<PAGE> 1
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
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
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) 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
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 X NO
--- ---
As of July 31, 1994, there were 12,081,060 Common Shares (par value $1.00 per
share) outstanding.
==============================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
CLEVELAND-CLIFFS INC.
STATEMENT OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
(In Millions, Except Per Share Amounts)
------------------------------------------
Three Months Six Months
Ended June 30, Ended June 30,
---------------- -----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Product sales and services $ 71.9 $ 73.4 $ 112.0 $ 105.9
Royalties and management fees 11.5 11.1 19.5 19.3
------- ------- ------- -------
Total operating revenues 83.4 84.5 131.5 125.2
Recovery on bankruptcy claim - 34.8 - 34.8
Investment income (securities) 1.5 2.1 2.7 4.4
Other income 0.1 0.3 0.3 0.6
------- ------- ------- -------
TOTAL REVENUES 85.0 121.7 134.5 165.0
COSTS AND EXPENSES:
Cost of goods sold and operating expenses 63.8 65.3 103.3 102.6
Administrative, selling and general expenses 3.9 4.4 7.9 8.1
Interest expense 1.7 1.7 3.3 3.3
Other expenses 1.6 1.0 3.0 1.9
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 71.0 72.4 117.5 115.9
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 14.0 49.3 17.0 49.1
Income taxes (credits)
Currently payable 3.9 15.3 4.7 15.2
Deferred (0.3) 0.5 (0.3) 0.5
------- ------- ------- -------
TOTAL INCOME TAXES 3.6 15.8 4.4 15.7
------- ------- ------- -------
NET INCOME $ 10.4 $ 33.5 $ 12.6 $ 33.4
======= ======= ======= =======
INCOME PER COMMON SHARE $ 0.86 $ 2.79 $ 1.04 $ 2.78
======= ======= ======= =======
</TABLE>
2
<PAGE> 3
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
(In Millions)
----------------------------
June 30, December 31,
1994 1993
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 99.6 $ 67.9
Marketable securities 51.9 93.1
------- -------
151.5 161.0
Accounts receivable 26.8 36.9
Product inventories 43.3 27.5
Deferred income taxes 14.1 14.1
Other 12.7 10.5
------- -------
TOTAL CURRENT ASSETS 248.4 250.0
PROPERTIES 172.4 172.6
Less allowances for depreciation and depletion (137.9) (137.3)
------- -------
TOTAL PROPERTIES 34.5 35.3
INVESTMENTS IN ASSOCIATED COMPANIES 147.2 152.3
OTHER ASSETS
Long-term investments 59.0 57.4
Deferred income taxes 6.9 6.5
Other 46.5 43.9
------- -------
TOTAL OTHER ASSETS 112.4 107.8
------- -------
TOTAL ASSETS $ 542.5 $ 545.4
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term obligations $ 5.0 $ -
Other 54.2 64.0
------- -------
TOTAL CURRENT LIABILITIES 59.2 64.0
LONG-TERM OBLIGATIONS 70.0 75.0
POST-EMPLOYMENT BENEFITS 72.2 71.2
RESERVE FOR CAPACITY RATIONALIZATION 23.6 21.7
OTHER LIABILITIES 31.0 32.8
SHAREHOLDERS' EQUITY
Preferred Stock
Class A - No Par Value
Authorized - 500,000 shares; Issued - None - -
Class B - No Par Value
Authorized - 4,000,000 shares; Issued - None - -
Common Shares - Par Value $1 a share
Authorized - 28,000,000 shares
Issued - 16,827,941 shares 16.8 16.8
Capital in excess of par value of shares 61.3 61.4
Retained income 321.2 315.8
Foreign currency translation adjustments 0.2 (0.3)
Unrealized gain on available-for-sale securities, net of tax 0.9 1.3
Cost of 4,747,381 Common Shares in treasury
(1993 - 4,763,824) (113.9) (114.3)
------- -------
TOTAL SHAREHOLDERS' EQUITY 286.5 280.7
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 542.5 $ 545.4
======= =======
<F/N>
See notes to financial statements
</TABLE>
3
<PAGE> 4
CLEVELAND-CLIFFS INC
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Increase (Decrease)
in Cash and Cash
Equivalents for
Six Months Ended
June 30,
(In Million)
-------------------------
1994 1993
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 12.6 $ 33.4
Depreciation and amortization:
Consolidated 1.0 1.0
Share of Associated Companies 5.6 5.8
Provision for deferred income taxes (0.3) (0.5)
Charges to capacity rationalization reserve 1.2 0.4
Recovery of Bankruptcy Claim (34.8)
Other (0.4) (0.5)
------- -------
Total Before Changes in Operating Assets and Liabilities 19.7 4.8
Changes in operating assets and liabilities
Marketable Securities (increase) decrease 41.2 (91.2)
Other (17.7) (2.9)
------- -------
NET CASH FROM (USED BY) OPERATING ACTIVITIES 43.2 (89.3)
INVESTING ACTIVITIES
Purchase of long-term investments (2.0) (6.0)
Capital expenditures (3.1) (2.1)
------- -------
NET CASH (USED BY) INVESTING ACTIVITIES (5.1) (8.1)
FINANCING ACTIVITIES
Dividends (7.2) (7.2)
Other 0.3 0.2
------- -------
NET CASH (USED BY) FINANCING ACTIVITIES (6.9) (7.0)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 0.5 (0.1)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 31.7 (104.5)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 67.9 128.6
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 99.6 $ 24.1
======= =======
Taxes paid on income $ 10.9 $ 10.5
Interest paid on debt obligations $ 3.3 $ 3.3
</TABLE>
4
<PAGE> 5
CLEVELAND-CLIFFS INC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and should be read in conjunction
with the financial statement footnotes and other information in the Company's
1993 Annual Report on Form 10-K. In management's opinion, the quarterly
unaudited financial statements present fairly the Company's financial position
and results. References to the "Company" mean Cleveland-Cliffs Inc and
consolidated subsidiaries, unless otherwise indicated. Quarterly results are
not necessarily representative of annual results due to seasonal and other
factors.
Certain prior year amounts have been reclassified to conform to current year
classifications.
NOTE B - SHAREHOLDERS' EQUITY
The 1987 Incentive Equity Plan authorizes the Company to make grants and
awards of stock options, stock appreciation rights and restricted or deferred
stock awards to officers and key employees, for up to 839,045 Common Shares.
The 1992 Incentive Equity Plan authorizes the Company to issue up to 595,000
Common Shares upon the exercise of Options Rights, as Restricted Shares, in
payment of Performance Shares or Performance Units that have been earned, as
Deferred Shares, or in payment of dividend equivalents paid with respect to
awards made under the Plan. Such shares may be shares of original issuance or
treasury shares or a combination of both. Stock option and restricted award
transactions since December 31, 1993 are summarized as follows:
<TABLE>
<CAPTION>
Stock Options: 1987 Plan 1992 Plan
--------- ---------
<S> <C> <C>
Options outstanding as of 12/31/93 95,125 10,000
Granted -0- 5,500
Exercised (16,643) -0-
Cancelled -0- -0-
---------- -------
Options outstanding as of 06/30/94 78,482 15,500
Options exercisable as of 06/30/94 78,482 10,000
Restricted awards:
Awarded and restricted as of 12/31/93 4,941 15,277
Awarded -0- -0-
Vested (2,442) -0-
Cancelled -0- -0-
------- -------
Awarded and restricted as of 06/30/94 2,499 15,277
Performance Shares allocated -0- 42,067
Reserved for future grants or awards
as of 06/30/94 6,501 522,156
</TABLE>
5
<PAGE> 6
NOTE C - INVESTMENTS IN ASSOCIATED COMPANIES
Summarized income statement information for a significant
unconsolidated subsidiary, as defined, follows:
<TABLE>
TILDEN MINING COMPANY
(A 60% ownership interest at June 30, 1994 and 1993 carried at equity)
STATEMENT OF COSTS AND EXPENSES CHARGED TO ASSOCIATES
<CAPTION>
(In Millions)
Six Months
Ended June 30
-------------
1994 1993
----- -----
<S> <C> <C>
EXPENSES:
Operating costs $ 6.8 $ 7.0
Interest -- --
----- -----
TOTAL EXPENSES $ 6.8 $ 7.0
===== =====
</TABLE>
In February, 1994, the Company reached agreement in principle with
Algoma Steel Inc. ("Algoma") and Stelco Inc. to restructure and simplify the
Tilden Mine entities effective January 1, 1994. The principal terms of the new
agreement are (1) the participants' tonnage entitlements and cost-sharing will
be based on a 6.0 million ton target normal production level instead of the
previous 4.0 million ton base production level, (2) the Company's interest in
the Tilden Magnetite Partnership increases from 33.33% to 40.0% with
corresponding increase in the Company's obligation for mine costs, (3) the
Company will receive an increased royalty, (4) the Company has the right to
supply any additional iron ore pellet requirements of Algoma (beyond its Tilden
share) from Tilden or the Company, and (5) a partner may take additional
production with certain fees paid to the Partnership. The agreement is not
expected to have a material financial effect on the Company's consolidated
financial statements. The new Tilden arrangements reflect an underlying plan of
operating improvements and will allow a lengthening of the magnetite ore
reserve life. Additional capital and development expenditures are expected in
connection with the improvement plan.
NOTE D - ENVIRONMENTAL MATTERS
The Company's policy is to conduct business in a manner that promotes
environmental quality. Environmental costs at active operations are included in
current operating and capital costs. The Company's environmental obligations
for idle and closed mining and other sites 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.
6
<PAGE> 7
At June 30, 1994, the Company has an environmental reserve of $8.2
million, of which $3.0 million is current. The components are as follows:
- $2.7 million for the Cliffs-Dow site in Michigan, which is
independent of the Company's mining operations. The reserve is based
on an engineering study prepared by outside consultants engaged by
the responsible parties. The Company continues to evaluate the study
recommendations and other means to clean-up the site. Significant
site clean-up activities have taken place in the fourth quarter of
1993 and the first half of 1994.
- $5.5 million for other identified environmental exposures, including
the Arrowhead Refinery site in Minnesota, the Rio Tinto mine site in
Nevada and the Summitville mine site in Colorado, which sites are
independent of the Company's iron mining operations. The reserve is
based on the estimated cost of investigation and remediation of
sites where expenditures may be incurred. Final plans and
allocations among the involved parties are undetermined.
Environmental expenditures under current laws and regulations are not
expected to materially impact the Company's consolidated financial statements.
NOTE E - ACCOUNTING CHANGES
In November, 1992, the Financial Accounting Standards Board issued
Statement 112, "Employers' Accounting for Postemployment Benefits." Statement
112 requires accrual 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 elected to
adopt the provisions of this standard for the year ended December 31, 1993. The
effect of adopting this statement was not material to the consolidated
financial statements.
In May, 1993, the Financial Accounting Standards Board issued
Statement 115, "Accounting for Certain Investments in Debt and Equity
Securities," which establishes standards of financial accounting and reporting
investments in equity securities that have readily determinable fair values and
for investments in debt securities. This statement, which is effective for
years beginning after December 15, 1993, has been adopted for the year ended
December 31, 1993. The effect of adopting this statement was not material to
the consolidated financial statements.
Prior year financial statements have not been restated for adoption of
the two standards. However, certain prior year amounts have been reclassified
to conform to current year classifications.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
RESULTS OF OPERATIONS
---------------------
COMPARISON OF SECOND QUARTER AND FIRST SIX MONTHS - 1994 AND 1993
- - -----------------------------------------------------------------
Net income for the second quarter of 1994 was $10.4 million, or $.86 per
share. Comparable earnings in the second quarter of 1993 were $10.5 million, or
$.88 per share, before recognizing a $23.0 million after-tax gain on the
settlement of the Company's bankruptcy claim against The LTV Corporation
(including its wholly-owned, integrated steel company subsidiary, LTV Steel
Company, Inc.; collectively "LTV").
Net income for the first half of 1994 was $12.6 million or $1.04 per share. In
the first six months of 1993, comparable earnings, before the bankruptcy
settlement gain, were $10.4 million or $.87 a share.
The $2.2 million increase in first half earnings, excluding the 1993
bankruptcy gain, primarily resulted from higher sales realization in North
America, and higher earnings from Australian operations, partially offset by
increased operating costs and lower investment income. The second quarter
comparison reflected a less favorable mix of the same factors.
Second quarter and first half of 1994 results included losses on investments
in marketable securities due to the rapid rise in interest rates. Excluding
such losses, second quarter earnings would have been $11.2 million, or $.93 per
share, and first half earnings would have been $14.4 million, or $1.19 per
share. The losses will not reoccur in the second half of 1994 as the investment
portfolio has been converted to short-term securities.
* * *
The Company's North American pellet sales in the second quarter of 1994 were
1.7 million tons, unchanged from 1993. First half sales were 2.4 million tons
in 1994 compared to 2.3 million tons in 1993. Pellet inventory at June 30, 1994
was 1.2 million tons versus 2.0 million tons one year ago. The Company's pellet
sales, including resale of purchased ore, are estimated to be 6.9 million tons
for the year 1994 versus 6.4 million tons in 1993.
Cliffs-managed mines in North America produced 8.7 million tons of iron ore in
the second quarter of 1994, unchanged from 1993. Year-to-date production was
16.4 million tons in 1994 compared with 16.8 million tons in 1993. Full year
production is expected to be 34.5 million tons, a seven percent increase from
the strike-affected 1993 production level. Operating costs in the first half of
1994 were substantially higher than one year ago, primarily due to lower ore
grades mined, higher employment costs, unusually severe winter weather, and
maintenance outages. The Company is addressing the problems with emphasis on
orebody development, related capital expenditures, and productivity
improvement.
LIQUIDITY
- - ---------
At June 30, 1994, the Company had cash and marketable securities of $151.5
million, including $6.0 million dedicated to fund Australian mine obligations.
In addition, the full amount of a $75.0 million unsecured revolving credit was
available. The Company was in compliance with all financial covenants and
restrictions of the revolving credit agreement.
8
<PAGE> 9
Since December 31, 1993, cash and marketable securities have decreased $9.5
million due to increased working capital, $17.7 million, dividends, $7.2
million, capital expenditures, $3.1 million, and purchase of long-term
investments, $2.0 million, partially offset by cash flow from operating
activities, $19.7 million.
North American pellet inventories were 1.2 million tons, at June 30, 1994,
versus .8 million tons at December 31, 1993 and 2.0 million tons one year ago.
The increase of .4 million tons from December 31, 1993 reflects the first
quarter build-up due to the seasonal nature of the Great Lakes shipping season.
Pursuant to the Coal Industry Retiree Health Benefit Act of 1992, the Trustees
of the UMWA Combined Benefit Fund have assigned responsibility to the Company
for premium payments with respect to 366 retirees and dependents and 111
"orphans" (unassigned beneficiaries), representing less than one-half of one
percent of all "assigned beneficiaries." The Company has evaluated each
assignment, has contested those it believes were incorrectly assigned, and is
currently paying premiums under protest. In December, 1993, a complaint was
filed in U. S. District Court by the Trustees of the United Mine Workers of
America 1992 Benefit Plan (a separate fund from the Combined Benefit Fund)
against the Company demanding the payment of premiums on 75 beneficiaries
related to two formerly operated joint venture coal mines. The Company is
actively contesting the complaint. Monthly premium payments are being paid into
an escrow account (80% by a former joint venture participant and 20% by the
Company) by joint agreement with the Trustee, pending outcome of the
litigation. At June 30, 1994, the coal retiree reserve maintained by the
Company is $10.9 million, of which $1.0 million is current. In the second
quarter 1994, the Company increased its coal retiree reserve by $.6 million
(reflecting accretion of discount), and made payments of $.3 million. The
reserve is reflected at present value, utilizing an assumed discount rate of
7.25%. Constitutional and other legal challenges to various provisions of the
Benefit Act by other former coal producers are pending in the Federal Courts.
CAPITALIZATION
- - --------------
Long-term obligations effectively serviced by the Company at June 30, 1994,
including the current portion, totalled $88.5 million. The Company guarantees
Empire mine debt obligations of LTV and Wheeling Pittsburgh Steel Corporation
("Wheeling") which totalled $20.8 million at June 30, 1994. The following
table sets forth information concerning long-term obligations guaranteed and
effectively serviced by the Company.
(Millions)
-------------------------------------------------------
June 30, 1994 December 31, 1993
--------------------------- -------------------------
Total Total
Long-Term Long-Term
Obligations Obligations Obligations Obligations
Effectively and Effectively and
Serviced Guarantees Serviced Guarantees
------------ ------------ ------------ -----------
CONSOLIDATED $ 75.0 $ 75.0 $ 75.0 $ 75.0
SHARE OF UNCONSOLIDATED
AFFILIATES 13.5 34.3* 13.6 34.4*
------ ------- ------- -------
TOTAL $ 88.5 $ 109.3 $ 88.6 $ 109.4
====== ======= ======= =======
RATIO TO SHAREHOLDERS'
EQUITY .3:1 .4:1 .3:1 .4:1
* Includes $20.8 million of Empire Mine debt obligations which are
serviced by LTV and Wheeling.
9
<PAGE> 10
At June 30, 1994, the Company was in compliance with all financial
covenants and restrictions related to its $75.0 million, medium-term,
unsecured senior note agreement.
The fair value of the Company's long-term debt (which had a carrying
value of $75.0 million) at June 30, 1994, was estimated at $76.0 million based
on a discounted cash flow analysis and estimates of current borrowing rates.
In addition, on April 30, 1992, the Company entered into a $75.0
million three-year revolving credit agreement. No borrowings are outstanding
under the revolving credit facility. The Company may convert amounts
outstanding at the end of three years to a three-year term loan. The Company
was in compliance with all financial covenants and restrictions of the
revolving credit agreement at June 30, 1994.
Following is a summary of common shares outstanding:
1994 1993 1992
---------- ---------- ----------
March 31 12,079,885 11,992,804 11,979,764
June 30 12,080,560 12,008,065 11,985,804
September 30 12,038,092 11,987,554
December 31 12,064,117 11,988,554
ACTUARIAL ASSUMPTIONS
- - ---------------------
As a result of the increasing trend in long-term interest rates, the
Company is re-evaluating the interest rates used to calculate its pension and
post-retirement benefit obligations ("OPEB"). Financial accounting standards
require that the discount rates used to calculate the actuarial present value
of such benefits reflect the rate of interest on high quality fixed income
securities. A discount rate of 7.25% was used to calculate the Company's
pension and OPEB obligations as of December 31, 1993. The Company does not
anticipate changing the long-term rate of return assumption on pension assets
(currently 8%) in the near-term future. An increase in the interest rate
assumption would not affect 1994 financial results; however, in 1995 and
subsequent years, the Company would recognize a non-cash increase in pension
credits and a non-cash decrease in OPEB expense.
POTENTIAL INVESTMENTS
- - ---------------------
On July 25, 1994, the Company signed a letter of intent with Cyprus
Amax Minerals Company ("Cyprus Amax") to acquire the Cyprus Northshore Mining
Corporation ("Northshore") and its subsidiary, the Cyprus Silver Bay Power
Corporation, located in Minnesota. The principal assets are an iron ore mine
and processing facilities, with a current annual capacity of four million tons
of iron ore pellets, supported by six million tons of annual concentrate
capacity, and a 115 megawatt power generation plant.
Northshore produces several iron ore products, including fluxed
pellets that receive a price premium over standard pellets. Northshore has
sales contracts for most of its pellet capacity and has been studying
installation of a "direct reduced iron" production facility. The acquisition is
consistent with the Company's strategy to be the premier supplier of high
quality iron feedstocks to a broad spectrum of steelmakers.
The acquisition is subject to the satisfactory completion of due
diligence, a definitive agreement, regulatory approvals, and other customary
closing conditions. Closing is expected by September 30, 1994. The mine and
power plant companies to be acquired from Cyprus Amax will be operated by their
present management as separate subsidiaries of the Company.
10
<PAGE> 11
The Company plans to finance the acquisition from current cash and
marketable securities which before the acquisition would be expected to be
approximately $175 million at year-end 1994. After the closing of the
acquisition, the Company expects to have adequate financial capability to
implement its strategic objectives.
On July 26, 1994, the Company significantly enhanced its Utah oil
shale holdings when it agreed to purchase the oil shale mineral rights on
16,000 acres which the Company previously held under a long-term lease. The
$700,000 purchase, which is expected to close later this month, will give the
Company title "in fee" to one of the most attractive oil shale properties in
the United States, containing up to an estimated one billion barrels of
recoverable shale oil. While commercialization of oil shale is currently
uneconomical, the Company's holding costs are minimal.
Extensive activity continues toward development of reduced iron
ventures, principally in the Caribbean and Pacific Basin. A go-ahead decision
on one project is possible by late 1994 if economic and commercial arrangements
are satisfactorily negotiated.
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
- - ---------------------------------------------------------
The Company's Annual Meeting of Shareholders was held on May 10, 1994. At the
meeting the Company's shareholders acted upon the election of Directors and a
proposal to ratify the appointment of the Company's independent public
accountants. In the election of Directors, all 12 nominees named in the
Company's Proxy Statement, dated March 25, 1994, were elected to hold office
until the next Annual Meeting of Shareholders and until their respective
successors are elected. Each nominee received the number of votes set opposite
his or her name:
<TABLE>
<CAPTION>
NOMINEES FOR WITHHELD
---------- -------- ----------
<S> <C> <C>
Robert S. Colman 10,892,647 42,978
James D. Ireland III 10,892,977 42,648
G. Frank Joklik 10,890,596 45,029
E. Bradley Jones 10,891,907 43,718
Leslie L. Kanuk 10,892,687 42,938
Gilbert H. Lamphere 10,891,792 43,833
M. Thomas Moore 10,891,922 43,703
Stephen B. Oresman 10,891,872 43,753
Alan Schwartz 10,892,089 43,536
Samuel K. Scovil 10,891,860 43,765
Jeptha H. Wade 10,892,170 43,455
Alton W. Whitehouse 10,893,335 42,290
</TABLE>
Votes cast in person and by proxy at such meeting for and against the
adoption of the proposal to ratify the appointment of the firm of Ernst &
Young, independent public accountants to examine the books of account and other
records of the Company and its consolidated subsidiaries for the year 1994 were
as follows: 10,776,795 Common Shares were cast for the adoption of the
proposal; 42,849 Common Shares were cast against the adoption of the proposal;
and 115,980 Common Shares abstained from voting on the proposal.
There were no broker non-votes with respect to the election of
directors or the ratification of the independent public accountants.
Item 6. Exhibits and Reports on Form 8-K
- - ----------------------------------------
(a) List of Exhibits - Refer to Exhibit Index on page 13.
(b) There were no reports on Form 8-K filed during the three
months ended June 30, 1994.
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 thereunto duly authorized.
CLEVELAND-CLIFFS INC
Date August 9, 1994 By /s/ J. S. Brinzo
------------------- --------------------------------
J. S. Brinzo
Senior Executive-Finance
and Principal Financial
Officer
12
<PAGE> 13
EXHIBIT INDEX
-------------
Exhibit Page
Number Exhibit Number
- - ------- ----------------------------------------- ------
10 Cleveland-Clliffs Inc Voluntary Non-
Qualified Deferred Compensation Plan,
Amended and Restated as of January 1, 1994 14-27
11 Statement re computation of earnings per
share 28
13
<PAGE> 1
Exhibit 10
CLEVELAND-CLIFFS INC
--------------------
VOLUNTARY NON-QUALIFIED
DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED AS OF JANUARY 1, 1994)
--------------------------------------------
ARTICLE I
---------
PURPOSE
-------
1.1 STATEMENT OF PURPOSE; EFFECTIVE DATE. This is the Cleveland-
Cliffs Inc Voluntary Non-Qualified Deferred Compensation Plan (the "Plan") made
in the form of this Plan and in related agreements between an Employer and
certain management and highly compensated employees. The purpose of the Plan
is to provide management and highly compensated employees of the Employers with
the option to defer the receipt of a portion of their regular compensation or
bonuses payable for services rendered to the Employer. It is intended that the
Plan will assist in attracting and retaining qualified individuals to serve as
officers and key managers of the Employers. The Plan, originally effective as
of June 1, 1989, as amended by Amendments No. 1 and No. 2, effective as of
January 1, 1991 and February 1, 1992, respectively, is amended and restated as
of January 1, 1994.
ARTICLE II
-----------
DEFINITIONS
-----------
When used in this Plan and initially capitalized, the following words
and phrases shall have the meanings indicated:
2.1 ACCOUNT. "Account" means the sum of a Participant's Deferral
Account and Matching Account under the Plan.
2.2 BASE SALARY. "Base Salary" means a Participant's base earnings
paid by an Employer to a Participant without regard to any increases or
decreases in base earnings as a result of an election to defer base earnings
under this Plan, or an election between benefits or cash provided under a plan
of an Employer maintained pursuant to Section 125 or 401(k) of the Code.
2.3 BENEFICIARY. "Beneficiary" means the person or persons
designated or deemed to be designated by the Participant pursuant to Article
VII to receive benefits payable under the Plan in the event of the Participant's
death.
14
<PAGE> 2
2
2.4 BOARD. "Board" means the Board of Directors of the
Company.
2.5 BONUS. "Bonus" means a Participant's annual bonus paid
by an Employer to a Participant under the Cleveland-Cliffs Inc Management
Performance Incentive Plan without regard to any decreases as a result of an
election to defer all or any portion of a bonus under this Plan, or an election
between benefits or cash provided under a plan of an Employer maintained
pursuant to Section 401(k) of the Code.
2.6 CHANGE IN CONTROL. "Change in Control" means the date on
which any of the following is effective:
(a) The Company shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of the Company as the same shall have
existed immediately prior to such merger or consolidation;
(b) The Company shall sell or transfer to one or more persons,
corporations or entities, in a single transaction or a series of
related transactions, more than one-half of the assets accounted for
on the Statement of Consolidated Financial Position of the Company as
"properties" or "investments in associated companies" (or such
replacements for these accounts as may be adopted from time to time)
unless by an affirmative vote of two-thirds of the members of the
Board of Directors, the transaction or transactions are exempted from
the operation of this provision based on a good faith finding that the
transaction or transactions are not within the intended scope of this
definition for purposes of this instrument;
(c) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of the Company (whether directly or indirectly); or
(d) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of the Company cease, for any reason, to constitute at least
a majority thereof, unless the election, or the nomination for
election by the shareholders of the Company, of each Director first
elected during any such period was approved by a vote of at least
one-third of the Directors of the Company who are Directors
15
<PAGE> 3
3
of the Company on the date of the beginning of any such period.
2.7 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
2.8 COMMITTEE. "Committee" has the meaning set forth in Section 8.1.
2.9 COMPANY. "Company" means Cleveland-Cliffs Inc and any successor
thereto.
2.10 COMPENSATION. "Compensation" means the Base Salary and Bonus
payable with respect to an Eligible Employee for each calendar year.
2.11 DECLARED RATE. "Declared Rate" for any period ending on or
before December 31, 1993 means the base lending interest rate ("Prime Rate")
published by Ameritrust Company National Association or its successor on the
specified date or, if not a business day, on the next succeeding business day.
"Declared Rate" for any period commencing on or after January 1, 1994 means the
Moody's Corporate Bond Yield, as adjusted on the first business day of each
January, April, July and October.
2.12 DEFERRAL ACCOUNT. "Deferral Account" means the account
maintained on the books of the Employer for the purpose of accounting for the
amount of Compensation that each Participant elects to defer under the Plan and
for the amount of interest credited thereto for each Participant pursuant to
Article V.
2.13 DEFERRAL BENEFIT. "Deferral Benefit" means the benefit payable
to a Participant or his or her Beneficiary pursuant to Article VI.
2.14 DETERMINATION DATE. "Determination Date" means a date on which
the amount of a Participant's Account is determined as provided in Article V.
The 15th day and the last day of each month shall be a Determination Date.
2.15 ELIGIBLE EMPLOYEE. "Eligible Employee" means a senior corporate
officer of the Company or a full-time, salaried employee of an Employer who has
a Management Performance Incentive Plan Salary Grade 18 or above.
2.16 EMERGENCY BENEFIT. "Emergency Benefit" has the meaning set forth
in Section 6.2.
2.17 EMPLOYER. "Employer" means, with respect the Participant, the
Company or the Selected Affiliate which pays such Participant's Compensation.
16
<PAGE> 4
4
2.18 MATCHING ACCOUNT. "Matching Account" means the account
maintained on the books of an Employer for the purpose of accounting for the
Matching Amount and for the amount of interest credited thereto for each
Participant pursuant to Article V.
2.19 MATCHING AMOUNT. "Matching Amount" means the amount credited to
a Participant's Matching Account under Section 4.3.
2.20 MATCHING PERCENTAGE. "Matchring Percentage" means the matching
contribution percentage in effect for a specific Plan Year under the Savings
Plan.
2.21 PARTICIPANT. "Participant" means any Eligible Employee who
elects to participate by filing a Participation Agreement as provided in
Section 3.2.
2.22 PARTICIPATION AGREEMENT. "Participation Agreement" means the
agreement filed by a Participant, in the form prescribed by the Committee,
pursuant to Section 3.2.
2.23 PLAN. "Plan" means the Cleveland-Cliffs Inc Voluntary
Non-Qualified Deferred Compensation Plan, as amended from time to time.
2.24 PLAN YEAR. "Plan Year" means a twelve-month period commencing
January 1 and ending the following December 31, provided that the first Plan
Year shall commence June 1, 1989 and end December 31, 1989.
2.25 SAVINGS PLAN. "Savings Plan" means, with respect to a
Participant, the Cliffs and Associated Employers Salaried Employees
Supplemental Retirement Savings Plan for which he is eligible to contribute.
2.26 SELECTED AFFILIATE. "Selected Affiliate" means (1) any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the chain owns or
controls, directly or indirectly, stock possessing not less than 50 per cent of
the total combined voting power of all classes of stock in one of the other
corporations, or (2) any partnership or joint venture in which one or more of
such corporations is a partner or venturer, each of which shall be selected by
the Committee.
ARTICLE III
-----------
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 ELIGIBILITY. Eligibility to participate in the Plan is limited to
Eligible Employees.
17
<PAGE> 5
5
3.2 PARTICIPATION. Participation in the Plan shall be limited to
Eligible Employees who elect to participate in the Plan by filing a
Participation Agreement with the Committee. A properly completed and executed
Participation Agreement shall be filed on or prior to the December 31
immediately preceding the Plan Year in which the Participant's participation in
the Plan will commence. The election to participate shall be effective on the
first day of the Plan Year following receipt by the Committee of the
Participation Agreement. Notwithstanding the foregoing, in the case of the
first Plan Year, a Participation Agreement shall be filed by June 15, 1989 and
shall be effective as of June 1, 1989. In the event that an Eligible Employee
first becomes eligible to participate in the Plan or first commences employment
during the course of a Plan Year, a Participation Agreement shall be filed with
the Committee not later than 30 days following his eligibility date or date of
employment. Each Participation Agreement shall be effective only with regard
to Compensation earned and payable following the later of the effective date of
the Participation Agreement or the date the Participation Agreement is filed
with the Committee.
3.3 TERMINATION OF PARTICIPATION. A Participant may elect to
terminate his or her participation in the Plan by filing a written notice
thereof with the Committee. The termination shall be effective at any time
specified by the Participant in the notice but not earlier than the first day
of the Plan Year immediately succeeding the Plan Year in which such notice is
filed with the Committee. Amounts credited to such Participant's Account with
respect to periods prior to the effective date of such termination shall
continue to be payable pursuant to, receive interest on, and otherwise governed
by, the terms of the Plan.
3.4 INELIGIBLE PARTICIPANT. Notwithstanding any other provisions of
this Plan to the contrary, if the Committee determines that any Participant may
not qualify as a "management or highly compensated employee" within the meaning
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or regulations thereunder, the Committee may determine, in its sole discretion,
that such Participant shall cease to be eligible to participate in this Plan.
Upon such determination, the Employer shall make an immediate lump sum payment
to the Participant equal to the vested amount credited to his Account. Upon
such payment no benefit shall thereafter be payable under this Plan either to
the Participant or any Beneficiary of the Participant, and all of the
Participant's elections as to the time and manner of payment of his Account
will be deemed to be cancelled.
18
<PAGE> 6
6
ARTICLE IV
----------
DEFERRAL OF COMPENSATION
------------------------
4.1 AMOUNT OF DEFERRAL. With respect to each Plan Year, a Participant
may elect to defer a specified percentage of his or her Compensation, provided
the deferred Compensation under this Plan and the Participant's pretax elective
deferrals for such Plan Year under the Savings Plan, in the aggregate, shall
not exceed the sum of 25% of his or her Base Salary net of such pretax elective
deferrals, if any, plus 100% of his or her Bonus. A Participant may choose to
have amounts deferred under this Plan deducted from his Base Salary, Bonus or a
combination of both. For the first Plan Year, a Participant may elect to defer
all or any portion of his or her Compensation earned or payable after the later
of the effective date of the Participation Agreement or the date of filing the
Participation Agreement with the Committee, provided the total deferred amount
for such Plan Year does not exceed the annual limitation under this Section
4.1. A Participant may change the percentage of his or her Compensation to be
deferred by filing a written notice thereof with the Committee. Any such
change shall be effective as of the first day of the Plan Year immediately
succeeding the Plan Year in which such notice is filed with the Committee.
4.2 MATCHING AMOUNTS. An Employer shall provide Matching Amounts
under this Plan with respect to each Participant who is eligible to be
allocated matching contributions under the Savings Plan. The total Matching
Amounts under this Plan on behalf of a Participant for each Plan Year shall not
exceed (i) the Matching Percentage of the Compensation deferred by a
Participant under Section 4.1, up to a maximum of 7% of Compensation, less (ii)
the Employer matching contributions allocated to the Participant under the
Savings Plan for such Plan Year.
4.3 CREDITING DEFERRED COMPENSATION AND MATCHING AMOUNTS. The amount
of Compensation that a Participant elects to defer under the Plan shall be
credited by the Employer to the Participant's Deferral Account semi-monthly.
To the extent that the Employer is required to withhold any taxes or other
amounts' from a Participant's deferred Compensation pursuant to any state,
federal or local law, such amounts shall be withheld from the Participant's
Compensation before such amounts are credited. The Matching Amount under the
Plan for each Participant shall be credited by the Employer at the same time
that matching contributions are allocated under the Savings Plan.
19
<PAGE> 7
7
ARTICLE V
---------
BENEFIT ACCOUNTS
----------------
5.1 INVESTMENT OF ACCOUNTS. As soon as practicable after the
crediting of any amount to a Participant's Account, the Company may, in its
sole discretion, direct that the Company invest the amount credited, in whole
or in part, in such property (real, personal, tangible or intangible), other
than securities of the Company, (collectively the "Investments"), as the
Committee shall direct, or may direct that the Company retain the amount
credited as cash to be added to its general assets. The Committee may, but is
under no obligation to, direct the investment of amounts credited to a
Participant's Account in accordance with requests made by the Participant and
communicated to the Committee. Earnings from Investments shall be credited to
a Participant's Account and shall be reinvested, as soon as practicable, in the
manner provided above. The Company shall be the sole owner and beneficiary of
all Investments, and all contracts and other evidences of the Investments shall
be registered in the name of the Company. The Company, under the direction of
the Committee, shall have the unrestricted right to sell any of the Investments
included in any Participant's Account, and the unrestricted right to reinvest
the proceeds of the sale in other Investments or to credit the proceeds of the
sale to a Participant's Account as cash. Amounts credited to a Participant's
Account that are not invested in Investments shall be credited to a
Participant's Account as cash.
5.2 DETERMINATION OF ACCOUNT. As of each Determination Date, a
Participant's Account shall consist of the following: (i) the balance of the
Participant's Account as of the immediately preceding Determination Date, plus
(ii) the Participant's deferred Compensation and Matching Amount credited
pursuant to Section 4.3 since the immediately preceding Determination Date and
any earnings and/or income credited to such amounts pursuant to Sections 5.1
and 5.3 as of such Determination Date, minus (iii) any losses or other
diminution in the value of assets in such Account since the immediately
preceding Determination Date, minus (iv) the aggregate amount of distributions,
if any, made from such Participant's Account since the immediately preceding
Determination Date.
5.3 CREDITING OF INTEREST. As of each Determination Date, the amounts
credited to a Participant's Account as cash shall be increased by the amount of
interest earned since the immediately preceding Determination Date. Interest
shall be credited at the Declared Rate as of such Determination Date based on
the balance of the cash amounts credited to the Account since the immediately
preceding Determination Date, but after such Account has been adjusted for any
contributions or distributions to be credited or deducted for such period.
Interest for the
20
<PAGE> 8
8
period prior to the first Determination Date applicable to a Participant's
Account shall be deemed earned ratably over such period.
5.4 STATEMENT OF ACCOUNTS. The Committee shall cause to be kept a
detailed record of all transactions affecting each Participant's Account and
shall provide to each Participant, within 120 days after the close of each Plan
Year, a written statement setting forth a description of the Investments in
such Participant's Account and the cash balance, if any, of such Participant's
Account as of the last day of the preceding Plan Year and showing all
adjustments made thereto during such Plan Year.
5.5 VESTING OF ACCOUNT. A Participant shall be 100% vested in his or
her Account at all times.
ARTICLE VI
----------
PAYMENT OF BENEFITS
-------------------
6.1 PAYMENT OF DEFERRAL BENEFIT ON TERMINATION OF SERVICE OR DEATH.
Upon the earlier of (i) termination of service of the Participant as an
employee of the Employer and all Selected Affiliates, for reasons other than
death, or (ii) the death of a Participant, the Employer shall, in accordance
with this Article VI, pay to the Participant or his Beneficiary, as the case
may be, a Deferral Benefit equal to the balance of his or her vested Account
determined pursuant to Article V, less any amounts previously distributed.
6.2 EMERGENCY BENEFIT. In the event that the Committee, upon written
petition of a Participant, determines, in its sole discretion, that the
Participant has suffered an unforeseeable financial emergency, the Employer
shall pay to the Participant, as soon as practicable following such
determination, an amount necessary to meet the emergency (the "Emergency
Benefit"), but not exceeding the aggregate balance of such Participant's
Deferral Account and Matching Account as of the date of such payment. For
purposes of this Section 6.2, an "unforeseeable financial emergency" shall mean
an unexpected need for cash arising from an illness, disability, casualty loss,
sudden financial reversal or other such unforeseeable occurrence. Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children shall not be considered to be the result of an
unforeseeable financial emergency. The amount of the Deferral Benefit
otherwise payable under the Plan to such Participant shall be adjusted to
reflect the early payment of the Emergency Benefit.
21
<PAGE> 9
9
6.3 IN-SERVICE DISTRIBUTION. A Participant may elect to receive an
in-service distribution of his or her deferred Compensation beginning at any
time at least four years after the date such Compensation otherwise would have
been first payable. A Participant's election for an in-service distribution
shall be filed in writing with the Committee before the date his or her
deferred Compensation otherwise would have been first payable. The Participant
may elect to receive such Compensation as an in-service distribution as
provided in Section 6.4. Any benefits paid to the Participant as an in-service
distribution shall reduce the amount of Deferral Benefit otherwise payable to
the Participant under the Plan.
6.4 FORM OF PAYMENT.
(a) The Deferral Benefit payable pursuant to Section 6.1 or Section
6.3 shall be paid in one of the following forms, as elected by the
Participant in his or her Participation Agreement:
(1) Annual payments of a fixed amount which shall amortize the
vested Account balance, or the in-service distribution portion thereof,
as of the payment commencement date elected by the Participant over a
period not to exceed ten years (together, in the case of each annual
payment, with interest thereon credited after the payment commencement
date pursuant to Section 5.2).
(2) A lump sum.
(3) A combination of (1) and (2) above. The Participant shall
designate the percentage payable under each option.
(b) After a Participant elects the payment commencement date and the
form of payment for his benefits, he may not change the payment
commencement date or form thereafter.
6.5 COMMENCEMENT OF PAYMENTS. Commencement of payments under Section
6.1 of the Plan shall begin as soon as practicable, and in accordance with the
payment commencement date elected by the Participant, following receipt of
notice by the Committee of an event which entitles a Participant (or a
Beneficiary) to payments under the Plan.
6.6 SMALL BENEFIT. In the event the Committee determines that the
balance of the Participant's Account is less than $50,000 at the time of
commencement of payments, or the portion of the balance of the Participant's
Account payable to any beneficiary is less than $50,000 at the time of
commencement
22
<PAGE> 10
10
of the payments, the Employer may pay the benefit in the form of a lump sum
payment, notwithstanding any provision of the Plan to the contrary. Such lump
sum payment shall be equal to the balance of the Participant's Account, or the
portion thereof payable to a beneficiary.
ARTICLE VII
-----------
BENEFICIARY DESIGNATION
-----------------------
7.1 BENEFICIARY DESIGNATION. Each Participant shall have the right,
at any time, to designate any person or persons as his Beneficiary to whom
payment under the Plan shall be made in the event of his or her death prior to
complete distribution to the Participant of his or her Deferral Benefit. Any
Beneficiary designation shall be made in a written instrument filed with the
Committee and shall be effective only when received in writing by the
Committee.
7.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed.
7.3 NO DESIGNATION. If a Participant fails to designate a Beneficiary
as provided above, or if all designated Beneficiaries predecease the
Participant, then the Participant's designated Beneficiary shall be deemed to
be the Participant's estate.
7.4 EFFECT OF PAYMENT. Payment to a Participant's Beneficiary (or,
upon the death of a Beneficiary, to the Beneficiary's estate) shall completely
discharge the Employer's obligations under the Plan.
ARTICLE VIII
------------
ADMINISTRATION
--------------
8.1 COMMITTEE. The administrative committee for the Plan (the
"Committee") shall be those members of the Compensation Committee of the Board
who are not Participants, as long as there are at least three such members. If
there are not at least three such non-participating persons on the Compensation
Committee, the chief executive officer of the Company shall appoint other
non-participating Directors or Company officers to serve on the Committee. The
Committee shall supervise the administration and operation of the Plan, may
from time to time adopt rules and procedures governing the Plan and shall have
authority to give interpretive rulings with respect to the Plan.
23
<PAGE> 11
11
8.2 AGENTS. The Committee may appoint an individual, who may be an
employee of the Company, to be the Committee's agent with respect to the
day-today administration of the Plan. In addition, the Committee may, from
time to time, employ other agents and delegate to them such administrative
duties as it sees fit, and may from time to time consult with counsel who may
be counsel to the Company.
8.3 BINDING EFFECT OF DECISIONS. Any decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan shall be final and
binding upon all persons having any interest in the Plan.
8.4 INDEMNITY OF COMMITTEE. The Company shall indemnify and hold
harmless the members of the Committee and their duly appointed agents under
Section 8.2 against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to the Plan, except in
the case of gross negligence or willful misconduct by any such member or agent
of the Committee.
ARTICLE IX
----------
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
9.1 AMENDMENT. The Company, on behalf of itself and of each Selected
Affiliate may at any time amend, suspend or reinstate any or all of the
provisions of the Plan, except that no such amendment, suspension or
reinstatement may adversely affect any Participant's Account, as it existed as
of the effective date of such amendment, suspension or reinstatement, without
such Participant's prior written consent. Written notice of any amendment or
other action with respect to the Plan shall be given to each Participant.
9.2 TERMINATION. The Company, on behalf of itself and of each
Selected Affiliate, in its sole discretion, may terminate this Plan at any time
and for any reason whatsoever. Upon termination of the Plan, the Committee
shall take those actions necessary to administer any Accounts existing prior to
the effective date of such termination; provided, however, that a termination
of the Plan shall not adversely affect the value of a Participant's Account,
the earnings from Investments credited to a Participant's Account under Section
5.1, the interest on cash amounts credited to a Participant's Account under
Section 5.3, or the timing or method of distribution of a Participant's
Account, without the Participant's prior written consent.
24
<PAGE> 12
12
ARTICLE X
---------
MISCELLANEOUS
-------------
10.1 FUNDING. Participants, their Beneficiaries, and their heirs,
successors and assigns, shall have no secured interest or claim in any property
or assets of the Employer. The Employer's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of the Employer to pay money
in the future. Notwithstanding the foregoing, in the event of a Change in
Control, the Company shall create an irrevocable trust to hold funds to be used
in payment of the obligations of Employers under the Plan, and the Company
shall fund such trust in an amount equal to no less than the total value of the
Participants' Accounts under the Plan as of the Determination Date immediately
preceding the Change in Control, provided that any funds contained therein
shall remain liable for the claims of the respective Employer's general
creditors.
10.2 NONASSIGNABILITY. No right or interest under the Plan of a
Participant or his or her Beneficiary (or any person claiming through or under
any of them), other than the surviving spouse of any deceased Participant,
shall be assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any manner
be liable for or subject to the debts or liabilities of any such Participant or
Beneficiary. If any Participant or Beneficiary (other than the surviving
spouse of any deceased Participant) shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or
other event happening at any time such benefits would devolve upon anyone else
or would not be enjoyed by him or her, then the Committee, in its discretion,
may terminate his or her interest in any such benefit to the extent the
Committee considers necessary or advisable to prevent or limit the effects of
such occurrence. Termination shall be effected by filing a written
"termination declaration" with the Secretary of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary whose
interest is adversely affected (the "Terminated Participant").
As long as the Terminated Participant is alive, any benefits affected
by the termination shall be retained by the Employer and, in the Committee's
sole and absolute judgment, may be paid to or expended for the benefit of the
Terminated Participant, his or her spouse, his or her children or any other
person or persons in fact dependent upon him or her in such a manner as the
Committee shall deem proper. Upon the death of the Terminated Participant, all
benefits withheld from him or her and not paid to others in accordance with the
preceding sentence shall be disposed of according to the provisions of the Plan
that
25
<PAGE> 13
13
would apply if he or she died prior to the time that all benefits to which he
or she was entitled were paid to him or her.
10.3 LEGAL FEES AND EXPENSES. It is the intent of the Company and
each Selected Affiliate that no Eligible Employee or former Eligible Employee
be required to incur the expenses associated with the enforcement of his rights
under this Plan by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to an Eligible Employee hereunder. Accordingly, if it should appear
that the Employer has failed to comply with any of its obligations under this
Plan or in the event that the Employer or any other person takes any action to
declare this Plan void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Eligible Employee the benefits intended to be
provided to such Eligible Employee hereunder, the Employer irrevocably
authorizes such Eligible Employee from time to time to retain counsel of his
choice, at the expense of the Employer as hereafter provided, to represent such
Eligible Employee in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Employer or any
director, officer, stockholder or other person affiliated with the Employer in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Employer and such counsel, the Employer irrevocably
consents to such Eligible Employee's entering into an attorney-client
relationship with such counsel, and in that connection the Employer and such
Eligible Employee agree that a confidential relationship shall exist between
such Eligible Employee and such counsel. The Employer shall pay and be solely
responsible for any and all attorneys' and related fees and expenses incurred
by such Eligible Employee as a result of the Employer's failure to perform
under this Plan or any provision thereof; or as a result of the Employer or any
person contesting the validity or enforceability of this Plan or any provision
thereof.
10.4 CAPTIONS. The captions contained herein are for convenience only
and shall not control or affect the meaning or construction hereof.
10.5 GOVERNING LAW. The provisions of the Plan shall be construed and
interpreted according to the laws of the State of Ohio.
10.6 SUCCESSORS. The provisions of the Plan shall bind and inure to
the benefit of the Company, its selected Affiliates, and their respective
successors and assigns. The term successors as used herein shall include any
corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise, acquire all or substantially all of the
business and assets of the Company or a
26
<PAGE> 14
14
Selected Affiliate and successors of any such corporation or other business
entity.
10.7 RIGHT TO CONTINUED SERVICE. Nothing contained herein shall be
construed to confer upon any Eligible Employee the right to continue to serve
as an Eligible Employee of the Employer or in any other capacity.
Executed this 21st day of December, 1993.
------
CLEVELAND-CLIFFS INC
By: /s/ Richard F. Novak
---------------------------------
Vice President-Human Resources
27
<PAGE> 1
<TABLE>
COMPUTATION OF EARNINGS PER SHARE Exhibit 11
CLEVELAND-CLIFFS INC AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
(In Millions, Except
Per Share Amounts)
Six Months Ended
June 30
----------------------------
1994 1993
----------- -----------
<S> <C> <C>
Primary and fully diluted earnings per share:
Average shares outstanding 12.1 12.0
Net effect of dilutive stock options -
based on treasury stock method using
average market price -- --
----- -----
Average shares and equivalents 12.1 12.0
===== =====
Net income (loss) applicable to average
share and equivalents $12.6 $33.4
===== =====
Income (loss) per share $1.04 $2.78
===== =====
</TABLE>
28
