clf-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 1-8944

CLEVELAND-CLIFFS INC.

(Exact Name of Registrant as Specified in Its Charter)

Ohio

34-1464672

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

200 Public Square,

Cleveland,

Ohio

44114-2315

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (216) 694-5700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common shares, par value $0.125 per share

CLF

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of the registrant’s common shares, par value $0.125 per share, was 524,737,194 as of April 25, 2022.

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TABLE OF CONTENTS

Page Number

DEFINITIONS

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

Statements of Unaudited Condensed Consolidated Financial Position as of March 31, 2022 and December 31, 2021

Statements of Unaudited Condensed Consolidated Operations for the Three Months Ended March 31, 2022 and 2021

Statements of Unaudited Condensed Consolidated Comprehensive Income for the Three Months Ended March 31, 2022 and 2021

Statements of Unaudited Condensed Consolidated Cash Flows for the Three Months Ended March 31, 2022 and 2021

Statements of Unaudited Condensed Consolidated Changes in Equity for the Three Months Ended March 31, 2022 and 2021

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

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DEFINITIONS

The following abbreviations or acronyms are used in the text. References in this report to the “Company,” “we,” “us,” “our” and “Cliffs” are to Cleveland-Cliffs Inc. and subsidiaries, collectively, unless stated otherwise or the context indicates otherwise.


Abbreviation or acronym						Term

4.625% 2029 Senior Notes						4.625% Senior Guaranteed Notes due 2029 issued by Cleveland-Cliffs Inc. on February 17, 2021 in an aggregate principal amount of $500 million
4.875% 2031 Senior Notes						4.875% Senior Guaranteed Notes due 2031 issued by Cleveland-Cliffs Inc. on February 17, 2021 in an aggregate principal amount of $500 million

ABL Facility						Asset-Based Revolving Credit Agreement, dated as of March 13, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent, as amended as of March 27, 2020, and December 9, 2020, and as may be further amended from time to time
Adjusted EBITDA						EBITDA, excluding certain items such as EBITDA of noncontrolling interests, asset impairment, extinguishment of debt, severance, acquisition-related costs, amortization of inventory step-up and impacts of discontinued operations
AK Steel						AK Steel Holding Corporation (n/k/a Cleveland-Cliffs Steel Holding Corporation) and its consolidated subsidiaries, including AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation), its direct, wholly owned subsidiary, collectively, unless stated otherwise or the context indicates otherwise
AK Steel Merger						The merger of Merger Sub with and into AK Steel, with AK Steel surviving the merger as a wholly owned subsidiary of Cleveland-Cliffs Inc., subject to the terms and conditions set forth in the AK Steel Merger Agreement, consummated on March 13, 2020
AK Steel Merger Agreement						Agreement and Plan of Merger, dated as of December 2, 2019, among Cleveland-Cliffs Inc., AK Steel and Merger Sub
AM USA Transaction						The acquisition of ArcelorMittal USA, consummated on December 9, 2020
AM USA Transaction Agreement						Transaction Agreement, dated as of September 28, 2020, by and between Cleveland-Cliffs Inc. and ArcelorMittal
AOCI						Accumulated Other Comprehensive Income (Loss)
ArcelorMittal						ArcelorMittal S.A., a company organized under the laws of Luxembourg and the former ultimate parent company of ArcelorMittal USA
ArcelorMittal USA						Substantially all of the operations of the former ArcelorMittal USA LLC, its subsidiaries and certain affiliates, and Kote and Tek, collectively
ASC						Accounting Standards Codification
ASU						Accounting Standards Update
Board						The Board of Directors of Cleveland-Cliffs Inc.
BOF						Basic oxygen furnace
CARES Act						Coronavirus Aid, Relief, and Economic Security Act
CERCLA						Comprehensive Environmental Response, Compensation and Liability Act of 1980
COVID-19						A novel strain of coronavirus that the World Health Organization declared a global pandemic in March 2020
Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act
EAF						Electric arc furnace
EBITDA						Earnings before interest, taxes, depreciation and amortization

EPA						U.S. Environmental Protection Agency
EPS						Earnings per share
Exchange Act						Securities Exchange Act of 1934, as amended
FASB						Financial Accounting Standards Board
Fe						Iron
FMSH Act						Federal Mine Safety and Health Act of 1977, as amended
FPT						Ferrous Processing and Trading Company, including certain related entities
FPT Acquisition						The purchase of FPT, subject to the terms and conditions set forth in the FPT Acquisition Agreement
FPT Acquisition Agreement						Securities Purchase Agreement, dated as of October 8, 2021, by and between Cleveland-Cliffs Inc. and Anthony Soave Revocable Trust u/a/d January 14, 1987, as amended and restated
GAAP						Accounting principles generally accepted in the United States
GHG						Greenhouse gas
GOES						Grain oriented electrical steel
HBI						Hot briquetted iron

HRC						Hot-rolled coil steel
IRB						Industrial Revenue Bond
JSW Steel						JSW Steel (USA) Inc. and JSW Steel USA Ohio, Inc., collectively
Kote and Tek						I/N Kote L.P. (n/k/a Cleveland-Cliffs Kote L.P.) and I/N Tek L.P. (n/k/a Cleveland-Cliffs Tek L.P.), former joint ventures between subsidiaries of the former ArcelorMittal USA LLC and Nippon Steel Corporation
Long ton						2,240 pounds
Merger Sub						Pepper Merger Sub Inc., a direct, wholly owned subsidiary of Cliffs prior to the AK Steel Merger
Metric ton						2,205 pounds
MSHA						U.S. Mine Safety and Health Administration
Net ton						2,000 pounds

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Abbreviation or acronym						Term
NOES						Non-oriented electrical steel

NPDES						National Pollutant Discharge Elimination System, authorized by the Clean Water Act
OPEB						Other postretirement benefits
Platts 62% price						Platts IODEX 62% Fe Fines CFR North China
RCRA						Resource Conservation and Recovery Act
RI/FS						Remedial Investigation/Feasibility Study

SEC						U.S. Securities and Exchange Commission
Section 232						Section 232 of the Trade Expansion Act of 1962, as amended
Securities Act						Securities Act of 1933, as amended
SunCoke Middletown						Middletown Coke Company, LLC, a subsidiary of SunCoke Energy, Inc.
Topic 805						ASC Topic 805, Business Combinations
Topic 815						ASC Topic 815, Derivatives and Hedging

U.S.						United States of America
U.S. Steel						United States Steel Corporation and its subsidiaries, collectively, unless stated otherwise or the context indicates otherwise

USMCA						United States-Mexico-Canada Agreement


VIE						Variable interest entity

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PART I


Item 1.			Financial Statements

Statements of Unaudited Condensed Consolidated Financial Position

Cleveland-Cliffs Inc. and Subsidiaries


	(In Millions)
	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	35	$	48
Accounts receivable, net	2,667		2,154
Inventories	5,562		5,188
Other current assets	295		263
Total current assets	8,559		7,653
Non-current assets:
Property, plant and equipment, net	9,012		9,186
Goodwill	1,127		1,116

Other non-current assets	1,070		1,020
TOTAL ASSETS	$	19,768	$	18,975
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,271	$	2,073
Accrued employment costs	541		585

Other current liabilities	939		903
Total current liabilities	3,751		3,561
Non-current liabilities:
Long-term debt	5,028		5,238
Pension liability, non-current	552		578
OPEB liability, non-current	2,346		2,383
Other non-current liabilities	1,483		1,441
TOTAL LIABILITIES	13,160		13,201
Commitments and contingencies (See Note 18)
Equity:
Common shares - par value $0.125 per share
Authorized - 1,200,000,000 shares (2021 - 1,200,000,000 shares);
Issued - 531,051,530 shares (2021 - 506,832,537 shares);
Outstanding - 524,714,208 shares (2021 - 500,158,955 shares)	66		63
Capital in excess of par value of shares	4,848		4,892
Retained earnings (deficit)	800		(1)
Cost of 6,337,322 common shares in treasury (2021 - 6,673,582 shares)	(90)		(82)
Accumulated other comprehensive income	715		618
Total Cliffs shareholders' equity	6,339		5,490
Noncontrolling interest	269		284
TOTAL EQUITY	6,608		5,774
TOTAL LIABILITIES AND EQUITY	$	19,768	$	18,975

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

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Statements of Unaudited Condensed Consolidated Operations

Cleveland-Cliffs Inc. and Subsidiaries


		(In Millions, Except Per Share Amounts)
	Three Months Ended March 31,
		2022		2021
Revenues		$	5,955	$	4,049
Operating costs:
Cost of goods sold		(4,706)		(3,761)
Selling, general and administrative expenses		(122)		(108)

Miscellaneous – net		(33)		(3)
Total operating costs		(4,861)		(3,872)
Operating income		1,094		177
Other income (expense):
Interest expense, net		(77)		(92)
Loss on extinguishment of debt		(14)		(66)
Net periodic benefit credits other than service cost component		49		47
Other non-operating expense		(2)		—
Total other expense		(44)		(111)
Income from continuing operations before income taxes		1,050		66
Income tax expense		(237)		(9)
Income from continuing operations		813		57
Income from discontinued operations, net of tax		1		—
Net income		814		57
Income attributable to noncontrolling interest		(13)		(16)
Net income attributable to Cliffs shareholders		$	801	$	41

Earnings per common share attributable to Cliffs shareholders - basic
Continuing operations		$	1.54	$	0.08
Discontinued operations		—		—
		$	1.54	$	0.08
Earnings per common share attributable to Cliffs shareholders - diluted
Continuing operations		$	1.50	$	0.07
Discontinued operations		—		—
		$	1.50	$	0.07

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

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Statements of Unaudited Condensed Consolidated Comprehensive Income

Cleveland-Cliffs Inc. and Subsidiaries


		(In Millions)
	Three Months Ended March 31,
		2022		2021
Net income		$	814	$	57
Other comprehensive income (loss):
Changes in pension and OPEB, net of tax		1		7
Changes in foreign currency translation		—		(1)
Changes in derivative financial instruments, net of tax		96		7
Total other comprehensive income		97		13
Comprehensive income		911		70
Comprehensive income attributable to noncontrolling interests		(13)		(16)
Comprehensive income attributable to Cliffs shareholders		$	898	$	54

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

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Statements of Unaudited Condensed Consolidated Cash Flows

Cleveland-Cliffs Inc. and Subsidiaries


	(In Millions)
	Three Months Ended March 31,
	2022		2021
OPERATING ACTIVITIES
Net income	$	814	$	57
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation, depletion and amortization	301		217
Impairment of long-lived assets	29		—


Pension and OPEB credits	(27)		(21)
Loss on extinguishment of debt	14		66
Amortization of inventory step-up	—		81
Other	82		26
Changes in operating assets and liabilities, net of business combination:
Receivables and other assets	(441)		(480)
Inventories	(372)		(172)
Pension and OPEB payments and contributions	(60)		(175)
Payables, accrued expenses and other liabilities	193		22
Net cash provided (used) by operating activities	533		(379)
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(236)		(136)

Other investing activities	1		1
Net cash used by investing activities	(235)		(135)
FINANCING ACTIVITIES

Proceeds from issuance of common shares	—		322
Repurchase of common shares	(19)		—
Proceeds from issuance of debt	—		1,000

Repayments of debt	(360)		(902)
Borrowings under credit facilities	1,715		1,158
Repayments under credit facilities	(1,609)		(1,010)


Other financing activities	(38)		(56)
Net cash provided (used) by financing activities	(311)		512
Net decrease in cash and cash equivalents	(13)		(2)
Cash and cash equivalents at beginning of period	48		112
Cash and cash equivalents at end of period	$	35	$	110

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

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Statements of Unaudited Condensed Consolidated Changes in Equity

Cleveland-Cliffs Inc. and Subsidiaries


	(In Millions)
	Number of Common Shares Outstanding	Par Value of Common Shares Issued		Capital in Excess of Par Value of Shares		Retained Earnings (Deficit)		Common Shares in Treasury		AOCI		Non-controlling Interests		Total
December 31, 2021	500	$	63	$	4,892	$	(1)	$	(82)	$	618	$	284	$	5,774
Comprehensive income	—	—		—		801		—		97		13		911

Redemption of convertible debt	24	3		(28)		—		—		—		—		(25)
Stock and other incentive plans	2	—		(16)		—		11		—		—		(5)
Common stock repurchases	(1)	—		—		—		(19)		—		—		(19)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(28)		(28)
March 31, 2022	525	$	66	$	4,848	$	800	$	(90)	$	715	$	269	$	6,608


	(In Millions)
	Number of Common Shares Outstanding	Par Value of Common Shares Issued		Capital in Excess of Par Value of Shares		Retained Earnings (Deficit)		Common Shares in Treasury		AOCI (Loss)		Non-controlling Interests		Total
December 31, 2020	478	$	63	$	5,431	$	(2,989)	$	(354)	$	(133)	$	323	$	2,341
Comprehensive income	—	—		—		41		—		13		16		70
Issuance of common stock	20	—		78		—		244		—		—		322
Stock and other incentive plans	1	—		(22)		—		17		—		—		(5)
Acquisition of ArcelorMittal USA - Measurement period adjustments	—	—		—		—		—		—		(1)		(1)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(8)		(8)
March 31, 2021	499	$	63	$	5,487	$	(2,948)	$	(93)	$	(120)	$	330	$	2,719

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

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Notes to Unaudited Condensed Consolidated Financial Statements

Cleveland-Cliffs Inc. and Subsidiaries

NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Business, Consolidation and Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC rules and regulations and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive income, cash flows and changes in equity for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or any other future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Business Operations

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 organized into four operating segments based on differentiated products, Steelmaking, Tubular, Tooling and Stamping, and European Operations. We primarily operate through one reportable segment – the Steelmaking segment.

Basis of Consolidation

The unaudited 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. All intercompany transactions and balances are eliminated upon consolidation.

Investments in Affiliates

We have investments in several businesses accounted for using the equity method of accounting. As of March 31, 2022 and December 31, 2021, our investment in affiliates of $129 million and $128 million, respectively, was classified in Other non-current assets.

Significant Accounting Policies

A detailed description of our significant accounting policies can be found in the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC. There have been no material changes in our significant accounting policies and estimates from those disclosed therein.

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.

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NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

Allowance for Credit Losses

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


	(In Millions)
	2022		2021
Allowance for credit losses as of January 1	$	(4)	$	(5)
Increase in allowance	—		(1)
Allowance for credit losses as of March 31	$	(4)	$	(6)

Inventories

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


	(In Millions)
	March 31, 2022		December 31, 2021
Product inventories
Finished and semi-finished goods	$	2,943	$	2,814
Raw materials	2,312		2,070
Total product inventories	5,255		4,884
Manufacturing supplies and critical spares	307		304
Inventories	$	5,562	$	5,188

Cash Flow Information

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


	(In Millions)
	Three Months Ended March 31,
	2022		2021
Capital additions	$	181	$	162
Less:
Non-cash accruals	(55)		23
Right-of-use assets - finance leases	—		3

Cash paid for capital expenditures including deposits	$	236	$	136

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


	(In Millions)
	Three Months Ended March 31,
	2022		2021
Taxes paid on income	$	1	$	3
Income tax refunds	(1)		(14)
Interest paid on debt obligations net of capitalized interest1	65		75

1 Capitalized interest was $2 million and $1 million for the three months ended March 31, 2022 and 2021, respectively.

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NOTE 3 - ACQUISITIONS

FPT Acquisition

Overview

On November 18, 2021, pursuant to the FPT Acquisition Agreement, we completed the FPT Acquisition, in which we were the acquirer. The FPT Acquisition gives us a competitive advantage in sourcing prime scrap, a key raw material for our steelmaking facilities. We incurred acquisition-related costs, excluding severance costs, of $1 million for the three months ended March 31, 2022, which was recorded in Selling, general and administrative expenses on the Statements of Unaudited Condensed Consolidated Operations.

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


	(In Millions)
Cash consideration:
Cash consideration pursuant to the FPT Acquisition Agreement	$	778
Estimated cash consideration payable related to Internal Revenue Code Section 338(h)(10)	35
Total cash consideration	813
Fair value of settlement of a pre-existing relationship	(20)
Total purchase consideration	$	793

The Company's estimation of cash consideration payable related to Internal Revenue Code Section 338(h)(10) with respect to entities acquired in connection with the FPT Acquisition could potentially change as elections are expected to be finalized in the third quarter of 2022.

Valuation Assumption and Purchase Price Allocation

We estimated fair values at November 18, 2021 for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in connection with the FPT Acquisition. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. If we determine any measurement period adjustments are material, we will apply those adjustments, including any related impacts to net income, in the reporting period in which the adjustments are determined. We are in the process of conducting a valuation of the assets acquired and liabilities assumed related to the FPT Acquisition, most notably, personal and real property, deferred taxes, environmental obligations and intangible assets, and the final allocation will be made when completed, including the result of any identified goodwill. Accordingly, the provisional measurements noted below are preliminary and subject to modification in the future.

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The preliminary purchase price allocation to assets acquired and liabilities assumed in the FPT Acquisition was:


	(In Millions)
	Initial Allocation of Consideration		Measurement Period Adjustments		Updated Allocation
Cash and cash equivalents	$	9	$	—	9
Accounts receivable, net	233		2		235
Inventories	137		2		139
Other current assets	4		(1)		3
Property, plant and equipment	179		26		205
Other non-current assets	74		(1)		73
Accounts payable	(122)		—		(122)
Accrued employment costs	(8)		—		(8)
Other current liabilities	(9)		—		(9)
Other non-current liabilities	(21)		(1)		(22)
Net identifiable assets acquired	476		27		503
Goodwill	279		11		290
Total net assets acquired	$	755	$	38	$	793

The goodwill resulting from the FPT Acquisition primarily represents the incremental benefit of providing substantial access to prime scrap for our vertically integrated steelmaking business, as well as any synergistic benefits to be realized from the FPT Acquisition within our Steelmaking segment.

The preliminary purchase price allocated to identifiable intangible assets acquired was:


	(In Millions)		Weighted Average Life (In Years)
Customer relationships	$	13	15
Supplier relationships	21		18
Trade names and trademarks	7		15
Total identifiable intangible assets	$	41	17

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

NOTE 4 - REVENUES

We generate our revenue through product sales, in which shipping terms indicate when we have fulfilled our performance obligations and transferred control of products to our customer. Our revenue transactions consist of a single performance obligation to transfer promised goods. Our contracts with customers define the mechanism for determining the sales price, which is generally fixed upon transfer of control, but the contracts generally do not impose a specific quantity on either party. Quantities to be delivered to the customer are determined at a point near the date of delivery through purchase orders or other written instructions we receive from the customer. Spot market sales are made through purchase orders or other written instructions. We consider our performance obligation to be complete and recognize revenue when control transfers in accordance with shipping terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring product. We reduce the amount of revenue recognized for estimated returns and other customer credits, such as discounts and volume rebates, based on the expected value to be realized. Payment terms are consistent with terms standard to the markets we serve. Sales taxes collected from customers are excluded from revenues.

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The following table represents our Revenues by market:


	(In Millions)
	Three Months Ended March 31,
	2022		2021
Steelmaking:
Automotive	$	1,607	$	1,287
Infrastructure and manufacturing	1,542		954
Distributors and converters	1,829		1,248
Steel producers	816		430
Total Steelmaking	5,794		3,919
Other Businesses:
Automotive	122		105
Infrastructure and manufacturing	15		10
Distributors and converters	24		15
Total Other Businesses	161		130
Total revenues	$	5,955	$	4,049

The following tables represent our Revenues by product line:


	(Dollars in Millions, Sales Volumes in Thousands of Net Tons)
	Three Months Ended March 31,
	2022			2021
	Revenue		Volume	Revenue		Volume
Steelmaking:
Hot-rolled steel	$	1,194	903	$	895	1,182
Cold-rolled steel	984		651	632		748
Coated steel	1,775		1,242	1,308		1,369
Stainless and electrical steel	551		189	363		167
Plate	421		221	244		275
Other steel products	334		431	289		403
Other	535		N/A	188		N/A
Total Steelmaking	5,794			3,919
Other Businesses:
Other	161		N/A	130		N/A
Total revenues	$	5,955		$	4,049

NOTE 5 - SEGMENT REPORTING

We are vertically integrated from mined raw materials and direct reduced iron and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing. We are organized into four operating segments based on our differentiated products – Steelmaking, Tubular, Tooling and Stamping, and European Operations. We have one reportable segment – Steelmaking. The operating segment results of our Tubular, Tooling and Stamping, and European Operations that do not constitute reportable segments are combined and disclosed in the Other Businesses category. Our Steelmaking segment operates as the largest flat-rolled steel producer supported by being the largest iron ore pellet producer as well as a leading prime scrap processor in North America, primarily serving the automotive, distributors and converters and infrastructure and manufacturing markets. Our Other Businesses primarily include the operating segments that provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components, and complex assemblies. All intersegment transactions were eliminated in consolidation.

We evaluate performance on an operating segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure. This measure is used by management, investors, lenders and other

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external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the steel industry. In addition, management believes Adjusted EBITDA is a useful measure to assess the earnings power of the business without the impact of capital structure and can be used to assess our ability to service debt and fund future capital expenditures in the business.

Our results by segment are as follows:


		(In Millions)
	Three Months Ended March 31,
		2022		2021
Revenues:
Steelmaking		$	5,794	$	3,919
Other Businesses		161		130
Total revenues		$	5,955	$	4,049

Adjusted EBITDA:
Steelmaking		$	1,423	$	502
Other Businesses		29		11
Eliminations1		(1)		—
Total Adjusted EBITDA		$	1,451	$	513

1 In 2022, we began allocating Corporate SG&A to our operating segments. Prior periods have been adjusted to reflect this change. The Eliminations line now only includes sales between segments.

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


		(In Millions)
	Three Months Ended March 31,
		2022		2021
Net income		$	814	$	57
Less:
Interest expense, net		(77)		(92)
Income tax expense		(237)		(9)
Depreciation, depletion and amortization		(301)		(217)
		1,429		375
Less:
EBITDA of noncontrolling interests1		22		22
Asset impairment		(29)		—
Loss on extinguishment of debt		(14)		(66)
Severance costs		(1)		(11)
Acquisition-related costs excluding severance costs		(1)		(2)

Amortization of inventory step-up		—		(81)
Impact of discontinued operations		1		—
Total Adjusted EBITDA		$	1,451	$	513

1 EBITDA of noncontrolling interests includes the following:
Net income attributable to noncontrolling interests		$	13	$	16
Depreciation, depletion and amortization		9		6
EBITDA of noncontrolling interests		$	22	$	22

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The following summarizes our assets by segment:


	(In Millions)
	March 31, 2022		December 31, 2021
Assets:
Steelmaking	$	19,042	$	18,326
Other Businesses	335		306
Total segment assets	19,377		18,632
Corporate/Eliminations	391		343
Total assets	$	19,768	$	18,975

The following table summarizes our capital additions by segment:


		(In Millions)
	Three Months Ended March 31,
		2022		2021
Capital additions1:
Steelmaking		$	175	$	133
Other Businesses		6		11
Corporate		—		18
Total capital additions		$	181	$	162

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

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

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


	(In Millions)
	March 31, 2022		December 31, 2021
Land, land improvements and mineral rights	$	1,397	$	1,291
Buildings	907		889
Equipment	8,691		8,709
Other	233		229
Construction in progress	414		408
Total property, plant and equipment1	11,642		11,526
Allowance for depreciation and depletion	(2,630)		(2,340)
Property, plant and equipment, net	$	9,012	$	9,186

1 Includes right-of-use assets related to finance leases of $371 million and $411 million as of March 31, 2022 and December 31, 2021, respectively.

We recorded depreciation and depletion expense of $298 million and $215 million for the three months ended March 31, 2022 and 2021, respectively. Depreciation and depletion expense for the three months ended March 31, 2022 includes $68 million of accelerated depreciation related to the indefinite idle of the Indiana Harbor #4 blast furnace.

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NOTE 7 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES

Goodwill

The following is a summary of Goodwill by segment:


	(In Millions)
	March 31, 2022		December 31, 2021
Steelmaking	$	953	$	942
Other Businesses	174		174
Total goodwill	$	1,127	$	1,116

The increase of $11 million in the balance of Goodwill in our Steelmaking segment as of March 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 preliminary purchase price allocation for the acquisition of FPT. Refer to NOTE 3 - ACQUISITIONS for further details.

Intangible Assets and Liabilities

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


	(In Millions)
	March 31, 2022						December 31, 2021
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Intangible assets1:
Customer relationships	$	90	$	(9)	$	81	$	95	$	(8)	$	87
Developed technology	60		(8)		52		60		(6)		54
Trade names and trademarks	18		(3)		15		18		(2)		16
Mining permits	72		(26)		46		72		(26)		46
Supplier relationships	21		—		21		18		—		18
Total intangible assets	$	261	$	(46)	$	215	$	263	$	(42)	$	221
Intangible liabilities2:
Above-market supply contracts	$	(71)	$	15	$	(56)	$	(71)	$	14	$	(57)

1 Intangible assets are classified as Other non-current assets. Amortization related to mining permits is recognized in Cost of goods sold. Amortization of all other intangible assets is recognized in Selling, general and administrative expenses.
2 Intangible liabilities are classified as Other non-current liabilities. Amortization of all intangible liabilities is recognized in Cost of goods sold.

Amortization expense related to intangible assets was $4 million and $3 million for the three months ended March 31, 2022 and 2021, respectively. Estimated future amortization expense is $9 million for the remainder of 2022 and $13 million annually for the years 2023 through 2027.

Income from amortization related to the intangible liabilities for both the three months ended March 31, 2022 and 2021 was $1 million. Estimated future income from amortization is $4 million for the remainder of 2022 and $5 million annually for the years 2023 through 2027.

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NOTE 8 - DEBT AND CREDIT FACILITIES

The following represents a summary of our long-term debt:


(In Millions)
Debt Instrument	Issuer1	Annual Effective Interest Rate	March 31, 2022		December 31, 2021
Senior Secured Notes:
9.875% 2025 Senior Secured Notes	Cliffs	10.57%	$	607	$	607
6.750% 2026 Senior Secured Notes	Cliffs	6.99%	845		845
Senior Unsecured Notes:
1.500% 2025 Convertible Senior Notes	Cliffs	6.26%	—		294
7.000% 2027 Senior Notes	Cliffs	9.24%	73		73
7.000% 2027 AK Senior Notes	AK Steel	9.24%	56		56
5.875% 2027 Senior Notes	Cliffs	6.49%	556		556
4.625% 2029 Senior Notes	Cliffs	4.63%	500		500
4.875% 2031 Senior Notes	Cliffs	4.88%	500		500
6.250% 2040 Senior Notes	Cliffs	6.34%	263		263
IRBs due 2024 to 2028	AK Steel	Various	—		66
ABL Facility	Cliffs2	Variable3	1,715		1,609
Total principal amount			5,115		5,369
Unamortized discounts and issuance costs			(87)		(131)
Total long-term debt			$	5,028	$	5,238



1 Unless otherwise noted, references in this column and throughout this NOTE 8 - DEBT AND CREDIT FACILITIES to "Cliffs" are to Cleveland-Cliffs Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation).
2 Refers to Cleveland-Cliffs Inc. as borrower under our ABL Facility.
3 Our ABL Facility annual effective interest rate was 2.00% and 1.87%, respectively, as of March 31, 2022 and December 31, 2021.

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