Filed by USX Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: USX Corporation
Registration Statement No. 333-71454
USX CORPORATION REPORTS U. S. STEEL GROUP
THIRD QUARTER 2001 RESULTS
Earnings Highlights
(Dollars in millions except per diluted share data)
3Q 2001 3Q 2000
$(18) $25
Net income (loss) adjusted for $(0.22) $0.26
special items
- per diluted share
$(23) $19
Net income (loss)
$(0.28) $0.19
Net income (loss) per diluted share
$1,660 $1,475
Revenues and other income
PITTSBURGH, October 22, 2001 -- USX-U. S. Steel Group (NYSE: X) reported an
adjusted third quarter 2001 net loss of $18 million, or 22 cents per diluted
share, compared with adjusted net income of $25 million, or 26 cents per diluted
share, in the third quarter 2000.
U. S. Steel Group recorded a third quarter 2001 net loss of $23 million, or
28 cents per diluted share. Included was the net effect of special items
related to the Fairless facility shutdowns and USS-POSCO insurance recoveries
which together reduced net income by $5 million, or 6 cents per share. Third
quarter 2000 net income of $19 million, or 19 cents per diluted share, included
after-tax charges of $6 million related to USX's share of restructuring and
impairment charges at Republic Technologies International, LLC.
In third quarter 2001, U. S. Steel Group recorded a loss from reportable
segments of $8 million, or $2 per ton, on steel shipments of 3.6 million tons.
U. S. Steel Group's Domestic Steel segment recorded a loss from operations
of $47 million, or $18 per ton, which included $21 million income from
U. S. Steel's share of insurance recoveries in excess of facility repair costs
for the cold mill fire at USS-POSCO on May 31, 2001. Aside from the insurance
recoveries, U. S. Steel's share of USS-POSCO's operating results was adversely
impacted by the higher cost of operations following the fire. Claims for
reimbursement for such higher costs and lost volumes under USS-POSCO's business
interruption insurance coverage are pending and will be reflected in income as
received in future periods. The cold mill is expected to resume production
during first quarter 2002, although full production may not be achieved until
mid-year.
Domestic Steel shipments in third quarter 2001 were 2.6 million net tons,
about the same as third quarter 2000. The average realized domestic steel price
was $420 per ton in third quarter 2001 compared with $454 per ton in the third
quarter 2000 and $429 per ton in the second quarter 2001. The reduction from
the second quarter 2001 was primarily related to product mix.
Commenting on third quarter results for Domestic Steel, USX Corporation
Board Chairman Thomas J. Usher said, "Domestic Steel's commercial environment
remains extremely difficult due to the weakening economy and the devastating
impact that global oversupply continues to have on the U.S. steel industry."
U. S. Steel Kosice, s.r.o. (USSK), the Slovak Republic steel operation
acquired during the fourth quarter 2000, reported third quarter 2001 segment
income of $39 million, or $39 per ton.
"USSK enjoyed another strong quarter in a difficult European and
international commercial climate," Usher said. Total USSK shipments in third
quarter 2001 were 1.0 million net tons, down from 1.1 million tons in second
quarter 2001, as shipments of low value-added products declined. The average
USSK realized steel price in the third quarter was $256 per ton, up from $249
per ton in second quarter 2001, with the increase primarily related to improved
product mix and hot rolled pricing.
On August 14, 2001, U. S. Steel announced its intention to permanently
close the cold rolling and tin mill operations at Fairless Works near
Philadelphia on or around November 12, 2001. These facilities' combined annual
finishing capacity is 1.5 million tons. U. S. Steel intends to continue
operating Fairless Works' hot dip galvanizing line, subject to market
conditions. A pretax charge of $29 million was recorded in the third quarter and
an additional $6 to $11 million is expected to be recorded in the fourth
quarter.
"Fairless Works was yet another American victim of dumped and subsidized
steel," said Usher, "but we remain optimistic about the Bush Administration's
commitment and strategy to restore a level playing field for American steel
companies and their workers. As we await the resolution of the Section 201
cases, we will continue to encourage Congress and the Administration to address
the import problem. In addition, we will continue to file trade cases against
nations responsible for unfairly traded imports. In late September, we joined
seven other steel producers in filing trade law actions against 20 countries who
are major exporters of cold-rolled steel products to the U.S.
"Despite the current difficulties facing the steel industry, U. S. Steel
has pursued strategic investments that we expect will enhance future
profitability and shareholder value. During the third quarter, we continued
development of Straightline, a new technology-enabled steel distributor, which
will open for business in certain parts of the country in the fourth quarter
with additional development and regional expansion planned for 2002. USSK
continued with the tin mill expansion and vacuum degasser projects.
"During the third quarter, we also completed the repairs to the Mon Valley
Works No. 3 blast furnace and, in light of expected slow market conditions in
the fourth quarter, we plan to advance the schedule for a maintenance outage on
the Gary Works No. 6 blast furnace. Additionally, USSK has scheduled several
outages in the fourth quarter which are expected to limit shipments and increase
repair and maintenance expenses."
Usher added, "The domestic order rate for the fourth quarter is currently
running lower than the third quarter rate. For the full year 2001, we now
expect total shipments to approximate 13.5 to 13.8 million net tons. Domestic
Steel shipments should account for approximately 10 million net tons of the
total and USSK about 3.5 to 3.8 million net tons."
In connection with the proposed separation of USX Corporation's steel and
energy businesses, U. S. Steel completed two private placements of Senior Notes
during the third quarter having an aggregate principal amount of $535 million.
The proposed separation of the U. S. Steel Group and the Marathon Group into two
independent companies is subject to approval at a special meeting of
stockholders to be held on October 25. The reorganization is also subject to
several other conditions including receipt of a favorable ruling from the
Internal Revenue Service as to the tax-free status of the separation. The
separation is expected to occur at year-end, subject to the absence of any
materially adverse change in business conditions for the energy and/or steel
business, delay in obtaining the IRS ruling or other unfavorable circumstances.
Shareholders should note that failure to cast a vote will have the same effect
as voting against the separation. Shareholders may vote in person, by returning
their proxy card, or by telephone or Internet.
*****
This release contains forward-looking statements with respect to the
expected restart of the USS-POSCO cold rolling mill, the regional expansion of
Straightline, market conditions, costs, shipments and prices. One factor, among
others, that may affect the restart of the cold rolling mill at the USS-POSCO
joint venture is the timing of completion of repairs. Some factors that could
affect the expansion of Straightline include economic conditions and the
customers' acceptance of this technology-based buying approach. Some factors,
among others, that could affect full year 2001 market conditions, costs,
shipments and prices include import levels, customer inventory levels, plant
operating performance, domestic natural gas prices and usage, and U.S. and
European economic performance and political developments. In accordance with
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, USX has included in Form 10-K for the year ended December 31, 2000, as
amended in Forms 10-K/A, and in subsequent Forms 10-Q and Forms 8-K, cautionary
statements identifying important factors, but not necessarily all factors, that
could cause actual results to differ materially from those set forth in the
forward-looking statements.
A Statement of Operations and Preliminary Supplemental Statistics for the
U. S. Steel Group and a Consolidated Statement of Operations for USX Corporation
are attached.
The company will conduct a conference call on third quarter earnings on
Monday, October 22 at 10 a.m. EDST. To listen to the webcast of the conference
call, visit the USX website, www.usx.com and click on the "U. S. Steel Group"
button, then the "Investor Services" button. Replays of the conference call
will be available until October 29.
U. S. STEEL GROUP OF USX CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
------------------------------------
Third Quarter Nine Months
Ended Ended
September 30 September 30
(Dollars in millions,
except per share amounts) 2001 2000 2001 2000
---------------------------------------------------------------------
REVENUES AND OTHER INCOME:
Revenues $1,645 $1,462 $4,888 $4,673
Income from investees 11 6 51 13
Net gains on disposal of assets 4 6 20 34
Other income (loss) - 1 2 (1)
------ ------ ------ ------
Total revenues and other income 1,660 1,475 4,961 4,719
------ ------ ------ ------
COSTS AND EXPENSES:
Cost of revenues
(excludes items shown below) 1,519 1,344 4,658 4,234
Selling, general and administrative
expenses (credits) 7 (56) 19 (176)
Depreciation, depletion and amortization 94 69 246 222
Taxes other than income taxes 65 58 191 176
------ ------ ------ ------
Total costs and expenses 1,685 1,415 5,114 4,456
------ ------ ------ ------
INCOME (LOSS) FROM OPERATIONS (25) 60 (153) 263
Net interest and other financial costs 38 27 74 75
------ ------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES (63) 33 (227) 188
Provision (credit) for income taxes (40) 14 (183) 70
------ ------ ------ ------
NET INCOME (LOSS) (23) 19 (44) 118
Dividends on preferred stock 2 2 6 6
------ ------ ------ ------
NET INCOME (LOSS) APPLICABLE TO
STEEL STOCK $(25) $17 $(50) $112
====== ====== ====== ======
STEEL STOCK DATA:
Net income (loss) $(25) $17 $(50) $112
- Per share
o - basic (.28) .19 (.56) 1.27
- diluted (.28) .19 (.57) 1.27
Dividends paid per share .10 .25 .45 .75
Weighted average shares, in thousands
- Basic 89,193 88,738 89,003 88,554
- Diluted 89,193 88,738 89,003 88,556
The following notes are an integral part of this financial statement.
U. S. STEEL GROUP OF USX CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENT
--------------------------------------
1.The statement of operations of the U. S. Steel Group includes the
results of operations for the businesses of USX other than
businesses included in the Marathon Group and a portion of USX's
net financial costs, general and administrative costs and income
taxes attributed to the groups in accordance with USX's accounting
and tax allocation policies. This statement should be read in
connection with the consolidated statement of operations of USX.
2.On March 1, 2001, USX completed the purchase of the tin mill
products business of LTV Corporation (LTV), which is now operated
as East Chicago Tin. In this noncash transaction, USX assumed
approximately $66 million of certain employee related obligations
from LTV. The acquisition was accounted for using the purchase
method of accounting. Results of operations for the nine months of
2001 include the operations of East Chicago Tin from the date of
acquisition.
On March 23, 2001, Transtar, Inc. (Transtar) completed its
previously announced reorganization with its two voting
shareholders, USX and Transtar Holdings, L.P. (Holdings), an
affiliate of Blackstone Capital Partners L.P. As a result of this
transaction, USX became sole owner of Transtar and certain of its
subsidiaries. Holdings became owner of the other subsidiaries of
Transtar. USX accounted for the change in its ownership interest
in Transtar using the purchase method of accounting. The U. S.
Steel Group recognized in the nine months of 2001, a pretax gain of
$68 million (included in income from investees) and a favorable
deferred tax adjustment of $33 million related to this transaction.
USX previously accounted for its investment in Transtar under the
equity method of accounting.
3.USX has a 16% investment in Republic Technologies International LLC
(Republic) which was accounted for under the equity method of
accounting. During the first quarter of 2001, USX discontinued
applying the equity method since investments in and advances to
Republic had been reduced to zero. Also, USX has recognized
certain debt obligations of $14 million previously assumed by
Republic. On April 2, 2001, Republic filed a voluntary petition
with the U.S. Bankruptcy Court to reorganize its operations under
Chapter 11 of the U.S. Bankruptcy Code. In the first quarter of
2001, as a result of Republic's action, the U. S. Steel Group
recorded a pretax charge of $74 million for potentially
uncollectible receivables from Republic.
4.Interest and other financial costs in the nine months of 2001
includes a favorable adjustment of $67 million and provision for
income taxes includes an unfavorable adjustment of $15 million
related to prior years' taxes.
5.On August 14, 2001, USX announced its intention to permanently
close the cold rolling and tin mill operations at U. S. Steel's
Fairless Works. In the third quarter of 2001, the U. S. Steel
Group recorded a pretax charge of $29 million relative to the
shutdown.
U. S. STEEL GROUP OF USX CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENT (Continued)
------------------------------------------------
6.On July 31, 2001, USX announced that its board of directors
approved the definitive plan of reorganization to separate the
energy and steel businesses of USX (Proposed Separation). The
Proposed Separation envisions a tax-free spin-off of the steel
business of USX into a freestanding, publicly traded company to be
known as United States Steel Corporation. Holders of current USX-U.
S. Steel Group Common Stock will become holders of United States
Steel Corporation Common Stock. Holders of current USX-Marathon
Group Common Stock will continue to hold their shares in USX which
will be renamed Marathon Oil Corporation. The Proposed Separation
does not contemplate a cash distribution to stockholders. The
Proposed Separation is subject to the approval of the holders of a
majority of the outstanding shares of each class of current USX
common stock, receipt of a favorable private letter ruling from the
Internal Revenue Service (IRS) on the tax-free nature of the
transaction, completion of necessary financing arrangements and
receipt of necessary regulatory and third party consents. The
transaction is expected to occur on or about December 31, 2001.
7.On July 2, 2001, a corporate reorganization was implemented to
create a new holding company structure. USX became a holding
company that owns all of the outstanding equity of Marathon Oil
Company, an Ohio Corporation which, directly and indirectly, owns
and operates the businesses of the USX-Marathon Group, and United
States Steel LLC, a Delaware limited liability company which,
directly and indirectly, owns and operates the businesses of the
USX-U. S. Steel Group. The reorganization will not have any impact
on the results of operations or financial position of USX
Corporation, the Marathon Group or the U. S. Steel Group.
This reorganization in corporate form was independent of the
Proposed Separation of the energy and steel businesses of USX
Corporation.
U. S. STEEL GROUP OF USX CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
------------------------------------------------
Third Quarter Nine Months
Ended Ended
September 30 September 30
(Dollars in millions) 2001 2000 2001 2000
-----------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Domestic Steel(a)(b) $(47) $23 $(267) $145
U. S. Steel Kosice(c) 39 - 121 -
----- ----- ----- -----
Income (loss) from Reportable Segments $(8) $23 $(146) $145
Items not allocated to segment:
Net Pension Credits(d) 38 67 110 199
Administrative Expenses (5) (7) (20) (18)
Costs related to former business (21) (23) (59) (63)
activities(e)
Costs related to proposed separation(f) - - (9) -
Costs related to Fairless facility (29) - (29) -
shutdown(g)
----- ----- ----- -----
Total U. S. Steel Group $(25) $60 $(153) $263
CAPITAL EXPENDITURES
Domestic Steel $39 $36 $166 $133
U. S. Steel Kosice 17 - 31 -
----- ----- ----- -----
Total U. S. Steel Group $56 $36 $197 $133
OPERATING STATISTICS
Average steel price: ($/net ton)
Domestic Steel $420 $454 $429 $448
U. S. Steel Kosice 256 - 263 -
Steel Shipments:(h)
Domestic Steel 2,554 2,557 7,597 8,441
U. S. Steel Kosice 1,008 - 2,826 -
----- ----- ----- -----
Total Steel Shipments 3,562 2,557 10,423 8,441
Raw Steel-Production:(h)
Domestic Steel 2,689 2,752 7,933 8,938
U. S. Steel Kosice 1,131 - 3,214 -
----- ----- ----- -----
Total Raw Steel-Production 3,820 2,752 11,147 8,938
Raw Steel-Capability Utilization:(i)
Domestic Steel 83.3% 85.5% 82.9% 93.3%
U. S. Steel Kosice 89.7% - 85.9% -
Iron ore shipments - Domestic Steel(h) 4,494 4,770 11,594 11,455
-----------
(a) Results in the third quarter and first nine months of 2001
include a favorable $21 million from insurance recoveries for
fire damages to the cold rolling mill at USS-POSCO. Results in
the first nine months of 2001 also include a favorable $68
million for USX's share of gain on the Transtar reorganization
and a $74 million charge for a substantial portion of accounts
receivable from Republic. Results in the third quarter and
first nine months of 2000 included $10 million for USX's share
of Republic's special charges. Results in the first nine
months of 2000 also include charges totaling $15 million for
certain environmental and legal accruals.
(b) Includes the sale, domestic production and transportation
of steel products, coke, taconite pellets and coal; the
management of mineral resources; real estate development;
engineering and consulting services; and equity income from
joint ventures and partially owned companies.
(c) Includes the production and sale of steel products and
coke from facilities primarily located in the Slovak Republic.
(d) Excludes termination costs of $11 million related to
Fairless facility shutdown.
(e) Includes other postretirement benefit costs and certain
other expenses principally attributable to former business
units of the U. S. Steel Group.
(f) Includes professional fees and expenses and certain other
costs related to the proposed separation.
(g) Includes costs related to the shutdown of the cold rolling
and tin mill facilities at Fairless Works.
(h) Thousands of net tons.
(i) Based on annual raw steel production capability of 12.8
million tons for Domestic Steel and 5.0 million tons for U. S.
Steel Kosice.
USX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
------------------------------------------------
Third Quarter Nine Months
Ended Ended
September 30 September 30
(Dollars in millions) 2001 2000 2001 2000
---------------------------------------------------------------------
REVENUES AND OTHER INCOME:
Revenues $10,139$10,607$31,099$30,207
Dividend and investee income 45 46 157 81
Net gains (losses) on disposal of assets (203) 8 (165) 138
Other income 7 18 85 32
------ ------ ------ ------
Total revenues and other income 9,988 10,679 31,176 30,458
------ ------ ------ ------
COSTS AND EXPENSES:
Cost of revenues
(excludes items shown below) 7,557 8,184 23,108 23,107
Selling, general and
administrative expenses 178 95 516 233
Depreciation, depletion and amortization 396 310 1,157 949
Taxes other than income taxes 1,282 1,250 3,732 3,650
Exploration expenses 20 51 69 142
------ ------ ------ ------
Total costs and expenses 9,433 9,890 28,582 28,081
------ ------ ------ ------
INCOME FROM OPERATIONS 555 789 2,594 2,377
Net interest and other financial costs 74 80 183 267
Minority interest in income of Marathon Ashland
Petroleum LLC 223 115 650 373
------ ------ ------ ------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 258 594 1,761 1,737
Provision for income taxes 88 454 522 877
------ ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 170 140 1,239 860
Cumulative effect of change in accounting
principle - - (8) -
------ ------ ------ ------
NET INCOME 170 140 1,231 860
Dividends on preferred stock 2 2 6 6
------ ------ ------ ------
NET INCOME APPLICABLE TO COMMON STOCKS $168 $138 $1,225 $854
====== ====== ====== ======
USX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF OPERATIONS (Continued) (Unaudited)
INCOME PER COMMON SHARE
------------------------------------------------------------
Third Quarter Nine Months
Ended Ended
September 30 September 30
(Dollars in millions,
except per share amounts) 2001 2000 2001 2000
---------------------------------------------------------------------
APPLICABLE TO MARATHON STOCK:
Income before cumulative effect of change
in accounting principle $193 $121 $1,283 $742
- Per share - basic .63 .38 4.16 2.38
- diluted .62 .38 4.15 2.37
Cumulative effect of change in accounting
principle - - (8) -
- Per share - basic - - (.03) -
- diluted - - (.03) -
Net income $193 $121 $1,275 $742
- Per share - basic .63 .38 4.13 2.38
- diluted .62 .38 4.12 2.37
Dividends paid per share .23 .23 .69 .65
Weighted average shares, in thousands
- Basic 309,309311,847309,056312,068
- Diluted 309,923312,094309,452312,272
APPLICABLE TO STEEL STOCK:
Net income (loss) $(25) $17 $(50) $112
- Per share - basic (.28) .19 (.56) 1.27
- diluted (.28) .19 (.57) 1.27
Dividends paid per share .10 .25 .45 .75
Weighted average shares, in thousands
- Basic 89,193 88,738 89,003 88,554
- Diluted 89,193 88,738 89,003 88,556
The following notes are an integral part of this financial statement.
USX CORPORATION AND SUBSIDIARY COMPANIES
SELECTED NOTES TO FINANCIAL STATEMENT
----------------------------------------
1.Effective January 1, 2001, USX adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133), which was
amended by SFAS Nos. 137 and 138. This Standard requires
recognition of all derivatives as either assets or liabilities at
fair value.
The transition adjustment related to adopting SFAS No. 133 on
January 1, 2001, was recognized as a cumulative effect of change in
accounting principle. The unfavorable cumulative effect on net
income, net of a tax benefit of $5 million, was $8 million. The
unfavorable cumulative effect on other comprehensive income (OCI),
net of a tax benefit of $4 million, was $8 million. The amounts
reported as OCI will be reflected in net income when the
anticipated physical transactions are consummated.
2.In the first quarter 2001, Marathon Oil Company (Marathon) acquired
Pennaco Energy, Inc. (Pennaco), a natural gas producer. Marathon
acquired 87% of the outstanding stock of Pennaco through a tender
offer completed on February 7, 2001 at $19 a share. On March 26,
2001, Pennaco was merged with a wholly owned subsidiary of
Marathon. Under the terms of the merger, each share not held by
Marathon was converted into the right to receive $19 in cash. The
total purchase price of Pennaco was $506 million. The acquisition
was accounted for under the purchase method of accounting. Results
of operations for the nine months of 2001 include the results of
Pennaco from February 7, 2001.
On March 1, 2001, USX completed the purchase of the tin mill
products business of LTV Corporation (LTV), which is now operated
as East Chicago Tin. In this noncash transaction, USX assumed
approximately $66 million of certain employee related obligations
from LTV. The acquisition was accounted for using the purchase
method of accounting. Results of operations for the nine months of
2001 include the operations of East Chicago Tin from the date of
acquisition.
On March 23, 2001, Transtar, Inc. (Transtar) completed its
previously announced reorganization with its two voting
shareholders, USX and Transtar Holdings, L.P. (Holdings), an
affiliate of Blackstone Capital Partners L.P. As a result of this
transaction, USX became sole owner of Transtar and certain of its
subsidiaries. Holdings became owner of the other subsidiaries of
Transtar. USX accounted for the change in its ownership interest
in Transtar using the purchase method of accounting. USX
recognized in the nine months of 2001, a pretax gain of $68 million
(included in dividend and investee income) and a favorable deferred
tax adjustment of $33 million related to this transaction. USX
previously accounted for its investment in Transtar under the
equity method of accounting.
3.USX has a 16% investment in Republic Technologies International LLC
(Republic) which was accounted for under the equity method of
accounting. During the first quarter of 2001, USX discontinued
applying the equity method since investments in and advances to
Republic had been reduced to zero. Also, USX has recognized
certain debt obligations of $14 million previously assumed by
Republic. On April 2, 2001, Republic filed a voluntary petition
with the U.S. Bankruptcy Court to reorganize its operations under
Chapter 11 of the U.S. Bankruptcy Code. In the first quarter of
2001, as a result of Republic's action, USX recorded a pretax
charge of $74 million for potentially uncollectible receivables
from Republic.
USX CORPORATION AND SUBSIDIARY COMPANIES
SELECTED NOTES TO FINANCIAL STATEMENT (Continued)
-------------------------------------------------
4.In the third quarter of 2001, the Marathon Group recorded a $221
million pretax loss related to the sale of Marathon's heavy oil
assets in Canada, which is included in net gains (losses) on
disposal of assets.
5.On August 14, 2001, USX announced its intention to permanently
close the cold rolling and tin mill operations at U. S. Steel's
Fairless Works. In the third quarter of 2001, USX recorded a
pretax charge of $29 million relative to the shutdown.
6.On July 31, 2001, USX announced that its board of directors
approved the definitive plan of reorganization to separate the
energy and steel businesses of USX (Proposed Separation). The
Proposed Separation envisions a tax-free spin-off of the steel
business of USX into a freestanding, publicly traded company to be
known as United States Steel Corporation. Holders of current USX-U.
S. Steel Group Common Stock will become holders of United States
Steel Corporation Common Stock. Holders of current USX-Marathon
Group Common Stock will continue to hold their shares in USX which
will be renamed Marathon Oil Corporation. The Proposed Separation
does not contemplate a cash distribution to stockholders. The
Proposed Separation is subject to the approval of the holders of a
majority of the outstanding shares of each class of current USX
common stock, receipt of a favorable private letter ruling from the
Internal Revenue Service (IRS) on the tax-free nature of the
transaction, completion of necessary financing arrangements and
receipt of necessary regulatory and third party consents. The
transaction is expected to occur on or about December 31, 2001.
7.On July 2, 2001, a corporate reorganization was implemented to
create a new holding company structure. USX became a holding
company that owns all of the outstanding equity of Marathon Oil
Company, an Ohio Corporation which, directly and indirectly, owns
and operates the businesses of the USX-Marathon Group, and United
States Steel LLC, a Delaware limited liability company which,
directly and indirectly, owns and operates the businesses of the
USX-U. S. Steel Group. The reorganization will not have any impact
on the results of operations or financial position of USX
Corporation, the Marathon Group or the U. S. Steel Group.
This reorganization in corporate form was independent of the
Proposed Separation of the energy and steel businesses of USX
Corporation.