What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-08 compared with 2023-02-14 · 298 added, 437 removed, 1294 unchanged (36% of the section changed)

13 unchanged sentences

Goodwill 1,005 1,130

Pension and OPEB, asset 356 223

Pension and OPEB assets 329 356

Other non-current assets 672 777

4 unchanged sentences

Accrued employment costs 511 429

Accrued expenses 380 383

Other current liabilities 518 551

2 unchanged sentences

Long-term debt 3,137 4,249

Pension liability, non-current 473 578

OPEB liability, non-current 585 2,383

Pension and OPEB liabilities 821 1,058

Deferred income taxes 639 590

7 unchanged sentences

Capital in excess of par value of shares 4,861 4,871

Retained earnings (deficit) 1,334 ( 1 )

Retained earnings 1,733 1,334

Cost of 26,164,757 common shares in treasury (2022 - 17,710,751 shares)

2 unchanged sentences

Total Cliffs shareholders' equity 7,887 7,791

Noncontrolling interest 251 284

Noncontrolling interests 235 251

TOTAL EQUITY 8,122 8,042

12 unchanged sentences

Acquisition-related costs ( 12 ) ( 4 ) ( 20 )

Goodwill impairment ( 125 ) — —

Miscellaneous – net — ( 110 ) ( 80 )

Total operating costs ( 21,319 ) ( 21,050 ) ( 16,432 )

Operating income (loss) 1,939 4,012 ( 142 )

Operating income 677 1,939 4,012

Other income (expense):

Interest expense, net ( 289 ) ( 276 ) ( 337 )

Gain (loss) on extinguishment of debt ( 75 ) ( 88 ) 130

Loss on extinguishment of debt — ( 75 ) ( 88 )

Net periodic benefit credits other than service cost component 204 212 210

1 unchanged sentence

Total other expense ( 80 ) ( 143 ) ( 209 )

Income (loss) from continuing operations before income taxes 1,796 3,803 ( 193 )

Income tax benefit (expense) ( 423 ) ( 773 ) 111

Income (loss) from continuing operations 1,373 3,030 ( 82 )

Income from continuing operations before income taxes 597 1,796 3,803

Income tax expense ( 148 ) ( 423 ) ( 773 )

Income from continuing operations 449 1,373 3,030

Income from discontinued operations, net of tax 1 3 3

Net income (loss) 1,376 3,033 ( 81 )

Income attributable to noncontrolling interest ( 41 ) ( 45 ) ( 41 )

Net income (loss) attributable to Cliffs shareholders $ 1,335 $ 2,988 $ ( 122 )

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

Net income 450 1,376 3,033

Net income attributable to noncontrolling interests ( 51 ) ( 41 ) ( 45 )

Net income attributable to Cliffs shareholders $ 399 $ 1,335 $ 2,988

Earnings per common share attributable to Cliffs shareholders - basic

Continuing operations $ 0.78 $ 2.57 $ 5.62

1 unchanged sentence

$ 0.78 $ 2.57 $ 5.63

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

Earnings per common share attributable to Cliffs shareholders - diluted

Continuing operations $ 0.78 $ 2.55 $ 5.35

8 unchanged sentences

(In millions) 2023 2022 2021

Net income (loss) $ 1,376 $ 3,033 ( 81 )

Net income $ 450 $ 1,376 3,033

Other comprehensive income (loss):

2 unchanged sentences

Changes in foreign currency translation 1 ( 2 ) ( 2 )

Total other comprehensive income 1,212 751 186

Total other comprehensive income (loss) ( 173 ) 1,212 751

Comprehensive income 277 2,588 3,784

9 unchanged sentences

OPERATING ACTIVITIES

Net income (loss) $ 1,376 $ 3,033 $ ( 81 )

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

Net income $ 450 $ 1,376 $ 3,033

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

Depreciation, depletion and amortization 973 1,034 897

Amortization of inventory step-up — 161 96

Deferred income taxes 114 90 767

Pension and OPEB credits ( 163 ) ( 132 ) ( 103 )

Loss (gain) on extinguishment of debt 75 88 ( 130 )

Impairment of long-lived assets 29 1 —

Goodwill impairment 125 — —

Loss on extinguishment of debt — 75 88

Amortization of inventory step-up — — 161

Other 76 151 139

Changes in operating assets and liabilities, net of business combination:

Receivables and other assets 177 ( 722 ) ( 91 )

Accounts receivable, net 120 197 ( 754 )

Inventories 670 64 ( 1,370 )

1 unchanged sentence

Pension and OPEB payments and contributions ( 94 ) ( 204 ) ( 343 )

Payables, accrued expenses and other liabilities ( 186 ) 374 5

Net cash provided (used) by operating activities 2,423 2,785 ( 258 )

Payables, accrued employment and accrued expenses 4 ( 70 ) 457

Other, net ( 130 ) ( 136 ) ( 51 )

Net cash provided by operating activities 2,267 2,423 2,785

INVESTING ACTIVITIES

2 unchanged sentences

Acquisition of ArcelorMittal USA, net of cash acquired — — 54

Acquisition of AK Steel, net of cash acquired — — ( 869 )

Other investing activities 55 38 33

1 unchanged sentence

FINANCING ACTIVITIES

Repurchase of common shares ( 152 ) ( 240 ) —

Series B Redeemable Preferred Stock redemption — — ( 1,343 )

Proceeds from issuance of common shares — — 322

Repurchase of common shares ( 240 ) — —

Proceeds from issuance of debt 750 — 1,000

Debt issuance costs — ( 20 ) ( 76 )

Repayments of debt ( 1,358 ) ( 1,372 ) ( 1,023 )

Repayments of senior notes — ( 1,358 ) ( 1,372 )

Borrowings under credit facilities 3,004 5,749 5,962

Repayments under credit facilities ( 4,868 ) ( 5,494 ) ( 5,889 )

Debt issuance costs ( 34 ) — ( 20 )

Other financing activities ( 204 ) ( 166 ) ( 130 )

Net cash provided (used) by financing activities ( 1,509 ) ( 1,470 ) 2,059

Net decrease in cash and cash equivalents ( 22 ) ( 64 ) ( 241 )

Net cash used by financing activities ( 1,504 ) ( 1,509 ) ( 1,470 )

Net increase (decrease) in cash and cash equivalents 172 ( 22 ) ( 64 )

Cash and cash equivalents at beginning of year 26 48 112

12 unchanged sentences

Treasury AOCI

Interest Total

December 31, 2019 271 $ 37 $ 3,873 $ ( 2,842 ) $ ( 391 ) $ ( 319 ) $ — $ 358

Comprehensive income (loss) — — — ( 122 ) — 186 41 105

Stock and other incentive plans 2 — ( 24 ) — 37 — — 13

Acquisition of AK Steel 127 16 602 — — — 330 948

Acquisition of ArcelorMittal USA 78 10 980 — — — 13 1,003

Common share dividends ($ 0.06 per share)

— — — ( 25 ) — — — ( 25 )

Net distributions to noncontrolling interests — — — — — — ( 61 ) ( 61 )

Interests Total

December 31, 2020 477.5 $ 63 $ 5,431 $ ( 2,989 ) $ ( 354 ) $ ( 133 ) $ 323 $ 2,341

13 unchanged sentences

December 31, 2022 513.3 66 4,871 1,334 ( 310 ) 1,830 251 8,042

Comprehensive income (loss) — — — 399 — ( 173 ) 51 277

Stock and other incentive plans 2.0 — ( 10 ) — 33 — — 23

Common share repurchases, net of excise tax ( 10.4 ) — — — ( 153 ) — — ( 153 )

Net distributions to noncontrolling interests — — — — — ( 67 ) ( 67 )

December 31, 2023 504.9 $ 66 $ 4,861 $ 1,733 $ ( 430 ) $ 1,657 $ 235 $ 8,122

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

9 unchanged sentences

We are vertically integrated from mined raw materials, direct reduced iron and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing.

We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of markets due to our comprehensive offering of flat-rolled steel products.

We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of other markets due to our comprehensive offering of flat-rolled steel products.

Headquartered in Cleveland, Ohio, we employ approximately 28,000 people across our operations in the United States and Canada, of which approximately 20,000 were represented by labor unions under various agreements.

5 unchanged sentences

BASIS OF CONSOLIDATION

The condensed consolidated financial statements consolidate our accounts and the accounts of our wholly owned subsidiaries, all subsidiaries in which we have a controlling interest and VIEs for which we are the primary beneficiary.

The consolidated financial statements consolidate our accounts and the accounts of our wholly owned subsidiaries, all subsidiaries in which we have a controlling interest and VIEs for which we are the primary beneficiary.

All intercompany transactions and balances are eliminated upon consolidation.

47 unchanged sentences

Amounts recorded in Accumulated other comprehensive income 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.

The cash flows resulting from these derivative instruments are classified in Other, net in operating activities on the Statements of Consolidated Cash Flows.

For derivative instruments that have not been designated as cash flow hedges, changes in fair value are recorded in the period of the instrument's earnings or losses.

11 unchanged sentences

Goodwill represents the excess purchase price paid over the fair value of the net assets from an acquisition.

Goodwill is not amortized for financial statement purposes, but it is assessed for impairment on an annual basis on October 1 (or more frequently if necessary).

Goodwill is not amortized for financial statement purposes.

Goodwill is tested on a qualitative or quantitative basis for impairment at the reporting unit level on an annual basis on October 1 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

We have an unconditional option to bypass the qualitative test for any reporting unit in any period and proceed directly to performing the quantitative test.

Should our qualitative test indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative test to determine the amount of impairment, if any, to the carrying value of the reporting unit and its associated goodwill.

OTHER INTANGIBLE ASSETS AND LIABILITIES

2 unchanged sentences

We recognize right-of-use assets and lease liabilities associated with leases based on the present value of the future minimum lease payments over the lease term at the commencement date.

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Lease terms reflect options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

Short-term leases (leases with an initial lease term of 12 months or less), right-of-use assets and lease liabilities are not recognized on the Statements of Consolidated Financial Position.

Short-term leases (leases with an initial lease term of 12 months or less) are not recognized on the Statements of Consolidated Financial Position.

Operating lease expense is recognized on a straight-line basis over the lease term.

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ASSET IMPAIRMENT

3 unchanged sentences

Fair value can be determined using a market approach, income approach or cost approach.

During the year ended December 31, 2022, we concluded that there were no triggering events resulting in the need for an impairment assessment except for the announcement of the permanent closure of Mountain State Carbon, which resulted in a $ 29 million asset impairment charge during the year.

For the years ended December 31, 2021 and 2020, no impairment indicators 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

16 unchanged sentences

Year-end balance sheet adjustments to pension and OPEB assets and obligations are recorded as Accumulated other comprehensive income on the Statements of Consolidated Financial Position.

The actuarial estimates of the PBO (Projected benefit obligation) and APBO (Accumulated postretirement benefit obligation) 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.

7 unchanged sentences

Cumulative actuarial gains and losses will be amortized to expense using the corridor method, where gains and losses are recognized if they exceed 10% of the greater of the fair value of plan assets or the plans' benefit obligations.

The amortization period will vary by plan.

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The amortization period varies by plan.

ASSET RETIREMENT OBLIGATIONS

4 unchanged sentences

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 for each applicable operation in accordance with the provisions of ASC Topic 410, Asset Retirement and Environmental Obligations .

We review, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation for each

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applicable operation 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.

1 unchanged sentence

Such cost estimates include, where applicable, ongoing maintenance and monitoring costs.

Changes in estimates at inactive operations are reflected in earnings in the period an estimate is revised.

Changes in estimates at inactive operations are reflected in Miscellaneous – net on the Statements of Consolidated Operations in the period an estimate is revised.

ENVIRONMENTAL REMEDIATION COSTS

8 unchanged sentences

Sales are recognized when our performance obligations are satisfied.

Generally, our performance obligations are satisfied, control of our products is transferred and revenue is recognized at a single point in time, when title transfers to our customer for product shipped according to shipping terms.

Generally, our performance obligations are satisfied, control of our products is transferred and revenue is recognized at a single point in time, according to shipping terms.

Shipping and other transportation costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer.

3 unchanged sentences

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 historical and projected stock prices was developed for both the Company and its predetermined peer group of metals and mining companies.

The fair value assumes that the performance 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 metals and mining 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, the option exercise price, 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.

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) .

Any interest or penalties on income tax are recognized as a component of Income tax 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 (loss) in the period that includes the enactment date.

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.

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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.

5 unchanged sentences

We present both basic and diluted EPS amounts for continuing operations and discontinued operations.

Total basic EPS amounts are calculated by dividing Net income (loss) attributable to Cliffs shareholders , less the earnings allocated to any of our outstanding Series B Participating Redeemable Preferred Stock, by the weighted average number of common shares outstanding during the period presented.

Total diluted EPS amounts are calculated by dividing Net income (loss) attributable to Cliffs shareholders by the weighted average number of common shares, common share equivalents under stock plans using the treasury-stock method, common share equivalents of the Series B Participating Redeemable Preferred Stock using the if-converted method and the calculated common share equivalents in excess of the conversion rate related to our 1.500% 2025 Convertible Senior Notes using the treasury-stock method.

Total basic EPS amounts are calculated by dividing Net income attributable to Cliffs shareholders , less the earnings allocated to any of our outstanding Series B Participating Redeemable Preferred Stock, by the weighted average number of common shares outstanding during the period presented.

Total diluted EPS 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, common share equivalents of the Series B Participating Redeemable Preferred Stock using the if-converted method and the calculated common share equivalents in excess of the conversion rate related to our 1.500% 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.

1 unchanged sentence

We assess whether we have a variable interest in legal entities in which we have a financial relationship and, if so, whether or not those entities are VIEs.

A VIE is an entity with insufficient equity at risk for the entity to finance its activities without additional subordinated financial support or in which equity investors lack the characteristics of a controlling financial interest.

A VIE is an entity with insufficient equity at risk for the entity to finance its activities without additional

67 | CLF 2023 FORM 10-K

subordinated financial support or in which equity investors lack the characteristics of a controlling financial interest.

If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary.

1 unchanged sentence

We conclude that we are the primary beneficiary and consolidate the VIE if we have both (i) the power to direct the activities of the VIE that most significantly influence the VIE's economic performance and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

RECENT ACCOUNTING PRONOUNCEMENTS

ISSUED AND ADOPTED

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

This update requires certain convertible instruments to be accounted for as a single liability measured at its amortized cost.

Additionally, the update requires the use of the "if-converted" method, removing the treasury stock method, when calculating diluted shares.

We utilized the modified retrospective method of adoption;

using this approach, the guidance was applied to transactions outstanding as of the beginning of the fiscal year in which the amendment was adopted.

On January 18, 2022, we redeemed all of our outstanding 1.500% 2025 Convertible Senior Notes;

therefore, there was a de minimis impact as a result of our adoption of this update.

ISSUED AND NOT YET EFFECTIVE

RECENT ACCOUNTING PRONOUNCEMENTS AND LEGISLATION

ACCOUNTING PRONOUNCEMENTS

In September 2022, the FASB issued ASU No.

3 unchanged sentences

The new standard does not affect the recognition, measurement or financial statement presentation of the supplier finance program obligations.

These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

Upon adoption, we may be required to include additional disclosures to the extent we have material supplier finance program obligations.

We have adopted this standard, except for the roll-forward information, which is effective for fiscal years beginning after December 31, 2023.

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

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This guidance requires additional annual and interim disclosures for reportable segments.

This new standard does not affect the recognition, measurement or financial statement presentation.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This guidance requires additional annual and interim disclosures for income taxes.

This new standard does not affect the recognition, measurement or financial statement presentation.

The amendments are effective for fiscal years beginning after December 15, 2024.

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 and a 15% U.S.

corporate alternative minimum tax on adjusted financial statement income.

The excise tax and corporate alternative minimum tax, both of which are immaterial to our financial statements, are effective on transactions occurring after December 31, 2022.

The excise tax is recorded in equity as a cost of common shares in treasury.

In addition, a 15% global minimum corporate tax under Pillar Two of the Organization for Economic Cooperation and Development’s Global Anti-Base Erosion Rules has been adopted by the European Union requiring its Member States to implement national legislation applicable for fiscal years starting on or after December 31, 2023.

This global minimum corporate tax is expected to be immaterial to our 2024 financial statements.

NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

3 unchanged sentences

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

Decrease in allowance — 1

Increase in allowance ( 1 ) —

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

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

7 unchanged sentences

The excess of current cost over LIFO cost of iron ore inventories was $ 131 million and $ 169 million at December 31, 2023 and 2022, respectively.

As of December 31, 2022, the product inventory balance for iron ore inventories decreased, resulting in a liquidation of a LIFO layer in 2022.

The effect of the inventory reduction was an increase in Cost of goods sold of $ 36 million in the Statements of Consolidated Operations for the year ended December 31, 2022.

As of December 31, 2023, the product inventory balance for iron ore inventories increased, resulting in a LIFO increment in 2023.

The effect of the inventory build was an increase in Inventories of $ 21 million on the Statements of Consolidated Financial Position for the year ended December 31, 2023.

As of December 31, 2022, the product inventory balance

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for iron ore inventories decreased, resulting in a liquidation of a LIFO layer in 2022.

The effect of the inventory reduction was an increase in Cost of goods sold of $ 36 million on the Statements of Consolidated Operations for the year ended December 31, 2022.

SUPPLY CHAIN FINANCE PROGRAMS

We negotiate payment terms directly with our suppliers for the purchase of goods and services.

We currently offer voluntary supply chain finance programs that enable our suppliers to sell their Company receivables to financial intermediaries, at the sole discretion of both the suppliers and financial intermediaries.

No guarantees are provided by us or our subsidiaries under the supply chain finance programs.

The supply chain finance programs allow our suppliers to be paid by the financial intermediaries earlier than the due date on the applicable invoice.

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

As of December 31, 2023 and 2022, we had $ 21 million and $ 19 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of December 31, 2023 and 2022, we had $ 91 million and $ 112 million, respectively, classified as Accounts payable .

SALE OF BUSINESS

On October 6, 2023, we entered into a membership interest purchase agreement for the sale of the legal entities owning, among other things, our closed coal mines in Pennsylvania.

As a result of the sale, we recorded a gain of $ 63 million classified in Miscellaneous – net in the Statements of Consolidated Operations and as Other in operating activities on the Statements of Consolidated Cash Flows.

As part of this transaction, we received $ 35 million in proceeds related to the sale that is classified as Other investing activities on the Statements of Consolidated Cash Flows.

CASH FLOW INFORMATION

4 unchanged sentences

Non-cash accruals ( 13 ) 35 102

Equipment financed with seller 59 — —

Right-of-use assets - finance leases 93 55 50

1 unchanged sentence

Additionally, included within Other investing activities on the Statements of Consolidated Cash Flows are grant reimbursements related to governmental funded capital projects.

For the years ended December 31, 2022 and 2021, grant reimbursements were $ 27 million and $ 2 million, respectively.

For the years ended December 31, 2023, 2022 and 2021, grant reimbursements were $ 13 million, $ 27 million and $ 2 million, respectively.

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

1 unchanged sentence

(In millions) 2023 2022 2021

Taxes paid on income $ 334 $ 166 $ 5

Income taxes paid $ 94 $ 334 $ 166

Income tax refunds ( 205 ) ( 3 ) ( 16 )

1 unchanged sentence

1 Capitalized interest was $ 12 million, $ 9 million and $ 6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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Other non-cash investing and financing activities are as follows:

3 unchanged sentences

Fair value of settlement of a pre-existing relationship as part of consideration in connection with FPT Acquisition — — ( 20 )

Fair value of common shares issued as part of consideration in connection with AM USA Transaction — — 990

Fair value of Series B Participating Redeemable Preferred Stock issued as part of consideration in connection with AM USA Transaction — — 738

Fair value of settlement of a pre-existing relationship as part of consideration in connection with AM USA Transaction — — 237

Fair value of common shares issued as consideration in connection with AK Steel Merger — — 618

Fair value of equity awards assumed in connection with AK Steel Merger — — 4

NOTE 3 - ACQUISITIONS

In 2020, we acquired two major steelmakers, AK Steel and ArcelorMittal USA, vertically integrating our legacy iron ore business with steel production.

In 2021, we also entered into the scrap business with the FPT Acquisition.

We are vertically integrated from mined raw materials, direct reduced iron and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing.

We now have a presence across the entire steel manufacturing process, from mining to pelletizing to the development and production of finished high value steel products.

The AK Steel Merger combined Cliffs, a historic producer of iron ore pellets, with AK Steel, a producer of flat-rolled carbon, stainless and electrical steel products, to create a vertically integrated producer of value-added iron ore and steel products.

The AM USA Transaction transformed us into a fully-integrated steel enterprise with the size and scale to expand product offerings and improve through-the-cycle margins.

The FPT Acquisition provides us a competitive advantage in sourcing prime scrap, a key raw material for our steelmaking facilities.

FPT ACQUISITION

FPT ACQUISITION OVERVIEW

On November 18, 2021, pursuant to the FPT Acquisition Agreement, we completed the FPT Acquisition, in which we were the acquirer.

Following the FPT Acquisition, the operating results of FPT are included in our consolidated financial statements.

For the period subsequent to the FPT Acquisition (November 18, 2021 through December 31, 2021), FPT generated Revenues of $ 153 million and a loss of $ 18 million included within Net income (loss) attributable to Cliffs shareholders, which included $ 22 million related to amortization of the fair value inventory step-up.

The FPT Acquisition entered us into the scrap business and provides us a competitive advantage in sourcing prime scrap, a key raw material for our steelmaking facilities.

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The fair value of the total purchase consideration was determined as follows:

7 unchanged sentences

We made certain elections under Section 338(h)(10) of the IRC with respect to entities acquired in connection with the FPT Acquisition that were finalized during the third quarter of 2022, which changed the final cash consideration.

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VALUATION ASSUMPTION AND PURCHASE PRICE ALLOCATION

25 unchanged sentences

Intangible assets are classified as Other non-current assets on the Statements of Consolidated Financial Position.

ACQUISITION OF ARCELORMITTAL USA

On December 9, 2020, pursuant to the terms of the AM USA Transaction Agreement, we purchased ArcelorMittal USA from ArcelorMittal.

In connection with the closing of the AM USA Transaction, as contemplated by the terms of the AM USA Transaction Agreement, ArcelorMittal’s former joint venture partner in Kote and Tek exercised its put right pursuant to the terms of the Kote and Tek joint venture agreements.

As a result, we purchased all of such joint venture partner’s interests in Kote and Tek.

Following the closing of the AM USA Transaction, we own 100% of the interests in Kote and Tek.

We incurred acquisition-related costs, excluding severance costs, of $ 3 million and $ 26 million for the years ended December 31, 2021 and 2020, respectively, in connection with the AM USA Transaction, which were recorded in Acquisition-related costs in the Statements of Consolidated Operations.

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The fair value of the total purchase consideration was determined as follows:

(In millions)

Fair value of Cliffs common shares issued $ 990

Fair value of Cliffs Series B Participating Redeemable Preferred Stock issued 738

Fair value of settlement of a pre-existing relationship 237

Cash consideration 639

Total purchase consideration $ 2,604

The fair value of Cliffs common shares issued was calculated as follows:

Number of Cliffs common shares issued 78,186,671

Closing price of Cliffs common share as of December 9, 2020 $ 12.66

Fair value of Cliffs common shares issued (in millions) $ 990

The fair value of Cliffs Series B Participating Redeemable Preferred Stock issued was calculated as follows:

Number of Cliffs Series B Participating Redeemable Preferred Stock issued 583,273

Redemption price per share as of December 9, 2020 $ 1,266

Fair value of Cliffs Series B Participating Redeemable Preferred Stock issued (in millions) $ 738

The fair value of the cash consideration was comprised of the following:

(In millions)

Cash consideration pursuant to the AM USA Transaction Agreement $ 505

Cash consideration for purchase of the remaining JV partner's interest of Kote and Tek 182

Cash consideration pursuant to working capital adjustments ( 48 )

Total cash consideration $ 639

The cash portion of the purchase price was subject to customary working capital adjustments, and the working capital adjustments were finalized during the second quarter of 2021.

We made certain elections under Section 338(h)(10) of the IRC with respect to entities acquired in connection with the AM USA Transaction, which did not change the final cash consideration.

The fair value of the settlement of a pre-existing relationship was comprised of the following:

(In millions)

Accounts receivable $ 97

Freestanding derivative asset from customer supply agreement 140

Total fair value of settlement of a pre-existing relationship $ 237

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VALUATION ASSUMPTION AND PURCHASE PRICE ALLOCATION

The allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in connection with the AM USA Transaction was based on estimated fair values at December 9, 2020, and was finalized during the quarter ended December 31, 2021.

The following is a summary of the purchase price allocation to assets acquired and liabilities assumed in the AM USA Transaction:

(In millions) Initial Allocation of Consideration Measurement

Period Adjustments Final Allocation Consideration as of December 31, 2021

Cash and cash equivalents $ 35 $ — $ 35

Accounts receivable, net 349 ( 3 ) 346

Inventories 2,115 14 2,129

Other current assets 34 2 36

Property, plant and equipment 4,017 387 4,404

Deferred income taxes — 285 285

Other non-current assets 158 7 165

Accounts payable ( 736 ) 8 ( 728 )

Accrued employment costs ( 271 ) 5 ( 266 )

State and local taxes ( 76 ) — ( 76 )

Other current liabilities ( 453 ) 23 ( 430 )

Pension liability, non-current ( 730 ) — ( 730 )

OPEB liability, non-current ( 2,465 ) — ( 2,465 )

Other non-current liabilities ( 598 ) ( 171 ) ( 769 )

Noncontrolling interest ( 13 ) 21 8

Net identifiable assets acquired 1,366 578 1,944

Goodwill 1,230 ( 570 ) 660

Total net assets acquired $ 2,596 $ 8 $ 2,604

During the period subsequent to the AM USA Transaction, we made certain measurement period adjustments to the acquired assets and liabilities assumed due to clarification of information utilized to determine fair value during the measurement period.

The measurement period adjustments related to the revaluation of the Company's previously held equity method investment, which is now being consolidated post-acquisition, resulting in a loss of $ 31 million, within Miscellaneous – net for the year ended December 31, 2021.

The goodwill resulting from the acquisition of ArcelorMittal USA primarily represents the growth opportunities in the automotive, construction, appliances, infrastructure and machinery and equipment markets, as well as any synergistic benefits to be realized from the AM USA Transaction, and was assigned to our flat steel operations within our Steelmaking segment.

ACQUISITION OF AK STEEL

On March 13, 2020, pursuant to the AK Steel Merger Agreement (Agreement and Plan of Merger, dated as of December 2, 2019, among Cleveland-Cliffs Inc., AK Steel and Merger Sub), we completed the acquisition of AK Steel, in which we were the acquirer.

As a result of the AK Steel Merger, each share of AK Steel common stock issued and outstanding immediately prior to the effective time of the AK Steel Merger (other than excluded shares) was converted into the right to receive 0.400 Cliffs common shares and, if applicable, cash in lieu of any fractional Cliffs common shares.

We incurred acquisition-related costs, excluding severance costs, of $ 1 million and $ 26 million for the years ended December 31, 2021 and 2020, respectively, in connection with the AK Steel Merger, which were recorded in Acquisition-related costs in the Statements of Consolidated Operations.

The fair value of the total purchase consideration was determined as follows:

(In millions)

Fair value of AK Steel debt $ 914

Fair value of Cliffs common shares issued for AK Steel outstanding common stock 618

Total purchase consideration $ 1,535

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The fair value of Cliffs common shares issued for outstanding shares of AK Steel common stock and with respect to Cliffs common shares underlying converted AK Steel equity awards that vested upon completion of the AK Steel Merger was calculated as follows:

(In millions, except per share amounts)

Number of shares of AK Steel common stock issued and outstanding 317

Exchange ratio 0.400

Shares of Cliffs common shares issued to AK Steel stockholders 127

Price per share of Cliffs common shares $ 4.87

Fair value of Cliffs common shares issued for outstanding AK Steel common stock $ 618

The fair value of AK Steel's debt included in the consideration was calculated as follows:

(In millions)

Credit Facility $ 590

7.500% Senior Secured Notes due July 2023 324

Fair value of debt included in consideration $ 914

VALUATION ASSUMPTION AND PURCHASE PRICE ALLOCATION

The allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in connection with the AK Steel Merger was based on estimated fair values at March 13, 2020, and was finalized during the quarter ended March 31, 2021.

The following is a summary of the purchase price allocation to assets acquired and liabilities assumed in the AK Steel Merger:

(In millions) Initial Allocation of Consideration Measurement Period Adjustments Final Allocation of Consideration as of March 31, 2021

Cash and cash equivalents $ 38 $ 1 $ 39

Accounts receivable, net 666 ( 2 ) 664

Inventories 1,563 ( 243 ) 1,320

Other current assets 68 ( 16 ) 52

Property, plant and equipment 2,184 90 2,274

Deferred income taxes — 69 69

Other non-current assets 475 ( 4 ) 471

Accounts payable ( 636 ) ( 8 ) ( 644 )

Accrued employment costs ( 94 ) 1 ( 93 )

State and local taxes ( 35 ) 4 ( 31 )

Other current liabilities ( 276 ) 2 ( 274 )

Long-term debt ( 1,179 ) — ( 1,179 )

Pension liability, non-current ( 473 ) 10 ( 463 )

OPEB liability, non-current ( 400 ) ( 8 ) ( 408 )

Other non-current liabilities ( 507 ) 72 ( 435 )

Noncontrolling interest — ( 1 ) ( 1 )

Net identifiable assets acquired 1,394 ( 33 ) 1,361

Goodwill 141 33 174

Total net assets acquired $ 1,535 $ — $ 1,535

During the period subsequent to the AK Steel Merger, we made certain measurement period adjustments to the acquired assets and liabilities assumed due to clarification of information utilized to determine fair value during the measurement period.

The goodwill resulting from the acquisition of AK Steel was assigned to our downstream Tubular and Tooling and Stamping operating segments.

Goodwill is calculated as the excess of the purchase price over the net identifiable assets recognized and primarily represents the growth opportunities in light weighting solutions to automotive customers, as well as any synergistic benefits to be realized.

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The purchase price allocated to identifiable intangible assets and liabilities acquired was:

(In millions) Weighted Average Life (In Years)

Intangible assets:

Customer relationships $ 77 18

Developed technology 60 17

Trade names and trademarks 11 10

Total identifiable intangible assets $ 148 17

Intangible liabilities:

Above-market supply contracts $ ( 71 ) 12

Intangible assets are classified as Other non-current assets on the Statements of Consolidated Financial Position.

Intangible liabilities are classified as Other non-current liabilities on the Statements of Consolidated Financial Position.

The above-market supply contracts relate to the long-term coke and energy supply agreements with SunCoke Energy, which includes SunCoke Middletown, a consolidated VIE.

Refer to NOTE 18 - VARIABLE INTEREST ENTITIES for further information.

PRO FORMA RESULTS

2020 ACQUISITIONS

The following table provides unaudited pro forma financial information, prepared in accordance with Topic 805, as if ArcelorMittal USA and AK Steel had been acquired as of January 1, 2019:

(In millions) December 31, 2020

Revenues $ 12,837

Net loss attributable to Cliffs shareholders ( 520 )

The unaudited pro forma financial information has been calculated after applying our accounting policies and adjusting the historical results with pro forma adjustments, net of tax, that assume the 2020 Acquisitions occurred on January 1, 2019.

Significant pro forma adjustments include the following:

The elimination of intercompany revenues between Cliffs and ArcelorMittal USA and AK Steel of $ 844 million for the year ended December 31, 2020.

The 2020 pro forma net loss was adjusted to exclude $ 96 million of non-recurring inventory acquisition accounting adjustments incurred during the year ended December 31, 2020.

The elimination of non-recurring transaction costs incurred by Cliffs, AK Steel and ArcelorMittal USA in connection with the 2020 Acquisitions were $ 93 million for the year ended December 31, 2020.

The 2020 pro forma net loss was adjusted to exclude restructuring costs of $ 1,820 million of non-recurring costs incurred by ArcelorMittal USA prior to the AM USA Transaction.

The 2020 pro forma net loss was adjusted to exclude $ 140 million for the year ended December 31, 2020, for the impact of reversal of the fees charged for management, financial and legal services under the Industrial Franchise Agreement with the former parent.

Total other pro forma adjustments included reduced expenses of $ 32 million for the year ended December 31, 2020, primarily due to decreased depreciation expense and pension and OPEB expense, offset partially by increased interest and amortization expense.

The income tax impact of pro forma transaction adjustments that affect Net income (loss) attributable to Cliffs shareholders at a statutory rate of 24.3 % resulted in an increased benefit to Income tax benefit (expense) of $ 170 million for the year ended December 31, 2020.

FPT ACQUISITION

The following table provides unaudited pro forma financial information, prepared in accordance with Topic 805, as if FPT had been acquired as of January 1, 2020:

Year Ended December 31,

(In millions) 2021 2020

(In millions) December 31, 2021

Revenues $ 21,701

Net income (loss) attributable to Cliffs shareholders 3,074 ( 526 )

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Net income attributable to Cliffs shareholders 3,074

There were no significant pro forma adjustments for the FPT Acquisition.

The unaudited pro forma financial information does not reflect the potential realization of synergies or cost savings, nor does it reflect other costs relating to the integration of the acquired companies.

This unaudited pro forma financial information should not be considered indicative of the results that would have actually occurred if the 2020 Acquisitions had been consummated on January 1, 2019, or if the FPT Acquisition had been consummated on January 1, 2020, nor are they indicative of future results.

This unaudited pro forma financial information should not be considered indicative of the results that would have actually occurred if the FPT Acquisition had been consummated on January 1, 2020, nor are they indicative of future results.

NOTE 4 - REVENUES

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(In millions) 2023 2022 2021

Direct automotive $ 6,661 $ 4,726 $ 2,062

Automotive $ 7,440 $ 6,661 $ 4,726

Infrastructure and manufacturing 5,612 5,869 5,380

4 unchanged sentences

Other Businesses:

Direct automotive 478 426 329

Automotive 545 478 426

Infrastructure and manufacturing 38 52 47

2 unchanged sentences

Total revenues $ 21,996 $ 22,989 $ 20,444

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The following table represents our Revenues by product line:

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Total revenues $ 21,996 $ 22,989 $ 20,444

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NOTE 5 - SEGMENT REPORTING

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All intersegment transactions were eliminated in consolidation.

We allocate Corporate Selling, general and administrative expenses to our operating segments.

We evaluate performance on an operating segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure.

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Eliminations ( 5 ) 11 ( 12 )

11 ( 12 ) ( 10 )

Total Adjusted EBITDA $ 1,911 $ 3,169 $ 5,277

1 In 2022, we began allocating Corporate Selling, general and administrative expenses to our operating segments.

Prior periods have been adjusted to reflect this change.

The Eliminations line now only includes sales between segments.

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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:

Year Ended December 31,

(In millions) 2023 2022 2021

Net income (loss) $ 1,376 $ 3,033 $ ( 81 )

Net income $ 450 $ 1,376 $ 3,033

Interest expense, net ( 289 ) ( 276 ) ( 337 )

Income tax benefit (expense) ( 423 ) ( 773 ) 111

Income tax expense ( 148 ) ( 423 ) ( 773 )

Depreciation, depletion and amortization ( 973 ) ( 1,034 ) ( 897 )

1 unchanged sentence

EBITDA from noncontrolling interests 1

Gain (loss) on extinguishment of debt ( 75 ) ( 88 ) 130

Acquisition-related expenses and adjustments ( 12 ) ( 1 ) ( 197 )

Goodwill impairment ( 125 ) — —

Non-cash gain on sale of business 28 — —

Loss on extinguishment of debt — ( 75 ) ( 88 )

Asset impairment — ( 29 ) —

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Other Businesses 657 836

Intersegment eliminations ( 507 ) ( 521 )

Total segment assets 17,030 18,385

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Total goodwill $ 1,005 $ 1,130

The increase of $ 14 million in the balance of Goodwill in our Steelmaking segment as of December 31, 2022, compared to December 31, 2021, is due to the change in estimated identified goodwill as a result of measurement period adjustments to the purchase price allocation for the acquisition of FPT.

Refer to NOTE 3 - ACQUISITIONS for further details.

Our 2023 annual goodwill impairment analysis resulted in a full impairment charge of $ 125 million for goodwill related to our Tooling and Stamping reporting unit.

The fair value of our Tooling and Stamping reporting unit was estimated using the discounted cash flow methodology (level 3 within the fair value hierarchy), which considers forecasted cash flows discounted at an estimated weighted average cost of capital.

The decline in the fair value of our Tooling and Stamping reporting unit below its carrying value during 2023 resulted from forgoing previous investment and capital plans in favor of other opportunities and an increase in the discount rate.

INTANGIBLE ASSETS AND LIABILITIES

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

Amortization expense related to intangible assets was $ 13 million and $ 10 million for the years ended December 31, 2022 and 2021, respectively.

Amortization expense related to intangible assets was $ 13 million for both the years ended December 31, 2023 and 2022.

Estimated future amortization expense related to intangible assets is $ 13 million annually for the years 2024 through 2028.

Income from amortization related to intangible liabilities was $ 5 million and $ 7 million for the years ended December 31, 2022 and 2021, respectively.

Income from amortization related to intangible liabilities was $ 5 million for both the years ended December 31, 2023 and 2022.

Estimated future amortization income related to the intangible liabilities is $ 5 million annually for the years 2024 through 2028.

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Cliffs 6.990 % 829 829

6.750 % 2026 Senior Secured Notes

Cliffs 6.99 % 829 845

Senior Unsecured Notes:

1.500 % 2025 Convertible Senior Notes

Cliffs 6.26 % — 294

7.000 % 2027 Senior Notes

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Cliffs 4.875 % 325 325

IRBs AK Steel Various — 66

ABL Facility 3

6.250 % 2040 Senior Notes

Cliffs 6.340 % 235 235

ABL Facility Cliffs 2

Total debt 3,192 4,306

4 unchanged sentences

as borrower under our ABL Facility.

3 Our ABL Facility annual effective interest rate was 5.60 % and 1.87 %, respectively, as of December 31, 2022 and December 31, 2021.

3 Our ABL Facility annual effective interest rate was 5.60 % as of December 31, 2022.

OUTSTANDING SENIOR SECURED NOTES

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We may redeem the 6.750 % 2026 Senior Secured Notes in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders of the 6.750% 2026 Senior Secured Notes.

The 6.750% 2026 Senior Secured Notes became redeemable on March 15, 2022 at a redemption price equal to 105.063 % of the principal amount thereof, and decrease to 103.375 % on March 15, 2023, 101.688 % on March 15, 2024 and are redeemable at par beginning on March 15, 2025.

The 6.750% 2026 Senior Secured Notes are redeemable at a price equal to 103.375 % of the principal amount thereof, decreasing to 101.688 % on March 15, 2024 and are redeemable at par beginning on March 15, 2025.

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

2 unchanged sentences

however, there are no financial covenants.

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OUTSTANDING SENIOR UNSECURED NOTES

CLEVELAND-CLIFFS INC.

UNSECURED SENIOR NOTES

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, which commenced 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

76 | CLF 2023 FORM 10-K

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.

CLEVELAND-CLIFFS INC.

OTHER OUTSTANDING UNSECURED SENIOR NOTES

The following represents a summary of our other unsecured senior notes' maturity and interest payable due dates:

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The 7.000 % 2027 Senior Notes may be redeemed, in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders.

The 7.000% 2027 Senior Notes became redeemable on March 15, 2022 at a redemption price equal to 103.500 % of the principal amount thereof, and decrease to 102.333 % on March 15, 2023, 101.167 % on March 15, 2024 and are redeemable at par beginning on March 15, 2025.

The 7.000% 2027 Senior Notes are redeemable at a price equal to 102.333 % of the principal amount thereof, decreasing to 101.167 % on March 15, 2024 and are redeemable at par beginning on March 15, 2025.

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

The 5.875 % 2027 Senior Notes became redeemable on June 1, 2022 at a redemption price equal to 102.938 % of the principal amount thereof, and decrease to 101.958 % on June 1, 2023, 100.979 % on June 1, 2024 and are redeemable at par beginning on June 1, 2025.

The 5.875 % 2027 Senior Notes may be redeemed, in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders.

The 5.875 % 2027 Senior Notes are redeemable at a price equal to 101.958 % of the principal amount thereof, decreasing to 100.979 % on June 1, 2024 and are redeemable at par beginning on June 1, 2025.

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

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The 4.875% 2031 Senior Notes are redeemable beginning on March 1, 2026, at a redemption price equal to 102.438 % of the principal amount thereof, decreasing to 101.625 % on March 1, 2027, 100.813 % on March 1, 2028 and are redeemable at par beginning on March 1, 2029.

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

8 unchanged sentences

These notes contain no financial covenants.

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The 7.000 % 2027 AK Senior Notes may be redeemed, in whole or in part, at any time at our option upon not less than 30, and not more than 60, days' prior notice sent to the holders.

The 7.000% 2027 AK Senior Notes became redeemable on March 15, 2022 at a redemption price equal to 103.500 % of the principal amount thereof, and decrease to 102.333 % on March 15, 2023, 101.167 % on March 15, 2024 and are redeemable at par beginning on March 15, 2025.

The 7.000% 2027 AK Senior Notes are redeemable at a price equal to 102.333 % of the principal amount thereof, decreasing to 101.167 % on March 15, 2024 and are redeemable at par beginning on March 15, 2025.

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

We have an ABL Facility which provides for up to $ 4.5 billion in borrowings, including a $ 555 million sublimit for the issuance of letters of credit and a $ 200 million sublimit for swingline loans.

The ABL Facility will mature upon the earlier of March 13, 2025 or 91 days prior to the maturity of certain other material debt.

On June 9, 2023, we entered into the Fourth ABL Amendment to our ABL Facility.

The Fourth ABL Amendment increased the amount of tranche A revolver commitments thereunder by an additional $ 250 million to an aggregate principal amount of $ 4.75 billion.

As of December 31, 2023, the ABL Facility provides for up to $ 4.75 billion in borrowings, including a $ 555 million sublimit for the issuance of letters of credit and a $ 200 million sublimit for swingline loans.

The Fourth ABL Amendment also extended the maturity date of all commitments under the ABL Facility from March 13, 2025 to June 9, 2028 or 91 days prior to the maturity of certain other material debt.

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

Borrowings under the 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 %.

In addition, there is an unused commitment fee of between 0.25 % and 0.35 %, which is applied to the unused portion of the ABL Facility.

The ABL Facility and certain bank products and hedge obligations are guaranteed by certain of our existing wholly owned U.S.

2 unchanged sentences

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.

We may amend our ABL Facility to replace the LIBOR rate with one or more secured overnight financing based rates or an alternative benchmark rate, giving consideration to any evolving or then-existing convention for similar dollar denominated syndicated credit facilities for such alternative benchmarks.

If we do not amend or replace the ABL Facility, the ABL Facility provides a mechanism to automatically transition to a SOFR-based benchmark when all U.S.

dollar LIBOR settings are no longer provided or are no longer representative.

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.

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For certain events of default related to insolvency and receivership, the commitments of the lenders will be automatically terminated and all outstanding loans and other amounts will become immediately due and payable.

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

1 unchanged sentence

Available borrowing base on ABL Facility 1

Borrowings ( 1,864 )

Letter of credit obligations 2

Borrowing capacity available $ 4,341

1 As of December 31, 2022, the ABL Facility has a maximum available borrowing base of $ 4.5 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.

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DEBT EXTINGUISHMENTS - 2022

On January 18, 2022, we redeemed all of our outstanding 1.500% 2025 Convertible Senior Notes through a combination settlement, with the aggregate principal amount of $ 294 million paid in cash, and 24 million common shares, with a fair value of $ 499 million, delivered to noteholders in settlement of the premium due per the terms of the indenture, plus cash in respect of the accrued and unpaid interest on the 1.500% 2025 Convertible Senior Notes to, but not including, the redemption date per the terms of the indenture.

During the year ended December 31, 2022, we redeemed all $ 607 million remaining aggregate principal amount outstanding of our 9.875% 2025 Senior Secured Notes and all $ 66 million aggregate principal amount outstanding of the IRBs with available liquidity.

Additionally, during the year ended December 31, 2022, we repurchased $ 351 million in aggregate principal amount of our outstanding senior notes of various tranches with available liquidity at an average price of 92 % of par.

The following is a summary of the debt extinguished and the respective impact on extinguishment:

Year Ended December 31, 2022

(In millions) Debt Extinguished Gain (Loss) on Extinguishment

9.875% 2025 Senior Secured Notes $ 607 $ ( 85 )

6.750% 2026 Senior Secured Notes 16 ( 1 )

1.500% 2025 Convertible Senior Notes 294 ( 16 )

4.625% 2029 Senior Notes 132 9

4.875% 2024 Senior Secured Notes 175 13

6.250% 2040 Senior Notes 28 3

Total $ 1,318 $ ( 75 )

1 As of December 31, 2023, the ABL Facility has a maximum borrowing base of $ 4.75 billion.

The available 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, operating agreements, employee severance, environmental obligations, workers' compensation, and insurance obligations.

DEBT MATURITIES

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NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS

We offer defined benefit pension plans, defined contribution pension plans and OPEB plans to a significant portion of our employees and retirees.

We offer benefits through defined benefit pension plans, defined contribution pension plans and OPEB plans to a significant portion of our employees and retirees.

Benefits are also provided through multiemployer plans for certain union members.

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Certain labor agreements require the funding of VEBAs, which, depending on funding levels, may be used to reimburse the employer for paid benefits.

USW LABOR AGREEMENTS

On September 30, 2022, a new 47-month labor agreement with the USW was ratified.

The contract became effective on October 1, 2022, and covers approximately 2,000 USW-represented employees at our United Taconite, Hibbing Taconite, Tilden and Empire mines.

For the affected defined benefit pension plans, we agreed to increase the pre-2023 service multiplier to $ 115 and the service multiplier applicable to service beginning in 2023 to $ 126 for retirements after January 1, 2023.

For the affected OPEB plans, we introduced a new Medicare Advantage plan to the Medicare-eligible retirees.

Effective January 1, 2023, all Medicare-eligible retirees covered under this agreement will switch to this plan.

The Medicare Advantage plan will offer similar benefits to the previous healthcare plan but will have significantly lower premiums due to increased government subsidies and our successful use of scale to negotiate better healthcare rates with our vendors.

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On October 12, 2022, a new 4-year labor agreement with the USW, covering 12,000 USW-represented employees at 13 operating locations, was ratified.

For the affected OPEB plans, we implemented a cap on healthcare costs for employees retiring after January 1, 2026.

Separate from the labor agreements, we negotiated favorable Medicare Advantage Prescription Drug healthcare rates, which will go into effect January 1, 2023.

Additionally, we paused the contribution requirement to the Cleveland-Cliffs Steel LLC VEBA based on earnings for the remainder of the labor agreement with the USW, which expires in September of 2026.

Additionally, we increased our contribution rate to the Steelworkers Pension Trust by $ 0.50 to $ 4.00 per eligible hour with both agreements.

The increase was effective November 1, 2022.

These labor agreements triggered interim remeasurements on their ratification dates.

All affected plans were remeasured again at December 31, 2022.

OBLIGATIONS AND FUNDED STATUS

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Plan amendments 3 122 8 ( 163 )

Actuarial gain ( 1,236 ) ( 131 ) ( 1,781 ) ( 456 )

Actuarial loss (gain) 116 ( 1,236 ) ( 158 ) ( 1,781 )

Benefits paid ( 436 ) ( 431 ) ( 163 ) ( 232 )

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Current liabilities 1

( 18 ) ( 30 ) ( 76 ) ( 81 )

Non-current liabilities ( 408 ) ( 473 ) ( 413 ) ( 585 )

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Net amount recognized $ ( 198 ) $ ( 240 ) $ ( 2,164 ) $ ( 2,152 )

1 Current liabilities are classified within Other current liabilities on the Statements of Consolidated Financial Position.

The accumulated benefit obligation for all defined benefit pension plans was $ 4,557 million and $ 4,628 million at December 31, 2023 and 2022, respectively.

22 unchanged sentences

Demographic updates 1

( 5 ) ( 102 ) ( 208 ) ( 7 )

Mortality ( 2 ) 17 ( 11 ) —

Per capita healthcare costs 1

Per capita healthcare costs and healthcare trend 2

— — 33 ( 1,333 )

Other ( 1 ) ( 8 ) — —

Actuarial gain on benefit obligation ( 1,236 ) ( 131 ) ( 1,781 ) ( 456 )

Actuarial loss (gain) on benefit obligation 116 ( 1,236 ) ( 158 ) ( 1,781 )

Actual returns on assets under (over) expected ( 60 ) 1,165 ( 24 ) 134

5 unchanged sentences

Total recognized in other comprehensive loss (income) $ 42 $ 41 $ ( 12 ) $ ( 1,764 )

1 The gain in per capita healthcare costs in 2022 relating to our OPEB plans is primarily due to the negotiation of favorable Medicare Advantage Prescription Drug healthcare rates, which will go into effect January 1, 2023.

Additionally, we expanded the Medicare Advantage program to retirees on some of our other plans which added additional savings.

1 In 2023, the OPEB plans generated an actuarial gain relating to updates for demographic experience.

We had adjustments relating to retirements, participation, persistency and census data updates.

2 The gain in per capita healthcare costs in 2022 relating to our OPEB plans is primarily due to the negotiation of favorable Medicare Advantage Prescription Drug healthcare rates, which went into effect on January 1, 2023.

Additionally, we expanded the Medicare Advantage program to retirees on some of our other plans during the 2022 USW labor negotiations which added additional savings.

The negotiated rates extend through 2025.

3 In 2022, the plan amendment gains and losses were generated from the ratification of the 2022 USW labor agreements.

The plan amendment loss related to our pension plans is attributable to the increase to the pre-2023 service multiplier to $ 115 and the service multiplier applicable to service beginning in 2023 to $ 126 for retirements after January 1, 2023.

The plan amendment gain related to our OPEB plans is attributable to the implementation of a cap on healthcare costs for employees retiring after January 1, 2026 on one of our Cleveland-Cliffs Steel LLC plans as well as the extension of the Medicare Advantage offering to plans that previously didn't have the program.

The plan amendment gain related to our OPEB plans is attributable to the implementation of a cap on healthcare costs for employees retiring after January 1, 2026 on one of our Cleveland-Cliffs Steel LLC plans as well as the extension of the Medicare Advantage program to plans that previously did not have the offering.

81 | CLF 2023 FORM 10-K

3 unchanged sentences

Funded OPEB plans are not subject to minimum regulatory funding requirements, but rather amounts are contributed pursuant to bargaining agreements.

Contributions toward unfunded OPEB plans are payments made directly from corporate assets.

Contributions toward unfunded OPEB plans are payments made directly from corporate assets and are displayed net of participant contributions and other reimbursements.

Company contributions and payments we expect to make in 2024, and made in 2023 and 2022 are as follows:

Pension Benefits 1

Pension Benefits OPEB

(In millions) VEBA 1

3 unchanged sentences

2024 (Expected) 122 — 66 66

1 The 2021 pension contributions include $ 118 million in deferred 2020 pension contributions in connection with the CARES Act that were paid on January 4, 2021.

1 Pursuant to the applicable bargaining agreements, benefits can be paid from certain VEBAs that are at least 70% funded (all VEBAs were over 70% funded at December 31, 2023).

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VEBA withdrawals are represented net of direct payments.

There will be no further contributions to the Cleveland-Cliffs Steel LLC VEBA based on earnings for the remainder of labor agreement with the USW which expires September of 2026.

There will be no further contributions to the Cleveland-Cliffs Steel LLC VEBA based on earnings for the remainder of the labor agreement with the USW, which expires in September of 2026.

ESTIMATED FUTURE BENEFIT PAYMENTS

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Discount rates for expense are calculated using the granular approach for each plan.

Depending on the plan, we use either company-specific base mortality tables or tables issued by the Society of Actuaries.

We use company-specific base mortality tables for healthy annuitants in qualified pension plans.

We use tables issued by the Society of Actuaries for non-annuitants in qualified pension plans, all nonqualified pension participants and OPEB participants.

For tables issued by the Society of Actuaries, we use Pri-2012 mortality tables with adjustments for blue collar, white collar or no collar depending on the plan.

Mortality is projected for all plans using Scale MP-2021 with generational projection for both years.

In 2023, we switched two OPEB plans from company-specific base mortality tables to the Pri-2012 mortality tables to align with our other OPEB plans.

In 2022, we switched one pension plan from the Pri-2012 mortality tables to company-specific base mortality tables.

The following represents weighted-average assumptions used to determine benefit obligations:

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1 The health care trend rate for the next year is weighted for all of our OPEB plans and factors in our Medicare Advantage Prescription Drug pricing arrangements.

In 2023, we increased our assumed health care cost trend rate for self insured plans to 6.50% from 6.00% for 2024, which grades down on a linear basis to 4.50% by 2032.

The health care trend rate for the Medicare Advantage Prescription Drug plans is set to match the negotiated rates through 2025 and then converts to the same trend rate as our self insured plan.

In 2023, we layered in a one time increase to the healthcare trend rate for the Medicare Advantage Prescription Drug plans for 2026.

These increases align with our expectation of higher health care costs due to increased popularity of specialty medication, current carrier and provider negotiations and impacts from third party funding associated with the Inflation Reduction Act.

Our investment objectives with respect to our pension and OPEB assets are to maximize investment returns within reasonable and prudent levels of risk and maintain sufficient liquidity to meet benefit obligations over the life of each plan.

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Fixed income investments primarily include corporate bonds and government debt securities, which are generally customized based on a plan's obligation duration.

To enhance our diversification, we also invest in hedge funds, private equity, structured credit, real estate and absolute return fixed income.

To enhance our diversification, we also invest in hedge funds, private equity, structured credit and real estate.

We review investment performance, asset allocations and policy compliance on a quarterly basis.

In the fourth quarter of 2022, we increased our fixed income allocation for one of our more mature pension plans, which totaled $ 1.2 billion on December 31, 2022.

We also transitioned $ 2.9 billion of pension and OPEB assets to be managed by an external investment advisor in a delegated manner.

Due to the timing of this transition, the 2023 target allocation will not match our actual December 31, 2022 asset mix, as the investment strategy will require us to start reallocating assets in the first quarter of 2023.

The anticipated changes in our asset allocation will be reflected in our 2023 expected return on assets.

In the fourth quarter of 2022, we also transitioned $ 2.9 billion of pension and OPEB assets to be managed by an external investment advisor in a delegated manner, which resulted in a shift to treasury based hedging, a higher alternative investment allocation and reduction to equity risk exposure.

These changes resulted in a shift in underlying investments and increased our weighted-average expected return on plan assets in 2023 compared to 2022.

The expected return on plan assets are calculated on a plan-by-plan basis and take into account each plan's strategic asset allocation.

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Treasury STRIPS which are priced daily through a bond pricing vendor as well as corporate bonds, mortgage-backed securities and non-US bonds which have valuations based on their bid-ask spreads or quoted prices of securities with similar characteristics.

Hedge funds, private equity, structured credit and real estate investments are classified as Level 3 due to the absence of quoted market prices and inherent lack of liquidity.

Certain investments in hedge funds, private equity, structured credit and real estate are classified as Level 3 due to the absence of quoted market prices and inherent lack of liquidity.

These investments are generally valued at estimated fair value based on financial inputs from our investment advisors, investment managers or third party appraisers.

Certain Level 3 investments may be lagged up to three months if there are no financial inputs available.

Investment commitments are made in private equity funds and capital calls are made over the life of the funds to fund the commitments.

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corporate bonds 214 146 94 117 — — 49 — 357 263

and other bonds 3 — — — — — — — 3 —

Hedge funds — — — — 10 14 — — 10 14

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Sales ( 160 ) ( 29 ) ( 11 ) ( 9 )

Acquired through business combinations — — — —

Ending balance — December 31 $ 770 $ 912 $ 27 $ 35

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FIP/RP Status Pending/Implemented 2

Contributions Surcharge Imposed 3

Contributions

(in millions) Surcharge Imposed 3

Expiration Date of Collective Bargaining Agreement 4

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5 Plans that are not individually significant to our Company are presented in aggregate.

With the ratification of our USW labor agreements in 2022, we increased our contribution rate to the Steelworkers Pension Trust by $ 0.50 to $ 4.00 per eligible hour.

With the ratification of the 2022 USW labor agreements, we increased our contribution rate to the Steelworkers Pension Trust by $ 0.50 to $ 4.00 per eligible hour.

The increase was effective November 1, 2022.

5 unchanged sentences

the 2021 Equity Plan, the A&R 2015 Equity Plan and the 2012 Amended Equity Plan.

On April 28, 2021, our shareholders approved the 2021 Equity Plan, which succeeded the A&R 2015 Equity Plan and made available 26.0 million new common shares plus 2.5 million shares remaining available under the A&R 2015 Equity Plan.

As of December 31, 2023, there were 23.0 million remaining shares available for grant under the 2021 Equity Plan.

1 unchanged sentence

however, all awards previously granted under the predecessor plans will continue in accordance with the terms of the outstanding awards.

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Upon vesting of share-based compensation awards, we issue shares from treasury shares before issuing new shares.

Forfeitures are recognized when they occur.

STOCK-BASED COMPENSATION EXPENSE

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Selling, general and administrative expenses ( 32 ) ( 23 ) ( 16 )

Acquisition-related costs — — ( 2 )

Stock based compensation expense ( 41 ) ( 28 ) ( 18 )

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This expense is expected to be recognized over the remaining weighted-average period of 1.7 years.

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PERFORMANCE SHARES

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Granted 1.1 31.88 1.0 28.46 0.7 25.12

Granted - replacement awards — — — — 1.6 4.59

Distributed ( 1.8 ) 6.50 ( 1.1 ) 17.04 ( 1.3 ) 11.74

2 unchanged sentences

Outstanding at end of year 2.5 $ 29.09 2.7 $ 18.53 2.4 $ 14.04

On March 13, 2020, we granted 1.0 million long-term performance plan awards and 0.5 million performance shares as AK Steel replacement awards.

The long-term performance plan awards are based on a three-year Adjusted EBITDA metric.

We value our performance shares using a Monte Carlo simulation on the grant date.

The outstanding performance shares vest over a period of three years and are intended to be paid out in common shares.

1 unchanged sentence

The number of shares actually earned at the end of the three-year period will vary, based on performance, from 0 % to 200 % of the number of performance shares granted.

We value our performance shares using a Monte Carlo simulation on the grant date.

A correlation matrix of historical and projected stock prices was developed for both the Company and its predetermined peer group of metals and mining companies.

The fair value assumes that the performance 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 metals and mining 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.

RESTRICTED STOCK UNITS

4 unchanged sentences

Granted 1.2 19.30 1.0 19.41 0.7 17.45

Granted - replacement awards — — — — 0.2 4.87

Distributed ( 0.9 ) 5.99 ( 0.6 ) 10.47 ( 0.6 ) 7.31

1 unchanged sentence

Outstanding at end of year 2.5 $ 18.87 2.4 $ 13.66 2.1 $ 10.31

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We value our restricted stock units using the closing price of our common shares on the grant date.

1 unchanged sentence

Most restricted stock units were granted under three-year cliff vesting terms.

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STOCK OPTIONS

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Outstanding at beginning of year 0.6 $ 10.39 1.0 $ 12.75 2.5 $ 11.60

Granted - replacement awards — — — — 2.0 11.86

Exercised ( 0.1 ) 10.22 ( 0.3 ) 16.55 ( 1.5 ) 10.36

3 unchanged sentences

Stock options granted to date generally vest over a period from one to three years with an expiration date at ten years from the date of grant.

On March 13, 2020, we granted 2.0 million options as AK Steel replacement awards.

The weighted average fair value of the converted options was $ 0.51 per share and was calculated using the Black-Scholes option-pricing model.

The total intrinsic value of options exercised in 2023 was $ 1 million and the amount in 2022 was $ 3 million.

As of December 31, 2023, all outstanding options were exercisable.

For options outstanding at December 31, 2023, the weighted-average remaining contractual life was 2.1 years and the aggregate intrinsic value was $ 5 million.

For options exercisable at December 31, 2022, the weighted-average remaining contractual life was 2.4 years and the aggregate intrinsic value was $ 4 million.

NONEMPLOYEE DIRECTORS

5 unchanged sentences

NOTE 11 - INCOME TAXES

Income (loss) from continuing operations before income taxes includes the following components:

Income from continuing operations before income taxes includes the following components:

Year Ended December 31,

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Total $ 597 $ 1,796 $ 3,803

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The components of the income tax provision (benefit) on continuing operations consist of the following:

The components of the income tax expense from continuing operations consist of the following:

Year Ended December 31,

(In millions) 2023 2022 2021

Current provision (benefit):

Current provision:

United States federal $ 4 $ 201 $ 14

5 unchanged sentences

Foreign 10 ( 5 ) ( 10 )

Total income tax provision (benefit) from continuing operations $ 423 $ 773 $ ( 111 )

Total income tax expense from continuing operations $ 148 $ 423 $ 773

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Reconciliation of our income tax attributable to continuing operations computed at the U.S.

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Percentage depletion in excess of cost depletion ( 32 ) ( 5 ) ( 49 ) ( 3 ) ( 99 ) ( 3 )

Valuation allowance 14 2 — — — —

Unrecognized tax benefits 7 1 2 — 9 —

State taxes, net 28 5 71 4 86 2

Federal & state provision to return ( 20 ) ( 3 ) 27 1 ( 2 ) —

Income not subject to tax ( 11 ) ( 2 ) ( 9 ) — ( 9 ) —

Goodwill impairment 26 4 — — — —

Other items, net 11 2 4 — ( 11 ) —

Provision for income tax expense (benefit) and effective income tax rate including discrete items $ 423 23 % $ 773 20 % $ ( 111 ) 57 %

The decrease in income tax expense in 2022, as compared to the prior year, is directly related to the decrease in the pre-tax book income year-over-year.

The increase in income tax expense in 2021 from income tax benefit in 2020 is directly correlated to the increase in pre-tax book income year-over-year.

Provision for income tax expense and effective income tax rate including discrete items $ 148 25 % $ 423 23 % $ 773 20 %

The decreases in income tax expense in 2023, as compared to 2022, as well as 2022 compared to 2021 are predominately related to the decrease in the pre-tax book income year-over-year.

The components of income taxes for other than continuing operations consisted of the following:

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Total $ 57 $ ( 399 ) $ ( 227 )

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Significant components of our deferred tax assets and liabilities are as follows:

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The foreign NOLs begin to expire in 2035.

We had gross interest expense limitation carryforwards of $ 77 million and $ 18 million for the years ended December 31, 2022 and 2021, respectively.

This interest expense can be carried forward indefinitely.

For the year ended December 31, 2023, we had no gross interest expense limitation carryforwards.

For the year ended December 31, 2022, we had $ 77 million gross interest expense limitation carryforwards.

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The changes in the valuation allowance are presented below:

2 unchanged sentences

Change in valuation allowance:

Included in income tax benefit ( 19 ) ( 82 ) ( 3 )

Increase (decrease) from acquisitions — ( 345 ) 398

Included in income tax expense 6 ( 19 ) ( 82 )

Decrease from acquisitions — — ( 345 )

Balance at end of year $ 396 $ 390 $ 409

At December 31, 2023 and 2022, we have a valuation allowance recorded of $ 356 million and $ 342 million, respectively, related to foreign deferred tax assets, and an additional $ 40 million and $ 48 million, respectively, against certain state NOLs, which are expected to expire before utilization.

During 2023, we recorded a $ 14 million valuation allowance against a portion of our Canadian deferred tax assets due to losses in recent years.

We intend to maintain a valuation allowance against these deferred tax assets, unless and until sufficient positive evidence exists to support the realization of such assets.

During 2021, we recorded a decrease to the valuation allowance of $ 345 million related to the election filed with our 2020 federal tax return to waive the pre-acquisition NOLs that are limited under Section 382 of the IRC.

An offsetting decrease was recorded in the NOL deferred tax asset in the same period.

These amounts related to a portion of the $ 398 million valuation allowance recorded during 2020 through opening balance sheet adjustments to reflect the portion of federal and state NOLs that are limited under Section 382 of the IRC acquired through the AK Steel Merger.

Our losses in Luxembourg in recent periods represent sufficient negative evidence to require a full valuation allowance against the deferred tax assets in that jurisdiction.

We intend to maintain a valuation allowance against the deferred tax assets related to these operating losses, unless and until sufficient positive evidence exists to support the realization of such assets.

At December 31, 2023 and 2022, we had no cumulative undistributed earnings of foreign subsidiaries included in retained earnings.

7 unchanged sentences

Lapses in statutes of limitations — — ( 10 )

Increases from acquisitions — — 75

Unrecognized tax benefits balance as of December 31 $ 76 $ 58 $ 35

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The following table presents the classification of unrecognized tax benefits on the Statements of Consolidated Financial Position:

Balance Sheet Location (In millions) 2022 2021

Other current liabilities — $ 1

Other non-current liabilities 58 34

At December 31, 2023 and 2022, we had unrecognized tax benefits of $ 76 million and $ 58 million, respectively, included in Other non-current liabilities on the Statements of Consolidated Financial Position.

If the unrecognized tax benefits were recognized, the full $ 76 million would impact the effective tax rate.

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Our operating leases consist primarily of leases for land, office space, rail cars and storage tanks.

Our finance leases consist primarily of mining equipment, an on-site coke battery and rail cars.

We use our incremental borrowing rate as the discount rate to determine the present value of the lease payments, as our leases do not have readily determinable implicit discount rates.

Our finance leases consist primarily of mining equipment and rail cars.

When an implicit discount rate is not readily determinable under our leases, we use our incremental borrowing rate as the discount rate to determine the present value of the lease payments.

Our incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term and amount in a similar economic environment to pay our lease obligations.

2 unchanged sentences

We recognize leased assets and liabilities under these arrangements when we obtain control of the asset.

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Lease costs are presented below:

7 unchanged sentences

Total $ 333 $ 335

Lease terms and discount rates are shown below:

(In millions) 2023

Weighted average lease term (in years):

Operating leases 8

Finance leases 7

Weighted average discount rate:

Operating leases 8 %

Finance leases 6 %

Other information related to leases was as follows:

6 unchanged sentences

Right-of-use assets obtained in exchange for new finance lease liabilities 93 55 50

Weighted-average remaining lease term - operating leases (in years) 9 8

Weighted-average remaining lease term - finance leases (in years) 5 5

Weighted-average discount rate - operating leases 8 % 7 %

Weighted-average discount rate - finance leases 5 % 4 %

1 Right-of-use assets obtained in acquisitions are not included in this figure.

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Future minimum lease payments under noncancellable finance and operating leases as of December 31, 2023 were as follows:

8 unchanged sentences

The current and long-term portions of our finance and operating lease liabilities are included in Other current liabilities and Other non-current liabilities , respectively.

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NOTE 13 - ASSET RETIREMENT OBLIGATIONS

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For indefinitely idled or closed mines, the accretion of the liability is recognized over the anticipated timing of remediation.

As the majority of our asset retirement obligations at our steelmaking operations have indeterminate settlement dates, asset retirement obligations have been recorded at present values using estimated ranges of the economic lives of the underlying assets.

We performed a detailed assessment of our asset retirement obligations related to our active operations most recently in 2020 in accordance with our accounting policy, which requires us to perform an in-depth evaluation of the liability every three years in addition to routine annual assessments.

Asset retirement obligations at our steelmaking operations primarily include the closure and post-closure care for on-site landfills and other waste containment facilities.

Asset retirement obligations have been recorded at present values using settlement dates based on when we expect these facilities to reach capacity and close.

We performed a detailed assessment of our asset retirement obligations related to our active mining operations most recently in 2023 in accordance with our accounting policy, which requires us to perform an in-depth evaluation of the liability every three years in addition to routine annual assessments.

In 2023, we employed third-party specialists to assist in the evaluation.

5 unchanged sentences

1 Includes $ 259 million and $ 277 million related to our active operations as of December 31, 2023 and 2022, respectively.

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

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

(In millions) 2023 2022

Asset retirement obligation as of January 1 $ 520 $ 449

Increase from acquisitions — 116

Decrease from sale of business ( 76 ) —

Reclassification from environmental obligations — 63

3 unchanged sentences

Asset retirement obligation as of December 31 $ 459 $ 520

The increase from revision in estimated cash flows primarily relates to rising electricity costs associated with required water management systems related to closed coal mines in Pennsylvania.

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During 2023, we entered into a membership interest purchase agreement for the sale of the legal entities owning, among other things, our closed coal mines in Pennsylvania, resulting in a decrease to our asset retirement obligation.

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

8 unchanged sentences

Senior notes Level 1 $ 3,137 $ 3,118 $ 2,385 $ 2,311

IRBs Level 1 — — 68 66

ABL Facility - outstanding balance Level 2 — — 1,864 1,864

4 unchanged sentences

We may use cash-settled commodity swaps to hedge the market risk associated with the purchase of certain of our raw materials and energy requirements.

Our hedging strategy is to reduce the effect on earnings from the price volatility of these various commodity exposures, including timing differences between when we incur raw material commodity costs and when we receive sales surcharges from our customers based on those raw materials.

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based on those raw materials.

Independent of any hedging activities, price changes in any of these commodity markets could negatively affect operating costs.

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Commodity Contracts Unit of Measure Maturity Dates 2023 2022

Natural Gas MMBtu January 2023 - May 2025 127,790,000 92,591,000

Zinc Metric tons Not Applicable — 16,092

Electricity Megawatt hours January 2023 - December 2023 432,043 —

Tin Metric tons January 2023 - December 2023 180 —

Natural Gas MMBtu January 2024 - August 2026 168,590,000 127,790,000

Electricity Megawatt hours January 2024 - October 2026 3,501,898 432,043

At December 31, 2023, we expect to reclassify $ 155 million of net losses related to our hedge contracts from Accumulated other comprehensive income into Cost of goods sold during the next 12 months.

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

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On February 10, 2022, our Board of Directors authorized a program to repurchase outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $ 1 billion.

We are not obligated to make any purchases and the program may be suspended or

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discontinued at any time.

We are not obligated to make any purchases and the program may be suspended or discontinued at any time.

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

For the year ended December 31, 2022, we repurchased 12.5 million common shares at a cost of $ 240 million in the aggregate.

For the years ended December 31, 2023 and 2022, we repurchased 10.4 million and 12.5 million common shares, respectively, at a cost of $ 152 million and $ 240 million in the aggregate, respectively.

The cost of our share repurchases excludes the excise tax due under the Inflation Reduction Act.

As of December 31, 2023, there was $ 608 million remaining under the authorization.

1.500% 2025 CONVERTIBLE SENIOR NOTES REDEMPTION

10 unchanged sentences

During the third quarter of 2021, we redeemed all 583,273 shares of our Series B Participating Redeemable Preferred Stock at a redemption price of $ 1.3 billion using borrowings under our ABL Facility.

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AMENDMENT TO ARTICLES OF INCORPORATION

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PREFERRED STOCK

We have 3,000,000 shares of Serial Preferred Stock, Class A, without par value, authorized, of which, none are issued or outstanding as of December 31, 2022.

We also have 4,000,000 shares of Serial Preferred Stock, Class B, without par value, authorized, of which, none are issued or outstanding as of December 31, 2022.

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We have 3,000,000 shares of Serial Preferred Stock, Class A, without par value, authorized, and 4,000,000 shares of Serial Preferred Stock, Class B, without par value, authorized;

no preferred shares were issued or outstanding as of December 31, 2023.

NOTE 17 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

22 unchanged sentences

Losses (gains) reclassified from AOCI to net income 3

Income tax expense (benefit) 2

( 145 ) ( 36 ) 12

Income tax expense (benefit) 2

Net losses (gains) reclassified from AOCI to net income ( 96 ) ( 27 ) 9

2 unchanged sentences

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

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

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

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

4 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 $ 47 million and $ 52 million for the years ended December 31, 2022 and 2021, respectively, which was included in our consolidated Income (loss) from continuing operations before income taxes .

SunCoke Middletown had income before income taxes of $ 52 million and $ 47 million for the years ended December 31, 2023 and 2022, respectively, which was included in our consolidated Income from continuing operations before income taxes .

Additionally, SunCoke Middletown had cash used for capital expenditures of $ 25 million for the year ended December 31, 2023, compared to

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$ 12 million for the year ended December 31, 2022, that are included in our consolidated Purchase of property, plant and equipment on the Statements of Consolidated Cash Flows.

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

11 unchanged sentences

(In millions, except per share amounts) 2023 2022 2021

Income (loss) from continuing operations $ 1,373 $ 3,030 $ ( 82 )

Income from continuing operations $ 449 $ 1,373 $ 3,030

Income from continuing operations attributable to noncontrolling interest ( 51 ) ( 41 ) ( 45 )

Net income (loss) from continuing operations attributable to Cliffs shareholders 1,332 2,985 ( 123 )

Net income from continuing operations attributable to Cliffs shareholders 398 1,332 2,985

Income from discontinued operations, net of tax 1 3 3

Net income (loss) attributable to Cliffs shareholders $ 1,335 $ 2,988 $ ( 122 )

Net income attributable to Cliffs shareholders $ 399 $ 1,335 $ 2,988

Weighted average number of shares:

4 unchanged sentences

Diluted 511 524 558

Earnings (loss) per common share attributable to Cliffs common shareholders - basic 2 :

Earnings per common share attributable to Cliffs common shareholders - basic 2 :

Continuing operations $ 0.78 $ 2.57 $ 5.62

1 unchanged sentence

$ 0.78 $ 2.57 $ 5.63

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

Earnings per common share attributable to Cliffs common shareholders - diluted:

Continuing operations $ 0.78 $ 2.55 $ 5.35

4 unchanged sentences

using this approach, the guidance was applied to transactions outstanding as of the beginning of the fiscal year.

2 For the year ended December 31, 2021, basic earnings per share was calculated by dividing Net income (loss) attributable to Cliffs shareholders , less $ 187 million of earnings attributed to Series B Participating Redeemable Preferred Stock, by the weighted average number of basic common shares outstanding during the period presented.

2 For the year ended December 31, 2021, basic earnings per share was calculated by dividing Net income attributable to Cliffs shareholders , less $ 187 million of earnings attributed to Series B Participating Redeemable Preferred Stock, by the weighted average number of basic common shares outstanding during the period presented.

The following table summarizes the potentially dilutive shares that were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive:

Year Ended December 31,

(In millions) 2023 2022 2021

Employee stock plans 2 — —

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NOTE 20 - COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

We negotiate most of our purchases of chrome, industrial gases and a portion of our electricity under multi-year agreements.

Our purchases of coke are made under annual or multi-year agreements

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with periodic price adjustments.

Our purchases of coke are made under annual or multi-year agreements with periodic price adjustments.

We typically purchase coal under annual fixed price agreements.

3 unchanged sentences

$ 2,984 $ 1,707 $ 1,133 $ 1,025 $ 929 $ 5,365

OTHER COMMERCIAL COMMITMENTS

We use surety bonds and letters of credit to provide financial assurance for certain obligations and statutory requirements.

As of December 31, 2023, we had $ 260 million of surety-backed letters of credit and surety bonds outstanding.

Additionally, as of December 31, 2023, we had $ 56 million of outstanding letters of credit issued under our ABL Facility.

CONTINGENCIES

14 unchanged sentences

Long-term environmental obligations $ 113 $ 118

The decrease in environmental obligations relates to a reclassification of $ 63 million from environmental to asset retirement obligations as of December 31, 2022.

We cannot predict the ultimate costs for each site with certainty because of the evolving nature of the investigation and remediation process.

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However, since we recognize amounts in the consolidated financial statements in accordance with GAAP that exclude potential losses that are not probable or that may not be currently estimable, the ultimate costs of these environmental matters may be higher than the liabilities we currently have recorded in our consolidated financial statements.

Pursuant to RCRA (Resource Conservation and Recovery Act), which governs the treatment, handling and disposal of hazardous waste, the EPA and authorized state environmental agencies may conduct inspections of RCRA-regulated facilities to identify areas where there have been releases of hazardous waste or hazardous constituents into the environment and may order the facilities to take corrective action to remediate such releases.

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take corrective action to remediate such releases.

Likewise, the EPA or the states may require closure or post-closure care of residual, industrial and hazardous waste management units.

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Because of the uncertain status of these investigations, however, we cannot reasonably predict whether or when such spending might be required or its magnitude.

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BURNS HARBOR WATER ISSUES

In August 2019, ArcelorMittal Burns Harbor LLC (n/k/a Cleveland-Cliffs Burns Harbor LLC) suffered a loss of the blast furnace cooling water recycle system, which led to the discharge of cyanide and ammonia in excess of the Burns Harbor plant's NPDES permit limits.

Since that time, the facility has taken numerous steps to prevent recurrence and maintain compliance with its NPDES permit.

We engaged in settlement discussions with the U.S.

Department of Justice, the EPA and the State of Indiana to resolve any alleged violations of environmental laws or regulations arising out of the August 2019 event.

Later stages of the settlement discussions included the Environmental Law and Policy Center (ELPC) and Hoosier Environmental Council (HEC), which had filed a lawsuit on December 20, 2019 in the U.S.

District Court for the Northern District of Indiana alleging violations resulting from the August 2019 event and other Clean Water Act claims.

On February 14, 2022, the United States and the State of Indiana filed a complaint and a proposed consent decree, and on April 21, 2022, the United States, with the consent of all of the parties, filed a motion seeking final approval of the consent decree from the court.

The consent decree was approved by the court with an effective date of May 6, 2022.

The consent decree requires specified enhancements to the mill's wastewater treatment systems and required us to pay a $ 3 million civil penalty, along with other terms and conditions.

Other parties to the consent decree include the United States, the State of Indiana, ELPC and HEC.

The ELPC/HEC civil litigation was dismissed with prejudice on May 12, 2022.

In addition, ArcelorMittal Burns Harbor LLC was served with a subpoena on December 5, 2019, from the United States District Court for the Northern District of Indiana, relating to the August 2019 event and has responded to the subpoena requests, including follow-up requests.

With the resolution of monetary sanctions and injunctive relief requirements under the consent decree, we do not believe that the costs to resolve any other third-party claims, including potential natural resource damages claims, that may arise out of the August 2019 event are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or cash flows.

In addition to the foregoing matters, we are or may be involved in proceedings with various regulatory authorities that may require us to pay fines, comply with more rigorous standards or other requirements or incur capital and operating expenses for environmental compliance.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

MINERAL RESERVES — ASSET RETIREMENT OBLIGATIONS, VALUATION OF GOODWILL AND LONG-LIVED ASSETS AND DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT — REFER TO NOTES 5, 6, 7 AND 13 TO THE FINANCIAL STATEMENTS

IRON ORE MINERAL RESERVES — IMPACT ON ASSET RETIREMENT OBLIGATIONS — REFER TO NOTE 13 TO THE FINANCIAL STATEMENTS

Critical Audit Matter Description

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Changes in any of the judgments or assumptions related to the iron ore mineral reserve inputs can have a significant impact with respect to the accrual for asset retirement obligations, the impairment of goodwill and long-lived asset groups and the amount of depreciation, depletion, and amortization expense.

The closure date utilized in the Company’s accrual for asset retirement obligations for each of their active iron ore mine operations is determined based on the exhaustion date of the remaining iron ore mineral reserves, which is dependent on the estimate of iron ore mineral reserves.

The consolidated asset retirement obligation balance was $459 million as of December 31, 2023, of which $171 million related to active iron ore mine operations.

The total goodwill balance associated with the Company’s Steelmaking reportable segment was $956 million as of December 31, 2022.

The total asset balance associated with the Company’s Steelmaking reportable segment was $18,070 million as of December 31, 2022, of which $1,559 million related to long-lived assets associated with the Company’s combined iron ore mine asset groups.

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Depreciation, depletion and amortization expense for the Company’s combined iron ore mine asset groups was $161 million for the year ended December 31, 2022.

Given the significant judgments and assumptions made by management to estimate iron ore mineral reserves and the sensitivity of changes to iron ore mineral reserve estimates on the Company’s recorded asset retirement obligations, goodwill and long-lived asset impairment considerations and calculated depreciation, depletion and amortization expense, performing audit procedures to evaluate the reasonableness of management’s judgments and estimates related to the iron ore mineral reserve inputs required a high degree of auditor judgment and an increased extent of effort.

Given the significant judgments and assumptions made by management to estimate iron ore mineral reserves and the sensitivity of changes to iron ore mineral reserve inputs on the Company’s recorded asset retirement obligations, performing audit procedures to evaluate the reasonableness of management’s judgments and estimates related to the iron ore mineral reserve inputs required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s significant judgments and assumptions related to iron ore mineral reserve quantities and the related iron ore mine closure dates included the following, among others:

• We tested the operating effectiveness of internal controls related to the Company’s estimation of iron ore mineral reserve quantities and the related iron ore mine closure dates.

Our audit procedures related to management’s significant judgments and estimates related to iron ore mineral reserves included the following, among others:

• We tested the effectiveness of internal controls related to the Company’s estimation of iron ore mineral reserves.

• We evaluated the experience, qualifications and objectivity of management’s experts, including in-house iron ore mine engineers and the third-party Qualified Person.

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▪ Presentations to the Audit Committee.

▪ Asset retirement obligation valuation models, goodwill impairment analysis, information provided by asset group and depreciation, depletion and amortization expense calculations.

▪ Asset retirement obligation valuation models.

/s/ DELOITTE & TOUCHE LLP

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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-K

Item 8. Financial Statements and Supplementary Data