Cleveland-Cliffs Annual Report 2021
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Cleveland-Cliffs Annual Report 2021 Form 10-K (NYSE:CLF) Published: February 26th, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 clf-20201231_g1.jpg CLEVELAND-CLIFFS INC. (Exact name of registrant as specified in its charter) Ohio 34-1464672 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 200 Public Square, Cleveland, Ohio 44114-2315 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (216) 694-5700 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares, par value $0.125 per share CLF New York Stock Exchange Securities registered pursuant to section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ NO ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ 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 ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of June 30, 2020, the aggregate market value of the voting and non-voting common shares held by non-affiliates of the registrant, based on the closing price of $5.52 per share as reported on the New York Stock Exchange — Composite Index, was $2,171,029,299 (excluded from this figure are the voting shares beneficially owned by the registrant’s officers and directors). The number of shares outstanding of the registrant’s common shares, par value $0.125 per share, was4 98,885,558 as of February 24, 2021. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s proxy statement for its 2021 annual meeting of shareholders are incorporated by reference into Part III. TABLE OF CONTENTS Page Number DEFINITIONS 1 PART I Item 1. Business 4 Information About Our Executive Officers 19 Item 1A. Risk Factors 20 Item 1B. Unresolved Staff Comments 34 Item 2. Properties 35 Item 3. Legal Proceedings 42 Item 4. Mine Safety Disclosures 43 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 44 Securities Item 6. Selected Financial Data 45 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 68 Item 8. Financial Statements and Supplementary Data 69 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 142 Item 9A. Controls and Procedures 142 Item 9B. Other Information 145 PART III Item 10. Directors, Executive Officers and Corporate Governance 146 Item 11. Executive Compensation 146 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 146 Item 13. Certain Relationships and Related Transactions, and Director Independence 146 Item 14. Principal Accountant Fees and Services 146 PART IV Item 15. Exhibits and Financial Statement Schedules 147 Item 16. Form 10-K Summary 153 SIGNATURES 154 DEFINITIONS The following abbreviations or acronyms are used in the text. References in this report to the “Company,” “we,” “us,” “our” and “Cliffs” are to Cleveland-Cliffs Inc. and subsidiaries, collectively. References to “$” is to United States currency. Abbreviation or acronym Term 2012 Amended Equity Plan Cliffs Natural Resources Inc. 2012 Incentive Equity Plan, as amended or amended and restated from time to time A&R 2015 Equity Plan Cliffs Natural Resources Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan ABL Amendment Second Amendment to Asset-Based Revolving Credit Agreement, dated as of December 9, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent ABL Facility Asset-Based Revolving Credit Agreement, dated as of March 13, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent, as amended as of March 27, 2020, and December 9, 2020, and as may be further amended from time to time Acquisitions The AK Steel Merger and AM USA Transaction, together Adjusted EBITDA EBITDA, excluding certain items such as EBITDA of noncontrolling interests, extinguishment of debt, severance, acquisition-related costs, amortization of inventory step-up, impacts of discontinued operations and intersegment corporate allocations of selling, general and administrative costs AG Autogenous grinding AHSS Advanced high-strength steel AK Coal AK Coal Resources, Inc., an indirect, wholly owned subsidiary of AK Steel, and related coal mining assets AK Steel AK Steel Holding Corporation (n/k/a Cleveland-Cliffs Steel Holding Corporation) and its consolidated subsidiaries, including AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation), its direct, wholly owned subsidiary, collectively, unless stated otherwise or the context indicates otherwise AK Steel Merger The merger of Merger Sub with and into AK Steel, with AK Steel surviving the merger as a wholly owned subsidiary of Cleveland-Cliffs Inc., subject to the terms and conditions set forth in the Merger Agreement, consummated on March 13, 2020 AK Steel Merger Agreement Agreement and Plan of Merger, dated as of December 2, 2019, among Cleveland-Cliffs Inc., AK Steel and Merger Sub AM USA Transaction The acquisition of ArcelorMittal USA, consummated on December 9, 2020, and the entry into the ABL Amendment, together AM USA Transaction Agreement Transaction Agreement, dated as of September 28, 2020, by and between Cleveland-Cliffs Inc. and ArcelorMittal S.A. AMT Alternative minimum tax AOCI Accumulated other comprehensive income (loss) APBO Accumulated postretirement benefit obligation ArcelorMittal ArcelorMittal S.A., a company organized under the laws of Luxembourg and the former ultimate parent company of ArcelorMittal USA ArcelorMittal USA Substantially all of the operations of the former ArcelorMittal USA LLC, its subsidiaries and certain affiliates, and Kote and Tek, collectively ASC Accounting Standards Codification ASTM American Society for Testing and Materials ASU Accounting Standards Update BART Best available retrofit technology BNSF Burlington Northern Santa Fe, LLC Board The Board of Directors of Cleveland-Cliffs Inc. CARES Act Coronavirus Aid, Relief, and Economic Security Act CECL Current expected credit losses CERCLA Comprehensive Environmental Response, Compensation and Liability Act of 1980 CFR Cost and freight Clean Water Act Federal Water Pollution Control Act CN Canadian National Railway Company Compensation Committee Compensation and Organization Committee of the Board COVID-19 A novel strain of coronavirus that the World Health Organization declared a global pandemic in March 2020 Directors’ Plan Cliffs Natural Resources Inc. Amended and Restated 2014 Nonemployee Directors’ Compensation Plan Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act DOE U.S. Department of Energy DR-grade Direct reduction-grade EAF Electric arc furnace EBITDA Earnings before interest, taxes, depreciation and amortization EDC Revolving Facility Credit Facility Agreement, dated November 9, 2020, among Export Development Canada and Cleveland-Cliffs Inc.'s indirect, wholly owned subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc. EGLE Michigan Department of Environment,