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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, 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 (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION)
1100 Superior Avenue, Cleveland, Ohio 44114-2589
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 694-5700
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Shares - par value $1.00 per share New York Stock Exchange
and Chicago Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of the Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 15, 1999, the aggregate market value of the voting and
non-voting stock held by non-affiliates of the registrant, based on the closing
price of $35.00 per share as reported on the New York Stock Exchange - Composite
Index was $377,354,670 (excluded from this figure is the voting stock
beneficially owned by the registrant's officers and directors).
The number of shares outstanding of the registrant's $1.00 par value common
stock was 11,209,734 as of March 15, 1999.
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DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of registrant's 1998 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 11, 1999 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 has two business segments offering differing iron products
and services to the steel industry, with iron ore being the Company's dominant
segment and ferrous metallics being the other segment. The ferrous metallics
segment is in the development stage, and consists mainly of a hot briquetted
iron venture project located in Trinidad. The Company is seeking additional
investment opportunities, domestically and internationally, to broaden its scope
as a supplier of iron units to the steel industry, including investments in iron
ore mines or ferrous metallics facilities.
IRON ORE
--------
The Company owns, directly or indirectly, three major iron ore
operating subsidiaries, The Cleveland-Cliffs Iron Company ("CCIC"), Cliffs
Mining Company ("CMC") and Northshore Mining Company ("Northshore"). CCIC and
CMC hold interests in various independent iron ore mining ventures ("mining
ventures") and act as managing agent. The operations of Northshore are entirely
owned by the Company. CCIC, CMC and Northshore's business during 1998 was the
production and sale of iron ore, principally iron ore pellets. Collectively,
CCIC, CMC and Northshore 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 and Canada.
Iron ore is marketed by the subsidiaries in the United States, Canada, and
Europe.
For information on the iron ore business, including royalties and
management fees for the years 1996-1998, 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, 1998, which Note C is contained
in Exhibit 13(g) and incorporated herein by reference and made a part hereof.
For information concerning operations of the Company, see material
under the heading "Summary of Financial and Other Statistical Data" in the
Company's Annual Report to Security Holders for the year ended December 31,
1998, which Summary of Financial and Other Statistical Data is contained in
Exhibit 13(j) and incorporated herein by reference and made a part hereof.
CCIC owns or holds long-term leasehold interests in active North
American properties containing an estimated 1.5 billion tons of crude iron ore
reserves (approximately 493 million tons of equivalent standard iron ore
pellets). CCIC, CMC and Northshore manage six active mines in North America with
a total rated annual capacity of 41.6 million tons and own equity interests in
five of these mines (see Table on page 4).
CCIC, CMC and Northshore's United States properties are located on the
Marquette Range of the Upper Peninsula of Michigan, which has two active
open-pit mines and pellet plants, and the Mesabi Range in Minnesota, which has
three active open-pit mines and pellet plants. CMC acts only in the capacity of
manager at one of the Mesabi Range facilities. Two railroads, one of which is
99.5% owned by a subsidiary of the Company, link the Marquette Range with Lake
Michigan at the loading port of
2
Escanaba and with Lake Superior at the loading port of Marquette. From the
Mesabi Range, pellets are transported by rail to shiploading ports at Superior,
Wisconsin and Taconite Harbor, Minnesota. At Northshore, crude ore is shipped by
rail from the mine to the processing facilities at Silver Bay, Minnesota, which
is also the upper lakes port of shipment. In addition, in Canada, there is an
open-pit mine and concentrator at Wabush, Labrador, Newfoundland and a pellet
plant and dock facility at Pointe Noire, Quebec. At Wabush Mines, concentrates
are shipped by rail from the Scully Mine at Wabush to Pointe Noire, Quebec,
where they 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 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 15% to 40% (see Table on page 4). Pursuant
to certain operating agreements at each mine, each participant is generally
obligated to take its share of production for its own use. CCIC and CMC's share
of production is resold to steel manufacturers pursuant to multi-year contracts,
usually with price escalation provisions, or one-year contracts. Pursuant to
operating agreements at each mine, each participant is entitled to nominate the
amount of iron ore which will be produced for its account for that year. During
the year, such nomination generally may be increased (subject to capacity
availability) or decreased (subject to certain minimum production levels) by a
specified amount. During 1998, the North American mines operated at or near
capacity levels.
Cliffs Minnesota Minerals Company, a subsidiary of the Company, owns
an iron ore operation (Northshore) and power plant (Silver Bay Power
Company ("Silver Bay Power")) in Minnesota with 4.3 million annual tons of
active capacity for production of standard and flux pellets (equivalent to 4.8
million tons of standard pellet capacity), supported by a 115 megawatt power
generation plant, and an estimated 1.1 billion tons of magnetite crude iron ore
reserves (approximately 355 million tons of equivalent standard iron ore
pellets) leased mainly from the Mesabi Trust. Production in 1998 was 4.3 million
tons of standard and flux pellets.
Effective January 1, 1997, CMC acquired the 15.1% interest of Ispat
Inland Inc. ("Ispat Inland") in Wabush Mines, an iron ore joint venture interest
in Canada, for $15 million, which acquisition raised CMC's ownership interest in
Wabush Mines to 22.8%.
On September 29, 1998, Acme Metals Incorporated ("Acme") petitioned for
protection under Chapter 11 of the U.S. Bankruptcy Code. Acme's subsidiary, Acme
Steel Company, is a partner in the Company's managed Wabush Mines and the
Company has a multi-year pellet sales contract to supply Acme iron ore pellets.
At the time of the bankruptcy filing, the Company had a receivable from Acme of
$1.2 million. Since Acme's bankruptcy filing, Acme has continued its ongoing
commercial relationship with Wabush Mines and the Company. Pellet sales by the
Company to Acme in 1998 represented less than 5% of the Company's total pellet
sales volume and did not have a significant impact on the Company's financial
results for the year 1998.
3
Following is a table of production, current defined capacity, and
implied exhaustion dates for the iron ore mines currently managed or owned by
CCIC, CMC and Northshore. The exhaustion dates are based on estimated mineral
reserves and full production rates, which could be affected, among other things,
by future industry conditions, geological conditions, and ongoing mine planning.
Maintenance of effective production capacity or implied exhaustion dates could
require increases in capital and development expenditures. Alternatively,
changes in economic conditions or the expected quality of ore reserves could
decrease capacity or accelerate exhaustion dates. Technological progress could
alleviate such factors or increase capacity or mine life.
Company's Current
Current Pellet Production Current Operating Implied
Operating ----------------------- Annual Continuously Exhaustion
Name and Location Type of Ore Interest 1996 1997 1998 Capacity Since Date(1)
- ----------------- ----------- -------- ---- ---- ---- -------- ----- -------
(Tons in Thousands)(2)
Mining Ventures
- ---------------
Michigan
--------
Marquette Range
- Empire Iron Mining
Partnership (3) Magnetite 22.56% 8,084 8,353 8,114 8,000 1963 2018
- Tilden Mining Hematite and
Company L.C.(3) Magnetite 40.00%(4) 6,702 6,016 6,891 7,800(4) 1974 2041
Minnesota
---------
Mesabi Range
- Hibbing Taconite
Joint Venture (5) Magnetite 15.00% 8,120 7,670 7,777 8,000 1976 2029
- LTV Steel Mining
Company (5) Magnetite 0.00% 7,457 7,709 7,108 7,500 1957 2053
Canada
------
- Wabush Mines
(Newfoundland and Specular
Quebec) (5)(6) Hematite 22.78%(6) 5,309 5,581 6,009 6,000(6) 1965 2042
Wholly-Owned Entities
- ---------------------
Minnesota
---------
Mesabi Range
- Northshore Mining
Company Magnetite 100.00% 4,252 4,245 4,353 4,300(7) 1989 2081
Australia
---------
- Savage River Mines (8)
(Tasmania) Magnetite 100.00% 1,583 -- --(8) --(8) (8) (8)
------ ------ ------ ------
TOTAL 41,507 39,574 40,252 41,600
====== ====== ====== ======
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(1) Based on full production at current annual capacity without regard to
economic feasibility.
(2) Tons are long tons of 2,240 pounds.
(3) CCIC receives royalties and management fees.
(4) Expenditures in 1998 increased capacity to 7.8 million tons for 1999. The
predominant ore reserves are hematite.
(5) CMC receives no royalty payments with respect to such mine, but does
receive management fees.
(6) In 1996, the mine's annual production capacity was increased to 6 million
tons per year from 5.4 million tons per year. Effective January 1, 1997,
CMC's ownership in the Wabush Mines increased from 7.69% to 22.78%.
(7) Northshore can produce 4.8 million tons of standard pellets.
(8) Savage River Mines terminated operations at the end of 1996 and terminated
shipments in the first quarter of 1997.
4
With respect to the Empire Mine, CCIC owns directly approximately
one-half of the remaining mineral reserves and 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 the LTV Steel Mining Company, all 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; and the Wabush Mines
facilities were constructed beginning in 1962 with a total cost of approximately
$103 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. The Company's sales are subject to or
influenced by seasonal factors in the first quarter of the year, as the
shipments and sale of iron ore are restricted by weather conditions.
The Company's managed capacity is approximately 41.6 million tons, or
46% of total pellet capacity in North America, and the Company's annual North
American pellet sales capacity in 1998 was 11.5 million tons. In 1998, the
Company produced 11.4 million tons of pellets in North America for its own
account.
In 1998, the Company produced 28.7 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, Algoma Steel Company, Bethlehem
Steel Corporation, Ispat Inland, LTV Steel Company and Stelco Inc., aggregated
25.5 million gross tons, or 88.2%. The largest such participant accounted for
31.6% of such production.
During 1998, 100% of the Company's sales of iron ore and pellets, that
were produced in the United States and Canada for its own account or purchased
from others, were to 13 U.S., Canadian and European iron and steel manufacturing
companies.
In 1998, Weirton Steel Company, AK Steel, and Ispat Inland, directly
and indirectly accounted for 22%, 15%, and 9%, respectively, of total revenues.
RAIL TRANSPORTATION. The Company, through a wholly-owned subsidiary,
owns a 99.5% stock interest in Lake Superior & Ishpeming Railroad Company. The
railroad operates approximately 49 miles of track in the Upper Peninsula of
Michigan, principally to haul iron ore from the Empire and Tilden Mines to Lake
Superior at Marquette, Michigan, where the railroad has an ore loading dock, or
to interchange points with another railroad for delivery to Lake Michigan at
Escanaba, Michigan. In 1998, 81.9% of the railroad's revenues were derived from
hauling iron ore and pellets and other services in connection with mining
operations managed by CCIC. The railroad's rates are subject to regulation by
the Surface Transportation Board of the Department of Transportation.
5
FERROUS METALLICS
-----------------
Cliffs and Associates Limited, a joint venture in Trinidad and Tobago,
is completing construction of a facility to produce premium quality
hot-briquetted iron ("HBI") to be marketed to the steel industry. The venture's
participants, through subsidiaries, include the Company, 46.5 percent; The LTV
Corporation, 46.5 percent; and Lurgi AG of Germany, 7.0 percent, with the
Company acting as manager and sales agent. Project capital expenditures through
December 31, 1998 were $141.1 million (Company share - $65.6 million). Currently
estimated total capital expenditures of $151 million (Company share - $70.2
million) do not include construction claims of $16 million (Company share - $7.5
million) which are being contested. The Company believes the claims are largely
without merit; any payments on these claims are expected to be partially offset
by recoveries from contractors and suppliers. No project financing has been used
during construction. Plant commissioning activities are nearly complete for
start-up. At design, the facility is expected to produce 500,000 metric tons
annually. Full year production volume will depend on market demand.
The Company is studying the feasibility of an investment in a plant at
the Company's Northshore Mine that would produce "pig iron" from North American
iron ore with coal as the reductant. Markets for the product would be primarily
electric furnaces and foundries.
The Company is investigating additional investment opportunities in the
ferrous metallics business that could be developed, including strategic
alliances or joint ventures.
CREDIT AGREEMENT AND SENIOR NOTES
In 1995, the Company entered into a Credit Agreement ("Credit
Agreement") with Chemical Bank (now Chase Manhattan Bank), as Agent for a
six-bank lending group, pursuant to which the Company may borrow up to $100
million as revolving loans. The Credit Agreement was amended at various times to
reduce interest rates and fees and extend the expiration date currently to May
31, 2003. Interest on borrowings will be based on various interest rates as
defined in the Credit Agreement and as selected by the Company pursuant to the
terms of the Credit Agreement. There were no borrowings under the revolving
credit facility.
In 1995, the Company placed privately with a group of
institutional lenders $70 million 7% Senior Notes, due December 15, 2005.
COMPETITION
The iron ore mines, which the Company's subsidiaries operate
in North America and Canada, produce various grades of iron ore which are
marketed in the United States, Canada, and Europe. In North America, the Company
is in competition with several iron ore producers, including Iron Ore Company of
Canada, Quebec Cartier Mining Company, and Evtac Mining Company, as well as
other 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.
6
Other competitive forces have effectively become large factors 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. Imported steel, especially in 1998, has had a
significant impact on steelmaking in the United States, which has adversely
affected the demand for iron ore pellets.
The HBI, to be produced by the Cliffs and Associates Limited joint
venture in Trinidad in which the Company has an interest, is in competition
with other direct reduced iron projects (operating both domestically and
internationally), other scrap substitutes, premium grade scrap and pig iron.
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, ENERGY, AND RESEARCH AND DEVELOPMENT
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
$6.9 million in 1997 and $5.1 million in 1998. It is estimated that
approximately $5.3 million will be spent in 1999 for environmental control
facilities.
The Company received notice in 1983 from the U.S. Environmental
Protection Agency ("U.S. EPA") that the Company is a potentially responsible
party with respect to the Cliffs-Dow Superfund Site, located in the Upper
Peninsula of the State of Michigan, which is not related to the Company's iron
ore mining business. The Cliffs-Dow site was used prior to 1973 for the disposal
of wastes from charcoal production by a joint venture of the Company, the Dow
Chemical Company and afterward by a successor in interest, Georgia-Pacific
Corporation. The Company and certain other potentially responsible parties have
agreed upon allocation of the costs for investigation and remediation. The
Company and other potentially responsible parties voluntarily participated in
the preparation of a Remedial Investigation and Feasibility Study with respect
to the Cliffs-Dow site, which concluded with the publication by the U.S. EPA of
a Record of Decision dated September 27, 1989 setting forth the selected
remedial action plan adopted by the U.S. EPA for the Cliffs-Dow site. The
Company and other potentially responsible parties have largely implemented
remedial action satisfactory to the U.S. EPA at an estimated total cost of $8
million, of which the Company's share is $1.7 million. Upon the advice of
counsel, the Company believes it has a right to continued contribution from the
other potentially responsible parties for the costs of any further remedial
action required at the Cliffs-Dow site.
The Company has sufficient financial reserves at December 31, 1998 to
provide for its expected share of the cost of the remedial actions at the above
mentioned site.
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.
7
EMPLOYEES. As of December 31, 1998, CCIC and CMC and the North American
independent mining ventures had 5,006 employees, of which 4,125 were hourly
employees. The hourly employees are represented by the United Steelworkers of
America ("United Steelworkers") which have collective bargaining agreements. In
1993, a six-year "no strike" labor agreement was entered between the Hibbing
Taconite, Tilden and Empire Mines and the United Steelworkers covering the
period to August 1, 1999, but with provisions for a limited economic reopener on
August 1, 1996. In 1994, a new United Steelworkers labor agreement was entered
into covering employees of LTV Steel Mining Company, which agreement will expire
on August 1, 1999. In 1996, a new United Steelworkers labor agreement was
entered into covering the employees of Wabush Mines, which agreement expired on
March 1, 1999. Negotiations with the United Steelworkers on a new labor
agreement are about to begin with respect to the Wabush Mines and will begin by
early summer 1999 with respect to the Hibbing, Tilden, Empire and LTV Steel
Mining Company Mines.
As of December 31, 1998, Northshore had 508 salaried employees, none of
whom are represented by a union.
As of December 31, 1998, Cliffs Reduced Iron Management Company had 2
salaried employees and Cliffs and Associates Limited had 63 salaried employees.
As of December 31, 1998, Cleveland-Cliffs Inc and its wholly-owned
subsidiary, Cliffs Mining Services Company, had 279 salaried executive,
managerial, administrative and technical employees.
In addition, as of December 31, 1998, the Lake Superior & Ishpeming
Railroad had 171 employees.
ENERGY. In 1996, the Empire and Tilden Mines entered into new
seven-year electric power supply contracts with Wisconsin Electric Power Company
("WEPCo") to furnish electric power to those mines. Various terms and conditions
of the previous power contracts with WEPCo were revised to better accommodate
the operation of those Mines. The new power supply contracts became effective
March 1, 1996 and have curtailable features.
Electric power for Hibbing Taconite is supplied by Minnesota Power,
Inc. under a recently executed agreement, which became effective January 1, 1998
and continues to December, 2008. The Agreement provides for significant cost
reduction, reduction in certain take-or-pay commitments, and an energy price
cap. Electric power requirements will continue to be specified annually by the
Hibbing Taconite venturers corresponding to Hibbing's operating requirements.
LTV Steel Mining Company is currently generating the majority of its
requirements, and an interchange agreement with Minnesota Power, Inc. provides
backup power and allows sale of excess capacity to the Midwestern Area Power
Pool. Effective May 1, 1995, the interchange agreement was extended to April 30,
2000 to provide additional backup power and other cost-effective services.
Silver Bay Power Company, an indirect subsidiary of the Company,
provides the majority of Northshore's energy requirements, has an interchange
agreement with Minnesota Power, Inc. for backup power and sells 40 megawatts of
excess power capacity to Northern States Power Company. The contract with
Northern States Power extends to the year 2011. Effective November 1, 1995, the
interchange agreement was extended to October 31, 2000 to provide additional
backup power and other cost-effective services.
Wabush Mines owns a portion of the Twin Falls Hydro Generation facility
which provides power for Wabush's mining operations in Newfoundland. A twenty
year agreement with Newfoundland Power, which agreement continues until December
31, 2004, allows an interchange of water rights in return for the power
8
needs for Wabush's mining operations. The Wabush pelletizing operations in
Quebec are served by Quebec Hydro on an annual contract.
The Company has contracts providing for the transport of natural gas
for its North American iron ore operations.
The Empire and Tilden Mines have the capability of burning natural gas,
coal, or, to a lesser extent, oil. Wabush Mines has the capability of burning
oil and coke breeze. Hibbing Taconite, Northshore and LTV Steel Mining Company
have the capability of burning natural gas and oil. During 1998, the U.S. mines
burned natural gas as their primary fuel. Wabush Mines used oil, supplemented
with 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.
RESEARCH AND DEVELOPMENT. The Company maintains a strong commitment to
research and development with engineering staffs that are engaged in full-time
research and development of new iron-bearing products and improvement of
existing products with two research facilities, one located in Hibbing,
Minnesota, and one in Negaunee, Michigan.
9
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 and Canada. Located
specifically on the map are arrows and dots representing the location of the
properties described in the Table on page 4 to this report.
10
ITEM 3. LEGAL PROCEEDINGS.
The Company and certain of its subsidiaries are involved in various
claims and ordinary routine litigation incidental to their businesses, including
claims relating to the exposure of asbestos and silica to seamen who sailed on
the Great Lakes vessels formerly owned and operated by subsidiaries of the
Company. The full impact of these claims and proceedings in the aggregate
continues to be unknown. The Company continues to monitor its claims and
litigation expense, but believes that resolution of currently pending claims and
proceedings are unlikely in the aggregate to have a material adverse effect on
the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
11
EXECUTIVE OFFICERS OF THE REGISTRANT
Position with the Company
as of March 15, 1999
--------------------
Name Age
---- ---
J. S. Brinzo President and Chief Executive Officer 57
W. R. Calfee Executive Vice President-Commercial 52
T. J. O'Neil Executive Vice President-Operations 58
C. B. Bezik Senior Vice President-Finance 46
E. C. Dowling Senior Vice President-Operations 43
J. W. Sanders Senior Vice President-International
Development 56
A. S. West Senior Vice President-Sales and
Commercial Planning 62
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:
J. S. Brinzo Senior Executive-Finance, Company,
October 1, 1993 to September 30, 1995.
Executive Vice President-Finance, Company,
October 1, 1995 to June 30, 1997.
Executive Vice President-Finance and Planning, Company,
July 1, 1997 to November 9, 1997.
President and Chief Executive Officer, Company,
November 10, 1997 to date.
W. R. Calfee Senior Executive-Commercial, Company,
October 1, 1993 to September 30, 1995.
Executive Vice President-Commercial, Company,
October 1, 1995 to date.
T. J. O'Neil Senior Vice President-Technical, Company,
November 18, 1991 to September 30, 1994.
Executive Vice President-CCI Operations
and Technology, Company,
October 1, 1994 to September 30, 1995.
Executive Vice President-Operations, Company,
October 1, 1995 to date.
12
C. B. Bezik Manager-Financial Planning, Company,
December 1, 1991 to April 30, 1994.
Director-Financial Planning, Company,
May 1, 1994 to September 30, 1994.
Treasurer and Director-Financial Planning, Company,
October 1, 1994 to September 30, 1995.
Vice President and Treasurer, Company,
October 1, 1995 to November 9, 1997.
Senior Vice President-Finance, Company,
November 10, 1997 to date.
E. C. Dowling Vice President-Downstream Operations,
Cyprus Climax Metals Company,
November, 1993 to October, 1994.
Senior Vice President-Operations,
Cyprus Climax Metals Company,
October, 1994 to September, 1996.
Senior Vice President-Director Process Management
and Engineering,
Cyprus Amax Minerals Company,
September, 1996 to April, 1998.
Senior Vice President-Operations, Company,
April 15, 1998 to date.
J. W. Sanders Senior Vice President and General Manager,
Copper Range Company,
June, 1991 to June, 1994.
President and Chief Operating Officer,
Copper Range Company,
July, 1994 to September 30, 1995.
Senior Vice President-Technical, Company,
October 1, 1995 to June 30, 1997.
Senior Vice President-International Development,
Company,
July 1, 1997 to date.
A. S. West Senior Vice President-Sales, Company,
July 1, 1988 to July 31, 1998.
Senior Vice President-Sales and Commercial
Planning, Company,
August 1, 1998 to date.
13
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, 1998 contained in the
material under the headings, "Common Share Price Performance and Dividends",
"Investor and Corporate Information" and "Summary of Financial and Other
Statistical Data", such information filed as a part hereof as Exhibits 13(h),
13(i) and 13(j), respectively.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is incorporated herein by
reference and made a part hereof from that portion of the Company's Annual
Report to Security Holders for the year ended December 31, 1998 contained in the
material under the heading, "Summary of Financial and Other Statistical Data",
such information filed as a part hereof as Exhibit 13(j).
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, 1998 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 7. A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
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, 1998 contained in the
material under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations", such information located on page 35, and
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, 1998 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. Following is the "Report of Independent Auditors":
14
ITEM 8 (continued)
REPORT OF INDEPENDENT AUDITORS
------------------------------
Shareholders and Board of Directors
Cleveland-Cliffs Inc
We have audited the accompanying statement of consolidated financial position of
Cleveland-Cliffs Inc and consolidated subsidiaries as of December 31, 1998 and
1997, and the related statements of consolidated income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1998. Our audits also included the financial statement schedule listed in the
index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cleveland-Cliffs
Inc and consolidated subsidiaries at December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
January 29, 1999
15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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 22, 1999, 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 22, 1999, 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 22, 1999, 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 22, 1999, from the material in the fifth paragraph under
the heading "Directors' Compensation".
16
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, 1998, are incorporated herein by reference in Item 8:
Statement of Consolidated Financial Position -
December 31, 1998 and 1997
Statement of Consolidated Income - Years ended
December 31, 1998, 1997 and 1996
Statement of Consolidated Cash Flows - Years ended
December 31, 1998, 1997 and 1996
Statement of Consolidated Shareholders' Equity - Years ended
December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
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 19-26 which
is incorporated herein by reference.
(b) There were no reports on Form 8-K filed during the three months
ended December 31, 1998.
(c) Exhibits listed in Item 14(a)(3) above are included on pages
27-70.
(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 Associate General Counsel
Date: March 25, 1999
17
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
- ---------- ----- ----
J. S. Brinzo President and Chief March 25, 1999
Executive Officer and
Principal Executive Officer
and Director
C. B. Bezik Senior Vice President- March 25, 1999
Finance and Principal
Financial Officer
R. J. Leroux Controller and Principal March 25, 1999
Accounting Officer
R. C. Cambre Director March 25, 1999
R. S. Colman Director March 25, 1999
J. D. Ireland, III Director March 25, 1999
G. F. Joklik Director March 25, 1999
L. L. Kanuk Director March 25, 1999
F. R. McAllister Director March 25, 1999
M. T. Moore Director March 25, 1999
J. C. Morley Director and Chairman March 25, 1999
S. B. Oresman Director March 25, 1999
A. Schwartz Director March 25, 1999
A. W. Whitehouse Director March 25, 1999
By: /s/ John E. Lenhard
--------------------------------------
(John E. Lenhard, as Attorney-in-Fact)
Original powers of attorney authorizing John S. Brinzo, Cynthia B.
Bezik, Joseph H. Ballway, Jr., 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.
18
EXHIBIT INDEX
Pagination by
Exhibit Sequential
Number Numbering System
------ ----------------
ARTICLES OF INCORPORATION AND BY-LAWS OF
----------------------------------------
CLEVELAND-CLIFFS INC
--------------------
3(a) Amended Articles of Incorporation of
Cleveland-Cliffs Inc (filed as Exhibit
3(a) to Form 10-K of Cleveland-Cliffs Inc
filed on March 26, 1996 and incorporated
by reference) Not Applicable
3(b) Regulations of Cleveland-Cliffs Inc
(filed as Exhibit 3(b) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26,
1996 and incorporated by reference) Not Applicable
INSTRUMENTS DEFINING RIGHTS OF SECURITY
---------------------------------------
HOLDERS, INCLUDING INDENTURES
-----------------------------
4(a) Form of Common Stock Certificate (filed
as Exhibit 4(a) to Form 10-K of
Cleveland-Cliffs Inc filed on March 25,
1998 and incorporated by reference) Not Applicable
4(b) Rights Agreement, dated September 19,
1997, by and between Cleveland-Cliffs Inc
and First Chicago Trust Company of New
York, as Rights Agent (filed as Exhibit
4.1 to Form 8-K of Cleveland-Cliffs Inc
filed on September 19, 1997 and
incorporated by reference) Not Applicable
4(c) Credit Agreement, dated as of March 1,
1995, among Cleveland-Cliffs Inc, the
Banks named therein and Chase Manhattan
Bank, as Agent (successor to Chemical
Bank) (filed as Exhibit 4(o) to Form 10-K
of Cleveland-Cliffs Inc filed on March
27, 1995 and incorporated by reference) Not Applicable
4(d) Amendment dated as of July 19, 1996, to
the Credit Agreement dated as of March 1,
1995, among Cleveland-Cliffs Inc, the
Banks named therein and Chase Manhattan
Bank, as Agent (filed as Exhibit 4(a) to
Form 10-Q of Cleveland-Cliffs Inc filed
on November 13, 1996 and incorporated by
reference) Not Applicable
4(e) Amendment dated as of June 1, 1997, to
the Credit Agreement dated as of March 1,
1995, as amended, among Cleveland-Cliffs
Inc, the Banks named therein and Chase
Manhattan Bank, as Agent (filed as
Exhibit 4(a) to Form 10-Q of
Cleveland-Cliffs Inc filed on August 13,
1997 and incorporated by reference) Not Applicable
19
4(f) Amendment dated as of June 1, 1998, to
the Credit Agreement dated as of March 1,
1995, as amended, among Cleveland-Cliffs
Inc, the financial institutions named
therein and the Chase Manhattan Bank, as
Agent (filed as Exhibit 4(a) to Form 10-Q
of Cleveland-Cliffs Inc filed on August
12, 1998 and incorporated by reference) Not Applicable
4(g) Note Agreement, dated as of December 15,
1995, among Cleveland-Cliffs Inc and each
of the Purchasers named in Schedule I
thereto (filed as Exhibit 4(n) to Form
10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by
reference) Not Applicable
MATERIAL CONTRACTS
------------------
10(a) * Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan (as Amended and
Restated, effective January 1, 1997),
dated April 24, 1997 (filed as Exhibit
10(l) to Form 10-Q of Cleveland-Cliffs
Inc filed on August 13, 1997 and
incorporated by reference) Not Applicable
10(b) * Amendment No. 1 to Cleveland-Cliffs Inc
Supplemental Retirement Benefit Plan (as
Amended and Restated effective January 1,
1997), as of November 1,1997, dated March
31, 1998 (filed as Exhibit 10(a) to Form
10-Q of Cleveland-Cliffs Inc filed on May
1, 1998 and incorporated by reference) Not Applicable
10(c) * Cleveland-Cliffs Inc Amended and
Restated Employment Agreements with
certain executive officers, dated as of
June 30, 1997 (filed as Exhibit 10(j) to
Form 10-Q of Cleveland-Cliffs Inc filed
on August 13, 1997 and incorporated by
reference) Not Applicable
10(d) * Amendment No. 1, dated as of December
31, 1997, to Amended and Restated
Employment Agreement of John S. Brinzo
(filed as Exhibit 10(c) to Form 10-K of
Cleveland-Cliffs Inc filed on March 25,
1998 and incorporated by reference) Not Applicable
10(e) * Retirement and Consulting Agreement,
dated as of September 2, 1998, by and
between Cleveland-Cliffs Inc and M.
Thomas Moore (filed as Exhibit 10(a) to
Form 10-Q of Cleveland-Cliffs Inc filed
on November 5,1998 and incorporated by
reference) Not Applicable
10(f) * Cleveland-Cliffs Inc and Subsidiaries
Management Performance Incentive Plan,
dated as of January 1, 1994 (Summary
Description) (filed as Exhibit 10(g) to
Form 10-K of Cleveland-Cliffs Inc filed
on March 27, 1995 and incorporated by
reference) Not Applicable
- --------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
20
10(g) Form of indemnification agreements with
Directors (filed as Exhibit 10(j) to Form
10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by
reference) Not Applicable
10(h) * Cleveland-Cliffs Inc 1987 Incentive
Equity Plan, effective as of April 29,
1987 (filed as Exhibit 10(h) to Form 10-K
of Cleveland-Cliffs Inc filed on March 26,
1997 and incorporated by reference) Not Applicable
10(i) * Cleveland-Cliffs Inc 1992 Incentive
Equity Plan (as Amended and Restated as of
May 13, 1997), effective as of May 13,
1997 (filed as Appendix A to Proxy
Statement of Cleveland-Cliffs Inc filed on
March 24, 1997 and incorporated by
reference) Not Applicable
10(j) * Form of Nonqualified Stock Option
Agreement for Nonemployee Directors (filed
as Exhibit 10(i) to Form 10-K of
Cleveland-Cliffs Inc filed on March 25,
1998 and incorporated by reference) Not Applicable
10(k) * Form of Instrument of Amendment of
Nonqualified Stock Option Agreements for
Nonemployee Directors, dated as of March
17, 1997 (filed as Exhibit 10(a) to Form
10-Q of Cleveland-Cliffs Inc filed on May
9, 1997 and incorporated by reference) Not Applicable
10(l) * Amended and Restated Cleveland-Cliffs
Inc Retirement Plan for Non-Employee
Directors effective as of July 1, 1995
(filed as Exhibit 10(a) to Form 10-Q of
Cleveland-Cliffs Inc filed on November 13,
1996 and incorporated by reference) Not Applicable
10(m) * Trust Agreement No. 1 (Amended and
Restated effective June 1, 1997), dated
June 12, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee, with respect to
the Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan and certain
employment agreements (filed as Exhibit
10(a) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 and incorporated
by reference) Not Applicable
10(n) * Trust Agreement No. 2 (Amended and
Restated effective June 1, 1997), dated
June 12, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee, 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 employment
agreements (filed as Exhibit 10(b) to Form
10-Q of Cleveland-Cliffs Inc filed on
August 13, 1997 and incorporated by
reference) Not Applicable
- --------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
21
10(o) * First Amendment to Trust Agreement No. 2
(Amended and Restated effective June 1,
1997), dated July 15, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(c) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 and incorporated
by reference) Not Applicable
10(p) * Trust Agreement No. 4, dated as of
October 28, 1987, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee, with respect to
the Plan for Deferred Payment of
Directors' Fees (filed as Exhibit 10(p) to
Form 10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by
reference) Not Applicable
10(q) * 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., Trustee 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., Trustee (filed as Exhibit
10(q) to Form 10-K of Cleveland-Cliffs Inc
filed on March 26, 1996 and incorporated
by reference) Not Applicable
10(r) * Third Amendment to Trust Agreement No.
4, dated June 12, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(d) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 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., Trustee, with respect to
the Cleveland-Cliffs Inc Voluntary
Non-Qualified Deferred Compensation Plan
(filed as Exhibit 10(r) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26,
1996 and incorporated by reference) Not Applicable
10(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., Trustee, 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., Trustee 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., Trustee (filed as Exhibit
10(s) to Form 10-K of Cleveland-Cliffs Inc
filed on March 26, 1996 and incorporated
by reference) Not Applicable
- --------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
22
10(u) * 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., Trustee (filed as Exhibit
10(dd) to Form 10-K of Cleveland-Cliffs
Inc filed on March 27, 1995 and
incorporated by reference) Not Applicable
10(v) * Fifth Amendment to Trust Agreement No.
5, dated May 23, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(e) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 and incorporated
by reference) Not Applicable
10(w) * 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., Trustee, with
respect to indemnification agreements with
directors (filed as Exhibit 10(t) to Form
10-K of Cleveland-Cliffs Inc filed on
March 26, 1996 and incorporated by
reference) Not Applicable
10(x) * First Amendment to Amended and Restated
Trust Agreement No. 6, dated June 12,
1997, by and between Cleveland-Cliffs Inc
and Key Trust Company of Ohio, N.A.,
Trustee (filed as Exhibit 10(f) to Form
10-Q of Cleveland-Cliffs Inc filed on
August 13, 1997 and incorporated by
reference) Not Applicable
10(y) * Trust Agreement No. 7, dated as of April
9, 1991, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A.,
Trustee, with respect to the
Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan, as amended by
First Amendment to Trust Agreement No. 7,
by and between Cleveland-Cliffs Inc and
Key Trust Company of Ohio, N.A., Trustee
(filed as Exhibit 10(u) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26,
1996 and incorporated by reference) Not Applicable
10(z) * 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., Trustee (filed as Exhibit
10(ee) to Form 10-K of Cleveland-Cliffs
Inc filed on March 27, 1995 and
incorporated by reference) Not Applicable
10(aa) * Third Amendment to Trust Agreement No.
7, dated May 23, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(g) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 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(bb) * Fourth Amendment to Trust Agreement No.
7, dated July 15, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(h) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 and incorporated
by reference) Not Applicable
10(cc) * Trust Agreement No. 8, dated as of April
9, 1991, by and between Cleveland-Cliffs
Inc and Key Trust Company of Ohio, N.A.,
Trustee, with respect to the
Cleveland-Cliffs Inc Retirement Plan for
Non-Employee Directors, as amended by
First Amendment to Trust Agreement No. 8,
dated as of March 9, 1992 by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(v) to Form 10-K of Cleveland-Cliffs Inc
filed on March 26, 1996 and incorporated
by reference) Not Applicable
10(dd) * Second Amendment to Trust Agreement No.
8, dated June 12, 1997, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee (filed as Exhibit
10(i) to Form 10-Q of Cleveland-Cliffs Inc
filed on August 13, 1997 and incorporated
by reference) Not Applicable
10(ee) * Trust Agreement No. 9, dated as of
November 20, 1996, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee, with respect to
the Cleveland-Cliffs Inc Nonemployee
Directors' Supplemental Compensation Plan
(filed as Exhibit 10(v) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26,
1997 and incorporated by reference) Not Applicable
10(ff) * Trust Agreement No. 10, dated as of
November 20, 1996, by and between
Cleveland-Cliffs Inc and Key Trust Company
of Ohio, N.A., Trustee, with respect to
the Cleveland-Cliffs Inc Nonemployee
Directors' Compensation Plan (filed as
Exhibit 10(w) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26,
1997 and incorporated by reference) Not Applicable
10(gg) * Severance Pay Plan for Key Employees of
Cleveland-Cliffs Inc (as Amended and
Restated as of February 1, 1997), dated
June 26, 1997 (filed as Exhibit 10(k) to
Form 10-Q of Cleveland-Cliffs Inc filed on
August 13, 1997 and incorporated by
reference) Not Applicable
10(hh) * Amendment No. 1 to Severance Pay Plan
for Key Employees of Cleveland-Cliffs Inc
(as Amended and Restated as of February 1,
1997), effective as of November 1, 1997,
dated March 31, 1998 (filed as Exhibit
10(c) to Form 10-Q of Cleveland-Cliffs Inc
filed on May 1, 1998 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(ii) * Cleveland-Cliffs Inc Voluntary
Non-Qualified Deferred Compensation Plan,
Amended and Restated as of December 1,
1996 (filed as Exhibit 10(z) to Form 10-K
of Cleveland-Cliffs Inc filed on March 26,
1997 and incorporated by reference) Not Applicable
10(jj) * Amendment No. 1 to Cleveland-Cliffs Inc
Voluntary Non-Qualified Deferred
Compensation Plan (Amended and Restated as
of December 1, 1996) effective as of
November 1, 1997, dated March 31, 1998
(filed as Exhibit 10(b) to Form 10-Q of
Cleveland-Cliffs Inc filed on May 1, 1998
and incorporated by reference) Not Applicable
10(kk) * Cleveland-Cliffs Inc Long-Term
Performance Share Program, effective as of
March 31, 1994, as amended as of January
13, 1997 (filed as Exhibit 10(n) to Form
10-Q of Cleveland-Cliffs Inc filed on
August 13, 1997 and incorporated by
reference) Not Applicable
10(ll) * Cleveland-Cliffs Inc Nonemployee
Directors' Supplemental Compensation Plan,
effective as of July 1, 1995 (filed as
Exhibit 10(b) to Form 10-Q of
Cleveland-Cliffs Inc filed on November 13,
1996 and incorporated by reference) Not Applicable
10(mm) * First Amendment to Cleveland-Cliffs Inc
Nonemployee Directors' Supplemental
Compensation Plan, effective as of January
1, 1999 Filed Herewith
10(nn) * Cleveland-Cliffs Inc Nonemployee
Directors' Compensation Plan, effective as
of July 1, 1996 (filed as Appendix A to
Proxy Statement of Cleveland-Cliffs Inc
filed on March 25, 1996 and incorporated
by reference) Not Applicable
10(oo) * First Amendment to Cleveland-Cliffs Inc
Nonemployee Directors' Compensation Plan,
effective as of November 12, 1996 (filed
as Exhibit 10(dd) to Form 10-K of
Cleveland-Cliffs Inc filed on March 26,
1997 and incorporated by reference) Not Applicable
10(pp) * Second Amendment to Cleveland-Cliffs Inc
Nonemployee Directors' Compensation Plan,
effective as of May 13, 1997 (filed as
Exhibit 10(m) to Form 10-Q of
Cleveland-Cliffs Inc filed on August 13,
1997 and incorporated by reference) Not Applicable
10(qq) * Third Amendment to Cleveland-Cliffs Inc
Nonemployee Directors' Compensation Plan,
effective as of January 1, 1999 Filed Herewith
- --------------------
* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
25
13 Selected portions of 1998 Annual Report to Security Holders
13(a) Management's Discussion and Analysis of Filed Herewith
Financial Condition and Results of Operations (Page 27-37)
13(c) Statement of Consolidated Financial Position Filed Herewith
(Page 38-39)
13(d) Statement of Consolidated Income Filed Herewith
(Page 40)
13(e) Statement of Consolidated Cash Flows Filed Herewith
(Page 41)
13(f) Statement of Consolidated Shareholders' Equity Filed Herewith
(Page 42)
13(g) Notes to Consolidated Financial Statements Filed Herewith
(Page 43-60)
13(h) Quarterly Results of Operations/Common Share Filed Herewith
Price Performance and Dividends (Page 61)
13(i) Investor and Corporate Information Filed Herewith
(Page 62)
13(j) Summary of Financial and Other Statistical Data Filed Herewith
(Page 63-64)
21 Subsidiaries of the registrant Filed Herewith
(Page 65-67)
23 Consent of independent auditors Filed Herewith
(Page 68)
24 Power of Attorney Filed Herewith
(Page 69)
27 Consolidated Financial Data Schedule submitted
for Securities and Exchange Commission information ---
99 Additional Exhibits
99(a) Schedule II - Valuation and Qualifying Accounts Filed Herewith
(Page 70)
26