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

Quarterly report pursuant to Section 13 or 15(d)

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Notes)

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Notes)

9 Months Ended

Sep. 30, 2020

Disclosure Text Block [Abstract]

Supplementary Financial Statement Information

Revenues

The following table represents our consolidated Revenues (excluding intercompany revenues) by market:


	(In Millions)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Steel and Manufacturing:
Automotive	$	920.0	$	—	$	1,404.0	$	—
Infrastructure and manufacturing	198.8		—		446.2		—
Distributors and converters	142.9		—		344.1		—
Total Steel and Manufacturing	1,261.7		—		2,194.3		—
Mining and Pelletizing:
Steel producers¹	384.3		555.6		903.5		1,455.8
Total revenues	$	1,646.0	$	555.6	$	3,097.8	$	1,455.8

¹ Includes Realization of deferred revenue of $34.6 million for the nine months ended September 30, 2020.

The following table represents our consolidated Revenues (excluding intercompany revenues) by product line:


	(In Millions)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Steel and Manufacturing:
Carbon steel	$	821.2	$	—	$	1,391.6	$	—
Stainless and electrical steel	303.2		—		585.1		—
Tubular products, components and other	137.3		—		217.6		—
Total Steel and Manufacturing	1,261.7		—		2,194.3		—
Mining and Pelletizing:
Iron ore¹	357.1		515.0		838.1		1,357.8
Freight	27.2		40.6		65.4		98.0
Total Mining and Pelletizing	384.3		555.6		903.5		1,455.8
Total revenues	$	1,646.0	$	555.6	$	3,097.8	$	1,455.8

¹ Includes Realization of deferred revenue of $34.6 million for the nine months ended September 30, 2020.

We sell to customers located primarily in the United States and to foreign customers, primarily in Canada, Mexico and Western Europe. Net revenues to customers located outside the United States were $265.0 million and $487.7 million for the three and nine months ended September 30, 2020, respectively, and $138.9 million and $318.3 million for the three and nine months ended September 30, 2019, respectively.

Allowance for Credit Losses

The following is a roll forward of our allowance for credit losses associated with Accounts receivable, net:


	(In Millions)
	2020		2019
Allowance for credit losses as of January 1	$	—	$	—
Increase in allowance	5.2		—
Allowance for credit losses as of September 30	$	5.2	$	—

Inventories

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


	(In Millions)
	September 30, 2020		December 31, 2019
Product inventories
Finished and semi-finished goods	$	940.5	$	114.1
Work-in-process	78.2		68.7
Raw materials	382.3		9.4
Total product inventories	1,401.0		192.2
Manufacturing supplies and critical spares	394.1		125.2
Inventories	$	1,795.1	$	317.4

Deferred Revenue

The table below summarizes our deferred revenue balances:


	(In Millions)
	Deferred Revenue (Current)						Deferred Revenue (Long-Term)
	2020		2019		2020		2019
Opening balance as of January 1	$	22.1	$	21.0	$	25.7	$	38.5
Net decrease	(19.8)		(2.7)		(25.7)		(8.5)
Closing balance as of September 30	$	2.3	$	18.3	$	—	$	30.0

Prior to the Merger, our iron ore pellet sales agreement with Severstal, subsequently assumed by AK Steel, required supplemental payments to be paid by the customer during the period 2009 through 2013. Installment amounts received under this arrangement in excess of sales were classified as deferred revenue in the Statements of Consolidated Financial Position upon receipt of payment and the revenue was recognized over the term of the supply agreement, which had extended until 2022, in equal annual installments. As a result of the termination of that iron ore pellet sales agreement, we realized $34.6 million of deferred revenue, which was recognized within Realization of deferred revenue in the Statements of Unaudited Condensed Consolidated Operations, during the nine months ended September 30, 2020.

We have certain other sales agreements that require customers to pay in advance. Payments received pursuant to these agreements prior to revenue being recognized are recorded as deferred revenue in Other current liabilities.

Accrued Liabilities

The following table presents the detail of our Accrued liabilities in the Statements of Unaudited Condensed Consolidated Financial Position:


	(In Millions)
	September 30, 2020		December 31, 2019
Accrued employment costs	$	146.6	$	61.7
Accrued interest	81.8		29.0
Accrued dividends	1.0		17.8
Other	50.0		17.8
Accrued liabilities	$	279.4	$	126.3

Cash Flow Information

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


	(In Millions)
	Nine Months Ended September 30,
	2020		2019
Capital additions	$	333.0	$	505.6
Less:
Non-cash accruals	(88.4)		26.1
Right-of-use assets - finance leases	42.5		29.3
Grants	—		(10.5)
Cash paid for capital expenditures including deposits	$	378.9	$	460.7

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


	(In Millions)
	Nine Months Ended September 30,
	2020		2019
Taxes paid on income	$	3.2	$	0.1
Income tax refunds	(119.3)		(117.9)
Interest paid on debt obligations net of capitalized interest¹	106.0		71.9

¹Capitalized interest was $38.0 million and $16.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Non-Cash Investing and Financing Activities


	(In Millions)
	Nine Months Ended September 30,
	2020		2019
Fair value of common shares issued for consideration for business combination	$	617.6	$	—
Fair value of equity awards assumed from AK Steel acquisition	3.9		—