x-20240331

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, 2024


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

For the transition period from to

Commission file number 1-16811

United States Steel Corporation

(Exact name of registrant as specified in its charter)

Delaware

25-1897152

(State or other jurisdiction of incorporation)

(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 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 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, 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 29, 2024 – 224,849,607 shares

INDEX


			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Statement of Operations (Unaudited)	1
		Condensed Consolidated Statement of Comprehensive Income (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	26
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
	Item 4.	Controls and Procedures	36
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	38
	Item 1A.	Risk Factors	41
	Item 2	Purchases of Equity Securities by Issuer and Affiliated Purchasers	41
	Item 3	Defaults upon Senior Securities	41
	Item 4.	Mine Safety Disclosure	41
	Item 5.	Other Information	41
	Item 6.	Exhibits	42
SIGNATURE			43
WEB SITE POSTING			43

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains information regarding the Company and NSC that may constitute “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 and other securities laws, that are subject to risks and uncertainties. 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,” “plan,” “goal,” “future,” “will,” “may” and similar expressions or by using future dates in connection with any discussion of, among other things, statements expressing general views about future operating or financial results, operating or financial performance, trends, events or developments that we expect or anticipate will occur in the future, anticipated cost savings, potential capital and operational cash improvements and changes in the global economic environment, the construction or operation of new or existing facilities or capabilities, statements regarding our greenhouse gas emissions reduction goals, as well as statements regarding the proposed transaction, including the timing of the completion of the transaction. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements include all statements that are not historical facts, but instead represent only the Company’s beliefs regarding future goals, plans and expectations about our prospects for the future and other events, many of which, by their nature, are inherently uncertain and outside of the Company’s or NSC’s control. It is possible that the Company’s or NSC’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management of the Company 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. In addition, forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. Risks and uncertainties include without limitation: the ability of the parties to consummate the proposed transaction on a timely basis or at all; the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement and plan of merger relating to the proposed transaction (the “Merger Agreement”); the risk that the parties to the Merger Agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the proposed transaction; certain restrictions during the pendency of the proposed transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the Company’s common stock; the risk of any unexpected costs or expenses resulting from the proposed transaction; the risk of any litigation relating to the proposed transaction; the risk that the proposed transaction and its announcement could have an adverse effect on the ability of the Company or NSC to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, stockholders and other business relationships and on its operating results and business generally; and the risk the pending proposed transaction could distract management of the Company. The Company directs readers to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and Form 10-K for the year ended December 31, 2023, and the other documents it files with the SEC for other risks associated with the Company’s future performance. These documents contain and identify important factors that could cause actual results to differ materially from those contained in the forward-looking statements. All information in this report is as of the date above. The Company does not undertake any duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations whether as a result of new information, future events or otherwise, except as required by law.

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)	2024		2023
Net sales:
Net sales	$	3,500	$	3,912
Net sales to related parties (Note 19)	660		558
Total (Note 6)	4,160		4,470
Operating expenses (income):
Cost of sales (excludes items shown below)	3,665		3,953
Selling, general and administrative expenses	119		99
Depreciation, depletion and amortization	210		221
(Earnings) loss from investees	(14)		13
Asset impairment charges	7		4

Restructuring and other charges (Note 20)	6		1

Other losses (gains), net	13		(10)
Total	4,006		4,281
Earnings before interest and income taxes	154		189
Interest expense	2		27
Interest income	(32)		(30)
Loss on debt extinguishment	1		—
Other financial costs	11		6
Net periodic benefit income	(33)		(42)
Net gain from investments related to active employee benefits (Note 16)	(4)		(22)
Net interest and other financial benefits	(55)		(61)
Earnings before income taxes	209		250
Income tax expense (Note 12)	38		51
Net earnings	171		199
Less: Net earnings attributable to noncontrolling interests	—		—
Net earnings attributable to United States Steel Corporation	$	171	$	199
Earnings per common share (Note 13):
Earnings per share attributable to United States Steel Corporation stockholders:
'-Basic	$	0.76	$	0.87
'-Diluted	$	0.68	$	0.78

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

-1-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(Dollars in millions)	2024		2023
Net earnings	$	171	$	199
Other comprehensive income (loss), net of tax:
Changes in foreign currency translation adjustments	(36)		32
Changes in pension and other employee benefit accounts	(7)		(10)
Changes in derivative financial instruments	43		(44)
Changes in fair value of active employee benefit investments	—		3
Total other comprehensive income (loss), net of tax	—		(19)
Comprehensive income including noncontrolling interest	171		180
Comprehensive income attributable to noncontrolling interest	—		—
Comprehensive income attributable to United States Steel Corporation	$	171	$	180

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

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UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


(Dollars in millions)	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents (Note 7)	$	2,221	$	2,948
Receivables, less allowance of $39 and $38	1,530		1,390
Receivables from related parties (Note 19)	192		158
Inventories (Note 8)	2,157		2,128
Other current assets	321		319
Total current assets	6,421		6,943
Long-term restricted cash (Note 7)	32		32
Operating lease assets	99		109
Property, plant and equipment	24,557		23,975
Less accumulated depreciation and depletion	13,750		13,582
Total property, plant and equipment, net	10,807		10,393
Investments and long-term receivables, less allowance of $3 in both periods	785		761
Intangibles, net (Note 9)	431		436
Deferred income tax benefits (Note 12)	12		19
Goodwill (Note 9)	920		920
Other noncurrent assets	941		838
Total assets	$	20,448	$	20,451
Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	2,749	$	2,889
Accounts payable to related parties (Note 19)	199		139
Payroll and benefits payable	322		442
Accrued taxes	223		222
Accrued interest	55		70
Current operating lease liabilities	41		44
Short-term debt and current maturities of long-term debt (Note 15)	159		142
Total current liabilities	3,748		3,948
Noncurrent operating lease liabilities	65		73
Long-term debt, less unamortized discount and debt issuance costs (Note 15)	4,082		4,080
Employee benefits	116		126
Deferred income tax liabilities (Note 12)	629		587
Deferred credits and other noncurrent liabilities	516		497
Total liabilities	9,156		9,311
Contingencies and commitments (Note 21)
Stockholders’ Equity (Note 17):
Common stock (287,604,696 and 285,959,739 shares issued) (Note 13)	288		286
Treasury stock, at cost (62,771,459 shares and 62,288,523 shares)	(1,441)		(1,418)
Additional paid-in capital	5,266		5,253
Retained earnings	7,040		6,880
Accumulated other comprehensive income (Note 18)	46		46
Total United States Steel Corporation stockholders’ equity	11,199		11,047
Noncontrolling interests	93		93
Total liabilities and stockholders’ equity	$	20,448	$	20,451

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)	2024		2023
Increase (decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net earnings	$	171	$	199
Adjustments to reconcile to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	210		221
Asset impairment charges	7		4

Restructuring and other charges (Note 20)	6		1
Loss on debt extinguishment	1		—
Pensions and other postretirement benefits	(28)		(41)
Active employee benefit investments	30		(3)
Deferred income taxes (Note 12)	36		38
Net gain on sale of assets	—		(2)
Equity investee (earnings) loss, net of distributions received	(18)		13
Changes in:
Current receivables	(191)		(178)
Inventories	(43)		(167)
Current accounts payable and accrued expenses	(78)		298
Income taxes receivable/payable	5		10
All other, net	(136)		(212)
Net cash (used in) provided by operating activities	(28)		181
Investing activities:
Capital expenditures	(640)		(740)
Proceeds from sale of assets	—		2
Other investing activities	(5)		—
Net cash used in investing activities	(645)		(738)
Financing activities:




Repayment of long-term debt (Note 15)	(14)		(10)

Common stock repurchased (Note 22)	—		(75)
Other financing activities	(32)		(32)
Net cash used in financing activities	(46)		(117)
Effect of exchange rate changes on cash	(7)		8
Net decrease in cash, cash equivalents and restricted cash	(726)		(666)
Cash, cash equivalents and restricted cash at beginning of year (Note 7)	2,988		3,539
Cash, cash equivalents and restricted cash at end of period (Note 7)	$	2,262	$	2,873


Non-cash investing and financing activities:
Change in accrued capital expenditures	$	(102)	$	(226)
U. S. Steel common stock issued for employee/non-employee director stock plans	35		28
Capital expenditures funded by finance lease borrowings	32		24
Export Credit Agreement (ECA) financing	—		1

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

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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 such as consideration of forecasted financial information in context with other information reasonably available to us. However, our future assessment of our current expectations 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 SEC 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, 2023, which should be read in conjunction with these condensed financial statements.

Agreement and Plan of Merger with Nippon Steel Corporation

On December 18, 2023, the Company entered into an Agreement and Plan of Merger (such agreement, as it may be amended, modified or supplemented from time to time, the “Merger Agreement”) by and among the Company, Nippon Steel North America, Inc., a New York corporation (“Purchaser”), 2023 Merger Subsidiary, Inc., a Delaware corporation and a wholly owned subsidiary of Purchaser (“Merger Sub”), and solely as provided in Section 9.13 therein, Nippon Steel Corporation, a Japanese corporation (“NSC”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions described therein, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Purchaser (the “Merger”). On April 12, 2024, the Company obtained the approval of its stockholders required to adopt the Merger Agreement. U. S. Steel stockholders approved the Merger with 98.8% approval of shares voted, satisfying a significant condition to closing. Subject to the terms and conditions set forth in the Merger Agreement, each share of the Company's common stock, par value $1.00 per share, outstanding immediately prior to the effective time of the Merger (the "Effective Time") will, at the Effective Time, automatically be converted into the right to receive $55.00 per share in cash, without interest, subject to any required tax withholding.

The Merger Agreement requires us to operate in the ordinary course of business and restricts us, without the consent of Purchaser, from taking certain specified actions agreed by the parties to be outside the ordinary course of business until the pending Merger occurs or the Merger Agreement terminates.

2. New Accounting Standards

During the three months ended March 31, 2024 and the twelve months ended December 31, 2023, there were no accounting standards and interpretations issued which are expected to have a material impact on the Company's financial position, operations or cash flows.

In March 2024, the Securities and Exchange Commission (SEC) adopted final rules that will require certain climate related disclosures. Certain disclosures will be required in a footnote to the audited financial statements beginning in fiscal year 2025. The audited financial statement disclosures include capitalized costs and expenses related to severe weather events and other natural conditions subject to certain materiality thresholds. Beginning in annual disclosures for fiscal year 2026, certain greenhouse gas emission disclosures will also be required. In April 2024, the SEC issued a stay on the rules until legal challenges to the rule are addressed. U. S. Steel is monitoring the legal challenges and assessing the impact of the rules on its disclosures.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 includes requirements that an entity disclose specific categories in the rate reconciliation, provide additional information for reconciling items that are greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate, and income taxes paid by jurisdiction that are greater than 5 percent of total income taxes paid. The standard also requires that entities disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) each disaggregated between domestic and foreign. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. U. S. Steel is currently assessing the impact of ASU 2023-09 on its disclosures.

In November 2023, the FASB issued Accounting Standards Update 2023-07, Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 includes requirements that an entity disclose the title of the chief operating decision maker (CODM) and on an interim and annual basis, significant segment expenses and the composition of other segment items for each segment's reported profit. The standard also permits disclosure of additional measures of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within

-5-

fiscal years beginning after December 15, 2024. U. S. Steel is currently assessing the impact of ASU 2023-07 on its disclosures.

3. Recently Adopted Accounting Standards

In September 2022, the FASB issued Accounting Standards Update 2022-04, Disclosure of Supplier Finance Program Obligations (ASU 2022-04). ASU 2022-04 requires that an entity disclose certain information about supplier finance programs used in connection with the purchase of goods and services. ASU 2022-04 is effective for all entities with fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, except for the amendment on annual roll-forward information, which is effective for fiscal years beginning after December 15, 2023. U. S. Steel adopted this guidance effective January 1, 2023, with the exception of the amendment on roll-forward information, which will be adopted in our fiscal year beginning on January 1, 2024.

The Company has a SCF arrangement with a third-party administrator which allows participating suppliers, at their sole discretion, to make offers to sell payment obligations of the Company prior to their scheduled due dates at a discounted price to a participating financial institution. The third-party administrator entered into a separate agreement with the Export Import Bank of the United States to guarantee 90 percent of supplier obligations sold for up to $200 million. No guarantees or collateral are provided by the Company or any of its subsidiaries under the SCF program, and the Company does not benefit from any preferential payment terms or discounts as a result of supplier participation.

The Company’s goal is to capture overall supplier savings and improve working capital efficiency. The agreements facilitate the suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. The Company has no economic interest in the sale of the suppliers’ receivables and no direct financial relationship with the financial institution concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under the arrangements. The SCF program requires the Company to pay the third-party administrator the stated amount of the confirmed participating supplier invoices. The payment terms for confirmed invoices range from 75 to 90 days after the end of the month in which the invoice was issued.

The underlying costs from suppliers that elected to participate in the SCF program are generally recorded in cost of sales in the Company’s Condensed Consolidated Statement of Operations. Amounts due to suppliers who participate in the SCF program are reflected in accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheet and payments on the obligations by our suppliers are included in cash used in operating activities in the Condensed Consolidated Statement of Cash Flows. As of March 31, 2024, accounts payable and accrued expenses included $63 million of outstanding payment obligations which suppliers elected to sell to participating financial institutions.

In October 2021, the FASB issued Accounting Standards Update 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). ASU 2021-08 requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for public companies with fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption of all amendments in the same period permitted. U. S. Steel adopted this guidance effective January 1, 2023, and will apply it to any future business combinations.

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 results of our real estate businesses are disclosed in the Other category.

The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measure being earnings (loss) before interest and income taxes. Earnings (loss) before interest and income taxes for reportable segments and the Other category does not include net interest and other financial costs (income), income taxes, stock-based compensation expense, and certain other items that management believes are not indicative of future results.

The accounting principles applied at the operating segment level in determining earnings (loss) before interest and income taxes are generally the same as those applied at the consolidated financial statement level. Intersegment sales and transfers are accounted for at market-based prices and are eliminated at the corporate consolidation level. Corporate-level selling, general and administrative expenses and costs related to certain former businesses are allocated to the reportable segments and Other based on measures of activity that management believes are reasonable.

-6-

The results of segment operations for the three months ended March 31, 2024, and 2023 are:


(In millions) Three Months Ended March 31, 2024	Customer Sales		Intersegment Sales		Net Sales		Earnings (loss) from investees		Earnings (loss) before interest and income taxes
Flat-Rolled	$	2,391	$	62	$	2,453	$	5	$	34
Mini Mill	578		125		703		—		99
USSE	918		7		925		—		16
Tubular	271		4		275		9		57
Total reportable segments	4,158		198		4,356		14		206
Other	2		—		2		—		(2)
Reconciling Items and Eliminations	—		(198)		(198)		—		(50)
Total	$	4,160	$	—	$	4,160	$	14	$	154

Three Months Ended March 31, 2023
Flat-Rolled	$	2,570	$	90	$	2,660	$	(16)	$	(7)
Mini Mill	553		70		623		—		12
USSE	838		6		844		—		(34)
Tubular	505		1		506		3		232
Total reportable segments	4,466		167		4,633		(13)		203
Other	4		—		4		—		3
Reconciling Items and Eliminations	—		(167)		(167)		—		(17)
Total	$	4,470	$	—	$	4,470	$	(13)	$	189

A summary of total assets by segment is as follows:


(In millions)	March 31, 2024		December 31, 2023
Flat-Rolled	$	7,443	$	7,546
Mini Mill (a)	8,059		7,569
USSE	2,351		2,229
Tubular	1,001		1,002
Total reportable segments	$	18,854	$	18,346
Other	$	132	$	140
Corporate, reconciling items, and eliminations (b)	1,462		1,965
Total assets	$	20,448	$	20,451

(a) Includes assets of $3.4 billion and $3.0 billion at March 31, 2024, and December 31, 2023, respectively, related to a new technologically advanced flat rolled steelmaking facility, Big River 2 (BR2), currently under construction near Osceola, Arkansas.

(b) The majority of corporate, reconciling items, and eliminations is comprised of cash and the elimination of intersegment amounts.

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


	Three Months Ended March 31,
(In millions)	2024		2023
Items not allocated to segments:
Restructuring and other charges (Note 20)	$	(6)	$	(1)
Stock-based compensation expense (Note 11)	(11)		(11)
Asset impairment charges	(7)		(4)
Environmental remediation charges	(2)		—
Strategic alternatives review process costs	(23)		—
Granite City idling costs	(1)		—
Other charges, net	—		(1)
Total reconciling items	$	(50)	$	(17)

5. Disposition

In January 2022, the Company informed its employees, customers, and other key stakeholders that the Company would be idling its subsidiary in Pittsburg, California, USS-UPI, LLC ("UPI"), at the end of 2023. UPI primarily produces galvanized sheet and tin mill products. In September 2023, the Company issued WARN notices to employees at UPI to notify them of employment losses resulting from the idling of operations and production was indefinitely idled in December 2023. The Company had accrued a total of $66 million and $108 million for severance, exit costs and employee benefits as of March 31, 2024 and December 31, 2023, respectively. Payments of $40 million for these items were made during the three months ended March 31, 2024. The Company has previously committed to, and continues to intend to, pursue the disposition of certain assets related to the UPI facility.

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 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, 2024, and 2023, respectively (Net Sales by Product, in millions, excluding intersegment sales):


Three Months Ended March 31, 2024	Flat-Rolled		Mini Mill		USSE		Tubular		Other		Total
Semi-finished	$	28	$	—	$	25	$	—	$	—	$	53
Hot-rolled sheets	492		314		475		—		—		1,281
Cold-rolled sheets	945		98		77		—		—		1,120
Coated sheets	760		165		300		—		—		1,225
Tubular products	—		—		12		268		—		280
All Other (a)	166		1		29		3		2		201
Total	$	2,391	$	578	$	918	$	271	$	2	$	4,160
(a) Consists primarily of sales of raw materials and coke making by-products.

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Three Months Ended March 31, 2023	Flat-Rolled		Mini Mill		USSE		Tubular		Other		Total
Semi-finished	$	59	$	—	$	32	$	—	$	—	$	91
Hot-rolled sheets	554		332		348		—		—		1,234
Cold-rolled sheets	901		72		71		—		—		1,044
Coated sheets	853		148		340		—		—		1,341
Tubular products	—		—		12		500		—		512
All Other (a)	203		1		35		5		4		248
Total	$	2,570	$	553	$	838	$	505	$	4	$	4,470
(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, 2024		December 31, 2023		March 31, 2023
Cash and cash equivalents	$	2,221	$	2,948	$	2,837
Restricted cash in other current assets	9		8		4
Long-term restricted cash	32		32		32

Total cash, cash equivalents and restricted cash	$	2,262	$	2,988	$	2,873

Amounts included in restricted cash represent cash balances which are legally or contractually restricted, primarily for insurance purposes, environmental liabilities and certain capital projects.

8. Inventories

The last-in, first-out (LIFO) method is the predominant method of inventory costing for our Flat-Rolled and Tubular segments. The first-in, first-out (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, 2024, and December 31, 2023, the LIFO method accounted for 52 percent and 53 percent of total inventory values, respectively.


(In millions)	March 31, 2024		December 31, 2023
Raw materials	$	925	$	773
Semi-finished products	834		877
Finished products	351		428
Supplies and sundry items	47		50
Total	$	2,157	$	2,128

Current acquisition costs for LIFO inventories were estimated to exceed the above inventory values by $1.3 billion and $1.2 billion at March 31, 2024, and December 31, 2023, 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 and $9 million for the three months ended March 31, 2024 and 2023, respectively.

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9. Intangible Assets and Goodwill

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


		As of March 31, 2024						As of December 31, 2023
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	22 Years	$	413	$	60	$	353	$	413	$	56	$	357
Patents	5-15 Years	17		14		3		17		13		4
Energy Contract	2 Years	—		—		—		54		54		—
Total amortizable intangible assets		$	430	$	74	$	356	$	484	$	123	$	361

Amortization expense was $5 million and $11 million for the three months ended March 31, 2024 and 2023, respectively.

Total estimated amortization expense for the remainder of 2024 is $15 million. We expect approximately $97 million in total amortization expense from 2025 through 2029 and approximately $244 million in remaining amortization expense thereafter.

The carrying amount of acquired water rights with indefinite lives as of March 31, 2024, and December 31, 2023, totaled $75 million.

Below is a summary of goodwill by segment for the three months ended March 31, 2024:


	Flat-Rolled		Mini Mill		USSE		Tubular		Total
Balance at December 31, 2023	$	—	$	916	$	4	$	—	$	920
Additions	—		—		—		—		—
Balance at March 31, 2024	$	—	$	916	$	4	$	—	$	920

10. Pensions and Other Benefits

The following table reflects the components of net periodic benefit cost (income) for the three months ended March 31, 2024, and 2023:


	Pension Benefits				Other Benefits
(In millions)	2024		2023		2024		2023
Service cost	$	7	$	8	$	1	$	1
Interest cost	53		55		15		17
Expected return on plan assets	(74)		(82)		(18)		(15)
Amortization of prior service cost (credit)	4		5		(7)		(6)
Amortization of actuarial net loss (gain)	11		3		(16)		(18)
Net periodic benefit cost (income), excluding below	1		(11)		(25)		(21)
Multiemployer plans	20		21		—		—

Net periodic benefit cost (income)	$	21	$	10	$	(25)	$	(21)

Employer Contributions

During the first three months of 2024, U. S. Steel made cash payments of $21 million to the Steelworkers Pension Trust and $0.3 million of pension payments not funded by trusts.

During the first three months of 2024, cash payments of $4 million were made for other postretirement benefit payments not funded by trusts.

Company contributions to defined contribution plans totaled $11 million and $12 million for the three months ended March 31, 2024, and 2023, respectively.

11. Stock-Based Compensation Plans

U. S. Steel has outstanding stock-based compensation awards that were granted by the Compensation & Organization Committee (the Committee) of the Board of Directors, or its designee, under the 2005 Stock Incentive Plan (the 2005

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Plan) and the 2016 Omnibus Incentive Compensation Plan, as amended and restated (the Omnibus Plan). On April 26, 2016, the Company's stockholders approved the Omnibus Plan and, between 2016 and the present, authorized the Company to issue up to 32,700,000 shares in the aggregate of U. S. Steel common stock under the Omnibus Plan. While the awards that were previously granted under the 2005 Plan remain outstanding, all future awards will be granted under the Omnibus Plan. As of March 31, 2024, there were 3,520,973 shares available for future grants under the Omnibus Plan.

Recent grants of stock-based compensation consist of restricted stock units, total stockholder return (TSR) performance awards and return on capital employed (ROCE) performance awards. Shares of common stock under the Omnibus Plan are issued from authorized, but unissued stock. The following table is a summary of the awards made under the Omnibus Plan during the first three months of 2024 and 2023.


	2024			2023
Grant Details	Shares(a)	Fair Value(b)		Shares(a)	Fair Value(b)

Restricted Stock Units	796,820	$	47.36	1,274,520	$	29.90
Performance Awards (c)
TSR	—	$	—	185,120	$	37.41
ROCE (d)	230,350	$	46.96	357,020	$	29.35

(a) The share amounts shown in this table do not reflect an adjustment for estimated forfeitures.

(b) Represents the per share weighted average for all grants during the period.

(d) A portion of ROCE awards granted in 2024 and 2023 are not shown in the table because they were granted in cash.

U. S. Steel recognized pretax stock-based compensation expense in the amount of $11 million in both the three-month periods ended March 31, 2024, and 2023.

As of March 31, 2024, total future compensation expense related to nonvested stock-based compensation arrangements was $75 million, and the weighted average period over which this expense is expected to be recognized is approximately 28 months.

Stock Options

There have been no stock options granted since 2017 other than the 171,000 performance-based stock options granted in December 2021, which are further described below.

The 171,000 performance-based stock options granted in December 2021, which were valued using a lattice model, do not become vested and exercisable until the Company's 20-trading day average closing stock price meets or exceeds the following stock price hurdles during the seven-year period beginning on the grant date, as follows:


20-trading day Average Closing Stock Price Achievement During 7-Year Period Beginning on Grant Date(a)		Percentage of Performance-Based Stock Options Exercisable
$	35.00	33.33	%
$	45.00	33.33	%
$	55.00	33.34	%

(a) The $35.00 tranche vested in April 2022 and the $45.00 tranche vested in January 2024.

Stock Awards

Restricted stock units awarded as part of annual grants generally vest ratably over three years. Their fair value is the average market price of the underlying common stock on the date of grant. Restricted stock units granted in connection with new-hire or retention grants generally cliff vest three years from the date of the grant.

TSR performance awards may vest at varying levels at the end of a three-year performance period if U. S. Steel’s total shareholder return compared to the total shareholder return of a peer group of companies meets performance criteria during the three-year performance period. TSR is calculated as follows: 20 percent for each year in the three-year performance period and 40 percent for the full three-year period. TSR performance awards may vest and pay out 50 percent at the threshold level, 100 percent at the target level and 200 percent at the maximum level. Payment for performance in between the threshold percentages will be interpolated. The fair value of the performance awards is calculated using a Monte-Carlo simulation.

ROCE performance awards may vest at the end of a three-year performance period contingent upon meeting ROCE performance goals approved by the Committee. For the ROCE performance awards, each year in the three-year performance period is weighted at 20 percent and the full three-year period is weighted at 40 percent of the total award. ROCE performance awards may vest and pay out 50 percent at the threshold level, 100 percent at the target level and 200 percent at the maximum level. Payment for performance in between the threshold percentages will be interpolated.

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The fair value of the ROCE performance awards is the average market price of the underlying common stock on the date of grant.

In December 2021, and August 2022, special performance-based restricted stock unit awards (PSUs) were granted to members of the Company’s executive leadership team. Shares are earned based on the achievement of certain pre-set quantitative performance criteria during the four-year performance period, January 1, 2022, through December 31, 2025. Shares may vest following the expiration of the Performance Period if the Company satisfies the performance criteria.

The Chief Executive Officer was granted PSUs that vest with the following, equally weighted, performance metrics: (i) EBITDA margin expansion, (ii) greenhouse gas emissions intensity reduction, (iii) asset portfolio optimization, (iv) leverage metrics and (v) corporate relative valuation. Other members of the executive leadership team were granted PSUs that vest with performance criteria related to: (i) on time and on budget completion of BR2 (30% of the grant), (ii) EBITDA margin expansion (40% of the grant) and (iii) greenhouse gas emissions intensity reduction (30% of the grant).

For the PSU awards, a payout is achievable at threshold (50% of target), target (100% of target) or maximum (200% of target) performance achievement. Payout amounts will be interpolated between the threshold, target and maximum amounts.

12. Income Taxes

Tax provision

For the three months ended March 31, 2024, and 2023, the Company recorded a tax provision of $38 million and $51 million, respectively. The tax provisions for the first three months of 2024 and 2023 were based on an estimated annual effective rate, which requires management to make its best estimate of annual pretax income or loss and discrete items recognized during the period, if applicable.

Throughout the year, management regularly updates forecasted annual pretax results for the various countries in which we operate based on changes in factors such as prices, shipments, product mix, plant operating performance and cost estimates. To the extent that actual 2024 pretax results for U.S. and foreign income or loss vary from estimates applied herein, the actual tax provision or benefit recognized in 2024 could be materially different from the forecasted amount used to estimate the tax provision for the three months ended March 31, 2024.

In March 2022, the Company and the Arkansas Economic Development Commission entered into the Recycling Tax Credit Incentive Agreement, whereby the Company may earn state income tax credits in an amount equal to 30 percent of the cost of waste reduction, reuse, or recycling equipment, subject to meeting the requirements of the Arkansas Code Ann. Section 26-51-506, for BR2 which is currently under construction near Osceola, Arkansas. Documentation supporting the Company's investment in qualifying equipment must be submitted as part of an application for certification expected to be completed on or before 2025. In March 2022, the Company received a lump-sum payment of approximately $82 million as proceeds from the sale of a portion of expected future tax credits to be earned by the Company (see Note 21 for additional information). The Company estimates that it could earn tax credits in excess of $700 million, exclusive of the amount sold in March 2022, which the Company will recognize in the year the assets are placed into service and meet the requirements of Arkansas Code Ann. Section 26-51-506. Any unused tax credit that cannot be claimed in a tax year may be carried forward indefinitely by the Company and applied to its future state tax liability.

On August 16, 2022, H.R. 5376 (commonly called the Inflation Reduction Act of 2022) was signed into law, which, among other things, implemented a corporate alternative minimum tax (CAMT) of 15 percent on net book income of certain large corporations adjusted for certain items prescribed by the legislation.

The Organization for Economic Co-operation and Development (the “OECD”), an international association of 38 countries including the U.S., has proposed changes to numerous long-standing tax principles, including a global minimum tax initiative. On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar 2 global corporate minimum tax rate of 15 percent on companies with revenues of at least €750 million, which went into effect in 2024. The law on minimum top-up tax for multinational enterprise groups and large-scale domestic groups in Slovakia was approved by the parliament on December 8, 2023 and signed by the President on December 21, 2023, with an effective date of December 31, 2023.

The tax provision for the three months ended March 31, 2024, reflects the impact of CAMT and Pillar 2, which were not material to the Condensed Consolidated Financial Statements.

13. Earnings and Dividends Per Common Share

Earnings Per Share Attributable to United States Steel Corporation Stockholders

The effect of dilutive securities on weighted average common shares outstanding included in the calculation of diluted earnings per common share for the three months ended March 31, 2024, and March 31, 2023, were as follows.

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	Three Months Ended March 31,
(Dollars in millions, except per share amounts)	2024		2023
Earnings attributable to United States Steel Corporation stockholders:
Basic	$	171	$	199
Interest expense on Senior Convertible Notes, net of tax	3		3
Diluted	$	174	$	202
Weighted-average shares outstanding (in thousands):
Basic	224,099		227,332
Effect of Senior Convertible Notes	26,168		26,194
Effect of stock options, restricted stock units and performance awards	4,317		3,921
Diluted	254,584		257,447
Earnings per share attributable to United States Steel Corporation stockholders:
Basic	$	0.76	$	0.87
Diluted	$	0.68	$	0.78

Excluded from the computation of diluted earnings per common share due to their anti-dilutive effect were 0.3 million and 0.9 million outstanding securities granted under the Omnibus Plan for the three months ended March 31, 2024, and 2023 respectively.

The dividend for each of the first quarter of 2024 and 2023 was five cents per common share.

14. Derivative Instruments

U. S. Steel uses foreign exchange forward sales contracts (foreign exchange forwards) with maturities up to 11 months to manage our currency requirements and exposure to foreign currency exchange rate fluctuations. The USSE and Flat-Rolled segments use hedge accounting for their foreign exchange forwards.

U. S. Steel also uses financial swaps to protect from the commodity price risk associated with purchases of natural gas, zinc, tin, electricity and iron ore (commodity purchase swaps). We elected cash flow hedge accounting for commodity purchase swaps for natural gas, zinc, tin, iron ore, and electricity. The commodity purchase swaps where hedge accounting was elected have maturities of up to 9 months.

U. S. Steel has entered into financial swaps that are used to partially manage the sales price risk of certain hot-rolled coil sales and iron ore sales (sales swaps). The sales swaps are accounted for using hedge accounting and have maturities of up to 9 months.

The table below shows the outstanding swap quantities used to hedge forecasted purchases and sales as of March 31, 2024, and March 31, 2023:


Hedge Contracts	Classification	March 31, 2024		March 31, 2023
Natural gas (in mmbtus)	Commodity purchase swaps	15,688,000		32,976,000
Tin (in metric tons)	Commodity purchase swaps	—		1,045
Zinc (in metric tons)	Commodity purchase swaps	18,933		23,783
Electricity (in megawatt hours)	Commodity purchase swaps	110,880		367,200
Iron ore (in metric tons)	Commodity purchase swaps	—		280,000

Iron ore (in metric tons)	Sales swaps	408,233		1,087,500
Hot-rolled coils (in tons)	Sales swaps	202,000		215,000
Foreign currency (in millions of euros)	Foreign exchange forwards	€	428	€	383
Foreign currency (in millions of dollars)	Foreign exchange forwards	$	16	$	85

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The following summarizes the fair value amounts included in our Condensed Consolidated Balance Sheets as of March 31, 2024, and December 31, 2023:


Balance Sheet Location (in millions)	March 31, 2024		December 31, 2023
Designated as Hedging Instruments
Accounts receivable	$	15	$	4
Accounts payable	30		81

Other long-term liabilities	—		2

The table below summarizes the effect of hedge accounting on Accumulated Other Comprehensive Income (AOCI) and amounts reclassified from AOCI into earnings for the three months ended March 31, 2024, and 2023:


	Gain (Loss) on Derivatives in AOCI					Amount of Gain (Loss) Recognized in Income
(In millions)	Three Months Ended March 31, 2024		Three Months Ended March 31, 2023		Location of Reclassification from AOCI	Three Months Ended March 31, 2024		Three Months Ended March 31, 2023
Sales swaps	$	50	$	(31)	Net sales	$	(30)	$	3
Commodity purchase swaps	(3)		(18)		Cost of sales (a)	(16)		(9)
Foreign exchange forwards	12		(8)		Cost of sales	1		4
(a) Costs for commodity purchase swaps are recognized in cost of sales as products are sold.

At current contract values, $20 million currently in AOCI as of March 31, 2024, will be recognized as an increase in cost of sales over the next year and $4 million currently in AOCI as of March 31, 2024, will be recognized an increase in net sales over the next year.

Foreign exchange forwards and commodity purchase swaps where hedge accounting was not elected generated a net loss of $1 million and $10 million for the three months ended March 31, 2024, and 2023, respectively.

15. Debt


(In millions)	Issuer/Borrower	Interest Rates %	Maturity	March 31, 2024		December 31, 2023
2037 Senior Notes	U. S. Steel	6.650	2037	274		274
2026 Senior Convertible Notes	U. S. Steel	5.000	2026	349		350
2029 Senior Notes	U. S. Steel	6.875	2029	475		475
2029 Senior Secured Notes	Big River Steel	6.625	2029	720		720
Environmental Revenue Bonds	U. S. Steel	4.125 - 6.750	2024 - 2053	1,164		1,164
Environmental Revenue Bonds	Big River Steel	4.500 - 4.750	2049	752		752
Finance leases and all other obligations	U. S. Steel	Various	2024 - 2029	177		157
Finance leases and all other obligations	Big River Steel	Various	2024 - 2027	167		167
Export Credit Agreement	U. S. Steel	Variable	2031	97		97
Credit Facility Agreement	U. S. Steel	Variable	2027	—		—
Big River Steel ABL Facility	Big River Steel	Variable	2026	—		—
USSK Credit Agreement	U. S. Steel Kosice	Variable	2026	—		—
USSK Credit Facility	U. S. Steel Kosice	Variable	2024	—		—
Total Debt				4,175		4,156
Less unamortized discount, premium, and debt issuance costs				(66)		(66)
Less short-term debt, long-term debt due within one year, and short-term issuance costs				159		142
Long-term debt				$	4,082	$	4,080

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Arkansas Development Finance Authority Environmental Improvement Revenue Bonds, Series 2023

On May 18, 2023, U. S. Steel closed on an offering consisting of an aggregate principal amount of $240 million unsecured Arkansas Development Finance Authority environmental improvement revenue bonds, which carry a green bond designation. The bonds, issued through Arkansas Development Finance Authority, have a coupon rate of 5.700% and carry a final maturity of 2053 (2053 ADFA Green Bonds). U. S. Steel received net proceeds of approximately $238 million after fees of approximately $2 million related to the underwriting and third-party expenses, and will pay semiannual interest. The net proceeds from the issuance of the 2053 ADFA Green Bonds were used to partially fund work related to BR2, currently under construction near Osceola, Arkansas.

On and after May 1, 2026, the Company may redeem the 2053 ADFA Green Bonds at its option, at any time in whole or from time to time in part at the redemption prices (expressed in percentages of principal amount) listed below, plus accrued and unpaid interest on the 2053 ADFA Green Bonds, if any, to, but excluding, the applicable redemption date, if redeemed during the twelve-month period beginning on May 1 of each of the years indicated below.


Year	Redemption Price
2026	105.000	%
2027	104.000	%
2028	103.000	%
2029	102.000	%
2030	101.000	%
2031 and thereafter	100.000	%

At any time prior to May 1, 2026, U. S. Steel may also redeem the 2053 ADFA Green Bonds, at our option, in whole or in part, or from time to time, at a price equal to the greater of 100 percent of the principal amount of the 2053 ADFA Green Bonds plus accrued and unpaid interest, if any, or the sum of the present value of the redemption price of the 2053 ADFA Green Bonds if they were redeemed on May 1, 2026, plus interest payments due through May 1, 2026, discounted to the date of redemption on a semi-annual basis at the applicable tax-exempt municipal bond rate, plus accrued and unpaid interest, if any.

2026 Senior Convertible Notes

In October 2019, U. S. Steel issued $350 million of 5.00% Senior Convertible Notes due November 1, 2026 (2026 Senior Convertible Notes). Interest on the 2026 Senior Convertible Notes is payable semi-annually on May 1 and November 1 of each year. The initial conversion rate for the 2026 Senior Convertible Notes is 74.8391 shares of U. S. Steel common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $13.36 per share of common stock, subject to adjustment pursuant to the 2026 Senior Convertible Notes indenture. Based on the initial conversion rate, the 2026 Senior Convertible Notes are convertible into 26,155,592 shares of U. S. Steel common stock and we reserved for the possible issuance of 33,348,361 shares, which is the maximum amount that could be issued upon conversion at maturity. Prior to August 1, 2026, holders of notes may convert all or a portion of their notes at their option only upon the satisfaction of specified conditions and during certain periods. On or after August 1, 2026, holders may convert all or a portion of their notes prior to the maturity date. Upon conversion, we will satisfy the obligation with cash, common stock, or a combination thereof, at our election. Anytime prior to August 1, 2026, if the price per share of U. S. Steel's common stock has been at least 130% of the conversion price for specified periods, U. S. Steel may redeem all or a portion of the 2026 Senior Convertible Notes at a cash redemption price of 100% of the principal amount, plus accrued and unpaid interest.

If U. S. Steel undergoes a fundamental change, as defined in the 2026 Senior Convertible Notes, holders may require us to repurchase the 2026 Senior Convertible Notes in whole or in part for cash at a price equal to 100% of the principal amount of the 2026 Senior Convertible Notes to be purchased plus any accrued and unpaid interest up to, but excluding the repurchase date.

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Big River Steel - Sustainability Linked ABL Facility

Big River Steel's amended senior secured asset-based revolving credit facility (Big River Steel ABL Facility) matures on July 23, 2026. The facility is secured by first-priority liens on accounts receivable and inventory and certain other assets and second priority liens on most tangible and intangible assets of Big River Steel in each case subject to permitted liens. Additionally, the amendment includes sustainability targets related to greenhouse gas emissions intensity reduction, safety performance and facility certification by ResponsibleSteel™.

The Big River Steel ABL Facility provides for borrowings for working capital and general corporate purposes in an amount equal up to the lesser of (a) $350 million and (b) a borrowing base calculated based on specified percentages of eligible accounts receivables and inventory, subject to certain adjustments and reserves.

Big River Steel LLC must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent twelve consecutive months when availability under the Big River Steel ABL Facility is less than the greater of ten percent of the borrowing base availability and $13 million. Based on the most recent four quarters as of March 31, 2024, Big River Steel would have met the fixed charge coverage ratio test. The facility includes affirmative and negative covenants and events of default that are customary for facilities of this type.

There were no loans outstanding under the Big River Steel ABL Facility at March 31, 2024. Availability under the Big River Steel ABL Facility, pursuant to the available borrowing base was $350 million at March 31, 2024.

U. S. Steel - Sustainability Linked Credit Facility Agreement

On May 27, 2022, U. S. Steel entered into the Sixth Amended and Restated Credit Facility Agreement (Credit Facility Agreement) to replace the existing Fifth Amended and Restated Credit Facility Agreement (Fifth Credit Facility Agreement). The Credit Facility Agreement has substantially the same terms as the Fifth Credit Facility Agreement, except the Credit Facility Agreement references the Secured Overnight Financing Rate instead of the London Interbank Offered Rate, adjusts the individual lenders' commitments, and renews the five-year maturity to May 27, 2027. The Credit Facility Agreement also adjusts the threshold for the fixed charge coverage ratio. The total availability under the facility remained the same at $1,750 million, and the financial impact from replacing the Fifth Credit Facility Agreement was immaterial. Consistent with the Fifth Credit Facility Agreement, the Credit Facility Agreement is secured by first-priority liens on certain accounts receivable and inventory and includes targets related to greenhouse gas emissions intensity reduction, safety performance and facility certification by ResponsibleSteel™.

The Credit Facility Agreement provides for borrowings for working capital and general corporate purchases in an amount equal to the lesser of (a) $1,750 million or (b) a borrowing base calculated based on specified percentages of eligible accounts receivable and inventory, subject to certain adjustments and reserves. As of March 31, 2024, there were approximately $4 million of letters of credit issued and no amounts drawn under the Credit Facility Agreement. U. S. Steel must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent four consecutive quarters when availability under the Credit Facility Agreement is less than the greater of ten percent of the maximum facility availability and $140 million. Based on the most recent four quarters as of March 31, 2024, the Company would have met the fixed charge coverage ratio test.

U. S. Steel Košice (USSK) Credit Facilities

On September 28, 2023, the Company elected to reduce the size of the USSK Credit Agreement from €300 million to €150 million (approximately $162 million). The reduced credit facility size supports USSK’s liquidity needs and is consistent with efforts to optimize costs and the global liquidity position. The USSK Credit Agreement matures in 2026 and contains sustainability targets related to greenhouse gas emissions intensity reduction, safety performance and facility certification by ResponsibleSteel™.

Under the USSK Credit Agreement, USSK is required to maintain a net debt to EBITDA ratio of less than 3.50:1.00 (the “EBITDA Ratio Covenant”), as measured on a rolling twelve month basis on June 30th and December 31st of each year. At March 31, 2024, USSK was in compliance with the EBITDA Ratio Covenant and the USSK Credit Agreement was undrawn and fully available.

During the first quarter of 2023, USSK increased the size of its €20 million credit facility to €30 million (approximately $32 million) (the USSK Credit Facility). At March 31, 2024, USSK had no borrowings under the USSK Credit Facility, and the availability was approximately $16 million due to approximately $16 million of customs and other guarantees outstanding.

16. Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, current accounts and notes receivable, accounts payable and accrued interest included in the Condensed Consolidated Balance Sheet approximate fair value. See Note 14 for disclosure of U. S. Steel’s derivative instruments, which are accounted for at fair value on a recurring basis.

Stelco Option for Minntac Mine Interest

On April 30, 2020, the Company entered into an Option Agreement with Stelco, Inc. (Stelco), that grants Stelco the option to purchase a 25 percent interest (Option Interest) in a to-be-formed entity (Joint Venture) that will own the Company’s

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current iron ore mine located in Mt. Iron, Minnesota (Minntac Mine). As consideration for the Option Interest, Stelco paid the Company an aggregate amount of $100 million in five $20 million installments during the year-ended December 31, 2020, which are recorded net of transaction costs in noncontrolling interests in the Condensed Consolidated Balance Sheet. The option can be exercised any time before January 31, 2027, and in the event Stelco exercises the option, Stelco will contribute an additional $500 million to the Joint Venture, which amount shall be remitted solely to U. S. Steel in the form of a one-time special distribution, and the parties will engage in good faith negotiations to finalize the master agreement (pursuant to which Stelco will acquire the Option Interest) and the limited liability company agreement of the Joint Venture.

Surplus VEBA assets

During the fourth quarter 2022, U. S. Steel and the United Steelworkers (USW) agreed to utilize the overfunded OPEB plans to support the benefits provided to active represented employees. Beginning January 1, 2023, this agreement allows the Company to use a certain amount of surplus VEBA assets (the surplus amount) to pay for legally permissible benefits under Section 501(c)(9) of the Internal Revenue Code for active employees and retirees of the USW. The surplus amount of $595 million was determined as of December 31, 2022, and was the balance of VEBA assets in excess of 135% of the retiree obligation at that time. On January 1, 2023, a subaccount was created and consisted of a pro-rata share of the existing trust. On February 1, 2023, using January 31, 2023 asset values, a new investment strategy was implemented and comprised of existing investments from the VEBA trust and cash. On February 1, 2023, certain assets were transferred from the VEBA to the subaccount. The Company is permitted to withdraw a target of $75 million annually, with a guaranteed annual minimum of $50 million, on a quarterly pro rata basis, from the subaccount to cover the cost of the permissible benefits for active USW employees and USW retirees. The surplus VEBA assets subaccount portfolio consists of fixed income securities including corporate bonds, U.S. government bonds, a commingled equity fund, and U.S. Treasury notes, in addition to alternatives including investments in private credit partnerships and real estate funds. A portion of the corporate bonds are classified as available-for-sale debt securities, with unrealized gains and losses reported in Accumulated other comprehensive loss. Upon sale, realized gains and losses are reported in earnings. All other investments in the subaccount are financial instruments measured at fair value or net asset value, with gains and losses recognized through net earnings and are reported as Net gain from investments related to active employee benefits on the Company's Condensed Consolidated Statements of Operations.

As of March 31, 2024, the fair value of the surplus VEBA assets subaccount portfolio was $540 million, with $75 million in Other current assets and $465 million in Other noncurrent assets on the Condensed Consolidated Balance Sheet.

As of December 31, 2023, the fair value of the surplus VEBA assets subaccount portfolio was $570 million, with $89 million in Other current assets and $481 million in Other noncurrent assets on the Consolidated Balance Sheet.

The value of corporate bonds classified as available-for-sale debt securities was $192 million and $208 million as of March 31, 2024, and December 31, 2023, respectively. A total pretax net gain related to available for sale securities of $7 million was included in Accumulated other comprehensive income at both March 31, 2024, and December 31, 2023.

During the three months ended March 31, 2024, pretax net gains of $4 million and an immaterial amount were recognized in Net gain from investments related to active employee benefits and in Accumulated other comprehensive income, respectively. During the three months ended March 31, 2023, pretax net gains of $22 million and $4 million were recognized in Net gain from investments related to active employee benefits and in Accumulated other comprehensive income, respectively.

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The fair value of the subaccount portfolio by asset category as of March 31, 2024, and December 31, 2023, were as follows (in millions):

March 31, 2024

December 31, 2023

Level 1

Level 2

Level 3

measured at NAV (a)

Total

Level 1

Level 2

Level 3

measured at NAV (a)

Total

Asset Category

Fixed Income