AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 2004
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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UNITED STATES STEEL CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 25-1897152
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
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600 GRANT STREET, PITTSBURGH, PENNSYLVANIA 15219-2800 (412) 433-1121
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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DAN D. SANDMAN, ESQ.
VICE CHAIRMAN AND CHIEF LEGAL OFFICER &
ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY
600 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219-2800
(412) 433-1121
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time
after the effective date of this Registration Statement, as determined by market
conditions.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] --------------------
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER UNIT(1)(2)(3) PRICE(1)(2)(4) REGISTRATION FEE
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Debt Securities(5)(13)....................... $ $
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Preferred Stock(6)(7)(13)....................
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Common Stock (8)(13)......................... $
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Warrants to Purchase, United States Steel....
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Corporation Debt Securities, Preferred Stock
or Common Stock (9)(13)....................
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Common Stock reserved for issuance upon
conversion or exchange of Debt Securities
or Preferred Stock (10)....................
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Stock Purchase Contracts(11)(13).............
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Stock Purchase Units(12)(13).................
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Total.................................... $600,000,000 $600,000,000 $48,544
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(1) In United States dollars or the equivalent thereof in any other currency
unit or units, or composite currency or currencies.
(2) Pursuant to General Instruction II.D to Form S-3, the amount to be
registered, proposed maximum aggregate offering price per security and
proposed maximum aggregate offering price has been omitted for each class of
securities that is registered hereby.
(footnotes continued on next page)
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT WILL ALSO BE USED FOR PURPOSES OF
SECTION 10(A)(3) OF THE ACT IN CONNECTION WITH SECURITIES REGISTERED ON FORM
S-3, REGISTRATION NUMBER 333-99273.
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(footnotes continued from previous page)
(3) The proposed maximum aggregate offering price per security will be
determined from time to time by the registrant in connection with the
issuance of the securities registered hereunder.
(4) Excludes an aggregate of $97,887,500 unsold securities (Debt Securities;
preferred stock; Depository Shares; common stock; Warrants to purchase Debt
Securities, preferred stock or common stock; and common stock reserved for
issuance upon conversion or exchange of Debt Securities or preferred stock)
included in Registration Statement Number 333-99273 for which a registration
fee was paid in connection with the filing thereof. The above excluded
securities are covered by the prospectus included in this registration
statement pursuant to Rule 429. As a result, up to an aggregate of
$697,887,500 of all of the securities referred to in this table may be sold
pursuant to the prospectus included in this registration statement. The
amount of the filing fee associated with the above excluded securities
previously paid with the above mentioned registration statement is $9,006.
(5) An indeterminate number of debt securities of United States Steel
Corporation are covered by this registration statement. Debt securities may
also be issued upon exercise of warrants to purchase debt securities that
are registered hereby.
(6) An indeterminate number of shares of preferred stock of United States Steel
Corporation are covered by this registration statement. Preferred stock may
also be issued upon exercise of warrants to purchase preferred stock that
are registered hereby.
(7) There is being registered hereunder an indeterminate number of Depositary
Shares as may be issued if United States Steel Corporation elects to offer
fractional interests in the preferred stock offered hereby.
(8) An indeterminate number of shares of common stock, par value $1.00 per
share, of United States Steel Corporation are covered by this registration
statement. Common stock may also be issued upon exercise of warrants to
purchase common stock that are registered hereby.
(9) An indeterminate number of warrants, representing rights to purchase debt
securities, preferred stock or common stock of United States Steel
Corporation, each of which is registered hereby, are covered by this
registration statement.
(10) Such indeterminate number of shares of common stock as may be issued upon
conversion of or in exchange for any Debt Securities, preferred stock or
Depositary Shares that provide for such conversion or exchange are being
registered hereby. No separate consideration will be received for the
common stock issuable upon such conversion or exchange.
(11) An indeterminate amount and number of stock purchase contracts,
representing obligations to purchase preferred stock, depositary shares,
common stock or other securities are covered by this registration
statement.
(12) An indeterminate amount and number of stock purchase units, consisting of
stock purchase contracts together with debt securities, preferred stock,
warrants or debt obligations of third parties securing the holders'
obligations to purchase the securities under the stock purchase contracts
are covered by this registration statement.
(13) An indeterminate amount of securities as may be issued in exchange for, or
upon conversion or exercise of, as the case may be, the debt securities,
preferred stock, depositary shares or warrants registered hereunder and
such indeterminate amount of securities as may be issued upon settlement of
the stock purchase contracts or stock purchase units registered hereunder
are covered by this registration statement. No separate consideration will
be received for any securities registered hereunder that are issued in
exchange for, or upon conversion of, as the case may be, the debt
securities, preferred stock, depositary shares or warrants.
PROSPECTUS
UNITED STATES STEEL CORPORATION
DEBT SECURITIES PREFERRED STOCK AND DEPOSITARY SHARES
COMMON STOCK WARRANTS
[US STEEL LOGO] STOCK PURCHASE UNITS STOCK PURCHASE CONTRACTS
We may issue and offer any of the following from time to CONSIDER THE RISK FACTORS LISTED ON
time: PAGE 3 OF THIS PROSPECTUS AND ANY IN
THE PROSPECTUS SUPPLEMENT CAREFULLY.
- Debt securities.
We produce, transport and sell steel
- Shares of or interests in preferred stock. mill products, coke and taconite
pellets in the United States and,
- Shares of common stock. through our subsidiaries U.S. Steel
Kosice, s.r.o. and U.S. Steel Balkan,
- Warrants to buy any of the foregoing. d.o.o., produce and sell steel mill
products in Central Europe.
- Stock purchase contracts.
- Stock purchase units.
Or any combination of these securities.
The maximum total public offering price of all the
securities offered will not exceed $697,887,500.
We will provide specific terms of these securities in
supplements to this prospectus. You should read this
prospectus and any prospectus supplement carefully before
you invest.
We may sell these securities through underwriters or directly to other
purchasers.
COMMON STOCK SYMBOL: X
When we issue any of these securities they will be listed on the New York Stock
Exchange, the Midwest Stock Exchange and the Pacific Stock Exchange.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Please refer to the prospectus supplement for more complete information. Neither
this prospectus nor any prospectus supplement is an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
The date of this Prospectus is January 27, 2004.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION......................... i
THE COMPANY................................................. 1
RISK FACTORS................................................ 2
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS...... 14
USE OF PROCEEDS............................................. 14
DESCRIPTION OF THE DEBT SECURITIES.......................... 14
DESCRIPTION OF CAPITAL STOCK................................ 24
DESCRIPTION OF DEPOSITARY SHARES............................ 29
DESCRIPTION OF WARRANTS..................................... 31
DESCRIPTION OF CONVERTIBLE OR EXCHANGEABLE SECURITIES....... 32
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS..................................................... 32
PLAN OF DISTRIBUTION........................................ 33
VALIDITY OF SECURITIES...................................... 34
EXPERTS..................................................... 35
You should rely only on the information contained in this prospectus, the
prospectus supplement or in documents we have referred you to. We have not
authorized anyone to provide you with information that is different.
i
WHERE YOU CAN FIND MORE INFORMATION
United States Steel Corporation files annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy any document we file with the SEC at the SEC's Public Reference Room at 450
Fifth Street, Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our
SEC filings are also accessible through the Internet at the SEC's website at
http://www.sec.gov. Many of our SEC filings are also accessible on our website
at http://www.ussteel.com.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the following documents
and any future filings we make with the SEC under Section 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
until all the offered securities are sold:
(a) USS' Annual Report on Form 10-K for the year ended December 31, 2002;
(b) USS' Proxy Statement on Schedule 14A dated March 14, 2003;
(c) USS' Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 2003 and on Form 10-Q/A for the quarter
ended September 30, 2003; and
(d) USS' Current Reports on Form 8-K dated January 9, January 28, February
3, February 4, February 10, March 31, March 31, April 1, April 11,
April 21, April 29, May 6, May 20, June 30, September 12, September 22,
September 30, October 10, October 28, and December 8, 2003 and January
2, 2004.
Any statement contained in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded will not
be deemed to constitute a part of this prospectus except as so modified or
superseded.
We will provide, upon written or oral request, to each person to whom a
prospectus is delivered, including any beneficial owner, a copy of any or all of
the information that has been incorporated by reference in the prospectus but
not delivered with the prospectus. You may request a copy of these filings at no
cost.
Requests for documents should be directed to:
UNITED STATES STEEL CORPORATION
Shareholder Services
600 Grant Street, Room 611
Pittsburgh, Pennsylvania 15219-2800
(412) 433-4801
(866) 433-4801 (toll free)
(412) 433-4818 (fax)
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THE COMPANY
U.S. Steel, through its domestic operations, is engaged in the production,
sale and transportation of steel mill products, coke, and taconite pellets; the
management of mineral resources; real estate development; and engineering and
consulting services and, through its European operations, which includes U.S.
Steel Kosice, s.r.o., located in the Slovak Republic ("USSK") and U.S. Steel
Balkan, d.o.o. located in the Republic of Serbia ("USSB"), in the production and
sale of steel mill products. Certain business activities are conducted through
joint ventures and partially owned companies. United States Steel Corporation is
a Delaware corporation. Our principal offices are at 600 Grant Street,
Pittsburgh PA 15219-2800 and our telephone number is (412) 433-1121. References
in this prospectus to the "Company," "United States Steel," "U. S. Steel,"
"USS," "we," "us" and "our" are to United States Steel Corporation and its
subsidiaries.
1
RISK FACTORS
You should carefully consider the following risk factors and the other
information contained elsewhere or incorporated by reference in this prospectus
and the prospectus supplement before making an investment decision.
The historical statistical and financial information prior to June 30, 2003
included in this prospectus does not allow for the effects of our purchase of
the assets of National Steel Corporation ("National") on May 20, 2003.
RISKS RELATED TO OUR INDUSTRY
OVERCAPACITY IN THE STEEL INDUSTRY MAY CAUSE OUR PRODUCTION LEVELS AND
SHIPMENTS TO DECLINE.
There is an excess of global steel-making capacity over global consumption
of steel products. This has caused shipment and production levels for our
domestic operations to vary from year to year and quarter to quarter, affecting
our results of operations and cash flows. Over the past six years, our domestic
steel shipments have varied from a high of 11.6 million net tons in 1997 to a
low of 9.8 million net tons in 2001. Production levels as a percentage of
capacity have ranged from a high of 96.5% in 1997 to a low of 78.9% in 2001.
THE STEEL BUSINESS IS CYCLICAL. ECONOMIC DOWNTURNS PUT PRESSURE ON OUR
FINANCIAL RESOURCES.
Demand for most of our products is cyclical in nature and sensitive to
general economic conditions, including currency fluctuations. Our business
supports cyclical industries such as the automotive, appliance, construction and
energy industries. As a result, downturns in the domestic and global economies,
or any of our customers' industries, could put pressure on our financial
resources to weather the negative impact such downturns have on our operations
and cash flows. Because we and other integrated steel producers generally have
high fixed costs, reduced volumes result in operating inefficiencies, such as
those experienced in 2001. Over the past six years, our net income has varied
from a high of $452 million in 1997 to a loss of $218 million in 2001 as our
domestic steel shipments have varied from a high of 11.6 million net tons in
1997 to a low of 9.8 million net tons in 2001.
IMPORTS OF UNFAIRLY TRADED STEEL MAY DEPRESS DOMESTIC PRICE LEVELS AND REDUCE
OUR RESULTS OF OPERATIONS AND CASH FLOWS.
We believe steel imports into the United States involve widespread dumping
and subsidy abuses and the remedies provided by United States law to private
litigants are insufficient to correct these problems. Imports of steel involving
dumping and subsidy abuses depress domestic price levels. This would reduce our
revenue, income and cash flows.
During 2004, two events will occur that may have a significant effect on
the amount of steel imports that will be allowed to enter the United States. The
ITC will commence a five-year review required by rules of the World Trade
Organization to determine whether antidumping findings against hot-rolled steel
from Japan, Russia and Brazil should be continued in effect, and the
Comprehensive Trade Agreement with Russia, under which Russia has voluntarily
limited the quantity of its exports to the United States of steel products that
are not covered by antidumping orders, will expire in July.
THE TERMINATION OF THE REMEDIES UNDER SECTION 201 OF THE TRADE ACT COULD
DEPRESS DOMESTIC PRICES AND REDUCE OUR RESULTS OF OPERATIONS AND CASH FLOWS.
On December 4, 2003, President Bush announced the termination of the
remedies under Section 201 of the Trade Act of 1974. The 201 remedies, which
became effective on March 5, 2002, pertained to imports entering the United
States on and after March 20, 2002 and provided for tariffs and quotas on some
steel products for three years with the tariff rates dropping and the quotas
increasing on the first and second anniversaries of the relief. These quotas and
tariffs had been set to expire in March 2005. The early
2
termination of these 201 remedies could have an adverse effect on our results
(see "Imports of unfairly traded steel may depress domestic price levels and
reduce our results of operations and cash flows", above), particularly if the
economy suffers a downturn.
RISKS RELATED TO OUR BUSINESS
MANY LAWSUITS HAVE BEEN FILED AGAINST US INVOLVING ASBESTOS-RELATED INJURIES;
THE OUTCOME OF THESE LAWSUITS COULD REDUCE OUR RESULTS OF OPERATIONS AND CASH
FLOW IN ANY GIVEN PERIOD.
We are a defendant in a large number of active cases in which, as of
September 30, 2003, approximately 16,000 plaintiffs have filed claims alleging
injury resulting from exposure to asbestos. These claims fall into three major
groups: (1) claims made under certain federal and general maritime laws by
employees of the Great Lakes Fleet or Intercoastal Fleet, former operations of
U. S. Steel; (2) claims made by persons who allegedly were exposed to asbestos
at U. S. Steel facilities; and (3) claims made by industrial workers allegedly
exposed to an electrical cable product formerly manufactured by U. S. Steel.
These cases allege a variety of respiratory and other diseases based on alleged
exposure to asbestos; approximately 200 plaintiffs allege they are suffering
from mesothelioma. The potential for damages may be greater in cases in which
the plaintiffs can prove mesothelioma, although in many such cases, the
plaintiffs have been unable to establish any causal relationship to U. S. Steel
or its products or premises. While U. S. Steel has excess casualty insurance,
these policies have multi-million dollar self-insured retentions and, to date,
U. S. Steel has not received any payments under these policies relating to
asbestos claims. In most cases, this excess casualty insurance is the only
insurance applicable to asbestos claims and it is not likely insurance coverage
will be available for any particular asbestos claim.
On March 28, 2003, a jury in Madison County, Illinois returned a verdict
against U. S. Steel for $50 million in compensatory damages and $200 million in
punitive damages. The plaintiff, an Indiana resident, alleged he was exposed to
asbestos while working as a U. S. Steel employee at our Gary Works in Gary,
Indiana from 1950 to 1981 and that he suffers from mesothelioma as a result. U.
S. Steel settled this case for substantially less than the verdict and the
impact was included in our results for the first quarter of 2003 and the nine
months ended September 30, 2003. We believe this verdict was aberrational, that
the court erred as a matter of law by failing to find that the plaintiff's
exclusive remedy was provided by the Indiana workers' compensation law and that
this issue and other errors at trial would have enabled U. S. Steel to succeed
on appeal. We view the verdict and resulting settlement in the Madison County
case as aberrational, and we believe that the likelihood of similar results in
other cases is remote, although not impossible.
The foregoing statements of our views and beliefs are forward-looking
statements. The outcome of asbestos-related litigation is subject to substantial
uncertainties including (among other things) factual and legal determinations,
and actual results could differ materially from those expressed in the
forward-looking statements.
WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS AND OTHER OBLIGATIONS THAT LIMIT
OUR ACCESS TO THE FINANCIAL MARKETS AND REQUIRE OUR OPERATIONS TO SUPPORT
SIGNIFICANT DEBT SERVICE PAYMENTS.
As of September 30, 2003, we were liable for indebtedness of approximately
$1.9 billion. This does not include obligations of Marathon Oil Corporation
("Marathon") for which we are contingently liable and that are not recorded on
our balance sheet. As of September 30, 2003, such obligations of Marathon were
$68 million. We may incur other obligations for working capital, refinancing of
a portion of the $1.9 billion referred to above or for other purposes. This
substantial amount of indebtedness and related covenants limits our access to
financial markets and requires our operations to support significant debt
service payments.
3
Our high degree of leverage could have important consequences to you,
including the following:
- Our ability to satisfy our obligations with respect to any other debt
securities or preferred stock may be impaired in the future;
- It may become difficult for us to obtain additional financing for working
capital, capital expenditures, debt service requirements, acquisitions or
general corporate or other purposes in the future;
- A substantial portion of our cash flow from operations must be dedicated
to the payment of principal and interest on our indebtedness, thereby
reducing the funds available to us for other purposes;
- Some of our borrowings may be at variable rates of interest (including
borrowings under our inventory credit facility), which will expose us to
the risk of increased interest rates;
- The sale prices, costs of selling receivables and amounts available under
our accounts receivable program fluctuate due to factors that include the
amount of eligible receivables available, the costs of the commercial
paper funding and our long-term debt ratings; and
- Our substantial leverage may limit our flexibility to adjust to changing
economic or market conditions, reduce our ability to withstand
competitive pressures and make us more vulnerable to a downturn in
general economic conditions.
OUR BUSINESS REQUIRES SUBSTANTIAL DEBT SERVICE, PREFERRED STOCK DIVIDEND
PAYMENTS, CAPITAL INVESTMENT, OPERATING LEASE PAYMENTS, CONTINGENT
OBLIGATIONS, MAINTENANCE EXPENDITURES AND OTHER OBLIGATIONS THAT WE MAY BE
UNABLE TO FULFILL.
Our business may not generate sufficient operating cash flow or external
financing sources may not be available in an amount sufficient to enable us to
service or refinance our indebtedness or to fund other liquidity needs.
With approximately $1.9 billion of debt outstanding as of September 30,
2003, we have substantial debt service requirements. Based on this outstanding
debt, our combined principal and interest payments will average approximately
$185 million annually over the next five years excluding a principal payment of
$535 million due on our Senior Notes in August 2008. We also currently
anticipate paying preferred stock dividends at a rate of $18 million per year
through June 2006. Our operations are capital intensive. For the five-year
period ended December 31, 2002, total capital expenditures were $1.4 billion,
and through September 30, 2003, capital expenditures totaled $205 million. As of
December 31, 2002, we were obligated to make aggregate lease payments of
approximately $500 million under operating leases over the next five years and
our acquisition of National's assets has increased this sum by $157 million. Our
business also requires substantial expenditures for routine maintenance.
Some of our operating lease agreements include contingent rental charges
that are not determinable to any degree of certainty. These charges are
primarily based on utilization of the power generation facility at our Gary
Works location and operating expenses incurred related to our headquarters'
office space.
USSK has a commitment to the Slovak government for a capital improvements
program over a period commencing with the acquisition date and ending on
December 31, 2010, and, as of September 30, 2003, the remaining commitment under
this program was $477 million.
At September 30, 2003, our domestic contract commitments to acquire
property, plant and equipment totaled $34 million.
USSB, an indirect wholly-owned Serbian subsidiary of U.S. Steel, acquired a
Serbian integrated steel company. USSB committed to future spending of up to
$150 million over five years for working capital and the repair, rehabilitation,
improvement, modification and upgrade of the facilities and $6.5 million for
cultural and economic development activities.
4
As of September 30, 2003 we had contingent obligations consisting of
indemnity obligations under active surety bonds, trusts and letters of credit
totaling approximately $146 million, guarantees of approximately $30 million of
indebtedness for unconsolidated entities and commitments under take or pay
arrangements of approximately $889 million, plus contingencies under the sale of
our mining assets of approximately $79 million. As the general partner of the
Clairton 1314B Partnership, L.P., we are obligated to fund cash shortfalls
incurred by that partnership but may withdraw as the general partner if we are
required to fund in excess of $150 million in operating cash shortfalls. As of
September 30, 2003, we were also contingently liable for $68 million of debt and
other obligations of Marathon.
RATING AGENCIES MAY DOWNGRADE OUR CREDIT RATINGS WHICH WOULD INCREASE OUR
FINANCIAL COSTS AND MAKE IT MORE DIFFICULT FOR US TO RAISE CAPITAL.
The fees payable and the amount of receivables eligible under our
receivables sales program are determined in part by our credit ratings and the
fees increase if these ratings drop. In January 2003, following our announcement
that we entered into an asset purchase agreement with National, rating agencies
placed our credit ratings under review and these ratings were subsequently
reduced in May 2003. If our credit ratings are downgraded further, the fees
payable under our receivables sales program would increase and the amount of
receivables eligible for sale could be reduced. In addition, any further
downgrade in our credit ratings could make raising capital more difficult,
increase the cost of future borrowings and affect the terms on which we purchase
goods and services.
WE HAVE LOST MARKET SHARE OVER THE LAST DECADE AND THIS HAS REDUCED OUR
SELLING PRICES AND SHIPMENT LEVELS.
USS has lost market share over the past decade. Based on statistics
supplied by the American Iron and Steel Institute, we believe our domestic
flat-rolled market share has dropped from 19.4% in 1990 to a low of 13.3% in
2001.
MINI-MILLS ARE INCREASINGLY ABLE TO COMPETE IN OUR MARKETS AND THIS COULD
REDUCE OUR SELLING PRICES AND SHIPMENT LEVELS.
An increasing number of mini-mills utilize thin slab casting technology to
produce flat-rolled products. Through the use of thin slab casting, mini-mill
competitors are increasingly able to compete directly with integrated producers
of flat-rolled products. Depending on market conditions, the additional
production generated by flat-rolled minimills could significantly reduce our
selling prices and shipment levels.
HIGH ENERGY COSTS REDUCE OUR RESULTS OF OPERATIONS AND CASH FLOWS.
Our operations consume large amounts of energy and we consume significant
amounts of natural gas. Domestic natural gas prices increased from an average of
$2.74 per million BTU in 1999 to an average of $5.86 per million BTU in the
first ten months of 2003. At normal annual consumption levels (including the
National assets), a $1.00 per million BTU change in domestic natural gas prices
would result in an estimated $80 million change in our annual domestic pretax
operating costs without taking into account the effect of any hedging. Due to
the volatility of natural gas prices, which in recent years have reached
historically high levels, we may hedge part of our natural gas purchases from
time to time. Hedging programs will affect our energy costs.
REDUCED AVAILABILITY OF RAW MATERIALS COULD AFFECT OUR PRODUCTION AND HIGH RAW
MATERIAL COSTS COULD REDUCE OUR RESULTS OF OPERATIONS AND CASH FLOWS.
With recent increases in global demand for steelmaking raw materials,
prices and related transportation costs are increasing for commodities such as
coking coal, coke, iron ore and scrap. Future results will be affected by market
prices for, and availability of, these purchased commodities. In the United
States, we purchase all our coking coal requirements and a portion of our scrap
requirements, but
5
are self-sufficient in iron ore and we are a net seller of coke. In Europe, we
purchase all of our coking coal and iron ore requirements and a modest portion
of our coke and scrap requirements.
ENVIRONMENTAL COMPLIANCE AND REMEDIATION COULD RESULT IN SUBSTANTIALLY
INCREASED CAPITAL REQUIREMENTS AND OPERATING COSTS.
Our domestic businesses are subject to numerous federal, state and local
laws and regulations relating to the protection of the environment. These laws
are constantly evolving and becoming increasingly stringent. The ultimate impact
of complying with existing laws and regulations is not always clearly known or
determinable because regulations under some of these laws have not yet been
promulgated or are undergoing revision. We are also involved in a number of
environmental remediation projects at both former and present operating
locations and are involved in a number of other remedial actions under federal
and state law. Our worldwide environmental expenditures were $230 million in
2002, $231 million in 2001 and $230 million in 2000. For more information see
"Management's Discussion and Analysis of Environmental Matters, Litigation and
Contingencies" in our Annual Report on Form 10-K for the year ended December 31,
2002, our Report on Form 10-Q for the quarter ended September 30, 2003 and
subsequent filings.
The specific impact of environmental compliance on each competitor may vary
depending upon a number of factors, including the age and location of operating
facilities, production processes (such as a mini-mill versus an integrated
producer) and the specific products and services it provides. To the extent our
competitors, particularly foreign steel producers and manufacturers of
competitive products, are not required to undertake equivalent costs, our costs
could be higher and, accordingly, we could be at a disadvantage in the market
with respect to such competitors.
USSK is subject to the laws of the Slovak Republic. The environmental laws
of the Slovak Republic generally follow the requirements of the European Union
("EU"), which are comparable to U. S. standards. USSK's capital spending
commitments include significant expenditures for environmental equipment to
bring it into compliance with EU environmental regulations. We believe these
projects, most of which will be completed during the next 12-24 months, will
result in USSK being in compliance with those requirements.
USSB is subject to the laws of the Union of Serbia and Montenegro. The
environmental laws of the Union of Serbia and Montenegro are currently more
lenient than either the EU or U. S. standards, but this is expected to change
over the next several years in anticipation of possible EU accession. A portion
of the $150 million we committed to spend in connection with USSB's Serbian
acquisition is expected to be used for environmental controls and upgrades.
OUR RETIREE EMPLOYEE HEALTH CARE AND RETIREE LIFE INSURANCE COSTS ARE HIGHER
THAN THOSE OF MANY OF OUR COMPETITORS.
We maintain defined benefit retiree health care and life insurance plans
covering substantially all domestic employees upon their retirement. U. S.
Steel's under funded benefit obligations for retiree medical and life insurance
increased from $1.8 billion at year-end 2001 to $2.6 billion at year-end 2002.
U. S. Steel estimates its under funded benefit obligation at year-end 2003 will
be $2.6 billion. Other post retirement benefit expense is expected to increase
to approximately $180 million in 2003, excluding one-time charges of
approximately $65 million related to workforce reductions.
These estimates are forward-looking statements. Factors that may affect the
amount of other post-retirement benefit expense include, among other things,
investment performance, medical cost inflation, liability changes and interest
rates.
6
OUR RETIREE EMPLOYEE HEALTH CARE AND RETIREE LIFE INSURANCE COSTS WILL BE PAID
OUT OF CORPORATE CASH FLOW STARTING IN 2004.
Payments for retiree medical and life insurance in 2002 and 2001 totaled
$212 million and $183 million, respectively. During 2002 and 2001, substantially
all payments on behalf of union retirees were paid from the Voluntary Employee
Benefit Association ("VEBA") trust. U. S. Steel expects that all payments on
behalf of union retirees will also be paid from the VEBA trust in 2003, but
beginning in early 2004, corporate funds will be used for these payments.
Corporate funds used for all retiree health and life benefits in 2004 and 2005,
excluding multiemployer plan payments, are expected to total $230 million and
$260 million, respectively.
These estimates are forward-looking statements. Factors that may affect the
amount of corporate funds used to pay these benefits include, among other
things, investment performance, medical cost inflation, liability changes and
interest rates.
OUR PENSION COSTS ARE HIGHER THAN THOSE OF MANY OF OUR COMPETITORS.
Unlike many of our competitors, we have noncontributory defined benefit
pension plans covering most of our domestic employees upon their retirement. The
funded status of these plans declined from an overfunded position of $1.2
billion at year-end 2001 to an underfunded position of $0.4 billion at year-end
2002. With the workforce reduction and certain retirement rate assumption
changes, the plan, after the merger hereinafter discussed, is expected to have a
year-end 2003 underfunded position of approximately $0.7 billion. Pension costs
for the domestic defined benefit plans are expected to be approximately $100
million in 2003, excluding one-time charges of approximately $440 million
connected with the union and salaried workforce reduction. This amount also does
not include expenses for contribution payments to the Steelworkers Pension Trust
("SPT") for former National union employees who joined U.S. Steel and for union
employees who join U. S. Steel after July 1, 2003. Non-union employees who join
U. S. Steel after July 1, 2003 participate in a defined contribution program.
These estimates are forward-looking statements. Factors that may affect the
amount of net periodic pension costs include, among other things, investment
performance, liability changes and interest rates.
WE MAY BE REQUIRED TO MAKE SUBSTANTIAL CONTRIBUTIONS TO OUR DEFINED BENEFIT
PENSION PLAN THAT COULD UNFAVORABLY IMPAIR OUR CASH FLOWS.
Funding requirements for our defined benefit pension plan could have an
unfavorable impact on our debt covenants, borrowing arrangements, and cash
flows. During the fourth quarter of 2003, we merged our defined benefit pension
plan for union employees and our defined benefit pension plan for nonunion
employees. Preliminary valuations indicate that the merged plan will not require
cash funding for the 2003 or 2004 plan years. Thereafter, annual funding
requirements are broadly estimated to be $75 million per year, excluding any
contributions to the SPT. In the fourth quarter of 2003, we made a $75 million
voluntary contribution to our main defined benefit pension plan, consisting
primarily of timber assets previously managed by U. S. Steel's real estate unit.
We may also decide to make other voluntary contributions in one or more future
periods in order to mitigate potentially larger required contributions in later
years.
These estimates are forward-looking statements. Factors that may affect the
amount of cash funding requirements include future asset performance, the level
of interest rates used to measure minimum funding levels, the impacts of
business acquisitions or sales, union negotiated changes and future government
regulation.
DECLINES IN THE VALUE OF INVESTMENTS OF OUR MAJOR PENSION TRUSTS COULD
MATERIALLY REDUCE OUR STOCKHOLDERS' EQUITY.
Under accounting principles generally accepted in the United States changes
in the market value of the assets held in trust for pension purposes can result
in significant changes in the sponsor's balance sheet.
7
The accounting rules provide that if at any plan measurement date (which in our
case is December 31 of each year or an earlier date if certain significant plan
events occur) the fair value of plan assets is less than the plan's accumulated
benefit obligation ("ABO"), the sponsor must establish a liability at least
equal to the amount by which the ABO exceeds the fair value of the plan assets
and any prepaid pension assets must be removed from the balance sheet. The sum
of the liability and prepaid pension assets must be offset by the recognition of
an intangible asset and/or as a direct charge against stockholders' equity, net
of tax effects. Such adjustments will have no direct impact on earnings per
share or cash.
The re-measurement of our union pension plan that was required to reflect
the workforce reduction, increased the net charge against equity to $927
million. During the fourth quarter of 2003, U. S. Steel merged its two major
defined benefit pension plans. Pension accounting rules may require that U. S.
Steel increase the additional minimum liability that was recorded at year-end.
This increase would result in a non-cash net charge against equity, which is
currently estimated in a range of $500 million to $600 million. The actual
amount of such charge will be determined based upon facts and circumstances on
the measurement date and the result could be materially different from the
foregoing estimate. Such differences could range from a reversal of the $927
million net charge against equity to a cumulative charge against equity of $1.4
to $1.5 billion. These entries will have no impact on income. These charges
against equity would result in an increase in federal and state deferred tax
assets, which management will assess to determine if such assets may be
realized. Should a valuation allowance be required, the upper range of the
cumulative charge against equity could increase from $1.5 billion discussed
above to as much as $2.5 billion, representing an increase of as much as $1
billion related to a valuation allowance for the full or partial effect in the
net charge as of September 30, 2003.
The foregoing estimates are forward-looking statements. Predictions as to
the value of and return on plan assets and the resulting impact on equity are
subject to substantial uncertainties such as (among other things) investment
performance and interest rates.
DOMESTIC COMPETITORS EMERGING FROM BANKRUPTCY MAY HAVE LOWER COSTS THAN OURS.
Since 1998, more than 30 domestic steel companies have sought protection
under Chapter 11 of the United States Bankruptcy Code. Many of these companies
have continued to operate. Some have reduced prices to maintain volumes and cash
flow and obtained concessions from their labor unions and suppliers. Upon
emergence from bankruptcy, these companies, or new entities that purchase their
facilities through the bankruptcy process, may be relieved of many
environmental, employee, retiree and other obligations.
OUR INTERNATIONAL OPERATIONS EXPOSE US TO UNCERTAINTIES AND RISKS FROM ABROAD,
WHICH COULD REDUCE OUR RESULTS OF OPERATIONS AND CASH FLOWS.
USSK, located in the Slovak Republic, constitutes 20% of our total raw
steel capability, and accounted for 17% of revenue for 2002. USSK exports about
85% of its products, with the majority of its sales being to other European
countries. Both USSK and USSB are affected by the worldwide overcapacity in the
steel industry and the cyclical nature of demand for steel products and that
demand's sensitivity to worldwide general economic conditions. In particular,
both USSK and USSB are subject to economic conditions and political factors in
Europe, which if changed could negatively affect their results of operations and
cash flows. Political factors include, but are not limited to, taxation,
nationalization, inflation, currency fluctuations, increased regulation and
protectionist measures. USSK and USSB are also subject to foreign currency
exchange risks. USSK's revenues are primarily in euros and its costs are
primarily in Slovak korunas and United States dollars. USSB's revenues are
primarily in euros and United States dollars, most of its labor and other
domestic costs are primarily in Serbian dinars and most of its raw materials
purchases are in United States dollars.
Although the bankruptcy laws of Serbia provide a discharge of all
pre-closing liabilities, USSB will be subject to the political and economic
risks of operating in Serbia.
8
USSK MAY LOSE SOME OF THE TAX BENEFITS IT ENJOYS IN SLOVAKIA.
In October 2002, a tax credit limit was negotiated by the Slovak government
as part of the Accession Treaty governing the Slovak Republic's entry into the
EU. The Treaty limits to $500 million the total tax credit to be granted to USSK
during the period 2000 through 2009. The impact of the tax credit limit is
expected to be minimal since Slovak tax laws have been modified and tax rates
have been reduced since the acquisition of USSK. The Treaty also places limits
upon total production and export sales to the EU, allowing for modest growth
each year through 2009. The limits upon export sales to the EU take effect upon
the Slovak Republic's entry into the EU, which is expected to occur in May 2004.
A question has recently arisen with respect to the effective date of the
production limits. The European Commission has taken the position that the
production limitations apply as of 2002 and is currently demanding that USSK pay
taxes on USSK's 2003 income as a result of allegedly exceeding the production
limits. Discussions between representatives of the Slovak Republic and the
European Commission are ongoing. At this time it is not possible to predict the
outcome of those discussions or the impact upon the results of USSK.
THE TERMS OF OUR INDEBTEDNESS MAY RESTRICT OUR ABILITY TO PAY DIVIDENDS.
Under the terms of our 10 3/4% Senior Notes due 2008 and our 9 3/4% Senior
Notes due 2010 (collectively, the "Senior Notes"), we are not able to pay
dividends on capital stock unless we can meet certain restricted payment tests.
THE TERMS OF OUR INDEBTEDNESS AND OUR ACCOUNTS RECEIVABLE PROGRAM CONTAIN
RESTRICTIVE COVENANTS, CROSS-DEFAULT, CROSS ACCELERATION AND OTHER PROVISIONS
THAT MAY LIMIT OUR OPERATING FLEXIBILITY.
We currently have Senior Notes outstanding in the aggregate principal
amount of $985 million as of September 30, 2003. The Senior Notes impose
significant restrictions on us that may limit our flexibility. These
restrictions include the following:
- Limits on additional borrowings, including limits on the amount of
borrowings secured by inventories or accounts receivable;
- Limits on sale/leasebacks;
- Limits on the use of funds from asset sales and sale of the stock of
subsidiaries; and
- Restrictions on our ability to invest in joint ventures or make certain
acquisitions.
We also have a revolving credit agreement secured by inventory that imposes
additional restrictions on us including the following:
- We must meet a fixed charge coverage ratio (the ratio of consolidated
earnings before interest, taxes depreciation and rental expense to
consolidated fixed charges) of at least 1.25: 1 if our average
availability under the credit agreement is less than $100,000,000;
- Limitations on capital expenditures; and
- Restrictions on investments.
The accounts receivable program terminates on the occurrence and failure to
cure certain events, including, among others:
- Certain defaults with respect to the inventory facility and other debt
obligations;
- Failure to maintain certain ratios related to the collectability of
receivables; and
- Failure of the commercial paper conduits' liquidity providers to extend
their commitments that currently expire in November of each year.
If these covenants are breached or if we fail to make payments under our
material debt obligations or our receivables purchase agreement, creditors would
be able to terminate their commitments to make further loans, declare their
outstanding obligations immediately due and payable and foreclose on any
9
collateral, and it may also cause a default under the Senior Notes. Additional
indebtedness that USS may incur in the future may also contain similar
covenants, as well as other restrictive provisions. Cross-default and
cross-acceleration clauses in our revolving credit facility, the Senior Notes,
the accounts receivable program and any future additional indebtedness could
have an adverse effect upon our financial position and liquidity to the extent
we are unable to satisfy the acceleration of all such debt. Such defaults
include failure to make payments when due, failure to comply with the covenants
described above and failure to pay judgments entered against USS (which may
include any judgments resulting from the environmental and asbestos litigation
matters described in this prospectus and the documents incorporated by
reference).
The sale prices, costs of selling receivables and amounts available under
our accounts receivable program fluctuate due to factors that include the amount
of eligible receivables available, costs of commercial paper funding and our
long-term debt ratings. The amount available under our secured inventory
facility fluctuates based on our eligible inventory levels.
We are currently in compliance with the terms of our outstanding
indebtedness.
"CHANGE IN CONTROL" CLAUSES MAY REQUIRE US TO IMMEDIATELY PURCHASE OR REPAY
DEBT.
Upon the occurrence of "change in control" events specified in our Senior
Notes, inventory facility and various other loan documents, the holders of our
indebtedness may require us to immediately purchase or repay that debt on less
than favorable terms. We may not have the financial resources to make these
purchases and repayments, and a failure to purchase or repay such indebtedness
would trigger cross-acceleration clauses under the Senior Notes and other
indebtedness.
OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY
IMPACTED BY STRIKES OR WORK STOPPAGES BY OUR UNIONIZED EMPLOYEES.
Strikes or work stoppages and the resulting adverse impact on our
relationships with our customers could have a material adverse effect on our
business, financial condition, results of operations and/or cash flows. In
addition, mini-mill producers and certain foreign competitors and producers of
comparable products do not have unionized work forces. This may place us at a
competitive disadvantage.
Substantially all hourly employees of our domestic steel, coke and taconite
pellet facilities are covered by a collective bargaining agreement with the
United Steelworkers of America that expires in September 2008 and includes a
no-strike provision. Other hourly employees (for example, those engaged in
transportation activities) are represented by the United Steelworkers of America
and other unions.
The majority of USSK employees are represented by a union and are covered
by a collective bargaining agreement that expires in February 2004.
The majority of USSB employees are represented by two trade unions and are
covered by a collective bargaining agreement that expires in November 2006.
PROVISIONS OF DELAWARE LAW, OUR GOVERNING DOCUMENTS AND OUR RIGHTS PLAN MAY
MAKE A TAKEOVER OF USS MORE DIFFICULT.
Certain provisions of Delaware law, our certificate of incorporation and
by-laws and our rights plan could make more difficult or delay our acquisition
by means of a tender offer, a proxy contest or otherwise and the removal of
incumbent directors. These provisions are intended to discourage certain types
of coercive takeover practices and inadequate takeover bids, even though such a
transaction may offer our stockholders the opportunity to sell their stock at a
price above the prevailing market price.
10
INTERNATIONAL ACQUISITIONS MAY EXPOSE US TO ADDITIONAL RISKS.
If we acquire companies or facilities outside the United States, we may be
exposed to increased risks including the following:
- Economic and political conditions in the countries where the facilities
are located and where the products made at those facilities are marketed;
- Currency fluctuations; Uncertain sources of raw materials;
- Economic disruptions in less developed economies where many potential
acquisition candidates have facilities or market products;
- Expenditures necessary to bring such facilities to profitable operation;
- Foreign tax risks; and
- Expenditures required to comply with potential new environmental
requirements.
TRADE RESTRICTIONS IMPOSED BY OTHER COUNTRIES IN EUROPE MAY AFFECT OUR
EUROPEAN SALES.
Although the European Commission recently announced the termination of
safeguard measures, it could reinstate such measures or impose others, such as
quotas and tariffs. Although the safeguard measures currently in place in Poland
and Hungary are not expected to have a material adverse impact on USSK, other
countries could impose similar measures.
Serbia also is subject to customs duties for shipments into certain Central
and Eastern European countries. Discussions and negotiations are being held with
many of these countries regarding these duties.
RISKS ASSOCIATED WITH THE ACQUISITION OF THE NATIONAL STEEL ASSETS
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE NATIONAL'S OPERATIONS AND REALIZE
THE FULL COST SAVINGS WE ANTICIPATE.
Among the factors considered by our board of directors in approving the
National transaction were the anticipated cost savings and operating synergies
that could result from the National transaction. These savings may not be
realized within the time periods contemplated or at all.
A substantial portion of the cost savings that we anticipate are due to the
reduced staffing levels allowed under our labor agreement. We may find that we
need more employees than we anticipated to operate our business, thereby
reducing the anticipated cost savings.
Also, the process of integrating the operations of National could cause an
interruption of, or loss of momentum in, the activities of our existing
businesses or the loss of key personnel. This diversion of management's
attention from our existing businesses and any delays or difficulties
encountered with the integration of National's operations could further reduce
the anticipated cost savings.
THE NATIONAL TRANSACTION WILL RESULT IN COSTS OF INTEGRATION.
We are incurring charges reflecting costs of integration, including
information technology integration and other expenses related to the National
transaction. Integration-related costs will be recognized as integration-related
activities take place. Although we expect the elimination of duplicative costs,
as well as the realization of other benefits related to the integration of
National's business may offset additional expenses over time, there may be no
net benefit achieved in the near term or at all. In addition, we must
renegotiate contractual arrangements with a number of National's suppliers,
vendors and lessors. This means our actual costs may substantially exceed
estimates. Unanticipated expenses associated with the integration of National's
operations may also arise.
11
THERE MAY BE UNKNOWN ENVIRONMENTAL OR OTHER RISKS INHERENT IN THE NATIONAL
TRANSACTION.
Although we have conducted due diligence with respect to National's assets,
we may not be aware of all of the risks associated with the National
transaction. For example, we may not be aware of all of the existing
environmental conditions at the former National facilities. Any future discovery
of adverse information concerning these assets could have a material adverse
effect on our business, financial condition, results of operations and cash
flows. We believe the likelihood of obtaining any damages from National in
connection with undisclosed liabilities is remote. We may also need to make
capital expenditures, which may be significant, to maintain the assets we
acquired and to comply with regulatory requirements, including environmental
laws.
CUSTOMERS MAY PURCHASE LESS FROM US FOLLOWING THE NATIONAL TRANSACTION THAN
THEY DID FROM NATIONAL AND US PRIOR TO THE NATIONAL TRANSACTION.
Customers who purchased steel from us and National may not buy as much
steel from us after the National transaction as they previously bought from the
separate companies. They may also seek to negotiate price concessions from us.
RISKS RELATED TO THE SEPARATION
Prior to December 31, 2001, our businesses were owned by USX Corporation,
now named Marathon Oil Corporation.
BECAUSE WE ARE NO LONGER OWNED BY USX, WE WILL NOT BE ABLE TO RELY ON MARATHON
FOR FINANCIAL SUPPORT.
Prior to our separation from Marathon ("Separation"), we funded our
negative operating cash flow through an increase in USX debt attributable to the
U. S. Steel Group. Because we are no longer owned by USX, we are not able to
rely on USX for financial support or benefit from a relationship with USX to
obtain credit.
WE HAVE INCURRED OPERATING AND CASH LOSSES AND WILL NO LONGER BE ABLE TO
REALIZE THE BENEFITS OF CASH FROM MARATHON TAX SETTLEMENTS.
Before the Separation, the USX tax allocation policy required the U. S.
Steel Group and the Marathon Group to pay the other for tax benefits resulting
from tax attributes that could not be utilized by the group for which those tax
attributes arose on a stand-alone basis but which could be used on a
consolidated, combined or unitary basis. The net amount of cash settlements made
by Marathon to USS under this policy for prior years, subject to adjustment, was
$819 million, $91 million and $(2) million in 2001, 2000 and 1999, respectively.
These payments allowed USS to realize the cash value of its tax benefits on a
current basis. Now, if USS generates losses or other tax attributes, we can
generally realize the cash value from them only if and when we generate enough
taxable income in future years to use those tax losses or other tax attributes
on a stand-alone basis. A delay in realizing tax benefits will reduce our cash
flow.
USS IS SUBJECT TO CERTAIN CONTINUING CONTINGENT LIABILITIES OF MARATHON THAT
COULD REDUCE OUR CASH FLOW AND OUR ABILITY TO INCUR ADDITIONAL INDEBTEDNESS
AND COULD CAUSE A DEFAULT UNDER OUR BORROWING FACILITIES.
USS is contingently liable for debt and other obligations of Marathon in
the amount of $68 million as of September 30, 2003. Marathon is not limited by
agreement with USS as to the amount of indebtedness that it may incur. In the
event of the bankruptcy of Marathon, these obligations for which USS is
contingently liable, as well as obligations relating to industrial development
and environmental improvement bonds and notes that were assumed by USS from
Marathon, may be declared immediately due and payable. If that occurs USS may
not be able to satisfy those obligations. In addition, if Marathon loses its
investment grade ratings, certain of these obligations will be considered
indebtedness under our indentures and for covenant calculations under our
revolving credit facility. This occurrence could prevent
12
USS from incurring additional indebtedness under our indentures or may cause a
default under our revolving credit facility.
Under the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder, USS and each subsidiary of USS that was a
member of the Marathon consolidated group during any taxable period or portion
thereof ending on or before the effective time of the Separation is jointly and
severally liable for the federal income tax liability of the entire Marathon
consolidated group for that taxable period. Other provisions of federal law
establish similar liability for other matters, including laws governing tax
qualified pension plans as well as other contingent liabilities.
THE SEPARATION MAY BE CHALLENGED BY CREDITORS AS A FRAUDULENT TRANSFER OR
CONVEYANCE THAT COULD PERMIT UNPAID CREDITORS OF MARATHON TO SEEK RECOVERY
FROM US.
If a court determines that the Separation and the related transactions
violated applicable provisions of the United States Bankruptcy Code and/or
applicable state fraudulent transfer or conveyance laws, the Separation could be
rescinded and unpaid creditors of Marathon could seek recovery from us.
THE SEPARATION MAY BECOME TAXABLE UNDER SECTION 355(E) OF THE INTERNAL REVENUE
CODE IF 50% OR MORE OF USS' SHARES OR MARATHON OIL CORPORATION'S SHARES ARE
ACQUIRED AS PART OF A PLAN THAT INCLUDES THE SEPARATION AND THE IMPOSITION OF
SUCH A TAX WOULD MATERIALLY AFFECT OUR FINANCIAL CONDITION.
The Separation may become taxable to Marathon pursuant to section 355(e) of
the Internal Revenue Code if 50% or more of either Marathon's shares or our
shares are acquired, directly or indirectly, as part of a plan or series of
related transactions that include the Separation. If section 355(e) applies,
Marathon would be required to pay a corporate tax based on the excess of the
fair market value of the shares distributed over Marathon's tax basis for such
shares. The amount of this tax would be materially greater if the Separation
were deemed to be a distribution of Marathon's shares. If an acquisition occurs
that results in the Separation being taxable under section 355(e), a Tax Sharing
Agreement between USS and Marathon provides that the resulting corporate tax
liability will be borne by the entity, either USS or Marathon, that is deemed to
have been acquired.
WE MAY BE RESPONSIBLE FOR A CORPORATE TAX IF THE SEPARATION FAILS TO QUALIFY
AS A TAX-FREE TRANSACTION.
Based on representations made by USX Corporation prior to the Separation,
the Internal Revenue Service issued a private letter ruling that the Separation
was tax-free to Marathon and its shareholders. To the extent a breach of one of
those representations results in a corporate tax being imposed on Marathon, the
breaching party, either USS or Marathon, will be responsible for payment of the
corporate tax. If the Separation fails to qualify as a tax-free transaction
through no fault of either USS or Marathon, the resulting tax liability, if any,
is likely to be borne by us under the Tax Sharing Agreement.
If the Separation is determined to be a taxable distribution of the stock
of U. S. Steel, but there is no breach of a representation or covenant by either
U. S. Steel or Marathon, we would be liable for any resulting taxes ("Separation
No-Fault Taxes") incurred by Marathon. Our indemnity obligation for Separation
No-Fault Taxes survives until the expiration of the applicable statute of
limitations. The maximum potential amount of our indemnity obligation for
Separation No-Fault Taxes as of September 30, 2003 was estimated to be
approximately $140 million. No liability has been recorded for this indemnity
obligation because we believe the likelihood of the Separation being determined
to be a taxable distribution of U. S. Steel is remote.
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RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)
CONTINUING OPERATIONS
NINE MONTHS
ENDED SEPT. YEAR ENDED DECEMBER
30 31,
----------- ---------------------
2003 2002 2002 2001 2000 1999 1998
---- ---- ---- ----- ----- ----- ----
Ratio of earnings to fixed charges(a)........... -- 1.34 1.04 -- 1.13 2.33 5.89
Ratio of earnings to combined fixed charges and
preferred stock dividends(a).................. -- 1.34 1.04 -- 1.05 2.10 5.15
---------------
(a) For the purposes of calculating the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock
dividends, "earnings" are defined as income before income taxes and
extraordinary items adjusted for minority interests in consolidated
subsidiaries, income (loss) from equity investees, and capitalized
interest, plus fixed charges, amortization of capitalized interest and
distributions from equity investees. "Fixed charges" consist of interest,
whether expensed or capitalized, on all indebtedness, amortization of
premiums, discounts and capitalized expenses related to indebtedness, and
an interest component equal to one-third of rental expense, representing
the portion of rental expense that management believes is attributable to
interest. "Preferred dividends" consists of pretax earnings required to
cover preferred stock dividends associated with the 6.50% preferred stock
attributed to USS by Marathon prior to the Separation which was retained
and subsequently repaid by Marathon in connection with the Separation.
Earnings were deficient in covering fixed charges by $767 million for the
nine months ended September 30, 2003, and by $586 million for the year
ended December 31, 2001. Earnings were deficient in covering combined fixed
charges and preferred stock dividends by $789 million for the nine months
ended September 30, 2003 and by $598 million for the year ended December
31, 2001.
USE OF PROCEEDS
The net proceeds from the sale of the offered securities will be used for
general corporate purposes unless we specify otherwise in the prospectus
supplement applicable to a particular offering. We may use those funds to repay
debt, fund employee benefit plans, to finance acquisitions, for stock
repurchases, for capital expenditures, for investments in subsidiaries and joint
ventures, and for working capital.
DESCRIPTION OF THE DEBT SECURITIES
The following is a general description of the debt securities (the "Debt
Securities") that we may offer from time to time. The particular terms of the
Debt Securities offered by any prospectus supplement and the extent, if any, to
which the general provisions described below may apply will be described in the
applicable prospectus supplement. Although our securities include securities
denominated in U.S. dollars, we can choose to issue securities in any other
currency, including the euro.
The Debt Securities will be either senior Debt Securities or subordinated
Debt Securities. We will issue the senior Debt Securities under the senior
indenture between The Bank of New York, or any successor trustee, and USS. We
will issue the subordinated Debt Securities under a subordinated indenture
between The Bank of New York, or any successor trustee, and USS. The senior
indenture and the subordinated indenture are collectively referred to in this
prospectus as the indentures, and each of the trustee under the senior indenture
and the trustee under the subordinated indenture are referred to in this
prospectus as trustee.
The following description is only a summary of the material provisions of
the indentures. We urge you to read the appropriate indenture because it, and
not this description, defines your rights as holders of the
14
notes or bonds. See the information under the heading "Where You Can Find More
Information" to contact us for a copy of the appropriate indenture.
GENERAL
The senior Debt Securities are unsubordinated obligations, will rank on par
with all other debt obligations of USS and, unless otherwise indicated in the
related prospectus supplement, will be unsecured. The subordinated Debt
Securities will be subordinate, in right of payment to senior Debt Securities. A
description of the subordinated Debt Securities is provided below under
" -- Subordinated Debt Securities". The specific terms of any subordinated Debt
Securities will be provided in the related prospectus supplement. For a complete
understanding of the provisions pertaining to the subordinated Debt Securities,
you should refer to the subordinated indenture attached as an exhibit to the
Registration Statement.
TERMS
The indentures do not limit the principal amount of debt we may issue.
We may issue notes or bonds in traditional paper form, or we may issue a
global security. The Debt Securities of any series may be issued in definitive
form or, if provided in the related prospectus supplement, may be represented in
whole or in part by a global security or securities, registered in the name of a
depositary designated by USS. Each Debt Security represented by a global
security is referred to as a "Book-Entry Security."
Debt Securities may be issued from time to time pursuant to this
prospectus, and will be offered on terms determined by market conditions at the
time of sale. Debt Securities may be issued in one or more series with the same
or various maturities and may be sold at par, a premium or an original issue
discount. Debt Securities sold at an original issue discount may bear no
interest or interest at a rate that is below market rates. Unless otherwise
provided in the prospectus supplement, Debt Securities denominated in U.S.
dollars will be issued in denominations of $1,000 and integral multiples
thereof.
Please refer to the prospectus supplement for the specific terms of the
Debt Securities offered including the following:
1. Designation of an aggregate principal amount, purchase price and
denomination;
2. Date of maturity;
3. If other than U.S. currency, the currency for which the Debt
Securities may be purchased;
4. The interest rate or rates and the method of calculating
interest;
5. The times at which any premium and interest will be payable;
6. The place or places where principal, any premium and interest
will be payable;
7. Any redemption or sinking fund provisions or other repayment
obligations;
8. Any index used to determine the amount of payment of principal of
and any premium and interest on the Debt Securities;
9. The application, if any, of the defeasance provisions to the Debt
Securities;
10. If other than the entire principal amount, the portion of the
Debt Securities that would be payable upon acceleration of the maturity
thereof;
11. If other than the entire principal amount plus accrued interest,
the portion of the Change in Control purchase price or prices applicable to
purchases of Debt Securities upon a Change in Control;
12. Whether the Debt Securities will be issued in whole or in part in
the form of one or more global securities, and in such case, the depositary
for the global securities;
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13. Any additional covenants applicable to the Debt Securities being
offered;
14. Any additional events of default applicable to the Debt
Securities being offered;
15. The terms of subordination, if applicable;
16. The terms of conversion, if applicable; and
17. Any other specific terms including any terms that may be required
by or advisable under applicable law.
Except with respect to Book-Entry Securities, Debt Securities may be
presented for exchange or registration of transfer, in the manner, at the places
and subject to the restrictions set forth in the Debt Securities and the
prospectus supplement. Such services will be provided without charge, other than
any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the indentures.
CERTAIN COVENANTS OF USS IN THE INDENTURES
PAYMENT
USS will pay principal of and premium, if any, and interest on the Debt
Securities at the place and time described in the Debt Securities. (Section
1001) Unless otherwise provided in the prospectus supplement, USS will pay
interest on any Debt Security to the person in whose name that security is
registered at the close of business on the regular record date for that interest
payment. (Section 307)
Any money deposited with the trustee or any paying agent for the payment of
principal of or any premium or interest on any Debt Security that remains
unclaimed for two years after that amount has become due and payable will be
paid to USS at its request. After this occurs, the holder of that security must
look only to USS for payment of that amount and not to the trustee or paying
agent. (Section 1003)
LIENS
If USS or any subsidiary of USS mortgages, pledges, encumbers or subjects
to a lien (a "Mortgage") as security for money borrowed any blast furnace
facility or steel producing facility, or casters that are part of a plant that
includes such a facility, having a net book value in excess of 1% of
Consolidated Net Tangible Assets at the time of determination (each, a
"Principal Property") or any shares of stock or other equity interests in any of
USS' subsidiaries that own one or more Principal Properties, USS will secure or
will cause such subsidiary to secure the Debt Securities equally and ratably
with all indebtedness or obligations secured by the Mortgage then being given
and with any other indebtedness of USS or the subsidiary of USS then entitled
thereto; provided, however, that this covenant shall not apply in the case of:
(a) any Mortgage existing on the date of the indentures (whether or not such
Mortgage includes an after-acquired property provision); (b) any Mortgage,
including a purchase money Mortgage, incurred in connection with the acquisition
of any Principal Property, the assumption of any Mortgage previously existing on
such acquired Principal Property or any Mortgage existing on the property of any
corporation when it becomes a subsidiary of USS; (c) any Mortgage on such
Principal Property in favor of the United States, or any State, or
instrumentality of either, to secure partial, progress or advance payments to
USS or any subsidiary of USS under any contract or statute; (d) any Mortgage in
favor of the United States, any State, or instrumentality of either, to secure
borrowings for the purchase or construction of the Principal Property mortgaged;
(e) any Mortgage on any Principal Property arising in connection with or to
secure all or any part of the cost of the repair, construction, improvement,
alteration or development of the Principal Property or any portion thereof; or
(f) any renewal of or substitution for any Mortgage permitted under the
preceding clauses. (Section 1005)
USS may and may permit its subsidiaries to (1) grant Mortgages or incur
liens on Principal Property (or on equity interests in subsidiaries that own
Principal Property) covered by the restriction described above and (2) sell or
transfer any Principal Property with the intention of taking back a lease on
that Principal Property so long as the net book value of the Principal Property
(or equity interests) so
16
encumbered or transferred, together with all property then permitted to be
encumbered or subject to a sale-leaseback under this clause, does not at the
time such Mortgage or lien is granted or such property is transferred exceed 10%
of Consolidated Net Tangible Assets. (Section 1005)
"Consolidated Net Tangible Assets" means the aggregate value of all assets
of USS and its subsidiaries after deducting (a) all current liabilities
(excluding all long-term debt due within one year), (b) all investments in
unconsolidated subsidiaries and all investments accounted for on the equity
basis and (c) all goodwill, patent and trademarks, unamortized debt discount and
other similar intangibles (all determined in conformity with generally accepted
accounting principles and calculated on a basis consistent with USS' most recent
audited consolidated financial statements). (Section 101)
LIMITATIONS ON CERTAIN SALE AND LEASEBACKS
USS will not, nor will it permit any subsidiary to, sell or transfer any
Principal Property with the intention of taking back a lease thereof, provided,
however, this covenant shall not apply if (a) the lease is to a subsidiary of
USS (or to USS in the case of a subsidiary of USS); (b) the lease is for a
temporary period by the end of which it is intended that the use of the
Principal Property by the lessee will be discontinued; (c) USS or a subsidiary
of USS could, as described under the caption "Liens" above, Mortgage such
property without equally and ratably securing the Debt Securities; or (d) USS
promptly informs the trustee of such sale, the net proceeds of such sale are at
least equal to the fair value (as determined by resolution adopted by the Board
of Directors of USS) of such Principal Property and USS within 180 days after
such sale applies an amount equal to such net proceeds (subject to reduction by
reason of credits to which USS is entitled, under the conditions specified in
the indentures) to the retirement or in substance defeasance of funded debt of
USS or a subsidiary of USS. This covenant does not apply to sales and leases
solely among USS and its subsidiaries. (Section 1006)
MERGER AND CONSOLIDATION
USS will not merge or consolidate with any other entity or sell or convey
all or substantially all of its assets to any person, firm, corporation or other
entity, except that USS may merge or consolidate with, or sell or convey all or
substantially all of its assets to, any other entity if (i) USS is the
continuing entity or the successor entity (if other than USS) is organized and
existing under the laws of the United States of America or a State thereof and
such entity expressly assumes payment of the principal and interest on all the
Debt Securities, and the performance and observance of all of the covenants and
conditions of the applicable indenture to be performed by USS and (ii) there is
no default under the applicable indenture. Upon such a succession, USS will be
relieved from any further obligations under the applicable indenture. For
purposes of this paragraph, "substantially all of its assets" means, at any
date, a portion of the non-current assets reflected in USS' consolidated balance
sheet as of the end of the most recent quarterly period that represents at least
66 2/3% of the total reported value of such assets. (Section 801)
WAIVER OF CERTAIN COVENANTS
Unless otherwise provided in the prospectus supplement, USS may, with
respect to the Debt Securities of any series, omit to comply with any provision
of the covenants described under "Liens" and "Limitations on Certain Sale and
Leasebacks" above or under "Purchase of Debt Securities Upon a Change in
Control" or in any covenant provided in the terms of those Debt Securities if,
before the time for such compliance, holders of at least a majority in principal
amount of the outstanding Debt Securities of that series waive such compliance
in that instance or generally.
PURCHASE OF DEBT SECURITIES UPON A CHANGE IN CONTROL
If any Change in Control (hereinafter defined) of USS occurs, each holder
of Debt Securities will have the right, at that holder's option, subject to the
terms and conditions of the indentures, to require USS to purchase all of that
holder's Debt Securities on the date that is 35 Business Days after the
occurrence of such Change in Control (the "Change in Control Purchase Date") at
a cash price equal to
17
(i) unless otherwise specified in the terms of such Debt Securities, 100% of the
principal amount thereof, together with accrued interest to such Change in
Control Purchase Date (except that interest installments due prior to such
Change in Control Purchase Date will be payable to the holders of such Debt
Securities of record at the close of business on the relevant record dates
according to their terms and the provisions of the indentures), or (ii) such
other price or prices as may be specified in the terms of such Debt Securities
(the "Change in Control Purchase Prices"). (Section 1007)
Under the indentures, a "Change in Control" of USS occurs if (i) any
"person" or "group" of persons (excluding USS, any subsidiary, any employee
stock ownership plan, any other employee benefit plan of USS or any person
holding Voting Stock for any employee benefit plan of USS) acquires "beneficial
ownership" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) of
shares of Voting Stock representing at least 35% of the outstanding Voting Power
of USS, (ii) during any period of 25 consecutive months, commencing before or
after the date of the indentures, individuals who at the beginning of such
25-month period were directors of USS (together with any replacement or
additional directors whose election was recommended by incumbent management of
USS or who were elected by a majority of directors then in office) cease to
constitute a majority of the board of directors of USS, or (iii) any person or
group of related persons shall acquire all or substantially all of the assets of
USS; provided, a Change in Control shall not have occurred if USS has merged or
consolidated with or transferred all or substantially all of its assets to
another entity in compliance with the provisions of Section 801 of the
indentures (relating to when USS may merge or transfer assets) and the surviving
or successor or transferee entity is no more leveraged than was USS immediately
prior to such event. The term "leveraged" means the percentage represented by
the total assets of that entity divided by its stockholders' or member's equity,
as would be shown on a consolidated balance sheet of that entity prepared in
accordance with generally accepted accounting principles in the United States of
America. The term "substantially all of its assets" used above means, at any
date, a portion of the non-current assets reflected in USS' consolidated balance
sheet as of the end of the most recent quarterly period that represents at least
66 2/3% of the total reported value of such assets.
"Voting Stock" means stock of USS having ordinary voting power for the
election of the directors of USS, other than stock having such power only by
reason of the happening of a contingency. "Voting Power" means the total voting
power represented by all outstanding shares of all classes of Voting Stock.
(Section 101)
To exercise this right to require USS to purchase a holder's Debt
Securities after a Change in Control, the holder must deliver, at any time prior
to the Change in Control Purchase Date specified in a notice delivered by USS
after that Change in Control, a written notice of purchase to the paying agent
specified in USS' notice. The holder's notice must state the numbers of the
certificates of any Debt Securities that the holder will deliver to be purchased
and that those Debt Securities are to be purchased under the terms and
conditions specified in the indentures and USS' notice.
If a Change in Control occurs, USS intends to comply with any applicable
securities laws or regulations, including any applicable requirements of Rule
14e-1 under the Exchange Act. The Change in Control purchase feature of the Debt
Securities may in certain circumstances make more difficult or discourage a
takeover of USS. The Change in Control purchase feature, however, is not the
result of management's knowledge of any specific effort to accumulate shares of
common stock or to obtain control of USS by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. The Change in Control purchase feature is similar to
that contained in other debt of USS as a result of negotiations between USS and
the underwriters or holders of that debt.
Except as discussed, the Change in Control purchase feature does not afford
holders of the Debt Securities protection against possible adverse effects of a
reorganization, restructuring, merger or similar transaction involving USS.
Our ability to purchase Debt Securities in the future may be limited by the
terms of any then existing borrowing arrangements and by our financial
resources.
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EVENTS OF DEFAULT
An Event of Default occurs with respect to any series of Debt Securities
when: (i) USS defaults in paying principal of or premium, if any, on any of the
Debt Securities of such series when due; (ii) USS defaults in paying interest on
the Debt Securities of such series when due, continuing for 30 days; (iii) USS
defaults in paying the Change in Control Purchase Price of any of the Debt
Securities of such series as and when the same shall become due and payable;
(iv) USS defaults in making deposits into any sinking fund payment with respect
to any Debt Security of such series when due; (v) failure by USS in the
performance of any other covenant or warranty in the Debt Securities of such
series or in the applicable indenture continues for a period of 90 days after
notice of such failure as provided in that indenture; (vi) certain events of
bankruptcy, insolvency, or reorganization occur; or (vii) any other Event of
Default provided with respect to Debt Securities of that series. (Section 501)
USS is required annually to deliver to the trustee officers' certificates
stating whether or not the signers have any knowledge of any default in the
performance by USS of certain covenants. (Section 1004)
If an Event of Default shall occur and be continuing with respect to any
series, the trustee or the holders of not less than 25% in principal amount of
the Debt Securities of such series then outstanding may declare the Debt
Securities of such series to be due and payable. If an Event of Default
described in clause (vi) of the first paragraph under "Events of Default" occurs
with respect to any series of Debt Securities, the principal amount of all Debt
Securities of that series (or, if any securities of that series are original
issue discount securities, the portion of the principal amount of such
securities as may be specified by the terms thereof) will automatically become
due and payable without any declaration by the trustee or the holders. (Section
502) The trustee is required to give holders of the Debt Securities of any
series written notice of a default with respect to such series as and to the
extent provided by the Trust Indenture Act, except that the trustee may not give
such notice of a default described in clause (v) of the first paragraph under
"Events of Default" until at least 60 days after the default. As used in this
paragraph, a "default" means an event described in the first paragraph under
"Events of Default" without including any applicable grace period. (Section 602)
If at any time after the Debt Securities of such series have been declared
due and payable, and before any judgment or decree for the moneys due has been
obtained or entered, USS shall pay or deposit with the trustee amounts
sufficient to pay all matured installments of interest upon the Debt Securities
of such series and the principal of all Debt Securities of such series which
shall have become due, otherwise than by acceleration, together with interest on
such principal and, to the extent legally enforceable, on such overdue
installments of interest and all other amounts due under the applicable
indenture shall have been paid, and any and all defaults with respect to such
series under that indenture shall have been remedied, then the holders of a
majority in aggregate principal amount of the Debt Securities of such series
then outstanding, by written notice to USS and the trustee, may rescind and
annul the declaration that the Debt Securities of such series are due and
payable. (Section 502) In addition, the holders of a majority in aggregate
principal amount of the Debt Securities of such series may waive any past
default and its consequences with respect to such series, except a default in
the payment of the principal of or any premium or interest on any Debt
Securities of such series or a default in the performance of a covenant that
cannot be modified under the indentures without the consent of the holder of
each affected Debt Security. (Section 513)
The trustee is under no obligation to exercise any of the rights or powers
under the indentures at the request, order or direction of any of the holders of
Debt Securities, unless such holders shall have offered to the trustee
reasonable security or indemnity. (Section 603) Subject to such provisions for
the indemnification of the trustee and certain limitations contained in the
indentures, the holders of a majority in aggregate principal amount of the Debt
Securities of each series at the time outstanding shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee, or exercising any trust or power conferred on the trustee, with
respect to the Debt Securities of such series. (Section 512)
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No holder of Debt Securities will have any right to institute any
proceeding, judicial or otherwise, with respect to the indentures, for the
appointment of a receiver or trustee or for any other remedy under the
indentures unless:
- The holder has previously given written notice to the trustee of a
continuing Event of Default with respect to the Debt Securities of that
series; and
- The holders of at least 25% in principal amount of the outstanding Debt
Securities of that series have made a written request to the trustee, and
offered reasonable indemnity, to the trustee to institute proceedings as
trustee, the trustee has failed to institute the proceedings within 60
days and the trustee has not received from the holders of a majority in
principal amount of the Debt Securities of that series a direction
inconsistent with that request. (Section 507)
Notwithstanding the foregoing, the holder of any Debt Security will have an
absolute and unconditional right to receive payment of the principal of and any
premium and, subject to the provisions of the applicable indenture regarding the
payment of default interest, interest on that Debt Security on the due dates
expressed in that security and to institute suit for the enforcement of payment.
(Section 508)
MODIFICATION OF THE INDENTURES
Each indenture contains provisions permitting USS and the trustee to modify
that indenture or enter into or modify any supplemental indenture without the
consent of the holders of the Debt Securities in regard to matters as shall not
adversely affect the interests of the holders of the Debt Securities, including,
without limitation, the following: (a) to evidence the succession of another
corporation to USS; (b) to add to the covenants of USS further covenants for the
benefit or protection of the holders of any or all series of Debt Securities or
to surrender any right or power conferred upon USS by that indenture; (c) to add
any additional Events of Default with respect to all or any series of Debt
Securities; (d) to add to or change any of the provisions of that indenture to
facilitate the issuance of Debt Securities in bearer form with or without
coupons, or to permit or facilitate the issuance of Debt Securities in
uncertificated form; (e) to add to, change or eliminate any of the provisions of
that indenture in respect of one or more series of Debt Securities thereunder,
under certain conditions designed to protect the rights of any existing holder
of those Debt Securities; (f) to secure all or any series of Debt Securities;
(g) to establish the forms or terms of the Debt Securities of any series; (h) to
evidence the appointment of a successor trustee and to add to or change
provisions of that indenture necessary to provide for or facilitate the
administration of the trusts under that indenture by more than one trustee; (i)
to cure any ambiguity, to correct or supplement any provision of that indenture
which may be defective or inconsistent with another provision of that indenture;
(j) to make other amendments that do not adversely affect the interests of the
holders of any series of Debt Securities in any material respect; and (k) to add
or change or eliminate any provision of that indenture as shall be necessary or
desirable in accordance with any amendments to the Trust Indenture Act. (Section
901)
USS and the trustee may otherwise modify each indenture or any supplemental
indenture with the consent of the holders of not less than a majority in
aggregate principal amount of each series of Debt Securities affected thereby at
the time outstanding, except that no such modifications shall (i) extend the
fixed maturity of any Debt Securities or any installment of interest or premium
on any Debt Securities, or reduce the principal amount thereof or reduce the
rate of interest or premium payable upon redemption, or reduce the amount of
principal of an original issue discount Debt Security or any other Debt Security
that would be due and payable upon a declaration of acceleration of the maturity
thereof, or change the currency in which the Debt Securities are payable or
impair the right to institute suit for the enforcement of any payment after the
stated maturity thereof or the redemption date, if applicable, or adversely
affect any right of the holder of any Debt Security to require USS to repurchase
that security, without the consent of the holder of each Debt Security so
affected, (ii) reduce the percentage of Debt Securities of any series, the
consent of the holders of which is required for any waiver or supplemental
indenture, without the consent of the holders of all Debt Securities affected
thereby then outstanding or (iii) modify the provisions of that indenture
relating to the waiver of past defaults or the waiver or certain covenants or
20
the provisions described under "Modification of the indentures," except to
increase any percentage set forth in those provisions or to provide that other
provisions of that indenture may not be modified without the consent of the
holder of each Debt Security affected thereby, without the consent of the holder
of each Debt Security affected thereby. (Section 902)
SATISFACTION AND DISCHARGE; DEFEASANCE AND COVENANT DEFEASANCE
Each indenture shall be satisfied and discharged if (i) USS shall deliver
to the trustee all Debt Securities then outstanding for cancellation or (ii) all
Debt Securities not delivered to the trustee for cancellation shall have become
due and payable, are to become due and payable within one year or are to be
called for redemption within one year and USS shall deposit an amount sufficient
to pay the principal, premium, if any, and interest to the date of maturity,
redemption or deposit (in the case of Debt Securities that have become due and
payable), provided that in either case USS shall have paid all other sums
payable under that indenture. (Section 401)
Each indenture provides, if such provision is made applicable to the Debt
Securities of a series, (i) that USS may elect either (A) to defease and be
discharged from any and all obligations with respect to any Debt Security of
such series (except for the obligations to register the transfer or exchange of
such Debt Security, to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B) to be
released from its obligations with respect to such Debt Security under Sections
801, 803, 1005, 1006, 1007 and 1009 of that indenture (being the restrictions
described above under "Certain Covenants of USS in the indentures" and USS'
obligations described under "Purchase of Debt Securities upon a Change in
Control") together with additional covenants that may be included for a
particular series and (ii) that Sections 501(4), 501(5) (as to Sections 801,
803, 1005, 1006, 1007 and 1009) and 501(8), as described in clauses (iv), (v)
and (vii) under "Events of Default," shall not be Events of Default under that
indenture with respect to such series ("covenant defeasance"), upon the deposit
with the trustee (or other qualifying trustee), in trust for such purpose, of
money certain U.S. government obligations and/or, in the case of Debt Securities
denominated in U.S. dollars, certain state and local government obligations
which through the payment of principal and interest in accordance with their
terms will provide money, in an amount sufficient to pay the principal of (and
premium, if any) and interest on such Debt Security, on the scheduled due dates.
In the case of defeasance, the holders of such Debt Securities are entitled to
receive payments in respect of such Debt Securities solely from such trust. Such
a trust may only be established if, among other things, USS has delivered to the
trustee an Opinion of Counsel (as specified in the indentures) to the effect
that the holders of the Debt Securities affected thereby will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred. Such
Opinion of Counsel, in the case of defeasance under clause (A) above, must refer
to and be based upon a ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the date of the indentures.
(Section 1304)
RECORD DATES
The indentures provide that in certain circumstances USS may establish a
record date for determining the holders of outstanding Debt Securities of a
series entitled to join in the giving of notice or the taking of other action
under the applicable indenture by the holders of the Debt Securities of such
series.
SUBORDINATED DEBT SECURITIES
Although the senior indenture and the subordinated indenture are generally
similar and many of the provisions discussed above pertain to both senior and
subordinated Debt Securities, there are many substantive differences between the
two. This section discusses some of those differences.
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SUBORDINATION
Subordinated Debt Securities will be subordinate, in right of payment, to
all Senior Debt. "Senior Debt" is defined to mean, with respect to USS, the
principal, premium, if any, and interest on the following:
(1) all indebtedness of USS, whether outstanding on the date of issuance or
thereafter created, incurred or assumed, which is for money borrowed,
or evidenced by a note or similar instrument given in connection with
the acquisition of any business, properties or assets, including
securities,
(2) any indebtedness of others of the kinds described in the preceding
clause (1) for the payment of which USS is responsible or liable
(directly or indirectly, contingently or otherwise) as guarantor or
otherwise, and
(3) amendments, renewals, extensions and refundings of any indebtedness
described in the preceding clauses (1) or (2), unless in any instrument
or instruments evidencing or securing such indebtedness or pursuant to
which the same is outstanding, or in any such amendment, renewal,
extension or refunding.
DIFFERENCE BETWEEN SUBORDINATED DEBT SECURITY COVENANTS AND DEBT SECURITY
COVENANTS AND EVENTS OF DEFAULT
Subordinated Debt Securities may not have the advantage of all of the
covenants and Events of Default provided in the senior indenture. For example,
covenants relating to Liens, Limitations on Certain Sale and Leasebacks and
Purchase of senior Debt Securities upon a Change in Control as discussed above
are not applicable to securities issued pursuant to the subordinated indenture.
Also, the Event of Default for failure to pay the Change in Control Purchase
Price when due is not available to subordinated Debt Securities.
TERMS OF SUBORDINATED DEBT SECURITIES MAY CONTAIN CONVERSION OR EXCHANGE
PROVISIONS
The prospectus supplement for a particular series of subordinated Debt
Securities will describe the specific terms discussed above that apply to the
subordinated Debt Securities being offered thereby as well as any applicable
conversion or exchange provisions.
MODIFICATION OF THE INDENTURE RELATING TO SUBORDINATED DEBT SECURITIES
The subordinated indenture may be modified by USS and the trustee without
the consent of the Holders of the subordinated Debt Securities for one or more
of the purposes discussed above under "--Modification of the indentures." USS
and the trustee may also modify the subordinated indenture to make provision
with respect to any conversion or exchange rights for a given issue of
subordinated Debt Securities.
GOVERNING LAW
The laws of the State of New York govern each indenture and will govern the
Debt Securities. (Section 112)
BOOK-ENTRY SECURITIES
The following description of book-entry securities will apply to any series
of Debt Securities issued in whole or in part in the form of one or more global
securities except as otherwise described in the prospectus supplement.
Book-entry securities of like tenor and having the same date will be
represented by one or more global securities deposited with and registered in
the name of a depositary that is a clearing agent registered under the Exchange
Act. Beneficial interests in book-entry securities will be limited to
institutions that have accounts with the depositary ("participants") or persons
that may hold interests through participants.
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Ownership of beneficial interests by participants will only be evidenced by, and
the transfer of that ownership interest will only be effected through, records
maintained by the depositary. Ownership of beneficial interests by persons that
hold through participants will only be evidenced by, and the transfer of that
ownership interest within such participant will only be effected through,
records maintained by the participants. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer beneficial
interests in a global security.
Payment of principal of and any premium and interest on book-entry
securities represented by a global security registered in the name of or held by
a depositary will be made to the depositary, as the registered owner of the
global security. Neither USS, the trustee nor any agent of USS or the trustee
will have any responsibility or liability for any aspect of the depositary's
records or any participant's records relating to or payments made on account of
beneficial ownership interests in a global security or for maintaining,
supervising or reviewing any of the depositary's records or any participant's
records relating to the beneficial ownership interests. Payments by participants
to owners of beneficial interests in a global security held through such
participants will be governed by the depositary's procedures, as is now the case
with securities held for the accounts of customers registered in "street name,"
and will be the sole responsibility of such participants.
A global security representing a book-entry security is exchangeable for
definitive Debt Securities in registered form, of like tenor and of an equal
aggregate principal amount registered in the name of, or is transferable in
whole or in part to, a person other than the depositary for that global
security, only if (a) the depositary notifies USS that it is unwilling or unable
to continue as depositary for that global security or the depositary ceases to
be a clearing agency registered under the Exchange Act, (b) there shall have
occurred and be continuing an Event of Default with respect to the Debt
Securities of that series or (c) other circumstances exist that have been
specified in the terms of the Debt Securities of that series. Any global
security that is exchangeable pursuant to the preceding sentence shall be
registered in the name or names of such person or persons as the depositary
shall instruct the trustee. It is expected that such instructions may be based
upon directions received by the depositary from its participants with respect to
ownership of beneficial interests in such global security.
Except as provided above, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the holders thereof for any purpose
under the indentures, and no global security shall be exchangeable, except for a
security registered in the name of the depositary. This means each person owning
a beneficial interest in such global security must rely on the procedures of the
depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a holder under the indentures. USS understands that under existing industry
practices, if USS requests any action of holders or an owner of a beneficial
interest in such global security desires to give or take any action that a
holder is entitled to give or take under the indentures, the depositary would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participant to give or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
CONCERNING THE TRUSTEE
The Bank of New York is also trustee for our 10 3/4% Senior Notes due
August 1, 2008, our 9 3/4% Senior Notes due May 15, 2010, our Senior Quarterly
Income Debt Securities, leverage leases in which USS is the lessee and several
series of obligations issued by various governmental authorities relating to
environmental projects at various USS facilities. The Bank of New York is a
lender under our revolving credit facility. USS and its subsidiaries also
maintain ordinary banking relationships, including loans and deposit accounts,
with The Bank of New York and anticipate that they will continue to do so.
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DESCRIPTION OF CAPITAL STOCK
The following is a description of the material terms of the capital stock
of USS included in its certificate of incorporation. This description is
qualified by reference to the certificate of incorporation, and the Rights
Agreement (the "Rights Agreement") between USS and Mellon Bank, N.A., as Rights
Agent (the "Rights Agent"), that have been filed as exhibits to the registration
statement of which this prospectus is a part.
GENERAL
The authorized capital stock of USS consists of 40 million shares of
preferred stock, without par value, and 400 million shares of common stock with
a par value of $1.00 per share. As of December 31, 2003, there were 5,000,000
shares of preferred stock outstanding and 103,672,275 shares of common stock
outstanding.
PREFERRED STOCK
The preferred stock may be issued without the approval of the holders of
common stock in one or more series, from time to time. The designation, powers,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions of any preferred stock will be
stated in a resolution providing for the issue of that series adopted by our
board of directors and will be described in the appropriate prospectus
supplement (if any), including the following:
1. When to issue the preferred stock, whether in one or more series so long
as the total number of shares does not exceed 40 million;
2. The powers, preferences and relative participation, optional or other
special rights, and qualifications, limits or restrictions on preferred
stock;
3. The dividend rate of each series, the terms of payment, the priority of
payment versus any other class of stock and whether the dividends will
be cumulative;
4. Terms of redemption;
5. Any convertible features;
6. Any voting rights;
7. Liquidation preferences; and
8. Any other terms.
Holders of preferred stock will be entitled to receive dividends (other
than dividends of common stock) before any dividends are payable to holders of
common stock.
The future issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of USS.
COMMON STOCK
The holders of common stock will be entitled to receive dividends when, as
and if declared by the USS board of directors out of funds legally available
therefor, subject to the rights of any shares of preferred stock at the time
outstanding. The holders of common stock will be entitled to one vote for each
share on all matters voted on generally by stockholders under our certificate of
incorporation, including the election of directors. Holders of common stock do
not have any cumulative voting, conversion, redemption or preemptive rights. In
the event of dissolution, liquidation or winding up of USS, holders of the
common stock will be entitled to share ratably in any assets remaining after the
satisfaction in full of the prior rights of creditors, including holders of any
then outstanding indebtedness, and subject to the aggregate liquidation
preference and participation rights of any preferred stock then outstanding. The
issuance of
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additional shares of authorized stock by USS may occur at such times and under
such circumstances as to have a dilutive effect on earnings per share and on the
equity ownership of the holders of common stock.
STOCK TRANSFER AGENT AND REGISTRAR
USS maintains its own stock transfer department at the following address:
United States Steel Corporation, Shareholders Services Department, 600 Grant
Street, Room 611, Pittsburgh, PA 15219-2800. Certificates representing shares
can also be presented for registration of transfer at Mellon Shareholder
Services, 120 Broadway, 13th Floor, New York, NY 10021.
Wells Fargo Shareowner Services, P.O. Box 64856, St. Paul, MN 55164-0856
serves as co-transfer agent.
Mellon Investor Services LLC, 500 Grant Street, Pittsburgh, PA 15219 is the
registrar for all the common stock.
RIGHTS PLAN
The following is a brief description of the terms of the stockholders
rights plan set forth in the Rights Agreement between USS and Mellon Investor
Services LLC, as Rights Agent.
The purpose of the Rights Agreement is to:
- Give our board of directors the opportunity to negotiate with any persons
seeking to obtain control of USS;
- Deter acquisitions of voting control of USS without assurance of fair and
equal treatment of all USS stockholders; and
- Prevent a person from acquiring in the market a sufficient amount of
voting power to be in a position to block an action sought to be taken by
our stockholders.
The exercise of such rights (the "Rights") would cause substantial dilution
to a person attempting to acquire USS on terms not approved by our board of
directors and would therefore significantly increase the price that person would
have to pay to complete the acquisition. The Rights Agreement may deter a
potential acquisition or tender offer.
Under the Rights Agreement, the Right to purchase from USS one-hundredth of
a share of Series A Junior Preferred Stock, no par value (the "Junior Preferred
Stock"), at a purchase price of $110 in cash, subject to adjustment, is attached
to each share of common stock.
The Rights will expire at the close of business on December 31, 2011,
unless that date is extended or the rights are earlier redeemed or exchanged by
USS as described below.
Until the Rights are distributed, they will:
- Not be exercisable;
- Be represented by the same certificates that represent the common stock;
and
- Trade together with the common stock.
If the Rights are distributed, they will become exercisable, and USS would
issue separate certificates representing the Rights, which would trade
separately from USS' common stock.
The Rights would be distributed upon the earlier of:
- 10 business days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired
(except pursuant to a Qualifying Offer (defined in the Rights Agreement
as an all-cash tender offer for all outstanding shares of common stock
meeting certain prescribed requirements)), or obtained the right to
acquire, beneficial ownership of
25
common stock representing 15% or more of the total voting power of all
outstanding shares of common stock (the "Stock Acquisition Date"), or
- 10 business days (or upon such later date as may be determined by the
board of directors) following the commencement of a tender offer or
exchange offer (other than a Qualifying Offer) that would result in a
person or a group beneficially owning common stock representing 15% or
more of the total voting power of all outstanding shares of common stock.
However, an "Acquiring Person" will not include USS, any of its
subsidiaries, any of its employee benefit plans or any person organized pursuant
to those employee benefit plans or a person acquiring pursuant to a Qualifying
Offer. The Rights Agreement also contains provisions designed to prevent the
inadvertent triggering of the Rights by institutional or certain other
stockholders.
If a person or group becomes the beneficial owner of common stock
representing 15% or more of the total voting power of all outstanding shares of
common stock (except pursuant to a Qualifying Offer), the Rights "flip-in" and
entitle each holder of a Right (other than the Acquiring Person and certain
related parties) to receive, upon exercise, common stock (or in certain
circumstances, cash, property, or other securities of USS), having a value equal
to two times the exercise price of the Right. However, Rights are not
exercisable until such time as the Rights are no longer redeemable by USS as set
forth below.
If at any time following the Stock Acquisition Date, (i) USS consolidates
with, or merges with and into, any other person in a transaction in which USS is
not the surviving corporation (other than a merger that follows a Qualifying
Offer) or another person consolidates with, or merges with or into, USS and USS'
common stock is changed into or exchanged for securities of another person or
cash or other property, or (ii) 50% or more of USS' assets, earning power or
cash flow is sold or transferred, the Rights "flip-over" and entitle each holder
of a Right (other than an Acquiring Person and certain related parties) to
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right.
USS reserves the right, before the occurrence of an event described in the
two preceding paragraphs, to require that upon an exercise of Rights, a number
of Rights be exercised so that only whole shares of Junior Preferred Stock would
be issued.
At any time until the earlier of 10 business days following the Stock
Acquisition Date and December 31, 2011 (subject to extension), USS may redeem
the Rights in whole, but not in part, at a price of $.01 per whole Right payable
in stock or cash or any other form of consideration deemed appropriate by its
board of directors (the "Redemption Price"). Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of the Rights will be to receive the
Redemption Price.
The board of directors may, at its option, at any time after any person
becomes an Acquiring Person, exchange all or part of the outstanding and
exercisable Rights (other than Rights held by the Acquiring Person and certain
related parties) for shares of common stock at an exchange ratio of one share of
common stock for each Right (subject to certain anti-dilution adjustments).
However, the board of directors may not effect such an exchange at any time any
person or group beneficially owns common stock representing 50% or more of the
total voting power of the common stock then outstanding. Immediately after the
board of directors orders such an exchange, the right to exercise the Rights
will terminate, and the only right of the holders of the Rights will be to
receive shares of common stock at the exchange ratio.
As long as the Rights are attached to shares of common stock, USS will
issue Rights on each share of common stock issued prior to the earlier of the
rights distribution date and the expiration date of the Rights so that all such
shares will have attached Rights.
A holder of Rights will not, as such, have any rights as a shareholder of
USS, including rights to vote or receive dividends.
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The purchase price payable upon exercise of the Rights is subject to
adjustment from time to time to prevent dilution, subject to the qualifications
set forth in the Rights Agreement:
- In the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Junior Preferred Stock;
- If holders of Junior Preferred Stock are granted certain rights or
warrants to subscribe for Junior Preferred Stock or securities
convertible into Junior Preferred Stock at less than the market price of
the Junior Preferred Stock; or
- Upon the distribution to holders of the Junior Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those
referred to above).
At any time prior to the distribution of the Rights, the board of directors
may amend any provision of the Rights Agreement. After the distribution of the
Rights, the board of directors may amend the provisions of the Rights Agreement
in order to:
- Cure any ambiguity;
- Correct any defective or inconsistent provision;
- Shorten or lengthen any time period under the Rights Agreement, subject
to the limitations specified in the Rights Agreement; or
- Make changes that will not adversely affect the interests of the holders
of Rights (other than an Acquiring Person and certain related parties);
provided, that no amendment may be made when the Rights are not redeemable.
The distribution of the Rights will not be taxable to USS or its
stockholders. A stockholder may recognize taxable income in the event that the
Rights become exercisable for common stock (or other consideration) of USS or
common stock of an acquiring company.
This description is only a summary of the material provisions of the Rights
Agreement. We urge you to read the Rights Agreement because it, and not this
description, defines your rights as holders of Rights. A copy of the Rights
Agreement is available free of charge from the Rights Agent by writing to Mellon
Investor Services, LLC at 500 Grant Street, Room 2122, Pittsburgh, Pennsylvania
15219 or from USS. (See "Where You Can Find More Information.")
DELAWARE LAW, OUR CERTIFICATE OF INCORPORATION AND BY-LAWS CONTAIN PROVISIONS
THAT MAY HAVE AN ANTI-TAKEOVER EFFECT
Certain provisions of Delaware law and our certificate of incorporation
could make more difficult or delay a change in control of USS by means of a
tender offer, a proxy contest or otherwise and the removal of incumbent
directors. These provisions are intended to discourage certain types of coercive
takeover practices and inadequate takeover bids, even though such a transaction
may offer our stockholders the opportunity to sell their stock at a price above
the prevailing market price. Our board of directors believes that these
provisions are appropriate to protect the interests of USS and of its
stockholders.
Delaware Law. We are governed by the provisions of Section 203 of the
Delaware General Corporation Law. In general, Section 203 prohibits a public
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years following the time that the
person became an interested stockholder, unless:
- Prior to the time that the person became an interested stockholder the
corporation's board of directors approved either the business combination
or the transaction that resulted in the stockholder's becoming an
interested stockholder;
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- Upon consummation of the transaction which resulted in the stockholder's
becoming an interested stockholder, the stockholder owned at least 85% of
the outstanding voting stock of the corporation at the time the
transaction commenced, excluding for the purpose of determining the
number of shares outstanding those shares owned by the corporation's
officers and directors and by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or
- At or subsequent to the time, the business combination is approved by the
corporation's board of directors and authorized at an annual or special
meeting of its stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of its outstanding voting stock that
is not owned by the interested stockholder.
A "business combination" includes mergers, asset sales or other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years did own) 15% or more of the corporation's voting stock.
Certificate of Incorporation and By-Laws. Our certificate of incorporation
provides that our board of directors is classified into three classes of
directors, each class consisting of approximately one-third of the directors.
Directors serve a three-year term, with a different class of directors up for
election each year. Under Delaware law, directors of a corporation with a
classified board may be removed only for cause unless the corporation's
certificate of incorporation provides otherwise. Our certificate of
incorporation does not provide otherwise. Board classification could prevent a
party who acquires control of a majority of USS' outstanding voting stock from
obtaining control of its board of directors until the second annual
stockholders' meeting following the date that party obtains that control.
Our certificate of incorporation also provides that any action required or
permitted to be taken by its stockholders must be effected at a duly called
annual or special meeting and may not be taken by written consent.
Our by-laws provide that special meetings of stockholders may be called
only by the board of directors and not by the stockholders. Our by-laws include
advance notice and informational requirements and time limitations on any
director nomination or any new proposal that a stockholder wishes to make at a
meeting of stockholders. In general, a stockholder's notice of a director
nomination or proposal will be timely if delivered or mailed to our Secretary at
our principal executive offices not less than 45 days and, in certain
situations, 90 days, before the annual meeting or within 10 days following the
announcement of the date of the meeting. These provisions may preclude
stockholders from bringing matters before a meeting or from making nominations
for directors at these meetings.
Our certificate of incorporation and by-laws do not include a provision for
cumulative voting for directors. Under cumulative voting, a minority stockholder
holding a sufficient percentage of a class of shares may be able to ensure the
election of one or more directors.
Our certificate of incorporation provides for the issuance of preferred
stock, at the discretion of our board of directors, from time to time, in one or
more series, without further action by our stockholders, unless approval of our
stockholders is deemed advisable by our board of directors or required by
applicable law, regulation or stock exchange listing requirements. In addition,
our authorized but unissued shares of our common stock will be available for
issuance from time to time at the discretion of our board of directors without
the approval of our stockholders, unless such approval is deemed advisable by
our board of directors or required by applicable law, regulation or stock
exchange listing requirements. One of the effects of the existence of
authorized, unissued and unreserved shares of our common stock and preferred
stock could be to enable our board of directors to issue shares to persons
friendly to current management that could render more difficult or discourage an
attempt to obtain control of USS by means of a merger, tender offer, proxy
contest or otherwise, and thereby protect the continuity of our management. Such
additional shares also could be used to dilute the stock ownership of persons
seeking to obtain control of USS.
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Our certificate of incorporation provides that vacancies in our board of
directors may be filled only by the affirmative vote of a majority of the
remaining directors. The certificate of incorporation also provides that
directors may be removed from office only with cause. These provisions preclude
stockholders from removing directors without cause and filling vacancies with
their own nominees.
Our Rights will permit disinterested stockholders to acquire additional
shares of USS, or of an acquiring company, at a substantial discount in the
event of certain changes in control. See "Description of Capital Stock -- Rights
Plan."
Certain provisions described above may have the effect of delaying
stockholder actions with respect to certain business combinations. As such, the
provisions could have the effect of discouraging open market purchases of our
shares of common stock because such provisions may be considered disadvantageous
by a stockholder who desires to participate in a business combination.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION MATTERS
Our certificate of incorporation provides that a director is not personally
liable to us or our stockholders for monetary damages for any breach of
fiduciary duty as a director, except (1) for breach of the director's duty of
loyalty to us and our stockholders, (2) for acts and omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (3) under
Section 174 of the Delaware General Corporation Law or (4) for any transaction
from which the director derived an improper personal benefit. These provisions
of our certificate of incorporation are intended to afford directors protection,
and limit their potential liability, to the fullest extent permitted by Delaware
law. Because of these provisions, stockholders may be unable to recover monetary
damages against directors for actions taken by them that constitute negligence
or gross negligence or that are in violation of some of their fiduciary duties.
These provisions do not affect a director's responsibilities under any other
laws, such as the federal securities laws.
In addition, our by-laws provide that we will indemnify our directors and
officers to the fullest extent permitted by law.
We have obtained directors' and officers' insurance for our directors and
officers for specified liabilities.
DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions of the deposit
agreement and of the depositary shares and depositary receipts, other than
pricing and related terms disclosed for a particular issuance in an accompanying
prospectus supplement. You should read the particular terms of any depositary
shares and any depositary receipts that we offer and any deposit agreement
relating to a particular series of preferred stock that will be described in
more detail in a prospectus supplement. The prospectus supplement will also
state whether any of the generalized provisions summarized below do not apply to
the depositary shares or depositary receipts being offered. A copy of the form
of deposit agreement, including the form of depositary receipt, is incorporated
by reference as an exhibit in the registration statement of which this
prospectus forms a part. You can obtain copies of these documents by following
the directions on page 1 under the caption "Where You Can Find More
Information." You should read the more detailed provisions of the deposit
agreement and the form of depositary receipt for provisions that may be
important to you.
GENERAL
USS may, at its option, elect to offer fractional shares of preferred
stock, rather than full shares of preferred stock. In such event, we will issue
receipts for depositary shares, each of which will represent a fraction of a
share of a particular series of preferred stock.
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The shares of any series of preferred stock represented by depositary
shares will be deposited under a deposit agreement between USS and a bank or
trust company selected by USS having its principal office in the United States
and having a combined capital and surplus of at least $50 million, as preferred
stock depositary. Each owner of a depositary share will be entitled to all the
rights and preferences of the underlying preferred stock, including dividend,
voting, redemption, conversion and liquidation rights, in proportion to the
applicable fraction of a share of preferred stock represented by such depositary
share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the applicable prospectus supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to such preferred stock in
proportion to the number of such depositary shares owned by such holders.
The preferred stock depositary will distribute any property received by it
other than cash to the record holders of depositary shares entitled thereto. If
the preferred stock depositary determines that it is not feasible to make such
distribution, it may, with the approval of USS, sell such property and
distribute the net proceeds from such sale to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of preferred stock represented by depositary shares is to be
redeemed, the depositary shares will be redeemed from the proceeds received by
the preferred stock depositary resulting from the redemption, in whole or in
part, of such series of preferred stock. The depositary shares will be redeemed
by the preferred stock depositary at a price per depositary share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of preferred stock so redeemed.
Whenever USS redeems shares of preferred stock held by the preferred stock
depositary, the preferred stock depositary will redeem as of the same date the
number of depositary shares representing shares of preferred stock so redeemed.
If fewer than all the depositary shares are to be redeemed, the depositary
shares to be redeemed will be selected by the preferred stock depositary by lot
or ratably as the preferred stock depositary may decide.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited preferred stock are entitled to vote, the preferred stock depositary
will mail the information contained in such notice of meeting to the record
holders of the depositary shares relating to such series of preferred stock.
Each record holder of such depositary shares on the record date will be entitled
to instruct the preferred stock depositary to vote the amount of the preferred
stock represented by such holder's depositary shares. The preferred stock
depositary will try to vote the amount of such series of preferred stock
represented by such depositary shares in accordance with such instructions.
USS will agree to take all actions that the preferred stock depositary
determines are necessary to enable the preferred stock depositary to vote as
instructed. The preferred stock depositary will abstain from voting shares of
any series of preferred stock held by it for which it does not receive specific
instructions from the holders of depositary shares representing such shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between USS and the preferred stock depositary. However, any amendment that
materially and adversely alters any existing right of the holders of depositary
shares (other than certain changes in the fees of the preferred stock
depositary) will not be
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effective unless such amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding. Every holder of an
outstanding depositary receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such depositary receipt, to consent and
agree to such amendment and to be bound by the deposit agreement, as amended
thereby. The deposit agreement may be terminated only if:
- All outstanding depositary shares have been redeemed; or
- A final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of USS.
CHARGES OF PREFERRED STOCK DEPOSITARY, TAXES AND OTHER GOVERNMENT CHARGES
USS will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. USS also will pay
charges of the depositary in connection with the initial deposit of preferred
stock and any redemption of preferred stock. Holders of depositary receipts will
pay other transfer and other taxes and governmental charges and such other
charges, including a fee for the withdrawal of shares of preferred stock upon
surrender of depositary receipts, as are expressly provided in the deposit
agreement to be for their accounts.
APPOINTMENT, RESIGNATION AND REMOVAL OF DEPOSITARY
USS will appoint the preferred stock depository. The preferred stock
depositary may resign at any time by delivering to USS notice of its intent to
do so and USS may at any time remove the preferred stock depositary, any such
resignation or removal to take effect upon the appointment of a successor
preferred stock depositary and its acceptance of such appointment. Such
successor preferred stock depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50 million.
MISCELLANEOUS
USS will transmit to the record holders of depositary shares all notices
and reports that USS is required to furnish to the holders of the depositary
shares.
Neither the preferred stock depositary nor USS will be liable under the
deposit agreement other than for its negligence or willful misconduct. The
preferred stock depositary and USS will not be obligated to prosecute or defend
any legal proceeding in respect of any depositary shares, depositary receipts or
shares of preferred stock unless satisfactory indemnity is furnished. USS and
the preferred stock depositary may rely upon written advice of counsel or
accountants, or upon information provided by holders of depositary receipts or
other persons believed to be competent and on documents believed to be genuine.
The preferred stock depositary will not be responsible for any failure to carry
out any instruction to vote any shares of preferred stock, as long as that
action or non-action is in good faith.
DESCRIPTION OF WARRANTS
USS may issue warrants ("Warrants") for the purchase of Debt Securities,
preferred stock or common stock (each a "USS Security," and together the "USS
Securities"). Warrants may be issued independently or together with any USS
Security offered by any prospectus supplement and may be attached to or separate
from any such USS Security. Each series of Warrants will be issued under a
separate warrant agreement (a "Warrant Agreement") to be entered into between
USS and a bank or trust company, as warrant agent (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of USS in connection with the Warrants
and will not assume any obligation or relationship of agency or trust for or
with any holders or beneficial owners of Warrants. The following summary of
certain provisions of the Warrants does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of the
Warrant Agreement that will be filed with the SEC in connection with the
offering of such Warrants.
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DEBT WARRANTS
The prospectus supplement relating to a particular issue of Warrants to
purchase Debt Securities ("Debt Warrants") will describe the terms of such Debt
Warrants, including the following (if applicable): (a) the title of such Debt
Warrants; (b) the offering price for such Debt Warrants; (c) the aggregate
number of such Debt Warrants; (d) the designation and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants; (e) the designation
and terms of the Debt Securities with which such Debt Warrants are issued and
the number of such Debt Warrants issued with each such Debt Security; (f) the
date from and after which such Debt Warrants and any Debt Securities issued
therewith will be separately transferable; (g) the principal amount of Debt
Securities purchasable upon exercise of a Debt Warrant and the price at which
such principal amount of Debt Securities may be purchased upon exercise (which
price may be payable in cash, securities, or other property); (h) the date on
which the right to exercise such Debt Warrants shall commence and the date on
which such right shall expire; (i) the minimum or maximum amount of such Debt
Warrants that may be exercised at any one time; (j) whether the Debt Warrants
represented by the Debt Warrant certificates, or Debt Securities that may be
issued upon exercise of the Debt Warrants, will be issued in registered or
bearer form; (k) information with respect to book-entry procedures; (l) the
currency or currency units in which the offering price and the exercise price
are payable; (m) a discussion of material United States federal income tax
considerations; (n) the redemption or call provisions applicable to such Debt
Warrants; and (o) any additional terms of the Debt Warrants, including terms,
procedures, and limitations relating to the exchange and exercise of such Debt
Warrants.
STOCK WARRANTS
The prospectus supplement relating to any particular issue of Warrants to
purchase preferred stock, depositary shares representing fractional shares of
preferred stock or common stock ("Stock Warrants") will describe the terms of
such Stock Warrants, including the following (if applicable): (a) the title of
such Stock Warrants; (b) the offering price for such Stock Warrants; (c) the
aggregate number of such Stock Warrants; (d) the designation and terms of the
preferred stock or common stock purchasable upon exercise of such Stock
Warrants; (e) the designation and terms of the USS Securities with which such
Stock Warrants are issued and the number of such Stock Warrants issued with each
such USS Security; (f) the date from and after which such Stock Warrants and any
USS Securities issued therewith will be separately transferable; (g) the number
of shares of preferred stock or common stock purchasable upon exercise of a
Stock Warrant and the price at which such shares may be purchased upon exercise;
(h) the date on which the right to exercise such Stock Warrants shall commence
and the date on which such right shall expire; (i) the minimum or maximum amount
of such Stock Warrants that may be exercised at any one time; (j) the currency
or currency units in which the offering price and the exercise price are
payable; (k) a discussion of material United States federal income tax
considerations; (l) the anti-dilution provisions of such Stock Warrants; (m) the
redemption or call provisions applicable to such Stock Warrants; and (n) any
additional terms of the Stock Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of such Stock Warrants.
DESCRIPTION OF CONVERTIBLE OR EXCHANGEABLE SECURITIES
If any Debt Security, preferred stock, depositary shares representing
fractional shares of preferred stock or Warrant is converted or exchanged into
any other security the conversion or exchange terms thereof will be set forth in
the prospectus supplement issued for the sale of such convertible or
exchangeable security. These terms will include some or all of the terms
described for Warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
USS may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and us to sell to holders, a specified number of
shares of common stock at a future date or dates. The consideration per share of
common stock may be fixed at the time the stock purchase contracts are issued
32
or may be determined by reference to a specific formula described in the stock
purchase contracts. USS may issue the stock purchase contracts separately or as
a part of stock purchase units consisting of a stock purchase contract and one
or more shares of our preferred stock or debt securities or debt obligations of
third parties (including U.S. Treasury securities) securing the holders'
obligations to purchase the shares of common stock under the stock purchase
contracts. The stock purchase contracts may require us to make periodic payments
to the holders of stock purchase units or vice-versa. These payments may be
unsecured or pre-funded on some basis. The stock purchase contracts may require
holders to secure their obligations in a specified manner. The applicable
prospectus supplement will describe the specific terms of any stock purchase
contracts or stock purchase units.
PLAN OF DISTRIBUTION
We may offer the offered securities in one or more of the following ways
from time to time:
- To or through underwriting syndicates represented by managing
underwriters;
- Through one or more underwriters without a syndicate for them to offer
and sell to the public;
- Through dealers or agents;
- To investors directly in negotiated sales or in competitively bid
transactions; or
- To holders of other securities in exchanges in connection with
acquisitions.
The prospectus supplement for each series of securities we sell will
describe the offering, including:
- The name or names of any underwriters;
- The purchase price and the proceeds to us from that sale;
- Any underwriting discounts and other items constituting underwriters'
compensation, which in the aggregate will not exceed eight percent of the
gross proceeds of the offering;
- Any commissions paid to agents;
- The initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and
- Any securities exchanges on which the securities may be listed.
UNDERWRITERS
If underwriters are used in a sale, we will execute an underwriting
agreement with them regarding those securities. Unless otherwise described in
the prospectus supplement, the obligations of the underwriters to purchase these
securities will be subject to conditions, and the underwriters must purchase all
of these securities if any are purchased.
The securities subject to the underwriting agreement may be acquired by the
underwriters for their own account and may be resold by them from time to time
in one or more transactions, including negotiated transactions, at a fixed
offering price or at varying prices determined at the time of sale. Underwriters
may be deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from the purchasers of
these securities for whom they may act as agent. Underwriters may sell these
securities to or through dealers. These dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent. Any initial
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
We may authorize underwriters to solicit offers by institutions to purchase
the securities subject to the underwriting agreement from us, at the public
offering price stated in the prospectus supplement under delayed delivery
contracts providing for payment and delivery on a specified date in the future.
If we sell
33
securities under these delayed delivery contracts, the prospectus supplement
will state that this is the case and will describe the conditions to which these
delayed delivery contracts will be subject and the commissions payable for that
solicitation.
In connection with underwritten offerings of the securities, the
underwriters may engage in over-allotment, stabilizing transactions, covering
transactions and penalty bids in accordance with Regulation M under the Exchange
Act, as follows:
- Over-allotment involves sales in excess of the offering size, which
creates a short position for the underwriters.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Covering transactions involve purchases of the securities in the open
market after the distribution has been completed in order to cover short
positions.
- Penalty bids permit the underwriters to reclaim a selling concession from
a broker/dealer when the securities originally sold by that broker/dealer
are repurchased in a covering transaction to cover short positions.
These stabilizing transactions, covering transactions and penalty bids may
cause the price of the securities to be higher than it would otherwise be in the
absence of these transactions. If these transactions occur, they may be
discontinued at any time.
AGENTS
We may also sell any of the securities through agents designated by us from
time to time. We will name any agent involved in the offer or sale of these
securities and will list commissions payable by us to these agents in the
prospectus supplement. These agents will be acting on a best efforts basis to
solicit purchases for the period of its appointment, unless we state otherwise
in the prospectus supplement.
DIRECT SALES
We may sell any of the securities directly to purchasers. In this case, we
will not engage underwriters or agents in the offer and sale of these
securities.
In addition, Debt Securities or shares of common stock or preferred stock
may be issued upon the exercise of Warrants.
INDEMNIFICATION
We may indemnify underwriters, dealers or agents who participate in the
distribution of securities against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, and may agree to contribute to
payments that these underwriters, dealers or agents may be required to make.
NO ASSURANCE OF LIQUIDITY
The securities we offer may be a new issue of securities with no
established trading market. Any underwriters that purchase securities from us
may make a market in these securities. The underwriters will not be obligated,
however, to make a market and may discontinue market-making at any time without
notice to holders of the securities. There may not be liquidity in the trading
market for any securities of any series.
VALIDITY OF SECURITIES
The validity of the issuance of the offered securities will be passed upon
for USS by D. D. Sandman, Esq., Vice Chairman, Chief Legal Officer and Chief
Administrative Officer of USS or by R.M. Stanton,
34
Esq., Assistant General Counsel -- Corporate and Assistant Secretary of USS.
Messrs. Sandman and Stanton, in their respective capacities as set forth above,
are paid salaries by USS, participate in various employee benefit plans offered
by USS and own common stock of USS.
EXPERTS
The consolidated financial statements of United States Steel Corporation
incorporated in this prospectus by reference to United States Steel
Corporation's Annual Report on Form 10-K for the year ended December 31, 2002
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of National Steel Corporation and
Subsidiaries (Debtor-in-Possession) as of December 31, 2002 and 2001, and for
each of the three years in the period ended December 31, 2002, appearing in the
U. S. Steel Current Report on Form 8-K dated May 20, 2003, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
(which contains an explanatory paragraph describing conditions that raise
substantial doubt about National Steel Corporation's ability to continue as a
going concern as described in Note 1 to the consolidated financial statements)
incorporated by reference herein, in reliance upon such report given on the
authority of such firm, as experts in accounting and auditing.
35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission filing fee............... $48,544
Costs of printing and engraving............................. 10,000
Accounting fees and expenses................................ 30,000
Miscellaneous expenses...................................... 1,456
-------
Total....................................................... $90,000
=======
All of these foregoing expenses are estimated except for the Securities and
Exchange Commission filing fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article V of the Company's By-Laws provides that the Company shall
indemnify to the fullest extent permitted by law any person who is made or is
threatened to be made a party or is involved in any action, suit, or proceeding
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director, officer, employee or agent of the Company or is or
was serving at the request of the Company as an officer, director, employee or
agent of another corporation, partnership, joint venture, trust, enterprise, or
nonprofit entity.
The Company is empowered by Section 145 of the Delaware General Corporation
Law, subject to the procedures and limitations stated therein, to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that such person is or was an
officer, employee, agent or director of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company may indemnify
any such person against expenses (including attorneys' fees) in an action by or
in the right of the Company under the same conditions, except that no
indemnification is permitted without judicial approval if such person is
adjudged to be liable to the Company. To the extent a director or officer is
successful on the merits or otherwise in the defense of any action referred to
above, the Company must indemnify him against the expenses that he actually and
reasonably incurred in connection therewith.
Policies of insurance are maintained by the Company under which directors
and officers of the Company are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities which might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers.
The Company's Certificate of Incorporation provides that no director shall
be personally liable to the Company or its stockholders for monetary damages for
any breach of fiduciary duty by such director as a director, except (i) for
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
II-1
ITEM 16. LIST OF EXHIBITS.
See Exhibit Index.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table on the cover of this registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) USS hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of USS' annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
USS pursuant to the foregoing provisions, or otherwise, USS has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by USS of
expenses incurred or paid by a director, officer or controlling person of USS in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, USS will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of
such issue.
II-2
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PITTSBURGH, COMMONWEALTH OF PENNSYLVANIA, ON JANUARY
27, 2004.
UNITED STATES STEEL CORPORATION
By: /s/ GRETCHEN R. HAGGERTY
------------------------------------
Gretchen R. Haggerty
Executive Vice President, Treasurer
and Chief Financial Officer
Pittsburgh, Pennsylvania
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT ON FORM S-3 HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES INDICATED ON JANUARY 27, 2004.
SIGNATURE TITLE
--------- -----
* Chairman Board of Directors, Chief Executive Officer,
--------------------------------------------------------- and Director (Principal Executive Officer)
Thomas J. Usher
/s/ GRETCHEN R. HAGGERTY Executive Vice President, Treasurer and Chief
--------------------------------------------------------- Financial Officer (Principal Financial Officer)
Gretchen R. Haggerty
/s/ LARRY G. SCHULTZ Vice President & Controller (Controller)
---------------------------------------------------------
Larry G. Schultz
* Director
---------------------------------------------------------
J. Gary Cooper
* Director
---------------------------------------------------------
Robert J. Darnall
* Director
---------------------------------------------------------
John G. Drosdick
* Director
---------------------------------------------------------
Shirley Ann Jackson
* Director
---------------------------------------------------------
Charles R. Lee
* Director
---------------------------------------------------------
Frank J. Lucchino
II-3
SIGNATURE TITLE
--------- -----
* Vice Chairman, Chief Legal & Administrative Officer
--------------------------------------------------------- and Director
Dan D. Sandman
* Director
---------------------------------------------------------
Seth E. Schofield
* President and Director
---------------------------------------------------------
John P. Surma
* Director
---------------------------------------------------------
Douglas C. Yearley
*By /s/ GRETCHEN R. HAGGERTY
---------------------------------------------------
Gretchen R. Haggerty
Attorney in Fact
II-4
EXHIBIT INDEX
EXHIBIT
NUMBER
-------
*1 Form of Underwriting Agreement.
4.1 Form of Indenture for Debt Securities with Form of Debt
Securities.
4.2 Form of Subordinated Indenture for Debt Securities with Form
of Debt Securities.
*4.3 Form of Deposit Agreement for Depositary Shares.
**4.4 Rights Agreement. (Incorporated by Reference to Exhibit 4 to
the Registration Statement of USS on Form 8-A/A filed on
December 31, 2001.)
5 Opinion and consent of R. M. Stanton, Esq.
**12.1 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends. (Incorporated by reference to
Exhibit 12.1 to USS' Report on Form 10-Q for the quarterly
period ended September 30, 2003.)
**12.2 Computation of Ratio of Earnings to Fixed Charges.
(Incorporated by reference to Exhibit 12.2 to USS' Report on
Form 10-Q for the quarterly period ended September 30,
2003.)
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of R. M. Stanton, Esq. (Included in Exhibit 5.)
24 Powers of Attorney.
25.1 Statement of Eligibility of Trustee for Indenture for Debt
Securities.
25.2 Statement of Eligibility of Trustee for Subordinated
Indenture for Debt Securities.
------------------
* The Company will file as an exhibit to a current report on Form 8-K: (i) any
underwriting agreement relating to securities offered hereby, (ii) the
instruments setting forth the terms of any Debt Securities, preferred stock
or Warrants, (iii) any Deposit Agreement for Depositary Shares, (iv) the
instruments setting forth the terms of any stock purchase contracts or stock
purchase units, (v) any additional required opinion of counsel to the Company
as to the legality of the securities offered hereby or (vi) any required
opinion of counsel to the Company as to certain tax matters relative to
securities offered hereby.
** Previously filed.
II-5