x-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2021


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

United States Steel Corporation

(Exact name of registrant as specified in its charter)

Delaware

1-16811

25-1897152

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

600 Grant Street

Pittsburgh

15219-2800

(Address of principal executive offices)

(Zip Code)

(412) 433-1121

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
United States Steel Corporation Common Stock	X	New York Stock Exchange
United States Steel Corporation Common Stock	X	Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

Common stock outstanding at April 26, 2021 – 269,661,330 shares

INDEX


			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Statement of Operations (Unaudited)	1
		Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	2
		Condensed Consolidated Balance Sheet (Unaudited)	3
		Condensed Consolidated Statement of Cash Flows (Unaudited)	4
		Notes to Condensed Consolidated Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
	Item 4.	Controls and Procedures	39
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	40
	Item 4.	Mine Safety Disclosure	44
	Item 5.	Other Information	44
	Item 6.	Exhibits	45
SIGNATURE			46
WEB SITE POSTING			46

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,” “should,” “will,” "may" and similar expressions or by using future dates in connection with any discussion of, among other things, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational cash improvements, anticipated disruptions to our operations and industry due to the COVID-19 pandemic, changes in global supply and demand conditions and prices for our products, international trade duties and other aspects of international trade policy, the integration of Big River Steel in our existing business, business strategies related to the combined business and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in this report and in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, our Quarterly Reports on Form 10-Q and those described from time to time in our future reports filed with the Securities and Exchange Commission.

References in this Quarterly Report on Form 10-Q to (i) "U. S. Steel," "the Company," "we," "us," and "our" refer to United States Steel Corporation and its consolidated subsidiaries unless otherwise indicated by the context, and (ii) “Big River Steel” refer to Big River Steel Holdings LLC and its direct and indirect subsidiaries unless otherwise indicated by the context.

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


	Three Months Ended March 31,
(Dollars in millions, except per share amounts)	2021		2020
Net sales:
Net sales	$	3,369	$	2,397
Net sales to related parties (Note 19)	295		351
Total (Note 6)	3,664		2,748
Operating expenses (income):
Cost of sales	3,080		2,605
Selling, general and administrative expenses	96		72
Depreciation, depletion and amortization	189		160
(Earnings) loss from investees	(14)		8
Asset impairment charges (Note 1)	—		263
Gain on equity investee transactions	(111)		(31)
Restructuring and other charges (Note 20)	6		41

Other (gains) losses, net	(7)		5
Total	3,239		3,123
Earnings (loss) before interest and income taxes	425		(375)
Interest expense	92		50
Interest income	(1)		(4)
Loss on debt extinguishment	255		—
Other financial costs (gains)	18		(3)
Net periodic benefit income	(31)		(8)
Net interest and other financial costs	333		35
Earnings (loss) before income taxes	92		(410)
Income tax provision (benefit) (Note 12)	1		(19)
Net earnings (loss)	91		(391)
Less: Net earnings attributable to noncontrolling interests	—		—
Net earnings (loss) attributable to United States Steel Corporation	$	91	$	(391)
Earnings (loss) per common share (Note 13):
Earnings (loss) per share attributable to United States Steel Corporation stockholders:
-Basic	$	0.36	$	(2.30)
-Diluted	$	0.35	$	(2.30)

The accompanying notes are an integral part of these condensed consolidated financial statements.

-1-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended March 31,
(Dollars in millions)	2021		2020
Net earnings (loss)	$	91	$	(391)
Other comprehensive (loss) income, net of tax:
Changes in foreign currency translation adjustments	(47)		(23)
Changes in pension and other employee benefit accounts	24		52
Changes in derivative financial instruments	(20)		(5)
Total other comprehensive (loss) income, net of tax	(43)		24
Comprehensive income (loss) including noncontrolling interest	48		(367)
Comprehensive income attributable to noncontrolling interest	—		—
Comprehensive income (loss) attributable to United States Steel Corporation	$	48	$	(367)

The accompanying notes are an integral part of these condensed consolidated financial statements.

-2-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


(Dollars in millions)	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents (Note 7)	$	753	$	1,985
Receivables, less allowance of $33 and $34	1,517		914
Receivables from related parties (Note 19)	102		80
Inventories (Note 8)	1,750		1,402
Other current assets	128		51
Total current assets	4,250		4,432
Long-term restricted cash (Note 7)	122		130
Operating lease assets	210		214
Property, plant and equipment	19,910		17,704
Less accumulated depreciation and depletion	12,347		12,260
Total property, plant and equipment, net	7,563		5,444
Investments and long-term receivables, less allowance of $5 in both periods	545		1,177
Intangibles, net (Note 9)	539		129
Deferred income tax benefits (Note 12)	14		22
Goodwill (Note 9)	909		4
Other noncurrent assets	537		507
Total assets	$	14,689	$	12,059
Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	2,402	$	1,779
Accounts payable to related parties (Note 19)	126		105
Payroll and benefits payable	285		308
Accrued taxes	168		154
Accrued interest	60		59
Current operating lease liabilities	58		59
Short-term debt and current maturities of long-term debt (Note 15)	45		192
Total current liabilities	3,144		2,656
Noncurrent operating lease liabilities	161		163
Long-term debt, less unamortized discount and debt issuance costs (Note 15)	5,787		4,695
Employee benefits	288		322
Deferred income tax liabilities (Note 12)	54		11
Deferred credits and other noncurrent liabilities	535		333
Total liabilities	9,969		8,180
Contingencies and commitments (Note 21)
Stockholders’ Equity (Note 17):
Common stock (278,698,208 and 229,105,589 shares issued) (Note 13)	279		229
Treasury stock, at cost (9,046,965 shares and 8,673,131 shares)	(182)		(175)
Additional paid-in capital	5,152		4,402
Accumulated deficit	(532)		(623)
Accumulated other comprehensive loss (Note 18)	(90)		(47)
Total United States Steel Corporation stockholders’ equity	4,627		3,786
Noncontrolling interests	93		93
Total liabilities and stockholders’ equity	$	14,689	$	12,059

The accompanying notes are an integral part of these condensed consolidated financial statements.

-3-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(Dollars in millions)	2021		2020
Increase (decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net earnings (loss)	$	91	$	(391)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, depletion and amortization	189		160
Asset impairment charges (Note 1)	—		263
Gain on equity investee transactions	(111)		(31)
Restructuring and other charges (Note 20)	6		41
Loss on debt extinguishment	255		—
Pensions and other postretirement benefits	(25)		(1)
Deferred income taxes (Note 12)	3		6

Equity investee (earnings) loss, net of distributions received	(14)		8
Changes in:
Current receivables	(477)		(97)
Inventories	(183)		(204)
Current accounts payable and accrued expenses	386		139
Income taxes receivable/payable	3		3
All other, net	(12)		(38)
Net cash provided by (used in) operating activities	111		(142)
Investing activities:
Capital expenditures	(136)		(282)
Acquisition of Big River Steel, net of cash acquired (Note 5)	(625)		—
Proceeds from sale of assets	—		1
Proceeds from sale of ownership interests in equity investees	—		8
Other investing activities	(1)		(4)
Net cash used in investing activities	(762)		(277)
Financing activities:
Repayment of short-term debt (Note 15)	(180)		—
Revolving credit facilities - borrowings, net of financing costs (Note 15)	50		1,202
Revolving credit facilities - repayments (Note 15)	(671)		(281)
Issuance of long-term debt, net of financing costs (Note 15)	826		67
Repayment of long-term debt (Note 15)	(1,379)		(2)
Proceeds from public offering of common stock (Note 22)	791		—
Other financing activities	(10)		(3)
Net cash (used in) provided by financing activities	(573)		983
Effect of exchange rate changes on cash	(12)		(6)
Net (decrease) increase in cash, cash equivalents and restricted cash	(1,236)		558
Cash, cash equivalents and restricted cash at beginning of year (Note 7)	2,118		939
Cash, cash equivalents and restricted cash at end of period (Note 7)	$	882	$	1,497


Non-cash investing and financing activities:
Change in accrued capital expenditures	$	5	$	(66)
U. S. Steel common stock issued for employee/non-employee director stock plans	18		17
Capital expenditures funded by finance lease borrowings	1		29
Export Credit Agreement (ECA) financing	23		34

The accompanying notes are an integral part of these condensed consolidated financial statements.

-4-

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation and Significant Accounting Policies

The year-end Consolidated Balance Sheet data was derived from audited statements but does not include all disclosures required for complete financial statements by accounting principles generally accepted in the United States of America (U.S. GAAP). The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair statement of the results for the periods covered, including assessment of certain accounting matters using all available information including consideration of forecasted financial information in context with other information reasonably available to us. However, our future assessment of our current expectations, including consideration of the unknown future impacts of the COVID-19 pandemic, could result in material impacts to our consolidated financial statements in future reporting periods. All such adjustments are of a normal recurring nature unless disclosed otherwise. These condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. Additional information is contained in the United States Steel Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which should be read in conjunction with these condensed financial statements.

Asset Impairment

For the period ended March 31, 2020, the steep decline in oil prices that resulted from market oversupply and declining demand was considered a triggering event for the welded tubular and seamless tubular asset groups. A quantitative analysis was completed for both asset groups and a $263 million impairment, consisting of an impairment of $196 million for property, plant and equipment and $67 million for intangible assets was recorded for the welded tubular asset group while no impairment was indicated for the seamless tubular asset group. There were no triggering events that required an impairment evaluation of our long-lived asset groups as of March 31, 2021.

2. New Accounting Standards

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance in ASC 260 on the computation of EPS for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for public companies for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption of all amendments in the same period permitted. The Company is continuing to assess the impact of adoption of the ASU.

3. Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes (ASU 2019-12). ASU 2019-12 simplifies accounting for income taxes by removing certain exceptions from the general principles in Topic 740 including elimination of the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items such as other comprehensive income. U. S. Steel adopted this guidance on January 1, 2021. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements.

4. Segment Information

U. S. Steel has four reportable segments: North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE); and Tubular Products (Tubular). The Mini Mill segment reflects the acquisition of Big River Steel after the purchase of the remaining equity interest on January 15, 2021. See Note 5 for further details. Prior to the purchase, the equity earnings of Big River Steel were included in the Other segment. The Tubular Products segment includes the newly constructed EAF at our Fairfield Tubular Operations in Fairfield, Alabama. The results of our railroad, real estate businesses and the previously held equity method investment in Big River Steel are combined and disclosed in the Other category.

-5-

The results of segment operations for the three months ended March 31, 2021 and 2020 are:


(In millions) Three Months Ended March 31, 2021	Customer Sales		Intersegment Sales		Net Sales		Earnings (loss) from investees		Earnings (loss) before interest and income taxes
Flat-Rolled	$	2,272	$	43	$	2,315	$	5	$	146
Mini Mill	450		62		512		—		132
USSE	798		1		799		—		105
Tubular	134		4		138		3		(29)
Total reportable segments	3,654		110		3,764		8		354
Other	10		29		39		6		8
Reconciling Items and Eliminations	—		(139)		(139)		—		63
Total	$	3,664	$	—	$	3,664	$	14	$	425

Three Months Ended March 31, 2020
Flat-Rolled	$	1,974	$	62	$	2,036	$	4	$	(35)
USSE	505		1		506		—		(14)
Tubular	255		3		258		1		(48)
Total reportable segments	2,734		66		2,800		5		(97)
Other	14		28		42		(13)		1
Reconciling Items and Eliminations	—		(94)		(94)		—		(279)
Total	$	2,748	$	—	$	2,748	$	(8)	$	(375)

A summary of total assets by segment is as follows:


(In millions)	March 31, 2021		December 31, 2020
Flat-Rolled	$	7,325	$	7,099
Mini Mill	4,073		—
USSE	5,609		5,502
Tubular	949		887
Total reportable segments	$	17,956	$	13,488
Other	$	273	$	911
Corporate, reconciling items, and eliminations(a)	(3,540)		(2,340)
Total assets	$	14,689	$	12,059

(a)The majority of Corporate, reconciling items, and eliminations total assets is comprised of cash and the elimination of intersegment amounts.

-6-

The following is a schedule of reconciling items to consolidated earnings before interest and income taxes:


	Three Months Ended March 31,
(In millions)	2021		2020
Items not allocated to segments:
Gain on previously held investment in Big River Steel	$	111	$	—
Big River Steel - inventory step-up amortization	(24)		—
Big River Steel - unrealized losses (a)	(9)		—
Big River Steel - acquisition costs	(9)		—
Restructuring and other charges (Note 20)	(6)		(41)
Asset impairment charges (Note 1)	—		(263)
Gain on previously held investment in UPI	—		25
Total reconciling items	$	63	$	(279)

(a) Big River Steel – Unrealized losses represent the post-acquisition mark-to-market impacts of hedging instruments acquired with the purchase of the remaining equity interest in Big River Steel on January 15, 2021. See Note 14 for further details.

5. Acquisitions

Big River Steel

On January 15, 2021, U. S. Steel purchased the remaining equity interest in Big River Steel for approximately $625 million in cash net of $36 million and $62 million in cash and restricted cash received, respectively, and the assumption of liabilities of approximately $50 million. There were acquisition related costs of approximately $9 million during the three months ended March 31, 2021. Big River Steel is a technologically advanced mini mill that completed an expansion in November 2020 that doubled its hot-rolled steel production capacity to 3.3 million tons annually. The acquisition of Big River Steel furthers U. S. Steel's Best of BothSM strategy that combines the best of the integrated and mini mill steel making models.

Prior to the closing of the acquisition on January 15, 2021, U. S. Steel accounted for its 49.9% equity interest in Big River Steel under the equity method as control and risk of loss were shared among the partnership members. Using step acquisition accounting the Company increased the value of its previously held equity investment to its fair value of $770 million which resulted in a gain of approximately $111 million. The gain was recorded in gain on equity investee transactions in the Condensed Consolidated Statement of Operations.

The acquisition has been accounted for in accordance with ASC 805, Business combinations. There were step-ups to fair value of approximately $308 million, $194 million and $24 million for property, plant and equipment, debt and inventory, respectively. An intangible asset for customer relationships and goodwill of approximately $413 million and $905 million were also recorded, respectively. Goodwill represents the excess of purchase price over the fair market value of the net assets. Goodwill is primarily attributable to Big River Steel's operational abilities, workforce and the anticipated benefits from their recent expansion and will be partially tax deductible. The inventory step-up was fully amortized as of March 31, 2021, the intangible asset will be amortized over a 22 year period and the debt step up will be amortized over the contractual life of the underlying debt, see Note 15 for further details.

The value of Big River Steel was determined using Level 3 valuation techniques. Level 3 valuation techniques include inputs to the valuation methodology that are considered unobservable and significant to the fair value measurement. A significant factor in determining the equity value was the discounted forecasted cash flows of Big River Steel. Forecasted cash flows are primarily impacted by the forecasted market price of steel and metallic inputs as well as the expected timing of significant capital expenditures. The model utilized a risk adjusted discount rate of 11.0% and a terminal growth rate of 2%.

-7-

The following table presents the preliminary allocation of the aggregate purchase price based on estimated fair values:


	(in millions)
Assets Acquired:
Receivables	$	166
Receivables with U. S. Steel (1)	99
Inventories	184
Other current assets	16
Property, plant and equipment	2,188
Intangibles	413
Goodwill	905
Other noncurrent assets	19
Total Assets Acquired	$	3,990


Liabilities Assumed:
Accounts payable and accrued liabilities	$	224
Payroll and benefits payable	27
Accrued taxes	9
Accrued interest	33
Short-term debt and current maturities of long-term debt	29
Long-term debt	1,997
Deferred income tax liabilities	44
Deferred credits and other long-term liabilities	182
Total Liabilities Assumed	$	2,545

Fair value of previously held investment in Big River Steel	$	770
Purchase price, including assumed liabilities and net of cash acquired	675
Difference in assets acquired and liabilities assumed	$	1,445

(1) The transaction to purchase Big River Steel included receivables for payments made by Big River Steel on behalf of U. S. Steel for retention bonuses of $22 million that impacted the previously held equity investment and for U. S. Steel liabilities assumed in the purchase of approximately $50 million. In addition, there were assumed receivables of approximately $27 million for steel substrate sales from Big River Steel to U. S. Steel. The receivables with U. S. Steel eliminate in consolidation with offsetting intercompany payables from U. S. Steel.

U. S. Steel is continuing to conform accounting policies and procedures and evaluate assets and liabilities assumed. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. The final purchase price allocation may include changes in allocations to intangible assets, such as customer relationships, as well as goodwill, changes to the fair value of long-term debt and other changes to assets and liabilities. We will apply any material adjustments in the reporting period in which the adjustments are determined.

The following unaudited pro forma information for U. S. Steel includes the results of the Big River Steel acquisition as if it had been consummated on January 1, 2020. The unaudited pro forma information is based on historical information and is adjusted for amortization of the intangible asset, property, plant and equipment and debt fair value step-ups discussed above. Non-recurring acquisition related items included in the 2020 period include $111 million for the gain on previously held equity investment, $9 million in acquisition related costs and $24 million in inventory step-up amortization related to the purchase of the remaining interest in Big River Steel. In addition, costs for non-recurring retention bonuses of $44 million that occurred in January 2021 prior to the purchase of the remaining equity interest are included in the 2020 period. The pro forma information does not include any anticipated cost savings or other effects of the integration of Big River Steel. Accordingly, the unaudited pro forma information does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations. Pro forma adjustments were not tax-effected as U. S. Steel has a full valuation allowance on its domestic deferred tax assets.

-8-


	For the three month period ended
(in millions, except per share amounts)	March 31, 2021		March 31, 2020
Net sales	$	3,736	$	2,994
Net earnings (loss)	18		(367)

USS-POSCO Industries (UPI)

On February 29, 2020, U. S. Steel purchased the remaining equity interest in USS-POSCO Industries (UPI), now known as USS-UPI, LLC, for $3 million, net of cash received of $2 million. There was an assumption of accounts payable owed to U. S. Steel for prior sales of steel substrate of $135 million associated with the purchase that is reflected as a reduction in receivables from related parties on the Company's Condensed Consolidated Balance Sheet.

Using step acquisition accounting the Company increased the value of its previously held equity investment to its fair value of $5 million which resulted in a gain of approximately $25 million. The gain was recorded in gain on equity investee transactions in the Condensed Consolidated Statement of Operations.

Receivables of $44 million, inventories of $96 million, accounts payable and accrued liabilities of $19 million, current portion of long-term debt of $55 million and payroll and employee benefits liabilities of $78 million were recorded with the acquisition. Property, plant and equipment of $97 million which included a fair value step-up of $47 million and an intangible asset of $54 million were also recorded on the Company's Condensed Consolidated Balance Sheet. The intangible asset, which will be amortized over ten years, arises from a land lease contract, under which a certain portion of payment owed to UPI is realized in the form of deductions from electricity costs.

6. Revenue

Revenue is generated primarily from contracts to produce, ship and deliver steel products, and to a lesser extent, raw materials sales such as iron ore pellets and coke by-products and real estate sales. Generally, U. S. Steel’s performance obligations are satisfied and revenue is recognized at a point in time, when title transfers to our customer for product shipped or services are provided. Revenues are recorded net of any sales incentives. Shipping and other transportation costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Costs related to obtaining sales contracts are incidental and are expensed when incurred. Because customers are invoiced at the time title transfers and U. S. Steel’s right to consideration is unconditional at that time, U. S. Steel does not maintain contract asset balances. Additionally, U. S. Steel does not maintain contract liability balances, as performance obligations are satisfied prior to customer payment for product. U. S. Steel offers industry standard payment terms.

The following tables disaggregate our revenue by product for each of the reportable business segments for the three months ended March 31, 2021 and 2020, respectively:

Net Sales by Product (In millions):


Three Months Ended March 31, 2021	Flat-Rolled		Mini Mill		USSE		Tubular		Other		Total
Semi-finished	$	12	$	—	$	3	$	—	$	—	$	15
Hot-rolled sheets	450		249		386		—		—		1,085
Cold-rolled sheets	784		79		83		—		—		946
Coated sheets	878		121		298		—		—		1,297
Tubular products	—		—		10		128		—		138
All Other (a)	148		1		18		6		10		183
Total	$	2,272	$	450	$	798	$	134	$	10	$	3,664
(a) Consists primarily of sales of raw materials and coke making by-products.

-9-


Three Months Ended March 31, 2020	Flat-Rolled		USSE		Tubular		Other		Total
Semi-finished	$	27	$	1	$	—	$	—	$	28
Hot-rolled sheets	502		205		—		—		707
Cold-rolled sheets	598		45		—		—		643
Coated sheets	711		229		—		—		940
Tubular products	—		9		251		—		260
All Other (a)	136		16		4		14		170
Total	$	1,974	$	505	$	255	$	14	$	2,748
(a) Consists primarily of sales of raw materials and coke making by-products.

7. Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within U. S. Steel's Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statement of Cash Flows:


(In millions)	March 31, 2021		March 31, 2020
Cash and cash equivalents	$	753	$	1,350
Restricted cash in other current assets	7		4
Restricted cash in other noncurrent assets	122		143
Total cash, cash equivalents and restricted cash	$	882	$	1,497

Amounts included in restricted cash represent cash balances which are legally or contractually restricted, primarily for electric arc furnace construction, environmental and other capital expenditure projects and insurance purposes.

8. Inventories

The LIFO method is the predominant method of inventory costing for our Flat-rolled and Tubular segments. The FIFO and moving average methods are the predominant inventory costing methods for our Mini Mill segment and the FIFO method is the predominant inventory costing method for our USSE segment. At March 31, 2021 and December 31, 2020, the LIFO method accounted for 51 percent and 59 percent of total inventory values, respectively.


(In millions)	March 31, 2021		December 31, 2020
Raw materials	$	578	$	416
Semi-finished products	807		633
Finished products	315		300
Supplies and sundry items	50		53
Total	$	1,750	$	1,402

Current acquisition costs were estimated to exceed the above inventory values by $878 million and $848 million at March 31, 2021 and December 31, 2020, respectively. As a result of the liquidation of LIFO inventories, cost of sales decreased and earnings before interest and income taxes increased by $1 million for the three months ended March 31, 2021. Cost of sales increased and the loss before interest and income taxes increased by $5 million for the three months ended March 31, 2020, as a result of liquidation of LIFO inventories.

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9. Intangible Assets

Intangible assets that are being amortized on a straight-line basis over their estimated useful lives are detailed below:


		As of March 31, 2021						As of December 31, 2020
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Impairment (a)		Accumulated Amortization		Net Amount
Customer relationships	22 Years	$	413	$	4	$	409	$	132	$	55	$	77	$	—
Patents	10-15 Years	17		10		7		22		7		10		5
Energy Contract	10 Years	54		6		48		54		—		5		49
Other	4-20 Years	—		—		—		14		5		9		—
Total amortizable intangible assets		$	484	$	20	$	464	$	222	$	67	$	101	$	54

(a) The impairment charge was the result of the quantitative impairment analysis of the welded tubular asset group for the period ended March 31, 2020. See Note 1 for further details.

Total estimated amortization expense for the remainder of 2021 is $19 million. We expect approximately $25 million in annual amortization expense through 2026 and approximately $320 million in remaining amortization expense thereafter.

The carrying amount of acquired water rights with indefinite lives as of March 31, 2021 and December 31, 2020 totaled $75 million.

The purchase of the remaining equity interest in Big River Steel also included goodwill of $905 million which is included in our Mini Mill segment. Goodwill represents the excess of the cost of the purchase over the net fair value of acquired identifiable tangible and intangible assets and liabilities assumed. See Note 5 for further details. Below is a summary of goodwill by segment for the three months ended March 31, 2021:


	Flat-Rolled		Mini Mill		USSE		Tubular		Total
Balance at December 31, 2020	$	—	$	—	$	4	$	—	$	4
Additions	—		905		—		—		905
Balance at March 31, 2021	$	—	$	905	$	4	$	—	$	909

10. Pensions and Other Benefits

The following table reflects the components of net periodic benefit cost for the three months ended March 31, 2021 and 2020:


	Pension Benefits				Other Benefits
(In millions)	2021		2020		2021		2020
Service cost	$	14	$	12	$	3	$	3
Interest cost	40		48		12		16
Expected return on plan assets	(89)		(81)		(20)		(20)
Amortization of prior service credit	—		—		(7)		(2)
Amortization of actuarial net loss (gain)	38		36		(6)		(4)
Net periodic benefit cost/(income), excluding below	3		15		(18)		(7)
Multiemployer plans	19		21		—		—
Settlement, termination and curtailment losses (a)	—