ǿմý

Quarterly report pursuant to Section 13 or 15(d)

SUPPLEMENTARY GUARANTOR INFORMATION

v3.8.0.1
SUPPLEMENTARY GUARANTOR INFORMATION
 3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Supplemental Guarantor Information [Text Block]
NOTE 21 - SUPPLEMENTARY GUARANTOR INFORMATION
The accompanying unaudited 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 $1.075 billion 5.75% 2025 Senior Notes issued by ǿմý Inc. See NOTE 7 - DEBT AND CREDIT FACILITIES for further information.
The following presents the unaudited 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 March31, 2018 and December31, 2017. The unaudited condensed consolidating financial information is presented as if the Guarantor structure at March31, 2018 existed for all periods presented. As a result, the Guarantor subsidiaries within the unaudited condensed consolidating financial information as of March31, 2018 and December31, 2017 and for the three months ended March31, 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 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 unaudited consolidating financial information follows the same accounting policies as described in the consolidated financial statements. The accompanying unaudited 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.

Unaudited Condensed Consolidating Statement of Financial Position
As of March 31, 2018
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
753.6

$
1.0

$
32.0

$
—

$
786.6

Accounts receivable, net
5.7

27.7

15.9

(2.1
)
47.2

Inventories
—

303.2

21.2

—

324.4

Supplies and other inventories
—

81.4

0.3

—

81.7

Derivative assets
—

93.6

—

—

93.6

Loans to and accounts receivable from the Canadian Entities
43.5

6.9

—

—

50.4

Other current assets
15.5

7.9

5.1

—

28.5

TOTAL CURRENT ASSETS
818.3

521.7

74.5

(2.1
)
1,412.4

PROPERTY, PLANT AND EQUIPMENT, NET
16.2

956.9

74.2

—

1,047.3

OTHER ASSETS
Deposits for property, plant and equipment
—

1.9

72.2

—

74.1

Income tax receivable
219.9

—

—

—

219.9

Investment in subsidiaries
1,185.7

27.4

—

(1,213.1
)
—

Long-term intercompany notes
—

—

242.0

(242.0
)
—

Other non-current assets
8.9

97.9

2.4

—

109.2

TOTAL OTHER ASSETS
1,414.5

127.2

316.6

(1,455.1
)
403.2

TOTAL ASSETS
$
2,249.0

$
1,605.8

$
465.3

$
(1,457.2
)
$
2,862.9

LIABILITIES
CURRENT LIABILITIES
Accounts payable
$
4.6

$
71.8

$
25.2

$
(2.1
)
$
99.5

Accrued expenses
11.1

60.0

23.3

—

94.4

Accrued interest
28.2

—

—

—

28.2

Contingent claims
54.3

—

—

—

54.3

Partnership distribution payable
—

44.2

—

—

44.2

Other current liabilities
1.8

63.3

39.2

—

104.3

TOTAL CURRENT LIABILITIES
100.0

239.3

87.7

(2.1
)
424.9

PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES
66.1

429.6

(244.3
)
—

251.4

ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
—

143.1

38.1

—

181.2

LONG-TERM DEBT
2,308.2

—

—

—

2,308.2

LONG-TERM INTERCOMPANY NOTES
242.0

—

—

(242.0
)
—

OTHER LIABILITIES
17.5

142.9

21.6

—

182.0

TOTAL LIABILITIES
2,733.8

954.9

(96.9
)
(244.1
)
3,347.7

EQUITY
TOTAL CLIFFS SHAREHOLDERS' DEFICIT
(484.8
)
650.9

562.0

(1,213.1
)
(485.0
)
NONCONTROLLING INTEREST
—

—

0.2

—

0.2

TOTAL DEFICIT
(484.8
)
650.9

562.2

(1,213.1
)
(484.8
)
TOTAL LIABILITIES AND DEFICIT
$
2,249.0

$
1,605.8

$
465.3

$
(1,457.2
)
$
2,862.9

Unaudited 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

$
56.7

$
—

$
1,007.7

Accounts receivable, net
4.5

102.9

33.9

(0.7
)
140.6

Inventories
—

138.4

45.0

—

183.4

Supplies and other inventories
—

88.8

5.1

—

93.9

Derivative assets
—

37.9

1.5

—

39.4

Loans to and accounts receivable from the Canadian Entities
44.7

6.9

—

—

51.6

Other current assets
16.4

7.5

4.1

—

28.0

TOTAL CURRENT ASSETS
1,014.5

384.5

146.3

(0.7
)
1,544.6

PROPERTY, PLANT AND EQUIPMENT, NET
17.5

959.0

74.5

—

1,051.0

OTHER ASSETS
Deposits for property, plant and equipment
—

1.3

16.5

—

17.8

Income tax receivable
235.3

—

—

—

235.3

Investment in subsidiaries
1,024.3

29.9

—

(1,054.2
)
—

Long-term intercompany notes
—

—

242.0

(242.0
)
—

Other non-current assets
7.8

91.7

5.2

—

104.7

TOTAL OTHER ASSETS
1,267.4

122.9

263.7

(1,296.2
)
357.8

TOTAL ASSETS
$
2,299.4

$
1,466.4

$
484.5

$
(1,296.9
)
$
2,953.4

LIABILITIES
CURRENT LIABILITIES
Accounts payable
$
7.1

$
89.7

$
31.6

$
(0.7
)
$
127.7

Accrued expenses
19.0

59.9

28.2

—

107.1

Accrued interest
31.4

—

—

—

31.4

Contingent claims
55.6

—

—

—

55.6

Partnership distribution payable
—

44.2

—

—

44.2

Other current liabilities
2.1

63.5

20.6

—

86.2

TOTAL CURRENT LIABILITIES
115.2

257.3

80.4

(0.7
)
452.2

PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES
66.4

430.6

(239.3
)
—

257.7

ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
—

140.6

55.9

—

196.5

LONG-TERM DEBT
2,304.2

—

—

—

2,304.2

LONG-TERM INTERCOMPANY NOTES
242.0

—

—

(242.0
)
—

OTHER LIABILITIES
15.7

147.2

24.0

—

186.9

TOTAL LIABILITIES
2,743.5

975.7

(79.0
)
(242.7
)
3,397.5

EQUITY
TOTAL CLIFFS SHAREHOLDERS' DEFICIT
(444.1
)
490.7

563.3

(1,054.2
)
(444.3
)
NONCONTROLLING INTEREST
—

—

0.2

—

0.2

TOTAL DEFICIT
(444.1
)
490.7

563.5

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

$
1,466.4

$
484.5

$
(1,296.9
)
$
2,953.4


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

$
169.2

$
51.5

$
—

$
220.7

Freight and venture partners' cost reimbursements
—

10.8

7.5

—

18.3

—

180.0

59.0

—

239.0

COST OF GOODS SOLD AND OPERATING EXPENSES
—

(118.5
)
(124.1
)
—

(242.6
)
SALES MARGIN
—

61.5

(65.1
)
—

(3.6
)
OTHER OPERATING EXPENSE
Selling, general and administrative expenses
(20.1
)
(4.3
)
(3.3
)
—

(27.7
)
Miscellaneous – net
(0.2
)
(5.3
)
(3.2
)
—

(8.7
)
(20.3
)
(9.6
)
(6.5
)
—

(36.4
)
OPERATING INCOME (LOSS)
(20.3
)
51.9

(71.6
)
—

(40.0
)
OTHER INCOME (EXPENSE)
Interest expense, net
(31.9
)
(0.8
)
(0.8
)
—

(33.5
)
Other non-operating income (expense)
(0.9
)
0.5

4.8

—

4.4

(32.8
)
(0.3
)
4.0

—

(29.1
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(53.1
)
51.6

(67.6
)
—

(69.1
)
INCOME TAX EXPENSE
(15.6
)
(0.1
)
—

—

(15.7
)
EQUITY IN INCOME (LOSS) OF SUBSIDIARIES
(15.7
)
4.5

—

11.2

—

INCOME (LOSS) FROM CONTINUING OPERATIONS
(84.4
)
56.0

(67.6
)
11.2

(84.8
)
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
0.1

0.2

0.2

—

0.5

NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
(84.3
)
$
56.2

$
(67.4
)
$
11.2

$
(84.3
)
OTHER COMPREHENSIVE INCOME
7.7

5.9

0.8

(6.7
)
7.7

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
(76.6
)
$
62.1

$
(66.6
)
$
4.5

$
(76.6
)
Unaudited Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
For the Three Months Ended March 31, 2017
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
REVENUES FROM PRODUCT SALES AND SERVICES
Product
$
—

$
247.3

$
165.5

$
—

$
412.8

Freight and venture partners' cost reimbursements
—

38.9

9.9

—

48.8

—

286.2

175.4

—

461.6

COST OF GOODS SOLD AND OPERATING EXPENSES
—

(237.2
)
(128.1
)
—

(365.3
)
SALES MARGIN
—

49.0

47.3

—

96.3

OTHER OPERATING INCOME (EXPENSE)
Selling, general and administrative expenses
(19.5
)
(4.4
)
(3.8
)
—

(27.7
)
Miscellaneous – net
(0.1
)
(5.5
)
17.1

—

11.5

(19.6
)
(9.9
)
13.3

—

(16.2
)
OPERATING INCOME (LOSS)
(19.6
)
39.1

60.6

—

80.1

OTHER INCOME (EXPENSE)
Interest expense, net
(41.6
)
—

(1.2
)
—

(42.8
)
Loss on extinguishment of debt
(71.9
)
—

—

—

(71.9
)
Other non-operating income (expense)
(1.0
)
(0.8
)
4.3

—

2.5

(114.5
)
(0.8
)
3.1

—

(112.2
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(134.1
)
38.3

63.7

—

(32.1
)
INCOME TAX BENEFIT (EXPENSE)
5.2

(0.8
)
(2.6
)
—

1.8

EQUITY IN INCOME OF SUBSIDIARIES
100.4

3.2

—

(103.6
)
—

INCOME (LOSS) FROM CONTINUING OPERATIONS
(28.5
)
40.7

61.1

(103.6
)
(30.3
)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax
0.4

0.2

(0.1
)
—

0.5

NET INCOME (LOSS)
(28.1
)
40.9

61.0

(103.6
)
(29.8
)
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
—

1.7

—

—

1.7

NET INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
(28.1
)
$
42.6

$
61.0

$
(103.6
)
$
(28.1
)
OTHER COMPREHENSIVE INCOME (LOSS)
(3.0
)
10.8

(17.8
)
7.0

(3.0
)
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
$
(31.1
)
$
53.4

$
43.2

$
(96.6
)
$
(31.1
)

Unaudited Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2018
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Net cash used by operating activities
$
(54.7
)
$
(62.8
)
$
(25.4
)
$
—

$
(142.9
)
INVESTING ACTIVITIES
Purchase of property, plant and equipment
—

(8.1
)
(4.3
)
—

(12.4
)
Deposits for property, plant and equipment
—

(0.8
)
(58.2
)
—

(59.0
)
Intercompany investing
(137.7
)
(4.8
)
—

142.5

—

Net cash used by investing activities
(137.7
)
(13.7
)
(62.5
)
142.5

(71.4
)
FINANCING ACTIVITIES
Debt issuance costs
(1.5
)
—

—

—

(1.5
)
Intercompany financing
—

75.9

66.6

(142.5
)
—

Other financing activities
(1.4
)
(0.5
)
(3.6
)
—

(5.5
)
Net cash provided (used) by financing activities
(2.9
)
75.4

63.0

(142.5
)
(7.0
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
—

—

0.2

—

0.2

DECREASE IN CASH AND CASH EQUIVALENTS
(195.3
)
(1.1
)
(24.7
)
—

(221.1
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
948.9

2.1

56.7

—

1,007.7

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
753.6

$
1.0

$
32.0

$
—

$
786.6


Unaudited Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2017
(In Millions)
ǿմý Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Net cash provided (used) by operating activities
$
(99.5
)
$
(19.7
)
$
94.1

$
—

$
(25.1
)
INVESTING ACTIVITIES
Purchase of property, plant and equipment
(0.8
)
(24.9
)
(0.2
)
—

(25.9
)
Deposits for property, plant and equipment
—

(2.0
)
—

—

(2.0
)
Intercompany investing
(56.5
)
(0.5
)
(45.0
)
102.0

—

Other investing activities
—

0.5

—

—

0.5

Net cash used by investing activities
(57.3
)
(26.9
)
(45.2
)
102.0

(27.4
)
FINANCING ACTIVITIES
Net proceeds from issuance of common shares
661.3

—

—

—

661.3

Proceeds from issuance of debt
500.0

—

—

—

500.0

Debt issuance costs
(8.5
)
—

—

—

(8.5
)
Repurchase of debt
(1,115.5
)
—

—

—

(1,115.5
)
Distributions of partnership equity
—

(8.7
)
—

—

(8.7
)
Intercompany financing
45.1

55.8

1.1

(102.0
)
—

Other financing activities
(0.5
)
(0.7
)
(4.4
)
—

(5.6
)
Net cash provided (used) by financing activities
81.9

46.4

(3.3
)
(102.0
)
23.0

EFFECT OF EXCHANGE RATE CHANGES ON CASH
—

—

1.4

—

1.4

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(74.9
)
(0.2
)
47.0

—

(28.1
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
283.4

2.5

37.5

—

323.4

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
208.5

$
2.3

$
84.5

$
—

$
295.3