CLEVELAND-CLIFFS INC., 10-K filed on 2/20/2020
Annual Report
v3.19.3.a.u2
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2019
Feb. 18, 2020
Jun. 28, 2019
Cover page.      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2019    
Document Transition Report false    
Entity File Number 1-8944    
Entity Registrant Name CLEVELAND-CLIFFS INC.    
Entity Incorporation, State or Country Code OH    
Entity Tax Identification Number 34-1464672    
Entity Address, Address Line One 200 Public Square,    
Entity Address, City or Town Cleveland,    
Entity Address, State or Province OH    
Entity Address, Postal Zip Code 44114-2315    
City Area Code 216    
Local Phone Number 694-5700    
Title of 12(b) Security Common Shares, par value $0.125 per share    
Trading Symbol CLF    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 2,839,987,963
Entity Common Stock, Shares Outstanding   271,441,006  
Entity Central Index Key 0000764065    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Amendment Flag false    
Documents Incorporated by Reference [Text Block] Portions of the registrant’s proxy statement for its 2020 annual meeting of shareholders are incorporated by reference into Part III.    
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Statements Of Condensed Consolidated Financial Position - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 352.6 $ 823.2
Accounts receivable, net 94.0 226.7
Inventories 317.4 181.1
Derivative assets 45.8 91.5
Income tax receivable, current 58.6 117.3
Other current assets 29.5 39.8
Total current assets 897.9 1,479.6
Non-current assets:    
Property, plant and equipment, net 1,929.0 1,286.0
Income tax receivable, non-current 62.7 121.3
Deferred income taxes 459.5 464.8
Other non-current assets 154.7 177.9
TOTAL ASSETS 3,503.8 3,529.6
Current liabilities:    
Accounts payable 193.2 186.8
Accrued liabilities 126.3 158.9
State and local taxes payable 37.9 35.5
Other current liabilities 52.0 87.0
Total current liabilities 409.4 468.2
Non-current liabilities:    
Long-term debt 2,113.8 2,092.9
Pension and OPEB liabilities 311.5 248.7
Environmental and mine closure obligations 164.9 172.0
Other non-current liabilities 146.3 123.6
TOTAL LIABILITIES 3,145.9 3,105.4
Commitments and contingencies (See Note 18)
Equity:    
Common Shares - par value $0.125 per share, Authorized - 600,000,000 shares (2018 - 600,000,000 shares); Issued - 301,886,794 shares (2018 - 301,886,794) shares); Outstanding - 270,084,005 shares (2018 - 292,611,569) shares) 37.7 37.7
Capital in excess of par value of shares 3,872.1 3,916.7
Retained deficit (2,842.4) (3,060.2)
Cost of 31,802,789 common shares in treasury (2018 - 9,275,225 shares) (390.7) (186.1)
Accumulated other comprehensive loss (318.8) (283.9)
TOTAL EQUITY 357.9 424.2
TOTAL LIABILITIES AND EQUITY $ 3,503.8 $ 3,529.6
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Statements Of Condensed Consolidated Financial Position (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Common shares, par value $ 0.125 $ 0.125
Common shares, authorized (in shares) 600,000,000 600,000,000
Common shares, issued (in shares) 301,886,794 301,886,794
Common shares, outstanding (in shares) 270,084,005 292,611,569
Common shares in treasury 31,802,789 9,275,225
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Statements Of Condensed Consolidated Operations - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Statement [Abstract]                      
Revenues from product sales and services $ 534.1 $ 555.6 $ 743.2 $ 157.0 $ 696.3 $ 741.8 $ 714.3 $ 180.0 $ 1,989.9 $ 2,332.4 $ 1,866.0
Cost of goods sold and operating expenses                 (1,414.2) (1,522.8) (1,398.4)
Sales margin 126.9 154.9 263.0 30.9 202.0 261.6 284.5 61.5 575.7 809.6 467.6
Other operating income (expense):                      
Selling, general and administrative expenses                 (119.4) (113.5) (102.9)
Miscellaneous - net                 (27.0) (22.9) 25.5
Total other operating expense                 (146.4) (136.4) (77.4)
Operating income                 429.3 673.2 390.2
Other income (expense):                      
Interest expense, net                 (101.2) (118.9) (126.8)
Loss on extinguishment of debt                 (18.2) (6.8) (165.4)
Other non-operating income                 2.2 17.2 10.2
Total other expense                 (117.2) (108.5) (282.0)
Income from continuing operations before income taxes                 312.1 564.7 108.2
Income tax benefit (expense)                 (17.6) 475.2 252.4
Income from continuing operations                 294.5 1,039.9 360.6
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent (0.2) (0.9) (0.6) 0.0 (14.6) 238.0 (64.3) (70.9) (1.7) 88.2 2.5
Net income                 292.8 1,128.1 363.1
Loss attributable to noncontrolling interest                 0.0 0.0 3.9
Net income attributable to Cliffs shareholders $ 63.2 $ 90.9 $ 160.8 $ (22.1) $ 609.5 $ 437.8 $ 165.1 $ (84.3) $ 292.8 $ 1,128.1 $ 367.0
Earnings (loss) per common share attributable to Cliffs shareholders - basic                      
Continuing operations $ 0.23 $ 0.34 $ 0.59 $ (0.08) $ 2.11 $ 0.67 $ 0.77 $ (0.05) $ 1.07 $ 3.50 $ 1.27
Discontinued operations 0 0 0 0 (0.05) 0.80 (0.22) (0.24) (0.01) 0.30 0.01
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Basic: 0.23 0.34 0.59 (0.08) 2.06 1.47 0.55 (0.29) 1.06 3.80 1.28
Earnings (loss) per common share attributable to Cliffs shareholders - diluted                      
Continuing operations 0.23 0.33 0.57 (0.08) 2.03 0.64 0.76 (0.05) 1.04 3.42 1.25
Discontinued operations 0 0 0 0 (0.05) 0.77 (0.21) (0.24) (0.01) 0.29 0.01
Earnings (Loss) per Common Share Attributable to Cliffs Common Shareholders - Diluted: $ 0.23 $ 0.33 $ 0.57 $ (0.08) $ 1.98 $ 1.41 $ 0.55 $ (0.29) $ 1.03 $ 3.71 $ 1.26
Average number of shares (in thousands)                      
Basic                 276,761 297,176 288,435
Diluted                 284,480 304,141 292,961
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Statements Of Condensed Consolidated Comprehensive Income - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]      
Net income attributable to Cliffs shareholders $ 292.8 $ 1,128.1 $ 367.0
Net Income (Loss) Available to Common Stockholders, Basic 292.8 1,128.1 367.0
Other comprehensive income (loss):      
Changes in pension and OPEB, net of tax (34.6) (17.2) 11.5
Changes in foreign currency translation 0.0 (225.4) (13.9)
Changes in derivative financial instruments, net of tax (0.3) (2.3) (0.5)
Other comprehensive loss (34.9) (244.9) (2.9)
Other comprehensive loss attributable to the noncontrolling interest 0.0 0.0 (1.1)
Total comprehensive income attributable to Cliffs shareholders $ 257.9 $ 883.2 $ 363.0
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Statements Of Condensed Consolidated Cash Flows - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
OPERATING ACTIVITIES      
Net income $ 292.8 $ 1,128.1 $ 363.1
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, depletion and amortization 85.1 89.0 87.7
Deferred income taxes 16.8 (460.5) 0.0
Loss on extinguishment of debt 18.2 6.8 165.4
Loss (gain) on derivatives 46.8 (110.2) (4.1)
Gain on foreign currency translation 0.0 (228.1) 0.0
Other 65.4 20.7 45.5
Changes in operating assets and liabilities:      
Receivables and other assets 254.5 51.7 (246.3)
Inventories (136.3) 43.5 (4.2)
Payables, accrued expenses and other liabilities (80.8) (62.5) (69.0)
Net cash provided by operating activities 562.5 478.5 338.1
INVESTING ACTIVITIES      
Purchase of property, plant and equipment (639.0) (208.6) (134.9)
Deposits for property, plant and equipment (17.0) (87.5) (16.8)
Other investing activities 11.6 23.0 (4.3)
Net cash used by investing activities (644.4) (273.1) (156.0)
Payments for Repurchase of Common Stock 252.9 47.5 0.0
FINANCING ACTIVITIES      
Dividends paid (72.1) 0.0 0.0
Net proceeds from issuance of common shares 0.0 0.0 661.3
Proceeds from issuance of debt 720.9 0.0 1,771.5
Debt issuance costs (6.8) (1.5) (28.6)
Repurchase of debt (729.3) (234.5) (1,720.7)
Acquisition of noncontrolling interest 0.0 0.0 (105.0)
Distributions of partnership equity (44.2) (44.2) (52.9)
Other financing activities (9.7) (47.5) (26.7)
Net cash provided (used) by financing activities (394.1) (375.2) 498.9
Effect of exchange rate changes on cash 0.0 (2.3) 3.3
Increase (decrease) in cash and cash equivalents, including cash classified within other current assets related to discontinued operations (476.0) (172.1) 684.3
Less: increase (decrease) in cash and cash equivalents from discontinued operations, classified within other current assets (5.4) (17.0) 18.8
Net increase (decrease) in cash and cash equivalents (470.6) (155.1) 665.5
Cash and cash equivalents at beginning of year 823.2 978.3 312.8
Cash and cash equivalents at end of year $ 352.6 $ 823.2 $ 978.3
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Statements of Consolidated Changes in Equity - USD ($)
$ in Millions
Total
Common Stock [Member]
Capital in Excess of Par Value of Shares [Member]
Retained Earnings [Member]
Common Shares in Treasury [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
AOCI Attributable to Noncontrolling Interest [Member]
Noncontrolling Interest [Member]
Balance, beginning of period (in shares) at Dec. 31, 2016   233,100,000            
Balance, beginning of period at Dec. 31, 2016 $ (1,330.5) $ 29.8 $ 3,347.0 $ (4,574.3) $ (245.5) $ (21.3)   $ 133.8
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Comprehensive income (loss) 360.2     367.0   (4.0)   (2.8)
Issuance of convertible debt 83.4   83.4          
Equity offering (in shares)   63,300,000            
Equity offering (value) 661.3 $ 7.9 653.4          
Acquisition of noncontrolling interest (105.0)   (70.2)       $ (18.9) (15.9)
Distributions of partnership equity (128.8)   (17.3)       $ 5.2 (116.7)
Capital contributions by noncontrolling interest to subsidiary 1.8             1.8
Stock and other incentive plans (in shares)   1,000,000.0            
Stock and other incentive plans 13.5   (62.4)   75.9      
Balance, end of period (in shares) at Dec. 31, 2017   297,400,000            
Balance, end of period at Dec. 31, 2017 (444.1) $ 37.7 3,933.9 (4,207.3) (169.6) (39.0)   0.2
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Adoption of accounting standard 34.0     34.0        
Comprehensive income (loss) 883.2     1,128.1   (244.9)   0.0
Capital contributions by noncontrolling interest to subsidiary (0.2)             (0.2)
Stock and other incentive plans (in shares)   600,000            
Stock and other incentive plans $ 13.8   (17.2)   31.0      
Common stock repurchases (in shares) (5,400,000) (5,400,000)            
Common stock repurchased (value) $ (47.5)       (47.5)      
Common stock dividends 2019 - $0.27 per share (2018 - $0.05 per share) $ (15.0)     (15.0)        
Balance, end of period (in shares) at Dec. 31, 2018 292,611,569 292,600,000            
Balance, end of period at Dec. 31, 2018 $ 424.2 $ 37.7 3,916.7 (3,060.2) (186.1) (283.9)   0.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Comprehensive income (loss) 257.9     292.8   (34.9)   0.0
Stock and other incentive plans (in shares)   1,900,000            
Stock and other incentive plans $ 3.7   (44.6)   48.3      
Common stock repurchases (in shares) (24,400,000) (24,400,000)            
Common stock repurchased (value) $ (252.9)       (252.9)      
Common stock dividends 2019 - $0.27 per share (2018 - $0.05 per share) $ (75.0)     (75.0)        
Balance, end of period (in shares) at Dec. 31, 2019 270,084,005 270,100,000            
Balance, end of period at Dec. 31, 2019 $ 357.9 $ 37.7 $ 3,872.1 $ (2,842.4) $ (390.7) $ (318.8)   $ 0.0
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Statements of Consolidated Changes in Equity (Parenthetical) - $ / shares
3 Months Ended 12 Months Ended
Dec. 31, 2019
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Stockholders' Equity [Abstract]        
Common Stock, Dividends, Per Share, Declared $ 0.06 $ 0.27 $ 0.05 $ 0
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Existing Business
Founded in 1847, Cleveland-Cliffs Inc. is the largest and oldest independent iron ore mining company in the United States. We are a major supplier of iron ore pellets to the North American steel industry from our mines and pellet plants located in Michigan and Minnesota. In 2020, we expect to be the sole producer of HBI in the Great Lakes region with the startup of our first production plant in Toledo, Ohio.
Our Company’s continuing operations are organized and managed in two operating segments according to our differentiated products. Our Mining and Pelletizing segment is a major supplier of iron ore pellets to the North American steel industry from our mines and pellet plants located in Michigan and Minnesota. Our Metallics segment includes our HBI production plant in Toledo, Ohio, which is currently under construction and expected to be completed during the first half of 2020. During the second quarter of 2019, Northshore mine began supplying DR-grade pellets to our Metallics segment, which will be used as feedstock for the HBI production plant when we begin production in 2020.
Unless otherwise noted, discussion of our business and results of operations in this Annual Report on Form 10-K refers to our continuing operations on a stand-alone basis without giving effect to the Merger.
Proposed Merger with AK Steel
On December 2, 2019, we entered into the Merger Agreement with AK Steel and Merger Sub, pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into AK Steel, with AK Steel surviving the Merger as a wholly owned subsidiary of Cliffs.
Pursuant to the Merger Agreement, at the effective time of the Merger, each share of AK Steel common stock issued and outstanding prior to the effective time of the Merger will be converted into, and become exchangeable for, 0.400 of a share of our common stock, par value $0.125 per share.
We expect to complete the Merger in the first quarter of 2020. Completion of the Merger is subject to various conditions, such as satisfaction or waiver of certain specified closing conditions, and it is possible that factors outside of our control could result in the Merger being completed at a later time or not at all. The Merger Agreement also contains certain termination rights that may be exercised by either us or AK Steel. We plan to complete the Merger as soon as reasonably practicable following the satisfaction of all applicable conditions.
Significant Accounting Policies
We consider the following policies to be beneficial in understanding the judgments involved in the preparation of our consolidated financial statements and the uncertainties that could impact our financial condition, results of operations and cash flows. Certain prior period amounts have been reclassified to conform with the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP 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. The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves; future realizable cash flow; environmental, reclamation and closure obligations; valuation of long-lived assets, inventory, tax assets and post-employment, post-retirement and other employee benefit liabilities; reserves for contingencies and litigation; and the fair value of derivative instruments. Actual results could differ from estimates. Management reviews its estimates on an ongoing basis. Changes in facts and circumstances may alter such estimates and affect the results of operations and financial position in future periods.
Basis of Consolidation
The consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries, including the following iron ore operations at December 31, 2019:
Name
 
Location
 
Business Segment
 
Status of Operations
Northshore
 
Minnesota
 
Mining and Pelletizing
 
Active
United Taconite
 
Minnesota
 
Mining and Pelletizing
 
Active
Tilden
 
Michigan
 
Mining and Pelletizing
 
Active
Empire
 
Michigan
 
Mining and Pelletizing
 
Indefinitely Idled
Toledo HBI
 
Ohio
 
Metallics
 
Construction Stage

Intercompany transactions and balances are eliminated upon consolidation.
Equity Method Investment
We have an investment in an unconsolidated joint venture that we have the ability to exercise significant influence over, but not control, and is accounted for under the equity method.
Our 23% ownership interest in Hibbing is recorded as an equity method investment. As of December 31, 2019 and 2018, our investment in Hibbing was $18.0 million and $15.4 million, respectively, classified in Other non-current liabilities in the Statements of Consolidated Financial Position.
Our share of equity income is eliminated against consolidated product inventory upon production, and against Cost of goods sold and operating expenses when sold. This effectively reduces the cost of our share of the mining venture's production, reflecting the cost-based nature of our participation in the unconsolidated joint venture.
Noncontrolling Interests
During 2017, our ownership interest in Empire increased to 100% as we reached an agreement to distribute the noncontrolling interest net assets of $132.7 million to ArcelorMittal USA, in exchange for its interest in Empire. The parties agreed that the net assets were to be distributed in three installments of $44.2 million each, the balance of which was recorded in Other current liabilities in the Statements of Consolidated Financial Position. The final installment was paid in August 2019. Upon payment of the first installment, we assumed ArcelorMittal USA's 21% interest and reflected the ownership percentage change in our consolidated financial statements. During the year ended December 31, 2017, we accounted for the increase in ownership as an equity transaction, which resulted in a net $12.1 million decrease in equity attributable to Cliffs' shareholders and a $116.7 million decrease in Noncontrolling interest. The net loss attributable to the noncontrolling interest of the Empire mining venture was $3.9 million for the year ended December 31, 2017.
During 2017, we also acquired the remaining 15% equity interest in Tilden owned by U.S. Steel for $105.0 million. With the closing of this transaction, we have 100% ownership of the mine. During the year ended December 31, 2017, we accounted for the increase in ownership as an equity transaction, which resulted in an $89.1 million decrease in equity attributable to Cliffs' shareholders and a $15.9 million decrease in Noncontrolling interest.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and on deposit as well as all short-term securities held for the primary purpose of general liquidity. We consider investments in highly liquid debt instruments with an original maturity of three months or less from the date of acquisition and longer maturities when funds can be withdrawn in three months or less without a significant penalty to be cash equivalents. We routinely monitor and evaluate counterparty credit risk related to the financial institutions in which our short-term investment securities are held.
Trade Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at the point control transfers and represents the amount of consideration we expect to receive in exchange for transferred goods and do not bear interest. The allowance for doubtful accounts is our best estimate of the expected credit losses over the life of our existing accounts receivable. We establish provisions for expected lifetime losses on accounts receivable at the time a receivable is recorded based on historical experience, customer credit quality and forecasted economic conditions. We regularly review our accounts receivable balances and establish or adjust the allowance as necessary using the specific identification method.
Inventories
Product Inventories
The Mining and Pelletizing segment cost of product inventories is determined using the LIFO method and is stated at the lower of cost or market. The Metallics segment cost of product inventories is determined using the weighted-average method and is stated at the lower of cost or net realizable value.
Supplies and Other Inventories
Supply inventories include replacement parts, fuel, chemicals and other general supplies, which are expected to be used or consumed in normal operations. Supply inventories also include critical spares. Critical spares are replacement parts for equipment that is critical for the continued operation of the mine or processing facilities.
Supply inventories are stated at the lower of cost or net realizable value using average cost, less an allowance for obsolete and surplus items.
Refer to NOTE 4 - INVENTORIES for further information.
Derivative Financial Instruments and Hedging Activities
We are exposed to certain risks related to the ongoing operations of our business, including those caused by changes in commodity prices and energy rates. We have established policies and procedures, including the use of certain derivative instruments, to manage such risks, if deemed necessary.
Derivative financial instruments are recognized as either assets or liabilities in the Statements of Consolidated Financial Position and measured at fair value. On the date a qualifying hedging instrument is executed, we designate the hedging instrument as a hedge of the variability of cash flows to be received or paid related to a forecasted transaction (cash flow hedge). We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific firm commitments or forecasted transactions. We also formally assess, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the related hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively and record all future changes in fair value in the period of the instrument's earnings or losses.
For derivative instruments that have been designated as cash flow hedges, the changes in fair value are recorded in Accumulated other comprehensive loss. Amounts recorded in Accumulated other comprehensive loss are reclassified to earnings or losses in the period the underlying hedged transaction affects earnings or when the underlying hedged transaction is no longer reasonably possible of occurring.
For derivative instruments that have not been designated as cash flow hedges, such as provisional pricing arrangements and supplemental revenue or refunds contained within a customer supply agreement, changes in fair value are recorded in the period of the instrument's earnings or losses.
Refer to Revenue Recognition below for discussion of derivatives recorded as a result of pricing terms in our sales contracts. Additionally, refer to NOTE 12 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.
Property, Plant and Equipment
Our properties are stated at the lower of cost less accumulated depreciation or fair value. Depreciation of plant and equipment is computed principally by the straight-line method based on estimated useful lives, not to exceed the mine lives. Depreciation continues to be recognized when operations are idled temporarily. Depreciation and depletion is recorded over the following estimated useful lives:
Asset Class
 
Basis
 
Life
 Land rights and mineral rights
 
Units of production
 
Life of mine
Office and information technology
 
Straight line
 
3 to 15 years
Buildings
 
Straight line
 
45 years
Mining equipment
 
Straight line/Double declining balance
 
3 to 20 years
Processing equipment
 
Straight line
 
10 to 45 years
Electric power facilities
 
Straight line
 
10 to 45 years
Land improvements
 
Straight line
 
20 to 45 years
Asset retirement obligation
 
Straight line
 
Life of mine

Refer to NOTE 5 - PROPERTY, PLANT AND EQUIPMENT for further information.
Other Intangible Assets
Our mine permits are subject to periodic amortization on a straight line basis over their estimated useful life, which corresponds with the life of mine.
Asset Impairment
We monitor conditions that may affect the carrying value of our long-lived tangible and intangible assets when events and circumstances indicate that the carrying value of the asset groups may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available ("asset group"). An impairment loss exists when projected net undiscounted cash flows are less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach.
For the years ended December 31, 2019, 2018 and 2017, no impairment factors were present that would indicate the carrying value of any of our asset groups may not be recoverable; as a result, no impairment assessments were required.
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our own views about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below:
Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety.
Refer to NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS and NOTE 8 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.
Pensions and Other Postretirement Benefits
We offer defined benefit pension plans, defined contribution pension plans and OPEB plans, primarily consisting of retiree healthcare benefits, to most employees as part of a total compensation and benefits program.
We recognize the funded or unfunded status of our pension and OPEB obligations on our December 31, 2019 and 2018 Statements of Consolidated Financial Position based on the difference between the market value of plan assets and the actuarial present value of our retirement obligations on that date, on a plan-by-plan basis. If the plan assets exceed the pension and OPEB obligations, the amount of the surplus is recorded as an asset; if the pension and OPEB obligations exceed the plan assets, the amount of the underfunded obligations is recorded as a liability. Year-end balance sheet adjustments to pension and OPEB assets and obligations are recorded as Accumulated other comprehensive loss in the Statements of Consolidated Financial Position.
The actuarial estimates of the PBO and APBO incorporate various assumptions including the discount rates, the rates of increases in compensation, healthcare cost trend rates, mortality, retirement timing and employee turnover. The discount rate is determined based on the prevailing year-end rates for high-grade corporate bonds with a duration matching the expected cash flow timing of the benefit payments from the various plans. The remaining assumptions are based on our estimates of future events by incorporating historical trends and future expectations. The amount of net periodic cost that is recorded in the Statements of Consolidated Operations consists of several components including service cost, interest cost, expected return on plan assets, and amortization of previously unrecognized amounts. Service cost represents the value of the benefits earned in the current year by the participants. Interest cost represents the cost associated with the passage of time. Certain items, such as plan amendments, gains and/or losses resulting from differences between actual and assumed results for demographic and economic factors affecting the obligations and assets of the plans, and changes in other assumptions are subject to deferred recognition for income and expense purposes. The expected return on plan assets is determined utilizing the weighted average of expected returns for plan asset investments in various asset categories based on historical performance, adjusted for current trends. Service costs are classified within Cost of goods sold and operating expenses, Selling, general and administrative expenses and Miscellaneous - net while the interest cost, expected return on assets, amortization of prior service costs/credits, net actuarial gain/loss, and other costs are classified within Other non-operating income.
Refer to NOTE 8 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.
Asset Retirement Obligations
Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The fair value of the liability is determined as the discounted value of the expected future cash flows. The asset retirement obligation is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized and amortized over the life of the related asset. Reclamation costs are adjusted periodically to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs. We review, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site in accordance with the provisions of ASC Topic 410, Asset Retirement and Environmental Obligations. We perform an in-depth evaluation of the liability every three years in addition to our routine annual assessments.
Future reclamation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
Refer to NOTE 11 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.
Environmental Remediation Costs
We have a formal policy for environmental protection and restoration. Our mining and exploration activities are subject to various laws and regulations governing protection of the environment. We conduct our operations to protect the public health and environment and believe our operations are in compliance with applicable laws and regulations in all material respects. Our environmental liabilities, including obligations for known environmental remediation exposures at active and closed mining operations and other sites, have been recognized based on the estimated cost of investigation and remediation at each site. If the cost can only be estimated as a range of possible amounts with no point in the range being more likely, the minimum of the range is accrued. Future expenditures are not discounted unless the amount and timing of the cash disbursements reasonably can be estimated. It is possible that additional environmental obligations could be incurred, the extent of which cannot be assessed. Potential insurance recoveries have not been reflected in the determination of the liabilities.
Refer to NOTE 11 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.
Revenue Recognition - Pre-Adoption of Topic 606 (2017)
Prior to the adoption of Topic 606, revenue was recognized from a sale when persuasive evidence of an arrangement existed, the price was fixed or determinable, the product was delivered in accordance with shipping terms, title and risk of loss were transferred to the customer in accordance with the specified provisions of each supply agreement and collection of the sales price reasonably was assured. Our supply agreements provide that title and risk of loss transfer to the customer either upon loading of the vessel, shipment or when payment is received. Under certain supply agreements, we ship the product to ports on the lower Great Lakes or to the customers’ facilities prior to the transfer of title. Our rationale for shipping iron ore products to certain customers and retaining title until payment is received for these products is to minimize credit risk exposure.
Sales were recorded at a sales price specified in the relevant supply agreements resulting in revenue and a receivable at the time of sale. The majority of our contracts have pricing mechanisms that require price estimation at the time of delivery with price finalization at a future period. Upon revenue recognition for provisionally priced sales, a derivative was created for the difference between the sales price used and expected future settlement price. The derivative was adjusted to fair value through Revenues from product sales and services as a revenue adjustment each reporting period based upon current market data and forward-looking estimates determined by management until the final sales price was determined. The principal risks associated with recognition of sales on a provisional basis include Platts 62% price, Atlantic Basin pellet premium and index freight fluctuations between the date initially recorded and the date of final settlement. For revenue recognition, we estimated the future settlement rate; however, if significant changes in inputs occurred between the provisional pricing date and the final settlement date, we were required to either return a portion of the sales proceeds received or bill for the additional sales proceeds due based on the provisional sales price.    
Revenue Recognition - Post-Adoption of Topic 606 (2018 and 2019)
We sell a single product, iron ore pellets, in the North American market. With the adoption of Topic 606 as of January 1, 2018, revenue is recognized generally when iron ore is delivered to our customers. Revenue is measured at the point that control transfers and represents the amount of consideration we expect to receive in exchange for transferring goods. We offer standard payment terms to our customers, generally requiring settlement within 30 days.
We enter into supply contracts of varying lengths to provide customers iron ore pellets to use in their blast furnaces. Blast furnaces run continuously with a constant feed of iron ore and once shut down, cannot easily be restarted. As a result, we ship iron ore in large quantities for storage and use by customers at a later date. Customers do not simultaneously receive and consume the benefits of the iron ore. Based on our assessment of the factors that indicate the pattern of satisfaction, we transfer control of the iron ore at a point in time upon shipment or delivery of the product. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered.
Most of our customer supply agreements specify a provisional price, which is used for initial billing and cash collection. Revenue recorded in accordance with Topic 606 is calculated using the expected revenue rate at the point when control transfers. The final settlement includes market inputs for a specified period of time, which may vary by customer, but typically include one or more of the following: Platts 62% price, Atlantic Basin pellet premium, Platts international indexed freight rates and changes in specified PPI, including industrial commodities, energy and steel. Changes in the expected revenue rate from the date control transfers through final settlement of contract terms is recorded in accordance with Topic 815. Refer to NOTE 12 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on how our estimated and final revenue rates are determined.
A supply agreement with a customer provides for supplemental revenue or refunds based on the hot-rolled coil steel price in the year the iron ore is consumed in the customer’s blast furnaces. As control transfers prior to consumption, the supplemental revenue is recorded in accordance with Topic 815. Refer to NOTE 12 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information on supplemental revenue or refunds.
Included within Revenues from product sales and services is derivative revenue related to Topic 815 of $7.5 million, $422.6 million and $120.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.
As of December 31, 2019 and 2018, under Topic 606, we had finished goods of 1.0 million long tons and 0.8 million long tons, respectively, in transit or stored at ports and customer facilities on the lower Great Lakes to service customers, for which revenue had yet to be recognized. Under the previous accounting standard, we did not recognize revenue and related cost of goods sold until title transferred to the customer, usually when payment was received. As of December 31, 2017, under the previous accounting standard, we had finished goods of 1.5 million long tons stored at ports and customer facilities on the lower Great Lakes to service customers, for which revenue had yet to be recognized.
Practical expedients and exemptions
We have elected to treat all shipping and handling costs as fulfillment costs because a significant portion of these costs are incurred prior to control transfer.
We have various long-term sales contracts with minimum purchase and supply requirement provisions that extend beyond the current reporting period. The portion of our transaction price for these contracts that is allocated entirely to wholly unsatisfied performance obligations is based on market prices that have not yet been determined and therefore is variable in nature. As such, we have not disclosed the value of unsatisfied performance obligations pursuant to the practical expedient.
Cost of Goods Sold
Cost of goods sold and operating expenses represents all direct and indirect costs and expenses applicable to the sales from our mining operations.
In some circumstances, as requested by the customer, we will coordinate and ship our product via vessel directly to the port nearest to the customer's blast furnace. In this type of contract, the customer will pay one amount inclusive of both product and freight. We recognize revenue for both product revenue and the amount reimbursed for the vessel freight to the final port. We separate these revenue types in NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION. Accordingly, the revenue we record for freight is offset by an equal amount included in Cost of goods sold and operating expenses for costs we incur for that freight, resulting in no impact on sales margin.
Operating expenses represented the portion of the Tilden mining venture costs prior to our 100% ownership; that is, the costs attributable to the share of the mine’s production owned by the other joint venture partner in the Tilden mine until we acquired the remaining 15% noncontrolling interest during 2017. The mining venture functioned as a captive cost company, supplying product only to its owners effectively for the cost of production. Accordingly, the noncontrolling interests’ revenue amounts were stated at cost of production and were offset by an equal amount included in Cost of goods sold and operating expenses resulting in no sales margin reflected for the noncontrolling partner participant. As we were responsible for product fulfillment under the venture, we acted as a principal in the transaction and, accordingly, recorded revenue under these arrangements on a gross basis.
We received management fees or royalties, which were earned as pellets were produced for our joint ownership mines, until we ceased our mine manager duties at Hibbing and until we purchased the remaining interest in Tilden.
Repairs and Maintenance
Repairs, maintenance and replacement of components are expensed as incurred. The cost of major equipment overhauls is capitalized and depreciated over the estimated useful life, which is the period until the next scheduled overhaul, generally five years. All other planned and unplanned repairs and maintenance costs are expensed when incurred.
Share-Based Compensation
The fair value of each performance share grant is estimated on the date of grant using a Monte Carlo simulation to forecast relative TSR performance. A correlation matrix of historic and projected stock prices was developed for both the Company and its predetermined peer group of mining and metals companies. The fair value assumes that objective will be achieved. The expected term of the grant represents the time from the grant date to the end of the service period. We estimate the volatility of our common shares and that of the peer group of mining and metals companies using daily price intervals for all companies. The risk-free interest rate is the rate at the grant date on zero-coupon government bonds, with a term commensurate with the remaining performance period.
The fair value of the restricted stock units is determined based on the closing price of our common shares on the grant date.
Upon vesting of share-based compensation awards, we issue shares from treasury shares before issuing new shares. Forfeitures are recognized when they occur.
The fair value of stock options is estimated on the date of grant using a Black-Scholes model using the grant date price of our common shares and option exercise price, and assumptions regarding the option’s expected term, the volatility of our common shares, the risk-free interest rate, and the dividend yield over the option’s expected term.
Refer to NOTE 9 - STOCK COMPENSATION PLANS for additional information.
Income Taxes
Income taxes are based on income for financial reporting purposes, calculated using tax rates by jurisdiction, and reflect a current tax liability or asset for the estimated taxes payable or recoverable on the current year tax return and expected annual changes in deferred taxes. Any interest or penalties on income tax are recognized as a component of Income tax benefit (expense).
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized within Net income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial results of operations.
Accounting for uncertainty in income taxes recognized in the financial statements requires that a tax benefit from an uncertain tax position be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.
See NOTE 10 - INCOME TAXES for further information.
Discontinued Operations
Asia Pacific Iron Ore Operations
During 2018, we committed to a course of action leading to the permanent closure of the Asia Pacific Iron Ore mining operations and sold all of the assets of our Asia Pacific Iron Ore business through a series of sales to third parties. As a result of our exit, management determined that our Asia Pacific Iron Ore operating segment met the criteria to be classified as held for sale and a discontinued operation under ASC Topic 205, Presentation of Financial Statements. As such, all current and historical Asia Pacific Iron Ore operating segment results are classified within discontinued operations.
Canadian Operations
During 2015, we announced that the Bloom Lake Group and the Wabush Group commenced restructuring proceedings in Montreal, Quebec under the CCAA to address the immediate liquidity issues and to preserve and protect their assets for the benefit of all stakeholders while restructuring and/or sale options were explored. Our Canadian exit represented a strategic shift in our business. For this reason, all Eastern Canadian Iron Ore costs to exit are classified as discontinued operations.
Refer to NOTE 13 - DISCONTINUED OPERATIONS for further discussion of the Asia Pacific Iron Ore segment and Eastern Canadian Iron Ore discontinued operations.
Foreign Currency
Our financial statements are prepared with the U.S. dollar as the reporting currency and the functional currency of all subsidiaries is the U.S. dollar. In August 2018, management determined that there were significant changes in economic factors related to our Australian subsidiaries. The change in economic factors was a result of the sale and conveyance of substantially all assets and liabilities of our Australian subsidiaries to third parties, representing a significant change in operations. As such, the functional currency for the Australian subsidiaries changed from the Australian dollar to the U.S. dollar and all remaining Australian denominated monetary balances will be remeasured prospectively through the Statements of Consolidated Operations.
As a result of the liquidation of the Australian subsidiaries' assets, the historical impact of foreign currency translation recorded in Accumulated other comprehensive loss in the Statements of Consolidated Financial Position of $228.1 million was reclassified and recognized as a gain in Income (loss) from discontinued operations, net of tax in the Statements of Consolidated Operations for the year ended December 31, 2018.
Refer to NOTE 13 - DISCONTINUED OPERATIONS for further information regarding our Australian subsidiaries.
Earnings Per Share
We present both basic and diluted earnings per share amounts for continuing operations and discontinued operations. Total basic earnings per share amounts are calculated by dividing Net income attributable to Cliffs shareholders by the weighted average number of common shares outstanding during the period presented. Total diluted earnings per share amounts are calculated by dividing Net income attributable to Cliffs shareholders by the weighted average number of common shares, common share equivalents under stock plans using the treasury-stock method and the calculated common share equivalents in excess of the conversion rate related to our 2025 Convertible Senior Notes using the treasury-stock method. Common share equivalents are excluded from EPS computations in the periods in which they have an anti-dilutive effect.
See NOTE 6 - DEBT AND CREDIT FACILITIES and NOTE 17 - EARNINGS PER SHARE for further information.
Recent Accounting Pronouncements
Issued and Adopted
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases except for short-term leases. For lessees, leases are classified as either operating or finance leases. We adopted this standard on its effective date of January 1, 2019 using the optional alternative approach, which requires application of the new guidance at the beginning of the standard's effective date. Adoption of the updated standard did not have a material effect on our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which introduces a new accounting model, Current Expected Credit Losses ("CECL"). CECL requires earlier recognition of credit losses, while also providing additional transparency about credit risk. CECL utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. We elected to early adopt this standard on December 31, 2019. Adoption of the updated standard did not have a material effect on our consolidated financial statements.
On January 1, 2018, we adopted Topic 606 and applied it to all contracts that were not completed using the modified retrospective method. We recognized the cumulative effect of initially applying Topic 606 as an adjustment of $34.0 million to the opening balance of Retained deficit. The comparative period information for the year ended December 31, 2017, has not been retrospectively revised and continues to be reported under the accounting standards in effect for that period. The adoption of Topic 606 increased 2018 Revenues from product sales and services and Net income by $68.1 million and $46.2 million, respectively.
Under Topic 606, revenue is generally recognized upon delivery to our customers, which is earlier than under the previous guidance. As an example, for certain iron ore shipments where revenue was previously recognized upon title transfer when payment was received, we now recognize revenue when control transfers, which is generally upon delivery. While we continue to retain title until we receive payment in many cases, we determined upon review of our customer contracts that the preponderance of control indicators pass to our customers' favor when we deliver our products; thus, we generally concluded that control transfers at that point. As a result of the adoption of Topic 606 and vessel deliveries not occurring during the winter months because of the closure of the Soo Locks at Sault Ste. Marie and the Welland Canal, our revenues and net income will be relatively lower than historical levels during the first quarter of each year and relatively higher than historical levels during the remaining three quarters of each year. However, the total amount of revenue recognized during the year should remain substantially the same as under previous accounting standards, assuming revenue rates and volumes are consistent between years. The adoption of Topic 606 did not have an impact on net cash flows in our Statements of Consolidated Cash Flows.
v3.19.3.a.u2
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION
12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Supplementary Financial Statement Information
NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION
Revenues from Product Sales and Services
The following table represents our Revenues from product sales and services contributed by each category of products and services:
 
(In Millions)
 
Year Ended December 31,
 
2019
 
2018
 
2017
Revenue category:
 
 
 
 
 
Product
$
1,848.1

 
$
2,172.3

 
$
1,644.6

Freight
141.8

 
160.1

 
166.7

Venture partner's cost reimbursements

 

 
54.7

Total revenues from product sales and services
$
1,989.9

 
$
2,332.4

 
$
1,866.0

Freight and venture partner's cost reimbursements are included in both Revenues from product sales and services and Cost of goods sold and operating expenses and are offset within Sales margin.
There was no allowance for doubtful accounts at December 31, 2019 and 2018 and no bad debt expense for the years ended December 31, 2019, 2018 and 2017.
Deferred Revenue
The table below summarizes our deferred revenue balances:
 
(In Millions)
 
Deferred Revenue (Current)
 
Deferred Revenue (Long-Term)
 
Year Ended
December 31,
 
Year Ended
December 31,
 
2019
 
2018
 
2019
 
2018
Opening balance as of January 1
$
21.0

 
$
23.8

 
$
38.5

 
$
51.4

Closing balance as of December 31
22.1

 
21.0

 
25.7

 
38.5

Increase (Decrease)
$
1.1

 
$
(2.8
)
 
$
(12.8
)
 
$
(12.9
)

The terms of one of our pellet supply agreements required supplemental payments to be paid by the customer during the period 2009 through 2012. Installment amounts received under this arrangement in excess of sales were classified as Other current liabilities and Other non-current liabilities in the Statements of Consolidated Financial Position upon receipt of payment. Revenue is recognized over the life of the supply agreement, which extends until 2022, in equal annual installments. As of December 31, 2019 and December 31, 2018, installment amounts received in excess of sales totaled $38.5 million and $51.3 million, respectively, related to this agreement. As of December 31, 2019, and December 31, 2018, deferred revenue of $12.8 million was recorded in Other current liabilities and $25.7 million and $38.5 million, respectively, was recorded as long-term in Other non-current liabilities in the Statements of Consolidated Financial Position, related to this agreement.
Due to the payment terms and the timing of cash receipts near a period end, cash receipts can exceed deliveries for certain customers. Revenue associated with these transactions totaling $9.3 million and $8.2 million was deferred and included in Other current liabilities in the Statements of Consolidated Financial Position as of December 31, 2019 and December 31, 2018, respectively.
Accrued Liabilities
The following table presents the detail of our Accrued liabilities in the Statements of Consolidated Financial Position:
 
(In Millions)
 
December 31,
 
2019
 
2018
Accrued employment costs
$
61.7

 
$
74.0

Accrued interest
29.0

 
38.4

Accrued dividends
17.8

 
15.0

Accrued royalties
8.4

 
17.3

Other
9.4

 
14.2

Accrued liabilities
$
126.3

 
$
158.9


Cash Flow Information
A reconciliation of capital additions to cash paid for capital expenditures is as follows:
 
(In Millions)
 
Year Ended December 31,
 
2019
 
2018
 
2017
Capital additions1
$
689.8

 
$
394.8

 
$
156.0

Less:
 
 
 
 
 
Non-cash accruals
15.3

 
93.6

 
(2.2
)
Right-of-use assets - finance leases
29.3

 
7.6

 
6.5

Grants
(10.8
)
 
(2.5
)
 

Cash paid for capital expenditures including deposits
$
656.0

 
$
296.1

 
$
151.7

 
 
 
 
 
 
1 Includes capital additions related to discontinued operations of $0.1 million and $2.8 million for the years ended December 31, 2018 and 2017, respectively.

Cash payments (receipts) for interest and income taxes are as follows:
 
(In Millions)
2019
 
2018
 
2017
Taxes paid on income
$
0.2

 
$
2.9

 
$
1.7

Income tax refunds
(117.9
)
 
(11.3
)
 
(7.8
)
Interest paid on debt obligations net of capitalized interest1
97.6

 
105.7

 
139.0

 
 
 
 
 
 
1 Capitalized interest was $24.8 million and $6.5 million for the years ended December 31, 2019 and 2018, respectively.

Non-Cash Financing Activities - Declared Dividends
On December 2, 2019, the Board of Directors declared a quarterly cash dividend on our common shares of $0.06 per share. The cash dividend of $16.2 million was paid on January 15, 2020 to shareholders of record as of the close of business on January 3, 2020.
v3.19.3.a.u2
SEGMENT REPORTING
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
SEGMENT REPORTING
NOTE 3 - SEGMENT REPORTING
Our Company’s continuing operations are organized and managed in two operating segments according to our differentiated products. Our Mining and Pelletizing segment is a major supplier of iron ore pellets to the North American steel industry from our mines and pellet plants located in Michigan and Minnesota. Our Metallics segment includes our HBI production plant in Toledo, Ohio, which is currently under construction and expected to be completed during the first half of 2020. During the second quarter of 2019, Northshore mine began supplying DR-grade pellets to our Metallics segment, which will be used as feedstock for the HBI production plant. All intersegment sales were eliminated in consolidation.
We evaluate performance based on sales margin, defined as revenues less cost of goods sold identifiable to each segment. Additionally, we evaluate performance on a segment basis, as well as a consolidated basis, based on EBITDA and Adjusted EBITDA. These measures are used by management, investors, lenders and other external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the iron ore industry. In addition, management believes EBITDA and Adjusted EBITDA are useful measures to assess the earnings power of the business without the impact of capital structure and can be used to assess our ability to service debt and fund future capital expenditures in the business.
The following tables present a summary of our reportable segments including a reconciliation of segment revenues to total Revenues from product sales and services, segment sales margin to total Sales margin and a reconciliation of Net income to EBITDA and Adjusted EBITDA:    
 
(In Millions)
 
Year Ended
December 31, 2019
 
Mining and Pelletizing
 
Metallics
 
Total
Operating segment revenues from product sales and services
$
2,069.2

 
$

 
$
2,069.2

Elimination of intersegment revenues
(79.3
)
 

 
(79.3
)
Total revenues from product sales and services
$
1,989.9

 
$

 
$
1,989.9

 
 
 
 
 
 
Operating segment sales margin
$
600.0

 
$

 
$
600.0

Elimination of intersegment sales margin
(24.3
)
 

 
(24.3
)
Total sales margin
$
575.7

 
$

 
$
575.7

Revenues from product sales and services of $2,332.4 million and $1,866.0 million, respectively, and sales margin of $809.6 million and $467.6 million, respectively, related to our Mining and Pelletizing segment accounted for all of our consolidated revenues and sales margin for years ended December 31, 2018 and December 31, 2017.

 
(In Millions)
 
2019
 
2018
 
2017
Net income
$
292.8

 
$
1,128.1

 
$
363.1

Less:
 
 
 
 
 
Interest expense, net
(101.6
)

(121.3
)

(132.0
)
Income tax benefit (expense)
(17.6
)

460.3


252.4

Depreciation, depletion and amortization
(85.1
)

(89.0
)

(87.7
)
Total EBITDA
$
497.1

 
$
878.1

 
$
330.4

Less:
 
 
 
 
 
Impact of discontinued operations
$
(1.3
)
 
$
120.6

 
$
22.0

Loss on extinguishment of debt
(18.2
)
 
(6.8
)
 
(165.4
)
Severance costs
(1.7
)
 

 

Acquisition costs
(6.5
)
 

 

Foreign exchange remeasurement

 
(0.9
)
 
13.9

Impairment of other long-lived assets


(1.1
)


Total Adjusted EBITDA
$
524.8

 
$
766.3

 
$
459.9

 
 
 
 
 
 
EBITDA:
 
 
 
 
 
Mining and Pelletizing
$
648.1


$
852.9


$
534.9

Metallics
(8.1
)
 
(3.3
)
 
(0.4
)
Corporate and Other (including discontinued operations)
(142.9
)

28.5


(204.1
)
Total EBITDA
$
497.1

 
$
878.1

 
$
330.4

 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
Mining and Pelletizing
$
668.3

 
$
875.3

 
$
559.4

Metallics
(8.1
)
 
(3.3
)
 
(0.4
)
Corporate
(135.4
)
 
(105.7
)
 
(99.1
)
Total Adjusted EBITDA
$
524.8

 
$
766.3

 
$
459.9

The following table summarizes our depreciation, depletion and amortization and capital additions:
 
(In Millions)
 
2019
 
2018
 
2017
Depreciation, depletion and amortization:
 
 
 
 
 
Mining and Pelletizing
$
79.0

 
$
68.2

 
$
66.6

Metallics
0.6

 

 

Corporate
5.5

 
5.6

 
6.8

Total depreciation, depletion and amortization
$
85.1

 
$
73.8

 
$
73.4

 
 
 
 
 
 
Capital additions1:
 
 
 
 
 
Mining and Pelletizing
$
128.1

 
$
145.0

 
$
136.8

Metallics
558.4

 
248.1

 
13.7

Corporate and Other
3.3

 
1.6

 
2.7

Total capital additions
$
689.8

 
$
394.7

 
$
153.2

 
 
 
 
 
 
1 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for additional information.

A summary of assets by segment is as follows:
 
(In Millions)
 
December 31,
 
2019
 
2018
 
2017
Assets:
 
 
 
 
 
Mining and Pelletizing
$
1,643.1

 
$
1,694.1

 
$
1,500.6

Metallics
913.6

 
265.9

 
13.4

Total reportable segment assets
2,556.7

 
1,960.0

 
1,514.0

Corporate and Other
940.1

 
1,557.2

 
1,300.6

Assets of discontinued operations
7.0

 
12.4

 
138.8

Total assets
$
3,503.8

 
$
3,529.6

 
$
2,953.4


Included in the consolidated financial statements are the following amounts relating to geographic location:
 
(In Millions)
 
2019
 
2018
 
2017
Revenues from product sales and services:
 
 
 
 
 
United States
$
1,505.2

 
$
1,847.3

 
$
1,504.5

Canada
448.1

 
395.1

 
206.2

Other countries
36.6

 
90.0

 
155.3

Total revenues from product sales and services
$
1,989.9

 
$
2,332.4

 
$
1,866.0

 
 
 
 
 
 
Property, plant and equipment, net:
 
 
 
 
 
United States
$
1,929.0

 
$
1,286.0

 
$
1,033.8


Concentrations in Revenue
In 2019, 2018 and 2017, three customers individually accounted for more than 10% of our consolidated product revenue. Total product revenue from those customers represents $1.8 billion, $2.1 billion and $1.5 billion of our total consolidated product revenue in 2019, 2018 and 2017, respectively.
v3.19.3.a.u2
INVENTORIES
12 Months Ended
Dec. 31, 2019
Inventory Disclosure [Abstract]  
Inventories
NOTE 4 - INVENTORIES
The following table presents the detail of our Inventories in the Statements of Consolidated Financial Position:
 
 
(In Millions)
 
 
December 31,
 
 
2019
 
2018
Product inventories
 
 
 
 
Finished goods
 
$
114.1

 
$
77.8

Work-in-process
 
68.7

 
10.1

Total product inventories
 
182.8

 
87.9

Supplies and other inventories
 
134.6

 
93.2

Inventories
 
$
317.4

 
$
181.1


The excess of current cost over LIFO cost of iron ore inventories was $101.3 million and $95.6 million at December 31, 2019 and 2018, respectively. As of December 31, 2019, the product inventory balance for the Mining and Pelletizing segment increased, resulting in a LIFO increment in 2019. The effect of the inventory build was an increase in Inventories of $34.2 million in the Statements of Consolidated Financial Position for the year ended December 31, 2019. As of December 31, 2018, the product inventory balance for the Mining and Pelletizing segment declined, resulting in the liquidation of a LIFO layer in 2018. The effect of the inventory reduction was a decrease in Cost of goods sold and operating expenses of $0.2 million in the Statements of Consolidated Operations for the year ended December 31, 2018.
The allowance for obsolete and surplus items in supplies and other inventories was $12.7 million and $12.6 million at December 31, 2019 and 2018, respectively.
v3.19.3.a.u2
PROPERTY, PLANT AND EQUIPMENT
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
The following table indicates the carrying value of each of the major classes of our consolidated property, plant and equipment:
 
(In Millions)
 
December 31,
 
2019
 
2018
Land rights and mineral rights
$
549.7

 
$
549.6

Office and information technology
71.9

 
70.0

Buildings
157.8

 
87.2

Mining equipment
581.9

 
548.5

Processing equipment
791.8

 
645.8

Electric power facilities
81.9

 
58.7

Land improvements
32.5

 
23.8

Asset retirement obligation
1.7

 
14.8

Other
27.9

 
25.2

Construction-in-progress
730.3

 
284.8

 
3,027.4

 
2,308.4

Allowance for depreciation and depletion
(1,098.4
)
 
(1,022.4
)
 
$
1,929.0

 
$
1,286.0


At December 31, 2019 and 2018, we had deposits for property, plant and equipment of $34.0 million and $83.0 million, respectively, included in Other non-current assets.
We recorded depreciation expense of $76.6 million, $65.6 million and $65.8 million in the Statements of Consolidated Operations for the years ended December 31, 2019, 2018 and 2017, respectively.
We recorded capitalized interest into property, plant and equipment of $24.8 million and $6.5 million during the years ended December 31, 2019 and 2018, respectively.
The net book value of the land rights and mineral rights is as follows:
 
(In Millions)
 
December 31,
 
2019
 
2018
Land rights
$
12.4

 
$
12.4

Mineral rights:

 

Cost
$
537.3

 
$
537.2

Depletion
(134.1
)
 
(126.5
)
Net mineral rights
$
403.2

 
$
410.7


We recorded depletion expense of $7.5 million, $7.4 million and $6.8 million in the Statements of Consolidated Operations for the years ended December 31, 2019, 2018 and 2017, respectively.
v3.19.3.a.u2
DEBT AND CREDIT FACILITIES
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
DEBT AND CREDIT FACILITIES
NOTE 6 - DEBT AND CREDIT FACILITIES
The following represents a summary of our long-term debt:
(In Millions)
December 31, 2019
Debt Instrument
 
Annual Effective Interest Rate
 
Total Principal Amount
 
Debt Issuance Costs
 
Unamortized Discounts
 
Total Debt
Senior Secured Notes:
 
 
 
 
 
 
 
 
 
 
$400 Million 4.875% 2024 Senior Notes
 
5.00%
 
$
400.0

 
$
(4.6
)
 
$
(1.8
)
 
$
393.6

Senior Unsecured Notes:
 
 
 
 
 
 
 
 
 
 
$316.25 Million 1.50% 2025 Convertible Senior Notes
 
6.26%
 
316.3

 
(4.6
)
 
(65.0
)
 
246.7

$1.075 Billion 5.75% 2025 Senior Notes
 
6.01%
 
473.3

 
(3.6
)
 
(5.5
)
 
464.2

$750 Million 5.875% 2027 Senior Notes
 
6.49%
 
750.0

 
(6.3
)
 
(27.3
)
 
716.4

$800 Million 6.25% 2040 Senior Notes
 
6.34%
 
298.4

 
(2.2
)
 
(3.3
)
 
292.9

ABL Facility
 
N/A
 
450.0

 
N/A

 
N/A

 

Long-term debt
 
 
 
 
 
 
 
 
 
$
2,113.8

(In Millions)
December 31, 2018
Debt Instrument
 
Annual Effective Interest Rate
 
Total Principal Amount
 
Debt Issuance Costs
 
Unamortized Discounts
 
Total Debt
Senior Secured Notes:
 
 
 
 
 
 
 
 
 
 
$400 Million 4.875% 2024 Senior Notes
 
5.00%
 
$
400.0

 
$
(5.7
)
 
$
(2.2
)
 
$
392.1

Unsecured Senior Notes:
 
 
 
 
 
 
 
 
 
 
$700 Million 4.875% 2021 Senior Notes
 
4.89%
 
124.0

 
(0.2
)
 

 
123.8

$316.25 Million 1.50% 2025 Convertible Senior Notes
 
6.26%
 
316.3

 
(5.5
)
 
(75.6
)
 
235.2

$1.075 Billion 5.75% 2025 Senior Notes
 
6.01%
 
1,073.3

 
(9.9
)
 
(14.6
)
 
1,048.8

$800 Million 6.25% 2040 Senior Notes
 
6.34%
 
298.4

 
(2.3
)
 
(3.3
)
 
292.8

ABL Facility
 
N/A
 
450.0

 
N/A

 
N/A

 

Fair Value Adjustment to Interest Rate Hedge
 
 
 
 
 
 
 
 
 
0.2

Long-term debt
 
 
 


 
 
 
 
 
$
2,092.9


Outstanding Senior Secured Notes
Our Senior Secured Notes bear interest at a rate of 4.875% per annum, which is payable semi-annually in arrears on January 15 and July 15 of each year. The Senior Secured Notes mature on January 15, 2024 and are secured senior obligations of the Company.
Our Senior Secured Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by substantially all of our material domestic subsidiaries and are secured (subject in each case to certain exceptions and permitted liens) by (i) a first-priority lien on substantially all of our assets and the assets of the guarantors, and (ii) a second-priority lien on the ABL Collateral (as defined below), which is junior to a first-priority lien for the benefit of the lenders under our ABL Facility.
The terms of the Senior Secured Notes contain certain covenants; however, there are no financial covenants. Upon the occurrence of a change of control triggering event, as defined in the indenture, we will be required to offer to purchase the notes of the applicable series at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of purchase.
The following is a summary of redemption prices for our Senior Secured Notes:
Redemption Period
 
Redemption Price1
 
Restricted Amount
Prior to January 15, 2021 - using proceeds of equity issuance2
 
104.875
%
 
Up to 35% of original aggregate principal
Prior to January 15, 20212
 
100.000
 
 
 
Prior to January 15, 2021
 
103.000
 
 
Up to 10% of original aggregate principal
Beginning on January 15, 2021
 
102.438
 
 
 
Beginning on January 15, 2022
 
101.219
 
 
 
Beginning on January 15, 2023
 
100.000
 
 
 
 
 
 
 
 
 
1 Plus accrued and unpaid interest, if any, up to but excluding the redemption date.
2 Plus a "make-whole" premium.
Outstanding Senior Unsecured Notes
$750 Million 5.875% 2027 Senior Notes - 2019 Offering
On May 13, 2019, we entered into an indenture among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the issuance of $750 million aggregate principal amount of 5.875%
2027 Senior Notes. The 5.875% 2027 Senior Notes were issued at 96.125% of face value. The 5.875% 2027 Senior Notes were issued in a private transaction exempt from the registration requirements of the Securities Act of 1933. Pursuant to the registration rights agreement executed as part of the offering, we agreed to file a registration statement with the SEC with respect to a registered offer to exchange the 5.875% 2027 Senior Notes for publicly registered notes within 365 days of the closing date, with all significant terms and conditions remaining the same.
The 5.875% 2027 Senior Notes bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2019. The 5.875% 2027 Senior Notes mature on June 1, 2027.
The 5.875% 2027 Senior Notes are unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The 5.875% 2027 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly-owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 5.875% 2027 Senior Notes.
The 5.875% 2027 Senior Notes may be redeemed, in whole or in part, at any time at our option not less than 30 days nor more than 60 days after prior notice is sent to the holders of the 5.875% 2027 Senior Notes. The following is a summary of redemption prices for our 5.875% 2027 Senior Notes:
Redemption Period
 
Redemption Price1
 
Restricted Amount
Prior to June 1, 2022 - using proceeds of equity issuance
 
105.875
%
 
Up to 35% of original aggregate principal
Prior to June 1, 20222
 
100.000
 
 
 
Beginning on June 1, 2022
 
102.938
 
 
 
Beginning on June 1, 2023
 
101.958
 
 
 
Beginning on June 1, 2024
 
100.979
 
 
 
Beginning on June 1, 2025 and thereafter
 
100.000
 
 
 
 
 
 
 
 
 
1  Plus accrued and unpaid interest, if any, up to but excluding the redemption date.
2  Plus a "make-whole" premium.
In addition, if a change of control triggering event, as defined in the indenture, occurs with respect to the 5.875% 2027 Senior Notes, we will be required to offer to purchase the notes at a purchase price equal to 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of purchase.
The terms of the 5.875% 2027 Senior Notes contain certain customary covenants; however, there are no financial covenants.
Debt issuance costs of $6.8 million were incurred related to the offering of the 5.875% 2027 Senior Notes and are included in Long-term debt in the Statements of Consolidated Financial Position.
$316.25 Million 1.50% 2025 Convertible Senior Notes
The 2025 Convertible Notes bear interest at a rate of 1.50% per year, payable semiannually in arrears on January 15 and July 15 of each year. The 2025 Convertible Notes mature on January 15, 2025. The 2025 Convertible Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2025 Convertible Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. The terms of the 2025 Convertible Notes contain certain customary covenants; however, there are no financial covenants.
Holders may convert their 2025 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding July 15, 2024, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018, if the last reported sale price of our common shares, par value $0.125 per share, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than
or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five-consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2025 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common shares and the conversion rate on each such trading day; (3) if we call the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after July 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, common shares or a combination of cash and common shares, at our election.
Upon the issuance of the 2025 Convertible Notes the initial conversion rate was 122.4365 common shares per $1,000 principal, with a conversion price of $8.17 per common share. The conversion rate is subject to adjustment in some circumstances, including the payment of dividends on common shares, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2025 Convertible Notes in connection with such a corporate event or notice of redemption, as the case may be. As of December 31, 2019, the conversion rate was 126.3479 common shares per $1,000 principal amount of 2025 Convertible Notes.
We may not redeem the 2025 Convertible Notes prior to January 15, 2022. We may redeem all or any portion of the 2025 Convertible Notes, for cash at our option on or after January 15, 2022 if the last reported sale price of our common shares has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30-consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
It is our current intent to settle conversions through combination settlement.  Our ability to settle conversions through combination settlement and cash settlement will be subject to restrictions in the agreement governing our ABL Facility and may be subject to restrictions in agreements governing our future debt.
If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2025 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2025 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
In accounting for the issuance of the notes, we separated the 2025 Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar liabilities that did not have associated convertible features. The carrying amount of the equity component of $85.9 million representing the conversion option was determined by deducting the fair value of the liability component from the par value of the notes. The difference represents the debt discount that is amortized to interest expense over the term of the notes. The equity component is not remeasured as long as it continues to qualify for equity classification.
Other Outstanding Unsecured Senior Notes
The following represents a summary of our other unsecured senior notes' maturity and interest payable due dates:
Debt Instrument
 
Maturity
 
Interest Payable
(until maturity)
$1.075 Billion 5.75% 2025 Senior Notes
 
March 1, 2025
 
March 1 and September 1
$800 Million 6.25% 2040 Senior Notes
 
October 1, 2040
 
April 1 and October 1
The senior notes are unsecured obligations and rank equally in right of payment with all our other existing and future unsecured and unsubordinated indebtedness. There are no subsidiary guarantees of the interest and principal amounts for the 2040 Senior Notes. The 2025 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly-owned domestic subsidiaries and, therefore, are structurally senior to any of our existing and future indebtedness that is not guaranteed by such guarantors and are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 2025 Senior Notes.
The 2040 Senior Notes may be redeemed any time at our option not less than 30 days nor more than 60 days after prior notice is sent to the holders. The 2040 Senior Notes are redeemable at a redemption price equal to the greater of (1) 100% of the principal amount of the notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed, discounted to the redemption date on a semi-annual basis at the treasury rate plus 40 basis points, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
We may redeem the 2025 Senior Notes, in whole or in part, on or after March 1, 2020, at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, and prior to March 1, 2020, at a redemption price equal to 100% of the principal amount thereof plus a “make-whole” premium set forth in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. We may also redeem up to 35% of the aggregate principal amount of the 2025 Senior Notes on or prior to March 1, 2020 at a redemption price equal to 105.75% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption with the net cash proceeds of one or more equity offerings.
In addition, if a change of control triggering event, as defined in the applicable indenture, occurs with respect to the unsecured notes, we will be required to offer to purchase the notes of the applicable series at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of purchase.
The terms of the unsecured notes contain certain customary covenants; however, there are no financial covenants.
Debt Extinguishment - 2019
During the year ended December 31, 2019, we used the net proceeds from the issuance of $750 million aggregate principal amount of 5.875% 2027 Senior Notes, along with cash on hand, to redeem in full all of our outstanding 4.875% 2021 Senior Notes and to fund the repurchase of $600 million aggregate principal amount of our outstanding 5.75% 2025 Senior Notes in a tender offer.
The following is a summary of the debt extinguished and the respective loss on extinguishment:
 
 
(In Millions)
 
 
Year Ended
December 31, 2019
 
 
Debt Extinguished
 
(Loss) on Extinguishment1
Unsecured Notes:
 
 
 
 
$700 Million 4.875% 2021 Senior Notes
 
$
124.0

 
$
(5.3
)
$1.075 Billion 5.75% 2025 Senior Notes
 
600.0

 
(12.9
)
 
 
$
724.0

 
$
(18.2
)
 
 
 
 
 
1 This includes premiums paid related to the redemption of our notes of $5.3 million.

Debt Extinguishment - 2018
During the year ended December 31, 2018, we redeemed in full all of our outstanding 5.90% 2020 Senior Notes and 4.80% 2020 Senior Notes with cash on hand. Additionally, we purchased certain of our 4.875% 2021 Senior Notes and 5.75% 2025 Senior Notes.
The following is a summary of the debt extinguished and the respective gain (loss) on extinguishment:
 
 
(In Millions)
 
 
Year Ended
December 31, 2018
 
 
Debt Extinguished
 
Gain (Loss) on Extinguishment1
Unsecured Notes:
 
 
 
 
$400 Million 5.90% 2020 Senior Notes
 
$
88.9

 
$
(3.3
)
$500 Million 4.80% 2020 Senior Notes
 
122.4

 
(3.7
)
$700 Million 4.875% 2021 Senior Notes
 
14.4

 
0.1

$1.075 Billion 5.75% 2025 Senior Notes
 
1.7

 
0.1

 
 
$
227.4

 
$
(6.8
)
 
 
 
 
 
1 This includes premiums paid related to the redemption of our notes of $7.1 million.

Debt Extinguishment - 2017
During the year ended December 31, 2017, we issued 63.3 million common shares in an underwritten public offering. We received net proceeds of $661.3 million at a public offering price of $10.75 per common share. The net proceeds from the issuance of our common shares and the net proceeds from the issuance of $1.075 Billion 5.75% 2025 Senior Notes were used to redeem in full all of our outstanding 8.25% 2020 First Lien Notes, 8.00% 2020 1.5 Lien Notes and 7.75% 2020 Second Lien Notes. Additionally, through tender offers, we purchased certain of our 5.90% 2020 Senior Notes, our 4.80% 2020 Senior Notes and our 4.875% 2021 Senior Notes.
The following is a summary of the debt extinguished and the respective gain (loss) on extinguishment:
 
 
(In Millions)
 
 
Year Ended
December 31, 2017
 
 
Debt Extinguished
 
Gain (Loss) on Extinguishment1
Secured Notes:
 
 
 
 
$540 Million 8.25% 2020 First Lien Notes
 
$
540.0

 
$
(93.5
)
$218.5 Million 8.00% 2020 1.5 Lien Notes
 
218.5

 
45.1

$544.2 Million 7.75% 2020 Second Lien Notes
 
430.1

 
(104.5
)
Unsecured Notes:
 
 
 
 
$400 Million 5.90% 2020 Senior Notes
 
136.7

 
(7.8
)
$500 Million 4.80% 2020 Senior Notes
 
114.4

 
(1.9
)
$700 Million 4.875% 2021 Senior Notes
 
171.0

 
(2.8
)
 
 
$
1,610.7

 
$
(165.4
)
 
 
 
 
 
1 This includes premiums paid related to the redemption of our notes of $110.0 million.

Debt Maturities
The following represents a summary of our debt instrument maturities based on the principal amounts outstanding at December 31, 2019:
 
(In Millions)
 
Maturities of Debt
2020
$

2021

2022

2023

2024
400.0

2025 and thereafter
1,838.0

Total maturities of debt
$
2,238.0


ABL Facility
On February 28, 2018, we amended and restated our senior secured asset-based revolving credit facility with various financial institutions. The ABL Facility will mature upon the earlier of February 28, 2023 or 60 days prior to the maturity of certain other material debt and provides for up to $450.0 million in borrowings, including a $248.8 million sublimit for the issuance of letters of credit and a $100.0 million sublimit for swingline loans. Availability under the ABL Facility is limited to an eligible borrowing base, as applicable, determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.
The ABL Facility and certain bank products and hedge obligations are guaranteed by us and certain of our existing wholly-owned U.S. subsidiaries and are required to be guaranteed by certain of our future U.S. subsidiaries. Amounts outstanding under the ABL Facility are secured by (i) a first-priority security interest in the accounts receivable and other rights to payment, inventory, as-extracted collateral, certain investment property, deposit accounts, securities accounts, certain general intangibles and commercial tort claims, certain mobile equipment, commodities accounts and other related assets of ours, the other borrowers and the guarantors, and proceeds and products of each of the foregoing (collectively, the “ABL Collateral”) and (ii) a second-priority security interest in substantially all of our assets and the assets of the other borrowers and the guarantors other than the ABL Collateral.
Borrowings under the ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a LIBOR rate, in each case plus an applicable margin. The base rate is equal to the greater of the federal funds rate plus 0.5%, the LIBOR rate based on a one-month interest period plus 1% and the floating rate announced by Bank of America Merrill Lynch as its “prime rate" and 1%. The LIBOR rate is a per annum fixed rate equal to LIBOR with respect to the applicable interest period and amount of LIBOR rate loan requested.
The ABL Facility contains customary representations and warranties and affirmative and negative covenants including, among others, covenants regarding the maintenance of certain financial ratios if certain conditions are triggered, covenants relating to financial reporting, covenants relating to the payment of dividends on, or purchase or redemption of, our capital stock, covenants relating to the incurrence or prepayment of certain debt, covenants relating to the incurrence of liens or encumbrances, covenants relating to compliance with laws, covenants relating to transactions with affiliates, covenants relating to mergers and sales of all or substantially all of our assets and limitations on changes in the nature of our business.
The ABL Facility provides for customary events of default, including, among other things, the event of nonpayment of principal, interest, fees, or other amounts, a representation or warranty proving to have been materially incorrect when made, failure to perform or observe certain covenants within a specified period of time, a cross-default to certain material indebtedness, the bankruptcy or insolvency of the Company and certain of its subsidiaries, monetary judgment defaults of a specified amount, invalidity of any loan documentation, a change of control of the Company, a