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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
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, 1994
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 OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
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
________________________________
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 13, 1995, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price of $38.625 per
share as reported on the New York Stock Exchange - Composite Index was
$451,527,718 (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 12,104,892 as of March 13, 1995.
_________________________________
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of registrant's 1994 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 9, 1995 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, four major operating
subsidiaries, The Cleveland-Cliffs Iron Company ("CCIC"), Cliffs Mining Company
("CMC") (formerly known as Pickands Mather & Co.), Northshore Mining Company
("Northshore"), and Pickands Mather & Co. International ("PMI"). 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 1994 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 1992-1994, 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, 1994, 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 "11-Year Summary of Financial and Other Statistical Data" in
the Company's Annual Report to Security Holders for the year ended December 31,
1994, which 11-Year 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 1.7 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 39.6 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
99.3% 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,
2
Quebec, where they 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 7.01% 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 pursuant to multi-year contracts with price
escalation adjustment provisions or one year sales contracts with steel
manufacturers. 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 1994, the North
American mines operated at or near capacity levels.
In 1993, the Tilden Magnetite Partnership ("TMP") project, in which
affiliates of CCIC, Algoma Steel, Inc. ("Algoma"), and Stelco Inc. ("Stelco")
owned equity interests of 33.3%, 50.0%, and 16.7% respectively, had four
million tons per year of magnetite pellet production capacity. Pursuant to
facilities leasing and other operational arrangements between TMP and the
original Tilden Mining Company joint venture, substantial hematite iron ore
pellet production capacity continued to be available at the Tilden Mine. The
participants in the Tilden Mining Company joint venture are affiliates of CCIC,
Algoma and Stelco. The joint venture's activities relate to the development and
operation of hematite iron ore reserves at the Tilden Mine.
In February, 1994, CCIC reached general agreement with Algoma and
Stelco to restructure and simplify the Tilden Mine operating agreement
effective January 1, 1994. The principal terms of the new agreement are: (1)
the participants' tonnage entitlements and cost-sharing are based on a 6
million ton target normal production level instead of the previous 4 million
ton base production level; (2) CCIC's interest in TMP has increased from 33.3%
to 40.0% with an associated increase in CCIC's obligation for its share of mine
costs; (3) CCIC is receiving a higher royalty; (4) CCIC has the right to supply
any additional iron ore pellet requirements of Algoma from Tilden or from CCIC;
and (5) any partner may take additional production with payment of certain fees
to TMP. The parties implemented the general agreement effective January 1,
1994, and are negotiating the detailed provisions of the definitive agreement.
The agreement has not had a material financial effect on the Company's
Consolidated Financial Statements.
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
3
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 6 million tons of active concentrate capacity, 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 would be required under certain expansion conditions.
Any such payment would occur under conditions expected to be favorable to the
Company, and is not expected to be material in any year. In January, 1995, the
Company approved a $6.1 million iron ore pellet expansion of Northshore. The
expansion, which involves the reactivation of one idle pelletizing line, is
expected to be completed by June, 1995, and will increase Northshore's annual
production capability by 900,000 tons. Production in 1995, originally
scheduled to be 3.6 million tons of standard and flux pellets, is now scheduled
to be 4.1 million tons.
McLouth Steel Products Company ("McLouth"), a significant customer of
the Company, continues to be significantly undercapitalized. The Company has
periodically extended financial support to McLouth in the form of deferred
payment terms and other considerations. Iron ore pellet sales to McLouth
totaled 1.5 million tons in 1994 which represented 18% of sales volume and a
higher percentage contribution to net income before fixed cost absorption. The
Company included in its December 31, 1994 inventory 200,000 tons of pellets
consigned to McLouth in accordance with long-standing practice. The Company
has no earnings exposure in regard to the consigned inventory and accounts
receivable from McLouth as of December 31, 1994. Non-performance by McLouth on
its sales arrangement with the Company would have a materially adverse effect
on the Company unless comparable replacement sales to other companies are
obtained. The Company has periodically replaced major customers.
On November 30, 1992, Sharon Steel Corporation ("Sharon") filed for
protection under Chapter 11 of the U.S. Bankruptcy laws. At the time of the
filing, Sharon was indebted to the Company for substantial amounts relating to
contract defaults for payments for iron ore pellets sold to Sharon during the
years 1991 and 1992 under a term sales agreement. In 1992 the Company recorded
a $12.5 million reserve, representing amounts due on the ore sales accounts
receivable of Sharon at the time of Sharon's Chapter 11 filing. Pellet sales to
Sharon, which were suspended in 1992, represented approximately 14% of the
Company's sales capacity. In November, 1994, Sharon liquidated substantially
all of its assets through an approved Bankruptcy Court sale. The Company had
filed a substantial claim against Sharon in the Bankruptcy Court for amounts
owed and contractual damages; however, the Company does not expect to receive
any material proceeds from the asset liquidation. The Company replaced the
lost Sharon sales. All amounts due from Sharon were previously reserved.
In 1992, the Company purchased $1.0 million worth of steel from LCG
Funding Corporation, an entity owned by the principal owner of Sharon 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 the
Company filed suit against Castle Harlan, Inc. and LCG Funding Corporation in
Federal District Court for the purchase price of the steel plus interest. The
proceedings, which were dismissed for lack of diversity, will be refiled.
On June 28, 1993, LTV Steel Company, Inc., a significant partner of
the Company, and its parent corporation, The LTV Corporation ("LTV Corp")
emerged from Chapter 11 bankruptcy. In final settlement of its $200 million
allowed claim, the Company received 2.3 million shares of LTV Corp Common Stock
and 4.4 million Contingent Value Rights, which were issued by the Pension
Benefit Guaranty Corporation. On July 13, 1993, the Company distributed to its
shareholders a special dividend consisting of 1.5 million shares of LTV Corp
Common Stock and $12.0 million ($1.00 per share) cash.
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 assume full production rates, which could be affected by future
industry 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 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 1992 1993 1994 Capacity Since Date (1)
----------------- -------------- -------- ------ ------ ------ ---------- ------------ ----------
(Tons in Thousands)(2)
Mining Ventures
---------------
Michigan
--------
Marquette Range
-Empire Iron Mining
Partnership (3) Magnetite 22.56%(4) 8,099 7,209 7,306 8,000 1963 2023
-Tilden Mine (3) Hematite and
Magnetite 40.00% 5,470 5,369 6,246 6,000(5)(6) 1974 2047
(5)(6)
Minnesota
---------
Mesabi Range
-Hibbing Taconite
Joint Venture (7) Magnetite 15.00% 8,048 7,544 8,355 8,270 1976 2022
-LTV Steel Mining
Company (7) Magnetite 0.00% 6,776 7,668 7,809 8,000 1957 2059
Canada
------
-Wabush Mines
(Newfoundland and Specular
Quebec) (7)(8) Hematite 7.01% 4,495 4,492 4,654 4,500(8) 1965 2057
Wholly-Owned Entities
---------------------
Minnesota
---------
Mesabi Range
-Northshore Mining
Company (9) Magnetite 100.00% (9) (9) 865(9) 4,800(10) 1989 2072
Australia
---------
-Savage River Mines
(Tasmania) Magnetite 100.00% 1,432 1,488 1,483 1,500 1967 1997
------ ----- ------ ------
TOTAL 34,320 33,770 36,718 41,070
====== ====== ====== ======
(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) On January 1, 1992, a wholly-owned subsidiary of CCIC transferred 2.5% of
its Empire Mine interest to Wheeling-Pittsburgh.
(5) In 1993, CCIC's ownership interest in the Tilden Mining Company and
Tilden Magnetite Partnership was 60.0% and 33.3%, respectively. Design
capacity for exclusive production of hematite ore was 8 million tons
annually. The Tilden Mining Company and the Tilden Magnetite Partnership
established certain leasing and shared usage arrangements relating to
production and other facilities at the Tilden Mine.
(6) As a result of the restructuring of the Tilden Magnetite Partnership,
effective as of January 1, 1994 and as discussed on page 3, CCIC's
entitlement ownership in the Tilden Magnetite Partnership increases from
33.3% to 40.0%. As a result of these arrangements, annual production
capacity is targeted at 6 million tons annually, and could be increased
to 8 million tons, depending on type of ore production. The predominate
ore reserves are hematite.
(7) CMC received no royalty payments with respect to such mine, but did
receive management fees.
(8) In 1991, the mine's annual production capacity was reduced to 4.5 million
tons per year. For the year 1995, annual production was increased to
5.4 million tons.
(9) Acquired by the Company on September 30, 1994. Pellet production for
Northshore for the years ending 1992, 1993 and 1994 was 1,430,000,
3,483,000 tons and 3,481,000 tons, respectively. Pellet production for
Northshore for the three months ending December 31, 1994 was 865,000
tons.
(10) Includes 900,000 annual tons of expansion to be completed on or about
June, 1995.
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,
Northshore Mine, and Savage River Mines, 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 of Northshore, the Company's managed capacity has
increased to approximately 39.6 million tons or 47% of total pellet capacity in
North America and the Company's annual North American pellet sales capacity has
increased from 5.8 to 9.8 million tons. In 1994, the Company produced 8.3
million tons of pellets for its own account.
In 1994, the Company produced 28.4 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
("Bethlehem"), Algoma, Inland Steel Company, LTV and Stelco aggregated 26.8
million gross tons, or 94.3%. None of such participants accounted for more than
33.9% of such production.
During 1994, the Company sold 100% of the iron ore and pellets that
were produced in the United States and Canada for its own account or purchased
from others to 13 U.S. and Canadian iron and steel manufacturing companies.
In 1994, McLouth Steel Products, WCI (formerly Warren Consolidated
Industries, Inc.), and Weirton Steel Company, directly and indirectly accounted
for 14%, 14%, and 12%, 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. Concentrate slurry is
pumped from the minesite through a 53 mile pipeline to Port Latta where it is
pelletized and shipped by vessel to customers in the Pacific Rim region. The
operation was downsized in 1990 to produce approximately 1.5 million tons per
year and long term sales agreements were signed with customers in Australia,
Japan and Korea to support the operation until the exhaustion of economic ore
reserves in 1997. Savage River Mines will terminate operations in the first
quarter of 1997 when economically recoverable iron ore from surface mining is
exhausted. A study to extend operations with underground mining concluded that
financial results would not justify the mining risks and large investment.
6
RAIL TRANSPORTATION. The Company, through a wholly-owned subsidiary,
owns a 99.3% 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 1994, 89.2% 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 Interstate Commerce Commission.
Other Activities and Resources
------------------------------
REDUCED IRON. The Company's strategy is to grow its basic iron ore
business 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.
The Company's wholly-owned subsidiary, Cliffs Reduced Iron Corporation,
continues to explore various technologies and markets for reduced iron
products, including the investigation of domestic and international site
alternatives. Commercial plants are estimated to require capital expenditures
of $75 to $100 million, depending on location and process. Decisions are
expected in 1995 on whether to proceed with one or more projects. The
Company's total 1995 expenditures are not expected to exceed $25 million.
Specific activities are described below.
The Company and several partners have formed a joint venture to
produce iron carbide, a premium form of reduced iron that would be marketed
primarily to the flat-rolled electric furnace producers in the United States.
Substantial progress has been made on siting a plant in Trinidad and improving
upon the original iron carbide process design; however, the holder of the
process license for Trinidad has withdrawn its offer to the venture of
cooperation. Rather than unduly delay the project while the issue is being
resolved, the venture is evaluating sites in the United States for an iron
carbide plant. The Company's process design improvements, coupled with
currently lower domestic natural gas prices, may result in the iron carbide
project being economically attractive in the southern part of the United
States, using the offshore iron ore supply arrangement already negotiated.
Although a precise go-ahead date is not known at this time, the joint venture's
objective is to start commercial development of iron carbide in 1995 and to
achieve production in 1997. In addition, the Company is examining other
available reduced iron processes for its Trinidad site. Northstar Steel
Company, an original partner in the Trinidad venture, recently advised the
Company that Northstar does not intend to continue as an equity participant due
to capital constraints. The Company has also been advised by Northstar that it
desires to negotiate a multi-year iron carbide purchase contract. Northstar's
withdrawal has not impeded the iron carbide project development effort.
The Company has been investigating coal-based technologies for the
production of hot briquetted iron ("HBI") in the United States. Coal-based
processes, although largely unproven, may be applicable to the Company's
Northshore Mine in Minnesota and the Company's Republic Mine in Michigan. HBI
is a potential feed for electric furnaces as well as for certain blast furnaces
where it would supplement pellets to maximize productivity. Since this HBI
product would have a lower chemical quality due to the coal reductant and
higher-silica domestic ore feed, the Company is also studying the alternative
feasibility of additional process steps that would produce a higher value
product with broader market applicability. The Company will also investigate
the use of low-silica offshore ore in a coal-based process at a site in the
United States that would be located closer to the steel producing markets.
7
The Company previously formed a venture with steel company partners to
develop a commercial facility at the Company's Republic Mine in Michigan using
the coal-based technology supplied by MIDREX Corporation. During 1994, MIDREX
withdrew the technology pending further testing by its parent, Kobe Steel, and
the venture disbanded. Northshore, prior to the Company's acquisition, had
also been considering the MIDREX process, but decided to pursue technology
supplied by Inmetco and licensed to Mannesmann Demag of Germany. This effort
is continuing at Northshore as noted above for HBI products. If a favorable
decision would be made later this year, commercial production could begin in
late 1997. Issues being evaluated include technology, markets, and alternative
use of existing plant capacity.
The Company and Mitsubishi Corporation have jointly exercised an
option for a license to produce iron carbide in Australia to serve various
Pacific Rim markets. Feasibility studies, based on various iron ore feeds,
potential plant sites, and recent process design improvements, are expected to
be concluded this year. A decision to move forward could be made later in 1995
and lead to commercial production by 1998. The Company's participation would
depend on definition of a satisfactory on-going role.
OIL SHALE. Cliffs Synfuel Corp., a wholly-owned subsidiary of CCIC,
significantly enhanced its Utah oil shale holdings when it acquired in 1994 for
$700,000 the oil shale mineral rights on approximately 16,000 acres which it
previously held under a long-term lease. The acquisition gave the Company title
"in fee" to one of the most attractive oil shale properties in the United
States which contains an estimated one billion barrels of recoverable shale oil
and associated conditional water rights. While commercialization of oil shale
is currently uneconomical, the Company's holding costs are minimal.
Cliffs Oil Shale Corp., another wholly-owned subsidiary of CCIC, owns
a 15% interest in a smaller Colorado oil shale property. The remaining 85% is
owned by a Mobil Corporation subsidiary.
COAL. In 1992 CMC owned and operated its 100% owned Turner Elkhorn
Mining Co. from reserves located in Floyd County, Kentucky and managed
Pikeville Coal Co. which operates the Chisholm Mine at Phelps, Kentucky, owned
100% by Stelco. CMC sold the coal produced from Turner Elkhorn to utility and
other customers. CMC's employment as manager of the Pikeville Coal Co. was
governed by an agreement between it and the owner of the mine, which agreement
provided that CMC be reimbursed for substantially all of its expenses incurred
as manager and receive a management fee based on the number of clean tons
produced. Stelco terminated the management contract on December 31, 1992. CMC
continued to provide administrative services to Pikeville Coal Company under
the terms of an interim administrative services agreement with Stelco which
agreement terminated March 31, 1993. CMC sold its broker operations, lake
forwarding services, and royalty reserves in 1992. On February 26, 1993 CMC
sold Turner Elkhorn Mining Co., CMC's last remaining coal property.
Credit Agreement and Senior Notes
---------------------------------
On March 1, 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. Interest on borrowings will be
based on various interest
8
rates as defined in the Credit Agreement and as selected by the Company
pursuant to the terms of the Credit Agreement. There have been no borrowings
under either of the revolving credit facilities.
On May 1, 1992, the Company placed privately with a group of
institutional lenders $25 million 8.51% Senior Notes, Series A due May 1, 1999
("Series A Notes") and $50 million 8.84% Senior Notes, Series B due May 1, 2002
("Series B Notes"). The Series A Notes are subject to mandatory annual
redemption of $5 million commencing May 1, 1995 and ending May 1, 1999. The
Series B Notes are subject to mandatory annual redemption of $7.14 million
commencing May 1, 1996 and ending May 1, 2002.
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 Oglebay Norton Company, Iron Ore Company of Canada,
Quebec Cartier Mining Company, and USX Corporation, 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 preservation resulted in North American capital expenditures of
$835,000 in 1993 and $3,696,000 in 1994. It is estimated that approximately
$3,449,000 will be spent in 1995 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 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
9
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 notified the U.S. EPA that they are implementing, at an estimated
cost of $2.8 million, some of the remedial action selected in the ROD. The
Company and certain other potentially responsible parties have agreed upon
allocation of the costs for conducting the RI/FS, and implementation of the
selected remedial action plan. Upon the advice of counsel, the Company
believes it has a right to contribution from the other potentially responsible
parties for the costs of any remedial action plan ultimately implemented 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. The Company is participating in an RI/FS of this site, but
that study has not yet been completed. The Company has joined with the other
potentially responsible parties in an interim removal action at the site which
is now complete. The Company has a financial reserve of $2.4 million 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, 1994, CCIC and CMC and the North
American independent mining ventures had 5,371 employees, of which 4,418 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, and General Shops facilities 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 facilities and the United Steelworkers
covering the period to July 31, 1999. 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
will expire on March 1, 1996.
As of December 31, 1994, Northshore had 415 employees, of which 289
were hourly employees, none of whom are represented by a union.
As of December 31, 1994, the Savage River Mines operations had 227
employees, 164 of whom are represented by several unions, whose contracts are
renegotiated from time to time.
In addition, as of December 31, 1994, Cleveland-Cliffs Inc and its
wholly-owned subsidiary, Cliffs Mining Services Company, had 296 salaried
executive, managerial, administrative and technical employees.
10
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 primary term of
these contracts covers 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. CCIC, as managing agent for
the Empire and Tilden Mines, is presently in negotiations with WEPCo to revise
various terms and conditions of the power contracts to better accommodate the
operations of those mines. 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. 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 nearly all 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. Silver Bay Power
Company, a 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 power to Northern States Power Company.
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. Savage River Mines obtains its power from the local Government Power
Authority on a special contract for the expected life of the mine.
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 1994, requiring use of alternate fuels.
Empire and Tilden Mines have the capability of burning coal, natural
gas, or oil. Wabush and Savage River Mines have the capability of burning coal
and oil. Hibbing Taconite, Northshore and LTV Steel Mining Company have the
capability of burning natural gas and oil. During 1994 the U.S. mines burned
natural gas as their primary fuel due to favorable pricing. Wabush and Savage
River 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 arrrows
and dots representing the location of the properties described in the Table on
page 5 to this report.
12
ITEM 3. LEGAL PROCEEDINGS.
Arrowhead.
----------
CMC, which has a 15 percent ownership interest in and acts as Managing
Agent for Hibbing Taconite Company, a joint venture, has been included as a
named defendant in a suit captioned United States of America v. Arrowhead
Refining Company, et al., which was filed on or about September 29, 1989 in the
United States District Court for the District of Minnesota, Fifth Division. In
that suit, the United States seeks declaratory relief and recovery of costs
incurred in connection with the study and remedial plan conducted or to be
conducted by the U.S. EPA at the Arrowhead Refinery Superfund Site near Duluth,
St. Louis County, Minnesota. In that suit, the United States has alleged that
CMC and the other 14 named defendants, including former and present owners of
the Arrowhead site, are jointly and severally liable for $1.9 million, plus
interest, representing the amount incurred for actions already taken by or on
behalf of the U.S. EPA at the Arrowhead site, and are jointly and severally
liable for the cost attributable to implementation of a remedial plan adopted
by the U.S. EPA with respect to the Arrowhead site, which remedial action is
estimated by the U.S. EPA to cost $30 million. CMC has filed an answer to the
suit denying liability. Since January 31, 1991, CMC and 13 of the other named
defendants have filed a counter claim against the United States and further
complaints naming additional parties as third party defendants. The counter
claim and third party complaints allege that the parties named therein are
jointly and severally liable for such costs. During the year certain defendants
have been dismissed, and as of December 31, 1994 there are 224 third party
defendants named in this suit. A Consent Decree is expected to be entered into
in 1995 between the parties, which agreement will provide for substantial
funding by the U.S. EPA and the State of Minnesota for remediation of the Site.
It is estimated that Hibbing Taconite's share of the funding will be
approximately $230,000, of which CMC's share is 15 percent.
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. The Company does not believe the potential liability, if any,
to be material. The Company believes that it has substantial defenses to claims
of liability and intends to vigorously defend alleged violations.
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 does not
believe the potential liability, if any, to be material. The Company has
substantial defenses to these claims of liability. The Company conducted no
production activities at the Summitville mine site.
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 1, 1995
-------------------------
Name Age
---- ---
M. T. Moore Chairman, President and Chief 60
Executive Officer
J. S. Brinzo Senior Executive-Finance 53
W. R. Calfee Senior Executive-Commercial 48
F. S. Forsythe Senior Executive-Operations 62
(Mine Partnerships)
T. J. O'Neil Executive Vice President- 54
CCI Operations and Technology
A. S. West Senior Vice President-Sales 58
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 Senior Vice President-Finance, Company,
May 1, 1987 to August 31, 1989.
Executive Vice President-Finance, Company,
September 1, 1989 to September 30, 1993.
Senior Executive-Finance, Company,
October 1, 1993 to date.
W. R. Calfee Group Executive Vice President, Company,
March 1, 1987 to August 31, 1989.
Senior Executive Vice President, Company,
September 1, 1989 to September 30, 1993.
Senior Executive-Commercial, Company,
October 1, 1993 to date.
F. S. Forsythe Executive Vice President-Commercial, Company,
February 25, 1985 to August 31, 1989.
Executive Vice President-Operations, Company,
September 1, 1989 to September 30, 1993.
Senior Executive-Operations, Company,
October 1, 1993 to September 30, 1994.
Senior Executive-Operations (Mine Partnerships), Company,
October 1, 1994 to date.
14
T. J. O'Neil Vice President-South Pacific Operations,
Cyprus Gold Company,
October, 1987 to August, 1989.
Vice President/General Manager,
Cyprus Sierrita Corp.,
August, 1989 to April, 1991.
Vice President-Engineering and Development,
Cyprus Copper Company,
April, 1991 to November, 1991.
Senior Vice President-Technical, Company,
November 18, 1991 to September 30, 1994.
Executive Vice President-CCI Operations and
Technology, Company,
October 1, 1994 to date.
A. S. West Senior Vice President-Sales, CCIC,
April 15, 1987 to date.
Vice President, Company,
May 14, 1985 to May 11, 1987.
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, 1994 contained in
the material under the headings, "Common Share Price Performance and
Dividends", "Investor and Corporate Information" and "11-Year 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, 1994 contained in
the material under the headings, "11-Year 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, 1994 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, 1994 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 23, 1995, 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 23, 1995 from the material under the headings "Executive
Compensation (excluding the Compensation Committee Report on Executive
Compensation)", "Pension Benefits", and the first five 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 23, 1995, from the material under the heading "Securities
Ownership of Management and Certain Other Persons".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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 23, 1995, from the material under the last paragraph of
the heading "Directors' Compensation".
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, 1994, are incorporated herein by reference from Item 8 and made a part
hereof:
Statement of Consolidated Financial Position -
December 31, 1994 and 1993
Statement of Consolidated Income - Years ended
December 31, 1994, 1993 and 1992
Statement of Consolidated Cash Flows - Years ended
December 31, 1994, 1993 and 1992
Statement of Consolidated Shareholders' Equity - Years ended
December 31, 1994, 1993 and 1992
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 20-29 which
is incorporated herein by reference.
(b) During the three months ended December 31, 1994, the Company filed
(i) a Current Report on Form 8-K, dated October 13, 1994, covering
information reported under ITEM 2. ACQUISITION OR DISPOSITION OF
ASSETS, and (ii) a Current Report on Form 8-K/A, dated December 13,
1994, covering information reported under ITEM 7. FINANCIAL
STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(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 27, 1995
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 27, 1995
President and Chief
Executive Officer and
Principal Executive Officer
and Director
J. S. Brinzo Senior Executive-Finance March 27, 1995
and Principal
Financial Officer
R. Emmet Vice President and March 27, 1995
Controller and Principal
Accounting Officer
R. S. Colman Director March 27, 1995
J. D. Ireland, III Director March 27, 1995
G. F. Joklik Director March 27, 1995
E. B. Jones Director March 27, 1995
L. L. Kanuk Director March 27, 1995
S. B. Oresman Director March 27, 1995
A. Schwartz Director March 27, 1995
S. K. Scovil Director March 27, 1995
J. H. Wade Director March 27, 1995
A. W. Whitehouse Director March 27, 1995
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
29, 1991 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 29, 1991 and
incorporated by reference) Not Applicable
Instruments defining rights of security
holders, including indentures
-----------------------------
4(a) Restated Indenture, between Empire Iron Mining Partnership, Inland
Steel Company, McLouth Steel Corporation, The Cleveland-Cliffs Iron
Company, International Harvester Company, WSC Empire, Inc. and
Chemical Bank, as Trustee, dated as of December 1, 1978 (filed as
Exhibit 4(a) to Form 10-K of Cleveland-Cliffs Inc filed on March
29, 1991 and incorporated by reference) Not Applicable
4(b) First Supplemental Indenture, between Empire Iron Mining
Partnership, Inland Steel Company, McLouth Steel Corporation, The
Cleveland-Cliffs Iron Company, International Harvester Company, WSC
Empire Inc. and Chemical Bank, as Trustee, dated as of February 14,
1981 (filed as Exhibit 4(b) to Form 10-K of Cleveland-Cliffs Inc
filed on March 29, 1991 and incorporated by reference) Not Applicable
4(c) Second Supplemental Indenture, between Empire Iron Mining
Partnership, Inland Steel Company, McLouth Steel Corporation, The
Cleveland-Cliffs Iron Company, International Harvester Company, and
Chemical Bank, as Trustee, dated as of May 1, 1982 (filed as
Exhibit 4(c) to Form 10-K of Cleveland-Cliffs Inc filed on March
29, 1991 and incorporated by reference) Not Applicable
20
4(d) Third Supplemental Indenture, between Empire Iron Mining
Partnership, Inland Steel Company, McLouth Steel Corporation, The
Cleveland-Cliffs Iron Company, and Chemical Bank, as Trustee, dated
as of June 21, 1982 (filed as Exhibit 4(d) to Form 10-K of
Cleveland-Cliffs Inc filed on March 29, 1991 and incorporated by
reference) Not Applicable
4(e) Fourth Supplemental Indenture, between Empire Iron Mining
Partnership, Inland Steel Company, The Cleveland-Cliffs Iron
Company, Cliffs IH Empire, Inc., Cliffs MC Empire, Inc., Jones &
Laughlin Ore Mining Company, J&L Empire, Inc. and Chemical Bank, as
Trustee, dated as of February 1, 1983 (filed as Exhibit 4(e) to
Form 10-K of Cleveland-Cliffs Inc filed on March 29, 1991 and
incorporated by reference) Not Applicable
4(f) Fifth Supplemental Indenture, between Empire Iron Mining
Partnership, Inland Steel Company, The Cleveland-Cliffs Iron
Company, Cliffs IH Empire, Inc., J&L Empire, Inc., Wheeling-
Pittsburgh/Cliffs Partnership, and Chemical Bank, as Trustee, dated
as of October 1, 1983 (filed as Exhibit 4(f) to Form 10-K of
Cleveland-Cliffs Inc filed on March 29, 1991 and incorporated by
reference) Not Applicable
4(g) Sixth Supplemental Indenture, between Empire Iron Mining
Partnership, Inland Steel Company, The Cleveland-Cliffs Iron
Company, J&L Empire, Inc., Wheeling-Pittsburgh/Cliffs Partnership,
McLouth-Cliffs Partnership, Cliffs Empire, Inc. and Chemical Bank,
as Trustee, dated as of July 1, 1984 (filed as Exhibit 4(g) to Form
10-K of Cleveland-Cliffs Inc filed on March 29, 1991 and
incorporated by reference) Not Applicable
4(h) Form of Guaranty of Payment of 9.55% Secured Guaranteed Notes of
Empire Iron Mining Partnership due September 1, 1998 (filed as
Exhibit 4(h) to Form 10-K of Cleveland-Cliffs Inc filed on March
29, 1991 and incorporated by reference) Not Applicable
21
4(i) Restated First Mortgage Indenture, among Tilden Iron Ore
Partnership, Tilden Iron Ore Company and Chemical Bank and Clinton
G. Martens, as Trustees, dated as of October 31, 1977, as
supplemented and amended (See Footnote (A)) Not Applicable
4(j) Restated Financing Agreement, by and among Tilden Iron Ore
Partnership, Tilden Iron Ore Company, Cannelton Iron Ore Company,
The Cleveland-Cliffs Iron Company, Stelco Coal Company, Wheeling-
Pittsburgh Steel Corporation, Sharon Steel Corporation and Chemical
Bank and Clinton G. Martens, as Trustees, dated as of October 31,
1977 (filed as Exhibit 4(j) to Form 10-K of Cleveland-Cliffs Inc
filed on March 29, 1991 and incorporated by reference) Not Applicable
4(k) Form of Guarantee of Payment, dated January 20, 1984 relating to
Notes of Empire Iron Mining Partnership (See Footnote (A)) Not Applicable
4(l) Form of Guarantee of Payment, dated August 12, 1986 relating to
Notes of Empire Iron Mining Partnership (See Footnote (A)) Not Applicable
4(m) Form of Common Stock Certificate (filed as Exhibit 4(m) to Form 10-
K of Cleveland-Cliffs Inc filed on March 30, 1992 and incorporated
by reference) Not Applicable
4(n) Rights Agreement dated September 8, 1987, and amended and restated
as of November 19, 1991, by and between Cleveland-Cliffs Inc and
Society National Bank (successor to Ameritrust Company National
Association) (filed as Exhibit 4.2 to Form 8-K of Cleveland-Cliffs
Inc filed on November 20, 1991 and incorporated by reference) Not Applicable
4(o) Credit Agreement dated as of March 1, 1995 among Cleveland-Cliffs
Inc, the Banks named therein and Chemical Bank, as Agent Filed Herewith
4(p) Conformed Note Agreements dated as of May 1, 1992 among Cleveland-
Cliffs Inc and each of the Purchasers named in Schedule I thereto
(filed as Exhibit 4(t) to Form 10-Q of Cleveland-Cliffs Inc filed
on July 22, 1992 and incorporated by reference) Not Applicable
-------------------------
(A) This document has not been filed as an exhibit hereto because the
long-term debt of the Company represented thereby, either directly or through
its interest in an affiliated or associated entity, does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated basis. The
Company agrees to furnish a copy of this document to the Securities and
Exchange Commission upon request.
22
Material Contracts
------------------
10(a) * Amendment and Restatement of Supplemental Retirement Benefit Plan
of Cleveland-Cliffs Inc, dated as of January 1, 1991 (filed as
Exhibit 10(a) to Form 10-K of Cleveland-Cliffs Inc filed on March
30, 1992 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 29, 1991 and
incorporated by reference) Not Applicable
10(c) * Amendment No. 1 to Cleveland-Cliffs Inc Plan for Deferred Payment
of Directors' Fees (filed as Exhibit 10(c) to Form 10-K of
Cleveland-Cliffs Inc filed on March 30, 1992 and incorporated by
reference) Not Applicable
10(d) * Consulting Agreement dated as of June 23, 1987, by and between
Cleveland-Cliffs Inc and S. K. Scovil (filed as Exhibit 10(c) to
Form 10-K of Cleveland-Cliffs Inc filed on March 29, 1991 and
incorporated by reference) Not Applicable
10(e) * Amendment to Consulting Agreement with S. K. Scovil (filed as
Exhibit 10(e) to Form 10-K of Cleveland-Cliffs Inc filed on March
30, 1992 and incorporated by reference) Not Applicable
10(f) * Form of contingent employment agreements with certain executive
officers (filed as Exhibit 10(f) to Form 10-K of Cleveland-Cliffs
Inc filed on March 30, 1992 and incorporated by reference) Not Applicable
10(g) * Cleveland-Cliffs Inc and Subsidiaries Management Performance
Incentive Plan, dated as of January 1, 1994 (Summary Description) Filed Herewith
10(h) 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(f) to Form 10-K of Cleveland-Cliffs
Inc filed on March 29, 1991 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(i) Instrument of Assignment and Assumption dated as of September 1,
1985, by and between The Cleveland-Cliffs Iron Company and
Cleveland-Cliffs Inc (filed as Exhibit 10(g) to Form 10-K of
Cleveland-Cliffs Inc filed on March 29, 1991 and incorporated by
reference) Not Applicable
10(j) Form of indemnification agreements with certain directors and
officers (filed as Exhibit 10(h) to Form 10-K of Cleveland-Cliffs
Inc filed on March 29, 1991 and incorporated by reference) Not Applicable
10(k) * 1987 Incentive Equity Plan (filed as Exhibit 10(k) to Form 10-K of
Cleveland-Cliffs Inc filed on March 30, 1992 and incorporated by Not Applicable
10(l) * 1992 Incentive Equity Plan (filed as Appendix A to Proxy Statement
of Cleveland-Cliffs Inc filed on March 13, 1992 and incorporated by
reference) Not Applicable
10(m) Purchase and Sale Agreement dated as of December 8, 1987, by and
among The Cleveland-Cliffs Iron Company, Cliffs Electric Service
Company, Upper Peninsula Generating Company, Upper Peninsula Power
Company and Wisconsin Electric Power Company (filed as Exhibit
10(m) to Form 10-K of Cleveland-Cliffs Inc filed on March 29, 1993
and incorporated by reference) Not Applicable
10(n) * Amended and Restated Cleveland-Cliffs Inc Retirement Plan for Non-
Employee Directors dated as of January 1, 1988 (filed as Exhibit
10(n) to Form 10-K of Cleveland-Cliffs Inc filed on March 29, 1993
and incorporated by reference) Not Applicable
10(o) * 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(o) to Form
10-K of Cleveland-Cliffs Inc filed on March 30, 1992 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.
24
10(p) * 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, the Cleveland-Cliffs Inc Retention Plan for Salaried
Employees and certain contingent employment agreements (filed as
Exhibit 10(p) to Form 10-K of Cleveland-Cliffs Inc filed on March
30, 1992 and incorporated by reference) Not Applicable
10(q) * 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(q) to Form
10-K of Cleveland-Cliffs Inc filed on March 29, 1993 and
incorporated by reference) Not Applicable
10(r) * 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(r) to Form 10-K of Cleveland-Cliffs Inc filed on March 30, 1992
and incorporated by reference) Not Applicable
10(s) * 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(s) to Form 10-K of Cleveland-Cliffs Inc filed
on March 29, 1993 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.
25
10(t) * 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(t) to Form
10-K of Cleveland-Cliffs Inc filed on March 30, 1992 and
incorporated by reference) Not Applicable
10(u) 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(u) to Form 10-K of Cleveland-
Cliffs Inc filed on March 30, 1992 and incorporated by reference) Not Applicable
10(v) * 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(v) to
Form 10-K of Cleveland-Cliffs Inc filed on March 30, 1992 and
incorporated by reference) Not Applicable
10(w) * 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(w)
to Form 10-K of Cleveland-Cliffs Inc filed on March 30, 1992 and
incorporated by reference) Not Applicable
10(x) * Severance Pay Plan for Key Employees of Cleveland-Cliffs Inc (filed
as Exhibit 10(y) to Form 10-K of Cleveland-Cliffs Inc filed on
March 30, 1992 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.
26
10(y) * First Amendment to Severance Pay Plan for Key Employees of
Cleveland-Cliffs Inc, dated November 18, 1994 Filed Herewith
10(z) * Voluntary Non-Qualified Deferred Compensation Plan of Cleveland-
Cliffs Inc, Amended and Restated as of January 1, 1994 (filed as
Exhibit 10 to Form 10-Q of Cleveland-Cliffs Inc filed on August 9,
1994 and incorporated by reference) Not Applicable
10(aa) * First Amendment to Voluntary Non-Qualified Deferred Compensation
Plan of Cleveland-Cliffs Inc, Amended and Restated as of January 1,
1994, dated November 18, 1994 Filed Herewith
10(bb) * First Amendment to Amendment and Restatement of Cleveland-Cliffs
Inc Supplemental Retirement Benefit Plan, dated as of January 15,
1993 (filed as Exhibit 10(aa) to Form 10-Q of Cleveland-Cliffs Inc
filed on May 12, 1993 and incorporated by reference) Not Applicable
10(cc) * Second Amendment to Amendment and Restatement of Cleveland-Cliffs
Inc Supplemental Retirement Benefit Plan, dated November 18, 1994 Filed Herewith
10(dd) * 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 Herewith
10(ee) * 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 Herewith
10(ff) * Cleveland-Cliffs Inc Long-Term Performance Share Program, dated as
of March 31, 1994 (Summary Description) Filed Herewith
10(gg) 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
------------------------
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
27
10(hh) Financial Statements, Pro Forma Financial Information and Exhibits
to include the audited financial statements of Cyprus Northshore
Mining Corporation and consolidated subsidiary as of December 31,
1993, the unaudited financial statements of Cyprus Northshore
Mining Corporation and consolidated subsidiary as of September 30,
1994, and the related pro forma financial information (filed as
Exhibits 99.1, 99.2 and 99.3 to Form 8-K/A of Cleveland-Cliffs Inc
filed on December 13, 1994 and incorporated by reference) Not Applicable
Filed Herewith
11 Statement re computation of per share earnings (Page 30-31)
13 Selected portions of 1994 Annual Report to Security Holders
13(a) Management's Discussion and Analysis of Financial Condition Filed Herewith
and Results of Operations (Page 32-41-A)
Filed Herewith
13(b) Report of Independent Auditors (Page 42)
Filed Herewith
13(c) Statement of Consolidated Financial Position (Page 43-44)
Filed Herewith
13(d) Statement of Consolidated Income (Page 45)
Filed Herewith
13(e) Statement of Consolidated Cash Flows (Page 46)
Filed Herewith
13(f) Statement of Consolidated Shareholders' Equity (Page 47)
Filed Herewith
13(g) Notes to Consolidated Financial Statements (Page 48-63)
13(h) Quarterly Results of Operations/Common Share Price Filed Herewith
Performance and Dividends (Page 64)
Filed Herewith
13(i) Investor and Corporate Information (Page 65)
Filed Herewith
13(j) 11-Year Summary of Financial and Other Statistical Data (Page 66-67)
28
Filed Herewith
21 Subsidiaries of the registrant (Page 68-70)
Filed Herewith
23 Consent of independent auditors (Page 71)
Filed Herewith
24 Power of Attorney (Page 72)
27 Consolidated Financial Data Schedule submitted for Securities and
Exchange Commission information --
99 Additional Exhibits
99(a) Schedule II - Qualification and valuation
accounts 73
29