ǿմý

Annual report pursuant to Section 13 and 15(d)

SUPPLEMENTARY GUARANTOR INFORMATION

v3.10.0.1
SUPPLEMENTARY GUARANTOR INFORMATION
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
SUPPLEMENTARY GUARANTOR INFORMATION
NOTE 22 - SUPPLEMENTARY GUARANTOR INFORMATION
The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” Certain of our subsidiaries have guaranteed the obligations under the $1.075 billion 5.75% 2025 Senior Notes issued by ǿմý Inc. See NOTE 6 - DEBT AND CREDIT FACILITIES for further information.
The following presents the condensed consolidating financial information for: (i)the Parent Company and the Issuer of the guaranteed obligations (ǿմý Inc.); (ii)the Guarantor subsidiaries, on a combined basis; (iii)the non-guarantor subsidiaries, on a combined basis; (iv)consolidating eliminations; and (v)ǿմý Inc. and Subsidiaries on a consolidated basis. Each Guarantor subsidiary is 100% owned by the Parent Company as of December 31, 2018. The condensed consolidating financial information is presented as if the Guarantor structure at December 31, 2018 existed for all years presented. As a result, the Guarantor subsidiaries within the condensed consolidating financial information as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 include results of subsidiaries that were previously less than wholly-owned and were historically non-guarantors until 100% ownership was obtained.
Each of the Guarantor subsidiaries fully and unconditionally guarantee, on a joint and several basis, the obligations of ǿմý Inc. under the $1.075 billion 5.75% 2025 Senior Notes. The guarantee of a Guarantor subsidiary will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indenture governing the $1.075 billion 5.75% 2025 Senior Notes (the “Indenture”) will be automatically and unconditionally released and discharged, upon:
(a) any sale, exchange, transfer or disposition of such Guarantor subsidiary (by merger, consolidation, or the sale of) or the capital stock of such Guarantor subsidiary after which the applicable Guarantor subsidiary is no longer a subsidiary of the Company or the sale of all or substantially all of such Guarantor subsidiary’s assets (other than by lease);
(b) upon designation of any Guarantor subsidiary as an “excluded subsidiary” (as defined in the Indenture); and
(c) upon defeasance or satisfaction and discharge of the Indenture.
Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements. The accompanying condensed consolidating financial information has been presented on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the subsidiaries’ cumulative results of operations, capital contributions and distributions, and other changes in equity. Elimination entries include consolidating and eliminating entries for investments in subsidiaries, and intra-entity activity and balances.
Condensed Consolidating Statement of Financial Position
As of December 31, 2018
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
819.8

$
0.7

$
2.7

$

$
823.2

Accounts receivable, net
9.2

221.3

0.3

(4.1
)
226.7

Inventories

87.9



87.9

Supplies and other inventories

93.2



93.2

Derivative assets
0.1

91.4



91.5

Income tax receivable, current
117.3




117.3

Current assets of discontinued operations


12.4


12.4

Other current assets
10.0

16.9

0.5


27.4

TOTAL CURRENT ASSETS
956.4

511.4

15.9

(4.1
)
1,479.6

PROPERTY, PLANT AND EQUIPMENT, NET
13.3

1,221.9

50.8


1,286.0

OTHER ASSETS
Deposits for property, plant and equipment

68.4

14.6


83.0

Income tax receivable, non-current
117.2

4.1



121.3

Deferred income taxes
463.6


1.2


464.8

Investment in subsidiaries
1,262.3

50.8


(1,313.1
)

Long-term intercompany notes


121.3

(121.3
)

Other non-current assets
8.0

85.4

1.5


94.9

TOTAL OTHER ASSETS
1,851.1

208.7

138.6

(1,434.4
)
764.0

TOTAL ASSETS
$
2,820.8

$
1,942.0

$
205.3

$
(1,438.5
)
$
3,529.6

LIABILITIES
CURRENT LIABILITIES
Accounts payable
$
5.3

$
181.4

$
4.2

$
(4.1
)
$
186.8

Accrued employment costs
28.5

45.4

0.1


74.0

State and local taxes payable

35.4

0.1


35.5

Accrued interest
38.4




38.4

Partnership distribution payable

43.5



43.5

Current liabilities of discontinued operations


6.7


6.7

Other current liabilities
30.6

51.3

1.4


83.3

TOTAL CURRENT LIABILITIES
102.8

357.0

12.5

(4.1
)
468.2

POSTEMPLOYMENT BENEFIT LIABILITIES
Pensions
58.3

390.5

(230.4
)

218.4

Other postretirement benefits
6.0

23.9

0.4


30.3

TOTAL POSTEMPLOYMENT BENEFIT LIABILITIES
64.3

414.4

(230.0
)

248.7

ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS

152.1

19.9


172.0

LONG-TERM DEBT
2,092.9




2,092.9

LONG-TERM INTERCOMPANY NOTES
121.3



(121.3
)

NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS


8.3


8.3

OTHER LIABILITIES
15.3

99.5

0.5


115.3

TOTAL LIABILITIES
2,396.6

1,023.0

(188.8
)
(125.4
)
3,105.4

COMMITMENTS AND CONTINGENCIES
EQUITY
TOTAL EQUITY
424.2

919.0

394.1

(1,313.1
)
424.2

TOTAL LIABILITIES AND EQUITY
$
2,820.8

$
1,942.0

$
205.3

$
(1,438.5
)
$
3,529.6


Condensed Consolidating Statement of Financial Position
As of December 31, 2017
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
948.9

$
2.1

$
27.3

$

$
978.3

Accounts receivable, net
4.5

102.9


(0.7
)
106.7

Inventories

138.4



138.4

Supplies and other inventories

88.8



88.8

Derivative assets

37.9



37.9

Income tax receivable, current
11.4

1.9



13.3

Loans to and accounts receivables from the Canadian Entities
44.7

6.9



51.6

Current assets of discontinued operations


118.5


118.5

Other current assets
5.0

5.6

0.5


11.1

TOTAL CURRENT ASSETS
1,014.5

384.5

146.3

(0.7
)
1,544.6

PROPERTY, PLANT AND EQUIPMENT, NET
17.5

965.5

50.8


1,033.8

OTHER ASSETS
Deposits for property, plant and equipment

8.2

9.6


17.8

Income tax receivable, non-current
235.3




235.3

Investment in subsidiaries
1,024.3

29.9


(1,054.2
)

Long-term intercompany notes


242.0

(242.0
)

Non-current assets of discontinued operations


20.3


20.3

Other non-current assets
7.8

91.8

2.0


101.6

TOTAL OTHER ASSETS
1,267.4

129.9

273.9

(1,296.2
)
375.0

TOTAL ASSETS
$
2,299.4

$
1,479.9

$
471.0

$
(1,296.9
)
$
2,953.4

LIABILITIES
CURRENT LIABILITIES
Accounts payable
$
7.1

$
92.3

$
0.8

$
(0.7
)
$
99.5

Accrued employment costs
13.7

38.9

0.1


52.7

State and local taxes payable

30.0

0.2


30.2

Accrued interest
31.4




31.4

Contingent claims
55.6




55.6

Partnership distribution payable

44.2



44.2

Current liabilities of discontinued operations


75.0


75.0

Other current liabilities
7.4

54.5

1.7


63.6

TOTAL CURRENT LIABILITIES
115.2

259.9

77.8

(0.7
)
452.2

POSTEMPLOYMENT BENEFIT LIABILITIES
Pensions
59.2

403.6

(240.0
)

222.8

Other postretirement benefits
7.2

27.0

0.7


34.9

TOTAL POSTEMPLOYMENT BENEFIT LIABILITIES
66.4

430.6

(239.3
)

257.7

ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS

140.6

27.1


167.7

LONG-TERM DEBT
2,304.2




2,304.2

LONG-TERM INTERCOMPANY NOTES
242.0



(242.0
)

NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS


52.2


52.2

OTHER LIABILITIES
15.7

147.2

0.6


163.5

TOTAL LIABILITIES
2,743.5

978.3

(81.6
)
(242.7
)
3,397.5

COMMITMENTS AND CONTINGENCIES
EQUITY
TOTAL CLIFFS SHAREHOLDERS' EQUITY (DEFICIT)
(444.1
)
501.6

552.4

(1,054.2
)
(444.3
)
NONCONTROLLING INTEREST


0.2


0.2

TOTAL DEFICIT
(444.1
)
501.6

552.6

(1,054.2
)
(444.1
)
TOTAL LIABILITIES AND DEFICIT
$
2,299.4

$
1,479.9

$
471.0

$
(1,296.9
)
$
2,953.4


Condensed Consolidating Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2018
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
REVENUES FROM PRODUCT SALES AND SERVICES
Product
$

$
2,172.3

$

$

$
2,172.3

Freight and venture partners' cost reimbursements

160.1



160.1


2,332.4



2,332.4

COST OF GOODS SOLD AND OPERATING EXPENSES

(1,522.8
)


(1,522.8
)
SALES MARGIN

809.6



809.6

OTHER OPERATING INCOME (EXPENSE)
Selling, general and administrative expenses
(86.1
)
(30.4
)
(0.3
)

(116.8
)
Miscellaneous - net
(0.3
)
(23.6
)
4.3


(19.6
)
(86.4
)
(54.0
)
4.0


(136.4
)
OPERATING INCOME (LOSS)
(86.4
)
755.6

4.0


673.2

OTHER INCOME (EXPENSE)
Interest expense, net
(117.6
)
(2.1
)
0.8


(118.9
)
Loss on extinguishment of debt
(6.8
)



(6.8
)
Other non-operating income (loss)
(3.5
)
0.9

19.8


17.2

(127.9
)
(1.2
)
20.6


(108.5
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(214.3
)
754.4

24.6


564.7

INCOME TAX BENEFIT
474.7


0.5


475.2

EQUITY IN INCOME OF SUBSIDIARIES
858.2

25.5


(883.7
)

INCOME FROM CONTINUING OPERATIONS
1,118.6

779.9

25.1

(883.7
)
1,039.9

INCOME FROM DISCONTINUED OPERATIONS, net of tax
9.5

12.3

66.4


88.2

NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
1,128.1

$
792.2

$
91.5

$
(883.7
)
$
1,128.1

OTHER COMPREHENSIVE LOSS
(244.9
)
(24.1
)
(256.7
)
280.8

(244.9
)
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
883.2

$
768.1

$
(165.2
)
$
(602.9
)
$
883.2

Condensed Consolidating Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2017
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
REVENUES FROM PRODUCT SALES AND SERVICES
Product
$

$
1,644.6

$

$

$
1,644.6

Freight and venture partners' cost reimbursements

221.4



221.4


1,866.0



1,866.0

COST OF GOODS SOLD AND OPERATING EXPENSES

(1,398.4
)


(1,398.4
)
SALES MARGIN

467.6



467.6

OTHER OPERATING INCOME (EXPENSE)
Selling, general and administrative expenses
(77.2
)
(19.9
)
(5.8
)

(102.9
)
Miscellaneous - net
(2.3
)
11.0

16.8


25.5

(79.5
)
(8.9
)
11.0


(77.4
)
OPERATING INCOME (LOSS)
(79.5
)
458.7

11.0


390.2

OTHER INCOME (EXPENSE)
Interest expense, net
(126.8
)
(1.0
)
1.0


(126.8
)
Loss on extinguishment of debt
(165.4
)



(165.4
)
Other non-operating income (expense)
(4.0
)
(3.0
)
17.2


10.2

(296.2
)
(4.0
)
18.2


(282.0
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(375.7
)
454.7

29.2


108.2

INCOME TAX BENEFIT (EXPENSE)
251.4

1.3

(0.3
)

252.4

EQUITY IN INCOME OF SUBSIDIARIES
512.6

11.8


(524.4
)

INCOME FROM CONTINUING OPERATIONS
388.3

467.8

28.9

(524.4
)
360.6

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax
(21.3
)
1.7

22.1


2.5

NET INCOME
367.0

469.5

51.0

(524.4
)
363.1

INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

3.9



3.9

NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
367.0

$
473.4

$
51.0

$
(524.4
)
$
367.0

OTHER COMPREHENSIVE INCOME (LOSS)
(4.0
)
12.9

(4.8
)
(8.1
)
(4.0
)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
363.0

$
486.3

$
46.2

$
(532.5
)
$
363.0

Condensed Consolidating Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2016
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
REVENUES FROM PRODUCT SALES AND SERVICES
Product
$

$
1,379.7

$

$

$
1,379.7

Freight and venture partners' cost reimbursements

174.8



174.8


1,554.5



1,554.5

COST OF GOODS SOLD AND OPERATING EXPENSES

(1,274.4
)


(1,274.4
)
SALES MARGIN

280.1



280.1

OTHER OPERATING INCOME (EXPENSE)
Selling, general and administrative expenses
(94.3
)
(18.0
)
(3.5
)

(115.8
)
Miscellaneous - net
(5.6
)
(12.4
)
(15.6
)

(33.6
)
(99.9
)
(30.4
)
(19.1
)

(149.4
)
OPERATING INCOME (LOSS)
(99.9
)
249.7

(19.1
)

130.7

OTHER INCOME (EXPENSE)
Interest expense, net
(194.5
)
0.1

0.5


(193.9
)
Gain on extinguishment/restructuring of debt
166.3




166.3

Other non-operating income (expense)
(4.1
)
(5.0
)
16.4


7.3

(32.3
)
(4.9
)
16.9


(20.3
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(132.2
)
244.8

(2.2
)

110.4

INCOME TAX BENEFIT
4.3

3.0

4.9


12.2

EQUITY IN INCOME OF SUBSIDIARIES
319.1

13.7


(332.8
)

INCOME FROM CONTINUING OPERATIONS
191.2

261.5

2.7

(332.8
)
122.6

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax
(17.1
)
2.6

91.2


76.7

NET INCOME (LOSS)
174.1

264.1

93.9

(332.8
)
199.3

INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

(25.2
)


(25.2
)
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
174.1

$
238.9

$
93.9

$
(332.8
)
$
174.1

OTHER COMPREHENSIVE INCOME (LOSS)
(3.3
)
(20.7
)
15.4

5.3

(3.3
)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
170.8

$
218.2

$
109.3

$
(327.5
)
$
170.8


Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2018
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Net cash provided (used) by operating activities
$
(120.7
)
$
741.0

$
(141.8
)
$

$
478.5

INVESTING ACTIVITIES
Purchase of property, plant and equipment
(1.2
)
(207.3
)
(0.1
)

(208.6
)
Deposits for property, plant and equipment

(82.3
)
(5.2
)

(87.5
)
Intercompany investing
399.1

(7.1
)
120.7

(512.7
)

Other investing activities

3.1

19.9


23.0

Net cash provided (used) in investing activities
397.9

(293.6
)
135.3

(512.7
)
(273.1
)
FINANCING ACTIVITIES
Repurchase of common shares
(47.5
)



(47.5
)
Debt issuance costs
(1.5
)



(1.5
)
Repurchase of debt
(234.5
)



(234.5
)
Distributions of partnership equity

(44.2
)


(44.2
)
Intercompany financing
(120.7
)
(402.4
)
10.4

512.7


Other financing activities
(2.1
)
(2.2
)
(43.2
)

(47.5
)
Net cash used by financing activities
(406.3
)
(448.8
)
(32.8
)
512.7

(375.2
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH


(2.3
)

(2.3
)
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
(129.1
)
(1.4
)
(41.6
)

(172.1
)
LESS: DECREASE IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS


(17.0
)

(17.0
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(129.1
)
(1.4
)
(24.6
)

(155.1
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
948.9

2.1

27.3


978.3

CASH AND CASH EQUIVALENTS AT END OF YEAR
$
819.8

$
0.7

$
2.7

$

$
823.2

Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2017
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Net cash provided (used) by operating activities
$
(166.8
)
$
430.0

$
74.9

$

$
338.1

INVESTING ACTIVITIES
Purchase of property, plant and equipment
(3.4
)
(79.8
)
(51.7
)

(134.9
)
Deposits for property, plant and equipment

(11.7
)
(5.1
)

(16.8
)
Intercompany investing
225.7

(7.3
)
(45.1
)
(173.3
)

Other investing activities
(7.7
)
3.4



(4.3
)
Net cash provided (used) by investing activities
214.6

(95.4
)
(101.9
)
(173.3
)
(156.0
)
FINANCING ACTIVITIES
Net proceeds from issuance of common shares
661.3




661.3

Proceeds from issuance of debt
1,771.5




1,771.5

Debt issuance costs
(28.6
)



(28.6
)
Repurchase of debt
(1,720.7
)



(1,720.7
)
Acquisition of noncontrolling interest
(105.0
)



(105.0
)
Distributions of partnership equity

(52.9
)


(52.9
)
Intercompany financing
45.0

(277.6
)
59.3

173.3


Other financing activities
(5.8
)
(4.5
)
(16.4
)

(26.7
)
Net cash provided (used) by financing activities
617.7

(335.0
)
42.9

173.3

498.9

EFFECT OF EXCHANGE RATE CHANGES ON CASH


3.3


3.3

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
665.5

(0.4
)
19.2


684.3

LESS: INCREASE IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS


18.8


18.8

NET INCREASE IN CASH AND CASH EQUIVALENTS
665.5

(0.4
)
0.4


665.5

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
283.4

2.5

26.9


312.8

CASH AND CASH EQUIVALENTS AT END OF YEAR
$
948.9

$
2.1

$
27.3

$

$
978.3

Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2016
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Net cash provided (used) by operating activities
$
(275.7
)
$
462.9

$
115.8

$

$
303.0

INVESTING ACTIVITIES
Purchase of property, plant and equipment
(6.2
)
(55.1
)
(0.4
)

(61.7
)
Deposits for property, plant and equipment

(4.9
)
(2.5
)

(7.4
)
Intercompany investments
356.6

(3.3
)
(117.0
)
(236.3
)

Other investing activities
0.4

10.8



11.2

Net cash provided (used) by investing activities
350.8

(52.5
)
(119.9
)
(236.3
)
(57.9
)
FINANCING ACTIVITIES
Net proceeds from issuance of common shares
287.4




287.4

Debt issuance costs
(5.2
)



(5.2
)
Borrowings under credit facilities
105.0




105.0

Repayments on credit facilities
(105.0
)



(105.0
)
Repayments on equipment loans
(95.6
)



(95.6
)
Repurchase of debt
(305.4
)



(305.4
)
Distributions of partnership equity

(59.9
)


(59.9
)
Intercompany financing
117.0

(339.9
)
(13.4
)
236.3


Other financing activities
(0.6
)
(9.9
)
(17.2
)

(27.7
)
Net cash used by financing activities
(2.4
)
(409.7
)
(30.6
)
236.3

(206.4
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH


(0.5
)

(0.5
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS
72.7

0.7

(35.2
)

38.2

LESS: DECREASE IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS


(35.3
)

(35.3
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
72.7

0.7

0.1


73.5

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
210.7

1.8

26.8


239.3

CASH AND CASH EQUIVALENTS AT END OF YEAR
$
283.4

$
2.5

$
26.9

$

$
312.8