Cleveland-Cliffs Inc
2000 Annual Report
 
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NOTES  TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – Income Taxes
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2000 and 1999 are as follows:

  (In Millions)
  2000 1999
Deferred tax assets:    
    Postretirement benefits other than pensions $21.7 $21.4
    Capital loss carryforward 18.5  
    Other liabilities 12.9 13.2
    Alternative minimum tax credit carryforwards 4.2 8.9
    Product inventories 6.3 2.5
    Pre-operating loss of CAL   4.5
    Other 13.2 12.2
      Total deferred tax assets 76.8 62.7
     
Deferred tax liabilities:    
    CAL properties 30.4  
    Investment in ventures 17.0 20.7
    Properties 21.8 20.2
    Other 11.4 8.4
      Total deferred tax liabilities 80.6 49.3
        Net deferred tax assets (liability) $(3.8) $13.4

“Deferred and refundable income taxes” include a refund of approximately $14 million of current and prior years’ federal tax payments associated with the Company’s adjustment in its CAL tax basis of properties. Capital loss carryforwards totaling $53 million are available to offset capital gains through 2005.

The components of the Company’s provision for income taxes are as follows:

  (In Millions)
  2000 1999 1998
Current $(5.9) $0.1 $14.8
Deferred 4.4 (.2) (.4)
  $(1.5) $(.1) $14.4

In the fourth quarter of 2000, a favorable tax adjustment of $5.2 million was recorded reflecting the Company’s continuing assessment of its tax obligations, relating to the expected outcome of federal audit issues for tax years 1995 and 1996. Additional tax and interest payment of approximately $5 million related to the audit are expected to occur in 2001.

In 1999, the Company made additional tax and interest payments of $1.5 million related to final settlement of audit issues for years 1993 and 1994. In 1998, a favorable tax adjustment of $3.5 million was recorded which primarily reflected the expected outcome of 1993 and 1994 audit issues.

Reconciliation of the Company’s income tax to the tax at the United States statutory rate follows:

  (In Millions)
  2000 1999 1998
Tax at statutory rate of 35 percent $5.8 $1.7 $25.1
Increase (decrease) due to:      
    Percentage depletion in excess of cost depletion (2.6) (1.8) (5.9)
    Effect of foreign taxes (.2) .2  
    Prior years’ tax adjustments (4.9) (.3) (4.7)
    Other items – net .4 .1 (.1)
Income tax expense (credit) $(1.5) $(.1) $14.4

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