Cleveland-Cliffs Reports Results for 2000.Business Editors CLEVELAND--(BUSINESS WIRE)--Jan. 31, 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 year 2000 net income of $18.1 million, or $1.73 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. In 1999, net income was $4.8 million, or $.43 per diluted share. In the fourth quarter of 2000, Cliffs recorded net income of $4.3 million, or $.42 per diluted share, which compared with net income of $5.0 million, or $.45 per diluted share, in the fourth quarter of 1999. Following is a summary of results:
Net Income (Loss)
In Millions, Except Per Share
----------------------------------------
Fourth Quarter Year
-------------------- -----------------
2000 1999 2000 1999
--------- -------- ------- -------
Net Income:
Amount $ 4.3 $5.0 $18.1 $4.8
Per Share .42 .45 1.73 .43
Special Items:
Amount 4.7 -- 8.0 4.4
Per Share .45 -- .76 .39
Net Income (Loss)
Excluding Special Items:
Amount (.4) 5.0 10.1 .4
Per Share (.03) .45 .97 .04
The $9.7 million increase in full year net income excluding special items was primarily due to significant production curtailments in 1999, and higher 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 in 2000. Partly offsetting was a higher loss in 2000 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. ), the 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 facility 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. . The $5.4 million decrease in fourth quarter results excluding special items was mainly due to lower pellet sales volume and reduced royalties and management fees in 2000, and a $2.3 million pre-tax charge to reserve amounts due Cliffs as manager of LTV LTV See: Loan-to-value ratio Steel Mining Company. When LTV Corporation filed for protection under Chapter 11 of the U.S. bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most laws on December 29, 2000, its wholly-owned mine in Minnesota owed Cliffs for administrative services and management fees. The mine was permanently closed on January 5, 2001. John S. Brinzo, Chairman and Chief Executive Officer, said "Slowing economies in the US and Canada and the high volume of unfairly traded steel imports into both countries had a devastating dev·as·tate tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates 1. To lay waste; destroy. 2. To overwhelm; confound; stun: was devastated by the rude remark. impact on the operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. at Cliffs' steel company customers in the fourth quarter. The reduction in raw steel output caused our pellet sales to decline at a precipitous rate in the quarter and our year-end inventory to increase to 3.3 million tons." Iron ore pellet sales of 2.6 million tons in the fourth quarter were 1.3 million tons below 1999. Sales were 10.4 million tons for the full year 2000 versus 8.9 million tons in 1999. The unusually low shipment volume in 1999 was largely due 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 Steel.Iron ore pellet production at Cliffs-managed mines was a record 41.0 million tons in 2000 versus 36.2 million tons in 1999. Cliffs' share of full year production was 11.8 million tons in 2000 versus 8.8 million tons in 1999. Following is a summary of production tonnages by mine for the fourth quarter and full year of 2000 and 1999:
Tons in Millions
---------------------------------------
Fourth Quarter Year
------------------ ------------------
2000 1999 2000 1999
------- -------- ------- ---------
Empire 1.9 1.7 7.6 7.1
Hibbing 2.0 2.0 8.2 6.8
LTV Steel Mining 2.0 1.7 7.8 7.0
Northshore 1.1 .9 4.3 3.9
Tilden 1.4 1.6 7.2 6.2
Wabush 1.4 1.4 5.9 5.2
------- -------- ------- ---------
Total 9.8 9.3 41.0 36.2
------- -------- ------- ---------
------- -------- ------- ---------
The Tilden Mine suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. production for three weeks in November 2000 to accommodate reduced pellet requirements at 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 Tilden. Notwithstanding the reduced production in the fourth quarter, Tilden's full year output of 7.2 million tons was the highest since 1980. Production volumes in the fourth quarter and full year 1999 were below capacity levels primarily due to large curtailments for Cliffs' account. Special Items in 2000 The following table summarizes the special items included in fourth quarter and full year results for 2000:
After-Tax Income
(Expense) In Millions
----------------------
Fourth
Quarter Year
--------- --------
Insurance Recovery $9.9
Loss on LTV Shares $ (.5) (7.1)
Tax Adjustments for Prior Years 5.2 5.2
--------- --------
$ 4.7 $8.0
--------- --------
--------- --------
Insurance Recovery - Cliffs lost more than one million tons of iron ore pellet sales to Rouge Industries in 1999 following an explosion at the power plant that supplies Rouge. As a result, Cliffs recorded and received $15.3 million ($9.9 million after-tax) on its 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. The Company continues to pursue modest additional recoveries under the claim. Loss on LTV Shares - Cliffs recorded pre-tax charges of $10.9 million in 2000 ($.7 million in the fourth quarter) to recognize the reduction in the market value of 842,000 common shares of LTV that were previously owned by Cliffs. The after-tax charge was $7.1 million, including $.5 million in the fourth quarter. All of the LTV shares have been sold. Tax Adjustment - In the fourth quarter of 2000, Cliffs recorded a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. tax adjustment of $5.2 million which reflects the expected outcome of audit issues pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the examination of federal income tax returns for tax years 1995 and 1996. Special Items in 1999 The special income included in 1999 results represented favorable pre-tax adjustments of $6.8 million ($4.4 million after-tax), primarily relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc refunds of prior years' state taxes. These adjustments were largely recorded as a reduction in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . Liquidity At December 31, 2000, Cliffs had cash and cash equivalents of $29.9 million. On January 8, 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 working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . The borrowing, which is the first since this facility was established in 1995, was necessary due to the abnormally high pellet inventory at year-end. Cliffs expects to significantly reduce its pellet inventory and repay the $65 million borrowing by the end of the year. The $100 million revolving credit facility expires in May 2003. The Company's $70 million of senior unsecured notes are due in December 2005. On January 9, 2001, the Board of Directors reduced the quarterly dividend to $.10 per share from the previous rate of $.375 per share. The lower dividend will reduce cash outflows by more than $11 million annually and enhance the Company's financial flexibility during a period of extreme uncertainty 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. Year 2001 Outlook Business conditions in the iron and steel industry are expected to remain difficult through at least the first half of 2001. Given the harsh environment confronting the Company's steel company partners and customers, there is significant uncertainty regarding Cliffs' pellet sales volume in 2001 and production levels at managed mines. While production plans continue to be under review due to the business situation, production cuts have been announced at the Hibbing and Northshore mines. Losses from CAL are expected to be lower in 2001, but first half losses will be greater than 2000. Modifications to the Trinidad plant are on schedule and on budget and are expected to permit a restart To resume computer operation after a planned or unplanned termination. See boot, warm boot and checkpoint/restart. of the plant in February. CIRCAL CIRCAL - CIRcuit CALculus (TM) briquettes produced last summer were trial tested in two U.S. electric furnaces 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. . The trials demonstrated the high quality of CIRCAL(TM) briquettes. The marketing effort for 2001 is proceeding, but pricing for all metallics in the U.S. remains extremely weak. Brinzo said, "Cliffs is focused on taking decisive actions to reduce its cost structure, strengthen its competitiveness and ensure that the Company remains well positioned during this very challenging period. While we plan to reduce our pellet inventory this year, which will improve cash flow, profitability will be adversely impacted due to idle expense associated with production curtailments at several mines. To partially mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the adverse impact of the production curtailments,
we have 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: our company-wide cost reduction efforts. We will provide an update on our cost reduction actions at the end of the first quarter." 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 winter months. However, the adverse impact of production curtailments in the first quarter of 2001 will result in a loss that will be significantly larger than the $.32 per share loss recorded in the first quarter of 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 the impact 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 iron ore 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). , 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 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; changes in imports of steel, iron ore, or ferrous metallic products; changes due to CAL's ability to forecast revenue rates, costs and production levels; domestic or international economic and political conditions; major equipment failure, availability and magnitude and duration of repairs; process difficulties, including the failure of new technology to perform as anticipated; and availability and cost of key components of production (e.g., labor, electric power, fuel, water). 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 1999 Annual Report 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 year-end 2000 earnings conference call tomorrow, February 1, at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . 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 web site 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
Fourth Quarter Year
------------------- -----------------
(In Millions Except
Per Share Amounts) 2000 1999 2000 1999
------------------- -------- --------- --------- --------
REVENUES
Product sales and services $ 99.2 $ 132.8 $ 379.4 $ 316.1
Royalties and management fees 11.1 15.5 50.7 48.5
-------- --------- --------- --------
Total Operating Revenues 110.3 148.3 430.1 364.6
Insurance recovery 15.3
Interest income .8 .7 2.9 3.0
Other income 2.7 1.0 6.7 3.4
-------- --------- --------- --------
TOTAL REVENUES 113.8 150.0 455.0 371.0
COSTS AND EXPENSES
Cost of goods sold
and operating expenses 100.0 131.6 380.2 329.3
Administrative, selling
and general expenses 4.5 4.9 18.7 16.1
Write-down of
common stock investment .7 10.9
Pre-operating loss of
Cliffs and Associates Limited 3.6 3.1 13.3 8.8
Interest expense 1.2 1.3 4.9 3.7
Other expenses 5.3 2.2 10.4 8.4
-------- --------- --------- --------
TOTAL COSTS AND EXPENSES 115.3 143.1 438.4 366.3
-------- --------- --------- --------
INCOME (LOSS) BEFORE
INCOME TAXES (1.5) 6.9 16.6 4.7
INCOME TAXES (CREDIT) (5.8) 1.9 (1.5) (.1)
-------- --------- --------- --------
NET INCOME $ 4.3 $ 5.0 $ 18.1 $ 4.8
-------- --------- --------- --------
-------- --------- --------- --------
NET INCOME PER COMMON SHARE
Basic $ .43 $ .45 $ 1.74 $ .43
Diluted $ .42 $ .45 $ 1.73 $ .43
AVERAGE NUMBER OF SHARES
Basic 10.1 10.8 10.4 11.1
Diluted 10.1 10.9 10.4 11.1
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
Fourth Quarter Year
(In Millions, Brackets ---------------- ----------------
Indicate Decrease in Cash) 2000 1999 2000 1999
------- ------- ------- -------
OPERATING ACTIVITIES
Net income $ 4.3 $ 5.0 $ 18.1 $ 4.8
Depreciation and amortization:
Consolidated 3.3 3.3 12.9 10.5
Share of associated companies 3.3 2.9 12.7 12.0
Pre-operating loss of
Cliffs and Associates Limited 2.3 3.1 13.3 8.8
Deferred income taxes 13.7 .9 9.6 (.2)
Tax credit (5.2) (5.2)
Write-down of common
stock investment .7 10.9
Other 3.7 3.3 4.6 (.3)
------- ------- ------- -------
Total before changes
in operating assets
and liabilities 26.1 18.5 76.9 35.6
Changes in operating
assets and liabilities (24.1) 40.1 (48.9) (31.6)
------- ------- ------- -------
Net cash from
operating activities 2.0 58.6 28.0 4.0
INVESTING ACTIVITIES
Purchase of property, plant
and equipment:
Consolidated (12.4) (3.2) (17.8) (15.4)
Share of associated companies (1.5) (1.4) (5.6) (5.4)
Investment and advances in
Cliffs and Associates Limited (2.5) (3.9) (13.8) (12.5)
Purchase of additional
interest in Cliffs and
Associates Limited (1.7) (1.7)
Other (.2) .5 .3 .5
------- ------- ------- -------
Net cash used by
investing activities (18.3) (8.0) (38.6) (32.8)
FINANCING ACTIVITIES
Dividends (3.8) (4.1) (15.7) (16.7)
Repurchases of Common Shares (3.8) (12.0) (15.6) (17.2)
Contributions to Cliffs
and Associates Limited
of minority shareholder 4.2 4.2
------- ------- ------- -------
Net cash used by
financing activities (3.4) (16.1) (27.1) (33.9)
------- ------- ------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (19.7) $ 34.5 $ (37.7) $ (62.7)
------- ------- ------- -------
------- ------- ------- -------
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(In Millions)
--------------------------
Dec. 31, Sept. 30, Dec. 31,
2000 2000 1999
-------- -------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 29.9 $ 49.6 $ 67.6
Trade accounts receivable - net 46.3 52.2 66.0
Receivables from associated companies 18.5 19.6 16.6
Inventories 113.2 88.6 52.6
Other 40.1 21.1 14.3
-------- -------- --------
TOTAL CURRENT ASSETS 248.0 231.1 217.1
PROPERTIES - NET 272.7 150.1 153.9
INVESTMENTS IN ASSOCIATED COMPANIES 138.4 224.7 233.4
OTHER ASSETS 68.7 80.2 75.3
-------- -------- --------
TOTAL ASSETS $ 727.8 $ 686.1 $ 679.7
-------- -------- --------
-------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES $ 102.2 $ 85.5 $ 73.7
LONG-TERM DEBT 70.0 70.0 70.0
POSTEMPLOYMENT BENEFIT LIABILITIES 71.7 67.1 68.1
OTHER LIABILITIES 58.0 58.8 60.6
MINORITY INTEREST IN
CLIFFS AND ASSOCIATES LIMITED 23.9
SHAREHOLDERS' EQUITY 402.0 404.7 407.3
-------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 727.8 $ 686.1 $ 679.7
-------- -------- --------
-------- -------- --------
Unaudited Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge In management's opinion, the unaudited consolidated financial statements present fairly the company's consolidated 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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