Exhibit 99.1

 

UNITED STATES STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

 

On January 31, 2012, a wholly owned subsidiary of United States Steel Corporation (U. S. Steel) sold U. S. Steel Serbia d.o.o. (USSS) to the Republic of Serbia for a purchase price of one dollar.  In addition, U. S. Steel Košice s.r.o. (USSK), a wholly owned subsidiary of U. S. Steel, received a $40 million payment (as determined under Section 7.4 of the Master Share Purchase Agreement) for certain intercompany balances owed by USSS for raw materials and support services. There is a working capital adjustment in the agreement that may result in repayment of a portion of the $40 million received if USSS’ working capital is less than $110 million as of January 31, 2012. The objective of the following unaudited pro forma financial information is to provide information about the impact of the disposition.

 

The following unaudited condensed consolidated pro forma financial statements are based upon the historical financial statements of U. S. Steel and its consolidated subsidiaries, adjusted to reflect the disposition of USSS. The following unaudited condensed consolidated pro forma financial statements of U. S. Steel should be read in conjunction with the historical consolidated financial statements of U. S. Steel and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited condensed pro forma consolidated balance sheet reflects the disposition of USSS as if it occurred on September 30, 2011 while the unaudited condensed pro forma consolidated statements of operations give effect to the disposition as if it had occurred on January 1, 2010. The pro forma adjustments are based on the best available information including certain assumptions that U. S. Steel management believes are reasonable.

 

The unaudited condensed consolidated pro forma financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of USSS closed on September 30, 2011 for the unaudited condensed pro forma consolidated balance sheet or on January 1, 2010 for the unaudited condensed pro forma consolidated statements of operations. Readers should not rely on the unaudited condensed consolidated pro forma financial statements as being indicative of the historical operating results that U. S. Steel would have achieved or any future operating results or financial position that it will experience after the effective date of the transaction.

 

 
 

 

United States Steel Corporation

Unaudited Condensed Pro Forma Consolidated Balance Sheet

September 30, 2011

(Dollars in millions)  Historical U. S. Steel Consolidated  USSS Disposition  Pro Forma U. S. Steel
          
Assets         
Current assets:         
Cash and cash equivalents  $270   $2 (a) $268 
Receivables   2,613    124 (b)  2,489 
Inventories   2,843    133 (c)   2,710 
Other current assets   208    7 (c)   201 
Total current assets   5,934    266    5,668 
               
Property, plant and equipment, net   6,588    272 (c)   6,316 
Intangibles - net   264    —      264 
Goodwill   1,749    —      1,749 
Other noncurrent assets   1,396    4 (c)   1,392 
Total assets  $15,931   $542   $15,389 
                
Liabilities               
Current liabilities:               
Accounts payable  $2,161   $72   $2,089 
Other current liabilities   1,552    9    1,543 
Total current liabilities   3,713    81    3,632 
Long-term debt, less unamortized discount   3,641    —      3,641 
Employee benefits   3,942    11    3,931 
Deferred credits and other noncurrent liabilities   465    —      465 
Total liabilities   11,761    92 (d)   11,669 
                
Stockholders' Equity               
Total United States Steel Corporation stockholders' equity   4,169    450 (e)   3,719 
                
Noncontrolling Interest   1    —      1 
Total liabilities and stockholders' equity  $15,931   $542   $15,389 

 
 

 

United States Steel Corporation

Unaudited Condensed Pro Forma Consolidated Statement of Operations

Year ended December 31, 2010

(Dollars in millions,except share and per share data)  Historical U. S. Steel Consolidated  USSS Disposition (f)  Pro Forma U. S. Steel
Total Net Sales  $17,374   $969   $16,405 
                
Operating Expenses               
Cost of sales   16,259    1,068    15,191 
Selling, general and administrative expenses   610    51    559 
Depreciation, depletion and amortization   658    21    637 
Other operating income, net   (42)   (20)   (22)
Total operating expenses   17,485    1,120    16,365 
                
(Loss) income from operations   (111)   (151)   40 
Net interest and other financial costs   274    8    266 
Loss before income taxes   (385)   (159)   (226)
Income tax provision   97    —      97 
                
Net loss attributable to United States Steel Corporation  $(482)  $(159)  $(323)
                
Loss per common share               
Basic  $(3.36)       $(2.25)
Diluted  $(3.36)       $(2.25)
                
Average common shares outstanding, in thousands               
Basic   143,571         143,571 
Diluted   143,571         143,571 

 

 
 

 

United States Steel Corporation

Unaudited Condensed Pro Forma Consolidated Statement of Operations

Nine months ended September 30, 2011

 

(Dollars in millions,except share and per share data)  Historical U. S. Steel Consolidated  USSS Disposition (f)  Pro Forma U. S. Steel
Total Net Sales  $15,065   $821   $14,244 
                
Operating Expenses               
Cost of sales   13,679    902    12,777 
Selling, general and administrative expenses   550    42    508 
Depreciation, depletion and amortization   512    17    495 
Other operating income, net   (84)   (1)   (83)
Total operating expenses   14,657    960    13,697 
                
Income (loss) from operations   408    (139)   547 
Net interest and other financial costs (income)   136    (5)   141 
Income (loss) before income taxes   272    (134)   406 
Income tax provision   114    —      114 
                
Net income (loss) attributable to United States Steel Corporation  $158   $(134)  $292 
                
Income per common share               
Basic  $1.10        $2.03 
Diluted  $1.02        $1.80 
                
Average common shares outstanding, in thousands               
Basic   143,932         143,932 
Diluted   171,534         171,534 

 

 
 

 

UNITED STATES STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO THE PRO FORMA FINANCIAL STATEMENTS

 

(a)The adjustment represents the cash of USSS included in our historical financial statements, net of $17 million in cash that was used to pay USSK on the transaction closing date as partial payment for an intercompany balance (eliminated as an intercompany item in our historical financial statements) owed by USSS for raw materials and support services.
(b)The adjustment reflects the removal of the receivables of USSS included in our historical financial statements as well as the establishment of a $23 million receivable from the Republic of Serbia, due within three business days following the closing date of the transaction, as partial payment of the intercompany balance noted above.
(c)The adjustments reflect the removal of the the assets of USSS included in our historical financial statements.
(d) The adjustments reflect the removal of the liabilities of USSS included in our historical financial statements. The adjustments also include the accrual of $4 million in fees and expenses related to the disposition.
(e)The adjustment reflects an estimated loss of $481 million on the sale of USSS as if the transaction closed on September 30, 2011. The loss reflects the sale of net assets of $446 million, $4 million of transaction-related fees and $31 million of cumulative translation adjustments related to USSS. The net effect on the pro forma balance sheet of the release of the cumulative translation adjustments into earnings is zero since both the retained earnings and accumulated other comprehensive loss are classified as part of stockholders’ equity. We expect the first quarter 2012 income statement to include the loss on the sale and the release of cumulative currency translation adjustments related to USSS. These losses were excluded from the pro forma income statement as they are non-recurring. There is no tax effect associated with the disposition due to USSS having a full valuation allowance on its net deferred tax assets.
(f)The adjustments eliminate the results of USSS as if the transaction occurred on January 1, 2010. There is no tax effect associated with the disposition due to USSS having a full valuation allowance on its net deferred tax assets.