Cleveland-Cliffs Inc. 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK
REPURCHASE SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 2005
OR
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TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission file number: 1-8944
(Full Title of the plan and the address of the plan,
if different from that of issuer named below)
NORTHSHORE MINING COMPANY
and
SILVER BAY POWER COMPANY
RETIREMENT SAVINGS PLAN
10 OUTER DRIVE
SILVER BAY, MINNESOTA 55614
(Name of Issuer of the securities held pursuant to
the Plan and the address of its principal executive office)
CLEVELAND-CLIFFS INC, 1100 Superior Avenue, Cleveland, Ohio 44114-2589
NORTHSHORE MINING COMPANY
AND
SILVER BAY POWER COMPANY
RETIREMENT SAVINGS PLAN (“Plan”)
Audited financial statements and supplemental schedule for the Plan prepared in accordance with the
financial reporting requirements of the Employee Retirement Income Security Act of 1974, as
amended, are filed herewith in lieu of an audited statement of financial condition and statement of
income and changes in plan equity.
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
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Financial Statements: |
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Report of Independent Registered Public Accounting Firm |
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Statements of Net Assets Available for Benefits,
December 31, 2005 and 2004 |
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2 |
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Statement of Changes in Net Assets Available for Benefits,
For the Year Ended December 31, 2005 |
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3 |
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Notes to Financial Statements |
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4-7 |
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Supplemental Schedule: |
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Schedule of Assets (Held at End of Year)
December 31, 2005 |
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8 |
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All other schedules are omitted as not applicable or not required.
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
Plan Administrator
Northshore Mining Company and Silver Bay Power Company Retirement Savings Plan
Cleveland, Ohio
We have audited the accompanying statement of net assets available for benefits
of the NORTHSHORE MINING COMPANY AND SILVER BAY POWER COMPANY RETIREMENT SAVINGS
PLAN as of December 31, 2005 and 2004 and the related statement of changes in
net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan’s management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Northshore
Mining Company And Silver Bay Power Company Retirement Savings Plan as of
December 31, 2005 and 2004 and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2005, is presented for the purposes of
additional analysis and is not a required part of the financial statements, but
is supplementary information required by the Department of Labor’s Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan’s management. The supplemental information has been subjected to the
auditing procedures applied in our audit of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Meaden & Moore, LTD.
MEADEN & MOORE, LTD.
Certified Public Accountants
April 13, 2006
Cleveland, Ohio
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
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December 31 |
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2005 |
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2004 |
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ASSETS |
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Cash |
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$ |
3,471 |
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$ |
— |
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Receivable — Employee contributions |
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117,019 |
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106,287 |
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Receivable — Employer contributions |
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72,933 |
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68,915 |
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Receivable — Employer discretionary contribution |
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4,172,738 |
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1,963,670 |
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Total Receivables |
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4,362,690 |
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2,138,872 |
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Investments: |
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Cleveland-Cliffs Inc. Common Stock |
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4,200,576 |
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6,545,573 |
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T. Rowe Price Equity Index 500 Fund |
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5,673,138 |
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5,455,369 |
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T. Rowe Price Equity Spectrum Income Fund |
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6,094,416 |
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5,315,763 |
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T. Rowe Price New America Growth Fund |
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4,525,100 |
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4,698,683 |
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T. Rowe Price Capital Appreciation Fund |
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6,811,603 |
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5,759,272 |
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T. Rowe Price Prime Reserve Fund |
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3,784,977 |
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2,643,075 |
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T. Rowe Price International Stock Fund |
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4,301,865 |
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3,639,339 |
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T. Rowe Price Stable Value Fund |
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4,855,761 |
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3,507,934 |
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T. Rowe Price Mid-Cap Growth Fund |
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4,796,168 |
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3,800,556 |
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T. Rowe Price Equity Income Fund |
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2,057,125 |
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2,149,347 |
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T. Rowe Price Boston Co Small Cap Value |
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122,306 |
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— |
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T. Rowe Price Retirement 2005 Fund |
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6,197 |
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— |
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T. Rowe Price Retirement 2010 Fund |
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214,535 |
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— |
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T. Rowe Price Retirement 2015 Fund |
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118,913 |
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— |
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T. Rowe Price Retirement 2020 Fund |
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59,093 |
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— |
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T. Rowe Price Retirement 2030 Fund |
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26,911 |
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— |
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T. Rowe Price Retirement 2035 Fund |
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1,956 |
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— |
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Participant Loans |
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1,420,472 |
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1,408,666 |
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Total Investments |
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49,071,112 |
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44,923,577 |
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Total Assets |
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53,437,273 |
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47,062,449 |
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Net Assets Available for Benefits |
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$ |
53,437,273 |
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$ |
47,062,449 |
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See accompanying notes.
- 2 -
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
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Year Ended December 31 |
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2005 |
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2004 |
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Additions to Net Assets Attributed to: |
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Contributions: |
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Employer |
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$ |
4,821,784 |
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$ |
2,603,750 |
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Employee |
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2,613,116 |
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2,549,233 |
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Rollover |
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1,667 |
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42,021 |
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7,436,567 |
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5,195,004 |
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Interest and dividend income |
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1,792,851 |
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949,889 |
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Net unrealized gain on investments |
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119,379 |
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7,548,531 |
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Total Additions |
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9,348,797 |
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13,693,424 |
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Deductions from Net Assets Attributed to: |
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Benefits paid to participants |
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2,971,015 |
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3,489,198 |
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Administrative expenses |
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2,958 |
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— |
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Total Deductions |
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2,973,973 |
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3,489,198 |
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Net Increase |
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6,374,824 |
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10,204,226 |
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Net Assets Available for Benefits: |
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Beginning of Year |
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47,062,449 |
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36,858,223 |
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End of Year |
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$ |
53,437,273 |
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$ |
47,062,449 |
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See accompanying notes.
- 3 -
NOTES TO FINANCIAL STATEMENTS
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
1 Description of Plan
The following description of The Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan provides only general information. Participants should refer to the
Plan document for a complete description of the Plan’s provisions.
General:
The Plan, which began October 1, 1994, is a defined contribution plan covering all employees
of Northshore Mining Company & Silver Bay Power Company who meet the eligibility
requirements. It is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
The Plan was amended effective October 1, 2005. The Amendment offered additional investment
categories.
The Plan was amended effective March 28, 2005. The Amendment reflected the automatic cashout of a
terminated Participant or a Beneficiary with an account that does not exceed $1,000.
Eligibility:
All full time employees of the Companies are eligible to participate in the Plan.
Contributions:
Employee
deferral - Participants may elect a portion of their compensation between 1% to 18%,
to be contributed to the Plan by the Company.
Employer
Contributions - The Company contributes a matching contribution equal to 50% of
Participant pre-tax contributions not in excess of 6% of participant’s eligible earnings for
the Plan year. An additional matching amount may be contributed by the Company based on the
excess of 5% of the Company’s pre-tax earnings over the minimum matching contribution.
The Company may also contribute for any Plan year additional matching amounts (as limited) as
shall be determined by the Board of Directors of the Company.
Contributions are subject to limitations on annual additions and other limitations imposed by
the Internal Revenue Code as defined in the Plan agreement.
- 4 -
NOTES TO FINANCIAL STATEMENTS
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
1 Description of Plan, Continued
Participants’ Accounts:
401(k)
Accounts - Each participant’s account is credited with the participant’s elective
contributions, employer matching contributions, earnings and losses thereon. Plan
participants are allocated participation in the fund(s) based on cash value. Under the cash
value method, total monthly earnings are divided by the total value of the fund(s) to obtain
a ratio, which is then multiplied by each participant’s account balance in the fund(s) at the
beginning of the month.
Rollover contributions from other Plans are also accepted, providing certain specified conditions
are met.
Vesting:
All participants are 100% vested in elective deferrals, rollover contributions and company matching
and discretionary contributions made to the Plan.
Participants’ Loans:
Loans are permitted under certain circumstances and are subject to limitations. Participants
may borrow from their fund accounts, minimum of $1,000, up to a maximum equal to the lesser
of $50,000 or 50% of their account balance. Loans are repaid over a period not to exceed 5
years with exceptions for the purchase of a primary residence.
The loans are secured by the balance in the participant’s account and bear interest at rates
commercially reasonable that is published on the first day of the month proceeding the month the
loan was granted. Principal and interest are paid ratably through monthly payroll deductions.
Payment of Benefits:
Upon termination of service by reason of retirement, a participant has the option to keep
their funds in the Plan without option of contribution until age 70 1/2 or receive a lump sum
equal to the value of his or her account. Upon death a participant’s beneficiaries receives a
lump sum amount equal to the value of his or her account.
Hardship Withdrawals:
Hardship withdrawals are permitted in accordance with Internal Revenue Service guidelines.
- 5 -
NOTES TO FINANCIAL STATEMENTS
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
1 Description of Plan, Continued
Investment Options:
Upon enrollment in the Plan, a participant may direct his or her contributions in any or all
of the investment options offered by the Plan.
2 Summary of Significant Accounting Policies
Basis of Accounting:
The Plan’s transactions are reported on the accrual basis of accounting. All investment
securities are stated at fair value as measured by quoted prices in active markets. Shares of
mutual funds are valued at the net asset value of shares held by the Plan at year end.
Investments include participant loans valued at their outstanding balances, which approximate
fair value.
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the
exdividend date.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Administrative Fees:
The trust pays the trustee fees, audit fees and other expenses of the Plan, unless the Company
elects to pay all or part of these expenses. For the years ended December 31, 2005 and 2004, the
Company paid all such expenses. Other administrative expenses of the Plan, such as salaries and use
of facilities are paid by the Company.
Plan Termination:
Although it has not expressed any intent to do so, the Company has the right under the Plan
to discontinue its contributions at any time and to terminate the Plan subject to the
provisions of ERISA.
- 6 -
NOTES TO FINANCIAL STATEMENTS
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
3 Tax Status
On April 17, 2003, the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code. The Plan has
been amended, however, the Plan Administrator and the Plan’s tax counsel believe that the
Plan is currently designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, they believe that the Plan was qualified and the
related trust was tax-exempt as of the financial statement date.
4 Investments
The Plan’s funds are invested in the various stock, bond and cash investments enumerated in
Note 1, through the T. Rowe Price. Investments which constitute more than 5% of the Plan’s
net assets are:
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2005 |
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2004 |
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Cleveland-Cliffs Inc. Common Stock |
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$ |
4,200,576 |
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$ |
6,545,573 |
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T. Rowe Price Equity Index 500 Fund |
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$ |
5,673,138 |
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$ |
5,455,369 |
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T. Rowe Price Equity Spectrum Income Fund |
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$ |
6,094,416 |
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$ |
5,315,763 |
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T. Rowe Price New America Growth Fund |
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$ |
4,525,100 |
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$ |
4,698,683 |
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T. Rowe Price Capital Appreciation Fund |
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$ |
6,811,603 |
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$ |
5,759,272 |
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T. Rowe Price Prime Reserve Fund |
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$ |
3,784,977 |
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$ |
2,643,075 |
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T. Rowe Price International Stock Fund |
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$ |
4,301,865 |
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$ |
3,639,339 |
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T. Rowe Price Stable Value Fund |
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$ |
4,855,761 |
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$ |
3,507,934 |
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T. Rowe Price Mid-Cap Growth Fund |
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$ |
4,796,168 |
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$ |
3,800,556 |
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5 Party-in-Interest Transactions
Certain Plan investments are shares of mutual funds managed by T. Rowe Price, the Trustees as
defined by the Plan and, therefore, these transactions qualify as party-in-interest. Usual
and customary fees were paid by the mutual fund for the investment management services.
The Plan purchased shares of Cliffs’ common stock for $3,684,140 and sold shares of Cliffs’
common stock for $5,369,557 in 2005.
6 Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to
various risk such as interest rate, market and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably possible that
changes in the values if investment securities will occur in the near term and that such
changes could materially affect participants’ account balances and the amounts reported in
the statements of net assets available for benefits.
- 7 -
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
Form 5500, Schedule H, Part IV, Line 4i
Northshore Mining Company and Silver Bay Power Company
Retirement Savings Plan
EIN 84-1116857
Plan Number 001
December 31, 2005
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(b) |
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(c) |
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(d) |
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(e) |
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Identity of |
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Description of Investment |
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Issue, Borrower, |
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Including Maturity Date, Rate of |
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Lessor, or Similar |
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Interest, Collateral, Par or Maturity |
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Current |
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Party |
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Value |
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Cost |
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Value |
* |
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Cleveland-Cliffs Inc. Common Stock |
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Stock |
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N/A |
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$ |
4,200,576 |
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* |
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T. Rowe Price Equity Index 500 Fund |
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Mutual Fund |
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N/A |
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5,673,138 |
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* |
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T. Rowe Price Equity Spectrum Income Fund |
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Mutual Fund |
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N/A |
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6,094,416 |
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* |
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T. Rowe Price New America Growth Fund |
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Mutual Fund |
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N/A |
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4,525,100 |
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* |
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T. Rowe Price Capital Appreciation Fund |
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Mutual Fund |
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N/A |
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6,811,603 |
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* |
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T. Rowe Price Prime Reserve Fund |
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Mutual Fund |
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N/A |
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3,784,977 |
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* |
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T. Rowe Price International Stock Fund |
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Mutual Fund |
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N/A |
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4,301,865 |
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* |
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T. Rowe Price Stable Value Fund |
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Mutual Fund |
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N/A |
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4,855,761 |
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* |
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T. Rowe Price Mid-Cap Growth Fund |
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Mutual Fund |
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N/A |
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4,796,168 |
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* |
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T. Rowe Price Equity Income Fund |
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Mutual Fund |
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N/A |
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2,057,125 |
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* |
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T. Rowe Price Boston Co Small Cap Value |
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Mutual Fund |
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N/A |
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122,306 |
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* |
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T. Rowe Price Retirement 2005 Fund |
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Mutual Fund |
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N/A |
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6,197 |
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* |
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T. Rowe Price Retirement 2010 Fund |
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Mutual Fund |
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N/A |
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214,535 |
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* |
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T. Rowe Price Retirement 2015 Fund |
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Mutual Fund |
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N/A |
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118,913 |
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* |
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T. Rowe Price Retirement 2020 Fund |
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Mutual Fund |
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N/A |
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59,093 |
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* |
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T. Rowe Price Retirement 2030 Fund |
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Mutual Fund |
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N/A |
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26,911 |
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* |
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T. Rowe Price Retirement 2035 Fund |
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Mutual Fund |
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N/A |
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1,956 |
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* |
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Participant Loans |
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Notes receivable (interest at prevailing local rate) |
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N/A |
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1,420,472 |
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$ |
49,071,112 |
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| * |
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Party-in-interest to the Plan. |
- 8 -
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly caused this annual
report to be signed on their behalf by the undersigned hereunto duly authorized.
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NORTHSHORE MINING COMPANY and
SILVER BAY POWER COMPANY
RETIREMENT SAVINGS PLAN
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By:
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Pension Committee,
Plan Administrator |
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Date: June 26, 2006
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By:
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/s/ Robert J. Leroux |
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Member |
- 9 -
EXHIBIT INDEX
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| Exhibit |
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| Number |
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Description of Exhibit |
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Page |
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23
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Consent of Independent Registered
Public Accounting Firm
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Filed Herewith |
X-1