CLEVELAND-CLIFFS INC.

Previous wording

Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and other factors that may affect our future results. The following discussion should be read in conjunction with the consolidated financial statements and related notes that appear in Part II – Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Current wording

Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and other factors that may affect our future results. The following discussion should be read in conjunction with the consolidated financial statements and related notes that appear in Part II – Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. During the third quarter of 2025, we identified an immaterial error related to our accrual for certain employment costs, resulting in an understatement of Costs of goods sold in prior periods. Prior periods affected include the interim periods ended March 31, 2025 and June 30, 2025, and the interim and annual periods during the years 2022, 2023 and 2024. Refer to NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES for further information.

Previous wording

Throughout 2024, we continued to position the Company for long-term success and further established ourselves as a leading North America based steel producer. We completed the Stelco Acquisition, which diversifies our end-markets, expands our geographical presence in Canada and incorporates Stelco's industry low-cost structure into our overall asset portfolio. We also announced new strategic initiatives that are expected to provide meaningful earnings improvement in years to come; reduced our operational costs; returned substantial capital to shareholders through share repurchases; and announced new GHG emissions reduction targets after achieving our prior commitments, all with an eye toward the future and in line with our consistent strategic objectives. The Stelco Acquisition, our operational achievements and strategic initiatives further strengthen our position as a North American leader in the steel industry and are expected to create value for all Company stakeholders.

Current wording

Throughout 2025, we continued to position the Company for long-term success and further established ourselves as a leading North America based steel producer, particularly for the automotive industry. We announced a potential strategic partnership with a top-ten global steel producer, optimized our operational footprint, moved away from non-core assets, signed multi-year fixed price contracts with major automotive customers and further reduced unit costs year-over-year. The operational changes to our footprint, along with our commercial and strategic initiatives, further strengthen our position as a North American leader in the steel industry and are expected to create value for all Company stakeholders.

Previous wording

•Record safety year since becoming a steel company with lowest Total Reportable Incident Rate of 0.9, which represents a 26% improvement from prior year

Current wording

•Record safety year since becoming a steel company with lowest Total Recordable Incident Rate (including contractors) of 0.8 per 200,000 hours worked, which represents a 43% decrease since 2021, our first full-year as a steel company.

Previous wording

Steel market conditions in 2024 were driven by weaker than anticipated light vehicle production, lower demand and higher import levels. The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $772 per net ton for 2024, which was 15% lower than 2023 and the lowest annual average per net ton since 2020. Import levels were elevated in 2024, which contributed to downward pressure on HRC pricing. North American light vehicle production of 15.4 million units in 2024 was down from 15.7 million units in 2023 and significantly lower than the original expectation to exceed 16 million units. Looking forward, we expect domestic steel demand to grow as interest rates have started to decline, steel imports are currently unattractive, other end-user demand is improving, and incremental steel demand stimulated by recent government legislation and manufacturing on-shoring is realized.

Current wording

Steel market conditions in 2025 were driven by higher-than-historical HRC pricing and lower import levels, but subdued demand remained, driven by inconsistent buying behavior as our largest end markets experienced recession-like conditions. The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $851 per net ton for 2025, which was 10% higher than 2024. Finished steel import levels declined in 2025 after being elevated in early 2025 in anticipation of the implemented steel tariffs, which helped support domestic steel pricing. North American light vehicle production of 15.3 million units in 2025 was down from 15.4 million units in 2024 and remained lower than the five-year pre-COVID level of approximately 17 million units. Looking forward, we expect domestic steel demand to grow as interest rates have started to decline, steel imports are

Previous wording

The largest market for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand. Light vehicle production in 2024 was well below initial expectations. North American light vehicle production in 2024 was 15.5 million units, down from 15.7 million units in 2023. North American light vehicle production in 2025 and beyond is expected to remain above 15 million units annually. During 2024, light vehicle sales in the U.S. saw an average seasonally adjusted annualized rate of 15.8 million units sold, representing a 2% increase compared to 2023. December 2024 seasonally adjusted annualized rate was 16.8 million units sold, the highest published rate since 2021, indicating healthy consumer demand. Additionally, the average age of light vehicles on the road in the U.S. is at an all-time high of 12.6 years, surpassing the previous record set in 2023, which should support demand as older vehicles need to be replaced. As a leading supplier of automotive-grade steel in the U.S., we expect to benefit from healthy vehicle production over the coming years.

Current wording

The largest market for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand. Light vehicle production in 2025 remained below the five-year pre-COVID level of approximately 17 million units. North American light vehicle production in 2025 was 15.3 million units, down from 15.4 million units in 2024. During 2025, there were 16.3 million light vehicles sold in the U.S., representing a 2% increase compared to 2024. The average age of light vehicles on the road in the U.S. is at an all-time high of 12.8 years, surpassing the previous record set in 2024, which should support demand as older vehicles need to be replaced. Furthermore, we expect the 25% tariff on imports of automobiles and certain automobile parts, which were implemented during 2025, to lead to increased demand for domestically produced vehicles that consume domestically made steel. We also expect that a declining interest rate environment would increase demand for vehicles in the U.S. as consumers have been cautious due to elevated interest rates. As a leading supplier of automotive-grade steel in the U.S., we expect to benefit from healthier domestic vehicle production over the coming years as we continue to be an established and reliable supplier.

Previous wording

Since 2021, the price for busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., has continued to average well above the prior annual ten-year average of approximately $400 per long ton. The busheling price averaged $429 per long ton during 2024. We expect the supply of busheling scrap to further tighten due to decreasing prime scrap generation from original equipment manufacturers and the growth of EAF capacity in the U.S., reduced metallics import availability, and a push for expanded scrap use globally. As we are fully integrated and have primarily a blast furnace footprint, increased prices for busheling scrap in the U.S. bolster our competitive advantage, as we source the majority of our iron feedstock from our stable-cost mining and pelletizing operations in Minnesota and Michigan.

Current wording

Since 2021, the price for busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., has continued to average well above the prior annual ten-year average of approximately $385 per long ton. The busheling price averaged $424 per long ton during 2025. We expect the supply of busheling scrap to further tighten due to decreasing prime scrap generation from original equipment manufacturers and the growth of EAF capacity in the U.S., reduced metallics import availability, and a push for expanded scrap use globally. As we are fully integrated and have primarily a blast furnace footprint, increased prices for busheling scrap in the U.S. bolster our competitive advantage, as we source the majority of our iron feedstock from our stable-cost mining and pelletizing operations in Michigan and Minnesota.

Previous wording

During 2024, we continued our cost cutting efforts, which began in 2023, further reducing our year-over-year cost per ton as we worked through higher cost inventory and lower natural gas, coal and alloy costs mitigated any inflationary cost increases.

Current wording

During 2025, we continued our cost-cutting efforts, which began in 2023. We further reduced our year-over-year cost per ton as we worked through higher cost inventory, and we experienced lower coal and alloy costs, which helped mitigate the inflationary cost increases we experienced. We expect to continue our cost-cutting efforts in 2026 and maintain a strong focus on cost discipline for the long term.

Previous wording

Revenues from our Steelmaking segment decreased by 13% during the year ended December 31, 2024, as compared to the prior year, primarily due to:

Current wording

Revenues from our Steelmaking segment decreased by $576 million, or 3%, during the year ended December 31, 2025, as compared to the prior year, primarily due to:

Previous wording

Gross margin from our Steelmaking segment decreased by $1.3 billion, during the year ended December 31, 2024, as compared to the prior year, primarily due to:

Current wording

Gross margin from our Steelmaking segment decreased by $922 million during the year ended December 31, 2025, as compared to the prior year, primarily due to:

Previous wording

Adjusted EBITDA from our Steelmaking segment for the year ended December 31, 2024, decreased by $1.1 billion, as compared to 2023, due to the decreased gross margin from our operations. Additionally, our Steelmaking Adjusted EBITDA included $457 million and $549 million of Selling, general and administrative expenses for the years ended December 31, 2024 and 2023, respectively.

Current wording

Adjusted EBITDA from our Steelmaking segment for the year ended December 31, 2025, decreased by $736 million, as compared to 2024, due to the decreased financial performance from our Steelmaking operations. Additionally, our Steelmaking Adjusted EBITDA included $515 million and $457 million of Selling, general and administrative expenses for the years ended December 31, 2025 and 2024, respectively.

Previous wording

During the year ended December 31, 2024, our consolidated Revenues decreased by $2.8 billion, as compared to 2023. The decrease was primarily due to the decrease in the average steel product selling price of $90 per net ton and a decrease of 0.8 million net tons of steel shipments from our Steelmaking segment.

Current wording

During the year ended December 31, 2025, our consolidated Revenues decreased by $575 million, as compared to 2024. The decrease was primarily due to the decrease in the average steel product selling price of $76 per net ton as a result of product mix from our Steelmaking segment.

Previous wording

During the year ended December 31, 2024, our consolidated gross margin decreased by $1.3 billion, as compared to 2023. See "— Steelmaking Results" above for further detail on our operating results.

Current wording

During the year ended December 31, 2025, our consolidated gross margin decreased by $923 million, as compared to 2024. See “— Steelmaking Results” above for further detail on our operating results.

Previous wording

The increase of Acquisition-related costs primarily relates to third-party expenses associated with the Stelco Acquisition in 2024. Refer to NOTE 3 - ACQUISITIONS for further information.

Current wording

Acquisition-related costs decreased by$43 million during the year ended December 31, 2025 compared to 2024, primarily reflecting the absence in 2025 of significant third-party costs that were incurred in 2024 in connection with the Stelco Acquisition. Refer to NOTE 3 - ACQUISITIONS for further information.

Previous wording

During the year ended December 31, 2024, our consolidated Net periodic benefit credits other than service cost component increased $43 million compared to 2023. This increase primarily relates to an increase in actuarial gains reclassified from AOCI to net income and a decrease in interest cost year over year. Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

Current wording

During the year ended December 31, 2025, our consolidated Net periodic benefit credits other than service cost component decreased $24 million compared to 2024. This decrease primarily relates to an approximately $15 million year-over-year decline in amounts recognized from Accumulated other comprehensive income, largely driven by a reduction in actuarial gains and from a $5 million increase in special termination charges recorded in relation to decisions to indefinitely idle facilities in each respective period. Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

Previous wording

During the year ended December 31, 2024, our consolidated Other non-operating income (loss)decreased by $42 million compared to 2023. The decrease primarily relates to a loss recorded in 2024 as a result of a fair value adjustment of the MinnTac option, as well as a loss recorded on foreign currency contracts obtained in connection with financing the Stelco Acquisition. Refer to NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS and NOTE 15 - DERIVATIVE INSTRUMENTS AND HEDGING for further information.

Current wording

During the year ended December 31, 2025, our consolidated Changes in fair value of derivatives, netincreased by $4 million compared to 2024. The increase is primarily a reflection of a full year of fair value adjustments to the MinnTac option, partially offset by a one-time loss recorded on foreign currency contracts obtained in connection with financing the Stelco Acquisition in 2024. Refer to NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS and NOTE 15 - DERIVATIVE INSTRUMENTS AND HEDGING for further information.

Previous wording

Our effective tax rate is impacted by state income taxes and permanent items, primarily depletion. It also is affected by discrete items that may occur in any given period but are not consistent from period to period. The following represents a summary of our tax provision and corresponding effective rates:

Current wording

Our effective tax rate is impacted by state income taxes and permanent items. It also is affected by discrete items that may occur in any given period but are not consistent from period to period. The following represents a summary of our tax provision and corresponding effective rates:

Previous wording

The increase in income tax benefit in 2024, as compared to income tax expense in 2023, is predominantly related to the decrease in the pre-tax book income year-over-year. See NOTE 11 - INCOME TAXES for further information.

Current wording

See NOTE 11 - INCOME TAXES for further information.

Previous wording

•A $1.3 billion decrease in net income after adjustments for non-cash items due to lower gross margins resulting from a decrease in selling prices and sales volumes for our steel products. See "— Steelmaking Results" above for further detail on our operating results.

Current wording

•A $989 million decrease in net income after adjustments for non-cash items due to lower gross margins resulting from a decrease in selling prices for our steel products. See "— Steelmaking Results" above for further detail on our operating results.

Previous wording

•A $2.5 billion increase in cash used for acquisitions, net of cash acquired related to the Stelco Acquisition, which was completed on November 1, 2024. Refer to NOTE 3 - ACQUISITIONS for further information.

Current wording

•A $2.5 billion decrease in cash used for acquisitions, net of cash acquired related to the Stelco Acquisition, which was completed on November 1, 2024. Refer to NOTE 3 - ACQUISITIONS for further information.

Previous wording

•During the first quarter of 2025, we issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 at par. The net proceeds will be used for general corporate purposes, including the repayment of borrowings under our ABL Facility.

Current wording

•In February 2025, we issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 and used the proceeds primarily to repay borrowings under our ABL Facility.

Previous wording

Our primary sources of liquidity are Cash and cash equivalents, cash generated from our operations, availability under the ABL Facility and access to capital markets. Cash and cash equivalents, which totaled $54 million as of December 31, 2024, include cash on hand and on deposit, as well as short-term securities held for the primary purpose of general liquidity. The combination of cash and availability under our ABL Facility equated to $2.6 billion in liquidity as of December 31, 2024. During 2024, we issued $1.4 billion in aggregate principal amount of 7.000% 2032 Senior Notes, $900 million in aggregate principal amount of 6.875% 2029 Senior Notes, and $900 million in aggregate principal amount of 7.375% 2033 Senior Notes. We used a portion of the net proceeds from the initial offering of the 7.000% 2032 Senior Notes and available liquidity to repurchase $829 million in aggregate principal amount of our 6.750% 2026 Secured Senior Notes pursuant to a tender offer and subsequent redemption. We used remaining net proceeds of the debt issuances to finance a portion of the Stelco Acquisition. We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next 12 months and for the foreseeable future.

Current wording

Our primary sources of liquidity are Cash and cash equivalents, cash generated from our operations, availability under our ABL Facility and access to the capital markets. Cash and cash equivalents, which totaled $57 million as of December 31, 2025, include cash on hand and on deposit, as well as short-term securities held for the primary purpose of general liquidity. The combination of cash and availability under our ABL Facility equated to $3.3 billion in liquidity as of December 31, 2025. During 2025, we issued $850 million in aggregate principal amount of our 7.500% 2031 Senior Notes and $1,125 million in aggregate principal amount of our 7.625% 2034 Senior Notes, as well as 75 million of our common shares resulting in $951 million of net cash proceeds. In totality, we used the proceeds from these transactions to extend debt maturities by redeeming all remaining 2027 senior notes and repay borrowings on our ABL Facility. We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next 12 months and for the foreseeable future.

Previous wording

Our ABL Facility, which matures in June 2028, has a maximum borrowing base of $4.75 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. Our ABL Facility includes a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans. As of December 31, 2024, outstanding letters of credit totaled $62 million, which reduced availability. We issue standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations and insurance. Our ABL Facility agreement contains various financial and other covenants. As of December 31, 2024, we were in compliance with all of our ABL Facility covenants.

Current wording

Our ABL Facility, which matures in June 2028, has a maximum borrowing base of $4.75 billion. The available borrowing base, which was $3.2 billion as of December 31, 2025, is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. Our ABL Facility includes a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans. As of December 31, 2025, outstanding letters of credit totaled $65 million, which reduced availability under our ABL Facility. We issue standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations and insurance. Our ABL Facility agreement contains various financial and other covenants. As of December 31, 2025, we were in compliance with all of our ABL Facility covenants.

Previous wording

We have the capability to issue additional unsecured notes and, subject to the limitations set forth in our existing senior notes indentures and ABL Facility, additional secured debt, if we elect to access the debt capital markets. On February 6, 2025, we issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 at par. The net proceeds will be used for general corporate purposes, including the repayment of borrowings under our ABL Facility. However, our ability to issue additional notes could be limited by market conditions. We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such redemptions or repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material.

Current wording

We have the capability to issue additional unsecured notes and, subject to the limitations set forth in our existing senior notes indentures and ABL Facility, additional secured notes if we elect to access the debt capital markets. We currently have approximately $3.2 billion of secured note capacity. However, our ability to issue additional notes could be limited by market conditions. We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt or equity financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such redemptions or repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material.

Previous wording

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES and NOTE 21 - SUBSEQUENT EVENTS for further information on our ABL Facility and debt.

Current wording

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our ABL Facility and debt.

Previous wording

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $700 million, which primarily consists of sustaining capital spend of approximately $600 million, including Stelco, as well as initial spend on our capital projects at Middletown Works, Butler Works and Weirton. Each of these three capital projects are expected to be value-adding growth projects that have governmental support.

Current wording

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $700 million, which primarily consists of sustaining capital spend.

Previous wording

We have principal long-term debt of $7.1 billion with maturities starting in 2027. Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our long-term debt and interest.

Current wording

As of December 31, 2025, our Long-term debt was $7.3 billion, with our ABL Facility maturing in 2028 and senior notes maturities starting in 2029. Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our long-term debt and interest expense.

Previous wording

We have future minimum lease payments under noncancellable finance and operating leases. As of December 31, 2024, the current and non-current liabilities for our lease obligations were $113 million and $594 million, respectively. Refer to NOTE 12 - LEASE OBLIGATIONS for further information.

Current wording

We have future minimum lease payments under noncancellable finance and operating leases. As of December 31, 2025, the current and non-current liabilities for our lease obligations were $115 million and $569 million, respectively. Refer to NOTE 12 - LEASE OBLIGATIONS for further information.

Previous wording

We make both required and discretionary pension contributions. Required contributions are based on minimum funding requirements pursuant to ERISA regulations. We expect to make $69 million in pension contributions and payments in 2025, which is down from $119 million in 2024. The cash requirements for our OPEB plans consist of VEBA contributions and direct payments from corporate assets primarily for medical and drug costs. We expect to make $74 million in OPEB contributions and net payments from corporate assets in 2025, which is down from $76 million in 2024. Contributions and payments in future years can significantly change and will depend on the actual returns on assets, discount rates, actual health care trend rates, government regulations, changes to employee benefits through labor agreements and other demographic factors. Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

Current wording

We make both required and discretionary pension contributions. Required contributions are based on minimum funding requirements pursuant to ERISA regulations. We expect to make $43 million in pension contributions and payments in 2026, which is down from $68 million in 2025. The cash requirements for our OPEB plans consist of VEBA contributions and direct payments from corporate assets primarily for medical and drug costs. We expect to make $83 million in OPEB contributions and net payments from corporate assets in 2026, which is down from $86 million in 2025. Contributions and payments in future years can significantly change and will depend on the actual returns on assets, discount rates, actual health care trend rates, government regulations, changes to employee benefits through labor agreements and other demographic factors. Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

Previous wording

In the normal course of business, we are a party to certain off-balance sheet arrangements that are not reflected on our Statements of Consolidated Financial Position. These arrangements include unconditional purchase obligations, surety bonds and letters of credit. Our unconditional purchase obligations include minimum "take or pay" commitments, such as minimum electric power demand charges, minimum coal, diesel and natural gas purchase commitments, minimum railroad transportation commitments and minimum port facility usage commitments.

Current wording

In the normal course of business, we are a party to certain off-balance sheet arrangements that are not reflected on our Statements of Consolidated Financial Position. These arrangements include unconditional purchase obligations, surety bonds and letters of credit. Our unconditional purchase obligations include minimum "take or pay" commitments, such as minimum electric power demand charges, minimum coal, coke, diesel, industrial gas and natural gas purchase commitments, minimum railroad transportation commitments and minimum port facility usage commitments.

Previous wording

We use surety bonds and letters of credit to provide financial assurance for certain obligations. As of December 31, 2024, we had $271 million of outstanding surety bonds and surety-backed letters of credit. The use of surety bonds and surety-backed letters of credit has no impact on our liquidity. Additionally, as of December 31, 2024, we had $62 million of outstanding letters of credit issued under our ABL Facility, which reduced our availability thereunder.

Current wording

We use surety bonds and letters of credit to provide financial assurance for certain obligations. As of December 31, 2025, we had $278 million of outstanding surety bonds and surety-backed letters of credit. The use of surety bonds and surety-backed letters of credit has no impact on our liquidity. Additionally, as of December 31, 2025, we had $65 million of outstanding letters of credit issued under our ABL Facility, which reduced our availability thereunder.

Previous wording

The following provides a description and reconciliation of each of our non-GAAP financial measures to its most directly comparable respective GAAP measure. The presentation of these measures is not intended to be considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with GAAP. The presentation of these measures may be different from non-GAAP financial measures used by other companies.

Current wording

The following provides a description and reconciliation of our non-GAAP financial measure to its most directly comparable GAAP measure. The presentation of this measure is not intended to be considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with GAAP. The presentation of this measure may be different from non-GAAP financial measures used by other companies.

Previous wording

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of December 31, 2024 have fully and unconditionally, and jointly and severally, guaranteed the obligations under the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.000% 2032 Senior Notes and the 7.375% 2033 Senior Notes issued by Cleveland-Cliffs Inc. on a senior unsecured basis. See NOTE 8 - DEBT AND CREDIT FACILITIES for further information.

Current wording

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of December 31, 2025 have fully and unconditionally, and jointly and severally, guaranteed the obligations under the 4.625% 2029 Senior Notes, the 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.500% 2031 Senior Notes, the 7.000% 2032 Senior Notes, the 7.375% 2033 Senior Notes and the 7.625% 2034 Senior Notes issued by Cleveland-Cliffs Inc. on a senior unsecured basis. See NOTE 8 - DEBT AND CREDIT FACILITIES for further information.

Previous wording

As of December 31, 2024, the guarantee of a Guarantor subsidiary with respect to the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.000% 2032 Senior Notes and the 7.375% 2033 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with:

Current wording

As of December 31, 2025, the guarantee of a Guarantor subsidiary with respect to the 4.625% 2029 Senior Notes, the 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.500% 2031 Senior Notes, the 7.000% 2032 Senior Notes, the 7.375% 2033 Senior Notes and the 7.625% 2034 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with:

Previous wording

Additionally, for the year ended December 31, 2024, the obligated group had Revenues of $81 million and Cost of goods sold of $66 million, in each case with other related parties.

Current wording

Additionally, for the year ended December 31, 2025, the obligated group had Revenues of $84 million and Cost of goods sold of $73 million, in each case with other related parties.

Previous wording

In the ordinary course of business, we are exposed to market risk and price fluctuations related to the sale of our products, which are impacted primarily by market prices for HRC and other related spot pricing indices, and the purchase of energy and raw materials used in our operations, which are impacted by market prices for natural gas, electricity, ferrous and stainless steel scrap, metallurgical coal, coke, zinc, chrome, nickel and other alloys. Our strategy to address market risk has generally been to obtain competitive prices for our products and services and allow operating results to reflect market price movements dictated by supply and demand; however, we make forward physical purchases and enter into hedge contracts to manage exposure to price risk related to the purchases of certain raw materials and energy used in the production process.

Current wording

In the ordinary course of business, we are exposed to price fluctuations in both the production and sale of our products. Price fluctuations related to the production of our products are impacted by market prices for natural gas, electricity, ferrous and stainless steel scrap, metallurgical coal, coke, zinc, chrome, nickel and other alloys. Price fluctuations related to the sale of our products are primarily impacted by market prices for HRC and other related spot indices. Our financial results can vary for our operations as a result of these fluctuations.

Previous wording

Our strategy to address volatile natural gas rates and electricity rates includes improving efficiency in energy usage, identifying alternative providers and utilizing the lowest cost alternative fuels. If we are unable to align fixed and variable components between customer contracts and supplier purchase agreements, we routinely evaluate the use of derivative instruments to hedge market risk. As a result, we use cash-settled commodity price swaps to hedge a portion of our exposure from our natural gas and electricity requirements. Our hedging strategy is designed to protect us from excessive pricing volatility. However, since we do not typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.

Current wording

If we are unable to align fixed and variable components between customer contracts and supplier purchase agreements, we routinely evaluate the use of derivative instruments to hedge market risk. As a result, we use cash-settled commodity price swaps to hedge a portion of our exposure from our natural gas and electricity requirements. Our hedging strategy is designed to protect us from excessive pricing volatility. However, since we do not typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.

Previous wording

Any resulting changes in fair value would be recorded as adjustments to AOCI, net of income taxes, or recognized in net earnings, as appropriate. These hypothetical losses would be partially offset by the benefit of lower prices paid for the related commodities.

Current wording

Any resulting changes in fair value would be recorded as adjustments to AOCI, net of income taxes, or recognized in net earnings, as appropriate. These hypothetical losses would be partially offset by the benefit of lower prices paid for the related commodities or the benefit of higher selling prices related to the HRC price, respectively.

Previous wording

We assign goodwill arising from acquired companies to the reporting units that are expected to benefit from the synergies of the acquisition. Goodwill is tested on a qualitative or quantitative basis for impairment at the reporting unit level on an annual basis (October 1) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We have an unconditional option to bypass the qualitative test for any reporting unit in any period and proceed directly to performing the quantitative test. Should our qualitative test indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative test to determine the amount of impairment, if any, to the carrying value of the reporting unit and its associated goodwill.

Current wording

We assign goodwill arising from acquired companies to the reporting units that are expected to benefit from the synergies of the acquisition. Goodwill is tested on a qualitative or quantitative basis for impairment at the reporting unit level on an annual basis (October 1) and between annual tests if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We have an unconditional option to bypass the qualitative test for any reporting unit in any period and proceed directly to performing the quantitative test. Should our qualitative test indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative test to determine the amount of impairment, if any, to the carrying value of the reporting unit and its associated goodwill.

Previous wording

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and if a quantitative assessment is deemed necessary in determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using the guideline public company method, the discounted cash flow methodology, or a combination of both, which considers forecasted cash flows discounted at an estimated weighted average cost of capital. Assessing the recoverability of our goodwill requires significant assumptions regarding discount rates, market multiples, the estimated future cash flows and other factors to determine the fair value of a reporting unit, including, among other things, estimates related to forecasts of future revenues, Adjusted EBITDA, capital expenditures and working capital requirements, which are based upon our long-range plan estimates. The assumptions used to calculate the fair value of a reporting unit may change from year to year based on operating results, market conditions and other factors. Changes in these assumptions could materially affect the determination of fair value for each reporting unit.

Current wording

Application of a goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit, if a quantitative assessment is deemed necessary. The fair value of each reporting unit is estimated using the guideline public company method, the discounted cash flow methodology, or a combination of both, which considers forecasted cash flows discounted at an estimated weighted average cost of capital. Assessing the recoverability of our goodwill requires significant assumptions regarding discount rates, market multiples, the estimated future cash flows and other factors to determine the fair value of a reporting unit, including, among other things, estimates related to forecasts of future revenues, Adjusted EBITDA, capital expenditures and working capital requirements, which are based upon our long-range plan estimates. The assumptions used to calculate the fair value of a reporting unit may change based on operating results, market conditions and other factors. Changes in these assumptions could materially affect the determination of fair value for each reporting unit.

Previous wording

During the year ended December 31, 2024, we concluded there were no triggering events resulting in the need for an asset impairment assessment except for the announcement of the indefinite idle of our Weirton tinplate production plant, which resulted in a $79 million asset impairment charge.

Current wording

During the year ended December 31, 2025, we concluded there were no triggering events resulting in the need for an asset impairment assessment except for the announcement of the indefinite idle of our Steelton rail production plant, which resulted in a $39 million asset impairment charge.