Act, and FCPA | ||
4.14 | [Reserved.] | ||
4.15 | Payment of Taxes | ||
4.16 | Margin Stock | ||
4.17 | Governmental Regulation | ||
4.18 | OFAC | ||
4.19 | Employee and Labor Matters | ||
4.20 | [Reserved.] | ||
4.21 | [Reserved.] | ||
4.22 | Eligible Accounts | ||
4.23 | Eligible Inventory and Eligible Equipment | ||
4.24 | Material Contracts | ||
4.25 | Inventory and Equipment Records | ||
4.26 | EEA Financial Institutions | ||
5 | AFFIRMATIVE COVENANTS | ||
5.1 | Financial Statements, Reports, Certificates | ||
5.2 | Reporting | ||
5.3 | Existence | ||
5.4 | Maintenance of Properties | ||
5.5 | Taxes | ||
5.6 | Insurance | ||
5.7 | Inspection | ||
5.8 | Compliance with Laws | ||
5.9 | Environmental | ||
5.10 | [Reserved.] | ||
5.11 | Formation of Subsidiaries | ||
5.12 | Further Assurances | ||
5.13 | Lender Meetings | ||
5.14 | [Reserved] | ||
5.15 | Compliance with ERISA and the IRC | ||
5.16 | Cash Management | ||
6 | NEGATIVE COVENANTS | ||
6.1 | Indebtedness | ||
6.2 | Liens | ||
6.3 | Restrictions on Fundamental Changes | ||
6.4 | Disposal of Assets | ||
6.5 | Nature of Business | ||
6.6 | Prepayments and Amendments | ||
6.7 | Restricted Payments | ||
6.8 | Accounting Methods | ||
6.9 | Investments |
Page | |||
6.10 | Transactions with Affiliates | ||
6.11 | Use of Proceeds | ||
7 | FINANCIAL COVENANT | ||
8 | EVENTS OF DEFAULT | ||
8.1 | Payments | ||
8.2 | Covenants | ||
8.3 | Judgments | ||
8.4 | Voluntary Bankruptcy, etc. | ||
8.5 | Involuntary Bankruptcy, etc. | ||
8.6 | Default Under Other Agreements | ||
8.7 | Representations, etc. | ||
8.8 | Security Documents | ||
8.9 | Loan Documents | ||
8.10 | Change in Control | ||
8.11 | ERISA and Pension Events | ||
9 | RIGHTS AND REMEDIES | ||
9.1 | Rights and Remedies | ||
9.2 | Remedies Cumulative | ||
10 | WAIVERS; INDEMNIFICATION | ||
10.1 | Demand; Protest; etc. | ||
10.2 | The Lender Group's Liability for Collateral | ||
10.3 | Indemnification | ||
11 | NOTICES | ||
12 | CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION | ||
13 | ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS | ||
13.1 | Assignments and Participations | ||
13.2 | Successors | ||
14 | AMENDMENTS; WAIVERS | ||
14.1 | Amendments and Waivers | ||
14.2 | Replacement of Certain Lenders | ||
14.3 | No Waivers; Cumulative Remedies | ||
15 | AGENT | ||
15.1 | Appointment, Authority and Duties of Agent | ||
15.2 | Liability of Agent | ||
15.3 | Reliance by Agent | ||
15.4 | Notice of Default or Event of Default | ||
15.5 | Due Diligence and Non-Reliance | ||
15.6 | Indemnification | ||
15.7 | Individual Capacities | ||
15.8 | Successor Agent | ||
15.9 | Agreements Regarding Collateral and Borrower Materials | ||
15.10 | Ratable Sharing | ||
15.11 | Remittance of Payments and Collections | ||
15.12 | Titles | ||
15.13 | Bank of Product Providers |
Page | |||
15.14 | No Third Party Beneficiaries | ||
16 | [Reserved] | ||
17 | WITHHOLDING TAXES | ||
17.1 | Payments | ||
17.2 | Exemptions | ||
17.3 | Reductions | ||
17.4 | Refunds | ||
18 | GENERAL PROVISIONS | ||
18.1 | Effectiveness | ||
18.2 | Section Headings | ||
18.3 | Interpretation | ||
18.4 | Severability of Provisions | ||
18.5 | Bank Product Providers | ||
18.6 | Debtor-Creditor Relationship | ||
18.7 | Counterparts; Electronic Execution | ||
18.8 | Revival and Reinstatement of Obligations; Certain Waivers | ||
18.9 | Confidentiality | ||
18.10 | Survival | ||
18.11 | Patriot Act | ||
18.12 | Integration | ||
18.13 | Parent as Agent for Borrowers | ||
18.14 | Judgment Currency | ||
18.15 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | ||
18.16 | Certain ERISA Matters | ||
18.17 | Acknowledgement Regarding Any Supported QFCs | ||
18.18 | Application of Sanctions Provisions to the Loan Parties | ||
19 | INTERCREDITOR AGREEMENT |
Exhibit A-1 | Form of Assignment and Acceptance |
Exhibit B-1 | Form of Borrowing Base Certificate |
Exhibit B-2 | Form of Bank Product Provider Agreement |
Exhibit C-1 | Form of Compliance Certificate |
Exhibit D-1 | Form of Solvency Certificate |
Exhibit L-1 | Form of LIBOR Notice |
Schedule 1.1 | Definitions |
Schedule A-1 | [Reserved] |
Schedule C-1 | Revolver Commitments |
Schedule E-1 | Existing Hedge Obligations |
Schedule E-2 | Existing Letters of Credit |
Schedule E-3 | Excluded Subsidiary Indebtedness |
Schedule I-1 | Immaterial Subsidiaries |
Schedule J-1 | Joint Ventures |
Schedule P-1 | Permitted Investments |
Schedule P-2 | Permitted Liens |
Schedule P-3 | [Reserved] |
Schedule P-4 | Permitted Indebtedness |
Schedule 3.1 | Conditions Precedent to Closing Date |
Schedule 3.7 | Conditions Subsequent |
Schedule 4.1(b) | Capitalization of Borrowers |
Schedule 4.1(c) | Capitalization of Borrowers’ Subsidiaries |
Schedule 4.1(d) | Subscriptions, Options, Warrants, Calls |
Schedule 4.6 | Litigation |
Schedule 5.1 | Financial Statements, Reports, Certificates |
Schedule 5.2 | Collateral Reporting |
Schedule 5.16 | Deposit Accounts |
If to any Borrower: | c/o CLEVELAND-CLIFFS INC. 200 Public Square #3300 Cleveland, Ohio 44114 Attn: James Graham Email: james.graham@clevelandcliffs.com |
With a copy to: | |
Cleveland-Cliffs Inc. 200 Public Square #3300 Cleveland, Ohio 44114 Attn: Keith Koci Email: Keith.Koci@clevelandcliffs.com | |
If to Agent: | BANK OF AMERICA, N.A. 135 S. LaSalle St., Suite 925 Chicago, IL 60604 Attn: Thomas Herron Tel no.: 312-992-6107 Email: thomas.h.herron@baml.com |
If to Issuing Bank: | To Agent |
If to any Lender: | At such address as such Lender may designate in writing to the Agent from time to time or via the Platform |
CLEVELAND-CLIFFS INC. | |
By: | |
Name: | |
Title: | |
By: | |
Name: | |
Title: |
BANK OF AMERICA, N.A., as Agent and as a Lender | |
By: | |
Name: | |
Title: |
[_______________________________] | |
By: | |
Name: | |
Title: | |
If second signature is needed: | |
By: | |
Name: | |
Title: |
(a) | If to Assignee, to the following address (or to such other address as Assignee may designate from time to time): |
(b) | If to Assignor, to the following address (or to such other address as Assignor may designate from time to time): |
[NAME OF ASSIGNOR] as Assignor | |
By: | |
Name: | |
Title: |
[NAME OF ASSIGNEE] as Assignee | |
By: | |
Name: | |
Title: |
[NAME OF ASSIGNOR] as Assignor | |
By: | |
Name: | |
Title: |
[NAME OF ASSIGNEE] as Assignee | |
By: | |
Name: | |
Title: |
[BANK OF AMERICA, N.A., as Agent]¹ | |
By: | |
Name: | |
Title: |
[[ISSUING BANK], as Issuing Bank]² | |
By: | |
Name: | |
Title: |
CLEVELAND-CLIFFS INC., an Ohio corporation, as Parent | |
By: | |
Name: | |
Title: |
12 Borrowers may only exercise the LIBOR Option for proposed LIBOR Rate Loans of at least $1,000,000 (and integral multiples of $500,000 in excess thereof). | ||
13 If agreed to by all Lenders, such shorter or longer period. | ||
14 Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall have not more than ten (10) LIBOR Rate Loans in effect at any given time. |
Dated: | CLEVELAND-CLIFFS INC., an Ohio corporation, as Parent | ||
By: | |||
Name: | |||
Title: |
Acknowledged by: BANK OF AMERICA, N.A., as Agent | |
By: | |
Name: | |
Title: |
Level | Average Daily Aggregate Excess Availability | Applicable Margin Relative to Base Tranche A Revolving Rate Loans (the “Tranche A Base Rate Margin”) | Applicable Margin Relative to LIBOR Rate Tranche A Revolving Loans (the “Tranche A LIBOR Rate Margin”) | Applicable Margin Relative to Base Rate Tranche B Revolving Loans (the “Tranche B Base Rate Margin") | Applicable Margin Relative to LIBOR Rate Tranche B Revolving Loans (the “Tranche B LIBOR Rate Margin”) |
I | ≥ 66 2/3% of the Tranche A Line Cap | 0.25% | 1.25% | 2.00% | 3.00% |
II | < 66 2/3% of Tranche A Line Cap | 0.50% | 1.50% | 2.25% | 3.25% |
Level | Average Tranche A Revolver Usage | Applicable Unused Line Fee Percentage |
I | ≥ 50% of the Maximum Revolver Amount | 0.250% |
II | < 50% of the Maximum Revolver Amount | 0.300% |
Level | Average Tranche B Revolver Usage | Applicable Unused Line Fee Percentage |
I | ≥ 50% of the Maximum Revolver Amount | 0.250% |
II | < 50% of the Maximum Revolver Amount | 0.300% |
1. | this Agreement executed by each Borrower, Agent and each Lender; |
2. | the Guaranty and Security Agreement executed by the Loan Parties (including the Target Loan Parties); |
3. | the Copyright Security Agreement, the Patent Security Agreement and the Trademark Security Agreement, in each case, executed by the applicable Loan Parties (including the Target Loan Parties); |
4. | the Intercompany Subordination Agreement executed by the Loan Parties (including the Target Loan Parties) and the Agent; |
5. | a supplement to the Intercreditor Agreement designating this Agreement as an “ABL Credit Agreement” for the purposes of the Intercreditor Agreement executed by the Agent and the Borrowers; |
6. | an Additional Fixed Asset Designation and an Additional Fixed Asset Joinder (each as defined in the Intercreditor Agreement) with respect to the 2026 Senior Secured Notes; and |
7. | an Acknowledgement to the Intercreditor Agreement executed by the Target Loan Parties; |
Lender | Tranche A Commitment (USD) | Applicable Percentage |
BOFA SECURITIES, INC. | 300,000,000.00260,000,000.00 | 15.000014.05% |
WELLS FARGO BANK, NATIONAL ASSOCIATION | 175,000,000.00165,000,000.00 | 8.75008.92% |
JPMORGAN CHASE BANK, N.A. | 175,000,000.00165,000,000.00 | 8.75008.92% |
PNC BANK, NATIONAL ASSOCIATION | 130,000,000.00120,500,000.00 | 6.50006.51% |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | 120,000,000.00111,000,000.00 | 6.00006.00% |
DEUTSCHE BANK AG NEW YORK BRANCH | 120,000,000.00111,000,000.00 | 6.00006.00% |
GOLDMAN SACHS BANK USA | 120,000,000.00105,000,000.00 | 6.00005.68% |
REGIONS BANK | 100,000,000.0085,000,000.00 | 5.00004.59% |
FIFTH THIRD BANK, NATIONAL ASSOCIATION | 100,000,000.0093,500,000.00 | 5.00005.05% |
CITIBANK, N.A. | 100,000,000.0093,500,000.00 | 5.00005.05% |
CITIZENS BANK, N.A. | 100,000,000.00 | 5.00005.41% |
BARCLAYS BANK PLC | 75,000,000.0070,000,000.00 | 3.75003.78% |
THE HUNTINGTON NATIONAL BANK | 75,000,000.0070,000,000.00 | 3.75003.78% |
BMO HARRIS BANK N.A. | 60,000,000.0053,500,000.00 | 3.00002.89% |
U.S. BANK NATIONAL ASSOCIATION | 60,000,000.00 | 3.00003.24% |
TRUIST BANK | 42,500,000.0039,500,000.00 | 2.12502.14% |
NYCB SPECIALTY FINANCE COMPANY, LLC | 42,500,000.00 | 2.12502.30% |
SIEMENS FINANCIAL SERVICES, INC. | 35,000,000.00 | 1.75001.89% |
ING CAPITAL LLC | 35,000,000.00 | 1.75001.89% |
ROYAL BANK OF CANADA | 35,000,000.00 | 1.75001.89% |
Total | $2,000,000,000.001,850,000,000.00 | 100% |
Lender | Tranche B Commitment (USD) | Applicable Percentage |
BOFA SECURITIES, INC. | 40,000,000.00 | 26.67% |
WELLS FARGO BANK, NATIONAL ASSOCIATION | 10,000,000.00 | 6.67% |
JPMORGAN CHASE BANK, N.A. | 10,000,000.00 | 6.67% |
PNC BANK, NATIONAL ASSOCIATION | 9,500,000.00 | 6.33% |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | 9,000,000.00 | 6.00% |
DEUTSCHE BANK AG NEW YORK BRANCH | 9,000,000.00 | 6.00% |
GOLDMAN SACHS BANK USA | 15,000,000.00 | 10.00% |
REGIONS BANK | 15,000,000.00 | 10.00% |
FIFTH THIRD BANK, NATIONAL ASSOCIATION | 6,500,000.00 | 4.33% |
CITIBANK, N.A. | 6,500,000.00 | 4.33% |
BARCLAYS BANK PLC | 5,000,000.00 | 3.33% |
THE HUNTINGTON NATIONAL BANK | 5,000,000.00 | 3.33% |
BMO HARRIS BANK N.A. | 6,500,000.00 | 4.33% |
TRUIST BANK | 3,000,000.00 | 2.00% |
Total | $150,000,000.00 | 100% |
Lender | Letter of Credit Amount (USD) | Applicable Percentage |
BOFA SECURITIES, INC. | 170,000,000.00 | 30.6306% |
PNC BANK, NATIONAL ASSOCIATION | 55,000,000.00 | 9.9099% |
WELLS FARGO BANK, NATIONAL ASSOCIATION | 45,000,000.00 | 8.1081% |
JPMORGAN CHASE BANK, N.A. | 45,000,000.00 | 8.1081% |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | 30,000,000.00 | 5.4054% |
DEUTSCHE BANK AG NEW YORK BRANCH | 30,000,000.00 | 5.4054% |
GOLDMAN SACHS BANK USA | 30,000,000.00 | 5.4054% |
REGIONS BANK | 27,000,000.00 | 4.8649% |
FIFTH THIRD BANK, NATIONAL ASSOCIATION | 27,000,000.00 | 4.8649% |
CITIBANK, N.A. | 27,000,000.00 | 4.8649% |
CITIZENS BANK, N.A. | 27,000,000.00 | 4.8649% |
BARCLAYS BANK PLC | 21,000,000.00 | 3.7838% |
THE HUNTINGTON NATIONAL BANK | 21,000,000.00 | 3.7838% |
Total | 555,000,000.00 | 100% |
Cliffs Mining Company Northshore Mining Company The Cleveland-Cliffs Iron Company | |
By: | |
Name: | |
Title: |
Cliffs Minnesota Mining Company Cliffs TIOP, Inc. Lake Superior & Ishpeming Railroad Company Silver Bay Power Company United Taconite LLC Cliffs UTAC Holding LLC IronUnits LLC SNA Carbon, LLC AKS Investments, Inc. AK Tube LLC AK Steel Properties, Inc. AH Management, Inc. PPHC Holdings, LLC Mountain State Carbon, LLC | |
By: | |
Name: | |
Title: |
Cliffs TIOP II, LLC Cliffs TIOP Holding, LLC | |
By: | |
Name: | |
Title: | |
Tilden Mining Company L.C. | |
By: | |
Name: | |
Title: |
AK Steel Corporation AK Steel Holding Corporation | |
By: | |
Name: | |
Title: |
Lender | Tranche B Commitment (USD) | Applicable Percentage |
BOFA SECURITIES, INC. | 40,000,000.00 | 26.67% |
WELLS FARGO BANK, NATIONAL ASSOCIATION | 10,000,000.00 | 6.67% |
JPMORGAN CHASE BANK, N.A. | 10,000,000.00 | 6.67% |
PNC BANK, NATIONAL ASSOCIATION | 9,500,000.00 | 6.33% |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | 9,000,000.00 | 6.00% |
DEUTSCHE BANK AG NEW YORK BRANCH | 9,000,000.00 | 6.00% |
GOLDMAN SACHS BANK USA | 15,000,000.00 | 10.00% |
REGIONS BANK | 15,000,000.00 | 10.00% |
FIFTH THIRD BANK, NATIONAL ASSOCIATION | 6,500,000.00 | 4.33% |
CITIBANK, N.A. | 6,500,000.00 | 4.33% |
BARCLAYS BANK PLC | 5,000,000.00 | 3.33% |
THE HUNTINGTON NATIONAL BANK | 5,000,000.00 | 3.33% |
BMO HARRIS BANK N.A. | 6,500,000.00 | 4.33% |
TRUIST BANK | 3,000,000.00 | 2.00% |
Total | $150,000,000.00 | 100% |
Exact Name of Issuer or Guarantor Subsidiary (1) | Reported as Issuer or Guarantor Subsidiary | State of Incorporation or Organization | Primary Standard Industrial Classification Code Number | IRS Employer Identification Number | ||||
Cleveland-Cliffs Inc. | Issuer | Ohio | 1000 | 34-1464672 | ||||
AH Management, Inc. | (3) | Delaware | 3312 | 51-0390893 | ||||
AKS Investments, Inc. | (3) | Ohio | 3312 | 31-1283531 | ||||
AK Steel Corporation | (3) | Delaware | 3312 | 31-1267098 | ||||
AK Steel Holding Corporation | (3) | Delaware | 3312 | 31-1401455 | ||||
AK Steel Properties, Inc. | (3) | Delaware | 3312 | 51-0390894 | ||||
AK Tube LLC | (3) | Delaware | 3312 | 31-1283531 | ||||
Cliffs Mining Company | (2) | Delaware | 1000 | 34-1120353 | ||||
Cliffs Minnesota Mining Company | (2) | Delaware | 1000 | 42-1609117 | ||||
Cliffs TIOP Holding, LLC | (2) | Delaware | 1000 | 47-2182060 | ||||
Cliffs TIOP, Inc. | (2) | Michigan | 1000 | 34-1371049 | ||||
Cliffs TIOP II, LLC | (2) | Delaware | 1000 | 61-1857848 | ||||
Cliffs UTAC Holding LLC | (2) | Delaware | 1000 | 26-2895214 | ||||
IronUnits LLC | (2) | Delaware | 1000 | 34-1920747 | ||||
Lake Superior & Ishpeming Railroad Company | (2) | Michigan | 1000 | 38-6005761 | ||||
Mountain State Carbon, LLC | (3) | Delaware | 3312 | 31-1267098 | ||||
Northshore Mining Company | (2) | Delaware | 1000 | 84-1116857 | ||||
PPHC Holdings, LLC | (3) | Delaware | 3312 | 31-1283531 | ||||
Silver Bay Power Company | (2) | Delaware | 1000 | 84-1126359 | ||||
SNA Carbon, LLC | (3) | Delaware | 3312 | 31-1267098 | ||||
The Cleveland-Cliffs Iron Company | (2) | Ohio | 1000 | 34-0677332 | ||||
Tilden Mining Company L.C. | (2) | Michigan | 1000 | 34-1804848 | ||||
United Taconite LLC | (2) | Delaware | 1000 | 42-1609118 | ||||
(1) The address and phone number of each issuer and guarantor subsidiary is c/o Cleveland-Cliffs Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114, (216) 694-5700. | ||||||||
(2) The entity is included as a guarantor subsidiary as of March 31, 2020 and December 31, 2019. | ||||||||
(3) The entity is included as a guarantor subsidiary as of March 31, 2020. |
1. | I have reviewed this quarterly report on Form 10-Q of Cleveland-Cliffs 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: | May 11, 2020 | By: | /s/ Lourenco Goncalves | ||
Lourenco Goncalves | |||||
Chairman, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Cleveland-Cliffs 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: | May 11, 2020 | By: | /s/ Keith A. Koci | ||
Keith A. Koci | |||||
Executive Vice President, Chief Financial 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: | May 11, 2020 | ||
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: | May 11, 2020 | ||
By: | /s/ Keith A. Koci | ||
Keith A. Koci | |||
Executive Vice President, Chief Financial Officer |
(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 instituted 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 March 31, 2020 | ||||||||||||||||||||||||||
(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 Instituted During Period | Legal Actions Resolved During Period | |||||||||||||||||
Tilden / 2000422 | Iron Ore | 24 | — | — | — | $ | 382,181 | — | — | 1 | ||||||||||||||||
Empire / 2001012 | Iron Ore | — | — | — | — | — | — | — | — | |||||||||||||||||
Northshore Plant / 2100831 | Iron Ore | 12 | — | — | — | 104,533 | 6 | (2) | 1 | 1 | ||||||||||||||||
Northshore Mine / 2100209 | Iron Ore | — | — | — | — | — | 1 | (3) | 1 | — | ||||||||||||||||
United Taconite Plant / 2103404 | Iron Ore | 5 | — | — | — | 30,637 | 2 | (4) | 1 | — | ||||||||||||||||
United Taconite Mine / 2103403 | Iron Ore | — | — | — | — | 2,485 | — | — | — | |||||||||||||||||
Coal Innovations #1 / 3609406 | Coal | — | — | — | — | — | — | — | — | |||||||||||||||||
North Fork / 3610041 | Coal | 3 | — | — | — | 4,500 | 3 | (5) | 1 | 1 |
(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 March 31, 2020. |
(2) | This number consists of 2 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules and 4 pending legal actions related to appeals of judges' decisions or orders to FMSHRC referenced in Subpart H of FMSH Act's procedural rules. |
(3) | This number consists of 1 pending legal action related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules. |
(4) | This number consists of 2 pending legal actions related to contests of proposed penalties referenced in Subpart C of FMSH Act's procedural rules. |
(5) | This number consists of 3 pending legal actions related to contests of citations and orders referenced in Subpart B of FMSH Act's procedural rules. |
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Obligations | The following is a summary of our environmental obligations:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables reflect the changes in Accumulated other comprehensive loss related to shareholders’ equity:
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Details of Accumulated Other Comprehensive Income (Loss) Components | The following table reflects the details about Accumulated other comprehensive loss components related to shareholders’ equity:
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STOCK COMPENSATION PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block] | The following assumptions were utilized to estimate the fair value for the 2020 performance share grant under the A&R 2015 Equity Plan:
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DERIVATIVE INSTRUMENTS (Schedule Of Derivative Instruments In Statement Of Financial Position, Fair Value) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Commodity Contract [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | $ 1.6 | |
Commodity Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 26.5 | $ 3.2 |
Commodity Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 3.4 | |
Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 1.6 | |
Foreign Exchange Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0.9 | |
Customer Supply Agreement [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 19.0 | 44.5 |
Provisional Pricing Arrangements [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.6 | 1.3 |
Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 1.1 | |
Fair Value, Inputs, Level 2 [Member] | Commodity Contract [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 1.6 | |
Fair Value, Inputs, Level 2 [Member] | Commodity Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 26.5 | 3.2 |
Fair Value, Inputs, Level 2 [Member] | Commodity Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 3.4 | |
Fair Value, Inputs, Level 2 [Member] | Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 1.6 | |
Fair Value, Inputs, Level 2 [Member] | Foreign Exchange Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0.9 | |
Fair Value, Inputs, Level 2 [Member] | Customer Supply Agreement [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.0 | |
Fair Value, Inputs, Level 2 [Member] | Provisional Pricing Arrangements [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.0 | |
Fair Value, Inputs, Level 2 [Member] | Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0.0 | |
Fair Value, Inputs, Level 3 [Member] | Commodity Contract [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.0 | |
Fair Value, Inputs, Level 3 [Member] | Commodity Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0.0 | 0.0 |
Fair Value, Inputs, Level 3 [Member] | Customer Supply Agreement [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 19.0 | 44.5 |
Fair Value, Inputs, Level 3 [Member] | Provisional Pricing Arrangements [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.6 | 1.3 |
Fair Value, Inputs, Level 3 [Member] | Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 1.1 | |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.3 | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | (25.9) | (3.2) |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | (2.8) | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | (1.6) | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | (0.9) | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Not Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Derivative Asset [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 1.3 | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Not Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | (0.6) | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 2 [Member] | Not Designated as Hedging Instrument [Member] | Commodity Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | (0.6) | 0.0 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 3 [Member] | Not Designated as Hedging Instrument [Member] | Customer Supply Agreement [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 19.0 | 44.5 |
Valuation, Market Approach [Member] | Fair Value, Inputs, Level 3 [Member] | Not Designated as Hedging Instrument [Member] | Provisional Pricing Arrangements [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 0.6 | 1.3 |
Derivative liability | $ 0.0 | $ (1.1) |
SHAREHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 13, 2020 |
Dec. 31, 2019 |
Apr. 24, 2019 |
Nov. 26, 2018 |
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Class of Stock [Line Items] | ||||||
Common shares, par value | $ 0.125 | $ 0.125 | ||||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ 617.6 | |||||
Stock Repurchase Program, Authorized Amount | $ 100.0 | $ 200.0 | ||||
Stock Repurchased During Period, Shares | 11,500,000 | |||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 124.3 | |||||
Preferred Class A [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares authorized (in shares) | 3,000,000 | |||||
Preferred Stock, Shares Issued | 0 | |||||
Preferred Stock, Shares Outstanding | 0 | |||||
Preferred Class B [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares authorized (in shares) | 4,000,000 | |||||
Preferred Stock, Shares Issued | 0 | |||||
Preferred Stock, Shares Outstanding | 0 | |||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock Issued During Period, Shares, Acquisitions | 126,800,000 | |||||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ 0.0 | $ 617.6 | ||||
Stock Repurchased During Period, Shares | 11,500,000 |
GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Goodwill [Line Items] | |||
Goodwill | $ 143.3 | $ 2.1 | |
Amortization of Intangible Assets | 1.1 | $ 0.2 | |
Amortization of Intangible Liability | 2.1 | ||
Steel and Manufacturing [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 141.2 | ||
Mining and Pelletizing [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 2.1 | $ 2.1 |
EARNINGS PER SHARE (Narrative) (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1.6 | 11.5 |
Convertible Debt Securities [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.0 | 7.3 |
RELATED PARTIES (Summary Of Related Party Transactions Table Disclosure) (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|||
Related Party Transaction [Line Items] | |||||
Product revenues from related parties | $ 10.8 | $ 46.9 | |||
Revenues | [1] | $ 359.1 | $ 157.0 | ||
Related party product revenue as a percent of total product revenue | 3.00% | 29.90% | |||
Purchases from related parties | $ 2.5 | $ 0.0 | |||
Realization of deferred revenue | 34.6 | $ 0.0 | |||
Trade Accounts Receivable [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due from Related Parties, Current | 18.7 | $ 31.1 | |||
Other Current Assets [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due from Related Parties, Current | 19.0 | 44.5 | |||
Accounts Payable [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due to Related Parties, Current | (5.3) | 0.0 | |||
Other Current Liabilities [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due to Related Parties, Current | $ (0.3) | $ (2.0) | |||
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DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | The following table presents the fair value of our derivative instruments and the classification of each in the Statements of Unaudited Condensed Consolidated Financial Position:
Derivatives Designated as Hedging Instruments - Cash Flow Hedges Exchange rate fluctuations affect a portion of revenues and operating costs that are denominated in foreign currencies, and we use forward currency and currency option contracts to reduce our exposure to certain of these currency price fluctuations. Contracts to purchase Canadian dollars are designated as cash flow hedges for accounting purposes, and we record the gains and losses for the derivatives and premiums paid for option contracts in Accumulated other comprehensive loss until we reclassify them into Cost of goods sold when we recognize the associated underlying operating costs. We are exposed to fluctuations in market prices of raw materials and energy sources. We may use cash-settled commodity swaps and options to hedge the market risk associated with the purchase of certain of our raw materials and energy requirements. Our hedging strategy is to reduce the effect on earnings from the price volatility of these various commodity exposures, including timing differences between when we incur raw material commodity costs and when we receive sales surcharges from our customers based on those raw materials. Independent of any hedging activities, price changes in any of these commodity markets could negatively affect operating costs. The following table presents our outstanding hedge contracts:
Estimated losses before tax expected to be reclassified into Cost of goods sold within the next 12 months for our existing derivatives that qualify as cash flow hedges are presented below:
Derivatives Not Designated as Hedging Instruments Customer Supply Agreement A supply agreement with one customer provides for supplemental revenue or refunds to the customer based on the hot-rolled coil steel price at the time the iron ore product is consumed in the customer’s blast furnaces. The supplemental pricing is characterized as a freestanding derivative instrument and is required to be accounted for separately once control transfers to the customer. The derivative instrument, which is finalized based on a future price, is adjusted to fair value through Revenues each reporting period based upon current market data and forward-looking estimates provided by management until the pellets are consumed and the amounts are settled. Provisional Pricing Arrangements Certain of our supply agreements specify provisional price calculations, where the pricing mechanisms generally are based on market pricing, with the final revenue rate based on certain market inputs at a specified period in time in the future, per the terms of the supply agreements. Market inputs are tied to indexed price adjustment factors that are integral to the iron ore supply contracts and vary based on the agreement. The pricing mechanisms typically include adjustments based upon changes in the Platts 62% Price, Atlantic Basin pellet premiums and Platts international indexed freight rates. The pricing adjustments generally operate in the same manner, with each factor typically comprising a portion of the price adjustment, although the weighting of each factor varies based upon the specific terms of each agreement. The price adjustment factors have been evaluated to determine if they qualify as embedded derivatives. The price adjustment factors share the same economic characteristics and risks as the host sales contract and are integral to the host sales contract as inflation adjustments; accordingly, they have not been separately valued as derivative instruments. Revenue is recognized generally upon delivery to our customers. Revenue is measured at the point that control transfers and represents the amount of consideration we expect to receive in exchange for transferring goods. Changes in the expected revenue rate from the date that control transfers through final settlement of contract terms is recorded in accordance with Topic 815 and is characterized as a derivative instrument and accounted for separately. Subsequently, the derivative instruments are adjusted to fair value through Revenues each reporting period based upon current market data and forward-looking estimates provided by management until the final revenue rate is determined. Foreign Exchange Contracts Contracts to sell euro have not been designated as cash flow hedges for accounting purposes. Gains and losses are reported in earnings immediately in Other non-operating income. The notional amount of our outstanding contracts to sell euro is €2 million. The following summarizes the effect of our derivatives that are not designated as hedging instruments in the Statements of Unaudited Condensed Consolidated Operations:
Refer to NOTE 9 - FAIR VALUE MEASUREMENTS for additional information.
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VARIABLE INTEREST ENTITIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity Disclosure [Text Block] | SunCoke Middletown We purchase all the coke and electrical power generated from SunCoke Middletown’s plant under long-term supply agreements. SunCoke Middletown is a VIE because we have committed to purchase all the expected production from the facility through 2032 and we are the primary beneficiary. Therefore, we consolidate SunCoke Middletown’s financial results with our financial results, even though we have no ownership interest in SunCoke Middletown. SunCoke Middletown had income before income taxes of $3.5 million for the three months ended March 31, 2020 that was included in our consolidated income before income taxes. The assets of the consolidated VIE can only be used to settle the obligations of the consolidated VIE and not obligations of the Company. The creditors of SunCoke Middletown do not have recourse to the assets or general credit of the Company to satisfy liabilities of the VIE. The consolidated balance sheet as of March 31, 2020 includes the following amounts for SunCoke Middletown:
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Accounting | Business, Consolidation and Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC rules and regulations and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive income (loss), cash flows and changes in equity for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020 or any other future period. Due to the acquisition of AK Steel, certain balances have become material and are no longer being condensed in our Statements of Unaudited Condensed Consolidated Financial Position, such as balances for Right-of-use asset, operating lease and Operating lease liability, non-current. As a result, certain prior period amounts have been reclassified to conform with the current year presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.
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Basis of Consolidation | Basis of Consolidation The unaudited condensed consolidated financial statements consolidate our accounts and the accounts of our wholly owned subsidiaries, all subsidiaries in which we have a controlling interest and two variable interest entities for which we are the primary beneficiary. All intercompany transactions and balances are eliminated upon consolidation. Reportable Segments The acquisition of AK Steel has transformed us into a vertically integrated producer of value-added iron ore and steel products and we are organized according to our differentiated products in two reportable segments - the new Steel and Manufacturing segment and the Mining and Pelletizing segment. Our new Steel and Manufacturing segment includes the assets acquired through the acquisition of AK Steel and our previously reported Metallics segment, and our Mining and Pelletizing segment includes our three active operating mines and our indefinitely idled mine.
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Equity Method Investments | Investments in Affiliates We have investments in several businesses accounted for using the equity method of accounting. We review an investment for impairment when circumstances indicate that a loss in value below its carrying amount is other than temporary. Investees and equity ownership percentages are presented below:
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Significant Accounting Policies | Significant Accounting Policies A detailed description of our significant accounting policies can be found in the audited financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the SEC. Due to the completion of our acquisition of AK Steel, there have been several changes in our significant accounting policies from those disclosed therein. The significant accounting policies requiring updates have been included within the disclosures below. Revenue Recognition Steel and Manufacturing We generate our revenue through product sales, in which shipping terms generally indicate when we have fulfilled our performance obligations and transferred control of products to our customer. Our revenue transactions consist of a single performance obligation to transfer promised goods. We have contracts with a significant portion of our customers. These contracts usually define the mechanism for determining the sales price, which is normally fixed upon transfer of control, but the contracts do not impose a specific quantity on either party. Quantities to be delivered to the customer are determined at a point near the date of delivery through purchase orders or other written instructions we receive from the customer. Spot market sales are made through purchase orders or other written instructions. For sales with shipping terms that transfer control at the destination point, we consider our performance obligation is complete and recognize revenue when the customer receives the goods. For sales with shipping terms that transfer control at the shipping point with us bearing responsibility for freight costs to the destination, we determine that we fulfilled a single performance obligation and recognize revenue when we ship the goods. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring product. We reduce the amount of revenue recognized for estimated returns and other customer credits, such as discounts and volume rebates, based on the expected value to be realized. Payment terms are consistent with terms standard to the markets we serve. Sales taxes collected from customers are excluded from revenues. Mining and Pelletizing We sell a single product, iron ore pellets, in the North American market. Revenue is recognized generally when iron ore is delivered to our customers. Revenue is measured at the point that control transfers and represents the amount of consideration we expect to receive in exchange for transferring goods. We offer standard payment terms to our customers, generally requiring settlement within 30 days. We enter into supply contracts of varying lengths to provide customers iron ore pellets to use in their blast furnaces. Blast furnaces must run continuously with a constant feed of iron ore in order to be most efficient. As a result, we ship iron ore in large quantities for storage and use by customers at a later date. Customers do not simultaneously receive and consume the benefits of the iron ore. Based on our assessment of the factors that indicate the pattern of satisfaction, we transfer control of the iron ore at a point in time upon shipment or delivery of the product. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered. Most of our customer supply agreements specify a provisional price, which is used for initial billing and cash collection. Revenue is calculated using the expected revenue rate at the point when control transfers. The final settlement includes market inputs for a specified period of time, which may vary by customer, but typically include one or more of the following: Platts 62% Price, Atlantic Basin pellet premium and Platts international indexed freight rates. Changes in the expected revenue rate from the date control transfers through final settlement of contract terms is recorded in accordance with Topic 815. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on how our estimated and final revenue rates are determined. A supply agreement with a customer provides for supplemental revenue or refunds based on the hot-rolled coil steel price in the year the iron ore is consumed in the customer’s blast furnaces. As control transfers prior to consumption, the supplemental revenue is recorded in accordance with Topic 815. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on supplemental revenue or refunds. Included within Revenues related to Topic 815 is a derivative loss of $26.8 million and a derivative gain of $5.5 million for the three months ended March 31, 2020 and 2019, respectively. Allowance for Doubtful Accounts We establish provisions for expected lifetime losses on accounts receivable at the time a receivable is recorded based on historical experience, customer credit quality and forecasted economic conditions. We regularly review our accounts receivable balances and the allowance for credit loss and establish or adjust the allowance as necessary using the specific identification method in accordance with CECL. We evaluate the aggregation and risk characteristics of receivable pools and develop loss rates that reflect historical collections, current forecasts of future economic conditions over the time horizon we are exposed to credit risk, and payment terms or conditions that may materially affect future forecasts. We expect credit losses associated with major auto companies to be lower than other customer pools. Deferred Revenue The table below summarizes our deferred revenue balances:
One of our iron ore pellet sales agreements required supplemental payments to be paid by a customer during the period from 2009 through 2013. Installment amounts received under this arrangement in excess of sales were classified as deferred revenue in the Statements of Consolidated Financial Position upon receipt of payment and the revenue was recognized over the life of the supply agreement, which had extended until 2022, in equal annual installments. As a result of the termination of the AK Steel iron ore pellet sales agreement, we realized $34.6 million of deferred revenue, which was recognized within Realization of deferred revenue in the Statements of Unaudited Condensed Consolidated Operations, during the three months ended March 31, 2020. We have certain other sales agreements that require customers to pay in advance. Payments received on these agreements prior to revenue being recognized is recorded as deferred revenue in Other current liabilities. Inventories Steel and Manufacturing Inventories are stated at the lower of cost or net realizable value. The Steel and Manufacturing segment determines cost using average cost, excluding depreciation and amortization. Mining and Pelletizing Inventories are stated at the lower of cost or market. The Mining and Pelletizing segment determines cost using the LIFO method. Property, Plant and Equipment Our properties are stated at the lower of cost less accumulated depreciation or fair value. Depreciation of plant and equipment is computed principally by the straight-line method based on estimated useful lives. Depreciation continues to be recognized when operations are idled temporarily. Depreciation and depletion is recorded over the following estimated useful lives:
Refer to NOTE 5 - PROPERTY, PLANT AND EQUIPMENT for further information. Goodwill Goodwill represents the excess purchase price paid over the fair value of the net assets during an acquisition. Goodwill is not amortized but is assessed for impairment on an annual basis on October 1st (or more frequently if necessary). Other Intangible Assets and Liabilities Intangible assets and liabilities are subject to periodic amortization on a straight-line basis over their estimated useful lives as follows:
We monitor conditions that may affect the carrying value of our long-lived tangible and intangible assets when events and circumstances indicate that the carrying value of the asset groups may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available ("asset group"). An impairment loss exists when the carrying value of the asset group is greater than its fair value. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach. Refer to NOTE 6 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES for further information. Leases We determine if an arrangement contains a lease at inception. We recognize right-of-use assets and lease liabilities associated with leases based on the present value of the future minimum lease payments over the lease term at the commencement date. Lease terms reflect options to extend or terminate the lease when it is reasonably certain that the option will be exercised. For short-term leases (leases with an initial lease term of 12 months or less), right-of-use assets and lease liabilities are not recognized in the consolidated balance sheet, and lease expense is recognized on a straight-line basis over the lease term. In addition, we have agreements with both lease and non-lease components for which we have elected the practical expedient, for each underlying class of asset, to not separate the components. Refer to NOTE 8 - LEASES for further information. Investments in Affiliates We have investments in several businesses accounted for using the equity method of accounting. We review an investment for impairment when circumstances indicate that a loss in value below its carrying amount is other than temporary. Investees and equity ownership percentages are presented below:
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Revenue | Revenue Recognition Steel and Manufacturing We generate our revenue through product sales, in which shipping terms generally indicate when we have fulfilled our performance obligations and transferred control of products to our customer. Our revenue transactions consist of a single performance obligation to transfer promised goods. We have contracts with a significant portion of our customers. These contracts usually define the mechanism for determining the sales price, which is normally fixed upon transfer of control, but the contracts do not impose a specific quantity on either party. Quantities to be delivered to the customer are determined at a point near the date of delivery through purchase orders or other written instructions we receive from the customer. Spot market sales are made through purchase orders or other written instructions. For sales with shipping terms that transfer control at the destination point, we consider our performance obligation is complete and recognize revenue when the customer receives the goods. For sales with shipping terms that transfer control at the shipping point with us bearing responsibility for freight costs to the destination, we determine that we fulfilled a single performance obligation and recognize revenue when we ship the goods. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring product. We reduce the amount of revenue recognized for estimated returns and other customer credits, such as discounts and volume rebates, based on the expected value to be realized. Payment terms are consistent with terms standard to the markets we serve. Sales taxes collected from customers are excluded from revenues. Mining and Pelletizing We sell a single product, iron ore pellets, in the North American market. Revenue is recognized generally when iron ore is delivered to our customers. Revenue is measured at the point that control transfers and represents the amount of consideration we expect to receive in exchange for transferring goods. We offer standard payment terms to our customers, generally requiring settlement within 30 days. We enter into supply contracts of varying lengths to provide customers iron ore pellets to use in their blast furnaces. Blast furnaces must run continuously with a constant feed of iron ore in order to be most efficient. As a result, we ship iron ore in large quantities for storage and use by customers at a later date. Customers do not simultaneously receive and consume the benefits of the iron ore. Based on our assessment of the factors that indicate the pattern of satisfaction, we transfer control of the iron ore at a point in time upon shipment or delivery of the product. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered. Most of our customer supply agreements specify a provisional price, which is used for initial billing and cash collection. Revenue is calculated using the expected revenue rate at the point when control transfers. The final settlement includes market inputs for a specified period of time, which may vary by customer, but typically include one or more of the following: Platts 62% Price, Atlantic Basin pellet premium and Platts international indexed freight rates. Changes in the expected revenue rate from the date control transfers through final settlement of contract terms is recorded in accordance with Topic 815. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on how our estimated and final revenue rates are determined. A supply agreement with a customer provides for supplemental revenue or refunds based on the hot-rolled coil steel price in the year the iron ore is consumed in the customer’s blast furnaces. As control transfers prior to consumption, the supplemental revenue is recorded in accordance with Topic 815. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on supplemental revenue or refunds. Included within Revenues related to Topic 815 is a derivative loss of $26.8 million and a derivative gain of $5.5 million for the three months ended March 31, 2020 and 2019, respectively.
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Receivables, Allowance for Doubtful Accounts, | Allowance for Doubtful Accounts We establish provisions for expected lifetime losses on accounts receivable at the time a receivable is recorded based on historical experience, customer credit quality and forecasted economic conditions. We regularly review our accounts receivable balances and the allowance for credit loss and establish or adjust the allowance as necessary using the specific identification method in accordance with CECL. We evaluate the aggregation and risk characteristics of receivable pools and develop loss rates that reflect historical collections, current forecasts of future economic conditions over the time horizon we are exposed to credit risk, and payment terms or conditions that may materially affect future forecasts. We expect credit losses associated with major auto companies to be lower than other customer pools.
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Inventory | Inventories Steel and Manufacturing Inventories are stated at the lower of cost or net realizable value. The Steel and Manufacturing segment determines cost using average cost, excluding depreciation and amortization. Mining and Pelletizing Inventories are stated at the lower of cost or market. The Mining and Pelletizing segment determines cost using the LIFO method.
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Property, Plant and Equipment | Property, Plant and Equipment Our properties are stated at the lower of cost less accumulated depreciation or fair value. Depreciation of plant and equipment is computed principally by the straight-line method based on estimated useful lives. Depreciation continues to be recognized when operations are idled temporarily. Depreciation and depletion is recorded over the following estimated useful lives:
Refer to NOTE 5 - PROPERTY, PLANT AND EQUIPMENT for further information.
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Goodwill | Goodwill Goodwill represents the excess purchase price paid over the fair value of the net assets during an acquisition. Goodwill is not amortized but is assessed for impairment on an annual basis on October 1st (or more frequently if necessary).
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Intangible Assets | Other Intangible Assets and Liabilities Intangible assets and liabilities are subject to periodic amortization on a straight-line basis over their estimated useful lives as follows:
We monitor conditions that may affect the carrying value of our long-lived tangible and intangible assets when events and circumstances indicate that the carrying value of the asset groups may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available ("asset group"). An impairment loss exists when the carrying value of the asset group is greater than its fair value. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach. Refer to NOTE 6 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES for further information.
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Leases | Leases We determine if an arrangement contains a lease at inception. We recognize right-of-use assets and lease liabilities associated with leases based on the present value of the future minimum lease payments over the lease term at the commencement date. Lease terms reflect options to extend or terminate the lease when it is reasonably certain that the option will be exercised. For short-term leases (leases with an initial lease term of 12 months or less), right-of-use assets and lease liabilities are not recognized in the consolidated balance sheet, and lease expense is recognized on a straight-line basis over the lease term. In addition, we have agreements with both lease and non-lease components for which we have elected the practical expedient, for each underlying class of asset, to not separate the components. Refer to NOTE 8 - LEASES for further information.
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New Accounting Pronouncements | Recent Accounting Pronouncements Issued and Adopted On March 2, 2020, the SEC issued a final rule that amended the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rule 3-10, which required separate financial statements for subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met. The final rule replaces the previous requirement under Rule 3-10 to provide condensed consolidating financial information in the registrant’s financial statements with a requirement to provide alternative financial disclosures (which include summarized financial information of the parent and any issuers and guarantors, as well as other qualitative disclosures) in either the registrant’s Management's Discussion and Analysis of Financial Condition and Results of Operations or its financial statements, in addition to other simplifications. The final rule is effective for filings on or after January 4, 2021, and early adoption is permitted. We have elected to early adopt this disclosure update for the period ended March 31, 2020. As a result, we have excluded the footnote disclosures required under the previous Rule 3-10, and applied the final rule by including the summarized financial information and qualitative disclosures in Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q and Exhibit 22.1, filed herewith.
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Statements Of Condensed Consolidated Financial Position (Parenthetical) - $ / shares |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Statement of Financial Position [Abstract] | ||
Common shares, par value | $ 0.125 | $ 0.125 |
Common shares, authorized (in shares) | 600,000,000 | 600,000,000 |
Common shares, issued (in shares) | 428,645,866 | 301,886,794 |
Common shares, outstanding (in shares) | 398,587,083 | 270,084,005 |
Common shares in treasury (in shares) | 30,058,783 | 31,802,789 |
Statements of Unaudited Condensed Consolidated Changes in Equity Statement - USD ($) $ in Millions |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
AOCI Attributable to Parent [Member] |
Noncontrolling Interest [Member] |
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Balance, beginning of period (in shares) at Dec. 31, 2018 | 292,600,000 | ||||||
Balance, beginning of period at Dec. 31, 2018 | $ 424.2 | $ 37.7 | $ 3,916.7 | $ (3,060.2) | $ (186.1) | $ (283.9) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | (13.7) | (22.1) | 8.4 | ||||
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | 1,700,000 | ||||||
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture | $ (10.0) | (56.5) | 46.5 | ||||
Stock Repurchased During Period, Shares | (11,500,000) | (11,500,000) | |||||
Common Share Repurchases, Value | $ (124.3) | (124.3) | |||||
Dividends, Common Stock | (14.5) | (14.5) | |||||
Balance, end of period (in shares) at Mar. 31, 2019 | 282,800,000 | ||||||
Balance, end of period at Mar. 31, 2019 | $ 261.7 | $ 37.7 | 3,860.2 | (3,096.8) | (263.9) | (275.5) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.05 | ||||||
Balance, beginning of period (in shares) at Dec. 31, 2019 | 270,084,005 | 270,100,000 | |||||
Balance, beginning of period at Dec. 31, 2019 | $ 357.9 | $ 37.7 | 3,872.1 | (2,842.4) | (390.7) | (318.8) | $ 0.0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | (46.9) | (52.1) | 1.7 | 3.5 | |||
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | 1,700,000 | ||||||
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture | 2.1 | (23.6) | 25.7 | ||||
Stock Issued During Period, Shares, Acquisitions | 126,800,000 | ||||||
Noncontrolling Interest, Increase from Business Combination | 329.8 | ||||||
Stock Issued During Period, Value, Acquisitions | 947.4 | $ 15.9 | 601.7 | ||||
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders | (5.5) | (5.5) | |||||
Dividends, Common Stock | $ (24.0) | (24.0) | |||||
Balance, end of period (in shares) at Mar. 31, 2020 | 398,587,083 | 398,600,000 | |||||
Balance, end of period at Mar. 31, 2020 | $ 1,231.0 | $ 53.6 | $ 4,450.2 | $ (2,918.5) | $ (365.0) | $ (317.1) | $ 327.8 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.06 |
GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | Goodwill The increase in the balance of Goodwill as of March 31, 2020 is due to the preliminary assignment of $141.2 million to Goodwill in the first quarter of 2020 based on the preliminary purchase price allocation for the acquisition of AK Steel. The carrying amount of goodwill related to our Mining and Pelletizing segment was $2.1 million as of both March 31, 2020 and December 31, 2019. Intangible Assets and Liabilities The following is a summary of our intangible assets and liability:
Amortization expense related to intangible assets was $1.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively, and is recognized in Selling, general and administrative expenses in the Statements of Unaudited Condensed Consolidated Operations. Estimated future amortization expense related to intangible assets at March 31, 2020 is as follows:
Income from amortization of the intangible liability was $2.1 million for the three months ended March 31, 2020 and is recognized in Cost of goods sold in the Statements of Unaudited Condensed Consolidated Operations. Estimated future amortization income related to the intangible liability at March 31, 2020 is as follows:
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PENSIONS AND OTHER POSTRETIREMENT BENEFITS |
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PENSIONS AND OTHER POSTRETIREMENT BENEFITS | We offer defined benefit pension plans, defined contribution pension plans and OPEB plans, primarily consisting of retiree healthcare benefits, to most employees as part of a total compensation and benefits program. The defined benefit pension plans are noncontributory and benefits generally are based on a minimum formula or employees’ years of service and average earnings for a defined period prior to retirement. As a result of the acquisition of AK Steel, we assumed the obligations under AK Steel's defined benefit pension plans, defined contribution pension plans and OPEB plans. Noncontributory pension and various healthcare and life insurance benefits are provided to a significant portion of our employees and retirees. AK Steel also contributes to multiemployer pension plans according to collective bargaining agreements that cover certain union-represented employees. The AK Steel pension and OPEB plans were remeasured as of March 13, 2020. The following are the components of defined benefit pension and OPEB costs: Defined Benefit Pension Costs
OPEB Credits
Based on funding requirements, we made defined benefit pension contributions of $3.8 million for the three months ended March 31, 2020, compared to defined benefit pension contributions of $3.2 million for the three months ended March 31, 2019. OPEB contributions for our voluntary employee benefit association trust plans are typically made on an annual basis in the first quarter of each year, but due to plan funding requirements being met, no OPEB contributions for our voluntary employee benefit association trust plans were required or made for the three months ended March 31, 2020 and 2019.
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FAIR VALUE MEASUREMENTS (Tables) |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The following represents the assets and liabilities measured at fair value:
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Fair Value, Recurring and Nonrecurring, Valuation Techniques | The following table illustrates information about quantitative inputs and assumptions for the derivative assets and derivative liabilities categorized in Level 3 of the fair value hierarchy:
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Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation | The following tables represent a reconciliation of the changes in fair value of financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation |
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Schedule Of Carrying Value And Fair Value Of Financial Instruments | A summary of the carrying value and fair value of other financial instruments were as follows:
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PROPERTY, PLANT AND EQUIPMENT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value Of Each Of The Major Classes Of Consolidated Depreciable Assets | Depreciation and depletion is recorded over the following estimated useful lives:
The following table indicates the carrying value of each of the major classes of our depreciable assets:
1 Includes right-of-use assets related to finance leases of $84.2 million and $49.0 million as of March 31, 2020 and December 31, 2019, respectively.
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability | The table below summarizes our deferred revenue balances:
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Value Of Each Of The Major Classes Of Consolidated Depreciable Assets | Depreciation and depletion is recorded over the following estimated useful lives:
The following table indicates the carrying value of each of the major classes of our depreciable assets:
1 Includes right-of-use assets related to finance leases of $84.2 million and $49.0 million as of March 31, 2020 and December 31, 2019, respectively.
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[1] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Intangible assets and liabilities are subject to periodic amortization on a straight-line basis over their estimated useful lives as follows:
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Equity Method Investments | Investees and equity ownership percentages are presented below:
Hibbing is a co-owned joint venture with companies that are integrated steel producers or their subsidiaries. The following is a summary of the mine ownership of the co-owned iron ore mine at March 31, 2020:
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Intangibles Useful Lives) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |
Assumed Finite-lived Intangible Liabilities, Weighted Average Useful Life | 13 years |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 18 years |
Technology-Based Intangible Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 17 years |
Trademarks and Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Inventories) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished and semi-finished goods inventories | $ 1,358.9 | $ 114.1 |
Work-in-process | 88.0 | 68.7 |
Raw materials | 343.0 | 9.4 |
Total product inventories | 1,789.9 | 192.2 |
Manufacturing supplies and critical spares | 358.9 | 125.2 |
Inventories | $ 2,148.8 | $ 317.4 |
ACQUISITION OF AK STEEL (Business Acquisition Table) (Details) $ / shares in Units, $ in Millions |
Mar. 13, 2020
USD ($)
$ / shares
shares
|
Mar. 31, 2020
shares
|
Dec. 31, 2019
shares
|
---|---|---|---|
Business Acquisition [Line Items] | |||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ 617.6 | ||
Fair value of debt included in consideration | 913.6 | ||
Business Combination, Consideration Transferred | 1,535.5 | ||
Number of shares of AK Steel common stock issued and outstanding | shares | 398,587,083 | 270,084,005 | |
AK Steel Holding Corporation [Member] | |||
Business Acquisition [Line Items] | |||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | 617.6 | ||
Fair value of debt included in consideration | 913.6 | ||
Business Combination, Consideration Transferred | $ 1,500.0 | ||
Number of shares of AK Steel common stock issued and outstanding | shares | 316,900,000 | ||
Business Acquisition, Shares Exchange Ratio | 0.400 | ||
Shares of Cliffs common shares issued to AK Steel stockholders | shares | 126,800,000 | ||
Price per share of Cliffs common shares | $ / shares | $ 4.87 | ||
Credit Facility | AK Steel Holding Corporation [Member] | |||
Business Acquisition [Line Items] | |||
Fair value of debt included in consideration | $ 590.0 | ||
7.50% 2023 AK Senior Notes [Member] | AK Steel Holding Corporation [Member] | |||
Business Acquisition [Line Items] | |||
Fair value of debt included in consideration | $ 323.6 |
DEBT AND CREDIT FACILITIES (Schedule of Debt Maturities) (Details) $ in Millions |
Mar. 31, 2020
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Debt Maturities 2020 | $ 7.3 |
Debt Maturities 2021 | 33.5 |
Debt Maturities 2022 | 0.0 |
Debt Maturities 2023 | 12.8 |
Debt Maturities 2024 | 462.0 |
2025 and thereafter | 4,054.9 |
Total maturities of debt | $ 4,570.5 |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Estimated Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Pension Plan [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | $ 5.3 | $ 4.1 |
Interest cost | 8.2 | 8.7 |
Expected return on plan assets | (18.5) | (13.6) |
Prior service cost (credits) | 0.2 | 0.3 |
Net actuarial loss | 6.7 | 5.9 |
Net periodic benefit cost (credit) | 1.9 | 5.4 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | 0.5 | 0.4 |
Interest cost | 2.2 | 2.3 |
Expected return on plan assets | (4.5) | (4.2) |
Prior service cost (credits) | (0.5) | (0.5) |
Net actuarial loss | 0.7 | 1.3 |
Net periodic benefit cost (credit) | $ (1.6) | $ (0.7) |
FAIR VALUE MEASUREMENTS (Fair Value of Assets and Liabilities) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value Disclosure | $ 21.2 | $ 233.4 |
Liabilities, Fair Value Disclosure | 32.4 | 4.3 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value Disclosure | 0.0 | 0.0 |
Liabilities, Fair Value Disclosure | 0.0 | 0.0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value Disclosure | 1.6 | 187.6 |
Liabilities, Fair Value Disclosure | 32.4 | 3.2 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, Fair Value Disclosure | 19.6 | 45.8 |
Liabilities, Fair Value Disclosure | 0.0 | 1.1 |
Cash and Cash Equivalents [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 187.6 | |
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0.0 | |
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 187.6 | |
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0.0 | |
Commodity Contract [Member] | Other Current Assets [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 1.6 | |
Commodity Contract [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 0.0 | |
Commodity Contract [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 1.6 | |
Commodity Contract [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 0.0 | |
Commodity Contract [Member] | Other Current Liabilities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 26.5 | 3.2 |
Commodity Contract [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 0.0 | 0.0 |
Commodity Contract [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 26.5 | 3.2 |
Commodity Contract [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 0.0 | 0.0 |
Commodity Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 3.4 | |
Commodity Contract [Member] | Other Noncurrent Liabilities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 3.4 | |
Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 1.6 | |
Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 1.6 | |
Foreign Exchange Contract [Member] | Other Noncurrent Liabilities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 0.9 | |
Foreign Exchange Contract [Member] | Other Noncurrent Liabilities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 0.9 | |
Customer Supply Agreement [Member] | Other Current Assets [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 19.0 | 44.5 |
Customer Supply Agreement [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 0.0 | |
Customer Supply Agreement [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 19.0 | 44.5 |
Provisional Pricing Arrangements [Member] | Other Current Assets [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 0.6 | 1.3 |
Provisional Pricing Arrangements [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 0.0 | |
Provisional Pricing Arrangements [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | 0.0 | |
Provisional Pricing Arrangements [Member] | Other Current Assets [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset | $ 0.6 | 1.3 |
Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 1.1 | |
Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 0.0 | |
Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | 0.0 | |
Provisional Pricing Arrangements [Member] | Other Current Liabilities [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | $ 1.1 |
DEBT AND CREDIT FACILITIES (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 4,570.5 | |
LONG-TERM DEBT | 4,357.1 | $ 2,113.8 |
6.375% 2025 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 231.8 | |
7.00% 2027 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 335.4 | |
Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 2,000.0 | |
Long-term Line of Credit | $ 800.0 | |
Cleveland-Cliffs Inc. [Member] | 4.875% 2024 Senior Secured Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 5.00% | 5.00% |
Long-term Debt, Gross | $ 400.0 | $ 400.0 |
Unamortized Debt Issuance Expense | (4.3) | (4.6) |
Debt Instrument, Unamortized Discount | (1.7) | (1.8) |
Long-term Debt | $ 394.0 | $ 393.6 |
Cleveland-Cliffs Inc. [Member] | 6.75% 2026 Senior Secured Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 7.00% | |
Long-term Debt, Gross | $ 725.0 | |
Unamortized Debt Issuance Expense | (20.3) | |
Debt Instrument, Unamortized Discount | (8.8) | |
Long-term Debt | $ 695.9 | |
Cleveland-Cliffs Inc. [Member] | 6.375% 2025 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 8.11% | |
Long-term Debt, Gross | $ 231.8 | |
Unamortized Debt Issuance Expense | (0.9) | |
Debt Instrument, Unamortized Discount | (17.9) | |
Long-term Debt | $ 213.0 | |
Cleveland-Cliffs Inc. [Member] | 1.50% 2025 Convertible Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 6.26% | 6.26% |
Long-term Debt, Gross | $ 316.3 | $ 316.3 |
Unamortized Debt Issuance Expense | (4.4) | (4.6) |
Debt Instrument, Unamortized Discount | (62.2) | (65.0) |
Long-term Debt | $ 249.7 | $ 246.7 |
Cleveland-Cliffs Inc. [Member] | 5.75% 2025 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 6.01% | 6.01% |
Long-term Debt, Gross | $ 473.3 | $ 473.3 |
Unamortized Debt Issuance Expense | (3.5) | (3.6) |
Debt Instrument, Unamortized Discount | (5.3) | (5.5) |
Long-term Debt | $ 464.5 | $ 464.2 |
Cleveland-Cliffs Inc. [Member] | 7.00% 2027 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 9.24% | |
Long-term Debt, Gross | $ 335.4 | |
Unamortized Debt Issuance Expense | (1.3) | |
Debt Instrument, Unamortized Discount | (38.4) | |
Long-term Debt | $ 295.7 | |
Cleveland-Cliffs Inc. [Member] | 5.875% 2027 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 6.49% | 6.49% |
Long-term Debt, Gross | $ 750.0 | $ 750.0 |
Unamortized Debt Issuance Expense | (6.2) | (6.3) |
Debt Instrument, Unamortized Discount | (26.6) | (27.3) |
Long-term Debt | $ 717.2 | $ 716.4 |
Cleveland-Cliffs Inc. [Member] | 6.25% 2040 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 6.34% | 6.34% |
Long-term Debt, Gross | $ 298.4 | $ 298.4 |
Unamortized Debt Issuance Expense | (2.1) | (2.2) |
Debt Instrument, Unamortized Discount | (3.2) | (3.3) |
Long-term Debt | $ 293.1 | 292.9 |
Cleveland-Cliffs Inc. [Member] | Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.33% | |
Long-term Debt, Gross | $ 2,000.0 | 450.0 |
Long-term Line of Credit | $ 800.0 | $ 0.0 |
AK Steel Holding Corporation [Member] | 7.625% 2021 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 7.33% | |
Long-term Debt, Gross | $ 33.5 | |
Unamortized Debt Issuance Expense | 0.0 | |
Debt Instrument, Unamortized Premium | 0.1 | |
Long-term Debt | $ 33.6 | |
AK Steel Holding Corporation [Member] | 7.50% 2023 AK Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 6.17% | |
Long-term Debt, Gross | $ 12.8 | |
Unamortized Debt Issuance Expense | 0.0 | |
Debt Instrument, Unamortized Premium | 0.5 | |
Long-term Debt | $ 13.3 | |
AK Steel Holding Corporation [Member] | 6.375% 2025 AK Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 8.11% | |
Long-term Debt, Gross | $ 38.4 | |
Unamortized Debt Issuance Expense | 0.0 | |
Debt Instrument, Unamortized Discount | (3.0) | |
Long-term Debt | $ 35.4 | |
AK Steel Holding Corporation [Member] | 7.00% 2027 AK Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 9.24% | |
Long-term Debt, Gross | $ 56.3 | |
Unamortized Debt Issuance Expense | 0.0 | |
Debt Instrument, Unamortized Discount | (6.4) | |
Long-term Debt | 49.9 | |
AK Steel Holding Corporation [Member] | Industrial Revenue Bonds [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 99.3 | |
Unamortized Debt Issuance Expense | 0.0 | |
Debt Instrument, Unamortized Premium | 2.5 | |
Long-term Debt | $ 101.8 |
PROPERTY, PLANT AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT | The following table indicates the carrying value of each of the major classes of our depreciable assets:
1 Includes right-of-use assets related to finance leases of $84.2 million and $49.0 million as of March 31, 2020 and December 31, 2019, respectively. We recorded capitalized interest into property, plant and equipment of $9.7 million and $4.0 million during the three months ended March 31, 2020 and March 31, 2019, respectively. We recorded depreciation and depletion expense of $35.4 million and $19.6 million for the three months ended March 31, 2020 and March 31, 2019, respectively.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | The following represents the assets and liabilities measured at fair value:
The valuation of financial assets and liabilities classified in Level 2 is determined using a market approach based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable. Our foreign exchange contracts include Canadian dollars and euro, and our commodity hedge contracts primarily include those related to natural gas, electricity and zinc. The Level 3 assets and liabilities consist of a freestanding derivative instrument related to a certain supply agreement and derivative assets and liabilities related to certain provisional pricing arrangements with our customers. The supply agreement included in our Level 3 assets contains provisions for supplemental revenue or refunds based on the hot-rolled coil steel price in the year the iron ore product is consumed in the customer’s blast furnaces. We account for these provisions as a derivative instrument at the time of sale and adjust the derivative instrument to fair value through Revenues each reporting period until the product is consumed and the amounts are settled. We had assets of $19.0 million and $44.5 million at March 31, 2020 and December 31, 2019, respectively, related to this supply agreement. The provisional pricing arrangements included in our Level 3 assets/liabilities specify provisional price calculations, where the pricing mechanisms generally are based on market pricing, with the final revenue rate to be based on market inputs at a specified point in time in the future, per the terms of the supply agreements. The difference between the estimated final revenue rate at the date of sale and the estimated final revenue rate at the measurement date is characterized as a derivative and is required to be accounted for separately once the revenue has been recognized. The derivative instruments are adjusted to fair value through Revenues each reporting period based upon current market data and forward-looking estimates provided by management until the final revenue rates are determined. We had assets of $0.6 million and no liabilities related to provisional pricing arrangements at March 31, 2020. At December 31, 2019, we had assets of $1.3 million and liabilities of $1.1 million related to provisional pricing arrangements. The following table illustrates information about quantitative inputs and assumptions for the derivative assets and derivative liabilities categorized in Level 3 of the fair value hierarchy:
The significant unobservable input used in the fair value measurement of our customer supply agreement was a forward-looking estimate of the hot-rolled coil steel price determined by management. The significant unobservable input used in the fair value measurement of our provisional pricing arrangements at March 31, 2020 was estimates for PPI data. The following tables represent a reconciliation of the changes in fair value of financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
The carrying values of certain financial instruments (e.g., Accounts receivable, net, Accounts payable and Other current liabilities) approximates fair value and, therefore, have been excluded from the table below. A summary of the carrying value and fair value of other financial instruments were as follows:
The fair value of long-term debt was determined using quoted market prices.
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Statements Of Unaudited Condensed Consolidated Financial Position - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Current assets: | ||
Cash and cash equivalents | $ 186.9 | $ 352.6 |
Accounts receivable, net | 560.8 | 94.0 |
Inventories | 2,148.8 | 317.4 |
Income tax receivable, current | 61.7 | 58.6 |
Other current assets | 107.4 | 75.3 |
Total current assets | 3,065.6 | 897.9 |
Non-current assets: | ||
Property, plant and equipment, net | 4,549.8 | 1,929.0 |
Goodwill | 143.3 | 2.1 |
Intangible assets, net | 210.0 | 48.1 |
Income tax receivable, non-current | 4.1 | 62.7 |
Deferred income taxes | 486.4 | 459.5 |
Right-of-use asset, operating lease | 238.0 | 11.7 |
Other non-current assets | 215.1 | 92.8 |
TOTAL ASSETS | 8,912.3 | 3,503.8 |
Current liabilities: | ||
Accounts payable | 825.3 | 193.2 |
Accrued liabilities | 299.8 | 126.3 |
Other current liabilities | 245.7 | 89.9 |
TOTAL CURRENT LIABILITIES | 1,370.8 | 409.4 |
Non-current liabilities: | ||
Long-term debt | 4,357.1 | 2,113.8 |
Operating lease liability, non-current | 201.2 | 10.5 |
Intangible liability, net | 137.9 | 0.0 |
Pension and OPEB liabilities | 1,171.6 | 311.5 |
Asset retirement obligations | 179.2 | 163.2 |
Other non-current liabilities | 263.5 | 137.5 |
TOTAL LIABILITIES | 7,681.3 | 3,145.9 |
Commitments and contingencies (See Note 20) | ||
SHAREHOLDERS' EQUITY | ||
Common Shares - par value $0.125 per share, Authorized - 600,000,000 shares (2019 - 600,000,000 shares); Issued - 428,645,866 shares (2019 - 301,886,794 shares); Outstanding - 398,587,083 shares (2019 - 270,084,005 shares) | 53.6 | 37.7 |
Capital in excess of par value of shares | 4,450.2 | 3,872.1 |
Retained deficit | (2,918.5) | (2,842.4) |
Cost of 30,058,783 common shares in treasury (2019 - 31,802,789 shares) | (365.0) | (390.7) |
Accumulated other comprehensive loss | (317.1) | (318.8) |
Total Cliffs shareholders' equity | 903.2 | 357.9 |
Noncontrolling interest | 327.8 | 0.0 |
TOTAL EQUITY | 1,231.0 | 357.9 |
TOTAL LIABILITIES AND EQUITY | $ 8,912.3 | $ 3,503.8 |
Statements Of Unaudited Condensed Consolidated Cash Flows - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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OPERATING ACTIVITIES | ||
Net loss | $ (48.6) | $ (22.1) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation, depletion and amortization | 34.4 | 19.9 |
Deferred income taxes | (47.5) | (4.1) |
Loss (gain) on derivatives | 32.0 | (5.7) |
Other | (31.6) | 13.9 |
Changes in operating assets and liabilities, net of business combination: | ||
Receivables and other assets | 254.1 | 204.0 |
Inventories | (244.1) | (228.9) |
Payables, accrued expenses and other liabilities | (109.2) | (88.2) |
Net cash used by operating activities | (160.5) | (111.2) |
INVESTING ACTIVITIES | ||
Purchase of property, plant and equipment | (138.1) | (134.1) |
Acquisition of AK Steel, net of cash acquired | (869.3) | 0.0 |
Other investing activities | (0.1) | 8.5 |
Net cash used by investing activities | (1,007.5) | (125.6) |
FINANCING ACTIVITIES | ||
Repurchase of common shares | 0.0 | (124.3) |
Dividends paid | (16.9) | (14.8) |
Proceeds from issuance of debt | 716.2 | 0.0 |
Debt issuance costs | (44.4) | 0.0 |
Repurchase of debt | (429.9) | (10.3) |
Borrowings under credit facilities | 800.0 | 0.0 |
Other financing activities | (19.9) | (8.4) |
Net cash provided (used) by financing activities | 1,005.1 | (157.8) |
Decrease in cash and cash equivalents, including cash classified within other current assets related to discontinued operations | (162.9) | (394.6) |
Less: increase (decrease) in cash and cash equivalents from discontinued operations, classified within other current assets | 2.8 | (1.6) |
Cash and Cash Equivalents, Period Increase (Decrease) | (165.7) | (393.0) |
Cash and cash equivalents at beginning of period | 352.6 | 823.2 |
Cash and cash equivalents at end of period | $ 186.9 | $ 430.2 |
GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill [Table Text Block] | The following is a summary of our intangible assets and liability:
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Finite-lived Intangible Assets Amortization Expense [Table Text Block] | Estimated future amortization expense related to intangible assets at March 31, 2020 is as follows:
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Schedule of Finite-Lived Intangible Liabilities, Future Amortization Credit [Table Text Block] | Estimated future amortization income related to the intangible liability at March 31, 2020 is as follows:
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SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Tables) |
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Disclosure Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues from Product Sales and Services [Table Text Block] | The following table represents our consolidated Revenues (excluding intercompany revenues) by market:
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. The following table represents our consolidated Revenues (excluding intercompany revenues) by product line:
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. |
[1] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | The following is a roll forward of our allowance for credit losses associated with Accounts receivable, net:
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Schedule of Inventory, Current [Table Text Block] | The following table presents the detail of our Inventories in the Statements of Unaudited Condensed Consolidated Financial Position:
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Schedule of Accrued Liabilities [Table Text Block] | The following table presents the detail of our Accrued liabilities in the Statements of Unaudited Condensed Consolidated Financial Position:
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Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | A reconciliation of capital additions to cash paid for capital expenditures is as follows:
Cash payments (receipts) for income taxes and interest are as follows:
1 Capitalized interest was $9.7 million and $4.0 million for the three months ended March 31, 2020 and 2019, respectively. Non-Cash Investing and Financing Activities
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PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Postemployment Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following are the components of defined benefit pension and OPEB costs: Defined Benefit Pension Costs
OPEB Credits
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ACQUISITION OF AK STEEL (Narrative) (Details) $ in Millions |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 13, 2020
USD ($)
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Mar. 31, 2020
USD ($)
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Mar. 31, 2020
USD ($)
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Mar. 31, 2019
USD ($)
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Business Acquisition [Line Items] | ||||||
Business Combination, Consideration Transferred | $ 1,535.5 | |||||
Revenues | [1] | $ 359.1 | $ 157.0 | |||
Net income (loss) | (52.1) | (22.1) | ||||
Business Combination, Acquisition Related Costs | $ 42.5 | 0.0 | ||||
AK Steel Holding Corporation [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Business Combination, Consideration Transfered, Exchange Ratio | 0.400 | |||||
Business Combination, Consideration Transferred | $ 1,500.0 | |||||
Business Acquisition, Revenue Reported by Acquired Entity for Last Annual Period | $ 6,359.4 | |||||
Revenues | $ 217.5 | |||||
Net income (loss) | (55.1) | |||||
Severance costs | $ 17.6 | |||||
Intersegment Eliminations [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Revenues | $ 67.8 | $ 67.4 | ||||
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Deferred Revenue) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Realization of deferred revenue | $ 34.6 | $ 0.0 |
Other Noncurrent Liabilities [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Contract with Customer, Liability, Noncurrent | 25.7 | 38.5 |
Contract With Customer, Liability, Period Increase (Decrease) | (25.7) | 0.0 |
Contract with Customer, Liability, Noncurrent | 0.0 | 38.5 |
Other Current Liabilities [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Contract with Customer, Liability, Current | 22.1 | 21.0 |
Contract With Customer, Liability, Period Increase (Decrease) | (21.8) | (2.9) |
Contract with Customer, Liability, Current | $ 0.3 | $ 18.1 |
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Allowance for Credit Losses) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Accounts Receivable, Allowance for Credit Loss | $ 0.0 | $ 0.0 |
Accounts Receivable, Allowance for Credit Loss, Period Increase (Decrease) | 1.2 | 0.0 |
Accounts Receivable, Allowance for Credit Loss | $ 1.2 | $ 0.0 |
LEASES - Narrative (Details) - Equipment, Offices And Production Buildings |
Mar. 31, 2020 |
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Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Renewal Term | 1 year |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Renewal Term | 32 years |
Lessee, Operating Lease, Term of Contract | 20 years |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Pension Plans, Defined Benefit [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Pension Contributions | $ 3.8 | $ 3.2 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
OPEB Contributions | $ 0.0 | $ 0.0 |
FAIR VALUE MEASUREMENTS (Schedule Of Quantitative Inputs And Assumptions For Level 3 Assets And Liabilities) (Details) - Fair Value, Inputs, Level 3 [Member] - Not Designated as Hedging Instrument [Member] - Valuation, Market Approach [Member] $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Customer Supply Agreement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | $ 19.0 | $ 44.5 |
Provisional Pricing Arrangements [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | $ 0.6 | $ 1.3 |
PPI Estimates [Member] | Provisional Pricing Arrangements [Member] | Weighted Average [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value, Measurement With Unobservable Inputs Range | 136.5 | |
Customer's Hot-Rolled Steel Estimate [Member] | Customer Supply Agreement [Member] | Weighted Average [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value, Measurement With Unobservable Inputs Range | 559 |
DEBT AND CREDIT FACILITIES (Debt Instrument Redemption) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
6.75% 2026 Senior Notes [Member] | Debt Instrument, Redemption, Period One, Including Premium [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
6.75% 2026 Senior Notes [Member] | Debt Instrument, Redemption, Period One, Upon Equity Issuance [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 106.75% |
6.75% 2026 Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 105.063% |
6.75% 2026 Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 103.375% |
6.75% 2026 Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 101.688% |
6.75% 2026 Senior Notes [Member] | Debt Instrument, Redemption, Period Five [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
6.375% 2025 Senior Notes [Member] | Debt Instrument, Redemption, Period One, Including Premium [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
6.375% 2025 Senior Notes [Member] | Debt Instrument, Redemption, Period One, Upon Equity Issuance [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 106.375% |
6.375% 2025 Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 103.188% |
6.375% 2025 Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 101.594% |
6.375% 2025 Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
7.00% 2027 Senior Notes [Member] | Debt Instrument, Redemption, Period One, Including Premium [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
7.00% 2027 Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 103.50% |
7.00% 2027 Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 102.333% |
7.00% 2027 Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 101.167% |
7.00% 2027 Senior Notes [Member] | Debt Instrument, Redemption, Period Five [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
7.50% 2023 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 101.875% |
7.50% 2023 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
7.50% 2023 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 103.75% |
6.375% 2025 AK Senior Notes [Member] | Debt Instrument, Redemption, Period One, Including Premium [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
6.375% 2025 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 103.188% |
6.375% 2025 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 101.594% |
6.375% 2025 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
7.00% 2027 AK Senior Notes [Member] | Debt Instrument, Redemption, Period One, Including Premium [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 100.00% |
7.00% 2027 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 103.50% |
7.00% 2027 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 102.333% |
7.00% 2027 AK Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, Redemption Price, Percentage | 101.167% |
RELATED PARTIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Investees and equity ownership percentages are presented below:
Hibbing is a co-owned joint venture with companies that are integrated steel producers or their subsidiaries. The following is a summary of the mine ownership of the co-owned iron ore mine at March 31, 2020:
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Summary Of Related Party Transactions Table Disclosure | The tables below summarize our material related party transactions: Revenues from related parties were as follows:
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. The following table presents the classification of related party assets and liabilities in the Statements of Unaudited Condensed Consolidated Financial Position:
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ASSET RETIREMENT OBLIGATIONS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Remediation Obligations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Asset Retirement Obligations | The following is a summary of our asset retirement obligations:
1 Includes $32.5 million and $22.0 million related to our active operations as of March 31, 2020 and December 31, 2019, respectively.
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[1] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Asset Retirement Obligation | The following is a roll forward of our asset retirement obligation liability:
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Schedule of Equity Method Investments [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ 32.8 | |
Land Improvements [Member] | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 20 years | |
Land Improvements [Member] | Maximum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 45 years | |
Buildings [Member] | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 40 years | |
Buildings [Member] | Maximum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 45 years | |
Mining and Pelletizing Equipment [Member] | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Mining and Pelletizing Equipment [Member] | Maximum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 20 years | |
Steel and Manufacturing Equipment [Member] | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Steel and Manufacturing Equipment [Member] | Maximum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Property, Plant and Equipment, Useful Life | 20 years | |
Sales [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ 26.8 | $ (5.5) |
ACQUISITION OF AK STEEL (Pro Forma Information Tables) (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Business Acquisition, Pro Forma Revenue | $ 1,526.4 | $ 1,787.3 | |||
Business Acquisition, Pro Forma Net Income (Loss) | (17.4) | (79.7) | |||
Revenues | [1] | 359.1 | 157.0 | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (48.6) | (22.1) | |||
AK Steel Holding Corporation [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Revenues | $ 217.5 | ||||
Business Acquisition, Pro Forma Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 24.30% | ||||
Business Acquisition, Pro Forma Income Tax Expense (Benefit) | $ 11.6 | 18.3 | |||
Fair Value Adjustment to Inventory [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 23.2 | 84.8 | |||
Acquisition-related Costs [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 26.6 | ||||
Other Adjustments [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 13.1 | ||||
Other Adjustments [Member] | AK Steel Holding Corporation [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 4.2 | ||||
Intersegment Eliminations [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Revenues | $ 67.8 | $ 67.4 | |||
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ASSET RETIREMENT OBLIGATIONS (Asset Retirement Obligation Disclosure) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
||||
Asset Retirement Obligation [Roll Forward] | |||||
Asset retirement obligation at beginning of period | $ 165.3 | [1] | $ 172.4 | ||
Increase from AK Steel acquisition | 13.9 | 0.0 | |||
Accretion expense | 2.6 | 10.1 | |||
Remediation payments | (0.4) | (0.8) | |||
Revision in estimated cash flows | 0.0 | (16.4) | |||
Asset retirement obligation at end of period | [1] | $ 181.4 | $ 165.3 | ||
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DERIVATIVE INSTRUMENTS (Estimated Losses in Future Periods) (Details) - Designated as Hedging Instrument [Member] $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Natural Gas [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | $ (7.0) |
Energy Related Derivative [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | (0.2) |
Electricity [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | (1.5) |
Canada, Dollars | Foreign Exchange Contract [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | $ (0.2) |
PROPERTY, PLANT AND EQUIPMENT (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Property, Plant and Equipment [Abstract] | ||
Interest Costs Capitalized | $ 9.7 | $ 4.0 |
Depreciation and depletion expense | $ 35.4 | $ 19.6 |
EARNINGS PER SHARE (Schedule of Antidilutive Securities) (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1.6 | 11.5 |
Convertible Debt Securities [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.0 | 7.3 |
Share-based Payment Arrangement [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1.6 | 4.2 |
RELATED PARTIES (Narrative) (Details) |
Mar. 31, 2020 |
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Hibbing [Member] | |
Segment Reporting Information [Line Items] | |
Equity Method Investment, Ownership Percentage | 23.00% |
SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On April 17, 2020, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee and notes collateral agent, relating to the issuance by Cliffs of $400 million aggregate principal amount of 9.875% 2025 Senior Secured Notes in an offering that was exempt from the registration requirements of the Securities Act. We intend to use the net proceeds from this offering for general corporate purposes, including to strengthen our balance sheet and increase our liquidity. The 9.875% 2025 Senior Secured Notes will bear interest at an annual rate of 9.875% and were issued at a price of 94.5% of their principal amount. On April 24, 2020, we issued an additional $555.2 million aggregate principal amount of 9.875% 2025 Senior Secured Notes at a price of 99.0% of their principal amount in an offering that was exempt from the registration requirements of the Securities Act. These additional notes are of the same class and series as, and otherwise identical to, the 9.875% 2025 Senior Secured Notes issued on April 17, 2020, other than with respect to the date of issuance and issue price. We used the net proceeds from the offering of these additional notes to repurchase approximately $736.4 million aggregate principal amount of our outstanding senior notes of various series, which resulted in a principal debt reduction of approximately $181.3 million.
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ASSET RETIREMENT OBLIGATIONS |
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Environmental Remediation Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSET RETIREMENT OBLIGATIONS | The following is a summary of our asset retirement obligations:
1 Includes $32.5 million and $22.0 million related to our active operations as of March 31, 2020 and December 31, 2019, respectively. The accrued closure obligation is predominantly related to our iron ore mining operations and provides for contractual and legal obligations associated with the eventual closure of those operations. Additionally, we have included in our asset retirement obligation $13.9 million for our integrated steel facilities acquired in the Merger. The closure date for each of our active mine sites was determined based on the exhaustion date of the remaining iron ore reserves and the amortization of the related asset and accretion of the liability is recognized over the estimated mine lives. The closure date and expected timing of the capital requirements to meet our obligations for our indefinitely idled or closed mines is determined based on the unique circumstances of each property. For indefinitely idled or closed mines, the accretion of the liability is recognized over the anticipated timing of remediation. As the majority of our asset retirement obligations at our steelmaking operations have indeterminate settlement dates, asset retirement obligations have been recorded at present values using estimated ranges of the economic lives of the underlying assets. The following is a roll forward of our asset retirement obligation liability:
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RELATED PARTIES |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTIES | We have certain co-owned joint ventures with companies from the steel and mining industries, including integrated steel companies, their subsidiaries and other downstream users of steel and iron ore products. In addition, we have certain long-term contracts, and from time to time, enter into other sales agreements with these parties, and as a result, generate Revenues from related parties. Hibbing is a co-owned joint venture with companies that are integrated steel producers or their subsidiaries. The following is a summary of the mine ownership of the co-owned iron ore mine at March 31, 2020:
The tables below summarize our material related party transactions: Revenues from related parties were as follows:
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. The following table presents the classification of related party assets and liabilities in the Statements of Unaudited Condensed Consolidated Financial Position:
Other current assets A supply agreement with one customer provides for supplemental revenue or refunds to the customer based on the hot-rolled coil steel price at the time the product is consumed in the customer’s blast furnaces. The supplemental pricing is characterized as a freestanding derivative. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.
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LEASES (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease cost | Lease costs are presented below:
Other information related to leases was as follows:
1 Does not include right-of-use assets obtained in the Merger of $5.3 million for the three months ended March 31, 2020.
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Schedule of future minimum lease payments under noncancellable leases | Future minimum lease payments under noncancellable finance and operating leases as of March 31, 2020 were as follows:
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SEGMENT REPORTING (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Segment Reporting Information, By Segment | The following table summarizes our capital additions by segment:
1 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for additional information. Our results by segment are as follows:
1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020. The following table provides a reconciliation of our consolidated Net loss to Total Adjusted EBITDA:
1 Includes $3.5 million of income attributable to noncontrolling interests and $1.1 million of depreciation, depletion and amortization for the three months ended March 31, 2020.
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Reconciliation of Assets from Segment to Consolidated | The following summarizes our assets by segment:
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SUBSEQUENT EVENTS (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |||
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Apr. 24, 2020 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Apr. 17, 2020 |
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Subsequent Event [Line Items] | ||||
Long-term Debt, Gross | $ 4,570.5 | |||
Extinguishment of Debt, Amount | $ 739.9 | $ 10.0 | ||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Extinguishment of Debt, Amount | $ 736.4 | |||
Reduction of Principal Long-Term Debt | 181.3 | |||
9.875% 2025 Senior Secured Notes [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Long-term Debt, Gross | $ 555.2 | $ 400.0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 9.875% | |||
Debt issuance, discount rate | 99.00% | 94.50% |
ACQUISITION OF AK STEEL |
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Business Combination Disclosure [Text Block] | Transaction Overview On March 13, 2020, pursuant to the Merger Agreement, we completed the acquisition of AK Steel, in which we were the acquirer. As a result of the Merger, each share of AK Steel common stock issued and outstanding immediately prior to the effective time of the Merger (other than excluded shares) was converted into the right to receive 0.400 Cliffs common shares and, if applicable, cash in lieu of any fractional Cliffs common shares. The acquisition combined Cliffs, North America’s largest producer of iron ore pellets, with AK Steel, a leading producer of innovative flat-rolled carbon, stainless and electrical steel products, to create a vertically integrated producer of value-added iron ore and steel products. The combination is expected to create significant opportunities to generate additional value from market trends across the entire steel value chain and enable more consistent, predictable performance through normal market cycles. Together, Cliffs and AK Steel have a presence across the entire manufacturing process, from mining to pelletizing to the development and production of finished high value steel products, including Next Generation Advanced High Strength Steels for automotive and other markets. The combination is expected to generate cost synergies, primarily from consolidating corporate functions, reducing duplicative overhead costs, and procurement and energy cost savings, as well as operational and supply chain efficiencies. The combined company is well positioned to provide high-value iron ore and steel solutions to customers primarily across North America. Total net revenues for AK Steel for the most recent pre-acquisition year ended December 31, 2019 were $6,359.4 million. Following the acquisition, the operating results of AK Steel were included in our unaudited condensed consolidated financial statements and are reported as part of our Steel and Manufacturing segment. For the period subsequent to the acquisition (March 13, 2020 through March 31, 2020), AK Steel's Revenues were $217.5 million and Net loss attributable to Cliffs shareholders was $55.1 million, which includes $23.2 million and $17.6 million related to amortization of the fair value inventory step-up and severance costs, respectively. Additionally, we incurred acquisition costs of $23.2 million for the three months ended March 31, 2020, which were recorded in Acquisition-related costs on the Statements of Unaudited Condensed Consolidated Operations. Refer to NOTE 7 - DEBT AND CREDIT FACILITIES for information regarding debt transactions executed in connection with the Merger. The Merger was accounted for under the acquisition method of accounting for business combinations. The acquisition date fair value of the consideration transferred totaled $1.5 billion. The following tables summarize the consideration paid for AK Steel and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The fair value of the total purchase consideration was determined as follows:
The fair value of Cliffs common shares issued for outstanding shares of AK Steel common stock and with respect to Cliffs common shares underlying converted AK Steel equity awards that vested upon completion of the Merger is calculated as follows:
The fair value of AK Steel's debt included in the consideration is calculated as follows:
Valuation Assumption and Preliminary Purchase Price Allocation We estimated fair values at March 13, 2020 for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of net assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. If we determine any measurement period adjustments are material, we will apply those adjustments, including any related impacts to net income, in the reporting period in which the adjustments are determined. We are in the process of conducting a valuation of the assets acquired and liabilities assumed related to the acquisition, most notably, inventories, including manufacturing supplies and critical spares, personal and real property, leases, deferred taxes, investments, asset retirement obligations, OPEB liabilities and intangible assets/liabilities, and the final allocation will be made when completed, including the result of any identified goodwill. Accordingly, the provisional measurements noted below are preliminary and subject to modification in the future. The preliminary purchase price allocation to assets acquired and liabilities assumed in the Merger was:
The goodwill resulting from the acquisition of AK Steel was assigned to Precision Partners, our downstream tooling and stamping operations, and AK Tube, our tubing operations, that are reporting units included in the Steel and Manufacturing segment. Goodwill is calculated as the excess of the purchase price over the net identifiable assets recognized and primarily represents the growth opportunities in lightweighting solutions to automotive customers, as well as any synergistic benefits to be realized from the acquisition of AK Steel. None of the goodwill is expected be deductible for income tax purposes. The preliminary purchase price allocated to identifiable intangible assets and liabilities acquired was:
The above-market supply contract relates to a long-term coke supply agreement with SunCoke Middletown, a consolidated variable interest entity. Refer to NOTE 18 - VARIABLE INTEREST ENTITIES for further information. Pro Forma Results The following table provides unaudited pro forma financial information, prepared in accordance with Topic 805, for the three months ended March 31, 2020 and 2019, as if AK Steel had been acquired as of January 1, 2019:
The unaudited pro forma financial information has been calculated after applying our accounting policies and adjusting the historical results with pro forma adjustments, net of tax, that assume the acquisition occurred on January 1, 2019. Significant pro forma adjustments include the following:
The unaudited pro forma financial information does not reflect the potential realization of revenue synergies or cost savings, nor does it reflect other costs relating to the integration of the two companies. This unaudited pro forma financial information should not be considered indicative of the results that would have actually occurred if the acquisition had been consummated on January 1, 2019, nor are they indicative of future results.
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DEBT AND CREDIT FACILITIES |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT AND CREDIT FACILITIES | The following represents a summary of our long-term debt:
$725 Million 6.75% 2026 Senior Secured Notes Offering On March 13, 2020, we entered into an indenture among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee and notes collateral agent, relating to the issuance of $725 million aggregate principal amount of 6.75% 2026 Senior Secured Notes. The 6.75% 2026 Senior Secured Notes were issued at 98.783% of face value. The 6.75% 2026 Senior Secured Notes were issued in a private placement transaction exempt from the registration requirements of the Securities Act. The 6.75% 2026 Senior Secured Notes bear interest at a rate of 6.75% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2020. The 6.75% 2026 Senior Secured Notes mature on March 15, 2026. The 6.75% 2026 Senior Secured Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by substantially all of our material domestic subsidiaries and are secured (subject in each case to certain exceptions and permitted liens) by (i) a first-priority lien, on an equal ranking with the 4.875% 2024 Senior Secured Notes, on substantially all of our assets and the assets of the guarantors, and (ii) a second-priority lien on the ABL Collateral (as defined below), which is junior to a first-priority lien for the benefit of the lenders under our ABL Facility and pari passu with the 4.875% 2024 Senior Secured Notes. The 6.75% 2026 Senior Secured Notes may be redeemed, in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders of the 6.75% 2026 Senior Secured Notes. The following is a summary of redemption prices for our 6.75% 2026 Senior Secured Notes:
In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 6.75% 2026 Senior Secured Notes, we will be required to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of purchase. The terms of the 6.75% 2026 Senior Secured Notes contain certain customary covenants; however, there are no financial covenants. Debt issuance costs of $20.5 million were incurred related to the offering of the 6.75% 2026 Senior Secured Notes and are included in Long-term debt in the Statements of Unaudited Condensed Consolidated Financial Position. Cliffs Senior Notes exchanged for AK Steel Corporation Senior Notes On March 16, 2020, we entered into indentures, in each case among Cliffs, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the issuance by Cliffs of $231.8 million aggregate principal amount of 6.375% 2025 Senior Notes and $335.4 million aggregate principal amount of 7.00% 2027 Senior Notes. The new notes were issued in exchange for equal aggregate principal amounts of 6.375% 2025 AK Senior Notes and 7.00% 2027 AK Senior Notes, respectively. The 6.375% 2025 Senior Notes and 7.00% 2027 Senior Notes were issued pursuant to exchange offers made by Cliffs in private placement transactions exempt from the registration requirements of the Securities Act. Pursuant to the registration rights agreements executed in connection with the issuance of the new notes, we agreed to file registration statements with the SEC with respect to registered offers to exchange the 6.375% 2025 Senior Notes and 7.00% 2027 Senior Notes for publicly registered notes within 365 days of the closing date, with all significant terms and conditions remaining the same. The 6.375% 2025 Senior Notes and 7.00% 2027 Senior Notes are unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the notes. In addition, if a change in control triggering event, as defined in the indentures, occurs with respect to the 6.375% 2025 Senior Notes or 7.00% 2027 Senior Notes, we will be required to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of purchase. The terms of the 6.375% 2025 Senior Notes and 7.00% 2027 Senior Notes contain certain customary covenants; however, there are no financial covenants. 6.375% 2025 Senior Notes The 6.375% 2025 Senior Notes bear interest at a rate of 6.375% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2020. The 6.375% 2025 Senior Notes mature on October 15, 2025. The 6.375% 2025 Senior Notes may be redeemed, in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders of the 6.375% 2025 Senior Notes. The following is a summary of redemption prices for our 6.375% 2025 Senior Notes:
Debt issuance costs of $0.9 million were incurred in connection with the issuance of the 6.375% 2025 Senior Notes and are included in Long-term debt in the Statements of Unaudited Condensed Consolidated Financial Position. 7.00% 2027 Senior Notes The 7.00% 2027 Senior Notes bear interest at a rate of 7.00% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2020. The 7.00% 2027 Senior Notes mature on October 15, 2025. The 7.00% 2027 Senior Notes may be redeemed, in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders of the 7.00% 2027 Senior Notes. The following is a summary of redemption prices for our 7.00% 2027 Senior Notes:
Debt issuance costs of $1.3 million were incurred in connection with the issuance of the 7.00% 2027 Senior Notes and are included in Long-term debt in the Statements of Unaudited Condensed Consolidated Financial Position. AK Steel Corporation Senior Unsecured Notes As of March 31, 2020, AK Steel Corporation had outstanding a total of $141.0 million aggregate principal amount of 7.625% 2021 AK Senior Notes, 7.50% 2023 AK Senior Notes, 6.375% 2025 AK Senior Notes and 7.00% 2027 AK Senior Notes. These senior notes are unsecured obligations and rank equally in right of payment with AK Steel Corporation's guarantees of Cliffs' unsecured and unsubordinated indebtedness. These notes contain certain customary covenants; however, there are no financial covenants. We may redeem the 7.625% 2021 AK Senior Notes at 100.000% of their principal amount, together with all accrued and unpaid interest to the date of redemption. The following is a summary of redemption prices for the 7.50% 2023 AK Senior Notes:
The following is a summary of redemption prices for the 6.375% 2025 AK Senior Notes:
The following is a summary of redemption prices for the 7.00% 2027 AK Senior Notes:
Industrial Revenue Bonds AK Steel Corporation had an outstanding $73.3 million aggregate principal amount of fixed-rate, tax-exempt IRBs as of March 31, 2020. The weighted-average fixed rate of the unsecured IRBs is 6.80%. The IRBs are unsecured senior debt obligations that are equal in ranking with AK Steel Corporation's senior unsecured notes and AK Steel Corporation's guarantees of Cliffs' unsecured and unsubordinated indebtedness. In addition, AK Steel Corporation had outstanding $26.0 million aggregate principal amount of variable-rate IRBs as of March 31, 2020 that is backed by a letter of credit. These IRBs contain certain customary covenants; however, there are no financial covenants. Debt Extinguishments - 2020 On March 13, 2020, in connection with the Merger, we purchased $364.2 million aggregate principal amount of 7.625% 2021 AK Senior Notes and $310.7 million aggregate principal amount of 7.50% 2023 AK Senior Notes upon early settlement of tender offers made by Cliffs. The net proceeds from the offering of 6.75% 2026 Senior Secured Notes, along with a portion of the ABL Facility borrowings, were used to fund such purchases. As the 7.625% 2021 AK Senior Notes and 7.50% 2023 AK Senior Notes were recorded at fair value just prior to being purchased, there was no gain or loss on extinguishment. Additionally, in connection with the final settlement of the tender offers, on March 27, 2020, we purchased $8.5 million aggregate principal amount of the 7.625% 2021 AK Senior Notes and $56.5 million aggregate principal amount of the 7.50% 2023 AK Senior Notes with cash on hand. The following is a summary of the debt extinguished and the respective gain on extinguishment:
Subsequent to the period ended March 31, 2020, we issued $400 million aggregate principal amount of 9.875% 2025 Senior Secured Notes in a private placement transaction exempt from the registration requirements of the Securities Act. We intend to use the net proceeds from this offering for general corporate purposes, including to strengthen our balance sheet and increase our liquidity. We also issued an additional $555.2 million aggregate principal amount of 9.875% 2025 Senior Secured Notes in a subsequent private placement transaction exempt from the registration requirements of the Securities Act. We used the net proceeds from the offering of the additional 9.875% 2025 Senior Secured Notes to repurchase approximately $736.4 million aggregate principal amount of our outstanding senior notes, which resulted in a principal debt reduction of approximately $181.3 million. Refer to NOTE 21 - SUBSEQUENT EVENTS for further information. Debt Extinguishments - 2019 The following is a summary of the debt extinguished with cash and the respective loss on extinguishment:
ABL Facility On March 13, 2020, in connection with the Merger, we entered into a new ABL Facility with various financial institutions to replace and refinance Cliffs’ Former ABL Facility and AK Steel Corporation’s former revolving credit facility. The ABL Facility will mature upon the earlier of March 13, 2025 or 91 days prior to the maturity of certain other material debt and provides for up to $2.0 billion in borrowings, including a $555.0 million sublimit for the issuance of letters of credit and a $125.0 million sublimit for swingline loans. Availability under the ABL Facility is limited to an eligible borrowing base, as applicable, determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. The ABL Facility and certain bank products and hedge obligations are guaranteed by us and certain of our existing wholly owned U.S. subsidiaries and are required to be guaranteed by certain of our future U.S. subsidiaries. Amounts outstanding under the ABL Facility are secured by (i) a first-priority security interest in the accounts receivable and other rights to payment, inventory, as-extracted collateral, certain investment property, deposit accounts, securities accounts, certain general intangibles and commercial tort claims, certain mobile equipment, commodities accounts and other related assets of ours, the other borrowers and the guarantors, and proceeds and products of each of the foregoing (collectively, the “ABL Collateral”) and (ii) a second-priority security interest in substantially all of our assets and the assets of the other borrowers and the guarantors other than the ABL Collateral. Borrowings under the ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a LIBOR rate, in each case plus an applicable margin. We may amend this agreement to replace the LIBOR rate with one or more secured overnight financing based rates or an alternative benchmark rate, giving consideration to any evolving or then existing convention for similar dollar denominated syndicated credit facilities for such alternative benchmarks. The ABL Facility contains customary representations and warranties and affirmative and negative covenants including, among others, covenants regarding the maintenance of certain financial ratios if certain conditions are triggered, covenants relating to financial reporting, covenants relating to the payment of dividends on, or purchase or redemption of, our capital stock, covenants relating to the incurrence or prepayment of certain debt, covenants relating to the incurrence of liens or encumbrances, covenants relating to compliance with laws, covenants relating to transactions with affiliates, covenants relating to mergers and sales of all or substantially all of our assets and limitations on changes in the nature of our business. The ABL Facility provides for customary events of default, including, among other things, the event of nonpayment of principal, interest, fees or other amounts, a representation or warranty proving to have been materially incorrect when made, failure to perform or observe certain covenants within a specified period of time, a cross-default to certain material indebtedness, the bankruptcy or insolvency of the Company and certain of its subsidiaries, monetary judgment defaults of a specified amount, invalidity of any loan documentation, a change of control of the Company, and ERISA defaults resulting in liability of a specified amount. If an event of default exists (beyond any applicable grace or cure period), the administrative agent may, and at the direction of the requisite number of lenders shall, declare all amounts owing under the ABL Facility immediately due and payable, terminate such lenders’ commitments to make loans under the ABL Facility and/or exercise any and all remedies and other rights under the ABL Facility. For certain events of default related to insolvency and receivership, the commitments of the lenders will be automatically terminated and all outstanding loans and other amounts will become immediately due and payable. On March 27, 2020, the ABL Facility was amended, by and among Cliffs, the lenders and the administrative agent. The amendment modified the ABL Facility to, among other things, provide for a new first-in, last-out tranche of commitments in the aggregate amount of $150 million by exchanging existing commitments under the ABL Facility. The total commitments under the ABL Facility after giving effect to the amendment remain at $2.0 billion. The terms and conditions (other than the pricing) that apply to the first-in, last-out tranche are substantially the same as the terms and conditions that apply to the tranche A facility of the ABL Facility immediately prior to the amendment. As of March 31, 2020, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable. The following represents a summary of our borrowing capacity under the ABL Facility:
1 As of March 31, 2020, the ABL Facility has a maximum borrowing base of $2 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. 2 We issued standby letters of credit with certain financial institutions in order to support business obligations including, but not limited to, workers' compensation, employee severance, IRBs and environmental obligations. Debt Maturities The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at March 31, 2020:
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies [Text Block] | Business, Consolidation and Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC rules and regulations and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive income (loss), cash flows and changes in equity for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020 or any other future period. Due to the acquisition of AK Steel, certain balances have become material and are no longer being condensed in our Statements of Unaudited Condensed Consolidated Financial Position, such as balances for Right-of-use asset, operating lease and Operating lease liability, non-current. As a result, certain prior period amounts have been reclassified to conform with the current year presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019. Acquisition of AK Steel On March 13, 2020, we consummated the Merger, pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub was merged with and into AK Steel, with AK Steel surviving the Merger as a wholly owned subsidiary of Cliffs. Refer to NOTE 3 - ACQUISITION OF AK STEEL for further information. AK Steel is a leading North American producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing markets. The acquisition of AK Steel has transformed us into a vertically integrated producer of value-added iron ore and steel products. COVID-19 In response to the COVID-19 pandemic, we have made various operational changes to adjust to the demand for our products. Although steel and iron ore are considered “essential” by the states in which we operate, certain of our facilities, including Dearborn Works, all Precision Partners facilities and approximately 65% of AK Tube production, have been temporarily idled until market conditions improve. We have also temporarily shut down construction activities at the HBI production plant. On April 13, 2020, we announced the temporarily idling of two of our iron ore mining operations, Northshore in Minnesota and Tilden in Michigan, and we expect them to restart in July 2020 and August 2020, respectively. Mansfield Works is idled for an unknown, extended period of time, and AK Coal has been indefinitely idled and held for sale. We are also moving forward with the permanent idle of the Dearborn Works hot strip mill, anneal and temper operations. Finally, the Hibbing mine, of which we are a minority participant, has been idled by the joint venture. Basis of Consolidation The unaudited condensed consolidated financial statements consolidate our accounts and the accounts of our wholly owned subsidiaries, all subsidiaries in which we have a controlling interest and two variable interest entities for which we are the primary beneficiary. All intercompany transactions and balances are eliminated upon consolidation. Reportable Segments The acquisition of AK Steel has transformed us into a vertically integrated producer of value-added iron ore and steel products and we are organized according to our differentiated products in two reportable segments - the new Steel and Manufacturing segment and the Mining and Pelletizing segment. Our new Steel and Manufacturing segment includes the assets acquired through the acquisition of AK Steel and our previously reported Metallics segment, and our Mining and Pelletizing segment includes our three active operating mines and our indefinitely idled mine. Significant Accounting Policies A detailed description of our significant accounting policies can be found in the audited financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the SEC. Due to the completion of our acquisition of AK Steel, there have been several changes in our significant accounting policies from those disclosed therein. The significant accounting policies requiring updates have been included within the disclosures below. Revenue Recognition Steel and Manufacturing We generate our revenue through product sales, in which shipping terms generally indicate when we have fulfilled our performance obligations and transferred control of products to our customer. Our revenue transactions consist of a single performance obligation to transfer promised goods. We have contracts with a significant portion of our customers. These contracts usually define the mechanism for determining the sales price, which is normally fixed upon transfer of control, but the contracts do not impose a specific quantity on either party. Quantities to be delivered to the customer are determined at a point near the date of delivery through purchase orders or other written instructions we receive from the customer. Spot market sales are made through purchase orders or other written instructions. For sales with shipping terms that transfer control at the destination point, we consider our performance obligation is complete and recognize revenue when the customer receives the goods. For sales with shipping terms that transfer control at the shipping point with us bearing responsibility for freight costs to the destination, we determine that we fulfilled a single performance obligation and recognize revenue when we ship the goods. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring product. We reduce the amount of revenue recognized for estimated returns and other customer credits, such as discounts and volume rebates, based on the expected value to be realized. Payment terms are consistent with terms standard to the markets we serve. Sales taxes collected from customers are excluded from revenues. Mining and Pelletizing We sell a single product, iron ore pellets, in the North American market. Revenue is recognized generally when iron ore is delivered to our customers. Revenue is measured at the point that control transfers and represents the amount of consideration we expect to receive in exchange for transferring goods. We offer standard payment terms to our customers, generally requiring settlement within 30 days. We enter into supply contracts of varying lengths to provide customers iron ore pellets to use in their blast furnaces. Blast furnaces must run continuously with a constant feed of iron ore in order to be most efficient. As a result, we ship iron ore in large quantities for storage and use by customers at a later date. Customers do not simultaneously receive and consume the benefits of the iron ore. Based on our assessment of the factors that indicate the pattern of satisfaction, we transfer control of the iron ore at a point in time upon shipment or delivery of the product. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered. Most of our customer supply agreements specify a provisional price, which is used for initial billing and cash collection. Revenue is calculated using the expected revenue rate at the point when control transfers. The final settlement includes market inputs for a specified period of time, which may vary by customer, but typically include one or more of the following: Platts 62% Price, Atlantic Basin pellet premium and Platts international indexed freight rates. Changes in the expected revenue rate from the date control transfers through final settlement of contract terms is recorded in accordance with Topic 815. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on how our estimated and final revenue rates are determined. A supply agreement with a customer provides for supplemental revenue or refunds based on the hot-rolled coil steel price in the year the iron ore is consumed in the customer’s blast furnaces. As control transfers prior to consumption, the supplemental revenue is recorded in accordance with Topic 815. Refer to NOTE 14 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on supplemental revenue or refunds. Included within Revenues related to Topic 815 is a derivative loss of $26.8 million and a derivative gain of $5.5 million for the three months ended March 31, 2020 and 2019, respectively. Allowance for Doubtful Accounts We establish provisions for expected lifetime losses on accounts receivable at the time a receivable is recorded based on historical experience, customer credit quality and forecasted economic conditions. We regularly review our accounts receivable balances and the allowance for credit loss and establish or adjust the allowance as necessary using the specific identification method in accordance with CECL. We evaluate the aggregation and risk characteristics of receivable pools and develop loss rates that reflect historical collections, current forecasts of future economic conditions over the time horizon we are exposed to credit risk, and payment terms or conditions that may materially affect future forecasts. We expect credit losses associated with major auto companies to be lower than other customer pools. Deferred Revenue The table below summarizes our deferred revenue balances:
One of our iron ore pellet sales agreements required supplemental payments to be paid by a customer during the period from 2009 through 2013. Installment amounts received under this arrangement in excess of sales were classified as deferred revenue in the Statements of Consolidated Financial Position upon receipt of payment and the revenue was recognized over the life of the supply agreement, which had extended until 2022, in equal annual installments. As a result of the termination of the AK Steel iron ore pellet sales agreement, we realized $34.6 million of deferred revenue, which was recognized within Realization of deferred revenue in the Statements of Unaudited Condensed Consolidated Operations, during the three months ended March 31, 2020. We have certain other sales agreements that require customers to pay in advance. Payments received on these agreements prior to revenue being recognized is recorded as deferred revenue in Other current liabilities. Inventories Steel and Manufacturing Inventories are stated at the lower of cost or net realizable value. The Steel and Manufacturing segment determines cost using average cost, excluding depreciation and amortization. Mining and Pelletizing Inventories are stated at the lower of cost or market. The Mining and Pelletizing segment determines cost using the LIFO method. Property, Plant and Equipment Our properties are stated at the lower of cost less accumulated depreciation or fair value. Depreciation of plant and equipment is computed principally by the straight-line method based on estimated useful lives. Depreciation continues to be recognized when operations are idled temporarily. Depreciation and depletion is recorded over the following estimated useful lives:
Refer to NOTE 5 - PROPERTY, PLANT AND EQUIPMENT for further information. Goodwill Goodwill represents the excess purchase price paid over the fair value of the net assets during an acquisition. Goodwill is not amortized but is assessed for impairment on an annual basis on October 1st (or more frequently if necessary). Other Intangible Assets and Liabilities Intangible assets and liabilities are subject to periodic amortization on a straight-line basis over their estimated useful lives as follows:
We monitor conditions that may affect the carrying value of our long-lived tangible and intangible assets when events and circumstances indicate that the carrying value of the asset groups may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available ("asset group"). An impairment loss exists when the carrying value of the asset group is greater than its fair value. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach. Refer to NOTE 6 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES for further information. Leases We determine if an arrangement contains a lease at inception. We recognize right-of-use assets and lease liabilities associated with leases based on the present value of the future minimum lease payments over the lease term at the commencement date. Lease terms reflect options to extend or terminate the lease when it is reasonably certain that the option will be exercised. For short-term leases (leases with an initial lease term of 12 months or less), right-of-use assets and lease liabilities are not recognized in the consolidated balance sheet, and lease expense is recognized on a straight-line basis over the lease term. In addition, we have agreements with both lease and non-lease components for which we have elected the practical expedient, for each underlying class of asset, to not separate the components. Refer to NOTE 8 - LEASES for further information. Investments in Affiliates We have investments in several businesses accounted for using the equity method of accounting. We review an investment for impairment when circumstances indicate that a loss in value below its carrying amount is other than temporary. Investees and equity ownership percentages are presented below:
Recent Accounting Pronouncements Issued and Adopted On March 2, 2020, the SEC issued a final rule that amended the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rule 3-10, which required separate financial statements for subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met. The final rule replaces the previous requirement under Rule 3-10 to provide condensed consolidating financial information in the registrant’s financial statements with a requirement to provide alternative financial disclosures (which include summarized financial information of the parent and any issuers and guarantors, as well as other qualitative disclosures) in either the registrant’s Management's Discussion and Analysis of Financial Condition and Results of Operations or its financial statements, in addition to other simplifications. The final rule is effective for filings on or after January 4, 2021, and early adoption is permitted. We have elected to early adopt this disclosure update for the period ended March 31, 2020. As a result, we have excluded the footnote disclosures required under the previous Rule 3-10, and applied the final rule by including the summarized financial information and qualitative disclosures in Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q and Exhibit 22.1, filed herewith.
|
Statements Of Unaudited Condensed Consolidated Operations - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Statement [Abstract] | ||
Revenues | $ 324.5 | $ 157.0 |
Realization of deferred revenue | 34.6 | 0.0 |
Operating costs: | ||
Cost of goods sold | (356.0) | (126.1) |
Selling, general and administrative expenses | (26.1) | (27.3) |
Acquisition-related costs | (42.5) | 0.0 |
Miscellaneous - net | (13.3) | (4.4) |
Total operating costs | (437.9) | (157.8) |
Operating loss | (78.8) | (0.8) |
Other income (expense): | ||
Interest expense, net | (31.0) | (25.1) |
Other non-operating income | 9.2 | 0.1 |
Total other expense | (21.8) | (25.0) |
Loss from continuing operations before income taxes | (100.6) | (25.8) |
Income tax benefit | 51.4 | 3.7 |
Loss from continuing operations | (49.2) | (22.1) |
Income from discontinued operations, net of tax | 0.6 | 0.0 |
Net loss | (48.6) | (22.1) |
Income attributable to noncontrolling interest | (3.5) | 0.0 |
Net loss attributable to Cliffs shareholders | $ (52.1) | $ (22.1) |
Loss per common share attributable to Cliffs shareholders - basic | ||
Continuing operations (in dollars per share) | $ (0.18) | $ (0.08) |
Discontinued operations (in dollars per share) | 0 | 0 |
Earnings (Loss) per Common Share - Basic (in dollars per share) | (0.18) | (0.08) |
Loss per common share attributable to Cliffs shareholders - diluted | ||
Continuing operations (in dollars per share) | (0.18) | (0.08) |
Discontinued operations (in dollars per share) | 0 | 0 |
Earnings (Loss) per Common Share - Diluted (in dollars per share) | $ (0.18) | $ (0.08) |
Average number of shares (in thousands) | ||
Basic | 297,515 | 289,525 |
Diluted | 297,515 | 289,525 |
STOCK COMPENSATION PLANS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation Plans | The Compensation Committee approved grants effective as of March 13, 2020 under the A&R 2015 Equity Plan to certain officers and employees for the 2020 to 2022 performance period. Shares granted under the awards consisted of 0.9 million restricted stock units and 0.9 million performance shares. Restricted stock units granted during 2020 are subject to continued employment, are retention based and are payable in common shares. The outstanding restricted stock units that were granted in 2020 cliff vest on December 31, 2022. The grant date fair value of restricted stock units granted in 2020 was $4.87 per share. Performance shares are subject to continued employment, and each performance share, if earned, entitles the holder to be paid out in common shares. Performance is measured on the basis of relative TSR for the period of January 1, 2020 to December 31, 2022 and measured against the constituents of the SPDR S&P Metals and Mining ETF Index at the beginning of the relevant performance period. The final payouts for the outstanding performance period grants will vary from zero to 200% of the original grant depending on whether and to what extent the Company achieves certain objectives and performance goals as established by the Compensation Committee. The fair value of each performance share grant is estimated on the date of grant using a Monte Carlo simulation to forecast relative TSR performance. A correlation matrix of historical and projected share prices was developed for both the Company and our predetermined peer group of mining and metals companies. The fair value assumes that the objective will be achieved. The expected term of the grant represents the time from the grant date to the end of the service period. We estimate the volatility of our common shares and that of the peer group using daily price intervals for all companies. The risk-free interest rate is the rate at the grant date on zero-coupon government bonds with a term commensurate with the remaining life of the performance period. The following assumptions were utilized to estimate the fair value for the 2020 performance share grant under the A&R 2015 Equity Plan:
AK Steel Replacement Awards On March 13, 2020, we converted outstanding AK Steel stock-based incentive awards to AK Steel employees at a 0.400 rate of exchange. The converted stock-based incentive awards include 2.0 million stock options, 1.0 million long-term performance plan awards, 0.5 million performance shares, 0.4 million restricted stock awards and 0.3 million restricted stock units. The weighted average vesting period remaining for these awards was 1.9 years. We valued the restricted stock awards, restricted stock units and the long-term performance plan awards at $4.87 per share using the closing price of our common shares on March 13, 2020. The performance shares were fair valued at a weighted-average price of $4.06 per share using a Monte Carlo simulation similar to past awards. The stock options were fair valued at a weighted-average price of $0.51 per share of granted options using a Black-Scholes option valuation model. The stock option exercise price was determined by using the same conversion ratio and the options have expirations ranging from 0.2 to 9.9 years. Certain awards are subject to accelerated vesting based on qualifying termination events.
|
STOCK COMPENSATION PLANS (Assumptions Utilized to Estimate Fair Value for Performance Share Grants) (Details) - Performance Shares [Member] |
Mar. 13, 2020
$ / shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grant Date Market Price | $ 4.87 |
Average Expected Term | 2 years 9 months 18 days |
Expected Volatility | 53.60% |
Risk-Free Interest Rate | 0.56% |
Dividend Yield | 0.00% |
Fair Value | $ 6.93 |
Fair Value (Percent of Grant Date Market Price) | 142.30% |
LEASES - Summary of other information related to leases (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|||
Business Acquisition [Line Items] | ||||
Operating leases within cash flows from operating activities | $ 1.1 | $ 1.0 | ||
Finance leases within cash flows from operating activities | 0.5 | 0.3 | ||
Finance leases within cash flows from financing activities | 2.1 | 0.8 | ||
Right-of-use assets obtained in exchange for new finance lease liabilities1 | [1] | $ 29.9 | $ 15.1 | |
Weighted-average remaining lease term - operating leases (in years) | 8 years | 10 years | ||
Weighted-average remaining lease term - finance leases (in years) | 11 years | 6 years | ||
Weighted-average discount rate - operating leases | 8.40% | 7.90% | ||
Weighted-average discount rate - finance leases | 6.80% | 4.70% | ||
AK Steel Holding Corporation [Member] | ||||
Business Acquisition [Line Items] | ||||
Right-of-use assets obtained in exchange for new finance lease liabilities1 | $ 5.3 | |||
|
DEBT AND CREDIT FACILITIES (ABL Facility) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
||||
---|---|---|---|---|---|---|
Line of Credit Facility [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,000.0 | $ 450.0 | ||||
Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of Credit Facility, Current Borrowing Capacity | [1] | 1,789.3 | ||||
Long-term Line of Credit | (800.0) | |||||
Line of Credit Facility, Remaining Borrowing Capacity | 790.0 | |||||
Letter of Credit [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Long-term Line of Credit | [2] | (199.3) | ||||
Cleveland-Cliffs Inc. [Member] | Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Long-term Line of Credit | $ (800.0) | $ 0.0 | ||||
|
FAIR VALUE MEASUREMENTS (Carrying Value And Fair Value Of Financial Instruments Disclosure) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | $ 3,614.2 | $ 2,237.0 |
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | 4,357.1 | 2,113.8 |
Senior Notes | Fair Value [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | 2,712.8 | 2,237.0 |
Senior Notes | Carrying Value [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | 3,455.3 | 2,113.8 |
Industrial Revenue Bonds [Member] | Fair Value [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | 101.4 | 0.0 |
Industrial Revenue Bonds [Member] | Carrying Value [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | 101.8 | 0.0 |
Line of Credit [Member] | Fair Value [Member] | Fair Value, Inputs, Level 2 [Member] | Credit Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | $ 800.0 | 0.0 |
Line of Credit [Member] | Carrying Value [Member] | Fair Value, Inputs, Level 2 [Member] | Credit Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total long-term debt, fair value | $ 0.0 |
FAIR VALUE MEASUREMENTS (Narrative) (Details) - Not Designated as Hedging Instrument [Member] - Valuation, Market Approach [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Customer Supply Agreement [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset | $ 19.0 | $ 44.5 |
Provisional Pricing Arrangements [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset | 0.6 | 1.3 |
Derivative liability | $ 0.0 | $ (1.1) |
DEBT AND CREDIT FACILITIES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Apr. 24, 2020 |
Mar. 27, 2020 |
Mar. 13, 2020 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Apr. 17, 2020 |
Dec. 31, 2019 |
|
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 4,570.5 | ||||||
Extinguishment of Debt, Amount | 739.9 | $ 10.0 | |||||
6.75% 2026 Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 725.0 | ||||||
Debt issuance, discount rate | 98.783% | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.75% | ||||||
Repurchase price if triggering event occurs | 101.00% | ||||||
Debt Issuance Costs, Gross | $ 20.5 | ||||||
6.375% 2025 Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 231.8 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | ||||||
Repurchase price if triggering event occurs | 101.00% | ||||||
Debt Issuance Costs, Gross | $ 0.9 | ||||||
7.00% 2027 Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 335.4 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.00% | ||||||
Debt Issuance Costs, Gross | $ 1.3 | ||||||
7.625% 2021 AK Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Redemption Price, Percentage | 100.00% | ||||||
Extinguishment of Debt, Amount | $ 8.5 | $ 364.2 | $ 372.7 | ||||
7.50% 2023 AK Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Extinguishment of Debt, Amount | $ 56.5 | $ 310.7 | 367.2 | ||||
Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | 2,000.0 | ||||||
Sublimit for letters of credit | 555.0 | ||||||
Sublimit for swingline loans | 125.0 | ||||||
FILO Tranche Commitments | $ 150.0 | ||||||
Fixed Charge Coverage Ratio | 1.0 | ||||||
Cleveland-Cliffs Inc. [Member] | 6.375% 2025 Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 231.8 | ||||||
Cleveland-Cliffs Inc. [Member] | 7.00% 2027 Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 335.4 | ||||||
Repurchase price if triggering event occurs | 101.00% | ||||||
Cleveland-Cliffs Inc. [Member] | Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 2,000.0 | $ 450.0 | |||||
AK Steel Holding Corporation [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unsecured Long-term Debt, Noncurrent | 141.0 | ||||||
AK Steel Holding Corporation [Member] | Unsecured Industrial Revenue Bonds [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | 73.3 | ||||||
AK Steel Holding Corporation [Member] | Industrial Revenue Bonds [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 99.3 | ||||||
Debt, Weighted Average Interest Rate | 6.80% | ||||||
AK Steel Holding Corporation [Member] | Secured Industrial Revenue Bonds [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 26.0 | ||||||
AK Steel Holding Corporation [Member] | 7.625% 2021 AK Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | 33.5 | ||||||
AK Steel Holding Corporation [Member] | 7.50% 2023 AK Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 12.8 | ||||||
Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Extinguishment of Debt, Amount | $ 736.4 | ||||||
Reduction of Principal Long-Term Debt | 181.3 | ||||||
Subsequent Event [Member] | 9.875% 2025 Senior Secured Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt, Gross | $ 555.2 | $ 400.0 | |||||
Debt issuance, discount rate | 99.00% | 94.50% | |||||
Debt Instrument, Interest Rate, Stated Percentage | 9.875% |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Equity Method Investments) (Details) (Details) |
Mar. 31, 2020 |
---|---|
Combined Metals of Chicago, LLC [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 40.00% |
Hibbing Taconite Company [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 23.00% |
Spartan Steel Coating, LLC [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 48.00% |
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Accrued Liabilities) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Disclosure Text Block [Abstract] | ||
Accrued employment costs | $ 158.3 | $ 61.7 |
Accrued interest | 47.1 | 29.0 |
Accrued dividends | 24.9 | 17.8 |
Other | 69.5 | 17.8 |
Accrued liabilities | $ 299.8 | $ 126.3 |
ACQUISITION OF AK STEEL (Assets and Liabilities Assumed Tables) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 143.3 | $ 2.1 |
AK Steel Holding Corporation [Member] | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | 37.7 | |
Accounts receivable | 666.0 | |
Inventories | 1,562.8 | |
Other current assets | 67.5 | |
Property, plant and equipment | 2,184.4 | |
Intangible assets | 163.0 | |
Right-of-use asset, operating lease | 225.9 | |
Other non-current assets | 85.9 | |
Accounts payable | (636.3) | |
Accrued liabilities | (222.5) | |
Other current liabilities | (181.8) | |
Long-term debt | (1,179.4) | |
Deferred income taxes | (19.7) | |
Operating lease liability, non-current | (188.1) | |
Intangible liability | (140.0) | |
Pension and OPEB liabilities | (873.0) | |
Asset retirement obligations | (13.9) | |
Other non-current liabilities | (144.2) | |
Net identifiable assets acquired | 1,394.3 | |
Goodwill | 141.2 | |
Total net assets acquired | $ 1,535.5 |
INCOME TAXES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, Percent | 47.40% | 12.90% |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | |
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount | $ 4.0 | $ 0.4 |
DERIVATIVE INSTRUMENTS (Schedule Of Derivatives Not Designated As Hedging Instruments) (Details) € in Millions, $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2020
USD ($)
|
Mar. 31, 2019
USD ($)
|
Mar. 31, 2020
EUR (€)
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (32.8) | ||||
Revenues | [1] | 359.1 | $ 157.0 | ||
Foreign Exchange Contract [Member] | Other Nonoperating Income (Expense) [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | (0.1) | 0.0 | |||
Customer Supply Agreement [Member] | Revenue from Contract with Customer Benchmark [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | (25.6) | 17.1 | |||
Provisional Pricing Arrangements [Member] | Revenue from Contract with Customer Benchmark [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | (1.2) | (11.6) | |||
Commodity Contract [Member] | Cost of Sales [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (5.9) | $ 0.0 | |||
Euro Member Countries, Euro | Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative, Notional Amount | € | € 2 | ||||
|
SEGMENT REPORTING (Reconciliation of Assets from Segment to Consolidated) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | $ 8,912.3 | $ 3,503.8 |
Steel and Manufacturing [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 6,442.4 | 913.6 |
Mining and Pelletizing [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 1,752.4 | 1,643.1 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 8,194.8 | 2,556.7 |
Corporate and Other [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | $ 717.5 | $ 947.1 |
GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES (Intangible Assets and Liabilities) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 235.2 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (25.2) | |
Finite-Lived Intangible Assets, Net | 210.0 | |
Finite-Lived Intangible Liability, Gross | (140.0) | |
Finite-Lived Intangible Liability, Accumulated Amortization | 2.1 | |
Finite-Lived Intangible Liability, Net | (137.9) | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 91.0 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (0.5) | |
Finite-Lived Intangible Assets, Net | 90.5 | |
Technology-Based Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 61.0 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (0.3) | |
Finite-Lived Intangible Assets, Net | 60.7 | |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 11.0 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (0.1) | |
Finite-Lived Intangible Assets, Net | 10.9 | |
Mining Permits [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 72.2 | $ 72.2 |
Finite-Lived Intangible Assets, Accumulated Amortization | (24.3) | (24.1) |
Finite-Lived Intangible Assets, Net | $ 47.9 | $ 48.1 |
SHAREHOLDERS' EQUITY (Dividends Declared) (Details) - $ / shares |
3 Months Ended | |||||||
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Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
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Dividends Payable [Line Items] | ||||||||
Common Stock, Dividends, Per Share, Declared | $ 0.06 | $ 0.05 | ||||||
Dividends payable, per share | $ 0.06 | $ 0.10 | [1] | $ 0.06 | $ 0.05 | $ 0.05 | ||
Special Dividend [Member] | ||||||||
Dividends Payable [Line Items] | ||||||||
Dividends payable, per share | $ 0.04 | |||||||
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Computation | The following table summarizes the computation of basic and diluted earnings per share:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The following table summarizes the shares that have been excluded from the diluted earnings per share calculation as they were anti-dilutive:
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SHAREHOLDERS' EQUITY (Dividends Declared) (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared [Table Text Block] | The below table summarizes our recent dividend activity:
1 The dividend declared on September 3, 2019 included a special cash dividend of $0.04 per common share.
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SHAREHOLDERS' EQUITY |
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY | Acquisition of AK Steel As more fully described in NOTE 3 - ACQUISITION OF AK STEEL, we acquired AK Steel on March 13, 2020. At the effective time of the Merger, each share of AK Steel common stock issued and outstanding prior to the effective time of the Merger was converted into, and became exchangeable for, 0.400 Cliffs common shares, par value $0.125 per share. We issued a total of 126.8 million Cliffs common shares in connection with the Merger at a fair value of $617.6 million. Following the closing of the Merger, AK Steel's common stock was de-listed from the New York Stock Exchange. Dividends The below table summarizes our recent dividend activity:
1 The dividend declared on September 3, 2019 included a special cash dividend of $0.04 per common share. Subsequent to the dividend paid on April 15, 2020, our Board temporarily suspended future dividends as a result of the COVID-19 pandemic in order to preserve cash during this time of economic uncertainty. Preferred Stock We have 3,000,000 Class A preferred shares authorized and 4,000,000 Class B preferred shares authorized; no preferred shares are issued or outstanding. Share Repurchase Program In November 2018, our Board authorized a program to repurchase outstanding common shares in the open market or in privately negotiated transactions, up to a maximum of $200 million, excluding commissions and fees. In April 2019, our Board increased the common share repurchase authorization by an additional $100 million, excluding commissions and fees. During the three months ended March 31, 2019, we repurchased 11.5 million common shares at a cost of $124.3 million in the aggregate, including commissions and fees. The share repurchase program was effective until December 31, 2019.
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | The following table summarizes the computation of basic and diluted earnings per share:
The following table summarizes the shares that have been excluded from the diluted earnings per share calculation as they were anti-dilutive:
There was no dilution during the three months ended March 31, 2020 related to the common share equivalents for the convertible senior notes as our common shares average price did not rise above the conversion price.
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COMMITMENTS AND CONTINGENCIES (Environmental Obligations Table) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Environmental obligations | $ 40.0 | $ 2.0 |
Less current portion | 6.4 | 0.3 |
Long-term environmental obligations | $ 33.6 | $ 1.7 |
EARNINGS PER SHARE (Earnings Per Share Computation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Earnings Per Share [Abstract] | ||
Loss from continuing operations | $ (49.2) | $ (22.1) |
Income attributable to noncontrolling interest | (3.5) | 0.0 |
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent | (52.7) | (22.1) |
Income from discontinued operations, net of tax | 0.6 | 0.0 |
Net income (loss) | $ (52.1) | $ (22.1) |
Weighted average number of shares: | ||
Basic | 297,515 | 289,525 |
Convertible Senior Notes | 0 | 0 |
Employee stock plans | 0 | 0 |
Diluted | 297,515 | 289,525 |
Loss per common share attributable to Cliffs shareholders - basic: | ||
Continuing operations (in dollars per share) | $ (0.18) | $ (0.08) |
Discontinued operations (in dollars per share) | 0 | 0 |
Earnings (Loss) per Common Share - Basic (in dollars per share) | (0.18) | (0.08) |
Loss per common share attributable to Cliffs shareholders - diluted: | ||
Continuing operations (in dollars per share) | (0.18) | (0.08) |
Discontinued operations (in dollars per share) | 0 | 0 |
Earnings (Loss) per Common Share - Diluted (in dollars per share) | $ (0.18) | $ (0.08) |
RELATED PARTIES (Summary Of Ownership Interests) (Details) - Hibbing [Member] |
Mar. 31, 2020 |
---|---|
Related Party Transaction [Line Items] | |
Equity Method Investment, Ownership Percentage | 23.00% |
Arcelor Mittal [Member] | |
Related Party Transaction [Line Items] | |
Equity Method Investment, Ownership Percentage | 62.30% |
U. S. Steel Canada [Member] | |
Related Party Transaction [Line Items] | |
Equity Method Investment, Ownership Percentage | 14.70% |
GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES (Amortization of Intangible Assets) (Details) $ in Millions |
Mar. 31, 2020
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | $ 8.1 |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 10.8 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 10.8 |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 10.8 |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 10.8 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 10.8 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax | $ (315.7) | $ (281.1) |
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | 0.0 | |
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax | (3.1) | (2.8) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (318.8) | (283.9) |
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax | (310.1) | (275.4) |
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (0.9) | |
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax | (6.1) | (0.1) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (317.1) | (275.5) |
Changes in Pension and Other Post-Retirement Benefits, net of tax [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 0.0 | 0.2 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 5.6 | 5.5 |
Unrealized Net Gain (Loss) on Foreign Currency Translation [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | (0.9) | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0.0 | |
Net Unrealized Gain (Loss) on Derivative Financial Instruments, net of tax [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | (5.2) | 2.5 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 2.2 | 0.2 |
Accumulated Other Comprehensive Income (Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | (6.1) | 2.7 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ 7.8 | $ 5.7 |
ACQUISITION OF AK STEEL (Intangible Assets Tables) (Details) $ in Millions |
3 Months Ended |
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Mar. 31, 2020
USD ($)
| |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Assumed Finite-lived Intangible Liabilities, Weighted Average Useful Life | 13 years |
Customer Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 18 years |
Technology-Based Intangible Assets [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 17 years |
Trademarks and Trade Names [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
AK Steel Holding Corporation [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 163.0 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 17 years |
Intangible Liability Assumed | $ (140.0) |
Assumed Finite-lived Intangible Liabilities, Weighted Average Useful Life | 13 years |
AK Steel Holding Corporation [Member] | Customer Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 91.0 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 18 years |
AK Steel Holding Corporation [Member] | Technology-Based Intangible Assets [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 61.0 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 17 years |
AK Steel Holding Corporation [Member] | Trademarks and Trade Names [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 11.0 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
ASSET RETIREMENT OBLIGATIONS (Summary Of Asset Retirement Obligations) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Loss Contingencies [Line Items] | |||||||
Asset Retirement Obligation | $ 181.4 | [1] | $ 165.3 | [1] | $ 172.4 | ||
Asset Retirement Obligation, Current | 2.2 | 2.1 | |||||
Asset Retirement Obligations, Noncurrent | 179.2 | 163.2 | |||||
Operating Segments [Member] | Mining and Pelletizing [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Asset Retirement Obligation | $ 32.5 | $ 22.0 | |||||
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DERIVATIVE INSTRUMENTS (Schedule of Notional Amounts of Outstanding Derivatives) (Details) - Designated as Hedging Instrument [Member] lb in Millions, gal in Millions, MMBTU in Millions, $ in Millions |
3 Months Ended | ||
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Mar. 31, 2020
CAD ($)
MMBTU
lb
gal
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Mar. 31, 2019
MMBTU
lb
gal
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Dec. 31, 2019
CAD ($)
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Natural Gas [Member] | |||
Derivative [Line Items] | |||
Derivative, Nonmonetary Notional Amount, Energy Measure | MMBTU | 50.4 | 20.1 | |
Diesel [Member] | |||
Derivative [Line Items] | |||
Derivative, Nonmonetary Notional Amount, Volume | 0.0 | 0.8 | |
Derivative, Nonmonetary Notional Amount, Mass | lb | 28.8 | 0.0 | |
Electricity [Member] | |||
Derivative [Line Items] | |||
Derivative, Nonmonetary Notional Amount, Volume | 1.5 | 0.0 | |
Canada, Dollars | Foreign Exchange Contract [Member] | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | $ | $ 58.7 | $ 0.0 |
PROPERTY, PLANT AND EQUIPMENT (Value Of Each Of The Major Classes Of Consolidated Depreciable Assets) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | [1] | $ 5,812.2 | $ 3,027.4 | |
Allowance for depreciation and depletion | (1,262.4) | (1,098.4) | ||
Property, plant and equipment, net | 4,549.8 | 1,929.0 | ||
Finance Lease, Right-of-Use Asset | 84.2 | 49.0 | ||
Land, land improvements and mineral rights | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | 652.7 | 582.2 | ||
Buildings | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | 452.5 | 157.8 | ||
Mining and Pelletizing equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | 1,431.8 | 1,413.6 | ||
Steel and Manufacturing equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | 2,140.9 | 42.0 | ||
Other | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | 123.0 | 101.5 | ||
Construction-in-progress | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, gross | $ 1,011.3 | $ 730.3 | ||
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VARIABLE INTEREST ENTITIES (Tables) |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
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Schedule of Variable Interest Entities [Table Text Block] | The consolidated balance sheet as of March 31, 2020 includes the following amounts for SunCoke Middletown:
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DERIVATIVE INSTRUMENTS (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Table Text Block] | Estimated losses before tax expected to be reclassified into Cost of goods sold within the next 12 months for our existing derivatives that qualify as cash flow hedges are presented below:
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Schedule Of Derivative Instruments In Statement Of Financial Position, Fair Value | The following table presents the fair value of our derivative instruments and the classification of each in the Statements of Unaudited Condensed Consolidated Financial Position:
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Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | The following table presents our outstanding hedge contracts:
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Schedule Of Derivatives Not Designated As Hedging Instruments Statements Of Financial Performance Location Table | The following summarizes the effect of our derivatives that are not designated as hedging instruments in the Statements of Unaudited Condensed Consolidated Operations:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | The following tables reflect the changes in Accumulated other comprehensive loss related to shareholders’ equity:
The following table reflects the details about Accumulated other comprehensive loss components related to shareholders’ equity:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | Purchase Commitments HBI production plant In 2017, we began to incur capital commitments related to the construction of our HBI production plant in Toledo, Ohio, and have a few months of construction remaining to complete the project. However, due to the COVID-19 pandemic, we have temporarily halted construction. In total, to complete the project, we expect to spend approximately $1 billion on the HBI production plant, excluding capitalized interest, of which approximately $800 million was paid as of March 31, 2020. As of March 31, 2020, we have contracts and purchase orders in place for approximately $150 million. Contingencies We are currently the subject of, or party to, various claims and legal proceedings incidental to our operations. These claims and legal proceedings are subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, additional funding requirements or an injunction. If an unfavorable ruling were to occur, there exists the possibility of a material effect on the financial position and results of operations for the period in which the ruling occurs or future periods. However, based on currently available information we do not believe that any pending claims or legal proceedings will result in a material effect in relation to our consolidated financial statements. Environmental Contingencies Although we believe our operating practices have been consistent with prevailing industry standards, hazardous materials may have been released at operating sites or third-party sites in the past, including operating sites that we no longer own. If we reasonably can, we estimate potential remediation expenditures for those sites where future remediation efforts are probable based on identified conditions, regulatory requirements or contractual obligations arising from the sale of a business or facility. For sites involving government required investigations, we typically make an estimate of potential remediation expenditures only after the investigation is complete and when we better understand the nature and scope of the remediation. In general, the material factors in these estimates include the costs associated with investigations, delineations, risk assessments, remedial work, governmental response and oversight, site monitoring, and preparation of reports to the appropriate environmental agencies. The following is a summary of our environmental obligations:
We cannot predict the ultimate costs for each site with certainty because of the evolving nature of the investigation and remediation process. Rather, to estimate the probable costs, we must make certain assumptions. The most significant of these assumptions is for the nature and scope of the work that will be necessary to investigate and remediate a particular site and the cost of that work. Other significant assumptions include the cleanup technology that will be used, whether and to what extent any other parties will participate in paying the investigation and remediation costs, reimbursement of past response costs and future oversight costs by governmental agencies, and the reaction of the governing environmental agencies to the proposed work plans. Costs for future investigation and remediation are not discounted to their present value, unless the amount and timing of the cash disbursements are readily known. To the extent that we have been able to reasonably estimate future liabilities, we do not believe that there is a reasonable possibility that we will incur a loss or losses that exceed the amounts we accrued for the environmental matters discussed below that would, either individually or in the aggregate, have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, since we recognize amounts in the consolidated financial statements in accordance with GAAP that exclude potential losses that are not probable or that may not be currently estimable, the ultimate costs of these environmental matters may be higher than the liabilities we currently have recorded in our consolidated financial statements. Except as we expressly note below, we do not currently anticipate any material effect on our consolidated financial position, results of operations or cash flows as a result of compliance with current environmental regulations. Moreover, because all domestic steel and iron ore producers operate under the same federal environmental regulations, we do not believe that we are more disadvantaged than our domestic competitors by our need to comply with these regulations. Some foreign competitors may benefit from less stringent environmental requirements in the countries where they produce, resulting in lower compliance costs for them and providing those foreign competitors with a cost advantage on their products. According to RCRA, which governs the treatment, handling and disposal of hazardous waste, the EPA and authorized state environmental agencies may conduct inspections of RCRA-regulated facilities to identify areas where there have been releases of hazardous waste or hazardous constituents into the environment and may order the facilities to take corrective action to remediate such releases. Environmental regulators may inspect our major iron ore and steelmaking facilities. While we cannot predict the future actions of these regulators, it is possible that they may identify conditions in future inspections of these facilities which they believe require corrective action. Under authority from CERCLA, the EPA and state environmental authorities have conducted site investigations at certain of our facilities and other third-party facilities, portions of which previously may have been used for disposal of materials that are currently regulated. The results of these investigations are still pending, and we could be directed to spend funds for remedial activities at the former disposal areas. Because of the uncertain status of these investigations, however, we cannot reliably predict whether or when such spending might be required or its magnitude. On April 29, 2002, AK Steel entered a mutually agreed-upon administrative order on consent with the EPA pursuant to Section 122 of CERCLA to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of the Hamilton Plant site located in New Miami, Ohio. The plant ceased operations in 1990 and all of its former structures have been demolished. AK Steel submitted the investigation portion of the RI/FS and completed supplemental studies. We currently have accrued $0.7 million for the remaining cost of the RI/FS. Until the RI/FS is complete, we cannot reliably estimate the additional costs, if any, we may incur for potentially required remediation of the site or when we may incur them. On September 26, 2012, the EPA issued an order under Section 3013 of RCRA requiring a plan to be developed for investigation of four areas at the Ashland Works coke plant. The Ashland Works coke plant ceased operations in 2011 and all of its former structures have been demolished and removed. In 1981, AK Steel acquired the plant from Honeywell International Corporation (as successor to Allied Corporation), who had managed the coking operations there for approximately 60 years. In connection with the sale of the coke plant, Honeywell agreed to indemnify AK Steel against certain claims and obligations that could arise from the investigation, and we intend to pursue such indemnification from Honeywell, if necessary. We cannot reliably estimate how long it will take to complete the site investigation. On March 10, 2016, the EPA invited AK Steel to participate in settlement discussions regarding an enforcement action. Settlement discussions between the parties are ongoing, though whether the parties will reach agreement and any such agreement’s terms are uncertain. We currently have accrued $1.4 million for the projected cost of the investigation and known remediation. Until the site investigation is complete, we cannot reliably estimate the costs, if any, we may incur for potential additional required remediation of the site or when we may incur them. On May 12, 2014, the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”) (previously the Michigan Department of Environmental Quality) issued to Dearborn Works an Air Permit to Install No. 182-05C (the “PTI”) to increase the emission limits for the blast furnace and other emission sources. The PTI was issued as a correction to a prior permit to install that did not include certain information during the prior permitting process. On July 10, 2014, the South Dearborn Environmental Improvement Association (“SDEIA”), Detroiters Working for Environmental Justice, Original United Citizens of Southwest Detroit and the Sierra Club filed a Claim of Appeal of the PTI in the State of Michigan, Wayne County Circuit Court, Case No. 14-008887-AA. The appellants and EGLE required the intervention of Severstal Dearborn, LLC (now owned by us) in this action as an additional appellee. The appellants allege multiple deficiencies with the PTI and the permitting process. On July 2, 2019, the Circuit Court dismissed the PTI appeal and ruled that EGLE appropriately issued the permit modification. The appellants have appealed that decision. Until the appeal is resolved, we cannot determine what the ultimate permit limits will be. Until the permit limits are determined and final, we cannot reliably estimate the costs we may incur, if any, or when we may incur them. On August 21, 2014, the SDEIA filed a Complaint under the Michigan Environmental Protection Act (“MEPA”) in the State of Michigan, Wayne County Circuit Court, Case No. 14-010875-CE. The plaintiffs allege that the air emissions from Dearborn Works are impacting the air, water and other natural resources, as well as the public trust in such resources. The plaintiffs are requesting, among other requested relief, that the court assess and determine the sufficiency of the PTI’s limitations. On October 15, 2014, the court ordered a stay of the proceedings until a final order is issued in Wayne County Circuit Court Case No. 14-008887-AA (discussed above). When the proceedings resume, we intend to vigorously contest these claims. Until the claims in this complaint are resolved, we cannot reliably estimate the costs we may incur, if any, or when we may incur them. On November 18, 2019, November 26, 2019, and March 16, 2020, EGLE issued Notices of Violations (“NOVs”) with respect to the basic oxygen furnace electrostatic precipitator at Dearborn Works alleging violations of manganese, lead and opacity limits. We are investigating these claims and will work with EGLE to attempt to resolve them. We intend to vigorously contest any claims which cannot be resolved through a settlement. Until a settlement is reached with EGLE or the claims of the NOVs are otherwise resolved, we cannot reliably estimate the costs, if any, associated with any potentially required work. In addition to the foregoing matters, we are or may be involved in proceedings with various regulatory authorities that may require us to pay fines, comply with more rigorous standards or other requirements or incur capital and operating expenses for environmental compliance. We believe that the ultimate disposition of the proceedings will not have, individually or in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or cash flows. Other Contingencies In addition to the matters discussed above, there are various pending and potential claims against us and our subsidiaries involving product liability, commercial, employee benefits, and other matters arising in the ordinary course of business. Because of the considerable uncertainties which exist for any claim, it is difficult to reliably or accurately estimate what the amount of a loss would be if a claimant prevails. If material assumptions or factual understandings we rely on to evaluate exposure for these contingencies prove to be inaccurate or otherwise change, we may be required to record a liability for an adverse outcome. If, however, we have reasonably evaluated potential future liabilities for all of these contingencies, including those described more specifically above, it is our opinion, unless we otherwise noted, that the ultimate liability from these contingencies, individually and in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
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VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Millions |
3 Months Ended | |||
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Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Variable Interest Entity [Line Items] | ||||
Net Income (Loss) Attributable to Noncontrolling Interest | $ 3.5 | $ 0.0 | ||
Cash and cash equivalents | 186.9 | $ 430.2 | $ 352.6 | $ 823.2 |
Inventories | 2,148.8 | 317.4 | ||
Property, plant and equipment, net | 4,549.8 | 1,929.0 | ||
Accounts payable | 825.3 | 193.2 | ||
Noncontrolling interest | 327.8 | $ 0.0 | ||
SunCoke Middletown [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Net Income (Loss) Attributable to Noncontrolling Interest | 3.5 | |||
Cash and cash equivalents | 0.8 | |||
Inventories | 22.7 | |||
Property, plant and equipment, net | 313.6 | |||
Accounts payable | 10.0 | |||
Other Assets (Liabilities), Net | (0.2) | |||
Noncontrolling interest | $ 326.9 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details of Accumulated Other Comprehensive Income (Loss) Components) (Details) - Reclassification out of Accumulated Other Comprehensive Income [Member] - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Reclassification Adjustment from AOCI, before Tax | $ (0.3) | $ (0.2) |
Other Comprehensive Income (Loss), Reclassification, Pension and Other Postretirement Benefit Plans, Net Gain (Loss) Recognized in Net Periodic Benefit Cost, before Tax | (7.4) | (7.2) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax | 7.1 | 7.0 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, Tax | (1.5) | (1.5) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, after Tax | 5.6 | 5.5 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | 2.8 | 0.3 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax | (0.6) | (0.1) |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax | 2.2 | 0.2 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ 7.8 | $ 5.7 |
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2020 |
Dec. 31, 2019 |
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Unrecorded Unconditional Purchase Obligation [Line Items] | ||
Estimated Project Capital Expenditures | $ 1,000.0 | |
Total Project Expenditures, Excluding Capitalized Interest | 800.0 | |
Environmental obligations accrued | 40.0 | $ 2.0 |
Hamilton Plant [Member] | ||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||
Environmental obligations accrued | 0.7 | |
Ashland Works Coke Plant [Member] | ||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||
Environmental obligations accrued | 1.4 | |
Capital Addition Purchase Commitments [Member] | ||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||
Capital Additions, Purchase Commitments | $ 150.0 |