What changed in this filing

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Item 1. Financial Statements

2023-07-26 compared with 2023-04-26 · 142 added, 89 removed, 572 unchanged (29% of the section changed)

3 unchanged sentences

AND SUBSIDIARIES

(In millions, except share information) March 31,

(In millions, except share information) June 30,

2023 December 31,

44 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions, except per share amounts) 2023 2022 2023 2022

5 unchanged sentences

Total operating costs ( 5,501 ) ( 5,497 ) ( 10,827 ) ( 10,358 )

Operating income (loss) ( 31 ) 1,094

Operating income 483 840 452 1,934

Other income (expense):

4 unchanged sentences

Total other expense ( 25 ) ( 83 ) ( 50 ) ( 127 )

Income (loss) from continuing operations before income taxes ( 56 ) 1,050

Income tax benefit (expense) 13 ( 237 )

Income (loss) from continuing operations ( 43 ) 813

Income from continuing operations before income taxes 458 757 402 1,807

Income tax expense ( 102 ) ( 157 ) ( 89 ) ( 394 )

Income from continuing operations 356 600 313 1,413

Income from discontinued operations, net of tax — 1 1 2

Net income (loss) ( 42 ) 814

Net income 356 601 314 1,415

Income attributable to noncontrolling interest ( 9 ) ( 5 ) ( 24 ) ( 18 )

Net income (loss) attributable to Cliffs shareholders $ ( 57 ) $ 801

Earnings (loss) per common share attributable to Cliffs shareholders - basic

Net income attributable to Cliffs shareholders $ 347 $ 596 $ 290 $ 1,397

Earnings per common share attributable to Cliffs shareholders - basic

Continuing operations $ 0.68 $ 1.14 $ 0.56 $ 2.67

1 unchanged sentence

$ 0.68 $ 1.14 $ 0.56 $ 2.67

Earnings (loss) per common share attributable to Cliffs shareholders - diluted

Earnings per common share attributable to Cliffs shareholders - diluted

Continuing operations $ 0.67 $ 1.13 $ 0.56 $ 2.64

2 unchanged sentences

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE INCOME

CLEVELAND-CLIFFS INC.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

Net income (loss) $ ( 42 ) $ 814

Net income $ 356 $ 601 $ 314 $ 1,415

Other comprehensive income (loss):

1 unchanged sentence

Changes in derivative financial instruments, net of tax 18 ( 55 ) ( 134 ) 41

Changes in foreign currency translation — ( 2 ) — ( 2 )

Total other comprehensive income (loss) ( 8 ) ( 57 ) ( 187 ) 40

Comprehensive income (loss) ( 221 ) 911

Comprehensive income 348 544 127 1,455

Comprehensive income attributable to noncontrolling interests ( 9 ) ( 5 ) ( 24 ) ( 18 )

Comprehensive income (loss) attributable to Cliffs shareholders $ ( 236 ) $ 898

Comprehensive income attributable to Cliffs shareholders $ 339 $ 539 $ 103 $ 1,437

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

AND SUBSIDIARIES

Three Months Ended

Six Months Ended

(In millions) 2023 2022

OPERATING ACTIVITIES

Net income (loss) $ ( 42 ) $ 814

Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:

Net income $ 314 $ 1,415

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 489 551

10 unchanged sentences

Other, net ( 69 ) ( 20 )

Net cash provided (used) by operating activities ( 39 ) 533

Net cash provided by operating activities 848 1,398

INVESTING ACTIVITIES

4 unchanged sentences

Repurchase of common shares ( 94 ) ( 176 )

Proceeds from issuance of debt 750 —

Repayments of debt — ( 1,319 )

1 unchanged sentence

Repayments under credit facilities ( 3,710 ) ( 2,624 )

Debt issuance costs ( 34 ) —

Other financing activities ( 121 ) ( 73 )

Net cash provided (used) by financing activities 257 ( 311 )

Net cash used by financing activities ( 530 ) ( 932 )

Net increase (decrease) in cash and cash equivalents 8 ( 1 )

16 unchanged sentences

March 31, 2023 515 $ 66 $ 4,832 $ 1,277 $ ( 280 ) $ 1,651 $ 247 $ 7,793

Comprehensive income (loss) — — — 347 — ( 8 ) 9 348

Stock and other incentive plans 1 — 9 — 3 — — 12

Common stock repurchases, net of excise tax ( 7 ) — — — ( 95 ) — — ( 95 )

Net distributions to noncontrolling interests — — — — — — ( 14 ) ( 14 )

June 30, 2023 509 $ 66 $ 4,841 $ 1,624 $ ( 372 ) $ 1,643 $ 242 $ 8,044

(In millions) Number

11 unchanged sentences

March 31, 2022 525 $ 66 $ 4,848 $ 800 $ ( 90 ) $ 715 $ 269 $ 6,608

Comprehensive income (loss) — — — 596 — ( 57 ) 5 544

Stock and other incentive plans — — 7 — 1 — — 8

Common stock repurchases ( 8 ) — — — ( 157 ) — — ( 157 )

Net distributions to noncontrolling interests — — — — — — ( 9 ) ( 9 )

June 30, 2022 517 $ 66 $ 4,855 $ 1,396 $ ( 246 ) $ 658 $ 265 $ 6,994

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8 unchanged sentences

however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or any other future period.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or any other future period.

NATURE OF BUSINESS

14 unchanged sentences

We review an investment for impairment when circumstances indicate that a loss in value below its carrying amount is other than temporary.

Our investment in affiliates of $ 134 million and $ 133 million as of March 31, 2023 and December 31, 2022, respectively, was classified in Other non-current assets.

Our investment in affiliates of $ 132 million and $ 133 million as of June 30, 2023 and December 31, 2022, respectively, was classified in Other non-current assets.

SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

There have been no material changes in our significant accounting policies and estimates from those disclosed therein.

RECENT ACCOUNTING PRONOUNCEMENTS

ISSUED AND ADOPTED

RECENT ACCOUNTING PRONOUNCEMENTS AND LEGISLATION

In August 2022, the U.S.

government signed the Inflation Reduction Act into law.

The Inflation Reduction Act introduced, among other legislation, a 1% excise tax on the fair market value of stock repurchases net of the fair market value of stock issuances during the tax year.

The excise tax is effective on net stock repurchases that occur after December 31, 2022.

The tax will be recorded in equity as a cost of common shares in treasury.

In September 2022, the FASB issued ASU No.

10 unchanged sentences

Allowance for credit losses as of January 1 $ ( 4 ) $ ( 4 )

Increase in allowance ( 1 ) —

Allowance for credit losses as of March 31 $ ( 5 ) $ ( 4 )

Decrease (increase) in allowance ( 3 ) 1

Allowance for credit losses as of June 30 $ ( 7 ) $ ( 3 )

The following table presents the detail of our Inventories on the Statements of Unaudited Condensed Consolidated Financial Position:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

11 unchanged sentences

Supply chain finance programs that extend terms or provide us an economic benefit are classified as short-term financings.

As of March 31, 2023 and December 31, 2022, we had $ 27 million and $ 19 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of March 31, 2023 and December 31, 2022, we had $ 87 million and $ 112 million, respectively, classified as Accounts payable.

As of June 30, 2023 and December 31, 2022, we had $ 23 million and $ 19 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of June 30, 2023 and December 31, 2022, we had $ 94 million and $ 112 million, respectively, classified as Accounts payable.

CASH FLOW INFORMATION

A reconciliation of capital additions to cash paid for capital expenditures is as follows:

Three Months Ended

Six Months Ended

(In millions) 2023 2022

4 unchanged sentences

Cash payments (receipts) for income taxes and interest are as follows:

Three Months Ended

Six Months Ended

(In millions) 2023 2022

Taxes paid on income $ 1 $ 1

Income taxes paid $ 37 $ 299

Income tax refunds ( 138 ) ( 1 )

Interest paid on debt obligations net of capitalized interest 1

1 Capitalized interest was $ 3 million and $ 2 million for the three months ended March 31, 2023 and 2022, respectively.

1 Capitalized interest was $ 6 million and $ 5 million for the six months ended June 30, 2023 and 2022, respectively.

NOTE 3 - REVENUES

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

3 unchanged sentences

Steel producers

796 1,077 1,497 1,893

Total Steelmaking 5,808 6,176 10,934 11,970

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

23 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

7 unchanged sentences

Total Adjusted EBITDA $ 775 $ 1,131 $ 1,018 $ 2,583

The following table provides a reconciliation of our consolidated Net income (loss) to total Adjusted EBITDA:

The following table provides a reconciliation of our consolidated Net income to total Adjusted EBITDA:

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

Net income (loss) $ ( 42 ) $ 814

Net income $ 356 $ 601 $ 314 $ 1,415

Interest expense, net ( 79 ) ( 64 ) ( 156 ) ( 141 )

Income tax benefit (expense) 13 ( 237 )

Income tax expense ( 102 ) ( 157 ) ( 89 ) ( 394 )

Depreciation, depletion and amortization ( 247 ) ( 250 ) ( 489 ) ( 551 )

784 1,072 1,048 2,501

EBITDA of noncontrolling interests 1

8 unchanged sentences

The following summarizes our assets by segment:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

6 unchanged sentences

Other Businesses 2 9 3 15

Corporate 1 2 1 2

Total capital additions $ 162 $ 308 $ 290 $ 489

2 unchanged sentences

The following table indicates the carrying value of each of the major classes of our depreciable assets:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

8 unchanged sentences

Property, plant and equipment, net $ 8,878 $ 9,070

1 Includes right-of-use assets related to finance leases of $ 424 million and $ 408 million as of March 31, 2023 and December 31, 2022, respectively.

We recorded depreciation and depletion expense of $ 239 million and $ 298 million for the three months ended March 31, 2023 and 2022, respectively.

Depreciation and depletion expense for the three months ended March 31, 2022 includes $ 68 million of accelerated depreciation related to the indefinite idle of the Indiana Harbor #4 blast furnace.

1 Includes right-of-use assets related to finance leases of $ 467 million and $ 408 million as of June 30, 2023 and December 31, 2022, respectively.

We recorded depreciation and depletion expense of $ 246 million and $ 485 million for the three and six months ended June 30, 2023, respectively, and $ 249 million and $ 547 million for the three and six months ended June 30, 2022, respectively.

Depreciation and depletion expense for both the three and six months ended June 30, 2022 includes $ 23 million of accelerated depreciation related to the decision to indefinitely idle the coke facility at Middletown Works.

Depreciation and depletion expense for the six months ended June 30, 2022 also includes $ 68 million of accelerated depreciation related to the indefinite idle of the Indiana Harbor #4 blast furnace.

NOTE 6 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES

The following is a summary of Goodwill by segment:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

4 unchanged sentences

The following is a summary of our intangible assets and liabilities:

March 31, 2023

June 30, 2023

December 31, 2022

14 unchanged sentences

Amortization of all intangible liabilities is recognized in Cost of goods sold .

Amortization expense related to intangible assets was $ 4 million for both the three months ended March 31, 2023 and 2022.

Amortization expense related to intangible assets was $ 3 million for both the three months ended June 30, 2023 and 2022, and $ 7 million for both the six months ended June 30, 2023 and 2022.

Estimated future amortization expense is $ 6 million for the remainder of 2023 and $ 13 million annually for the years 2024 through 2028.

Income from amortization related to the intangible liabilities was $ 1 million for both the three months ended March 31, 2023 and 2022.

Income from amortization related to the intangible liabilities was $ 2 million for both the three months ended June 30, 2023 and 2022, and $ 3 million for both the six months ended June 30, 2023 and 2022.

Estimated future income from amortization is $ 2 million for the remainder of 2023 and $ 5 million annually for the years 2024 through 2028.

4 unchanged sentences

Annual Effective

Interest Rate March 31,

Interest Rate June 30,

2023 December 31,

15 unchanged sentences

Cliffs 4.875 % 325 325

6.250 % 2040 Senior Notes

Cliffs 6.340 % 235 235

ABL Facility Cliffs 2

5 unchanged sentences

as borrower under our ABL Facility.

3 Our ABL Facility annual effective interest rate was 6.40 % and 5.60 %, respectively, as of March 31, 2023 and December 31, 2022.

Subsequent to the quarter ended March 31, 2023, we issued $ 750 million aggregate principal amount of 6.750 % 2030 Senior Notes.

We used the net proceeds from the offering to repay a portion of the borrowings under our ABL Facility.

Refer to NOTE 18 - SUBSEQUENT EVENTS for further information.

As of March 31, 2023, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

3 Our ABL Facility annual effective interest rate was 7.091 % and 5.602 %, respectively, as of June 30, 2023 and December 31, 2022.

6.750% 2030 Senior Notes - 2023 Offering

On April 14, 2023, we entered into an indenture among Cliffs, the guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee, relating to the issuance of $ 750 million aggregate principal amount of our 6.750% 2030 Senior Notes, which were issued at par.

The 6.750% 2030 Senior Notes were issued in a private placement transaction exempt from the registration requirements of the Securities Act.

The 6.750% 2030 Senior Notes bear interest at a rate of 6.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2023.

The 6.750% 2030 Senior Notes mature on April 15, 2030.

The 6.750% 2030 Senior Notes are unsecured senior obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness.

The 6.750% 2030 Senior Notes are guaranteed on a senior unsecured basis by our material direct and indirect wholly owned domestic subsidiaries.

The 6.750% 2030 Senior Notes are structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries that do not guarantee the 6.750% 2030 Senior Notes.

The 6.750% 2030 Senior Notes may be redeemed, in whole or in part, at any time at our option not less than 10 days nor more than 60 days after prior notice is sent to the holders of the 6.750% 2030 Senior Notes.

The 6.750% 2030 Senior Notes are redeemable prior to April 15, 2026, at a redemption price equal to 100 % of the principal amount thereof plus a "make-whole" premium set forth in the indenture.

We may also redeem up to 35 % of the aggregate principal amount of the 6.750% 2030 Senior Notes prior to April 15, 2026 at a redemption price equal to 106.750 % of the principal amount thereof with the net cash proceeds of one or more equity offerings.

The 6.750% 2030 Senior Notes are redeemable beginning on April 15, 2026, at a redemption price equal to 103.375 % of the principal amount thereof, decreasing to 101.688 % on April 15, 2027, and are redeemable at par beginning on April 15, 2028.

In each case, we pay the applicable redemption and "make-whole" premiums plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 6.750% 2030 Senior Notes, we will be required to offer to repurchase the notes at a purchase price equal to 101 % of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The terms of the 6.750% 2030 Senior Notes contain certain customary covenants;

however, there are no financial covenants.

On June 9, 2023, we entered into the Fourth ABL Amendment to our ABL Facility to, among other things, increase the amount of tranche A revolver commitments available thereunder by an additional $ 250 million to an aggregate principal amount of $ 4.75 billion and extend the maturity date of all commitments under the ABL Facility from March 13, 2025 to June 9, 2028.

The Fourth ABL Amendment removed the LIBOR option for variable rate loans due to its cessation and replaced it with a SOFR option.

Borrowings under the amended ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a SOFR

rate, in each case, plus an applicable tiered margin.

The base rate is equal to the greater of the federal funds rate plus 0.5 % or the term SOFR plus 1.25 %.

As of June 30, 2023, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

The following represents a summary of our borrowing capacity under the ABL Facility:

(In millions) March 31,

(In millions) June 30,

Available borrowing base on ABL Facility 1

2 unchanged sentences

Borrowing capacity available $ 3,800

1 As of March 31, 2023, the ABL Facility has a maximum available borrowing base of $ 4.5 billion.

1 As of June 30, 2023, the ABL Facility has a maximum available borrowing base of $ 4.75 billion.

The borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.

2 We issued standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, employee severance, insurance, operating agreements and environmental obligations.

2 We issued standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations, and insurance.

DEBT MATURITIES

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at March 31, 2023 (in millions):

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at June 30, 2023 (in millions):

2023 2024 2025 2026 2027 Thereafter Total

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

6 unchanged sentences

Net periodic benefit costs (credits) $ ( 32 ) $ 18 $ ( 65 ) $ 36

Based on funding requirements, we made no defined benefit pension contributions for the three months ended March 31, 2023 and March 31, 2022.

Based on funding requirements, we made no contributions to our voluntary employee benefit association trust plans for the three months ended March 31, 2023.

We made contributions of $ 28 million to our voluntary employee benefit association trust plans for the three months ended March 31, 2022.

Based on funding requirements, we made no defined benefit pension contributions for the three and six months ended June 30, 2023 and June 30, 2022.

Based on funding requirements, we made no contributions to our voluntary employee benefit association trust plans for the three and six months ended June 30, 2023.

We made contributions of $ 28 million and $ 56 million to our voluntary employee benefit association trust plans for the three and six months ended June 30, 2022, respectively.

NOTE 9 - INCOME TAXES

Our 2023 estimated annual effective tax rate before discrete items as of March 31, 2023 is 22 %.

Our 2023 estimated annual effective tax rate before discrete items as of June 30, 2023 is 22 %.

The estimated annual effective tax rate exceeds the U.S.

statutory rate of 21 %, as state income tax expense exceeds the percentage depletion in excess of cost depletion.

The 2022 estimated annual effective tax rate before discrete items as of March 31, 2022 was 22 %.

The 2022 estimated annual effective tax rate before discrete items as of June 30, 2022 was 22 %.

NOTE 10 - ASSET RETIREMENT OBLIGATIONS

5 unchanged sentences

The following is a summary of our asset retirement obligations:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

2 unchanged sentences

Long-term asset retirement obligations $ 504 $ 499

1 Includes $ 279 million and $ 277 million related to our active operations as of March 31, 2023 and December 31, 2022, respectively.

1 Includes $ 278 million and $ 277 million related to our active operations as of June 30, 2023 and December 31, 2022, respectively.

The following is a roll forward of our asset retirement obligation liability:

2 unchanged sentences

Accretion expense 13 15

Reclassification from environmental obligations — 63

Revision in estimated cash flows 1 21

Remediation payments ( 9 ) ( 16 )

Asset retirement obligation as of March 31 $ 524 $ 460

Asset retirement obligation as of June 30 $ 525 $ 532

NOTE 11 - FAIR VALUE MEASUREMENTS

2 unchanged sentences

A summary of the carrying value and fair value of other financial instruments were as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In millions) Classification Carrying

13 unchanged sentences

Notional Amount

Commodity Contracts Unit of Measure Maturity Dates March 31,

Commodity Contracts Unit of Measure Maturity Dates June 30,

2023 December 31,

Natural Gas MMBtu April 2023 - November 2025 148,340,000 127,790,000

Electricity Megawatt hours April 2023 - January 2025 2,040,206 432,043

Tin Metric tons April 2023 - December 2023 135 180

Natural Gas MMBtu July 2023 - May 2026 152,920,000 127,790,000

Electricity Megawatt hours July 2023 - January 2026 2,810,342 432,043

Tin Metric tons July 2023 - December 2023 90 180

The following table presents the fair value of our cash flow hedges and the classification in the Statements of Unaudited Condensed Consolidated Financial Position:

Balance Sheet Location (In millions) March 31,

Balance Sheet Location (In millions) June 30,

2023 December 31,

8 unchanged sentences

The share repurchase program does not have a specific expiration date.

During the three months ended March 31, 2023, we had no share buybacks.

During the three months ended March 31, 2022, we repurchased 1 million common shares at a cost of $ 19 million in the aggregate.

As of March 31, 2023, there was $ 760 million remaining under the authorization.

During both the three and six months ended June 30, 2023, we repurchased 6.5 million common shares, at a cost of $ 94 million in the aggregate, excluding excise tax due under the Inflation Reduction Act of 2022.

During the three and six months ended June 30, 2022, we repurchased 7.5 million and 8.5 million common shares, respectively, at a cost of $ 157 million and $ 176 million in the aggregate, respectively.

As of June 30, 2023, there was $ 666 million remaining under the authorization.

PREFERRED STOCK

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2023 2022 2023 2022

8 unchanged sentences

Other comprehensive income (loss) before reclassifications, net of tax ( 24 ) ( 22 ) ( 157 ) 107

Gains reclassified from AOCI to net income (loss) 1

Losses (gains) reclassified from AOCI to net income 1

55 ( 42 ) 30 ( 84 )

Income tax expense 2

Net gains reclassified from AOCI to net income (loss) ( 19 ) ( 33 )

Income tax expense (benefit) 2

( 13 ) 9 ( 7 ) 18

Net losses (gains) reclassified from AOCI to net income 42 ( 33 ) 23 ( 66 )

Ending balance $ ( 150 ) $ 109 $ ( 150 ) $ 109

1 unchanged sentence

Beginning balance $ 1,820 $ 550 $ 1,847 $ 549

Losses (gains) reclassified from AOCI to net income (loss) 3

Losses (gains) reclassified from AOCI to net income 3

( 36 ) — ( 71 ) 1

Income tax expense 2

Net losses (gains) reclassified from AOCI to net income (loss) ( 27 ) 1

Net losses (gains) reclassified from AOCI to net income ( 26 ) — ( 53 ) 1

Ending balance $ 1,794 $ 550 $ 1,794 $ 550

1 unchanged sentence

1 Amounts recognized in Cost of goods sold in the Statements of Unaudited Condensed Consolidated Operations.

2 Amounts recognized in Income tax benefit (expense) in the Statements of Unaudited Condensed Consolidated Operations.

2 Amounts recognized in Income tax expense in the Statements of Unaudited Condensed Consolidated Operations.

3 Amounts recognized in Net periodic benefit credits other than service cost component in the Statements of Unaudited Condensed Consolidated Operations.

3 unchanged sentences

We consolidate SunCoke Middletown as a VIE because we are the primary beneficiary despite having no ownership interest in SunCoke Middletown.

SunCoke Middletown had income before income taxes of $ 17 million and $ 15 million for the three months ended March 31, 2023 and 2022, respectively, that was included in our consolidated income before income taxes.

SunCoke Middletown had income before income taxes of $ 10 million and $ 27 million for the three and six months ended June 30, 2023, respectively, compared to $ 7 million and $ 22 million for the three and six months ended June 30, 2022, respectively, that was included in our consolidated income before income taxes.

The assets of the consolidated VIE can only be used to settle the obligations of the consolidated VIE and not obligations of the Company.

1 unchanged sentence

The Statements of Unaudited Condensed Consolidated Financial Position includes the following amounts for SunCoke Middletown:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions, except per share amounts) 2023 2022 2023 2022

Income (loss) from continuing operations $ ( 43 ) $ 813

Income from continuing operations $ 356 $ 600 $ 313 $ 1,413

Income from continuing operations attributable to noncontrolling interest ( 9 ) ( 5 ) ( 24 ) ( 18 )

Net income (loss) from continuing operations attributable to Cliffs shareholders ( 58 ) 800

Net income from continuing operations attributable to Cliffs shareholders 347 595 289 1,395

Income from discontinued operations, net of tax — 1 1 2

Net income (loss) attributable to Cliffs shareholders $ ( 57 ) $ 801

Net income attributable to Cliffs shareholders $ 347 $ 596 $ 290 $ 1,397

Weighted average number of shares:

3 unchanged sentences

Diluted 514 526 515 529

Earnings (loss) per common share attributable to Cliffs shareholders - basic:

Earnings per common share attributable to Cliffs shareholders - basic:

Continuing operations $ 0.68 $ 1.14 $ 0.56 $ 2.67

1 unchanged sentence

$ 0.68 $ 1.14 $ 0.56 $ 2.67

Earnings (loss) per common share attributable to Cliffs shareholders - diluted:

Earnings per common share attributable to Cliffs shareholders - diluted:

Continuing operations $ 0.67 $ 1.13 $ 0.56 $ 2.64

1 unchanged sentence

$ 0.67 $ 1.13 $ 0.56 $ 2.64

1 For the three months ended March 31, 2023, we had 1 million shares related to employee stock plans that were excluded from the diluted EPS calculation as they were anti-dilutive.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

18 unchanged sentences

The following is a summary of our environmental obligations:

(In millions) March 31,

(In millions) June 30,

2023 December 31,

45 unchanged sentences

NOTE 18 - SUBSEQUENT EVENTS

On April 14, 2023, we issued $ 750 million aggregate principal amount of 6.750 % 2030 Senior Notes in an offering that was exempt from the registration requirements of the Securities Act.

The notes were issued at par.

We used the net proceeds from the notes offering to repay a portion of the borrowings under our ABL Facility.

We have evaluated subsequent events through the date of financial statement issuance.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements