SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______.
COMMISSION FILE NUMBER: 1-8944
CLEVELAND-CLIFFS INC
(Exact name of registrant as specified in its charter)
OHIO 34-1464672
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION)
1100 Superior Avenue, Cleveland, Ohio 44114-2589
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 694-5700
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Shares - par value $1.00 per share New York Stock Exchange
and Chicago Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of the Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
As of March 17, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price of $41.75 per share
as reported on the New York Stock Exchange - Composite Index was $459,100,368
(excluded from this figure is the voting stock beneficially owned by the
registrant's officers and directors).
The number of shares outstanding of the registrant's $1.00 par value common
stock was 11,389,541 as of March 17, 1997.
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DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of registrant's 1996 Annual Report to Shareholders are filed as
Exhibits 13(a) through 13(j) and are incorporated by reference into Parts
I, II and IV.
2. Portions of registrant's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held May 13, 1997 are incorporated by reference
into Part III.
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1
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES.
INTRODUCTION
Cleveland-Cliffs Inc (including its consolidated subsidiaries, the
"Company") is the successor to business enterprises whose beginnings can be
traced to earlier than 1850. The Company's headquarters are at 1100 Superior
Avenue, Cleveland, Ohio 44114-2589, and its telephone number is (216) 694-5700.
BUSINESS
The Company owns, directly or indirectly, three major operating
subsidiaries, The Cleveland-Cliffs Iron Company ("CCIC"), Cliffs Mining Company
("CMC") (formerly known as Pickands Mather & Co.), and Northshore Mining Company
("Northshore"). A fourth operating subsidiary, Pickands Mather & Co.
International ("PMI"), terminated operations at the end of 1996. CCIC and CMC
hold interests in various independent iron ore mining ventures ("mining
ventures") and act as managing agent. The operations of Northshore and PMI are
entirely owned by the Company. CCIC, CMC, Northshore, and PMI's business during
1996 was the production and sale of iron ore, principally iron ore pellets.
Collectively, CCIC, CMC, Northshore, and PMI control, develop, and lease
reserves to mine owners; manage and own interests in mines; sell iron ore; and
provide ancillary services to the mines. The operations of each mine are
independent of the other mines. Iron ore production activities are conducted in
the United States, Canada and Australia. Iron ore is marketed by the
subsidiaries in the United States, Canada, Europe, Asia and Australia.
For information on the iron ore business, including royalties and
management fees for the years 1994-1996, see Note C in the Notes to the
Company's Consolidated Financial Statements in the Company's Annual Report to
Security Holders for the year ended December 31, 1996, which Note C is contained
in Exhibit 13(g) and incorporated herein by reference and made a part hereof.
For information concerning operations of the Company, see material
under the heading "Summary of Financial and Other Statistical Data" in the
Company's Annual Report to Security Holders for the year ended December 31,
1996, which Summary of Financial and Other Statistical Data is contained in
Exhibit 13(j) and incorporated herein by reference and made a part hereof.
NORTH AMERICA. CCIC owns or holds long-term leasehold interests in
active North American properties containing approximately 1.45 billion tons of
crude iron ore reserves. CCIC, CMC and Northshore manage six active mines in
North America with a total rated annual capacity of 42.1 million tons and own
equity interests in five of these mines (see Table on page 5).
CCIC, CMC and Northshore's United States properties are located on the
Marquette Range of the Upper Peninsula of Michigan, which has two active
open-pit mines and pellet plants, and the Mesabi Range in Minnesota, which has
three active open-pit mines and pellet plants. CMC acts only in the capacity of
manager at one of the Mesabi Range facilities. Two railroads, one of which is
99.5% owned by a subsidiary of the Company, link the Marquette Range with Lake
Michigan at the loading port of Escanaba and with Lake Superior at the loading
port of Marquette. From the Mesabi Range, pellets are transported by rail to
shiploading ports at Superior, Wisconsin and Taconite Harbor, Minnesota. At
Northshore, crude ore is shipped by rail from the mine to the processing
facilities at Silver Bay, Minnesota, which is also the upper lakes port of
shipment. In addition, in Canada, there is an open-pit mine and concentrator at
Wabush, Labrador, Newfoundland and a pellet plant and dock facility at Pointe
Noire, Quebec. At Wabush Mines, concentrates are shipped by rail from the Scully
Mine at Wabush to Pointe Noire, Quebec, where they
2
are pelletized for shipment via vessel to Canada, United States and Europe or
shipped as concentrates for sinter feed to Europe.
CCIC leases or subleases its reserves to certain mining ventures which
pay royalties to CCIC on such reserves based on the tonnage and the iron content
of iron ore produced. The royalty rates on leased or subleased reserves per ton
are subject to periodic adjustments based on changes in the Bureau of Labor
Statistics producer price index for all commodities or on certain iron ore and
steel price indices. The mining ventures, except for LTV Steel Mining Company
which is wholly-owned by LTV Steel Company, include as participants CCIC or CMC
and steel producers (who are "participants" either directly or through
subsidiaries).
CCIC and CMC, pursuant to management agreements with the participants
having operating interests in the mining ventures, manage the development,
construction and operation of iron ore mines and concentrating and pelletizing
plants to produce iron ore pellets for steel producers. CCIC and CMC are
reimbursed by the participants of the mining ventures for substantially all
expenses incurred by CCIC and CMC in operating the mines and mining ventures. In
addition, CCIC and CMC are paid management fees based on the tonnage of iron ore
produced. A substantial portion of such fees is subject to escalation
adjustments in a manner similar to the royalty adjustments.
With respect to the active mines in which CCIC and CMC have an equity
interest, such interests range from 7.7% to 40.0% (see Table on page 5).
Pursuant to certain operating agreements at each mine, each participant is
generally obligated to take its share of production for its own use. CCIC and
CMC's share of production is resold to steel manufacturers pursuant to
multi-year contracts, usually with price escalation provisions, or one-year
contracts. Pursuant to operating agreements at each mine, each participant is
entitled to nominate the amount of iron ore which will be produced for its
account for that year. During the year, such nomination generally may be
increased (subject to capacity availability) or decreased (subject to certain
minimum production levels) by a specified amount. During 1996, the North
American mines operated at or near capacity levels.
On September 30, 1994, Cliffs Minnesota Minerals Company, a subsidiary
of the Company, completed a stock acquisition of Cyprus Amax Minerals Company's
("Cyprus Amax") iron ore operation ("Northshore") and power plant (Silver Bay
Power Company ("Silver Bay Power")) in Minnesota for $66 million, plus net
working capital of $28 million. The principal assets acquired were 4 million
annual tons of active capacity for production of standard pellets (equivalent to
3.5 million tons of flux pellet capacity), supported by a 115 megawatt power
generation plant, and an estimated 1.2 billion tons of magnetite crude iron ore
reserves, leased mainly from the Mesabi Trust. Additional payments to Cyprus
Amax are required as a result of certain favorable expansion conditions which
payments would not be material in any year. In June, 1995, a $6 million pellet
expansion project at Northshore, which involved the re-commissioning of an idled
pelletizing unit, was completed. On an annualized basis, the expansion added
approximately 900,000 tons of pellets, a 23% expansion of Northshore capacity.
Production in 1996 was 4.3 million tons of standard and flux pellets.
In 1992, the Company purchased $1.0 million worth of steel from LCG
Funding Corporation, an entity owned by the principal owner of Sharon Steel
Corporation ("Sharon"), which had filed for protection under Chapter 11 of the
U.S. Bankruptcy laws, and affiliated with Castle Harlan, Inc. In connection with
the transaction, LCG Funding Corporation agreed to indemnify the Company for any
loss incurred upon resale of the steel. Following ultimate resale of the steel,
LCG Funding Corporation and Castle Harlan, Inc. refused to honor that
commitment, and in 1995, the Company filed suit against Castle Harlan, Inc. and
LCG Funding Corporation in Federal District Court. During 1995, the Company,
Castle Harlan, Inc. and LCG Funding Corporation settled the legal proceedings
out of court and full payment of the loss was made to the Company in 1996.
3
On September 29, 1995, McLouth Steel Products Company ("McLouth")
petitioned for protection under Chapter 11 of the U.S. Bankruptcy Code. At the
time of the bankruptcy filing, the Company had an unreserved receivable from
McLouth of $5.0 million, secured by liens on certain McLouth fixed assets.
Reserves of $3.4 million have been recorded against the receivable. On March 15,
1996, McLouth announced that it had begun a shutdown of its operations due to
inadequate funds. The Company had supplied 300,000 tons of pellets to McLouth in
1996 prior to shutdown. The Company reserved all financial exposure from the
McLouth shutdown, except the remaining unreserved receivable which is secured by
first liens on property and equipment. On June 26, 1996, the bankruptcy court
approved the sale of McLouth's assets and an agreement to settle secured claims,
including the Company's secured claim. Based on the terms of the agreement, the
Company expects to recover the carrying value of its secured claim. Proceeds
from the sale of McLouth's assets will be used primarily to satisfy
administrative claims, including the Company's administrative claim. The
Company's total shipments in 1996 were not affected by McLouth's bankruptcy
filing or the shutdown of its operations. Although sales to McLouth in 1996 were
only 300,000 tons prior to shutdown in the first quarter, compared to 1.3
million tons in all of 1995, sales of the remaining available tons in 1996 were
made to other customers.
4
Following is a table of production, current defined capacity, and
implied exhaustion dates for the iron ore mines managed or owned by CCIC, CMC,
Northshore and PMI. The exhaustion dates are based on estimated mineral reserves
and full production rates, which could be affected, among other things, by
future industry conditions, geological conditions, and ongoing mine planning.
Maintenance of effective production capacity or implied exhaustion dates could
require increases in capital and development expenditures. Alternatively,
changes in economic conditions or the expected quality of ore reserves could
decrease capacity or accelerate exhaustion dates. Technological progress could
alleviate such factors or increase capacity or mine life.
Company's Current
Current Pellet Production Current Operating Implied
Operating ------------------------ Annual Continuously Exhaustion
Name and Location Type of Ore Interest 1994 1995 1996 Capacity Since Date (1)
- ----------------- -------------- -------- ------ ------ ----- -------- ------------ ----------
(Tons in Thousands)(2)
Mining Ventures
- ---------------
Michigan
--------
Marquette Range
- Empire Iron Mining
Partnership (3) Magnetite 22.56% 7,306 7,910 8,084 8,000 1963 2019
- Tilden Mining Hematite and
Company L.C.(3) Magnetite 40.00%(4) 6,246 6,186 6,702 7,000(4) 1974 2036
Minnesota
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Mesabi Range
- Hibbing Taconite
Joint Venture (5) Magnetite 15.00% 8,355 8,615 8,120 8,270 1976 2028
- LTV Steel Mining
Company (5) Magnetite 0.00% 7,809 7,757 7,457 8,000 1957 2049
Canada
------
Wabush Mines
(Newfoundland and Specular
Quebec) (5)(6) Hematite 7.69% 4,654 5,295 5,309 6,000(6) 1965 2042
Wholly-Owned Entities
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Minnesota
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Mesabi Range
- Northshore Mining
Company (7) Magnetite 100.00% 865(7) 3,791 4,252 4,800(8) 1989 2072
Australia
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- Savage River
Mines (9)
(Tasmania) Magnetite 100.00% 1,483 1,557 1,583 (9) 1967(9) 1996(9)
------ ------ ------
TOTAL 36,718 41,111 41,507 42,070
====== ====== ====== ======
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(1) Based on full production at current annual capacity without regard to
economic feasibility.
(2) Tons are long tons of 2,240 pounds.
(3) CCIC receives royalties and management fees.
(4) As a result of the restructuring of the Tilden Mining Company and the Tilden
Magnetite Partnership into the Tilden Mining Company L.C., effective as of
January 1, 1994, CCIC's entitlement ownership in the Tilden Mine increased
from 33.3% to 40.0%. As a result of these arrangements, annual production
capacity is targeted at a minimum of 6 million tons annually (7 million tons
are initially nominated for 1997), and could be increased to 8 million tons,
depending on type of ore production. The predominant ore reserves are
hematite.
(5) CMC received no royalty payments with respect to such mine, but did receive
management fees.
(6) In 1991, the mine's annual production capacity was reduced to 4.5 million
tons per year and was increased to 6 million tons in 1996. For both the
years 1995 and 1996, annual production was increased to 5.3 million tons and
5.7 million tons.
(7) Acquired by the Company on September 30, 1994. Pellet production for
Northshore for the three months ending December 31, 1994 was 865,000
tons.Pellet production for Northshore for the years ending 1994, 1995 and
1996 was 3,481,000 tons, 3,791,000 tons and 4,252,000 tons, respectively.
(8) Includes 900,000 annual tons of expansion completed in June, 1995.
(9) Savage River Mines will terminate shipments in the first quarter of 1997.
(See discussion on page 6.)
5
With respect to the Empire Mine, CCIC owns directly approximately
one-half of the remaining mineral reserves and CCIC leases the balance of the
reserves from their owners; with respect to the Tilden Mine, CCIC owns all of
the mineral reserves; with respect to the Hibbing Mine, Wabush Mines and
Northshore Mine, all of the mineral reserves are owned by others and leased or
subleased directly to those mines.
Each of the mines contains crushing, concentrating, and pelletizing
facilities. The Empire Iron Mining Partnership facilities were constructed
beginning in 1962 and expanded in 1966, 1974 and 1980 with a total cost of
approximately $367 million; the Tilden Mine facilities were constructed
beginning in 1972, expanded in 1979 and modified in 1988 with a total cost of
approximately $523 million; the LTV Steel Mining Company facilities were
constructed beginning in 1954 and expanded in 1967 with a total cost of
approximately $250 million; the Hibbing Taconite Joint Venture facilities were
constructed beginning in 1973 and expanded in 1979 with a total cost of
approximately $302 million; the Northshore Mining Company facilities were
constructed beginning in 1951, expanded in 1963 and significantly modified in
1979 with a total cost estimated in excess of $500 million; the Wabush Mines
facilities were constructed beginning in 1962 with a total cost of approximately
$103 million; and the Savage River Mines facilities were constructed beginning
in 1965 with a total cost of approximately $57 million. The Company believes the
facilities at each site are in satisfactory condition. However, the older
facilities require more capital and maintenance expenditures on an ongoing
basis.
Production and Sales Information
--------------------------------
With the acquisition and expansion of Northshore, the Company's managed
capacity has increased to approximately 42.1 million tons, or 48% of total
pellet capacity in North America, and the Company's annual North American pellet
sales capacity increased in 1996 from 10.7 to 10.8 million tons. In 1996, the
Company produced 10.4 million tons of pellets in North America for its own
account.
In 1996, the Company produced 29.5 million gross tons of iron ore in
the United States and Canada for participants other than the Company. The share
of participants having the five largest amounts, Bethlehem Steel Corporation,
Algoma, Inland Steel Company, LTV and Stelco, aggregated 26.3 million gross
tons, or 89.5%. The largest such participant accounted for 32.2% of such
production.
During 1996, 100% of the Company's sales of iron ore and pellets, that
were produced in the United States and Canada for its own account or purchased
from others, were to 13 U.S., Canadian and European iron and steel manufacturing
companies.
In 1996, AK Steel, Weirton Steel Company, and WCI, directly and
indirectly accounted for 15%, 12%, and 11%, respectively, of total revenues.
AUSTRALIA. PMI owns 100% of Savage River Mines, an open pit iron ore
mining operation and concentrator at Savage River, Tasmania, and a pellet plant
with offshore loading facilities at Port Latta, Tasmania. Production at Savage
River Mines was terminated prior to year-end 1996 due to exhaustion of the
economically recoverable iron ore from surface mining. Remaining inventory is
expected to be shipped during the first quarter of 1997. No significant earning
contribution is expected in 1997. The mine operated two years beyond the
original schedule established when the Company acquired full ownership in 1990.
Termination costs have been provided in the capacity rationalization reserve.
The Company's subsidiary, Pickands Mather & Co. International ("PMI"),
received notice from the Tasmanian government in 1996 asserting certain
environmental obligations in connection with rehabilitating the Savage River
Mine site. PMI has asserted that all obligations to rehabilitate the mine and
plant sites are specified in the Rehabilitation Plan agreement between the
State of Tasmania and PMI, which
6
agreement was formalized in June, 1990 by an Act of Parliament and was
a condition of PMI's acquisition of interests in the mine from Japanese steel
companies. PMI has provided reserves for all environmental and other
rehabilitation obligations specified in the Rehabilitation Plan.
On December 5, 1996, PMI and the State of Tasmania entered into a Deed
of Arrangement whereby the assets (including $8.7 million in cash) and all
environmental and rehabilitation obligations of the Savage River Mines will be
transferred to the Tasmanian government. The transfer is contingent on certain
events which are anticipated to be completed in March, 1997.
RAIL TRANSPORTATION. The Company, through a wholly-owned subsidiary,
owns a 99.5% stock interest in Lake Superior & Ishpeming Railroad Company. The
railroad operates approximately 49 miles of track in the Upper Peninsula of
Michigan, principally to haul iron ore from the Empire and Tilden Mines to Lake
Superior at Marquette, Michigan, where the railroad has an ore loading dock, or
to interchange points with another railroad for delivery to Lake Michigan at
Escanaba, Michigan. In 1996, 86.1% of the railroad's revenues were derived from
hauling iron ore and pellets and other services in connection with mining
operations managed by CCIC. The railroad's rates are subject to regulation by
the Surface Transportation Board of the Department of Transportation.
Other Activities and Resources
------------------------------
REDUCED IRON. The Company's strategy is to grow its basic iron ore
business domestically and internationally and to extend its business scope to
produce and supply "reduced iron ore feed" for steel and iron production.
Reduced iron products contain approximately 90% iron versus 65% for traditional
iron ore pellets and contain less undesirable chemical elements than most scrap
steel feed. The market for reduced iron is relatively small, but is projected to
increase at a greater rate than other iron ore products.
On April 15, 1996, the Company announced an international joint venture
to produce and market premium quality reduced iron briquettes for the steel
industry, and all definitive project agreements were signed in May, 1996. The
venture's participants, through subsidiaries, are the Company, through Cliffs
Reduced Iron Corporation, (46.5 percent), The LTV Corporation, (46.5 percent),
and Lurgi AG of Germany, (7 percent). The Company, through Cliffs Reduced Iron
Management Company, manages the $150 million reduced iron project, located in
Trinidad and Tobago, and will be responsible for sales by the venture company,
Cliffs and Associates Limited. The Company's share of capital expenditures is
estimated to be $70 million, of which $13.1 million was spent in 1996 and $46
million is expected to be spent in 1997. No project financing will be utilized.
The plant is designed to produce at least 500,000 metric tons of
briquettes per year. The product will be initially marketed in the United
States. Initial construction of the facilities has begun and startup is
scheduled for the fourth quarter 1998. Approximately 500 people will be employed
at peak construction. The plant will employ about 75 people upon completion.
The Company is studying the feasibility of a midwestern U.S. project to
produce "pig iron" from North American iron ore with coal instead of natural gas
as the reductant. Markets for the product would be primarily electric furnaces
and foundries.
During 1995, the Company suspended its iron carbide development
activities but continues to believe that iron carbide has long-term potential.
The Company is a joint holder of iron carbide process licenses in Venezuela with
North Star Steel and in Australia with Mitsubishi Corporation.
7
OIL SHALE. Cliffs Synfuel Corp., a wholly-owned subsidiary of the
Company, owns oil shale properties in the United States which contain an
estimated one billion barrels of recoverable shale oil with associated
conditional water rights. While commercialization of U.S. oil shale is currently
uneconomical, the Company's holding costs are minimal. If oil prices rise
significantly and new technology being applied to other world oil shale deposits
is successful, the Company's property could have substantial value.
Cliffs Oil Shale Corp., another wholly-owned subsidiary of the Company,
owns a 15% interest in a smaller Colorado oil shale property. The remaining 85%
is owned by a Mobil Corporation subsidiary.
Credit Agreement and Senior Notes
---------------------------------
In 1995 the Company entered into a new Credit Agreement ("Credit
Agreement") with Chemical Bank, as Agent for a six-bank lending group, pursuant
to which the Company may borrow up to $100 million as revolving loans until
March 1, 2000, which Credit Agreement replaced the April 30, 1992 credit
facility scheduled to expire on April 30, 1995. In 1996, the Credit Agreement
was amended to extend the expiration date by one year to March 1, 2001. Interest
on borrowings will be based on various interest rates as defined in the Credit
Agreement and as selected by the Company pursuant to the terms of the Credit
Agreement. There were no borrowings under either of the revolving credit
facilities.
In 1995, the Company placed privately with a group of institutional
lenders $70 million 7% Senior Notes, due December 15, 2005, the proceeds of
which Senior Notes were used to retire the Company's $20 million 8.51% Senior
Notes and $50 million 8.84% Senior Notes.
COMPETITION
The iron ore mines, which the Company's subsidiaries operate in North
America, Canada and Australia, produce various grades of iron ore which is
marketed in the United States, Canada, Great Britain, Italy, Australia, Japan
and Korea. In North America, the Company is in competition with several iron ore
producers, including USS Corporation, Iron Ore Company of Canada, Quebec Cartier
Mining Company, and Evtac Mining Company, as well as other major steel companies
which own interests in iron ore mines and/or have excess iron ore purchase
commitments. In addition, significant amounts of iron ore have, since the early
1980s, been shipped to the United States from Venezuela and Brazil in
competition with iron ore produced by the Company.
Other competitive forces have in the last decade become a large factor
in the iron ore business. With respect to a significant portion of steelmaking
in North America, electric furnaces built by "minimills" have replaced the use
of iron ore pellets with scrap metal in the steelmaking process. In addition,
operators of sinter plants produce iron agglomerates which substitute for iron
ore pellets. Imported steel slabs also replace the use of iron ore pellets in
producing finished steel products. Imported steel produced from iron ore
supplied by international competitors also effectively competes with the
Company's iron ore pellets.
Competition among the sellers of iron units is predicated upon the
usual competitive factors of price, availability of supply, product performance,
service and cost to the consumer.
ENVIRONMENT, EMPLOYEES AND ENERGY
ENVIRONMENT. In the construction of the Company's facilities and in its
operating arrangements, substantial costs have been incurred and will be
incurred to avoid undue effect on the environment. The Company's commitment to
environmental
8
preservation resulted in the Company's North American capital expenditures
of $3,674,000 in 1995 and $6,072,000 in 1996. It is estimated that approximately
$6,506,000 will be spent in 1997 for environmental control facilities.
The Company received notice in 1983 from the U.S. Environmental
Protection Agency ("U.S. EPA") that the Company is a potentially responsible
party with respect to the Cliffs-Dow Superfund Site, located in the Upper
Peninsula of the State of Michigan, which is not related to the Company's iron
ore mining business. The Cliffs-Dow site was used prior to 1973 for the disposal
of wastes from charcoal production by a joint venture of the Company, the Dow
Chemical Company and afterward by a successor in interest, Georgia-Pacific
Corporation. The Company and certain other potentially responsible parties have
agreed upon allocation of the costs for investigation and remediation. The
Company and other potentially responsible parties voluntarily participated in
the preparation of a Remedial Investigation and Feasibility Study ("RI/FS") with
respect to the Cliffs-Dow site, which concluded with the publication by the U.S.
EPA of a Record of Decision dated September 27, 1989 ("ROD"), setting forth the
selected remedial action plan adopted by the U.S. EPA for the Cliffs-Dow site.
The Company and other potentially responsible parties have largely implemented
remedial action satisfactory to the U.S. EPA at an estimated total cost of $8
million, of which the Company's share is $1.7 million. Upon the advice of
counsel, the Company believes it has a right to continued contribution from the
other potentially responsible parties for the costs of any further remedial
action required at the Cliffs-Dow site. A second disposal area at the Cliffs-Dow
charcoal production plant is on the list of priority sites issued by the
Michigan Department of Natural Resources (now the Michigan Department of
Environmental Quality). The Company and certain other potentially responsible
parties have agreed upon allocation of investigation and remediation costs at
this site. The Company is participating in a RI/FS of this site. That study has
been completed and is being reviewed by the Michigan Department of Environmental
Quality. The Company has joined with the other potentially responsible parties
in an interim removal action at the site which has been completed at an
estimated total cost of $18 million, of which the Company's share is $4.5
million. The Company has sufficient financial reserves at December 31, 1996 to
provide for its expected share of the cost of the remedial actions at the above
mentioned sites. (See "Legal Proceedings" for additional information concerning
environmental matters).
Generally, various legislative bodies and federal and state agencies
are continually promulgating numerous new laws and regulations affecting the
Company, its customers, and its suppliers in many areas, including waste
discharge and disposal; hazardous classification of materials, products, and
ingredients; air and water discharges; and many other matters. Although the
Company believes that its environmental policies and practices are sound and
does not expect a material adverse effect of any current laws or regulations, it
cannot predict the collective adverse impact of the rapidly expanding body of
laws and regulations.
EMPLOYEES. As of December 31, 1996, CCIC and CMC and the North American
independent mining ventures had 5,198 employees, of which 4,282 were hourly
employees. The hourly employees are represented by the United Steelworkers of
America ("United Steelworkers") which have collective bargaining agreements. The
United Steelworkers labor agreement at Hibbing Taconite Company, Tilden and
Empire Mines expired on August 1, 1993, and the United Steelworkers struck those
mines and facilities for six weeks. In 1993, a new six-year "no strike" labor
agreement was entered between those Mines and the United Steelworkers covering
the period to July 31, 1999, but with provisions for a limited economic reopener
on August 1, 1996. During the year, the labor economic reopeners at the Hibbing
Taconite, Tilden and Empire Mines were settled based on the pattern of recent
steel company settlements. In 1994, a new United Steelworkers labor agreement
was entered into covering employees of LTV Steel Mining Company, which agreement
will expire on July 31, 1999. In 1994, a new United Steelworkers labor agreement
covering Wabush was entered into, which agreement was to expire on March
9
1, 1996. A new labor agreement was completed at Wabush Mines effective
March 1, 1996 and will expire March 1, 1999.
As of December 31, 1996, Northshore had 531 employees, of which 385
were hourly employees, none of whom are represented by a union.
As of December 31, 1996, Cliffs Reduced Iron Management Company had 2
salaried employees.
In addition, as of December 31, 1996, Cleveland-Cliffs Inc and its
wholly-owned subsidiary, Cliffs Mining Services Company, had 280 salaried
executive, managerial, administrative and technical employees.
ENERGY. Electric power supply contracts between Wisconsin Electric
Power Company ("WEPCo") and the Empire and Tilden Mines, entered into in
December 1987, provide that WEPCo shall furnish electric power to these Mines,
within specific demand limits, pursuant to price formulas. The term of these
contracts covered ten years through 1997. In return for a substantial reduction
in rates, the Tilden Mine converted a portion of its firm power contract to
curtailable power beginning in 1993. In January, 1996, CCIC, as managing agent
for the Empire and Tilden Mines, entered into new seven-year power supply
contracts with WEPCo, which included the two years remaining on the previous
contracts. Various terms and conditions of the power contracts were revised to
better accommodate the operation of those Mines. The new power supply contracts
became effective March 1, 1996.
Electric power for Hibbing Taconite is supplied by Minnesota Power and
Light under an agreement which can be terminated with four years' notice. In
1994, Minnesota Power and Light filed and was granted a power rate increase with
the Minnesota Public Utility Commission's approval. A large part of the increase
was negated by reason of a three year extension of Hibbing Taconite's power
contract with Minnesota Power and Light. In December, 1995, a contract amendment
became effective, extending the contract an additional year and lowering firm
demand requirements. Electric power requirements will continue to be specified
annually by the Hibbing Taconite venturers corresponding to Hibbing's operating
requirements.
LTV Steel Mining Company completed reactivation of its power plant in
1992 and is currently generating the majority of its requirements, and an
interchange agreement with Minnesota Power and Light provides backup power and
allows sale of excess capacity to the Midwestern Area Power Pool. Effective May
1, 1995, the interchange agreement was extended to April 30, 2000 to provide
additional backup power and other cost-effective services.
Silver Bay Power Company, an indirect subsidiary of the Company,
provides the majority of Northshore's energy requirements, has an interchange
agreement with Minnesota Power and Light for backup power and sells 40 megawatts
of excess power capacity to Northern States Power Company. The contract with
Northern States Power extends to the year 2011. Effective November 1, 1995, the
interchange agreement was extended to October 31, 2000 to provide additional
backup power and other cost-effective services.
Wabush Mines owns a portion of the Twin Falls Hydro Generation facility
which provides power for Wabush's mining operations in Newfoundland. A twenty
year agreement with Newfoundland Power allows an interchange of water rights in
return for the power needs for Wabush's mining operations. The Wabush
pelletizing operations in Quebec are served by Quebec Hydro on an annual
contract.
The Company has contracts providing for the transport of natural gas
for its North American iron ore operations. Several interruptions of supply of
natural gas occurred during early 1996, requiring use of alternate fuels.
10
Empire and Tilden Mines have the capability of burning natural gas,
oil, or, to a lesser extent, coal. Wabush Mines has the capability of burning
oil or, to a lesser extent, coal. Hibbing Taconite, Northshore and LTV Steel
Mining Company have the capability of burning natural gas and oil. During 1996
the U.S. mines burned natural gas as their primary fuel due to favorable
pricing. Wabush Mines used oil, supplemented with coal or coke breeze.
Any substantial interruption of operations or substantial price
increase resulting from future government regulations or energy taxes,
injunctive order, or fuel shortages could be materially adverse to the Company.
11
In the paper format version of this document, this page contains a
map. The map is entitled, "Cleveland-Cliffs Inc and Associated
Companies Location of Iron Ore Operations". The map has an outline
of the United States, Canada and Tasmania (Australia). Located
specifically on the map are arrows and dots representing the
location of the properties described in the Table on page 5 to this
report.
12
ITEM 3. LEGAL PROCEEDINGS.
Rio Tinto.
- ----------
On July 21, 1993, CCIC and Cliffs Copper Corp, a subsidiary of the Company,
each received Findings of Alleged Violation and Order from the Department of
Conservation and Natural Resources, Division of Environmental Protection, State
of Nevada. The Findings allege that tailings materials left at the Rio Tinto
Mine, located near Mountain City, Nevada, are entering State waters which the
State considers to be in violation of State water quality laws. The Rio Tinto
Mine was operated by Cliffs Copper Corp from 1971 to 1975 and by other companies
prior to 1971. The Order requires remedial action to eliminate water quality
impacts. In 1996, CCIC and other responsible parties entered into an
Administrative Order on Consent (AOC) with the Nevada Division of Environmental
Protection (NDEP), which provides for the completion of remedial action to occur
in 1996 and 1997. CCIC and the other responsible parties have entered into a
Participation Agreement to equitably share the cost of the remediation. The
total projected cost of remediation is $2,335,000 of which CCIC's share is
$525,000.
Summitville.
- ------------
On January 12, 1993, CCIC received from the United States Environmental
Protection Agency a Notice of Potential Liability at the Summitville mine site,
located at Summitville, Colorado, where CCIC, as one of three joint venturers,
conducted an unsuccessful copper ore exploration activity from 1966 through
1969. On June 25, 1993, CCIC received from the U.S. EPA a Notice of Potential
Involvement in certain portions of the Summitville mine site. The mine site has
been listed on the National Priorities List under the Comprehensive
Environmental Response Compensation and Liability Act. The Company conducted no
production activities at the Summitville mine site. In 1996, CCIC and one of the
other venturers reached a de minimis settlement agreement with U.S. EPA, which
became final in February, 1997, on payment of the $700,000 settlement amount of
which CCIC's share was $350,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
13
EXECUTIVE OFFICERS OF THE REGISTRANT
Position with the Company
as of March 17, 1997
--------------------
Name Age
---- ---
M. T. Moore Chairman, President and Chief 62
Executive Officer
J. S. Brinzo Executive Vice President-Finance 55
W. R. Calfee Executive Vice President-Commercial 50
T. J. O'Neil Executive Vice President-Operations 56
J. W. Sanders Senior Vice President-Technical 54
A. S. West Senior Vice President-Sales 60
There is no family relationship between any of the executive officers of the
Company, or between any of such executive officers and any of the Directors of
the Company. Officers are elected to serve until successors have been elected.
All of the above-named executive officers of the Company were elected effective
on the effective dates listed below for each such officer.
The business experience of the persons named above for the last five years
is as follows:
M. T. Moore President and Chief Executive Officer, Company,
January 1, 1987 to May 9, 1988.
Chairman,President and Chief Executive
Officer, Company, May 10, 1988 to
date.
J. S. Brinzo Executive Vice President-Finance, Company,
September 1, 1989 to September 30, 1993.
Senior Executive-Finance, Company,
October 1, 1993 to September 30, 1995.
Executive Vice President-Finance, Company,
October 1, 1995 to date.
W. R. Calfee Senior Executive Vice President, Company,
September 1, 1989 to September 30, 1993.
Senior Executive-Commercial, Company,
October 1, 1993 to September 30, 1995.
Executive Vice President-Commercial, Company
October 1, 1995 to date.
T. J. O'Neil Senior Vice President-Technical, Company,
November 18, 1991 to September 30, 1994.
Executive Vice President-CCI Operations and
Technology, Company, October 1, 1994
to September 30, 1995.
Executive Vice President-Operations, Company,
October 1, 1995 to date.
14
J. W. Sanders Senior Vice President and General Manager,
Copper Range Company,
June, 1991 to June, 1994.
President and Chief Operating Officer, Copper
Range Company, July, 1994 to
September 30, 1995.
Senior Vice President-Technical, Company,
October 1, 1995 to date.
A. S. West Senior Vice President-Sales, Company,
July 1, 1988 to date.
15
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required by this item is incorporated herein by
reference and made a part hereof from that portion of the Company's Annual
Report to Security Holders for the year ended December 31, 1996 contained in the
material under the headings, "Common Share Price Performance and Dividends",
"Investor and Corporate Information" and "Summary of Financial and Other
Statistical Data", such information filed as a part hereof as Exhibits 13(h),
13(i) and 13(j), respectively.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is incorporated herein by
reference and made a part hereof from that portion of the Company's Annual
Report to Security Holders for the year ended December 31, 1996 contained in the
material under the headings, "Summary of Financial and Other Statistical Data"
and "Notes to Consolidated Financial Statements", such information filed as a
part hereof as Exhibits 13(j) and 13(g), respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item is incorporated herein by
reference and made a part hereof from that portion of the Company's Annual
Report to Security Holders for the year ended December 31, 1996 contained in the
material under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations", such information, filed as a part hereof
as Exhibit 13(a).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is incorporated herein by
reference and made a part hereof from that portion of the Company's Annual
Report to Security Holders for the year ended December 31, 1996 contained in the
material under the headings "Statement of Consolidated Financial Position",
"Statement of Consolidated Income", "Statement of Consolidated Cash Flows",
"Statement of Consolidated Shareholders' Equity", "Notes to Consolidated
Financial Statements" and "Quarterly Results of Operations", such information
filed as a part hereof as Exhibits 13(c), 13(d), 13(e), 13(f), 13(g) and 13(h),
respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information regarding Directors required by this Item is
incorporated herein by reference and made a part hereof from the Company's Proxy
Statement to Security Holders, dated March 24, 1997, from the material under the
heading "Election of Directors". The information regarding executive officers
required by this item is set forth in Part I hereof under the heading "Executive
Officers of the Registrant", which information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated herein by
reference and made a part hereof from the Company's Proxy Statement to Security
Holders, dated March 24, 1997 from the material under the headings "Executive
Compensation (excluding the Compensation Committee Report on Executive
Compensation)", "Pension Benefits", and the first seven paragraphs under
"Agreements and Transactions".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated herein by
reference and made a part hereof from the Company's Proxy Statement to Security
Holders, dated March 24, 1997, from the material under the heading "Securities
Ownership of Management and Certain Other Persons".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)
(1) and (2)-List of Financial Statements and Financial Statement
Schedules.
The following consolidated financial statements of the Company,
included in the Annual Report to Security Holders for the year ended December
31, 1996, are incorporated herein by reference from Item 8 and made a part
hereof:
Statement of Consolidated Financial Position -
December 31, 1996 and 1995
Statement of Consolidated Income - Years ended
December 31, 1996, 1995 and 1994
Statement of Consolidated Cash Flows - Years ended
December 31, 1996, 1995 and 1994
Statement of Consolidated Shareholders' Equity - Years
ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
17
The following consolidated financial statement schedule of the
Company is included herein in Item 14(d) and attached as Exhibit 99(a).
Schedule II - Valuation and Qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
(3) List of Exhibits - Refer to Exhibit Index on pages 20-26
which is incorporated herein by reference.
(b) There were no reports on Form 8-K filed during the three months
ended December 31, 1996.
(c) Exhibits listed in Item 14(a)(3) above are included herein.
(d) Financial Statements and Schedule listed above in Item 14(a)(1)
and (2) are incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CLEVELAND-CLIFFS INC
By: /s/ John E. Lenhard
----------------------------------------
John E. Lenhard,
Secretary and Assistant General Counsel
Date: March 26, 1997
18
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
M. T. Moore Chairman, March 26, 1997
President and Chief
Executive Officer and
Principal Executive Officer
and Director
J. S. Brinzo Executive Vice President- March 26, 1997
Finance and Principal
Financial Officer
R. Emmet Vice President and March 26, 1997
Controller and Principal
Accounting Officer
R. S. Colman Director March 26, 1997
J. D. Ireland, III Director March 26, 1997
G. F. Joklik Director March 26, 1997
E. B. Jones Director March 26, 1997
F. R. McAllister Director March 26, 1997
J. C. Morley Director March 26, 1997
S. B. Oresman Director March 26, 1997
J. H. Wade Director March 26, 1997
A. W. Whitehouse Director March 26, 1997
By: /s/ John E. Lenhard
-------------------------------------
(John E. Lenhard, as Attorney-in-Fact)
Original powers of attorney authorizing Messrs. M. Thomas Moore, John S.
Brinzo, Frank L. Hartman, and John E. Lenhard and each of them, to sign this
Annual Report on Form 10-K and amendments thereto on behalf of the above-named
officers and Directors of the Registrant have been filed with the Securities and
Exchange Commission.
19
EXHIBIT INDEX
Pagination by
Sequential
Exhibit Numbering
Number System
- ------ ------
Articles of Incorporation and By-Laws
of Cleveland-Cliffs Inc
-----------------------
3(a) Amended Articles of Incorporation of Cleveland
- Cliffs Inc (filed as Exhibit 3(a) to Form
10-K of Cleveland-Cliffs Inc filed on March 26,
1996 and incorporated by reference) Not Applicable
3(b) Regulations of Cleveland-Cliffs Inc (filed as
Exhibit 3(b) to Form 10-K of Cleveland-Cliffs
Inc filed on March 26, 1996 and incorporated by
reference) Not Applicable
Instruments defining rights of security
holders, including indentures
-----------------------------
4(a) Form of Common Stock Certificate Filed Herewith
4(b) Rights Agreement, dated September 8, 1987, and
amended and restated as of November 19, 1991, by
and between Cleveland-Cliffs Inc and KeyBank National
Association (successor to Ameritrust Company
National Association) (filed as Exhibit 4(l) to
Form 10-K of Cleveland-Cliffs Inc filed on March
26, 1996 and incorporated by reference) Not Applicable
4(c) Credit Agreement, dated as of March 1, 1995 among
Cleveland-Cliffs Inc, the Banks named therein and
Chase Manhattan Bank, as Agent (successor to Chemical
Bank) (filed as Exhibit 4(o) to Form 10- K of
Cleveland-Cliffs Inc, filed on March 27, 1995 and
incorporated by reference) Not Applicable
4(d) Amendment dated as of July 19, 1996, to the Credit
Agreement dated as of March 1, 1995, among Cleveland-
Cliffs Inc, the banks named therein and Chase Manhattan
Bank, as Agent (filed as Exhibit 4(a) to Form 10-Q of
Cleveland-Cliffs Inc filed on November 13, 1996 and
incorporated by reference) Not Applicable
20
4(e) Note Agreement, dated as of December 15, 1995 among
Cleveland-Cliffs Inc and each of the Purchasers named
in Schedule I thereto (filed as Exhibit 4(n) to
Form 10-K of Cleveland-Cliffs Inc filed on March 26,
1996 and incorporated by reference) Not Applicable
Material Contracts
------------------
10(a) * Cleveland-Cliffs Inc Supplemental Retirement Benefit
Plan Amended and Restated, effective January 1, 1995
(filed as Exhibit 10(b) to Form 10-Q of Cleveland-
Cliffs Inc filed on May 2, 1995 and incorporated by
reference) Not Applicable
10(b) * The Cleveland-Cliffs Iron Company Plan for Deferred
Payment of Directors' Fees, dated as of July 1, 1981,
assumed by Cleveland-Cliffs Inc effective July 1, 1985
(filed as Exhibit 10(b) to Form 10-K of Cleveland-
Cliffs Inc filed on March 26, 1996 and incorporated
by reference) Not Applicable
10(c) * Amendment No. 1 to Cleveland-Cliffs Inc Plan for
Deferred Payment of Directors' Fees, dated March
9, 1992 (filed as Exhibit 10(c) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26, 1996 and
incorporated by reference) Not Applicable
10(d) * Form of contingent employment agreements with
certain executive officers Filed Herewith
10(e) * Cleveland-Cliffs Inc and Subsiiaries Management
Performance Incentive Plan, dated as of January
1, 1994 (Summary Description) ( filed as Exhibit
10(g) to Form 10-K of Cleveland-Cliffs Inc filed
on March 27, 1995 and incorporated by reference) Not Applicable
- ---------------------------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
21
10(f) Instrument of Assignment and Assumption dated as of
July 1, 1985, by and between The Cleveland- Cliffs
Iron Company and Cleveland-Cliffs Inc (filed as Exhibit
10(i) to Form 10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by reference) Not Applicable
10(g) Form of indemnification agreements with directors
(filed as Exhibit 10(j) to Form 10-K of Cleveland-
Cliffs Inc filed on March 26, 1996 and incorporated by
reference) Not Applicable
10(h) * Cleveland-Cliffs Inc 1987 Incentive Equity Plan,
effective as of April 29, 1987 Filed Herewith
10(i) * Cleveland-Cliffs Inc 1992 Incentive Equity Plan
and Form of Stock Option Agreement for
Nonemployee Directors, effective as of April 14,
1992 Filed Herewith
10(j) * Amended and Restated Cleveland-Cliffs Inc Retirement
Plan for Non-Employee Directors effective as of July
1, 1995 (filed as Exhibit 10(a) to Form 10-Q of
Cleveland-Cliffs Inc filed on November 13, 1996 and
incorporated by reference) Not Applicable
10(k) * Amended and Restated Trust Agreement No. 1 dated as of
March 9, 1992, by and between Cleveland- Cliffs Inc
and Key Trust Company of Ohio, N.A. (successor
trustee to Society National Bank) with respect to the
Supplemental Retirement Benefit Plan and certain
contingent employment agreements (filed as Exhibit
10(n) to Form 10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by reference) Not Applicable
10(l) * Amended and Restated Trust Agreement No. 2 dated as of
March 9, 1992, by and between Cleveland- Cliffs Inc and
Key Trust Company of Ohio, N.A. (successor trustee to
Society National Bank) with respect to the Severance
Pay Plan for Key Employees of Cleveland-Cliffs Inc and
certain contingent employment agreements (filed as
Exhibit 10(o) to Form 10-K of Cleveland-Cliffs Inc
filed on March 26, 1996 and incorporated by reference) Not Applicable
- ---------------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
22
10(m) * Trust Agreement No. 4 dated as of October 28, 1987, by
and between Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A. (successor trustee to Society National
Bank) with respect to the Plan for Deferred Payment of
Directors' Fees (filed as Exhibit 10(p) to Form 10-K
of Cleveland-Cliffs Inc filed on March 26, 1996 and
incorporated by reference) Not Applicable
10(n) * First Amendment to Trust Agreement No. 4 dated as
of April 9, 1991, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A.
(successor trustee to Society National Bank) and
Second Amendment to Trust Agreement No. 4 dated
as of March 9, 1992 by and between Cleveland-
Cliffs Inc and Key Trust Company of Ohio, N.A.
(successor trustee to Society National Bank)
(filed as Exhibit 10(q) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26, 1996 and
incorporated by reference) Not Applicable
10(o) * Trust Agreement No. 5 dated as of October 28, 1987,
by and between Cleveland-Cliffs Inc and Key Trust
Company of Ohio, N.A. (successor trustee to
Society National Bank) with respect to the Cleveland-
Cliffs Inc Voluntary Non-Qualified Deferred
Compensation Plan (filed as Exhibit 10(r) to Form
10-K of Cleveland-Cliffs Inc filed on March 26, 1996
and incorporated by reference) Not Applicable
10(p) * First Amendment to Trust Agreement No. 5 dated as
of May 12, 1989, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A.
(successor trustee to Society National Bank),
Second Amendment to Trust Agreement No. 5 dated
as of April 9, 1991 by and between Cleveland-
Cliffs Inc and Key Trust Company of Ohio, N.A.
(successor trustee to Society National Bank) and
Third Amendment to Trust Agreement No. 5 dated as
of March 9, 1992, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A.
(successor trustee to Society National Bank)
(filed as Exhibit 10(s) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26, 1996 and
incorporated by reference) Not Applicable
- ---------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
23
10 (q) * Fourth Amendment to Trust Agreement No. 5, dated
November 18, 1994, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A. (successor
trustee to Society National Bank) (filed as Exhibit
10(dd) to Form 10-K of Cleveland-Cliffs Inc filed
on March 27, 1995 and incorporated by reference) Not Applicable
10(r) * Amended and Restated Trust Agreement No. 6 dated as of
March 9, 1992, by and between Cleveland-Cliffs Inc and
Key Trust Company of Ohio, N.A. (successor
trustee to Society National Bank) with respect to
certain indemnification agreements with directors and
certain officers (filed as Exhibit 10(t) to Form
10-K of Cleveland-Cliffs Inc filed on March 26, 1996
and incorporated by reference) Not Applicable
10(s) * Trust Agreement No. 7 dated as of April 9, 1991,
by and between Cleveland-Cliffs Inc and Key Trust
Company of Ohio, N.A. (successor trustee to
Society National Bank) with respect to the
Cleveland-Cliffs Inc Supplemental Retirement
Benefit Plan, as amended by First Amendment to
Trust Agreement No. 7 (filed as Exhibit 10(u) to
Form 10-K of Cleveland-Cliffs Inc filed on March
26, 1996 and incorporated by reference) Not Applicable
10(t) * Second Amendment to Trust Agreement No. 7, dated
November 18, 1994, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A. (successor
trustee to Society National Bank) (filed as Exhibit
10(ee) to Form 10-K of Cleveland-Cliffs Inc filed
on March 27, 1995 and incorporated by reference) Not Applicable
10(u) * Trust Agreement No. 8 dated as of April 9, 1991,
by and between Cleveland-Cliffs Inc and Key Trust
Company of Ohio, N.A. (successor trustee to
Society National Bank) with respect to the
Cleveland-Cliffs Inc Retirement Plan for Non-
Employee Directors, as amended by First Amendment
to Trust Agreement No. 8 (filed as Exhibit 10(v)
to Form 10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by reference) Not Applicable
10(v) Trust Agreement No. 9, dated as of November 20,
1996, by and between Cleveland-Cliffs Inc and Key
Trust Company of Ohio, N.A. with respect to the
Cleveland-Cliffs Inc Nonemployee Directors'
Supplemental Compensation Plan Filed Herewith
- -----------------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
24
10(w) Trust Agreement No. 10, dated as of November 20,
1996, by and between Cleveland-Cliffs Inc and Key
Trust Company of Ohio, N.A. with respect to the
Cleveland-Cliffs Inc Nonemployee Directors'
Compensation Plan Filed Herewith
10(x) * Severance Pay Plan for Key Employees of
Cleveland-Cliffs Inc, effective as of February 1,
1992 Filed Herewith
10(y) * First Amendment to Severance Pay Plan for Key
Employees of Cleveland-Cliffs Inc, dated November
18, 1994 (filed as Exhibit 10(y) to Form 10-K of
Cleveland-Cliffs Inc filed on March 27, 1995 and
incorporated by reference) Not Applicable
10(z) * Cleveland-Cliffs Inc Voluntary Non-Qualified
Deferred Compensation Plan, Amended and Restated
as of December 1, 1996 Filed Herewith
10(aa) * Cleveland-Cliffs Inc Long-Term Performance Share
Program, dated as of January 1, 1996 Filed Herewith
10(bb) * Cleveland-Cliffs Inc Nonemployee Directors Supplemental
Compensation Plan, effective as of July 1, 1995
(filed as Exhibit 10(b) to Form 10-Q of
Cleveland-Cliffs Inc filed November 13, 1996 and
incorporated by reference) Not Applicable
10(cc) * Cleveland-Cliffs Inc Nonemployee Directors' Compensation
Plan effective as of July 1, 1996 (filed as Appendix A
to Proxy Statement of Cleveland-Cliffs Inc
filed on March 25, 1996 and incorporated by reference) Not Applicable
10(dd) * First Amendment to Cleveland-Cliffs Inc
Nonemployee Directors' Compensation Plan, effective as
of November 12, 1996 Filed Herewith
10(ee) Stock Purchase Agreement, dated as of September 30,
1994, among Cleveland-Cliffs Inc, Cliffs Minnesota
Minerals Company and Cyprus Amax Minerals Company
(filed as Exhibit 2 to Form 8-K of Cleveland-Cliffs
Inc filed on October 13, 1994 and incorporated by
reference, and to which certain portions of which were
accorded "Confidential Information" pursuant to order
of the Securities and Exchange Commission, dated
December 21, 1994) Not Applicable
11 Statement re computation of per share earnings Filed Herewith
(Page 27-28)
- -------------------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
25
13 Selected portions of 1996 Annual Report to
Security Holders
13(a) Management's Discussion and Analysis of
Financial Condition and Results of
Operations Filed Herewith
(Page 29-39)
13(b) Report of Independent Auditors Filed Herewith
(Page 40)
13(c) Statement of Consolidated Financial
Position Filed Herewith
(Page 41-42)
13(d) Statement of Consolidated Income Filed Herewith
(Page 43)
13(e) Statement of Consolidated Cash Flows Filed Herewith
(Page 44)
13(f) Statement of Consolidated Shareholders'
Equity Filed Herewith
(Page 45)
13(g) Notes to Consolidated Financial Statements Filed Herewith
(Page 46-63)
13(h) Quarterly Results of Operations/Common
Share Price Performance and Dividends Filed Herewith
(Page 64)
13(i) Investor and Corporate Information Filed Herewith
(Page 65)
13(j) Summary of Financial and Other Statistical
Data Filed Herewith
(Page 66-67)
21 Subsidiaries of the registrant Filed Herewith
(Page 68-70)
23 Consent of independent auditors Filed Herewith
(Page 71)
24 Power of Attorney Filed Herewith
(Page 72)
27 Consolidated Financial Data Schedule submitted
for Securities and Exchange Commission --
information
99 Additional Exhibits
99(a) Schedule II - Valuation and Qualifying
Accounts Filed Herewith
(Page 73)
26