Exhibit 99(a)
NEWS RELEASE CLEVELAND-CLIFFS INC
1100 Superior Avenue
Cleveland, Ohio 44114-2589
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CLEVELAND-CLIFFS REPORTS
FIRST QUARTER 2000 RESULTS
Cleveland, OH - April 19, 2000 - Cleveland-Cliffs Inc (NYSE:CLF) today
reported a net loss of $3.5 million, or $.32 per diluted share, for the first
quarter of 2000. In the first quarter of 1999, Cliffs recorded net income of
$2.7 million, or $.24 per diluted share, which included favorable pre-tax
adjustments of $4.3 million that mainly related to refunds of prior years' state
taxes. The decrease in first quarter 2000 results also reflected a lower margin
on iron ore pellet sales, an increase in the equity loss from Cliffs and
Associates Limited (CAL), and higher interest expense.
John S. Brinzo, Cliffs' Chairman and Chief Executive Officer, said,
"First quarter results are historically not representative of annual results due
to limited shipments of iron ore pellets on the Great Lakes during the winter
months. We expect full year 2000 earnings to exceed significantly 1999 earnings,
due to higher sales and production volumes and continued cost reduction."
Pellet sales in the first quarter of 2000 increased to .7 million tons
from .3 million tons in 1999, largely due to rail shipments in 2000. There were
no rail shipments in the first quarter of 1999. The average price realization
declined in 2000 due to the mix of sales under various contracts, while
operating costs were higher in 2000 primarily due to a train derailment on the
railroad which serves Wabush Mine, a temporary outage of the Empire Mine primary
crushers and higher energy costs.
The $3.2 million equity loss from CAL in the first quarter of 2000
reflects the continuation of start-up difficulties at the hot briquetted iron
(HBI) plant in Trinidad. In the first quarter of 1999, the CAL facility was in
construction. Interest expense increased in 2000 since interest was being
capitalized in the first quarter of 1999 during construction of the HBI plant.
IRON ORE
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Iron ore pellet production at Cliffs-managed mines increased to 9.8
million tons in the first quarter of 2000 from 9.6 million tons in 1999. Lower
production at the Empire Mine was more than offset by modest increases at four
other mines. Cliffs' share of first quarter production was 2.8 million tons,
unchanged from 1999. Following is a summary of production tonnage for the first
quarter of 2000 and 1999:
(Tons in Millions)
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First Quarter 2000 First Quarter 1999
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Total Cliffs' Share Total Cliffs' Share
----------------- ---------------- ---------------- ---------------
Empire 1.8 .4 2.1 .5
Hibbing 2.0 .3 1.9 .3
LTV Steel Mining 1.8 - 1.7 -
Northshore 1.1 1.1 1.1 1.1
Tilden 1.7 .7 1.6 .6
Wabush 1.4 .3 1.2 .3
----------------- ---------------- ---------------- ---------------
Total 9.8 2.8 9.6 2.8
================= ================ ================ ===============
While production plans are subject to change as the year progresses,
the six mines are currently scheduled to produce a record 42.0 million tons for
the full year 2000, a 5.8 million ton increase from 1999. The Empire Mine is
taking actions to maximize production over the remainder of the year to recover
its production shortfall in the first quarter. Cliffs' share of scheduled
production for the full year is 11.8 million tons, up from 8.8 million tons in
1999.
Thomas J. O'Neil, Cliffs' President and Chief Operating Officer, said,
"All the mines continue to make good progress on cost-reduction objectives. The
rapid rise in energy prices has pushed energy costs up significantly, increasing
the challenge to achieve overall cost-reduction goals. In the first quarter,
Cliffs activated an auction segment on the Company's internet site to use
e-commerce technology in
purchasing activities. A reverse auction to purchase light trucks for all U.S.
mines was successfully completed in March. The auction capability allows a more
efficient interface with potential suppliers and lowers purchasing expenses."
FERROUS METALLICS
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Commissioning and start-up activities at the CAL plant in Trinidad and
Tobago are ongoing. The plant has demonstrated the capability to produce
significant quantities of highly metalized direct reduced iron (DRI) that meet
targeted quality specifications, but mechanical and material handling problems
have precluded production of commercial grade briquettes. CAL is evaluating a
temporary suspension of start-up activities in order to make modifications and
enhancements mainly to improve material flow through the discharge system to
obtain consistent feed of hot DRI to the briquetting machines. If the
modification work is undertaken, it would require capital expenditures estimated
to be about $10 million. Cliffs' share of the estimated expenditures would be
about $5 million. The long-term prospects for ferrous metallics products,
including CIRCALTM briquettes, continue to be favorable and Cliffs is committed
to the commercial success of CAL.
OUTLOOK
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Brinzo said, "Iron ore industry fundamentals around the globe have
improved markedly in 2000, and the major international iron ore producers are
reported to be sold out for 2000. As a result of the improved supply/demand
balance, international prices for iron ore pellets have risen between 6 and 7
percent. Despite higher prices on most contract sales, our average price
realization is expected to be about the same as 1999, reflecting the mix of
contracts. While we are not sold out yet, we expect to sell more than 11 million
tons of pellets."
* * *
Cleveland-Cliffs is the largest supplier of iron ore products to the
North American steel industry and is developing a significant ferrous metallics
business. Subsidiaries of the Company manage six iron ore mines in North America
and hold equity interests in five of the mines. Cliffs has a major iron ore
reserve position in the United States, is a substantial iron ore merchant, and
is beginning production of hot briquetted iron at a joint venture plant in
Trinidad and Tobago.
This press release contains a number of predictive statements about
future events. These statements are intended to be made as "forward-looking"
within the safe harbor protections of the Private Securities Litigation Reform
Act of 1995. Reference is made to the detailed explanation of the many factors
and risks that may cause such predictive statements to turn out differently, as
set forth in the Company's 1999 Annual Report and report on Form 10-K filed with
the Securities and Exchange Commission, available publicly on Cliffs' web site.
Contacts
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Media: David L. Gardner, (216) 694-5407
Financial Community: Fred B. Rice, (800) 214-0739 or (216) 694-5459
To obtain faxed copies of Cleveland-Cliffs Inc news releases dial (800)
778-3888.
News releases and other information on the Company are available on the Internet
at
http://www.cleveland-cliffs.com
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CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED INCOME
Three Months
Ended March 31,
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(In Millions Except Per Share Amounts) 2000 1999
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REVENUES
Product sales and services $ 23.8 $ 13.6
Royalties and management fees 9.2 9.2
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Total Operating Revenues 33.0 22.8
Interest income 1.3 1.4
Other income 1.0 .7
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TOTAL REVENUES 35.3 24.9
COSTS AND EXPENSES
Cost of goods sold and operating expenses 29.8 12.9
Administrative, selling and general expenses 3.4 3.7
Equity loss in Cliffs and Associates Limited 3.2 1.1
Interest expense 1.2
Other expenses 2.4 3.5
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TOTAL COSTS AND EXPENSES 40.0 21.2
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INCOME (LOSS) BEFORE INCOME TAXES (4.7) 3.7
INCOME TAXES (CREDITS) (1.2) 1.0
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NET INCOME (LOSS) $ (3.5) $ 2.7
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NET INCOME (LOSS) PER COMMON SHARE
Basic $ (.32) $ .24
Diluted $ (.32) $ .24
AVERAGE NUMBER OF SHARES
Basic 10.7 11.2
Diluted 10.7 11.2
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CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
Three Months
Ended March 31,
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(In Millions, Brackets Indicate Decrease in Cash) 2000 1999
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OPERATING ACTIVITIES
Net income (loss) $ (3.5) $ 2.7
Depreciation and amortization:
Consolidated 3.1 2.1
Share of associated companies 3.2 3.3
Equity loss in Cliffs and Associates Limited 3.2 1.1
Other (.9) (3.5)
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Total before changes in operating assets and liabilities 5.1 5.7
Changes in operating assets and liabilities (27.9) (56.1)
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Net cash used by operating activities (22.8) (50.4)
INVESTING ACTIVITIES
Purchase of property, plant and equipment:
Consolidated (.8) (5.5)
Share of associated companies (.6) (.3)
Investment and advances in Cliffs and Associates Limited (4.1) (3.0)
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Net cash used by investing activities (5.5) (8.8)
FINANCING ACTIVITIES
Dividends (4.0) (4.2)
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Net cash used by financing activities (4.0) (4.2)
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DECREASE IN CASH AND CASH EQUIVALENTS $ (32.3) $ (63.4)
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CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(In Millions)
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Mar. 31 Dec. 31 Mar. 31
2000 1999 1999
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ASSETS
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CURRENT ASSETS
Cash and cash equivalents $ 35.3 $ 67.6 $ 66.9
Accounts receivable - net 37.7 82.6 21.3
Inventories 117.7 52.6 141.6
Other 16.4 14.3 12.5
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TOTAL CURRENT ASSETS 207.1 217.1 242.3
PROPERTIES - NET 151.6 153.9 153.4
INVESTMENTS IN ASSOCIATED COMPANIES 230.0 233.4 235.3
OTHER ASSETS 74.6 75.3 76.5
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TOTAL ASSETS $ 663.3 $ 679.7 $ 707.5
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES $ 65.6 $ 73.7 $ 70.7
LONG-TERM DEBT 70.0 70.0 70.0
POSTEMPLOYMENT BENEFIT LIABILITIES 67.5 68.1 68.2
OTHER LIABILITIES 60.5 60.6 63.4
SHAREHOLDERS' EQUITY 399.7 407.3 435.2
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 663.3 $ 679.7 $ 707.5
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UNAUDITED FINANCIAL STATEMENTS
In management's opinion, the unaudited financial statements present fairly
the company's financial position and results. All supplementary information
required by generally accepted accounting principles for complete financial
statements has not been included. For further information, please refer to the
Company's latest Annual Report.
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