ǿմý

Annual report pursuant to Section 13 and 15(d)

SUPPLEMENTARY GUARANTOR INFORMATION

v3.19.3.a.u2
SUPPLEMENTARY GUARANTOR INFORMATION
 12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
SUPPLEMENTARY GUARANTOR INFORMATION
NOTE 21 - 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 (the "Guarantors") have guaranteed the obligations under the 5.75% 2025 Senior Notes and the 5.875% 2027 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, 2019. The condensed consolidating financial information is presented as if the Guarantor structure at December 31, 2019 existed for all years presented. As a result, the Guarantor subsidiaries within the condensed consolidating financial information as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 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 guarantees, on a joint and several basis, the obligations of ǿմý Inc. under the 5.75% 2025 Senior Notes and the 5.875% 2027 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 5.75% 2025 Senior Notes and the 5.875% 2027 Senior Notes (the “Indentures”) 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) designation of any Guarantor subsidiary as an “excluded subsidiary” (as defined in the Indenture); and
(c) 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, 2019
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
ASSETS
Current Assets:
Cash and cash equivalents
$
349.7

$
0.1

$
2.8

$
—

$
352.6

Accounts receivable, net
4.9

93.0

0.3

(4.2
)
94.0

Inventories
—

317.4

—

—

317.4

Derivative assets
—

45.8

—

—

45.8

Income tax receivable, current
58.6

—

—

—

58.6

Other current assets
9.1

13.0

7.4

—

29.5

Total current assets
422.3

469.3

10.5

(4.2
)
897.9

Non-current assets:
Property, plant and equipment, net
11.2

1,867.1

50.7

—

1,929.0

Income tax receivable, non-current
58.6

4.1

—

—

62.7

Deferred income taxes
458.3

—

1.2

—

459.5

Investment in subsidiaries
1,821.1

47.2

—

(1,868.3
)
—

Long-term intercompany notes
—

—

121.3

(121.3
)
—

Other non-current assets
15.1

121.4

18.2

—

154.7

TOTAL ASSETS
$
2,786.6

$
2,509.1

$
201.9

$
(1,993.8
)
$
3,503.8

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
5.7

$
187.5

$
4.2

$
(4.2
)
$
193.2

Accrued liabilities
80.7

45.5

0.1

—

126.3

State and local taxes payable
—

37.9

—

—

37.9

Other current liabilities
6.0

38.6

7.4

—

52.0

Total current liabilities
92.4

309.5

11.7

(4.2
)
409.4

Non-current liabilities:
Long-term debt
2,113.8

—

—

—

2,113.8

Pension and OPEB liabilities
80.5

496.9

(265.9
)
—

311.5

Environmental and mine closure obligations
—

145.6

19.3

—

164.9

Long-term intercompany notes
121.3

—

—

(121.3
)
—

Other non-current liabilities
20.7

120.3

5.3

—

146.3

TOTAL LIABILITIES
2,428.7

1,072.3

(229.6
)
(125.5
)
3,145.9

Commitments and contingencies
TOTAL EQUITY
357.9

1,436.8

431.5

(1,868.3
)
357.9

TOTAL LIABILITIES AND EQUITY
$
2,786.6

$
2,509.1

$
201.9

$
(1,993.8
)
$
3,503.8


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
—

181.1

—

—

181.1

Derivative assets
0.1

91.4

—

—

91.5

Income tax receivable, current
117.3

—

—

—

117.3

Other current assets
10.0

16.9

12.9

—

39.8

Total current assets
956.4

511.4

15.9

(4.1
)
1,479.6

Non-current assets:
Property, plant and equipment, net
13.3

1,221.9

50.8

—

1,286.0

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

153.8

16.1

—

177.9

TOTAL ASSETS
$
2,820.8

$
1,942.0

$
205.3

$
(1,438.5
)
$
3,529.6

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
5.3

$
181.4

$
4.2

$
(4.1
)
$
186.8

Accrued liabilities
92.7

66.1

0.1

—

158.9

State and local taxes payable
—

35.4

0.1

—

35.5

Other current liabilities
4.8

74.1

8.1

—

87.0

Total current liabilities
102.8

357.0

12.5

(4.1
)
468.2

Non-current liabilities:
Long-term debt
2,092.9

—

—

—

2,092.9

Pension and OPEB liabilities
64.3

414.4

(230.0
)
—

248.7

Environmental and mine closure obligations
—

152.1

19.9

—

172.0

Long-term intercompany notes
121.3

—

—

(121.3
)
—

Other non-current liabilities
15.3

99.5

8.8

—

123.6

TOTAL LIABILITIES
2,396.6

1,023.0

(188.8
)
(125.4
)
3,105.4

Commitments and contingencies
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 Operations and Comprehensive Income
For the Year Ended December 31, 2019
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Revenues from product sales and services
$
—

$
1,989.9

$
—

$
—

$
1,989.9

Cost of goods sold and operating expenses
—

(1,414.2
)
—

—

(1,414.2
)
Sales margin
—

575.7

—

—

575.7

Other operating income (expense):
Selling, general and administrative expenses
(100.7
)
(18.3
)
(0.4
)
—

(119.4
)
Miscellaneous - net
0.1

(26.0
)
(1.1
)
—

(27.0
)
Total other operating expense
(100.6
)
(44.3
)
(1.5
)
—

(146.4
)
Operating income (loss)
(100.6
)
531.4

(1.5
)
—

429.3

Other income (expense):
Interest income (expense), net
(99.4
)
(2.3
)
0.5

—

(101.2
)
Loss on extinguishment of debt
(18.2
)
—

—

—

(18.2
)
Other non-operating income (expense)
(4.0
)
(12.9
)
19.1

—

2.2

Total other income (expense)
(121.6
)
(15.2
)
19.6

—

(117.2
)
Income (loss) from continuing operations before income taxes
(222.2
)
516.2

18.1

—

312.1

Income tax expense
(17.0
)
(0.4
)
(0.2
)
—

(17.6
)
Equity in income of subsidiaries
531.6

18.3

—

(549.9
)
—

Income from continuing operations
292.4

534.1

17.9

(549.9
)
294.5

Income (loss) from discontinued operations, net of tax
0.4

(0.3
)
(1.8
)
—

(1.7
)
Net income attributable to Cliffs shareholders
$
292.8

$
533.8

$
16.1

$
(549.9
)
$
292.8

Other comprehensive income (loss)
(34.9
)
(35.8
)
16.9

18.9

(34.9
)
Total comprehensive income attributable to Cliffs shareholders
$
257.9

$
498.0

$
33.0

$
(531.0
)
$
257.9

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
For the Year Ended December 31, 2018
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Revenues from product sales and services
$
—

$
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
)
(27.1
)
(0.3
)
—

(113.5
)
Miscellaneous - net
(0.3
)
(26.9
)
4.3

—

(22.9
)
Total other operating income (expense)
(86.4
)
(54.0
)
4.0

—

(136.4
)
Operating income (loss)
(86.4
)
755.6

4.0

—

673.2

Other income (expense):
Interest income (expense), net
(117.6
)
(2.1
)
0.8

—

(118.9
)
Loss on extinguishment of debt
(6.8
)
—

—

—

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

19.8

—

17.2

Total other income (expense)
(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
$
—

$
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

Total other operating income (expense)
(79.5
)
(8.9
)
11.0

—

(77.4
)
Operating income (loss)
(79.5
)
458.7

11.0

—

390.2

Other income (expense):
Interest income (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

Total other income (expense)
(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

Loss 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 Cash Flows
For the Year Ended December 31, 2019
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Net cash provided (used) by operating activities
$
(50.0
)
$
616.3

$
(3.8
)
$
—

$
562.5

INVESTING ACTIVITIES
Purchase of property, plant and equipment
(1.2
)
(637.8
)
—

—

(639.0
)
Deposits for property, plant and equipment
—

(14.0
)
(3.0
)
—

(17.0
)
Intercompany investing
(63.9
)
(3.7
)
(0.1
)
67.7

—

Other investing activities
—

10.8

0.8

—

11.6

Net cash used by investing activities
(65.1
)
(644.7
)
(2.3
)
67.7

(644.4
)
FINANCING ACTIVITIES
Repurchase of common shares
(252.9
)
—

—

—

(252.9
)
Dividends paid
(72.1
)
—

—

—

(72.1
)
Proceeds from issuance of debt
720.9

—

—

—

720.9

Debt issuance costs
(6.8
)
—

—

—

(6.8
)
Repurchase of debt
(729.3
)
—

—

—

(729.3
)
Distributions of partnership equity
—

(44.2
)
—

—

(44.2
)
Intercompany financing
0.1

63.4

4.2

(67.7
)
—

Other financing activities
(14.9
)
8.6

(3.4
)
—

(9.7
)
Net cash provided (used) by financing activities
(355.0
)
27.8

0.8

(67.7
)
(394.1
)
Effect of exchange rate changes on cash
—

—

—

—

—

Decrease in cash and cash equivalents, including cash classified within other current assets related to discontinued operations
(470.1
)
(0.6
)
(5.3
)
—

(476.0
)
Less: decrease in cash and cash equivalents from discontinued operations, classified within other current assets
—

—

(5.4
)
—

(5.4
)
Net increase (decrease) in cash and cash equivalents
(470.1
)
(0.6
)
0.1

—

(470.6
)
Cash and cash equivalents at beginning of year
819.8

0.7

2.7

—

823.2

Cash and cash equivalents at end of year
$
349.7

$
0.1

$
2.8

$
—

$
352.6

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) by 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 other current assets related to discontinued operations
(129.1
)
(1.4
)
(41.6
)
—

(172.1
)
Less: decrease in cash and cash equivalents from discontinued operations, classified within other current assets
—

—

(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 investments
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 on cash
—

—

3.3

—

3.3

Increase (decrease) in cash and cash equivalents, including cash classified within other current assets related to discontinued operations
665.5

(0.4
)
19.2

—

684.3

Less: increase in cash and cash equivalents from discontinued operations, classified within other current assets
—

—

18.8

—

18.8

Net increase (decrease) 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