<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, 1996
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 August 2, 1996, there were 11,604,917 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,
------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Product sales and services $ 122.9 $ 103.3 $ 170.8 $ 154.6
Royalties and management fees 13.4 12.9 22.6 21.8
-------- -------- -------- --------
Total operating revenues 136.3 116.2 193.4 176.4
Investment income (securities) 1.6 2.1 3.8 4.7
Property damage insurance recovery 2.0 2.0
Other income 0.9 0.6 1.4 1.4
-------- -------- -------- --------
TOTAL REVENUES 140.8 118.9 200.6 182.5
COSTS AND EXPENSES:
Cost of goods sold and operating expenses 106.2 89.8 152.9 139.6
Administrative, selling and general expenses 3.7 3.7 7.5 6.8
Interest expense 1.2 1.5 2.4 3.2
Other expenses 1.9 12.2 4.7 14.1
-------- -------- -------- --------
TOTAL COSTS AND EXPENSES 113.0 107.2 167.5 163.7
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 27.8 11.7 33.1 18.8
INCOME TAXES (CREDITS) :
Currently payable 8.2 3.1 9.6 5.0
Deferred 1.8 (12.3) 2.1 (12.1)
-------- -------- -------- --------
TOTAL INCOME TAXES 10.0 (9.2) 11.7 (7.1)
-------- -------- -------- --------
NET INCOME $ 17.8 $ 20.9 $ 21.4 $ 25.9
======== ======== ======== ========
NET INCOME PER COMMON SHARE $ 1.52 $ 1.75 $ 1.82 $ 2.16
======== ======== ======== ========
</TABLE>
See notes to financial statements
2
<PAGE> 3
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
(In Millions)
--------------------------
June 30, December 31,
ASSETS 1996 1995
------ ------- -------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 101.1 $ 139.9
Marketable securities 8.8 8.9
------- -------
109.9 148.8
Accounts receivable - net 61.0 61.8
Inventories:
Finished products 69.5 38.0
Work in process 0.5 0.7
Supplies 14.6 17.0
------- -------
84.6 55.7
Deferred income taxes 14.1 14.1
Other 9.9 12.3
------- -------
TOTAL CURRENT ASSETS 279.5 292.7
PROPERTIES 263.2 260.0
Less allowances for depreciation and depletion (143.0) (140.0)
------- -------
TOTAL PROPERTIES 120.2 120.0
INVESTMENTS IN ASSOCIATED COMPANIES 152.3 152.0
OTHER ASSETS
Long-term investments 14.3 16.3
Deferred income taxes 9.5 11.2
Other 56.4 52.4
------- -------
TOTAL OTHER ASSETS 80.2 79.9
------- -------
TOTAL ASSETS $ 632.2 $ 644.6
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES $ 90.2 $ 103.5
LONG-TERM OBLIGATIONS 70.0 70.0
POST EMPLOYMENT BENEFITS 66.7 67.3
RESERVE FOR CAPACITY RATIONALIZATION 14.8 17.2
OTHER LIABILITIES 43.3 44.0
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 16.8 16.8
Issued - 16,827,941 shares
Capital in excess of par value of shares 67.2 65.2
Retained income 399.9 386.1
Foreign currency translation adjustments 0.5 0.3
Net unrealized (loss) on marketable securities (1.3) 0.1
Cost of 5,213,424 Common Shares in treasury
(1995 - 4,998,674) (132.6) (123.8)
Unearned Compensation (3.3) (2.1)
------- -------
TOTAL SHAREHOLDERS' EQUITY 347.2 342.6
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 632.2 $ 644.6
======= =======
</TABLE>
See notes to financial statements
3
<PAGE> 4
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Increase (Decrease)
in Cash and Cash
Equivalents for
Six Months Ended
June 30,
(In Millions)
------------------
1996 1995
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 21.4 $ 25.9
Depreciation and amortization:
Consolidated 3.2 3.5
Share of associated companies 5.4 5.7
Changes in capacity rationalization reserve 1.5 (1.4)
Tax credit (12.2)
Increases to environmental reserve 1.2 10.7
Other 0.8 (1.2)
------- -------
Total Before Changes in Operating Assets and Liabilities 33.5 31.0
Changes in operating assets and liabilities
Short-term marketable securities 0.1 0.2
Other (44.8) (16.4)
------- -------
NET CASH FROM (USED BY) OPERATING ACTIVITIES (11.2) 14.8
INVESTMENT ACTIVITIES
Capital expenditures:
Consolidated (4.0) (9.1)
Share of associated companies (7.4) (1.9)
Other (1.0)
------- -------
NET CASH (USED BY) INVESTMENT ACTIVITIES (11.4) (12.0)
FINANCING ACTIVITIES
Repurchase of common stock (8.8) (8.0)
Principal payment of long-term debt (5.0)
Dividends (7.6) (7.8)
Other 0.1
------- -------
NET CASH (USED BY) FINANCING ACTIVITIES (16.4) (20.7)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 0.2 (0.7)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (38.8) (18.6)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 139.9 140.6
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 101.1 $ 122.0
======= =======
Income taxes paid $ 9.9 $ 7.6
Interest paid on debt obligations $ 2.4 $ 3.3
</TABLE>
See notes to financial statements
4
<PAGE> 5
CLEVELAND-CLIFFS INC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
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
1995 Annual Report on Form 10-K. In management's opinion, the quarterly
unaudited financial statements present fairly the Company's financial position
and results in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 - MCLOUTH BANKRUPTCY
On September 29, 1995, McLouth Steel Products Corporation, Inc.
("McLouth"), a significant customer, petitioned for protection under Chapter 11
of the U.S. Bankruptcy Code. The Company had periodically extended credit to
McLouth. At the time of the bankruptcy filing, the Company had an unreserved
receivable from McLouth of $5.0 million, secured by first liens on certain
McLouth fixed assets. A $2.7 million reserve against the receivable was recorded
in September, 1995.
On March 15, 1996, McLouth announced that it had begun a shutdown of
its operations due to inadequate funds. The Company had supplied approximately
120,000 tons of pellets per month to McLouth in 1996 prior to shutdown. The
Company has reserved all financial exposure from the McLouth shutdown, except
the $2.3 million unreserved receivable which is secured by first liens on
property and equipment.
On June 26, 1996, the bankruptcy court approved the sale of McLouth's
assets and an agreement to settle secured claims, including the Company's
secured claim. Based on the terms of the agreement, the Company expects to fully
recover the carrying value of its secured claim. Proceeds from the sale of
McLouth's assets will be used primarily to satisfy administrative claims,
including the Company's administrative claim.
5
<PAGE> 6
NOTE C - ENVIRONMENTAL RESERVES
The Company has a formal code of environmental conduct which promotes
environmental protection and restoration. The Company's obligations for known
environmental problems at active mining operations, idle and closed mining
operations and other sites have been recognized based on estimates of the cost
of required investigation and remediation at each site. If the cost can only be
estimated as a range of possible amounts with no specific amount being most
likely, the minimum of the range is accrued in accordance with generally
accepted accounting principles. Estimates may change as additional information
becomes available. Actual cost incurred may vary from the estimates due to the
inherent uncertainties involved. Any potential insurance recoveries have not
been reflected in the determination of the financial reserve.
During the first six months of 1996, the Company provided $1.2 million
of additional environmental reserves and made payments of $.9 million. The
additional environmental provision reflects the Company's continuing review of
estimated restoration expense at all known sites.
At June 30, 1996, the Company has an environmental reserve of $23.2
million, of which $4.4 million is current. The reserve includes the Company's
obligations related to:
o Federal and State Superfund and Clean Water Act sites where the
Company is named as a potential responsible party, including
Cliffs-Dow and Kipling sites in Michigan, the Summitville mine
site in Colorado, and the Rio Tinto mine site in Nevada, all of
which sites are independent of the Company's iron mining
operations. The reserves are based on the Company's share of
engineering estimates of remedial investigations and remedial
actions prepared by outside consultants engaged by the potential
responsible parties. The Company continues to evaluate the
recommendations and other means for site clean-up. Significant
site clean-up activities have taken place at Cliffs-Dow since late
1993.
o Wholly-owned active and idle operations, including Northshore mine
and Silver Bay power plant in Minnesota, which was acquired on
September 30, 1994. The Northshore/Silver Bay reserve is based on
an environmental investigation conducted by the Company and an
outside consultant in connection with the purchase.
o Other sites, including current and former operations, for which
reserves are based on the Company's estimated cost of
investigation and remediation of sites where expenditures may be
incurred.
Estimated environmental expenditures under current laws and regulations are not
expected to materially impact the Company's consolidated financial statements.
6
<PAGE> 7
NOTE D - INSURANCE RECOVERY
In January, 1996, the Company's Northshore Mining Company sustained
property damage to 42 railroad ore cars relating to a train derailment. The
property damage, less deductible, resulted in a net insurance recovery of $2.0
million pre-tax.
NOTE E - ACCOUNTING AND DISCLOSURE CHANGES
In October, 1995, the Financial Accounting Standards Board issued
Statement 123, entitled, "Accounting for Stock-Based Compensation," which
establishes financial accounting and reporting standards for stock-based
employee compensation plans. The standard is effective for years that begin
after December 15, 1995. Management is evaluating the accounting and disclosure
alternatives; however, no significant financial statement effect is expected.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
RESULTS OF OPERATIONS
---------------------
COMPARISON OF SECOND QUARTER AND FIRST SIX MONTHS - 1996 AND 1995
- -----------------------------------------------------------------
Net income for the second quarter was $17.8 million, or $1.52 per
share, and first half earnings were $21.4 million, or $1.82 a share. Earnings
for both periods included a $1.3 million after-tax property damage insurance
recovery on a January, 1996 ore train derailment.
Second quarter 1995 earnings were $20.9 million, or $1.75 a share, and
first half 1995 earnings were $25.9 million, or $2.16 a share. Earnings for both
periods included income from special items: a $12.2 million tax credit resulting
from the settlement of prior years' tax issues, partly offset by a $6.7 million
after-tax increase in the reserve for environmental expenditures.
Excluding the special items in both years, second quarter 1996 earnings
were $16.5 million, or $1.41 a share, versus $15.4 million, or $1.29 a share in
1995, and first half 1996 earnings were $20.1 million, or $1.71 a share,
compared to $20.4 million, or $1.70 a share in 1995.
Following is a summary of results:
<TABLE>
<CAPTION>
(In Millions, Except Per Share)
-------------------------------------
Second Quarter First Half
--------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income Before Special Items:
Amount $ 16.5 $ 15.4 $ 20.1 $ 20.4
Per Share 1.41 1.29 1.71 1.70
Special Items:
Amount 1.3 5.5 1.3 5.5
Per Share .11 .46 .11 .46
Net Income:
Amount 17.8 20.9 21.4 25.9
Per Share 1.52 1.75 1.82 2.16
</TABLE>
Earning comparisons before special items for the second quarter and
first half were favorably affected by higher Australian earnings and increased
North American sales volume in 1996, and unfavorably affected by higher
operating costs and a higher effective income tax rate in 1996.
Earnings per share in the second quarter and first half of 1996 reflect
the favorable effect of repurchasing shares under the Company's stock repurchase
program.
Australian pre-tax earnings were $5.7 million and $9.2 million in the
second quarter and first half 1996. Comparable earnings in the second quarter
and first half 1995 were $2.5 million and $3.5 million respectively. The
Australian operation is projected to cease operations in the first quarter of
1997.
* * *
The Company's managed mines in North America produced 9.8 million tons
of pellets in the second quarter of 1996, equal to 1995. First half production
was 18.8 million tons, also unchanged from 1995.
8
<PAGE> 9
The Company's North American iron ore pellet sales in the second
quarter of 1996 were 2.9 million tons compared with 2.6 million tons in 1995.
First half sales were 3.9 million tons versus 3.8 million tons in 1995. Sales
for 1996 are up slightly from 1995 despite the failure of a significant customer
(McLouth Steel Products Corporation), which occurred in the first quarter 1996.
The increase is due, in part, to the continued strong demand in the steel
industry.
LIQUIDITY
- ---------
At June 30, 1996, the Company had cash and marketable securities of
$109.9 million. Since December 31, 1995, cash and marketable securities have
decreased $38.9 million due to increased working capital, $44.8 million, capital
expenditures, $11.4 million, repurchases of common stock, $8.8 million, and
dividends, $7.6 million, partially offset by cash flow from operating
activities, $33.5 million.
Capital additions and replacements, at the six Company-managed mines in
North America, are projected to total approximately $74 million in 1996. The
Company's share of such 1996 expenditures is expected to approximate $25
million.
On April 15, 1996, the Company announced an international joint venture
to produce and market premium quality reduced iron briquettes to the steel
industry. All definitive project documents were subsequently signed on May 8,
1996. The venture's participants, through subsidiaries, will be Cleveland-Cliffs
Inc, 46.5 percent; The LTV Corporation, 46.5 percent; and Lurgi AG of Germany, 7
percent. The Company will manage the $150 million project, to be located in
Trinidad and Tobago, and will be responsible for sales by the venture company,
Cliffs and Associates Limited. The Company's share of capital expenditures is
estimated to be $70 million, of which $18 million is expected to be spent in
1996. No project financing is envisioned.
Cliffs and Associates Limited has entered into forward currency
exchange contracts to hedge the Deutsche Mark as part of the construction
project. The purpose of the contracts is to manage the risk of exchange rate
fluctuation with respect to the portion of project construction costs
denomimated in the Deutsche Mark. The Company's share of outstanding contracts,
which have varying maturity dates to June 1, 1998, have an aggregate contract
value of $16.8 million and an aggregate estimated fair value of $16.3 million,
at June 30, 1996.
The Company has $70.0 million of senior unsecured notes outstanding
with a group of private investors. The notes which have a fixed interest rate of
7.0 percent are due in December, 2005. In addition, the Company has a $100
million revolving credit agreement. No borrowings are outstanding under this
agreement which was amended in July, 1996 to extend the expiration date by one
year to March 1, 2001. The Company was in compliance with all financial
covenants and restrictions of the agreements.
In January, 1995, the Company commenced a program to repurchase up to
600,000 shares of its common shares in the open market or in negotiated
transactions. In July, 1996, the Company announced the expansion of this program
to 1.0 million shares, an increase of 400,000 shares. Under the combined program
the Company has repurchased 503,500 shares through July 12 at a total cost of
$19.6 million.
9
<PAGE> 10
The Company initially established a reserve in 1983 for expected costs
of reorienting its mining joint ventures and facilities to adjust to changed
market conditions. The reserve balance is principally for the planned shutdown
of Savage River Mines in Tasmania, Australia, in the first quarter of 1997, and
the permanent shutdown of the Republic Mine, which was announced on January 30,
1996. The Republic Mine has been idle since 1981. Expenditures for the next
twelve months, for both Savage River Mines and Republic Mine, are projected to
approximate $14.4 million.
Pursuant to the Coal Industry Retiree Health Benefit Act of 1992
("Benefit Act"), the Trustees of the UMWA Combined Benefit Fund have assigned
responsibility to the Company for premium payments with respect to retirees,
dependents, and "orphans" (unassigned beneficiaries), representing less than
one-half of one percent of all "assigned beneficiaries" under the Benefit Act.
The Company is making premium payments under protest and is contesting the
assignments that it believes were incorrect. Premium payments by the Company
were $.6 million in the second quarter of 1996 and $.2 million in the second
quarter of 1995. Additionally, in December, 1993, a complaint was filed by the
Trustees of the United Mine Workers of America 1992 Benefit Plan against the
Company demanding the payment of premiums on additional beneficiaries related to
two formerly operated joint venture coal mines. The Company is actively
contesting the complaint. Monthly premiums 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, 1996,
the Company's coal retiree reserve was $9.7 million, of which $1.2 million is
expected to be paid in 1996. The reserve is reflected at present value, using a
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,
1996, including the current portion, totalled $76.8 million. The following table
sets forth information concerning long-term obligations guaranteed and
effectively serviced by the Company.
<TABLE>
<CAPTION>
(Millions)
--------------------------------------------------------------------
June 30, 1996 December 31, 1995
---------------------------- -----------------------------
Total Total
Long-Term Long-Term
Obligations Obligations Obligations Obligations
Effectively and Effectively and
Serviced Guarantees Serviced Guarantees
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Consolidated $70.0 $70.0 $70.0 $70.0
Share of Unconsolidated
Affiliates 6.8 13.4* 6.3 12.9*
----- ----- ----- -----
Total $76.8 $83.4 $76.3 $82.9
===== ===== ===== =====
Ratio to Shareholders'
Equity .2:1 .2:1 .2:1 .2:1
<FN>
* Includes $6.6 million of Empire Mine debt obligations which are
serviced by LTV and Wheeling and mature in December, 1996.
</TABLE>
At June 30, 1996, the Company was in compliance with all financial
covenants and restrictions related to its medium-term, unsecured senior note
agreement.
10
<PAGE> 11
The fair value of the Company's long-term debt (which had a carrying
value of $70.0 million) at June 30, 1996, was estimated at $66.4 million based
on a discounted cash flow analysis and estimates of current borrowing rates.
Following is a summary of common shares outstanding:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
March 31 11,832,767 12,031,392 12,079,885
June 30 11,614,517 11,892,092 12,080,560
September 30 11,898,467 12,091,310
December 31 11,829,267 12,099,860
</TABLE>
OUTLOOK FOR 1996
- ----------------
Steel markets in the U.S. and Canada continue to be strong and most
industry analysts see little change in demand levels over the balance of the
year. Strong order rates and historically low inventories are expected to keep
North American steelmakers operating at high levels with North American steel
shipments projected to meet or exceed the 112 million tons shipped in 1995.
However, steel price realizations have been disappointing.
The six North American mines managed by the Company are operating at
nearly full capacity and are scheduled to produce 40.6 million tons, a slight
increase from the 39.6 million tons produced in 1995. The Company's share of
scheduled production is 10.3 million tons in 1996 compared with 9.8 million tons
in 1995.
The Company's North American iron ore pellet sales for the year 1996
are now estimated to be 11.2 million tons, up slightly from the previous
forecast and higher than the 10.4 million tons sold in 1995, despite the
occurrence of the failure of one of the Company's significant customers
(McLouth). Average pellet price realization is expected to increase moderately
over 1995 due to the market strength and contractual increases.
BUSINESS RISK
- -------------
In addition to the preparation of financial statements in conformity
with generally accepted accounting principles, as described in Note A - Basis of
Presentation, this report contains forward-looking statements. Such statements
include discussions on capital expenditures, production and sales projections,
and development of a new venture. These forward-looking statements are based on
the Company's current expectations that are subject to risks and uncertainties,
which could materially impact the expected results.
The Company's dominant business is the production and sale of iron ore,
and is, therefore, subject to the cyclical nature of the steel industry. The
North American steel industry has experienced high operating rates in recent
years. Most steel company partners and customers of the Company have improved
their financial condition due to better operating results and increased equity
capital. However, the integrated steel industry continues to have relatively
high fixed costs and obligations.
11
<PAGE> 12
The improvement in most steel companies' financial positions has
reduced the major near-term business risk faced by the Company, i.e., the
potential financial failure and shutdown of one or more of its significant
customers or partners, with the resulting loss of ore sales or royalty and
management fee income. However, if any such shutdown were to occur without
mitigation through replacement sales or cost reduction, it would represent a
significant adverse financial development to the Company. The iron mining
business has high operating leverage because "fixed" costs are a large portion
of the cost structure. Therefore, loss of sales or other income due to failure
of a customer or partner would have an adverse income effect proportionately
greater than the revenue effect.
12
<PAGE> 13
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 14, 1996.
At the meeting the Company's shareholders acted upon the election of Directors,
a proposal to approve the Cleveland-Cliffs Inc Nonemployee Directors'
Compensation Plan, and a proposal to ratify the appointment of the Company's
independent public accountants. In the election of Directors, all 13 nominees
named in the Company's Proxy Statement, dated March 25, 1996, 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>
Ronald C. Cambre 10,668,665 174,491
Robert S. Colman 9,255,414 1,587,743
James D. Ireland 10,806,437 36,719
G. Frank Joklik 10,821,033 22,124
E. Bradley Jones 10,819,631 23,526
Leslie L. Kanuk 10,821,897 21,260
Francis R. McAllister 10,676,865 166,291
John C. Morley 10,821,620 21,536
M. Thomas Moore 10,821,968 21,189
Stephen B. Oresman 10,809,161 33,995
Alan Schwartz 10,820,502 22,654
Jeptha H. Wade 10,820,912 22,245
Alton W. Whitehouse 10,821,917 21,240
</TABLE>
Votes cast in person and by proxy at such meeting for and against the
adoption of the proposal to approve the Cleveland-Cliffs Inc Nonemployee
Directors' Compensation Plan were as follows: 10,597,844 Common Shares were cast
for the adoption of the proposal; 199,504 Common Shares were cast against the
adoption of the proposal; and 45,808 Common Shares abstained from voting on the
proposal.
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
LLP, independent public accountants, to examine the books of account and other
records of the Company and its consolidated subsidiaries for the year 1996 were
as follows: 10,820,098 Common Shares were cast for the adoption of the proposal;
7,476 Common Shares were cast against the adoption of the proposal; and 15,583
Common Shares abstained from voting on the proposal.
There were no broker non-votes with respect to the election of
directors, the approval of the Nonemployee Directors' Compensation Plan, or the
ratification of the independent public accountants.
13
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) List of Exhibits - Refer to Exhibit Index on page 15.
(b) There were no reports on Form 8-K filed during the three
months ended June 30, 1996.
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, 1996 By /s/ J. S. Brinzo
---------------------- ------------------------------------
J. S. Brinzo
Executive Vice President-Finance and
Principal Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- ------------------------------------------------------- --------
<S> <C> <C>
11 Statement re computation of earnings per share Filed
Herewith
27 Consolidated Financial Data Schedule submitted for
Securities and Exchange Commission information only
</TABLE>
15
<PAGE> 1
COMPUTATION OF EARNINGS PER SHARE Exhibit 11
CLEVELAND-CLIFFS INC AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
(In Millions, Except
Per Share Amounts)
Six Months Ended
June 30
-------------------
1996 1995
-------- --------
<S> <C> <C>
Primary and fully diluted earnings per share:
Average shares outstanding 11.8 12.0
Net effect of dilutive stock options
and performance shares based on
treasury stock method using
average market price -- --
-------- --------
Average shares and equivalents 11.8 12.0
======== ========
Net income applicable to average
share and equivalents $ 21.4 $ 25.9
======== ========
Income per share $ 1.82 $ 2.16
======== ========
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from statements
of consolidated income, consolidated financial position and computation of
earnings per share and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000764065
<NAME> CLEVELAND-CLIFFS INC
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 101
<SECURITIES> 9
<RECEIVABLES> 61
<ALLOWANCES> 1
<INVENTORY> 85
<CURRENT-ASSETS> 280
<PP&E> 263
<DEPRECIATION> 143
<TOTAL-ASSETS> 632
<CURRENT-LIABILITIES> 90
<BONDS> 0
<COMMON> 17
0
0
<OTHER-SE> 330
<TOTAL-LIABILITY-AND-EQUITY> 632
<SALES> 193
<TOTAL-REVENUES> 201
<CGS> 153
<TOTAL-COSTS> 161
<OTHER-EXPENSES> 5
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 33
<INCOME-TAX> 12
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 0
</TABLE>
