Cleveland-Cliffs Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2022

NOTE 19 - SUBSEQUENT EVENTS

On October 12, 2022, we announced the ratification of a new 4-year labor agreement with the USW, covering 12,000 USW-represented employees at 13 operating locations. As a result of significant pension and OPEB plan amendments in the agreement, we will be required to remeasure the plan assets and benefit obligations for the affected defined benefit pension and OPEB plans as of the October 12, 2022 ratification date.

The following table sets forth amounts recognized in the Statements of Financial Position related to pension and OPEB:

• on an actual basis as of September 30, 2022 reflecting our consolidated pension and OPEB; and

• on a pro forma basis as of September 30, 2022 to give effect to the remeasurement of pension and OPEB plans affected by the October 12, 2022 ratification. The pro forma column is presented with pro forma data pursuant to ASC 855-10-50-3.


	(In Millions)
	Pension Benefits				OPEB
	Actual		Pro forma		Actual		Pro forma
	September 30, 2022		September 30, 2022		September 30, 2022		September 30, 2022
Non-current assets	$	227	$	227	$	163	$	163
Current liabilities	(4)		(4)		(130)		(94)
Non-current liabilities	(464)		(558)		(2,287)		(801)
Funded Status	$	(241)	$	(335)	$	(2,254)	$	(732)

The remeasurement reflects updates for plan amendments, discount rates, asset values, and other actuarial assumptions as of September 30, 2022 for the affected plans.

The funded status of the affected defined benefit pension plans decreased $94 million as a result of the remeasurement. Actuarial gains on the benefit obligations amounted to $648 million, offset by plan amendment losses of $90 million and actual plan asset losses that were $652 million lower than the estimated returns on assets. The actuarial gain is primarily due to the increase in the weighted average discount rate used to measure the benefit obligations from 2.74% at December 31, 2021 to 5.61% at the remeasurement date. The plan amendment loss 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 funded status of the affected OPEB plans improved $1,522 million as a result of the remeasurement. Actuarial gains and plan amendment gains on the benefit obligations amounted to $1,460 million and $62 million, respectively. The actuarial gain is primarily due to the decrease in per capita health care costs and the increase in the weighted average discount rate used to measure the benefit obligations from 3.12% at December 31, 2021 to 5.63% at the remeasurement date. The lower health care costs are attributable to newly negotiated Medicare Advantage Prescription Drug rates, which are a result of increased government subsidies and our successful use of scale to negotiate better healthcare rates with our vendors. The plan amendment gain is attributable to the implementation of a cap on healthcare costs for employees retiring after January 1, 2026.

We now expect the net periodic benefit credit to be $125 million for the full-year 2022.