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Previous: DREYFUS INSURED MUNICIPAL BOND FUND INC, 485B24E, 1994-12-13 |
Next: POLY TECH INC, S-4, 1994-12-13 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
September 30, 1994
------------------
CLEVELAND-CLIFFS INC
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 1-8944 34-1464672
- - --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1100 Superior Avenue, Cleveland, Ohio 44114-2589
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 694-5700
--------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
The Exhibit Index is located on page 3 of this filing.
<PAGE> 2
CLEVELAND-CLIFFS INC
The undersigned Registrant hereby amends its response to Item No. 7 on
the Form 8-K filed on October 13, 1994 to include the audited financial
statements of Cyprus Northshore Mining Corporation and consolidated subsidiary
as of December 31, 1993, the unaudited financial statements of Cyprus
Northshore Mining Corporation and consolidated subsidiary as of September 30,
1994, and the related pro forma financial information.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
-----------------------------------
(a) Cyprus Northshore Mining Corporation and
Consolidated Subsidiary Financial Statements -
December 31, 1993, attached as Exhibit 99.1
hereto
(b) Cyprus Northshore Mining Corporation and
Consolidated Subsidiary Financial Statements
(Unaudited) - September 30, 1994, attached as
Exhibit 99.2 hereto
(c) Cleveland-Cliffs Inc and Consolidated
Subsidiaries Pro Forma Financial Statements
(Unaudited) - December 31, 1993 and September 30,
1994, attached as Exhibit 99.3 hereto
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CLEVELAND-CLIFFS INC
(Registrant)
By /s/John S. Brinzo
-----------------------------
John S. Brinzo
Senior Executive - Finance
Date: December 13, 1994
2
<PAGE> 3
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Page
Number Exhibit Number
- - ------- -------------------------------------- ------
<S> <C> <C>
23 Consent of independent auditors 4
99.1 Cyprus Northshore Mining Corporation
and Consolidated Subsidiary
Financial Statements -
December 31, 1993 5 - 17
99.2 Cyprus Northshore Mining Corporation
and Consolidated Subsidiary
Financial Statements (Unaudited) -
September 30, 1994 18 - 24
99.3 Cleveland-Cliffs Inc
and Consolidated Subsidiaries Pro
Forma Financial Statements (Unaudited) -
December 31, 1993 and
September 30, 1994 25 - 29
</TABLE>
3
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
-------------------------------
We consent to the incorporation by reference in Post-Effective Amendment Number
1 to the Registration Statement (Form S-8 No. 33-4555) pertaining to the
Restricted Stock Plan of Cleveland-Cliffs Inc and the related prospectus and in
the Registration Statement (Form S-8 No. 33-208033) pertaining to the 1987
Incentive Equity Plan of Cleveland-Cliffs Inc and the related prospectus and in
the Registration Statement (Form S-8 No. 33-48357) pertaining to the 1992
Incentive Equity Plan and the related prospectus and in the Registration
Statement (Form S-8 No. 33-56661) pertaining to the Northshore Mining Company
and Silver Bay Power Company Retirement Savings Plan and the related prospectus
of our report dated November 16, 1994, with respect to the consolidated
financial statements of Cyprus Northshore Mining Corporation and consolidated
subsidiary included in this Current Report on Form 8-K/A for the year ended
December 31, 1993.
ERNST & YOUNG LLP
Cleveland, Ohio
December 9, 1994
4
<PAGE> 1
EXHIBIT 99.1
CYPRUS NORTHSHORE MINING CORPORATION
AND CONSOLIDATED SUBSIDIARY
FINANCIAL STATEMENTS
DECEMBER 31, 1993
with
REPORT OF INDEPENDENT AUDITORS
5
<PAGE> 2
Report of Independent Auditors
------------------------------
Shareholder and Board of Directors
Northshore Mining Company
We have audited the accompanying statement of consolidated financial position
of Cyprus Northshore Mining Corporation and consolidated subsidiary as of
December 31, 1993, and the related statements of consolidated income, cash
flows and shareholder's equity for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 audit provides 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 Cyprus Northshore
Mining Corporation and consolidated subsidiary at December 31, 1993, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Cleveland, Ohio
November 16, 1994
6
<PAGE> 3
<TABLE>
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands)
December 31,
1993
--------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 72
Accounts receivable:
Trade 7,601
Other 163
----------
7,764
Inventories:
Concentrates 818
Finished products 14,027
Supplies and coal (net of reserve - $1,467) 9,179
----------
24,024
Deferred income taxes 846
Other current assets 195
----------
TOTAL CURRENT ASSETS 32,901
PROPERTIES
Land 4,526
Plant and equipment 80,221
----------
84,747
Allowance for depreciation and amortization (47,198)
----------
TOTAL PROPERTIES 37,549
OTHER ASSETS
Deferred income taxes 158
Other assets 81
----------
TOTAL OTHER ASSETS 239
----------
TOTAL ASSETS $ 70,689
==========
<FN>
See notes to consolidated financial statements.
</TABLE>
7
<PAGE> 4
<TABLE>
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands)
December 31,
1993
--------------
<S> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 3,725
Taxes payable:
Federal and state income 2,004
Other 4,895
Accrued employment costs 1,709
Royalties payable 1,720
Other current liabilities 3,485
---------
TOTAL CURRENT LIABILITIES 17,538
POSTEMPLOYMENT BENEFIT LIABILITIES 1,271
OTHER LIABILITIES 1,360
SHAREHOLDER'S EQUITY
Capital stock-par value $1 a share
Authorized-1,000 shares
Issued-100 shares --
Capital in excess of
par value of shares 93,104
Intercompany account with
Cyprus Amax Minerals Company (11,266)
Retained deficit (31,318)
---------
TOTAL SHAREHOLDER'S EQUITY 50,520
---------
COMMITMENTS - NOTE D
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $ 70,689
=========
<FN>
See notes to consolidated financial statements.
</TABLE>
8
<PAGE> 5
<TABLE>
STATEMENT OF CONSOLIDATED INCOME
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands)
Year Ended
December 31,
1993
--------------
<S> <C>
REVENUES
Product sales and service $ 98,238
Other income 599
----------
98,837
COSTS AND EXPENSES
Cost of sales 71,652
Depreciation and amortization 2,870
Royalties 4,269
State and local taxes 5,766
Administrative, selling and general expenses 1,269
Other expenses 153
----------
Total Costs and Expenses 85,979
----------
INCOME BEFORE INCOME TAXES 12,858
INCOME TAXES 4,544
----------
NET INCOME $ 8,314
==========
<FN>
See notes to consolidated financial statements.
</TABLE>
9
<PAGE> 6
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands,
Brackets Indicate
Cash Decrease)
Year Ended
December 31,
1993
--------------
<S> <C>
OPERATING ACTIVITIES
Net income $ 8,314
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 2,870
Deferred income tax provision 2,170
Loss on disposal of assets 15
Other 258
---------
Total before changes in operating
assets and liabilities 13,627
Changes in operating assets and liabilities:
Receivables (increase) (1,759)
Inventories (increase) (2,660)
Other current assets decrease 209
Payables and accrued liabilities increase 5,518
---------
Total changes in operating
assets and liabilities 1,308
---------
Net cash from operating activities 14,935
INVESTING ACTIVITIES
Purchase of plant, property and equipment (2,340)
Proceeds from sale of assets 267
---------
Net cash (used by) investing activities (2,073)
FINANCING ACTIVITIES
Increase in intercompany account with
Cyprus Amax Minerals Company (8,116)
Decrease in capital in excess of par value of shares (4,716)
---------
Net cash (used by) financing activities (12,832)
---------
INCREASE IN CASH 30
CASH AT BEGINNING OF YEAR 42
---------
CASH AT END OF YEAR $ 72
=========
State taxes paid on income $ 370
<FN>
See notes to consolidated financial statements.
</TABLE>
10
<PAGE> 7
<TABLE>
STATEMENT OF CONSOLIDATED SHAREHOLDER'S EQUITY
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
In Thousands
-------------------------------------------------------------------------
Capital In
Excess of
Capital Par Value Inter- Retained
Stock of Shares Company Deficit Total
------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $ -- $97,820 $ (3,150) $(39,632) $55,038
Net income -- -- -- 8,314 8,314
Return of capital to
Cyprus Amax Minerals
Company -- (4,716) -- -- (4,716)
Increase in intercompany
account with Cyprus
Amax Minerals Company -- -- (8,116) -- (8,116)
------ ------- -------- -------- -------
Balance, December 31, 1993 $ -- $93,104 $(11,266) $(31,318) $50,520
====== ======= ======== ======== =======
<FN>
See notes to consolidated financial statements.
</TABLE>
11
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
ACCOUNTING POLICIES
BASIS OF CONSOLIDATION: Cyprus Northshore Mining Corporation (the "Company")
is a wholly-owned subsidiary of Cyprus Amax Minerals Company ("Cyprus"). The
consolidated financial statements include the accounts of Cyprus Silver Bay
Power Corporation ("Power"), a wholly-owned subsidiary of the Company. All
intercompany balances and transactions between Company and Power have been
eliminated.
BUSINESS: The Company's primary business is the production and sale of iron
ore pellets. Crude ore is mined at Babbitt, Minnesota and railed to Silver Bay,
Minnesota where it is concentrated, pelletized and shipped primarily to
integrated steel company customers by lake carriers. One customer accounts for
72.4 percent of the Company's revenues. Electric power is generated at Power's
115 megawatt power station located at Silver Bay, Minnesota for use in iron ore
processing with excess capacity sold to a utility company.
CASH: The Company maintains small cash accounts for local expenditures. All
cash receipts from sales and cash disbursements for employment, material and
service costs are transacted through Cyprus cash accounts (see Note A).
INVENTORIES: Product inventories, primarily finished pellets, are stated at
the lower of cost or market. The cost of product inventories is determined
using the first-in, first-out method. The cost of supplies and coal
inventories is determined by the average cost method.
PROPERTIES: Properties are stated on the basis of cost. Depreciation of plant
and equipment is computed principally by the straight-line method based on
estimated useful lives. Mine development costs are charged to operations as
incurred. Gains or losses upon retirement or replacement of equipment and
facilities are credited or charged to income, as appropriate.
INCOME TAXES: The operations of the Company are included in the consolidated
federal income tax returns filed by Cyprus, the parent company. The
accompanying consolidated financial statements reflect income tax expense on a
separate company basis. The Company has recorded income tax based on statutory
tax rates applied to the Company's reported book income adjusted for permanent
differences.
POSTRETIREMENT BENEFITS: In December, 1990, the Financial Accounting Standards
Board ("FASB") issued Statement 106, "Accounting for Postretirement Benefits
Other than Pensions" which requires that the projected future expense of
providing postretirement benefits, such as health care and life insurance, be
recognized as employees render service instead of when the benefits are paid.
Statement 106 requires the assumption that present benefit plans continue at
escalating costs. The Company adopted the provisions of this standard in its
financial statements for the year ended December 31, 1992.
12
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
ACCOUNTING POLICIES - Continued
POSTEMPLOYMENT BENEFITS: In November, 1992, the FASB issued Statement 112,
"Employers' Accounting for Postemployment Benefits." Statement 112 requires
accrual basis accounting for benefits provided to former or inactive employees
after employment but before retirement. Although Statement 112 is effective
for years beginning after December 15, 1993, the Company adopted provisions of
this standard in its financial statements for the year ended December 31, 1992.
CONTINGENCIES: The Company's policy is to conduct business in a manner that
promotes environmental quality. The Company's environmental obligations have
been recognized based on specific estimates for known conditions and required
investigations. Any potential insurance recoveries have not been reflected in
the determination of the reserve. At December 31, 1993, the Company had an
environmental reserve of $1,198,000, of which $12,000 was current.
Environmental expenditures under current laws and regulations are not expected
to materially impact the Company's consolidated financial statements.
NOTE A - INTERCOMPANY ACCOUNT WITH CYPRUS
The intercompany account with Cyprus included in the statement of financial
position represents a net balance as the result of various transactions between
the Company and Cyprus. The account is non-interest bearing and is settled
every six months by an adjustment to capital in excess of par value of shares.
The balance is primarily the result of the Company's participation in Cyprus'
central cash management program, wherein virtually all the Company's cash is
received by Cyprus and all significant cash disbursements are made by Cyprus.
Other transactions include the Company's calculated share of the current
portion of Cyprus' consolidated federal income tax liability, and corporate
charges incurred by Cyprus on behalf of the Company. An analysis of
transactions in the intercompany account for the year ended December 31, 1993
follows:
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Cash receipts from sales and other revenues $97,319
Operating cost and expense disbursements (83,445)
Corporate charges by Cyprus (1,042)
Settlement to capital in excess
of par value of shares (4,716)
-------
Net increase 8,116
Balance:
Beginning of year 3,150
-------
End of year $11,266
=======
</TABLE>
13
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
NOTE B - RETIREMENT BENEFITS
PENSION PLANS
- - -------------
A defined benefit pension plan covering all hourly employees of the Company is
sponsored by the Company, and a defined benefit pension plan covering all
salaried employees of Cyprus, including all salaried employees of the Company,
is sponsored by Cyprus. The plans are noncontributory and salaried pension
plan benefits generally are based on employees' years of service and average
earnings for a defined period prior to retirement; hourly pension plan benefits
are based on employees' years of service at a defined rate. Pension costs are
funded to the extent necessary to meet Federal requirements.
The components of 1993 pension cost attributed to the Company were as follows:
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Service cost-benefits earned during the period $ 508
Interest cost on projected benefit obligation 185
Actual return on plan assets (137)
Net amortization and deferral 5
--------
Total pension cost $ 561
========
</TABLE>
The Company's pension funds were held in the Cyprus Minerals Master Trust with
the funds contributed by Cyprus and its other affiliated companies. Plan
assets principally include diversified marketable equity securities and
corporate and government debt securities. Salaried plan assets have been
estimated. The following table presents a reconciliation of the funded status
of the Company's plans at December 31, 1993.
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Plan assets at fair value $ 2,105
Actuarial present value of benefit obligation:
Vested benefits --
Nonvested benefits 2,256
--------
Accumulated benefit obligation 2,256
Effect of projected compensation levels 913
--------
Projected benefit obligation 3,169
--------
Plan assets (less than) projected benefit obligation (1,064)
Unrecognized prior service costs 31
Unrecognized net loss 846
--------
Accrued cost $ (187)
========
</TABLE>
The discount rate and rate of increase in compensation levels used in
determining the actuarial present value of the projected benefit obligation at
December 31, 1993 were 7.5 percent and 5.5 percent, respectively. The expected
long-term rate of return on plan assets was 9 percent in 1993.
14
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
NOTE B - RETIREMENT BENEFITS - Continued
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
- - -------------------------------------------
In addition to the Company's defined benefit pension plans, the Company
currently provides retirement health care and life insurance benefits. The
medical plans provide benefits for most employees who reach normal, or in
certain cases, early retirement age while employed by the Company. The
postretirement medical plans are contributory, with annual adjustments to
retiree contributions, and contain certain other cost-sharing features such as
deductibles and coinsurance. The Company's practice is to prefund a portion of
the following year's projected medical cost in amounts determined at the
discretion of management.
The following table presents a reconciliation of the funded status of the
Company's plans at December 31, 1993.
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Accumulated postretirement benefit obligation:
Retirees $ --
Fully eligible active plan participants --
Other active plan participants 1,183
--------
1,183
Plan assets 0
--------
Accumulated postretirement benefit cost 1,183
Unamortized (loss) (99)
--------
Accumulated postretirement benefit obligation $ 1,084
========
</TABLE>
Net periodic postretirement benefit cost for 1993 includes the following
components:
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Service cost $ 320
Interest cost 85
--------
Net periodic postretirement benefit cost $ 405
========
</TABLE>
The incremental increase in 1993 postretirement benefit cost was $401,000. The
weighted-average annual assumed rate of increase in the per capita cost of
covered benefits was 14 percent for 1993, 13.5 percent for 1994, decreasing .5
percent per year for 13 years reaching 7 percent in 2006 and remaining at that
level thereafter.
The health care cost trend rate assumption has a significant effect on the
amounts reported. For example, changing the assumed health care cost trend
rate by one percentage point would change the accumulated postretirement
benefit obligation as of December 31, 1993, by $56,000 and the aggregate of the
service and interest cost components of net periodic postretirement benefit
cost for 1993 by $14,000.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.5 percent at December 31, 1993.
15
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
NOTE B - RETIREMENT BENEFITS - Continued
SAVINGS PLAN
- - ------------
Cyprus sponsors a defined contribution savings plan covering all
non-represented employees of Cyprus, including all employees of the Company.
Contributions by employees of up to 16 percent of base pay are matched by 75%
of the first 6 percent of base pay by the Company. The Company matching
contribution may only be used to purchase common stock of Cyprus. Total
purchases for the year ended December 31, 1993 were $446,000.
NOTE C - INCOME TAXES
Significant components of the Company's deferred tax assets and liabilities as
of December 31, 1993 were:
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Deferred tax assets:
Supplies and coal reserves $ 499
Postemployment benefit liabilities 432
Environmental reserve 407
Accrued employment costs 347
All other 139
------
Total deferred tax assets 1,824
Deferred tax liabilities:
Plant and equipment 820
------
Net deferred tax assets $1,004
======
</TABLE>
Components of the provision for income taxes for 1993 were as follows:
<TABLE>
<CAPTION>
(In Thousands)
------------
<S> <C>
Current:
Federal $1,979
State 395
------
2,374
Deferred 2,170
------
Total income taxes $4,544
======
</TABLE>
Reconciliation of the effective income tax rate and United States Federal
statutory rate for 1993 was as follows:
<TABLE>
<S> <C>
Statutory tax rate 34.0%
Increase (decrease) due to:
Effect of state income taxes 2.1
Stock ownership plan dividends (.8)
----
Effective income tax rate 35.3%
=====
</TABLE>
16
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
NOTE D - COMMITMENTS
During 1991, Power and Northern States Power Company (the "Utility") entered
into a 20-year contract which commits Power to make available to the Utility 40
megawatts of excess capacity. Revenue received by Power for this commitment is
subject to escalation. The contract is based on Power maintaining a Qualifying
Facility ("QF") status which obligates Power to maintain steam co-generation
capability. Loss of QF status would reduce revenues received by Power. The
contract may be terminated by either party for breach or force majeure
continuing for 12 months and is at present in good standing.
NOTE E - LITIGATION
The Company is periodically involved in litigation incidental to its
operations. Management believes that any pending litigation will not result in
material liability in relation to the Company's consolidated financial
statements.
NOTE F - SUBSEQUENT EVENT
On September 30, 1994, Cleveland-Cliffs Inc acquired, through its wholly-owned
subsidiary Cliffs Minnesota Minerals Company, all of the outstanding shares of
stock of the Company (renamed Northshore Mining Company) and Power (renamed
Silver Bay Power Company) from Cyprus.
17
<PAGE> 1
EXHIBIT 99.2
CYPRUS NORTHSHORE MINING CORPORATION
AND CONSOLIDATED SUBSIDIARY
FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1994
18
<PAGE> 2
<TABLE>
STATEMENT OF CONSOLIDATED FINANCIAL POSITION (UNAUDITED)
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands)
September 30,
1994
--------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 5
Accounts receivable:
Trade 12,883
Other 538
----------
13,421
Inventories:
Concentrates 589
Finished products 13,192
Supplies and coal (net of reserve - $1,469) 8,680
----------
22,461
Deferred income taxes 634
Other current assets 2,173
----------
TOTAL CURRENT ASSETS 38,694
PROPERTIES
Land 4,499
Plant and equipment 87,786
----------
92,285
Allowance for depreciation and amortization (53,710)
----------
TOTAL PROPERTIES 38,575
OTHER ASSETS 35
----------
TOTAL ASSETS $ 77,304
==========
<FN>
See notes to consolidated financial statements (unaudited).
</TABLE>
19
<PAGE> 3
<TABLE>
STATEMENT OF CONSOLIDATED FINANCIAL POSITION (UNAUDITED)
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands)
September 30,
1994
--------------
<S> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 2,610
Taxes payable:
Federal and state income 229
Other 4,589
Accrued employment costs 1,377
Royalties payable 2,025
Other current liabilities 2,372
----------
TOTAL CURRENT LIABILITIES 13,202
POSTEMPLOYMENT BENEFIT LIABILITIES 1,491
DEFERRED INCOME TAXES 1,291
OTHER LIABILITIES 1,487
SHAREHOLDER'S EQUITY
Capital stock-par value $1 a share
Authorized-1,000 shares
Issued-100 shares --
Capital in excess of
par value of shares 87,238
Retained deficit (27,405)
----------
TOTAL SHAREHOLDER'S EQUITY 59,833
----------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $ 77,304
==========
<FN>
See notes to consolidated financial statements (unaudited).
</TABLE>
20
<PAGE> 4
<TABLE>
STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands)
Nine Months Ended
September 30,
1994
-----------------
<S> <C>
REVENUES
Product sales and service $ 77,648
Other income 167
----------
77,815
COSTS AND EXPENSES
Cost of sales 59,647
Depreciation and amortization 2,340
Royalties 3,216
State and local taxes 5,267
Administrative, selling and general expenses 1,011
Other expenses 120
----------
Total Costs and Expenses 71,601
----------
INCOME BEFORE INCOME TAXES 6,214
INCOME TAXES 2,301
----------
NET INCOME $ 3,913
==========
<FN>
See notes to consolidated financial statements (unaudited).
</TABLE>
21
<PAGE> 5
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
(In Thousands,
Brackets Indicate
Cash Decrease)
Nine Months Ended
September 30,
1994
-----------------
<S> <C>
OPERATING ACTIVITIES
Net Income $ 3,913
Adjustments to reconcile net income
to net cash (used by) operations:
Depreciation and amortization 2,340
Deferred income tax provision 1,661
Loss on disposal of assets 8
Other 393
----------
Total before changes in operating
assets and liabilities 8,315
Changes in operating assets and liabilities:
Receivables (increase) (5,657)
Inventories decrease 1,563
Other current assets (increase) (1,978)
Payables and accrued liabilities (decrease) (4,336)
----------
Total changes in operating
assets and liabilities (10,408)
----------
Net cash (used by) operating activities (2,093)
INVESTING ACTIVITIES
Purchase of plant, property and equipment (3,509)
Proceeds from sale of assets 135
----------
Net cash (used by) investing activities (3,374)
FINANCING ACTIVITIES
Decrease in intercompany account with
Cyprus Amax Minerals Company 11,266
Decrease in capital in excess of par value of shares (5,866)
-----------
Net cash from financing activities 5,400
-----------
DECREASE IN CASH (67)
CASH AT BEGINNING OF PERIOD 72
-----------
CASH AT END OF PERIOD $ 5
===========
<FN>
See notes to consolidated financial statements (unaudited).
</TABLE>
22
<PAGE> 6
<TABLE>
STATEMENT OF CONSOLIDATED SHAREHOLDER'S EQUITY (UNAUDITED)
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
<CAPTION>
In Thousands
------------------------------------------------------------------
Capital In
Excess of
Capital Par Value Inter- Retained
Stock of Shares Company Deficit Total
------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $ -- $93,104 $(11,266) $(31,318) $50,520
Net income -- -- -- 3,913 3,913
Return of capital to
Cyprus Amax Minerals
Company -- (5,866) -- -- (5,866)
Decrease in intercompany
account with Cyprus
Amax Minerals Company -- -- 11,266 -- 11,266
------- ------- -------- -------- -------
Balance, September 30, 1994 $ -- $87,238 $ -- $(27,405) $59,833
======= ======= ======== ======== =======
<FN>
See notes to consolidated financial statements (unaudited).
</TABLE>
23
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CYPRUS NORTHSHORE MINING CORPORATION AND CONSOLIDATED SUBSIDIARY
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 8-K and should be read in conjunction
with the financial statement footnotes and other information in Cyprus
Northshore Mining Corporation and consolidated subsidiary's (the "Company")
1993 audited financial statements. In management's opinion, the unaudited
financial statements present fairly the Company's financial position and
results of operations.
NOTE B - ACQUISITION BY CLEVELAND-CLIFFS INC
On September 30, 1994, Cleveland-Cliffs Inc acquired, through its
wholly-owned subsidiary Cliffs Minnesota Minerals Company, all of the
outstanding shares of stock of the Company (renamed Northshore Mining Company)
and Cyprus Silver Bay Power Corporation (renamed Silver Bay Power Company) from
Cyprus Amax Minerals Company.
24
<PAGE> 1
EXHIBIT 99.3
CLEVELAND-CLIFFS INC
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1993
AND
SEPTEMBER 30, 1994
25
<PAGE> 2
PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
CLEVELAND-CLIFFS INC
The accompanying pro forma combined statements of operations for the
year ended December 31, 1993 and the nine months ended September 30, 1994 give
effect to the acquisition of all of the outstanding shares of stock of Cyprus
Northshore Mining Corporation (renamed Northshore Mining Company) and its
consolidated subsidiary, Cyprus Silver Bay Power Corporation (renamed Silver
Bay Power Company) by Cliffs Minnesota Minerals Company, a wholly-owned
subsidiary of Cleveland-Cliffs Inc, from Cyprus Amax Minerals Company
("Cyprus") on September 30, 1994. The pro forma information is based on the
historic financial statements of Cleveland-Cliffs Inc and Cyprus Northshore
Mining Corporation giving effect to the transaction under the purchase method
of accounting and the assumptions and adjustments in the accompanying notes to
the pro forma combined financial statements.
The pro forma combined statements of operations have been prepared by
the management of Cleveland-Cliffs Inc based upon the financial statements of
Cyprus Northshore Mining Corporation. The pro forma adjustments are based upon
the preliminary estimate of the fair value of the assets acquired and
liabilities assumed. The final allocation of the purchase price will be made
when the complete study of the fair value of the assets and liabilities has
been finalized. The pro forma combined financial statements may not be
indicative of the results that actually would have occurred if the combination
had occurred on January 1, 1993 or which may occur in the future. The pro
forma combined financial statements and notes should be read in conjunction
with the audited financial statements of Cleveland-Cliffs Inc included in the
annual report on Form 10-K and Cyprus Northshore Mining Corporation contained
elsewhere herein for the year ended December 31, 1993 and the unaudited interim
financial statements of Cleveland-Cliffs Inc included in Form 10-Q and Cyprus
Northshore Mining Corporation contained elsewhere herein for the nine months
ended September 30, 1994. A pro forma statement of financial position has not
been included since the transaction has been recorded in the unaudited
consolidated financial statements of Cleveland-Cliffs Inc as reported in Form
10-Q for the nine months ended September 30, 1994.
26
<PAGE> 3
<TABLE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
CLEVELAND-CLIFFS INC
Year Ended December 31, 1993
<CAPTION>
(In Millions, Except Per Share Amounts)
-------------------------------------------------------------
Cleveland- Northshore Pro Forma Pro Forma
Cliffs (1) Mining (2) Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Product sales and services $268.1 $98.2 $ -- $366.3
Royalties and management fees 39.7 -- -- 39.7
------ ----- ----- ------
Total operating revenues 307.8 98.2 -- 406.0
Recovery on bankruptcy claim 35.7 -- -- 35.7
Investment income (securities) 9.1 -- (3.6) (a) 5.5
Other income 3.3 .6 (.4) (b) 3.5
------ ----- ----- ------
TOTAL REVENUES 355.9 98.8 (4.0) 450.7
COST AND EXPENSES:
Cost of goods sold and
operating expenses 252.8 78.8 1.2 (c) 332.8
Administrative, selling
and general expenses 15.2 1.3 -- 16.5
Interest Expense 6.6 -- -- 6.6
Other expenses 5.6 5.9 -- 11.5
------ ----- ----- ------
TOTAL COST AND EXPENSES 280.2 86.0 1.2 367.4
------ ----- ----- ------
INCOME BEFORE INCOME TAXES 75.7 12.8 (5.2) 83.3
INCOME TAXES (CREDITS) 21.1 4.5 (2.0) (d) 23.6
------ ----- ----- ------
NET INCOME $ 54.6 $ 8.3 $(3.2) $ 59.7
====== ===== ===== ======
INCOME PER COMMON SHARE $ 4.55 $ 4.98
====== ======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES ISSUED
AND OUTSTANDING 12.0 12.0
====== ======
<FN>
(1) Derived from Cleveland-Cliffs Inc audited statement of consolidated
income for the year ended December 31, 1993.
(2) Derived from Cyprus Northshore Mining Corporation audited statement of
consolidated income for the year ended December 31, 1993.
See notes to pro forma combined financial statements (unaudited).
</TABLE>
27
<PAGE> 4
<TABLE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
CLEVELAND-CLIFFS INC
Nine Months Ended September 30, 1994
<CAPTION>
(In Millions, Except Per Share Amounts)
-------------------------------------------------------------
Cleveland- Northshore Pro Forma Pro Forma
Cliffs (1) Mining (2) Adjustments Combined
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Product sales and services $205.6 $77.6 $ -- $283.2
Royalties and management fees 33.3 -- -- 33.3
------ ----- ------ ------
Total operating revenues 238.9 77.6 -- 316.5
Investment income (securities) 5.8 -- -- 5.8
Other income .8 .2 -- 1.0
------ ----- ------ ------
TOTAL REVENUE 245.5 77.8 -- 323.3
COST AND EXPENSES:
Cost of goods sold and
operating expenses 187.1 65.2 .7 (e) 253.0
Administrative, selling
and general expenses 12.9 1.0 -- 13.9
Interest expense 4.9 -- -- 4.9
Other expenses 4.2 5.4 -- 9.6
------ ----- ------ ------
TOTAL COST AND EXPENSES 209.1 71.6 .7 281.4
------ ----- ------ ------
INCOME BEFORE INCOME TAXES 36.4 6.2 (.7) 41.9
INCOME TAXES (CREDITS) 9.0 1.6 (.3) (f) 10.3
------ ----- ------ ------
NET INCOME $ 27.4 $ 4.6 $ (.4) $ 31.6
====== ===== ====== ======
INCOME PER COMMON SHARE $ 2.27 $ 2.62
====== ======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES ISSUED
AND OUTSTANDING 12.1 12.1
====== ======
<FN>
(1) Derived from Cleveland-Cliffs Inc unaudited statement of consolidated income for the nine months ended September 30, 1994.
(2) Derived from Cyprus Northshore Mining Corporation unaudited statement of consolidated income for the nine months ended
September 30, 1994.
See notes to pro forma combined financial statements (unaudited).
</TABLE>
28
<PAGE> 5
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
CLEVELAND-CLIFFS INC
December 31, 1993 and September 30, 1994
NOTE A - PRO FORMA ADJUSTMENTS
Pro forma adjustments relating to the pro forma combined statements of
operations have been provided assuming the acquisition was consummated on
January 1, 1993. The pro forma adjustments for the year ended December 31,
1993 are as follows:
(a) Elimination of investment income on acquisition cash purchase
price, $3.6 million.
(b) Elimination of a non-recurring recovery on a casualty loss,
$.4 million.
(c) Depreciation expense increased to reflect the fair value of
the assets acquired, $.5 million. Write-off of deferred
maintenance, $.7 million.
(d) Favorable tax effect of pro forma adjustments, $2.0 million.
The pro forma adjustments for the nine months ended September 30, 1994 are as
follows:
(e) Depreciation expense increased to reflect the fair value of
the assets acquired, $.2 million. Write-off of deferred
maintenance, $.5 million.
(f) Favorable tax effect of pro forma adjustments, $.3 million.
NOTE B - ADMINISTRATIVE EXPENSE
The pro forma combined statements of operations include administrative
expense charges for the year ended December 31, 1993, and the nine months ended
September 30, 1994, by Cyprus Amax Minerals Company, parent of Cyprus
Northshore Mining Corporation, which have been considered by management of
Cleveland-Cliffs Inc to be comparable to administrative expense charges which
would have been incurred by Cyprus Northshore Mining Corporation if the
acquisition by Cleveland-Cliffs Inc had taken place January 1, 1993.
NOTE C - INVESTMENT INCOME
Income from Cleveland-Cliffs Inc investments has been adjusted for the
year ended December 31, 1993 for the effect of the acquisition cash purchase
price, and has not been adjusted for the nine months ended September 30, 1994
in the pro forma combined statements of operations. Management believes there
was no investment income in 1994 attributable to cash that would have been
invested in the acquisition.
29
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