- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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
incorporation) Identification No.)
1100 Superior Avenue, Cleveland, Ohio 44114-2589
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 694-5700
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
--- ---
As of July 31, 1998, there were 11,325,347 Common Shares (par value $1.00 per
share) outstanding.
================================================================================
PART I - FINANCIAL INFORMATION
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED INCOME
(In Millions, Except Per Share Amounts)
-------------------------------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
--------------------------- ---------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
REVENUES
Product sales and services $ 143.2 $ 102.7 $ 170.4 $ 123.2
Royalties and management fees 12.9 12.4 21.3 20.7
---------- ---------- ---------- ----------
Total Operating Revenues 156.1 115.1 191.7 143.9
Investment income (securities) .8 1.2 2.2 3.4
Recovery of excess closedown provision - 4.3 - 4.3
Other income 1.0 1.5 1.8 1.8
---------- ---------- ---------- ----------
TOTAL REVENUES 157.9 122.1 195.7 153.4
COSTS AND EXPENSES
Cost of goods sold and operating expenses 127.2 96.1 157.3 117.1
Administrative, selling and general expenses 4.9 3.5 9.6 7.2
Interest expense .1 .8 .3 1.7
Other expenses 2.9 2.2 5.0 3.5
---------- ---------- ---------- ----------
TOTAL COSTS AND EXPENSES 135.1 102.6 172.2 129.5
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 22.8 19.5 23.5 23.9
INCOME TAXES
Currently payable 3.4 2.7 3.5 3.3
Deferred 2.5 3.9 2.6 4.7
---------- ---------- ---------- ----------
TOTAL INCOME TAXES 5.9 6.6 6.1 8.0
---------- ---------- ---------- ----------
NET INCOME $ 16.9 $ 12.9 $ 17.4 $ 15.9
========== ========== ========== ==========
NET INCOME PER COMMON SHARE
Basic $ 1.49 $ 1.14 $ 1.53 $ 1.40
Diluted $ 1.48 $ 1.13 $ 1.52 $ 1.39
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
Basic 11,326 11,371 11,325 11,373
Diluted 11,423 11,421 11,413 11,422
See notes to financial statements
2
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(In Millions)
-------------------------
June 30 December 31
ASSETS 1998 1997
------ ---------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 71.7 $115.9
Accounts receivable - net 73.2 73.4
Inventories
Finished products 72.6 45.7
Work in process 1.2 .6
Supplies 13.7 15.1
------ ------
87.5 61.4
Federal income taxes 10.7 7.5
Other 5.9 7.6
------ ------
TOTAL CURRENT ASSETS 249.0 265.8
PROPERTIES 192.8 272.3
Allowances for depreciation and depletion (58.2) (138.3)
------ ------
TOTAL PROPERTIES 134.6 134.0
INVESTMENTS IN ASSOCIATED COMPANIES 225.9 218.3
OTHER ASSETS
Prepaid pensions 41.4 40.4
Other 39.7 35.8
------ ------
TOTAL OTHER ASSETS 81.1 76.2
------ ------
TOTAL ASSETS $690.6 $694.3
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES $ 78.0 $ 91.8
LONG-TERM OBLIGATIONS 70.0 70.0
POSTEMPLOYMENT BENEFIT LIABILITIES 69.8 70.1
OTHER LIABILITIES 56.8 55.0
SHAREHOLDERS' EQUITY
Preferred Stock
Class A - no par value
Authorized - 500,000 shares; Issued - none - -
Class B - no par value
Authorized - 4,000,000 shares; Issued - none - -
Common Shares - par value $1 a share
Authorized - 28,000,000 shares;
Issued - 16,827,941 shares 16.8 16.8
Capital in excess of par value of shares 73.3 69.8
Retained income 481.5 472.1
Accumulated other comprehensive loss, net of tax (2.2) (2.0)
Cost of 5,505,894 Common Shares in treasury
(1997 - 5,519,027 shares) (147.7) (146.2)
Unearned compensation (5.7) (3.1)
------ ------
TOTAL SHAREHOLDERS' EQUITY 416.0 407.4
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $690.6 $694.3
====== ======
See notes to financial statements
3
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
(In Millions,
Brackets Indicate
Cash Decrease)
Six Months Ended
June 30
----------------------
1998 1997
--------- ---------
OPERATING ACTIVITIES
Net income $ 17.4 $ 15.9
Depreciation and amortization:
Consolidated 4.3 3.5
Share of associated companies 6.3 6.0
Decrease in Savage River closedown reserve - (16.1)
Provision for deferred income taxes 2.6 4.8
Other (2.3) .6
------ ------
Total before changes in operating assets and liabilities 28.3 14.7
Changes in operating assets and liabilities (42.7) (75.3)
------ ------
NET CASH (USED BY) OPERATING ACTIVITIES (14.4) (60.6)
INVESTING ACTIVITIES
Purchase of property, plant and equipment:
Consolidated (6.1) (5.0)
Share of associated companies (13.8) (19.2)
Purchase of Wabush interest - (15.0)
Other 1.3 4.8
------ ------
NET CASH (USED BY) INVESTING ACTIVITIES (18.6) (34.4)
FINANCING ACTIVITIES
Dividends (8.0) (7.4)
Repurchases of Common Shares (3.2) (1.7)
------ ------
NET CASH (USED BY) FINANCING ACTIVITIES (11.2) (9.1)
EFFECT OF EXCHANGE RATE CHANGES ON CASH - .2
------ ------
DECREASE IN CASH AND CASH EQUIVALENTS (44.2) (103.9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 115.9 165.4
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 71.7 $ 61.5
====== ======
See notes to financial statements
4
CLEVELAND-CLIFFS INC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and should be read in conjunction
with the financial statement footnotes and other information in the Company's
1997 Annual Report on Form 10-K. In management's opinion, the quarterly
unaudited financial statements present fairly the Company's financial position
and results in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
References to the "Company" mean Cleveland-Cliffs Inc and
consolidated subsidiaries, unless otherwise indicated. Quarterly results are not
representative of annual results due to seasonal and other factors. Certain
prior year amounts have been reclassified to conform to current year
classifications.
NOTE B - ACCOUNTING AND DISCLOSURE CHANGES
In June, 1997, the Financial Accounting Standards Board ("FASB")
issued Statement 131, "Disclosures About Segments of an Enterprise and Related
Information." This statement changes the way that segment information is defined
and reported in annual and interim financial statements. Statement 131 is
effective for fiscal years beginning after December 15, 1997, although segment
information is not required to be reported in interim financial statements in
1998. Management is evaluating the new standard and has not determined what
effect it may have on future disclosures.
In February, 1998, the FASB issued Statement 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," effective for
fiscal years beginning after December 15, 1997. The objective of this statement
is to improve and standardize disclosures about pensions and other
postretirement benefits and does not change the measurement or recognition of
pensions or other postretirement benefits.
In June, 1998, the FASB issued Statement 133, "Accounting for
Derivative Instruments and for Hedging Activities," effective for fiscal years
beginning after June 15, 1999. This statement will provide comprehensive and
consistent standards for the recognition and measurement of derivatives and
hedging activities. Management is
5
evaluating the new standard, but does not expect it to have a material impact on
the Company's consolidated financial statements.
In March, 1998, the Accounting Standards Executive Committee
("AcSEC") of the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 15, 1998. The statement is intended to eliminate the
diversity in practice in accounting for internal-use software costs and improve
financial reporting. The Company is evaluating the new standard, but does not
expect it to have a material impact on the Company's consolidated financial
statements.
In April, 1998, the AcSEC issued SOP 98-5, "Reporting on the Costs of
Start-up Activities," effective for fiscal years beginning after December 15,
1998, which requires such costs to be expensed as incurred. Management is
evaluating the new standard, but does not expect it to have a material impact on
the Company's consolidated financial statements.
NOTE C - ENVIRONMENTAL RESERVES
The Company has a formal code of environmental conduct which promotes
environmental protection and restoration. The Company's obligations for known
environmental problems at active mining operations, idle and closed mining
operations and other sites have been recognized based on estimates of the cost
of investigation and remediation at each site. If the cost can only be estimated
as a range of possible amounts with no specific amount being most likely, the
minimum of the range is accrued in accordance with generally accepted accounting
principles. Estimates may change as additional information becomes available.
Actual costs incurred may vary from the estimates due to the inherent
uncertainties involved. Any potential insurance recoveries have not been
reflected in the determination of the financial reserves.
At June 30, 1998, the Company had an environmental reserve, including
its share of the environmental obligations of associated companies, of $22.3
million, of which $1.7 million is a current liability. The reserve includes the
Company's obligations related to:
- Federal and State Superfund and Clean Water Act sites where the
Company is named as a potentially responsible party, including
Cliffs-Dow and Kipling sites in Michigan and the Rio Tinto mine
site in Nevada, all of which sites are independent of the
Company's iron mining operations. The reserves are based on
engineering studies prepared by outside consultants engaged by
the potentially responsible parties. The Company continues to
evaluate the recommendations of the studies and other means for
site clean-up. Significant site clean-up activities have taken
place at Rio Tinto and Cliffs-Dow. The City of Marquette,
Michigan has purchased the Cliffs-Dow plant site, on January 29,
1998, from the Company and has agreed to assume any future
environmental responsibilities with respect to that site.
6
- Wholly-owned active and idle operations, and other sites,
including former operations, for which reserves are based on the
Company's estimated cost of investigation and remediation of
sites where expenditures may be incurred.
NOTE D - COMPREHENSIVE INCOME
Comprehensive Income includes Net Income and Other Comprehensive
Income, net of tax, consisting of unrealized gains (losses) on securities,
foreign currency translation adjustments and minimum pension liability.
Components of Comprehensive Income include:
(In Millions)
------------------------------------------------------------------
Second Quarter First-Half
------------------------------- ------------------------------
1998 1997 1998 1997
------------ ------------- ------------ -----------
Net Income $16.9 $12.9 $17.4 $15.9
Other Comprehensive Income -
Unrealized Gain (Loss)
on Securities (1.9) .5 (.2) .9
Foreign Currency
Translation Adjustment -- .2 -- .2
----- ----- ----- -----
Comprehensive Income $15.0 $13.6 $17.2 $17.0
===== ===== ===== =====
7
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
RESULTS OF OPERATIONS
---------------------
COMPARISON OF SECOND QUARTER AND FIRST SIX MONTHS - 1998 AND 1997
-----------------------------------------------------------------
Earnings for the second quarter of 1998 were $16.9 million, or $1.48
per diluted share (all per share earnings are "diluted earnings per share"
unless otherwise stated), and first-half earnings were $17.4 million, or $1.52
per share. Comparable earnings, before special items, in 1997 were $10.1
million, or $.88 per share, in the second quarter, and $13.1 million, or $1.14
per share, in the first-half. Net income for both 1997 periods included an
after-tax credit of $2.8 million resulting from the reversal of an excess
accrual for closedown obligations of the Savage River Mine in Australia which
were recorded prior to 1997.
Following is a summary of results:
(In Millions, Except Per Share)
----------------------------------------------------
Second Quarter First-Half
------------------------ -------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
Income Before Special Items:
Amount $16.9 $10.1 $17.4 $13.1
Per Share 1.48 .88 1.52 1.14
Special Items:
Amount -- 2.8 -- 2.8
Per Share -- .25 -- .25
Net Income:
Amount 16.9 12.9 17.4 15.9
Per Share 1.48 1.13 1.52 1.39
The $6.8 million, or 67 percent, increase in second quarter earnings
before special items was mainly due to higher North American sales volume and
price realization, lower interest expense, and a lower effective tax rate,
partially offset by higher administrative and business development expenses,
including ferrous metallics and international development activities, and lower
investment income.
The $4.3 million increase in first-half earnings before special items
was principally due to higher North American sales volume and price realization,
lower interest expense, and a lower effective tax rate, partially offset by the
termination of Savage River operations, higher administrative and business
development expenses, including ferrous metallics and international development
activities, and lower investment income. Savage River, which produced its last
iron ore pellets in December, 1996, earned $2.4 million in the first half of
1997 on sales of its remaining inventory.
8
The Company's North American iron ore pellet sales in the second
quarter of 1998 were a record 3.9 million tons, a 39 percent increase from the
2.8 million tons sold in the second quarter of 1997. First-half sales of 4.6
million tons were also a record and 48 percent higher than the 3.1 million tons
sold in the first half of 1997.
Administrative expenses increased by $1.4 million in the second quarter
of 1998 versus 1997 and $2.4 million in the first-half of 1998 versus 1997
principally due to the cost of Performance Share grants, a key component of
senior management compensation. Lower investment income in the second quarter
and first-half reflects lower average cash balances in 1998, while decreased
interest expense in both periods results from increased capitalization of
interest on the Company's share of construction costs on the Cliffs and
Associates Limited reduced iron project. Other expenses were up in both periods
due to increased costs of ferrous metallics and international development
activities.
The Company's managed mines produced 10.0 million tons in the second
quarter of 1998 compared with 9.6 million tons in 1997. First-half production
was 19.4 million tons, up from 19.2 million tons in 1997.
The Empire and Tilden Mines in Michigan have experienced some minor
electric power interruptions in the second quarter, and there is a risk of
further interruptions and production losses at these mines under interruptible
power contracts with Wisconsin Electric Power Company.
LIQUIDITY
- ---------
At June 30, 1998, the Company had cash and cash equivalents of $71.7
million. Since December 31, 1997, cash and cash equivalents have decreased $44.2
million, primarily due to increased working capital, $42.7 million, and project
investments and capital expenditures, $19.9 million (mainly Trinidad project,
$10.8 million), dividends, $8.0 million, and repurchases of common shares, $3.2
million, partially offset by cash flow from operations, $28.3 million.
For the year 1998 capital expenditures, principally for mining ventures
and including items classified as capital leases, are projected to total $139
million (Company's share - $61 million).
CAPITALIZATION
- --------------
Long-term debt of the Company consists of $70.0 million of senior
unsecured notes payable to an insurance company group. The notes bear a fixed
interest rate of 7.0 percent and are scheduled to be repaid with a single
principal payment in December, 2005. During the quarter, the Company extended
the maturity of the $100 million revolving credit agreement from March 1, 2002
to May 31, 2003. No borrowings are outstanding under this agreement. The Company
was in compliance with all financial covenants and restrictions of the
agreements.
9
The fair value of the Company's long-term debt (which had a carrying
value of $70.0 million) at June 30, 1998, was estimated at $71.7 million based
on a discounted cash flow analysis and estimates of current borrowing rates.
Following is a summary of common shares outstanding:
1998 1997 1996
-------------- -------------- -------------
March 31 11,344,605 11,377,322 11,832,767
June 30 11,322,047 11,374,448 11,614,517
September 30 11,379,357 11,367,717
December 31 11,308,914 11,369,717
Under the Company's program to repurchase up to 1.5 million of its
Common Shares in the open market or in negotiated transactions, the Company has
repurchased 953,400 Common Shares through June 30, 1998, at a total cost of
$38.4 million, including 60,000 Common Shares repurchased in the first half of
1998, at a total cost of $3.2 million.
FERROUS METALLICS DEVELOPMENTS
- ------------------------------
While good progress is being made on construction of the Company's
hot-briquetted iron venture project in Trinidad and Tobago with LTV Corporation
and Lurgi AG, exceptionally rainy weather over the last few months and other
construction difficulties have caused delays. Construction of the Cliffs and
Associates Limited facilities is now projected to be completed late in 1998,
with commissioning and initial production to follow. Operations planning and
employee training activities are well advanced in preparation for the plant
commissioning. The project will operate on a planned start-up curve and is
expected to achieve its design capacity rate of 500,000 metric tons per year in
mid-1999. The Company's cumulative investment totals $67.2 million as of June
30, 1998. Market prices for ferrous metallics products are currently depressed
as a result of Asian imports. While it is difficult to project how long prices
will remain depressed, the project is expected to be profitable even at current
price levels. A decision by the owners of Cliffs and Associates Limited to
expand could be made by the end of 1999 depending on market factors.
An investment in a plant to produce 700,000 metric tons annually of a
premium grade pig iron at the Company's wholly-owned Northshore Mine in Silver
Bay, Minnesota is being evaluated. Uncertainties concerning environmental
permitting and other matters have delayed a decision on this project.
The Company continues to consider other investment alternatives, both
domestically and internationally, in the iron ore and ferrous metallics
business.
10
TILDEN MINE KILN OUTAGE
- -----------------------
Welding repairs on one of the mine's two pelletizing kilns were
completed earlier than expected, and the kiln was put back in service on April
9. Production at the Tilden Mine for the full year is now expected to be 6.8
million tons. Expected production of 6.8 million tons is .8 million tons, or 13
percent, above 1997 production. The Company's share of the kiln repair costs,
$.6 million, was recorded in the first quarter.
COAL RETIREES
- -------------
Through June 30, 1998, payments covering over 300 beneficiaries have
been made to the UMWA Combined Benefit Fund as required by the Coal Industry
Retiree Health Benefit Act of 1992 ("Act"). Over 20 percent of these
beneficiaries are from former coal operations which ceased operations as
signatories to the UMWA contract prior to when coal wage agreements contained
any provisions that could be construed as promising or implying that health
benefits would be provided for life. Based on a recent U.S. Supreme Court
decision in EASTERN ENTERPRISES V. APFEL, premium payments on these
beneficiaries have been discontinued and a refund requested for previous
payments. Although the Act provides for substantial penalties for non-payment of
premiums, management believes that the Company's actions, in light of EASTERN
ENTERPRISES V. APFEL, would not subject the Company to such penalties.
OUTLOOK
- -------
Most steel industry analysts are projecting a continuation of
relatively high operating rates for steel producers in the United States and
Canada for the second half of 1998 and into 1999 despite increasing concerns
about Asian and other steel imports. For the full year 1998, the six mines are
expected to produce a record 40.5 million tons, with the Company's share being a
record 11.4 million tons. In 1997, the mines produced 39.6 million tons, with
the Company's share being 10.9 million tons. The increases in 1998 are mainly
due to higher scheduled production at the Tilden Mine. The Company's managed
mines are currently expected to operate at capacity levels in 1999, with pellet
production nearing 42 million tons. The Company's share of 1999 production at
capacity levels would be 11.8 million tons.
Ore sales for the full year 1998 are projected at 12.5 million tons,
2.1 million tons higher than 1997. Sales at the projected 12.5 million ton level
are possible by reducing inventories to a minimum level and by purchasing ore
for resale.
YEAR 2000 TECHNOLOGY
- --------------------
The Company continues its identification and assessment of various
areas of risk and implementation of strategies to resolve the year 2000
technology issue. A substantial portion of year 2000 information technology
compliance will be achieved as a result of the Company's Information Technology
Plan ("IT Plan"). Implementation of the IT Plan is estimated to cost
approximately $25 million for the Company and associated ventures, $17 million
of which is projected to be classified as capital
11
expenditures and $8 million charged to operations (Company's share $6.9 million
total; $4.6 million capital, $2.3 million operating). Since implementation and
through June 30, 1998, $7.6 million (Company's share - $2.1 million) was
expended with $3.3 million (Company's share $.9 million) charged to operations
as incurred. Project completion is expected in the third quarter of 1999. The
Company is charging to operations current state assessment, process
re-engineering, and training costs associated with the IT Plan. In addition to
the IT Plan, a year 2000 compliance program has been initiated to identify,
assess and mitigate the impact of the date change on systems not covered by the
IT Plan. The incremental expense of achieving year 2000 compliance on systems
not covered by the IT Plan is estimated to be $2 million for the Company and its
ventures. Completion of this program is targeted for mid-1999. Year 2000
compliance is not expected to have a material adverse impact on the operations
of the Company.
FORWARD-LOOKING STATEMENTS
- --------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. In addition to historical information,
this report contains forward-looking statements that are subject to risks and
uncertainties that could cause future results to differ materially from expected
results. Such statements are based on management's beliefs and assumptions made
on information currently available to it.
The Company's primary business is the production and sale of iron ore
pellets, which is subject to the cyclical nature of the integrated steel
industry. Factors that could cause the Company's actual results to be materially
different from projected results include the following:
- Changes in the financial condition of integrated steel company
partners and customers. The potential financial failure and
shutdown of one or more significant customers or partners without
mitigation could represent a significant adverse development;
- Domestic or international economic and political conditions;
- Unanticipated geological conditions or ore processing changes;
- Substantial changes in imports of steel or iron ore;
- Development of alternative steel-making technologies;
- Displacement of integrated steel production by electric furnace
production;
- Displacement of steel by competitive materials;
- Energy costs and availability;
- Shortage of available process water due to drought;
12
- Difficulties or delays in achieving Year 2000 compliance,
including the availability and cost of trained personnel, the
ability to locate and correct system codes, and similar
uncertainties;
- Major equipment failure, availability, and magnitude and duration
of repairs;
- Labor contract negotiations;
- Changes in tax laws directly affecting mineral exploration and
development;
- Changes in laws, regulations or enforcement practices governing
environmental site remediation requirements and the technology
available to complete required remediation. Additionally, the
impact of inflation, the identification and financial condition of
other responsible parties, as well as the number of sites and
quantity and type of material to be removed, may significantly
affect estimated environmental remediation liabilities;
- Changes in laws, regulations or enforcement practices governing
compliance with environmental and safety standards at operating
locations; and,
- Accounting principle or policy changes by the Financial Accounting
Standards Board or the Securities and Exchange Commission.
Additionally, the Company's projection of construction cost, start-up
date, production rate and profitability for the Trinidad reduced iron project
could change due to the following inherent uncertainties:
- Construction delays;
- Changes in product pricing and demand;
- Process difficulties; and
- Cost and availability of key components of production.
The Company is under no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
- ---------------------------------------------------------
The Company's Annual Meeting of Shareholders was held on May 12, 1998.
At the meeting the Company's shareholders acted upon the election of Directors
and a proposal to ratify the appointment of the Company's independent public
accountants. In the election of Directors, all 12 nominees named in the
Company's Proxy Statement, dated March 23, 1998, were elected to hold office
until the next Annual Meeting of Shareholders and until their respective
successors are elected. Each nominee received the number of votes set opposite
his or her name:
NOMINEES FOR WITHHELD
----------------------------------- ---------------- -----------------
John S. Brinzo 9,817,222 11,143
Ronald C. Cambre 9,816,472 11,893
Robert S. Colman 9,815,985 12,380
James D. Ireland III 9,815,705 12,660
G. Frank Joklik 9,815,467 12,898
Leslie L. Kanuk 9,815,344 13,021
Francis R. McAllister 9,816,722 11,643
M. Thomas Moore 9,815,999 12,366
John C. Morley 9,816,403 11,962
Stephen B. Oresman 9,815,639 12,726
Alan Schwartz 9,814,885 13,480
Alton W. Whitehouse 9,814,685 13,680
Votes cast in person and by proxy at such meeting for and against the
adoption of the proposal to ratify the appointment of the firm of Ernst & Young
LLP, independent public accountants, to examine the books of account and other
records of the Company and its consolidated subsidiaries for the year 1998 were
as follows: 9,809,193 Common Shares were cast for the adoption of the proposal;
6,535 Common Shares were cast against the adoption of the proposal; and 12,637
Common Shares abstained from voting on the proposal.
There were no broker non-votes with respect to the election of
directors or the ratification of the independent public accountants.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) List of Exhibits - Refer to Exhibit Index on page 16.
(b) There were no reports on Form 8-K filed during the three months
ended June 30, 1998.
14
SIGNATURE
Pursuant to the requirements 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
Date August 12, 1998 By /s/ C. B. Bezik
----------------------------- ---------------------------------
C. B. Bezik
Senior Vice President-Finance and
Principal Financial Officer
15
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit
- -------- ------------------------------------------------------- ---------
4(a) Amendment, dated as of June 1, 1998, to the Credit Filed
Agreement dated as of March 1, 1995, as amended, Herewith
among Cleveland-Cliffs Inc, the financial institutions
named therein, and The Chase Manhattan Bank,
as Agent.
27 Consolidated Financial Data Schedule submitted for
Securities and Exchange Commission information
only:
27.1 June 30, 1998 --
27.2 June 30, 1997 --
99(a) Cleveland-Cliffs Inc News Release published on Filed
July 22, 1998, with respect to 1998 second quarter Herewith
earnings and 1998 first-half earnings.
16