Cleveland-Cliffs Reports First Quarter 2001 Results.Business Editors CLEVELAND--(BUSINESS WIRE)--April 25, 2001 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 a net loss of $9.6 million, or $.95 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, for the first quarter of 2001. In the first quarter of 2000, Cliffs recorded a net loss of $3.5 million, or $.32 per diluted share. John S. Brinzo, Cliffs' Chairman and Chief Executive Officer, said, "The deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of fundamentals in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. steel industry is continuing to have a significant impact on our iron ore business. Our principal focus in 2001 is increasing cash flow to improve our financial condition and position the Company to take advantage of opportunities and deal with the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the North American steel industry. Financial results will be adversely impacted as we take the necessary actions to minimize 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. inventory levels in a period of excess production capacity." First quarter results are historically not representative of annual results due to limited shipments of iron ore pellets on the Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). during the winter months. The higher loss in the first quarter of 2001 was mainly due to higher mine costs, lower 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. sales volume and a greater loss from Cliffs and Associates Limited (CAL (1) (Computer-Assisted Learning) Same as CBT. (2) (Conversational Algebraic Language) A timesharing language from the University of California. ), partly offset by a higher average price realization on pellet sales. Higher operating costs operating costs npl → gastos mpl operacionales were principally due to costs associated with production curtailments at the Northshore and Hibbing Hibbing, city (1990 pop. 18,046), St. Louis co., NE Minn., on the Mesabi iron range 90 mi (145 km) from the Canadian border; inc. 1893. Iron mining, formerly the major industry, has declined. Mines and higher natural gas and diesel fuel prices. Pellet sales in the first quarter of 2001 were .5 million tons versus .7 million tons in 2000. The average price realization increased in 2001 primarily due to the mix of sales under various contracts. First quarter 2001 results benefited from the sale of non-strategic lands and also included a $1.9 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge for restructuring activities. Operations Total iron ore pellet production at Cliffs-managed mines decreased to 6.9 million tons in the first quarter of 2001 from 9.8 million tons in 2000. Cliffs' share of first quarter production was 2.8 million tons, unchanged from 2000. Following is a summary of 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. for the first quarter of 2001 and 2000:
(Tons in Millions)
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First Quarter 2001 First Quarter 2000
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Cliffs' Cliffs'
Total Share Total Share
----- ----- ----- -----
Empire 1.9 .7 1.8 .4
Hibbing 1.0 .2 2.0 .3
LTV Steel Mining - - 1.8 -
Northshore .9 .9 1.1 1.1
Tilden 1.7 .7 1.7 .7
Wabush 1.4 .3 1.4 .3
----- ----- ----- -----
Total 6.9 2.8 9.8 2.8
----- ----- ----- -----
----- ----- ----- -----
The 2.9 million ton decrease in total production was principally due to the permanent closure of LTV LTV See: Loan-to-value ratio Steel Mining Company at the beginning of 2001, and production curtailments at the Northshore and Hibbing Mines. On January 9, 2001, Northshore idled its smaller 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. line for an estimated nine-month period to reduce full year 2001 production by approximately 700,000 tons. Hibbing operations were idled for six weeks in the first quarter. Cliffs' share of production in the quarter was unchanged despite the curtailments at Northshore and Hibbing due to the Company's increased ownership of the Empire Mine. Modifications to the CAL 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 were completed on schedule and on budget early in March and the facility produced about nine thousand tons of commercial grade briquettes in March. The first quarter loss from CAL was higher than last year primarily due to Cliffs' increased ownership of CAL. Cliffs increased its CAL ownership from 46.5 percent to approximately 82 percent as a result of the Company and Lurgi acquiring LTV Corporation's 46.5 percent share of CAL in November, 2000. Liquidity At March 31, 2001, Cliffs had cash and cash equivalents of $56 million, which compared with $30 million at the beginning of the year and $35 million at March 31, 2000. In January 2001, the Company borrowed $65 million under its $100 million unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility to fund higher pellet inventories. At the end of March, there were 5.7 million tons of pellets in inventory at a cost of $161 million, an increase of 2.4 million tons or $70 million since December 31, 2000. Pellet inventory at March 31, 2000 was 3.6 million tons or $103 million. Cash flow from inventory liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy is expected to be sufficient to allow repayment of borrowings under the revolving credit facility by year-end. Outlook Difficult conditions in the North American steel industry have reduced the iron ore pellet requirements of Cliffs' customers and some of the mines' steel company partners. Production curtailments have been implemented at the Northshore and Hibbing Mines in Minnesota, and reductions at the Empire and Tilden 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). are scheduled this summer. While there continues to be uncertainty regarding the pellet requirements of certain customers, Cliffs' pellet sales for the full year 2001 are currently expected to approximate 11 million tons. This assumes about three million tons of sales to LTV Corporation after considering LTV's recent announcement that it will close one of its blast furnaces 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. in Cleveland by the middle of 2001. While Cliffs' sales projection for 2001 assumes LTV will purchase its iron ore pellet requirements from the Company, LTV has neither affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. nor rejected its ore purchase contract with Cliffs. Separately, LTV continues to meet its obligations as a 25 percent partner in the Empire Mine, but has neither affirmed nor rejected its ownership in Empire. On April 23, 2001, Algoma Steel ''See also Algoma (Disambiguation) Algoma Steel Corporation (TSX: AGA) was founded in 1902 by Francis Clergue, an American entrepreneur who had settled in Sault Ste. Marie, Ontario. Inc., a 45 percent owner of the Tilden Mine, announced that it was initiating a financial restructuring and, as part of the process, had obtained an Order for protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice The Superior Court of Justice for Ontario, Canada is the successor to the former Ontario Court of Justice (General Division), and was created on April 19 1999. Its predecessor, the Ontario Court (General Division) was the result of the 1990 merger and discontinuance of the previous . The Order protects Algoma from creditors during the restructuring process. The Company expects Algoma to continue to meet its obligations at the Tilden Mine. Given Cliffs' production capacity of 12.8 million tons, and the plan to significantly reduce inventory by the end of the year, the Company currently expects to curtail cur·tail tr.v. cur·tailed, cur·tail·ing, cur·tails To cut short or reduce. See Synonyms at shorten. [Middle English curtailen, to restrict its share of mine production by about 4 million tons, or roughly one-third of capacity. With fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). representing approximately one-third of total production costs, Cliffs' financial results for the balance of the year will be significantly impacted by costs associated with the production curtailments. Brinzo said, "Cliffs is taking decisive actions to reduce its cost structure, strengthen its competitiveness and ensure that the Company remains well positioned during this very challenging period." To partially mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the adverse impact of production
curtailments, the Company has intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: its cost reduction efforts, including the following: -- A 20 percent salaried workforce reduction at the Empire Mine in January. -- A 25 percent reduction in the Cleveland Office staff in early March. -- A 15 to 20 percent salaried workforce reduction at the Hibbing Mine in April. -- Employment levels and organizational structure are being evaluated at other locations. -- Outsourcing of various support services is being implemented. -- We are working with suppliers of purchased materials and equipment to further reduce prices. -- Continuous improvement and employee involvement efforts as part of our ForCE 21 initiative are beginning to show benefits in operating efficiencies and maintenance costs. -- All mine operations are taking actions to minimize energy costs. The adverse impact of high energy costs, which penalized Cliffs' operating earnings by $14 million in 2000, is continuing in 2001. The successful startup of the CAL plant in March was encouraging for the owners and employees of CAL. CAL is expected to produce about 250,000 tons of HBI in 2001. While the current pricing for HBI is weak, Circal(TM) briquettes have excellent market potential. Cliffs' losses from CAL are expected to be somewhat lower for the full year 2001 than the $13.3 million pre-tax loss recorded in 2000. Brinzo concluded, "While we cannot control the marketplace for iron ore and other 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 products, we can minimize adverse impacts by producing the highest quality products at the lowest possible cost. I am confident that Cliffs will successfully meet the challenges and take advantage of the opportunities that are ahead in 2001." 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 and hold equity interests in five iron ore mines in Michigan, Minnesota and Eastern Canada Eastern Canada (also the Eastern provinces) is the region of Canada generally considered to be east of Manitoba, consisting of the following provinces:
This news release contains predictive statements that are intended to be made as "forward-looking" within the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. protections of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Although the Company believes that its 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. are based on reasonable assumptions, such statements are subject to risks and uncertainties. Actual results may differ materially from such statements for a variety of factors; such as displacement displacement, in psychology: see defense mechanism. Same as offset. See base/displacement. of iron production by North American integrated steel producers due to electric furnace electric furnace: see furnace. electric furnace Chamber heated with electricity to very high temperatures, for melting and alloying metals and refractories. Modern electric furnaces generally are either arc furnaces or induction furnaces. production or imports of semi-finished steel or pig iron pig iron: see iron. pig iron Crude iron obtained directly from the blast furnace and cast in molds (see cast iron). The crude ingots, called pigs, are then remelted along with scrap and alloying elements and recast into molds to produce ; changes in the financial condition of the Company's partners and/or customers; rejection of major contracts and/or venture agreements by customers and/or participants under provisions of the U. S. Bankruptcy Code Bankruptcy Code may refer to:
Reference is made to the detailed explanation of the many factors and risks that may cause such predictive statements to turn out differently, as set forth in the Company's Annual Report for 2000 and Reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and 10-Q and previous news releases filed with the Securities and Exchange Commission, which are available on Cliffs' web site. The information contained in this document speaks as of the date of this news release and may be superceded by subsequent events. Cliffs will host its first quarter 2001 earnings conference call tomorrow, April 26, at 10:00 a.m. Eastern Time. The call will be broadcast live on Cliffs' web site at http://www.cleveland-cliffs.com. A replay of the call will be available on the website for 30 days. 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
Three Months
Ended March 31,
----------------
(In Millions Except Per Share Amounts) 2001 2000
------- -------
REVENUES
Product sales and services $ 20.9 $ 25.1
Royalties and management fees 8.8 9.2
------- -------
Total Operating Revenues 29.7 34.3
Interest income 1.1 1.0
Other income 2.4 1.0
------- -------
TOTAL REVENUES 33.2 36.3
COSTS AND EXPENSES
Cost of goods sold and operating expenses 36.0 31.1
Administrative, selling and general expenses 2.8 3.4
Pre-operating loss in Cliffs and
Associates Limited 5.8 2.9
Interest expense 2.1 1.2
Other expenses 2.5 2.4
------- -------
TOTAL COSTS AND EXPENSES 49.2 41.0
------- -------
LOSS BEFORE INCOME TAXES
AND MINORITY INTEREST (16.0) (4.7)
INCOME TAXES (CREDIT) (5.2) (1.2)
------- -------
LOSS BEFORE MINORITY INTEREST (10.8) (3.5)
MINORITY INTEREST 1.2
------- -------
NET LOSS $ (9.6) $ (3.5)
------- -------
------- -------
NET INCOME (LOSS) PER COMMON SHARE
Basic $ (.95) $ (.32)
Diluted $ (.95) $ (.32)
AVERAGE NUMBER OF SHARES
Basic 10.1 10.7
Diluted 10.1 10.7
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
Three Months
Ended March 31,
----------------
(In Millions, Brackets Indicate
Decrease in Cash) 2001 2000
------- -------
OPERATING ACTIVITIES
Net loss $ (9.6) $ (3.5)
Depreciation and amortization:
Consolidated 3.8 3.1
Share of associated companies 3.1 3.2
Equity loss in Cliffs and
Associates Limited 2.9
Minority interest in Cliffs and
Associates Limited (1.2)
Deferred income taxes (1.5)
Gain on sale of assets (1.4)
Other 1.1 (.6)
------- -------
Total before changes in operating
assets and liabilities (5.7) 5.1
Changes in operating assets and liabilities (31.2) (27.9)
------- -------
Net cash used by operating activities (36.9) (22.8)
INVESTING ACTIVITIES
Purchase of property, plant and equipment:
Consolidated (7.5) (.8)
Share of associated companies (.3) (.6)
Equity investment and advances in
Cliffs and Associates Limited (4.1)
Proceeds from sale of assets 1.5
Other (.4)
------- -------
Net cash used by investing activities (6.7) (5.5)
FINANCING ACTIVITIES
Dividends (1.0) (4.0)
Short-term borrowings 65.0
Contributions by minority shareholder in
Cliffs and Associates Limited 5.2
------- -------
Net cash from (used by)
financing activities 69.2 (4.0)
------- -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 25.6 $ (32.3)
------- -------
------- -------
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(In Millions)
--------------------------
Mar. 31 Dec. 31, Mar. 31
2001 2000 2000
-------- -------- --------
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 55.5 $ 29.9 $ 35.3
Trade accounts receivable - net 6.4 46.3 22.2
Receivables from associated companies 17.2 18.5 15.5
Inventories 183.2 113.2 117.7
Other 30.4 40.1 16.4
-------- -------- --------
TOTAL CURRENT ASSETS 292.7 248.0 207.1
PROPERTIES - NET 276.2 272.7 151.6
INVESTMENTS IN ASSOCIATED COMPANIES 135.2 138.4 230.0
OTHER ASSETS 61.8 68.7 74.6
-------- -------- --------
TOTAL ASSETS $ 765.9 $ 727.8 $ 663.3
-------- -------- --------
-------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ 65.0 $ $
Accounts payable and accrued expenses 88.8 102.2 65.6
-------- -------- --------
TOTAL CURRENT LIABILITIES 153.8 102.2 65.6
LONG-TERM DEBT 70.0 70.0 70.0
POSTEMPLOYMENT BENEFIT LIABILITIES 65.3 71.7 67.5
OTHER LIABILITIES 57.4 58.0 60.5
MINORITY INTEREST 27.9 23.9
SHAREHOLDERS' EQUITY 391.5 402.0 399.7
-------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 765.9 $ 727.8 $ 663.3
-------- -------- --------
-------- -------- --------
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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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