Cleveland-Cliffs Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Pensions And Other Postretirement Benefits (Tables)

Pensions And Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2011


	(In Millions)
	2011		2010		2009
Defined benefit pension plans	$	37.8	$	45.6	$	50.8
Defined contribution pension plans		5.7		4.2		2.1
Other postretirement benefits		26.8		24.2		25.5

Total	$	70.3	$	74.0	$	78.4

Obligations And Funded Status


	(In Millions)
	Pension Benefits						Other Benefits
Change in benefit obligations:	2011			2010			2011			2010
Benefit obligations — beginning of year	$	1,022.3		$	750.8		$	440.2		$	333.0
Service cost (excluding expenses)		23.6			18.5			11.1			7.5
Interest cost		51.4			52.9			22.3			22.0
Plan amendments		—			3.7			—			—
Actuarial loss		117.3			57.5			36.5			43.6
Benefits paid		(67.3	)		(67.0	)		(25.5	)		(28.2	)
Participant contributions		—			—			4.6			6.2
Federal subsidy on benefits paid		—			—			0.9			0.9
Exchange rate gain		(5.9	)		10.2			(1.7	)		2.9
Acquired through business combinations		—			195.7			—			52.3

Benefit obligations — end of year	$	1,141.4		$	1,022.3		$	488.4		$	440.2


Change in plan assets:
Fair value of plan assets — beginning of year	$	734.3		$	483.4		$	174.2		$	136.7
Actual return on plan assets		10.8			87.1			1.9			20.1
Participant contributions		—			—			1.6			1.6
Employer contributions		70.1			45.6			23.2			23.7
Asset transfers		—			—			—			—
Benefits paid		(67.3	)		(67.0	)		(7.4	)		(7.9	)
Exchange rate gain		(3.8	)		8.9			—			—
Acquired through business combinations		—			176.3			—			—

Fair value of plan assets — end of year	$	744.1		$	734.3		$	193.5		$	174.2


Funded status at December 31:
Fair value of plan assets	$	744.1		$	734.3		$	193.5		$	174.2
Benefit obligations		(1,141.4	)		(1,022.3	)		(488.4	)		(440.2	)

Funded status (plan assets less benefit obligations)	$	(397.3	)	$	(288.0	)	$	(294.9	)	$	(266.0	)

Amount recognized at December 31	$	(397.3	)	$	(288.0	)	$	(294.9	)	$	(266.0	)


Amounts recognized in Statements of Financial Position:
Current liabilities	$	(2.6	)	$	(3.1	)	$	(23.8	)	$	(22.9	)
Noncurrent liabilities		(394.7	)		(284.9	)		(271.1	)		(243.1	)

Net amount recognized	$	(397.3	)	$	(288.0	)	$	(294.9	)	$	(266.0	)


Amounts recognized in accumulated other comprehensive income:
Net actuarial loss	$	409.1		$	269.3		$	182.9		$	152.3
Prior service cost		18.8			24.2			8.1			11.8
Transition asset		—			—			(3.0	)		(5.7	)

Net amount recognized	$	427.9		$	293.5		$	188.0		$	158.4


The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2012:
Net actuarial loss	$	29.5					$	11.4
Prior service cost		3.9						3.0
Transition asset		—						(3.0	)

Net amount recognized	$	33.4					$	11.4

Net Funded Status


	(In Millions)
	2011
	Pension Plans															Other Benefits
	Salaried			Hourly			Mining			SERP			Total			Salaried			Hourly			Total
Fair value of plan assets	$	289.1		$	451.8		$	3.2			$—		$	744.1		$	—		$	193.5		$	193.5
Benefit obligation		(419.3	)		(708.0	)		(5.3	)		(8.8	)		(1,141.4	)		(70.7	)		(417.7	)		(488.4	)
Funded status	$	(130.2	)	$	(256.2	)	$	(2.1	)	$	(8.8	)	$	(397.3	)	$	(70.7	)	$	(224.2	)	$	(294.9	)

	2010
	Pension Plans															Other Benefits
	Salaried			Hourly			Mining			SERP			Total			Salaried			Hourly			Total
Fair value of plan assets	$	275.3		$	456.7		$	2.3			$—		$	734.3		$	—		$	174.2		$	174.2
Benefit obligation		(373.8	)		(635.3	)		(4.4	)		(8.8	)		(1,022.3	)		(63.7	)		(376.5	)		(440.2	)
Funded status	$	(98.5	)	$	(178.6	)	$	(2.1	)	$	(8.8	)	$	(288.0	)	$	(63.7	)	$	(202.3	)	$	(266.0	)

Components of Net Periodic Benefit Cost


	(In Millions)
	Pension Benefits									Other Benefits
	2011			2010			2009			2011			2010			2009
Service cost	$	23.6		$	18.5		$	14.3		$	11.1		$	7.5		$	5.4
Interest cost		51.4			52.9			42.6			22.3			22.0			18.9
Expected return on plan assets		(61.2	)		(53.3	)		(37.1	)		(16.1	)		(12.9	)		(9.1	)
Amortization:
Net asset		—			—			—			(3.0	)		(3.0	)		(3.0	)
Prior service costs (credits)		4.4			4.4			4.2			3.7			1.7			1.8
Net actuarial loss		19.6			23.1			26.8			8.8			8.9			11.5

Net periodic benefit cost	$	37.8		$	45.6		$	50.8		$	26.8		$	24.2		$	25.5
Acquired through business combinations		—			17.7			—			—			2.4			—
Current year actuarial (gain)/loss		165.3			(3.1	)		12.1			46.8			34.6			2.2
Amortization of net loss		(19.6	)		(23.1	)		(26.8	)		(8.8	)		(8.9	)		(11.5	)
Current year prior service cost		—			3.7			3.0			—			—			—
Amortization of prior service (cost) credit		(4.4	)		(4.4	)		(4.2	)		(3.7	)		(1.7	)		(1.8	)
Amortization of transition asset		—			—			—			3.0			3.0			3.0

Total recognized in other comprehensive income	$	141.3		$	(9.2	)	$	(15.9	)	$	37.3		$	29.4		$	(8.1	)

Total recognized in net periodic cost and other comprehensive income	$	179.1		$	36.4		$	34.9		$	64.1		$	53.6		$	17.4

Additional Information


	(In Millions)
	Pension Benefits						Other Benefits
	2011		2010		2009		2011		2010		2009
Effect of change in mine ownership & noncontrolling interest	$	53.3	$	49.9	$	50.9	$	12.5	$	10.7	$	10.1
Actual return on plan assets		10.8		87.1		63.0		1.9		20.1		27.8

Assumed Health Care Cost Trend Rates


	2011			2010
U.S. plan health care cost trend rate assumed for next year		7.50	%		8.00	%
Canadian plan health care cost trend rate assumed for next year		8.00			8.50
Ultimate health care cost trend rate		5.00			5.00
U.S. plan year that the ultimate rate is reached		2017			2017
Canadian plan year that the ultimate rate is reached		2018			2018

Effect Of One Percentage Point In Assumed Health Care Cost Trend Rates


	(In Millions)
	Increase		Decrease
Effect on total of service and interest cost	$	5.7	$	(4.4	)
Effect on postretirement benefit obligation		60.0		(48.3	)

Plan Assets And Asset Allocation


	Pension Assets									VEBA Assets
Asset Category	2012 Target Allocation			Percentage of Plan Assets at December 31,						2012 Target Allocation			Percentage of Plan Assets at December 31,
Asset Category	2012 Target Allocation			2011			2010			2012 Target Allocation			2011			2010
Equity securities		43.1	%		41.7	%		42.0	%		41.8	%		42.0	%		44.4	%
Fixed income		30.2			31.1			30.6			32.1			33.5			37.4
Hedge funds		13.8			13.5			14.4			14.9			14.6			13.8
Private equity		5.3			5.2			5.0			6.2			4.5			4.3
Structured credit		3.8			6.0			5.4			—			—			—
Real estate		3.8			2.2			2.1			5.0			5.3			—
Cash		—			0.3			0.5			—			0.1			0.1

Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Fair Value, Assets And Liabilities Measured On Recurring Basis


	(In Millions)
	December 31, 2011
Asset Category	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity securities:
U.S. large-cap	$	191.1	$	—	$	—	$	191.1
U.S. small/mid-cap		29.2		—		—		29.2
International		90.0		—		—		90.0
Fixed income		231.1		—		—		231.1
Hedge funds		—		—		100.7		100.7
Private equity		8.6		—		30.1		38.7
Structured credit		—		—		44.9		44.9
Real estate		—		—		16.5		16.5
Cash		1.9		—		—		1.9

Total	$	551.9	$	—	$	192.2	$	744.1


	(In Millions)
	December 31, 2010
Asset Category	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity securities:
U.S. large-cap	$	122.4	$	—	$	—	$	122.4
U.S. small/mid-cap		21.7		—		—		21.7
International		164.5		—		—		164.5
Fixed income		224.7		—		—		224.7
Hedge funds		—		—		105.8		105.8
Private equity		11.8		—		25.0		36.8
Structured credit		—		—		39.7		39.7
Real estate		—		—		15.5		15.5
Cash		3.2		—		—		3.2

Total	$	548.3	$	—	$	186.0	$	734.3

Schedule of Effect of Significant Unobservable Inputs, Changes in Plan Assets [Table Text Block]


	(In Millions)
	Year Ended December 31, 2011
	Hedge Funds			Private Equity Funds			Structured Credit Fund		Real Estate			Total
Beginning balance — January 1, 2011	$	105.8		$	25.0		$	39.7	$	15.5		$	186.0
Actual return on plan assets:
Relating to assets still held at the reporting date		(2.4	)		2.6			5.2		1.6			7.0
Relating to assets sold during the period		0.5			3.0			—		0.5			4.0
Purchases		35.8			4.4			—		—			40.2
Sales		(39.0	)		(4.9	)		—		(1.1	)		(45.0	)

Ending balance — December 31, 2011	$	100.7		$	30.1		$	44.9	$	16.5		$	192.2


	(In Millions)
	Year Ended December 31, 2010
	Hedge Funds			Private Equity Funds			Structured Credit Fund		Real Estate			Total
Beginning balance — January 1, 2010	$	71.4		$	18.2		$	39.1	$	14.4		$	143.1
Acquired through business combination		17.0			—			—		—			17.0
Actual return on plan assets:
Relating to assets still held at the reporting date		2.4			3.4			0.5		1.5			7.8
Relating to assets sold during the period		—			0.1			—		—			0.1
Purchases, sales and settlements		15.0			3.3			0.1		(0.4	)		18.0
Transfers in (out) of Level 3		—			—			—		—			—

Ending balance — December 31, 2010	$	105.8		$	25.0		$	39.7	$	15.5		$	186.0

Estimated Net Periodic Benefit Cost


	(In Millions)
Defined benefit pension plans	$	54.5
Other postretirement benefits		29.4

Total	$	83.9

Estimated Future Benefit Payments


	(In Millions)
	Pension Benefits		Other Benefits
	Pension Benefits		Gross Company Benefits		Less Medicare Subsidy		Net Company Payments
2012	$	73.3	$	24.8	$	1.0	$	23.8
2013		76.9		25.8		1.1		24.7
2014		75.0		27.3		1.2		26.1
2015		76.8		28.6		1.3		27.3
2016		77.1		29.5		1.4		28.1
2017-2021		396.4		152.7		9.6		143.1

Other Potential Benefit Obligations


	(In Millions)
	December 31, 2011
	Defined Benefit Pensions			Other Benefits
Fair value of plan assets	$	744.1		$	193.5
Benefit obligation		1,141.4			488.4

Underfunded status of plan	$	(397.3	)	$	(294.9	)

Additional shutdown and early retirement benefits	$	40.0		$	19.3

Schedule Of Annual Contributions


	(In Millions)
	Pension Benefits		Other Benefits
Company Contributions	Pension Benefits		VEBA		Direct Payments		Total
2010		45.6		17.4		21.1		38.5
2011		70.1		17.4		20.0		37.4
2012 (Expected)*		66.3		17.4		23.8		41.2

Benefit Obligations [Member]

Weighted-Average Assumptions Used To Determine Benefit Obligations


	Pension Benefits						Other Benefits
	2011			2010			2011			2010
U.S. plan discount rate		4.28	%		5.11	%		4.28	%		5.11	%
Canadian plan discount rate		4.00			5.00			4.25			5.00
Rate of compensation increase		4.00			4.00			4.00			4.00
U.S. expected return on plan assets		8.25			8.50			8.25			8.50
Canadian expected return on plan assets		7.25			7.50			7.25			7.50

Weighted-Average Assumptions Used To Determine Net Benefit Costs


	Pension Benefits									Other Benefits
	2011			2010			2009			2011			2010			2009
U.S. plan discount rate		5.11	%		5.66	%		6.00	%		5.11	%		5.66	%		6.00	%
Canadian plan discount rate		5.00			5.75/5.50	(2)		(1	)		5.00			6.00/5.75	(3)		(1	)
U.S. expected return on plan assets		8.50			8.50			8.50			8.50			8.50			8.50
Canadian expected return on plan assets		7.50			7.50			(1	)		7.50			7.50			(1	)
Rate of compensation increase		4.00			4.00			4.00			4.00			4.00			4.00

VEBA Trust [Member]

Fair Value, Assets And Liabilities Measured On Recurring Basis


	(In Millions)
	December 31, 2011
Asset Category	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity securities:
U.S. large-cap	$	46.5	$	—	$	—	$	46.5
U.S. small/mid-cap		7.9		—		—		7.9
International		26.8		—		—		26.8
Fixed income		64.9		—		—		64.9
Hedge funds		—		—		28.3		28.3
Private equity		1.9		—		6.8		8.7
Real estate		—		—		10.2		10.2
Cash		0.2		—		—		0.2

Total	$	148.2	$	—	$	45.3	$	193.5


	(In Millions)
	December 31, 2010
Asset Category	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity securities:
U.S. large-cap	$	38.5	$	—	$	—	$	38.5
U.S. small/mid-cap		11.7		—		—		11.7
International		27.2		—		—		27.2
Fixed income		65.2		—		—		65.2
Hedge funds		—		—		24.0		24.0
Private equity		2.5		—		4.9		7.4
Cash		0.2		—		—		0.2

Total	$	145.3	$	—	$	28.9	$	174.2