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

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2014

The following represents the assets and liabilities of the Company measured at fair value at June 30, 2014 and December 31, 2013:



	(In Millions)
	June 30, 2014
Description	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents	$	84.0	$	—	$	—	$	84.0
Derivative assets	—		3.6		33.0		36.6
Available-for-sale marketable securities	27.1		—		—		27.1
Foreign exchange contracts	—		12.1		—		12.1
Total	$	111.1	$	15.7	$	33.0	$	159.8
Liabilities:
Derivative liabilities	$	—	$	—	$	20.2	$	20.2
Foreign exchange contracts	—		0.5		—		0.5
Total	$	—	$	0.5	$	20.2	$	20.7



	(In Millions)
	December 31, 2013
Description	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents	$	85.0	$	—	$	—	$	85.0
Derivative assets	—		—		58.9		58.9
Available-for-sale marketable securities	21.4		—		—		21.4
Foreign exchange contracts	—		0.3		—		0.3
Total	$	106.4	$	0.3	$	58.9	$	165.6
Liabilities:
Derivative liabilities	$	—	$	2.1	$	10.3	$	12.4
Foreign exchange contracts	—		26.9		—		26.9
Total	$	—	$	29.0	$	10.3	$	39.3

Fair Value, Recurring and Nonrecurring, Valuation Techniques

The following table illustrates information about quantitative inputs and assumptions for the derivative assets and derivative liabilities categorized in Level 3 of the fair value hierarchy:

Qualitative/Quantitative Information About Level 3 Fair Value Measurements

($ in millions)

Fair Value at June 30, 2014

Balance Sheet Location

Valuation Technique

Unobservable Input

Range or Point Estimate

(Weighted Average)

Provisional Pricing Arrangements

20.2

Derivative liabilities

Market Approach

Management's

Estimate of 62% Fe

$93

Customer Supply Agreement

33.0

Derivative assets

Market Approach

Hot-Rolled Steel Estimate

$635 - $665 ($650)

Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation

The following tables represent a reconciliation of the changes in fair value of financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2014 and 2013.



	(In Millions)
	Derivative Assets (Level 3)
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Beginning balance	$	43.3		$	53.3		$	58.9		$	62.4
Total gains
Included in earnings	33.0			32.4			62.0			60.4
Settlements	(43.3		)	(40.6		)	(87.9		)	(77.7		)
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Ending balance - June 30	$	33.0		$	45.1		$	33.0		$	45.1
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date	$	33.0		$	32.4		$	62.0		$	60.4

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation



	(In Millions)
	Derivative Liabilities (Level 3)
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Beginning balance	$	(7.4	)	$	(6.8	)	$	(10.3	)	$	(11.3	)
Total gains
Included in earnings	(12.8		)	(25.2		)	(20.2		)	(32.0		)
Settlements	—			—			10.3			11.3
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Ending balance - June 30	$	(20.2	)	$	(32.0	)	$	(20.2	)	$	(32.0	)
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date	$	(12.8	)	$	(25.2	)	$	(20.2	)	$	(32.0	)

Schedule Of Carrying Value And Fair Value Of Financial Instruments

A summary of the carrying amount and fair value of other financial instruments at June 30, 2014 and December 31, 2013 were as follows:



		(In Millions)
		June 30, 2014				December 31, 2013
	Classification	Carrying Value		Fair Value		Carrying Value			Fair Value
Long-term debt:
Senior notes—$700 million	Level 2	$	699.5	$	756.6	$	699.4		$	718.2
Senior notes—$1.3 billion	Level 2	1,289.8		1,537.4		1,289.6			1,404.9
Senior notes—$400 million	Level 2	398.5		450.2		398.4			432.1
Senior notes—$500 million	Level 2	496.9		532.4		496.5			523.8
Revolving loan	Level 2	275.0		275.0		—			—
Equipment loan facilities	Level 2	130.0		130.0		140.8			140.8
Fair value adjustment to interest rate hedge	Level 2	3.3		3.3		(2.1		)	(2.1		)
Total long-term debt		$	3,293.0	$	3,684.9	$	3,022.6		$	3,217.7

Fair Value Measurements, Nonrecurring

The following table presents information about the impairment charges on both financial and nonfinancial assets that were measured on a fair value basis at December 31, 2013. The table also indicates the fair value hierarchy of the valuation techniques used to determine such fair value. We had no financial assets and liabilities measured at fair value on a non-recurring basis at June 30, 2014.



	(In Millions)
	December 31, 2013
Description	Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Assets:
Goodwill impairment - Ferroalloys reporting unit	$	—	$	—	$	—	$	—	$	80.9
Other long-lived assets - Property, plant and equipment	—		—		46.3		46.3		155.4
Other long-lived assets - Intangibles and long-term deposits	—		—		1.6		1.6		14.5
Investment in ventures impairment - Amapá	—		—		—		—		67.6
	$	—	$	—	$	47.9	$	47.9	$	318.4

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References + Details

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

+ References + Details