Cleveland Cliffs Inc (CLF)

[DewDiligence]

Re: APIO-shutdown costs

$50M of the projected $140-170M total APIO-shutdown charges were taken during 1Q18:

https://seekingalpha.com/article/4164506-cleveland-cliffs-clf-ceo-lourenco-goncalves-q1-2018-results-earnings-call-transcript?part=single

As noted in our 8-K filed two weeks ago, we expect cash and non-cash accounting charges related to the closure of a $140 to $170 million, including contract terminations, impairments, write-offs and demobilization costs.

Approximately $50 million of these charges were already taken in the first quarter thus the expected future range will be reduced by that amount.

A partial breakdown of the $50M was given in the PR you posted:

…accounting adjustments…were required based on the planned closure of the APIO operations. This includes a $22 million...adjustment to record saleable work-in process and finished goods inventory at the lower of cost or net realizable value. It also includes inventory impairments of $15 million…for inventory that is not expected to be sold; a $4 million…supplies inventory reserve; and a $2 million…unfavorable asset retirement obligation adjustment.

That comes to $43M, leaving approximately $7M of miscellaneous APIO charges taken in 1Q18.

Thus, remaining APIO-related expenses include: i) $80-120M of the original $120-170M guidance related to the actual shutdown; and ii) $80M for post-closure mitigation activities, to be reduced by proceeds from APIO asset sales, with 65-75% of the amount occurring during 2018.