Cleveland-Cliffs Reports 1999 Earnings.Business Editors CLEVELAND--(BUSINESS WIRE)--Jan. 20, 2000 Cleveland-Cliffs Cleveland-Cliffs Inc. is a Cleveland, Ohio business firm that specializes in the mining and beneficiation of iron ore. The firm, which believes it is the largest producer of beneficiated iron ore pellets in North America, is an independent company whose shares, as of December 2006, Inc (NYSE NYSE See: New York Stock Exchange :CLF CLF The ISO 4217 currency code for Chile Unidades de Fomento. ) today reported 1999 earnings of $4.8 million, or $.43 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Earnings in 1998 were $57.4 million, or $5.06 per diluted share. Fourth quarter 1999 earnings were $5.0 million, or $.45 per diluted share, which compared with $19.9 million, or $1.76 per diluted share, in the fourth quarter of 1998. Cliffs' Chairman and Chief Executive Officer, John S. Brinzo, said, &uot;The decrease in full year earnings was primarily due to production curtailments undertaken in the second half of the year to balance production with the significantly lower sales volume in 1999, and a decrease in the price realization on 1999 sales. Fourth quarter earnings were down mainly due to a lower price realization in 1999. Iron ore pellet pel·let n. 1. A small pill; a pilule. 2. A small rod-shaped or ovoid mass, as of compressed steroid hormones, intended for subcutaneous implantation in body tissues to provide timed release over an extended period of time. inventories, which peaked at 5.3 million tons prior to labor contract settlements at the end of July July: see month. , were reduced to 1.4 million tons at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , a .2 million ton decrease from the beginning of 1999. While actions taken to control inventory in 1999 were very difficult, the Company is now well positioned for 2000.&uot; Cliffs' iron ore pellet sales were 8.9 million tons in 1999 versus 12.1 million tons in 1998. As previously disclosed, the reduction in sales was largely attributable to blast furnace blast furnace, structure used chiefly in smelting. The principle involved in this means of extracting metals is that of the reduction of the ores by the action of carbon monoxide, i.e., the removal of oxygen from the metal oxide in order to obtain the metal. outages at Rouge Rouge, river, United States Rouge (r  zh), river, c.30 mi (50 km) long, rising in S Michigan and winding S and SE to the Detroit River at the city of River Rouge. Industries and Weirton Weirton, city (1990 pop. 22,124), Brooke and Hancock counties, NW W.Va., in the industrial Northern Panhandle, on the Ohio River; settled 1790s, inc. 1947. Its industries include coal mining and the manufacture of steel, chemicals, cans, and bottles. Steel. Fourth quarter 1999 sales were 3.9 million
tons versus 3.1 million tons in 1998. The average price realization on
full year 1999 sales was 8 percent below the 1998 realization primarily
due to the decrease in the international pellet price that is an
escalator escalatorMoving staircase used as transportation between floors or levels in stores, airports, subways, and other mass pedestrian areas. The name was first applied to a moving stairway shown at the Paris Exposition of 1900. or de-escalator in many of Cliffs' multi-year sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. . The lower realization in the fourth quarter reflects the decline of the international price and the mix of sales under various contracts. Administrative expenses were lower in both reporting periods, including the effect of lower management incentive compensation expense, cost reduction initiatives, and a 10 percent reduction of corporate staff in the first quarter of 1999. Interest expense increased in the quarter and for the full year since interest was being capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. in 1998 and early in 1999 during construction of the hot-briquetted iron (HBI HBI Home Builders Institute HBI Hot Briquetted Iron (plant or facility) HBI Health and Biomedical Information HBI Hot Beef Injection (band) HBI Healthcare Building Ideas (magazine) ) plant in Trinidad and Tobago Trinidad and Tobago (trĭn`ĭdăd, təbā`gō), officially Republic of Trinidad and Tobago, republic (2005 est. pop. 1,088,000), 1,980 sq mi (5,129 sq km), West Indies. The capital is Port of Spain. . Iron Ore Iron ore pellet production at Cliffs-managed mines was 36.2 million tons in 1999 versus 40.3 million tons in 1998. Fourth quarter production was 9.3 million tons, down from 10.1 million tons in 1998. Following is a summary of 1999 and 1998 production tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. by mine for the fourth quarter and full year:
(Tons in Millions)
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Fourth Quarter Year
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1999 1998 1999 1998
---- ---- ---- ----
Empire 1.7 2.0 7.1 8.1
Hibbing 2.0 1.9 6.8 7.8
LTV Steel Mining 1.7 1.6 7.0 7.1
Northshore .9 1.2 3.9 4.4
Tilden 1.6 1.9 6.2 6.9
Wabush 1.4 1.5 5.2 6.0
---- ---- ---- ----
Total 9.3 10.1 36.2 40.3
---- ---- ---- ----
---- ---- ---- ----
Although certain of Cliffs' steel company partners reduced production for their accounts, the lower output in 1999 was primarily due to curtailments for Cliffs' account. The production curtailments largely occurred in the third quarter, but production did not resume at the Empire and Tilden Til·den , Samuel Jones 1814-1886. American politician. The Democratic presidential nominee in 1876, he won the popular election but lost the presidency in an electoral college controversy that was settled by a Senate committee in favor of Rutherford Mines in Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). until the middle of October October: see month. , and the Company's wholly-owned Northshore Mine in Minnesota kept its smallest pelletizing Pelletizing or pelletising is the process of compressed or molding of product into the shape of a pellet. A large range of different products are pelletized including chemicals, iron ore, animal compound feed, and more. furnace furnace, enclosed space for the burning of fuel. There are many kinds of furnaces, the type depending upon the fuel and the use to which the heat produced within it is put. Most familiar are the furnaces used in the heating of buildings. out of service until the middle of December. Ferrous ferrous (fĕr`əs), iron in the +2 valence state. Containing or having to do with iron. The difference between ferrous and ferric is the number of valence electrons they contain (ferrous contains two and ferric contains three), which Metallics The pre-tax costs of ferrous metallics activities, which include the equity loss in Cliffs and Associates Limited, our joint venture in Trinidad and Tobago, were $3.5 million for the fourth quarter and $11.7 million for the full year. Comparable costs in 1998 were $1.4 million in the fourth quarter and $5.1 million for the full year. Outlook Commenting on the business outlook, Brinzo said, &uot;We took aggressive actions in 1999 to position Cliffs for 2000, and expect margins on pellet sales will improve in 2000 due to higher production volume and continued unit cost reduction. While improvements in global steel markets are likely to cause a modest increase in the international pellet price in 2000, the average price realization on Cliffs' sales is projected to be about the same as 1999, reflecting the mix of multi-year contracts. We expect year 2000 results will include a recovery from our business interruption insurance Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril claim related to the loss of sales to Rouge Industries in 1999. Cliffs lost over one million tons of sales as a result of an explosion at the power plant which supplies Rouge.&uot; Cliffs and its steel company partners have made their initial pellet production nominations for 2000. While the nominations are subject to change, the six North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. mines managed by Cliffs are currently scheduled to operate at capacity levels and produce a record 42 million tons of pellets. Cliffs' iron ore pellet sales in 2000 are expected to exceed eleven million tons, with the projected increase from 1999 sales largely due to an expected recovery of sales volume to Rouge Industries and Weirton Steel. Brinzo said, &uot;We are working hard to contract additional sales so that the Company's 11.8 million ton production capacity can be fully utilized. In 1999, we successfully negotiated multi-year extensions to sales agreements with three steel customers representing about 30 percent of our sales capacity.&uot; Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs J. O'Neil, Cliffs' President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , said, &uot;Prior to initiating production curtailments in the second half of 1999, our mines were having an excellent operating year. Comprehensive cost reduction plans initiated in 1998 were yielding encouraging results with operating costs operating costs npl → gastos mpl operacionales below 1998 cost levels. We regained momentum on our cost reduction progress late in the fourth quarter of 1999 and are aggressively pursuing additional cost reduction objectives as we begin 2000. In the year ahead, we expect our actions to reduce costs and improve quality will increase the competitive status of our mines.&uot; Brinzo said, &uot;We continue to address start-up Start-up The earliest stage of a new business venture. challenges at our Cliffs and Associates Limited HBI plant in Trinidad and Tobago. The plant has produced sufficient reduced iron See under Reduced. (Chem.) metallic iron obtained through deoxidation of an oxide of iron by exposure to a current of hydrogen or other reducing agent. When hydrogen is used the product is called also See also: Iron Reduce to demonstrate that the Circored(R) process technology will yield a product that meets the quality specifications that were expected, including high metalization rates. However, the start-up and commissioning of the plant has been difficult, and we have not been able to achieve sustained levels of briquette bri·quette also bri·quet n. A block of compressed coal dust, charcoal, or sawdust and wood chips, used for fuel and kindling. [French, diminutive of brique, brick production. While we are confident that we will succeed, we expect the extended start-up curve to delay the date when we introduce CIRCAL CIRCAL - CIRcuit CALculus (TM) briquettes into the market.&uot; Commenting further, Brinzo said, &uot;We are actively pursuing our strategy that is focused on improving the competitiveness of our existing operations, expanding our iron ore pellet business, and developing a significant ferrous metallics business. We are dedicated to building a company that delivers enhanced shareholder value over the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. .&uot; Cleveland-Cliffs is the largest supplier of iron ore products to the North American steel industry and is developing a significant ferrous metallics business. Subsidiaries of the Company manage six iron ore mines in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and hold equity interests in five of the mines. Cliffs has a major iron ore reserve position in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , is a substantial iron ore merchant, and is beginning production of hot briquetted iron at a joint venture plant in Trinidad and Tobago. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding financial performance, pricing, sales volume, and operating levels, which could differ significantly from current expectations due to inherent risks such as lower demand for steel, iron ore, and ferrous metallics products, higher steel imports, processing difficulties, or other factors. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which could cause actual results to differ materially. For further discussion of factors that could cause actual results to differ materially from those reflected in the forward looking statements, see the Company's Annual Report and reports on 10K and 10Q. To obtain faxed copies of Cleveland-Cliffs Inc news releases dial (800) 778-3888. News releases and other information on the Company are available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.cleveland-cliffs.com
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED INCOME
Fourth Quarter Year
---------------- ----------------
(In Millions Except
Per Share Amounts) 1999 1998 1999 1998
------------------- ------ ------ ------ ------
REVENUES
Product sales and services $129.0 $115.6 $305.7 $444.1
Royalties and management fees 15.5 12.9 48.5 49.7
------ ------ ------ ------
Total Operating Revenues 144.5 128.5 354.2 493.8
Interest income .9 1.7 3.3 5.4
Other income 1.3 1.4 3.9 4.7
------ ------ ------ ------
TOTAL REVENUES 146.7 131.6 361.4 503.9
COSTS AND EXPENSES
Cost of goods sold
and operating expenses 128.0 99.2 319.0 398.0
Administrative, selling
and general expenses 4.9 5.7 16.1 18.7
Equity loss in Cliffs
and Associates Limited 3.3 .7 9.1 2.3
Interest expense 1.3 3.7 .4
Other expenses 2.3 4.9 8.8 12.7
------ ------ ------ ------
TOTAL COSTS AND EXPENSES 139.8 110.5 356.7 432.1
------ ------ ------ ------
INCOME BEFORE INCOME TAXES 6.9 21.1 4.7 71.8
INCOME TAXES (CREDIT) 1.9 1.2 (.1) 14.4
------ ------ ------ ------
NET INCOME $ 5.0 $ 19.9 $ 4.8 $ 57.4
------ ------ ------ ------
------ ------ ------ ------
NET INCOME PER COMMON SHARE
Basic $ .45 $ 1.77 $ .43 $ 5.10
Diluted $ .45 $ 1.76 $ .43 $ 5.06
AVERAGE NUMBER OF SHARES
Basic 10.8 11.1 11.1 11.2
Diluted 10.9 11.3 11.1 11.3
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
Fourth Quarter Year
---------------- ----------------
(In Millions, Brackets
Indicate Decrease
in Cash) 1999 1998 1999 1998
------------------- ------ ------ ------ ------
OPERATING ACTIVITIES
Net income $ 5.0 $ 19.9 $ 4.8 $ 57.4
Depreciation and amortization:
Consolidated 3.1 1.4 10.3 7.8
Share of associated companies 2.9 3.1 12.0 12.5
Equity loss in Cliffs
and Associates Limited 3.3 .7 9.1 2.3
Provision for deferred
income taxes .9 (2.5) (.2) 3.1
Tax credit (3.5) (3.5)
Other 3.8 (1.2) .1 (4.5)
------ ------ ------ ------
Total before changes in
operating assets and
liabilities 19.0 17.9 36.1 75.1
Changes in operating assets
and liabilities 40.4 14.6 (31.3) 17.0
------ ------ ------ ------
Net cash from
operating activities 59.4 32.5 4.8 92.1
INVESTING ACTIVITIES
Purchase of property,
plant and equipment:
Consolidated (3.5) (5.7) (15.7) (24.5)
Share of associated companies (1.4) .9 (5.4) (7.2)
Investment and advances to
Cliffs and Associates Limited (3.9) (8.9) (12.5) (19.7)
------ ------ ------ ------
Other .2 1.5
Net cash (used by)
investing activities (8.8) (13.5) (33.6) (49.9)
FINANCING ACTIVITIES
Dividends (4.1) (4.2) (16.7) (16.3)
Repurchases of Common Shares (12.0) (17.2) (11.5)
------ ------ ------ ------
Net cash (used by)
financing activities (16.1) (4.2) (33.9) (27.8)
------ ------ ------ ------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 34.5 $ 14.8 $ (62.7) $ 14.4
------ ------ ------ ------
------ ------ ------ ------
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(In Millions)
--------------------------------
Dec. 31 Sept. 30 Dec. 31
1999 1999 1998
-------- --------- ---------
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 67.6 $ 33.1 $ 130.3
Accounts receivable - net 81.5 47.0 58.8
Inventories 52.6 126.6 59.6
Other 14.3 16.4 11.2
-------- --------- ---------
TOTAL CURRENT ASSETS 216.0 223.1 259.9
PROPERTIES - NET 153.9 154.1 150.0
INVESTMENTS IN ASSOCIATED COMPANIES 233.4 229.2 235.4
OTHER ASSETS 75.3 82.2 78.2
-------- --------- ---------
TOTAL ASSETS $678.6 $ 688.6 $ 723.5
-------- --------- ---------
-------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES $ 79.5 $ 77.1 $ 89.2
LONG-TERM DEBT 70.0 70.0 70.0
POSTEMPLOYMENT BENEFIT LIABILITIES 68.1 65.7 70.5
OTHER LIABILITIES 53.7 57.1 56.2
SHAREHOLDERS' EQUITY 407.3 418.7 437.6
-------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $678.6 $ 688.6 $ 723.5
-------- --------- ---------
-------- --------- ---------
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Unaudited Financial Statements In management's opinion, the unaudited financial statements present fairly the Company's financial position and results. All supplementary information required by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting for complete financial statements has not been included. For further information, please refer to the Company's latest Annual Report. |
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