Net Sales by Product (In millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
Flat-Rolled
|
Mini Mill
|
USSE
|
Tubular
|
Other
|
Total
|
|
Semi-finished
|
$
|
—
|
|
$
|
—
|
|
$
|
46
|
|
$
|
—
|
|
$
|
—
|
|
$
|
46
|
|
|
Hot-rolled sheets
|
653
|
|
451
|
|
561
|
|
—
|
|
—
|
|
1,665
|
|
|
Cold-rolled sheets
|
889
|
|
127
|
|
102
|
|
—
|
|
—
|
|
1,118
|
|
|
Coated sheets
|
1,020
|
|
179
|
|
334
|
|
—
|
|
—
|
|
1,533
|
|
|
Tubular products
|
—
|
|
—
|
|
14
|
|
178
|
|
—
|
|
192
|
|
|
All Other (a)
|
429
|
|
2
|
|
21
|
|
6
|
|
13
|
|
471
|
|
|
Total
|
$
|
2,991
|
|
$
|
759
|
|
$
|
1,078
|
|
$
|
184
|
|
$
|
13
|
|
$
|
5,025
|
|
|
(a) Consists primarily of sales of raw materials and coke making by-products.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
Flat-Rolled
|
|
USSE
|
Tubular
|
Other
|
Total
|
|
Semi-finished
|
$
|
31
|
|
|
$
|
1
|
|
$
|
—
|
|
$
|
—
|
|
$
|
32
|
|
|
Hot-rolled sheets
|
239
|
|
|
146
|
|
—
|
|
—
|
|
385
|
|
|
Cold-rolled sheets
|
342
|
|
|
26
|
|
—
|
|
—
|
|
368
|
|
|
Coated sheets
|
713
|
|
|
202
|
|
—
|
|
—
|
|
915
|
|
|
Tubular products
|
—
|
|
|
11
|
|
178
|
|
—
|
|
189
|
|
|
All Other (a)
|
172
|
|
|
17
|
|
4
|
|
9
|
|
202
|
|
|
Total
|
$
|
1,497
|
|
|
$
|
403
|
|
$
|
182
|
|
$
|
9
|
|
$
|
2,091
|
|
|
(a) Consists primarily of sales of raw materials and coke making by-products.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
Flat-Rolled
|
Mini Mill
|
USSE
|
Tubular
|
Other
|
Total
|
|
Semi-finished
|
$
|
12
|
|
$
|
—
|
|
$
|
49
|
|
$
|
—
|
|
$
|
—
|
|
$
|
61
|
|
|
Hot-rolled sheets
|
1,103
|
|
700
|
|
947
|
|
—
|
|
—
|
|
2,750
|
|
|
Cold-rolled sheets
|
1,673
|
|
206
|
|
185
|
|
—
|
|
—
|
|
2,064
|
|
|
Coated sheets
|
1,898
|
|
300
|
|
632
|
|
—
|
|
—
|
|
2,830
|
|
|
Tubular products
|
—
|
|
—
|
|
24
|
|
306
|
|
—
|
|
330
|
|
|
All Other (a)
|
577
|
|
3
|
|
39
|
|
12
|
|
23
|
|
654
|
|
|
Total
|
$
|
5,263
|
|
$
|
1,209
|
|
$
|
1,876
|
|
$
|
318
|
|
$
|
23
|
|
$
|
8,689
|
|
|
(a) Consists primarily of sales of raw materials and coke making by-products.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
Flat-Rolled
|
|
USSE
|
Tubular
|
Other
|
Total
|
|
Semi-finished
|
$
|
58
|
|
|
$
|
2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
60
|
|
|
Hot-rolled sheets
|
741
|
|
|
351
|
|
—
|
|
—
|
|
1,092
|
|
|
Cold-rolled sheets
|
940
|
|
|
71
|
|
—
|
|
—
|
|
1,011
|
|
|
Coated sheets
|
1,424
|
|
|
431
|
|
—
|
|
—
|
|
1,855
|
|
|
Tubular products
|
—
|
|
|
20
|
|
429
|
|
—
|
|
449
|
|
|
All Other (a)
|
308
|
|
|
33
|
|
8
|
|
23
|
|
372
|
|
|
Total
|
$
|
3,471
|
|
|
$
|
908
|
|
$
|
437
|
|
$
|
23
|
|
$
|
4,839
|
|
|
(a) Consists primarily of sales of raw materials and coke making by-products.
|
|
|
|
|
|
|
|
|
7. Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within U. S. Steel's Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statement of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Cash and cash equivalents
|
|
$
|
1,329
|
|
|
$
|
2,300
|
|
|
Restricted cash in other current assets
|
|
47
|
|
|
1
|
|
|
Restricted cash in other noncurrent assets
|
|
95
|
|
|
128
|
|
|
Transtar cash in assets held for sale
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Total cash, cash equivalents and restricted cash
|
|
$
|
1,472
|
|
|
$
|
2,429
|
|
Amounts included in restricted cash represent cash balances which are legally or contractually restricted, primarily for electric arc furnace construction, environmental and other capital projects, collateral for open cash flow hedge positions and insurance purposes.
8. Inventories
The LIFO method is the predominant method of inventory costing for our Flat-Rolled and Tubular segments. The FIFO and moving average methods are the predominant inventory costing methods for our Mini Mill segment and the FIFO method is the predominant inventory costing method for our USSE segment. At June 30, 2021 and December 31, 2020, the LIFO method accounted for 46 percent and 59 percent of total inventory values, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
June 30, 2021
|
|
December 31, 2020
|
|
Raw materials
|
$
|
658
|
|
|
$
|
416
|
|
|
Semi-finished products
|
900
|
|
|
633
|
|
|
Finished products
|
305
|
|
|
300
|
|
|
Supplies and sundry items
|
51
|
|
|
53
|
|
|
Total
|
$
|
1,914
|
|
|
$
|
1,402
|
|
Current acquisition costs were estimated to exceed the above inventory values by $667 million and $848 million at June 30, 2021 and December 31, 2020, respectively. As a result of the liquidation of LIFO inventories, cost of sales decreased and earnings before interest and income taxes increased by $6 million and $7 million for the three months and six months ended June 30, 2021, respectively. Cost of sales increased and earnings before interest and income taxes decreased by $1 million and $6 million for the three months and six months ended June 30, 2020, respectively, as a result of liquidation of LIFO inventories.
9. Intangible Assets and Goodwill
Intangible assets that are being amortized on a straight-line basis over their estimated useful lives are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
As of December 31, 2020
|
|
(In millions)
|
Useful
Lives
|
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Amount
|
|
Gross
Carrying
Amount
|
Accumulated Impairment
|
Accumulated
Amortization
|
Net
Amount
|
|
Customer relationships
|
22 Years
|
|
$
|
413
|
|
$
|
9
|
|
$
|
404
|
|
|
$
|
132
|
|
$
|
55
|
|
$
|
77
|
|
$
|
—
|
|
|
Patents
|
10-15 Years
|
|
17
|
|
10
|
|
7
|
|
|
22
|
|
7
|
|
10
|
|
5
|
|
|
Energy Contract
|
10 Years
|
|
54
|
|
7
|
|
47
|
|
|
54
|
|
—
|
|
5
|
|
49
|
|
|
Other
|
4-20 Years
|
|
—
|
|
—
|
|
—
|
|
|
14
|
|
5
|
|
9
|
|
—
|
|
|
Total amortizable intangible assets
|
|
|
$
|
484
|
|
$
|
26
|
|
$
|
458
|
|
|
$
|
222
|
|
$
|
67
|
|
$
|
101
|
|
$
|
54
|
|
Total estimated amortization expense for the remainder of 2021 is $13 million. We expect approximately $25 million in annual amortization expense through 2026 and approximately $320 million in remaining amortization expense thereafter.
The carrying amount of acquired water rights with indefinite lives as of June 30, 2021 and December 31, 2020 totaled $75 million.
Below is a summary of goodwill by segment for the six months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flat-Rolled
|
Mini Mill
|
USSE
|
Tubular
|
Total
|
|
Balance at December 31, 2020
|
$
|
—
|
|
$
|
—
|
|
$
|
4
|
|
$
|
—
|
|
$
|
4
|
|
|
Additions
|
—
|
|
905
|
|
—
|
|
—
|
|
905
|
|
|
Balance at June 30, 2021
|
$
|
—
|
|
$
|
905
|
|
$
|
4
|
|
$
|
—
|
|
$
|
909
|
|
10. Pensions and Other Benefits
The following table reflects the components of net periodic benefit cost (income) for the three months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Benefits
|
|
(In millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Service cost
|
$
|
14
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
Interest cost
|
41
|
|
|
48
|
|
|
12
|
|
|
16
|
|
|
Expected return on plan assets
|
(89)
|
|
|
(84)
|
|
|
(20)
|
|
|
(20)
|
|
|
Amortization of prior service credit
|
1
|
|
|
1
|
|
|
(7)
|
|
|
(2)
|
|
|
Amortization of actuarial net loss (gain)
|
37
|
|
|
36
|
|
|
(6)
|
|
|
(4)
|
|
|
Net periodic benefit cost (income), excluding below
|
4
|
|
|
14
|
|
|
(18)
|
|
|
(7)
|
|
|
Multiemployer plans
|
18
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
Settlement, termination and curtailment losses (a)
|
3
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
Net periodic benefit cost (income)
|
$
|
25
|
|
|
$
|
34
|
|
|
$
|
(18)
|
|
|
$
|
(7)
|
|
|
(a) During the three months ended June 30, 2021 the pension plan incurred curtailment charges of approximately $3 million with the sale of Transtar. For the three months ended June 30, 2020 the pension plan incurred special termination charges of $2 million due to workforce restructuring.
|
The following table reflects the components of net periodic benefit cost (income) for the six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Benefits
|
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Service cost
|
|
$
|
28
|
|
|
$
|
25
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
Interest cost
|
|
81
|
|
|
96
|
|
|
24
|
|
|
32
|
|
|
Expected return on plan assets
|
|
(178)
|
|
|
(165)
|
|
|
(40)
|
|
|
(40)
|
|
|
Amortization of prior service cost
|
|
1
|
|
|
1
|
|
|
(14)
|
|
|
(4)
|
|
|
Amortization of actuarial net loss (gain)
|
|
75
|
|
|
72
|
|
|
(12)
|
|
|
(8)
|
|
|
Net periodic benefit cost (income), excluding below
|
|
7
|
|
|
29
|
|
|
(36)
|
|
|
(14)
|
|
|
Multiemployer plans
|
|
37
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
Settlement, termination and curtailment losses (a)
|
|
3
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
Net periodic benefit cost (income)
|
|
$
|
47
|
|
|
$
|
76
|
|
|
$
|
(36)
|
|
|
$
|
(14)
|
|
|
(a) During the six months ended June 30, 2021 the pension plan incurred curtailment charges of approximately $3 million with the sale of Transtar. For the six months ended June 30, 2020 the pension plan incurred settlement and special termination charges of approximately $8 million due to workforce restructuring and lump sum payments made to certain individuals
|
Employer Contributions
During the first six months of 2021, U. S. Steel made cash payments of $37 million to the Steelworkers’ Pension Trust and $2 million of pension payments not funded by trusts.
During the first six months of 2021, cash payments of $18 million were made for other postretirement benefit payments not funded by trusts.
Company contributions to defined contribution plans totaled $11 million and $4 million for the three months ended June 30, 2021 and 2020, respectively. Company contributions to defined contribution plans totaled $21 million and $15 million for the six months ended June 30, 2021 and 2020, respectively.
Transtar Disposition
In connection with the Transtar sale, U. S. Steel remeasured its main pension benefit plan as of June 30, 2021. As a result of the remeasurement, the net pension obligation was reduced by $255 million and the funded status level of plan increased to 103 percent.
11. Stock-Based Compensation Plans
U. S. Steel has outstanding stock-based compensation awards that were granted by the Compensation & Organization Committee of the Board of Directors (Committee), or its designee, under the 2005 Stock Incentive Plan (2005 Plan) and the 2016 Omnibus Incentive Compensation Plan, as amended and restated (Omnibus Plan). The Company's stockholders approved the Omnibus Plan and authorized the Company to issue up to 32,700,000 shares of U. S. Steel common stock under the Omnibus Plan. While the awards that were previously granted under the 2005 Plan remain outstanding, all future awards will be granted under the Omnibus Plan. As of June 30, 2021, there were 16,428,281 shares available for future grants under the Omnibus Plan.
Recent grants of stock-based compensation consist of restricted stock units, total stockholder return (TSR) performance awards and return on capital employed (ROCE) performance awards. Shares of common stock under the Omnibus Plan are issued from authorized, but unissued stock. The following table is a summary of the awards made under the Omnibus Plan during the first six months of 2021 and 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Grant Details
|
|
Shares(a)
|
Fair Value(b)
|
|
Shares(a)
|
Fair Value(b)
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
1,492,880
|
|
$
|
18.30
|
|
|
2,640,690
|
|
$
|
8.82
|
|
|
Performance Awards (c)
|
|
|
|
|
|
|
|
TSR
|
|
306,930
|
|
$
|
19.46
|
|
|
671,390
|
|
$
|
8.19
|
|
|
ROCE (d)
|
|
485,900
|
|
$
|
17.92
|
|
|
—
|
|
$
|
—
|
|
(a) The share amounts shown in this table do not reflect an adjustment for estimated forfeitures.
(b) Represents the per share weighted average for all grants during the period.
(c) The number of performance awards shown represents the target share grant of the award.
(d) The ROCE awards granted in 2020 and a portion of ROCE awards granted in 2021 are not shown in the table because they were granted in cash.
U. S. Steel recognized pretax stock-based compensation expense in the amount of $15 million and $9 million in the three-month periods ended June 30, 2021 and 2020, respectively and $26 million and $13 million in the first six months of 2021 and 2020 respectively.
As of June 30, 2021, total future compensation expense related to nonvested stock-based compensation arrangements was $48 million, and the weighted average period over which this expense is expected to be recognized is approximately 17 months.
Restricted stock units awarded as part of annual grants generally vest ratably over three years. Their fair value is the market price of the underlying common stock on the date of grant. Restricted stock units granted in connection with new-hire or retention grants generally cliff vest three years from the date of the grant.
TSR performance awards may vest at varying levels at the end of a three-year performance period if U. S. Steel's total stockholder return compared to the total stockholder return of a peer group of companies meets specified performance criteria with each year in the three-year performance period weighted at 20 percent and the full three-year performance weighted at 40 percent. TSR performance awards can vest at between zero and 200 percent of the target award. The fair value of the TSR performance awards is calculated using a Monte Carlo simulation.
ROCE performance awards may vest at the end of a three-year performance period contingent upon meeting the specified ROCE performance metric. ROCE performance awards can vest between zero and 200 percent of the target award. The fair value of the ROCE performance awards is the average market price of the underlying common stock on the date of grant.
12. Income Taxes
Tax benefit
For the six months ended June 30, 2021 and 2020, the Company recorded a tax benefit of $36 million and $24 million, respectively. The tax benefit for the first six months of 2021 was based on an estimated annual effective rate, which requires management to make its best estimate of annual pretax income or loss and discrete items recognized during the period.
The tax benefit for the six months ended June 30, 2021 includes a benefit of $262 million for the release of the domestic valuation allowance recorded against domestic deferred tax assets that are more likely than not to be realized. During the second quarter of 2021, the Company evaluated all available positive and negative evidence, including the impact of profitability generated from current year operations and future projections of profitability. As a result, the Company determined that all of its domestic deferred tax assets were more likely than not to be realized with the exception of certain of its state net operating losses and state tax credits and reversed the valuation allowance against those deferred tax assets accordingly.
The tax benefit for the six months ended June 30, 2020 includes a $14 million benefit related to recording a loss from continuing operations and income from other comprehensive income categories.
Throughout the year, management regularly updates forecasted annual pretax results for the various countries in which we operate based on changes in factors such as prices, shipments, product mix, plant operating performance and cost estimates. To the extent that actual 2021 pretax results for U.S. and foreign income or loss vary from estimates applied herein, the actual tax provision or benefit recognized in 2021 could be materially different from the forecasted amount used to estimate the tax benefit for the six months ended June 30, 2021.
13. Earnings and Dividends Per Common Share
Earnings (Loss) Per Share Attributable to United States Steel Corporation Stockholders
The effect of dilutive securities on weighted average common shares outstanding included in the calculation of diluted earnings (loss) per common share for the three and six months ended June 30, 2021 and June 30, 2020 were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
(Dollars in millions, except per share amounts)
|
2021
|
2020
|
|
2021
|
2020
|
|
Earnings (loss) attributable to United States Steel Corporation stockholders
|
$
|
1,012
|
|
$
|
(589)
|
|
|
$
|
1,103
|
|
$
|
(980)
|
|
|
Weighted-average shares outstanding (in thousands):
|
|
|
|
|
|
|
Basic
|
269,872
|
|
175,327
|
|
|
259,668
|
|
172,775
|
|
|
Effect of Senior Convertible Notes
|
11,975
|
|
—
|
|
|
10,439
|
|
—
|
|
|
Effect of stock options, restricted stock units and performance awards
|
4,490
|
|
—
|
|
|
4,405
|
|
—
|
|
|
Adjusted weighted-average shares outstanding, diluted
|
286,337
|
|
175,327
|
|
|
274,512
|
|
172,775
|
|
|
Basic earnings (loss) per common share
|
$
|
3.75
|
|
$
|
(3.36)
|
|
|
$
|
4.25
|
|
$
|
(5.67)
|
|
|
Diluted earnings (loss) per common share
|
$
|
3.53
|
|
$
|
(3.36)
|
|
|
$
|
4.02
|
|
$
|
(5.67)
|
|
Excluded from the computation of diluted earnings (loss) per common share due to their anti-dilutive effect were 0.9 million and 1.3 million outstanding securities granted under the Omnibus Plan for the three and six months ended June 30, 2021, respectively and 5.9 million and 5.4 million outstanding securities granted under the Omnibus Plan for the three and six months ended June 30, 2020, respectively.
Dividends Paid Per Share
The dividend for each of the first and second quarters of 2021 and 2020 was one cent per common share.
14. Derivative Instruments
The USSE segment uses foreign exchange forward sales contracts (foreign exchange forwards) to exchange euros for U.S. dollars (USD), our Flat-Rolled segment used foreign exchange forwards to exchange USD for Canadian dollars and our Mini Mill segment uses foreign exchange forwards to exchange USD for euros. All of our foreign exchange forwards have maturities no longer than 13 months and are used to mitigate the risk of foreign currency exchange rate fluctuations and manage our foreign currency requirements. The USSE and Flat-Rolled segments use hedge accounting for their foreign exchange forwards. The Mini Mill segment has not elected hedge accounting; therefore, the changes in the fair value of their foreign exchange forwards are recognized immediately in the Condensed Consolidated Statements of Operations (mark-to-market accounting).
The Flat-Rolled and USSE segments also use financial swaps to protect from the commodity price risk associated with purchases of natural gas, zinc, tin and electricity (commodity purchase swaps). We elected cash flow hedge accounting for Flat-Rolled commodity purchase swaps for natural gas, zinc and tin and use mark-to-market accounting for electricity swaps used in our domestic operations and for commodity purchase swaps used in our European operations. The maximum derivative contract duration for commodity purchase swaps where hedge accounting was elected and was not elected is six months and 30 months, respectively.
The Flat-Rolled and Mini Mill segments have entered into financial swaps that are used to partially manage the sales price risk of certain hot-rolled coil sales (sales swaps). The Flat-Rolled segment uses hedge accounting for its sales swaps and the Mini Mill segment uses mark-to-market accounting for its sales swaps. Sales swaps have maturities of up to six months.
The table below shows the outstanding swap quantities used to hedge forecasted purchases and sales as of June 30, 2021 and June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Contracts
|
Classification
|
June 30, 2021
|
|
June 30, 2020
|
|
Natural gas (in mmbtus)
|
Commodity purchase swaps
|
25,251,000
|
|
44,462,000
|
|
Tin (in metric tons)
|
Commodity purchase swaps
|
796
|
|
1,221
|
|
Zinc (in metric tons)
|
Commodity purchase swaps
|
12,851
|
|
12,564
|
|
Electricity (in megawatt hours)
|
Commodity purchase swaps
|
986,400
|
|
936,000
|
|
Hot-rolled coils (in tons)
|
Sales swaps
|
159,880
|
|
—
|
|
Foreign currency (in millions of euros)
|
Foreign exchange forwards
|
€
|
278
|
|
|
€
|
239
|
|
|
Foreign currency (in millions of dollars)
|
Foreign exchange forwards
|
$
|
9
|
|
|
$
|
—
|
|
|
Foreign currency (in millions of CAD)
|
Foreign exchange forwards
|
$
|
—
|
|
|
$
|
15
|
|
There were $34 million and $5 million in accounts receivable and $151 million and $54 million in accounts payable recorded for derivatives designated as hedging instruments as of June 30, 2021 and December 31, 2020, respectively. Amounts recorded in long-term asset and long-term liability accounts for derivatives were not material as of June 30, 2021 and December 31, 2020. Accounts payable recorded in the Condensed Consolidated Balance sheet for derivatives not designated as hedging instruments was $14 million as of June 30, 2021 and was immaterial as of December 31, 2020.
The table below summarizes the effect of hedge accounting on AOCI and amounts reclassified from AOCI into earnings for the three and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on Derivatives in AOCI
|
|
|
Amount of Gain (Loss) Recognized in Income
|
|
(In millions)
|
Three Months Ended June 30, 2021
|
Three Months Ended June 30, 2020
|
|
Location of Reclassification from AOCI (a)
|
Three Months Ended June 30, 2021
|
Three Months Ended June 30, 2020
|
|
Sales swaps
|
$
|
(79)
|
|
$
|
—
|
|
|
Net sales
|
$
|
(23)
|
|
$
|
—
|
|
|
Commodity purchase swaps
|
22
|
|
19
|
|
|
Cost of sales (b)
|
5
|
|
(12)
|
|
|
Foreign exchange forwards
|
2
|
|
(4)
|
|
|
Cost of sales
|
(5)
|
|
—
|
|
(a) The earnings impact of our hedging instruments substantially offsets the earnings impact of the related hedged items resulting in immaterial ineffectiveness.
(b) Costs for commodity purchase swaps are recognized in cost of sales as products are sold.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on Derivatives in AOCI
|
|
|
|
Amount of Gain (Loss) Recognized in Income
|
|
(In millions)
|
Six Months Ended June 30, 2021
|
Six Months Ended June 30, 2020
|
|
Location of Reclassification from AOCI (a)
|
|
Six Months Ended June 30, 2021
|
Six Months Ended June 30, 2020
|
|
Sales swaps
|
$
|
(123)
|
|
$
|
—
|
|
|
Net sales
|
|
$
|
(33)
|
|
$
|
—
|
|
|
Commodity purchase swaps
|
32
|
|
11
|
|
|
Cost of sales (b)
|
|
4
|
|
(20)
|
|
|
Foreign exchange forwards
|
21
|
|
1
|
|
|
Cost of sales
|
|
(10)
|
|
—
|
|
(a) The earnings impact of our hedging instruments substantially offsets the earnings impact of the related hedged items resulting in immaterial ineffectiveness.
(b) Costs for commodity purchase swaps are recognized in cost of sales as products are sold.
At current contract values, $31 million currently in AOCI as of June 30, 2021 will be recognized as a decrease in cost of sales over the next year and $149 million currently in AOCI as of June 30, 2021 will be recognized as a decrease in net sales over the next year.
The loss recognized for sales swaps where hedge accounting was not elected was $6 million and $15 million and was recognized in cost of sales for the three and six months ended June 30, 2021, respectively. The loss recognized for sales swaps where hedge accounting was not elected was not material for the three and six months ended June 30, 2020.
15. Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Issuer/Borrower
|
Interest
Rates %
|
Maturity
|
June 30, 2021
|
|
December 31, 2020
|
|
2037 Senior Notes
|
U. S. Steel
|
6.650
|
2037
|
350
|
|
|
350
|
|
|
2029 Senior Secured Notes
|
Big River Steel
|
6.625
|
2029
|
900
|
|
|
—
|
|
|
2029 Senior Notes
|
U. S. Steel
|
6.875
|
2029
|
750
|
|
|
—
|
|
|
2026 Senior Notes
|
U. S. Steel
|
6.250
|
2026
|
600
|
|
|
650
|
|
|
2026 Senior Convertible Notes
|
U. S. Steel
|
5.000
|
2026
|
350
|
|
|
350
|
|
|
2025 Senior Notes
|
U. S. Steel
|
6.875
|
2025
|
718
|
|
|
750
|
|
|
2025 Senior Secured Notes
|
U. S. Steel
|
12.000
|
2025
|
—
|
|
|
1,056
|
|
|
Arkansas Teacher Retirement System Notes Payable
|
Big River Steel
|
5.500 - 7.750
|
2023
|
106
|
|
|
—
|
|
|
Export-Import Credit Agreement
|
U. S. Steel
|
Variable
|
2021
|
—
|
|
|
180
|
|
|
Environmental Revenue Bonds
|
U. S. Steel
|
4.125 - 6.750
|
2024 - 2050
|
717
|
|
|
717
|
|
|
Environmental Revenue Bonds
|
Big River Steel
|
4.500 - 4.750
|
2049
|
752
|
|
|
—
|
|
|
Finance leases and all other obligations
|
U. S. Steel
|
Various
|
2021 - 2029
|
80
|
|
|
81
|
|
|
Finance leases and all other obligations
|
Big River Steel
|
Various
|
2021 - 2031
|
115
|
|
|
—
|
|
|
Export Credit Agreement (ECA)
|
U. S. Steel
|
Variable
|
2031
|
136
|
|
|
113
|
|
|
Credit Facility Agreement
|
U. S. Steel
|
Variable
|
2024
|
—
|
|
|
500
|
|
|
Big River Steel ABL Facility, $350 million
|
Big River Steel
|
Variable
|
2022
|
—
|
|
|
—
|
|
|
USSK Credit Agreement
|
U. S. Steel Kosice
|
Variable
|
2023
|
—
|
|
|
368
|
|
|
USSK Credit Facilities
|
U. S. Steel Kosice
|
Variable
|
2021
|
—
|
|
|
—
|
|
|
Total Debt
|
|
|
|
5,574
|
|
|
5,115
|
|
|
Less unamortized discount, premium, and debt issuance costs
|
|
|
|
8
|
|
|
228
|
|
|
Less short-term debt, long-term debt due within one year, and short-term issuance costs
|
|
|
|
763
|
|
|
192
|
|
|
Long-term debt
|
|
|
|
$
|
4,803
|
|
|
$
|
4,695
|
|
Senior Secured Notes, Senior Notes and Export-Import Credit Agreement Repayments
The following debt repayments were made by U. S. Steel during the six-month period ended June 30, 2021:
•All of the remaining outstanding principal of approximately $180 million under the Export-Import Credit Agreement was repaid. There were approximately $3 million in non-cash debt extinguishment costs associated with the repayment. The Export-Import Credit Agreement and related security interests were terminated in conjunction with the payment in full. No early termination penalties applied with respect to the prepayment.
•The full optional redemption of the outstanding 12.000% Senior Secured Notes due 2025 for an aggregate principal amount of approximately $1.056 billion was completed. There were redemption premiums and unamortized discount and debt issuance write-offs of approximately $181 million and $71 million, respectively related to the repayment.
•Open market repurchases were made of approximately $50 million and $32 million of aggregate principal on the 6.250% Senior Notes due 2026 and its 6.875% Senior Notes due 2025, respectively.
2025 Senior Notes
On June 17, 2021, U. S. Steel issued an irrevocable notice of redemption to redeem the entirety of its approximately $718 million aggregate principal amount of outstanding 6.875% Senior Notes due 2025 (2025 Senior Notes). The Company expects the total payment to the holders including the redemption premium to be approximately $730 million (reflecting a redemption price of 101.719% of the aggregate principal amount), plus accrued and unpaid interest to, but excluding, the redemption date of August 15, 2021. The 2025 Senior Notes will be redeemed with cash on hand. The 2025 Senior Notes are reflected in short-term debt and current maturities of long-term debt on the Condensed Consolidated Balance Sheet as of June 30, 2021.
2029 Senior Notes
On February 11, 2021, U. S. Steel issued $750 million aggregate principal amount of 6.875% Senior Notes due 2029 (2029 Senior Notes). U. S. Steel received net proceeds of approximately $739 million after fees of approximately $11 million related to underwriting and third-party expenses. The net proceeds from the issuance of the 2029 Senior Notes, together with the proceeds of our recent common stock issuance were used to redeem all of our outstanding 2025 Senior Secured Notes as discussed above. See Note 22 for further details regarding our recent common stock issuance. The 2029 Senior Notes will pay interest semi-annually in arrears on March 1 and September 1 of each year beginning on September 1, 2021, and will mature on March 1, 2029, unless earlier redeemed or repurchased.
On and after March 1, 2024, the Company may redeem the 2029 Senior Notes at its option, at any time in whole or from time to time in part, upon not less than 15 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount) listed below, plus accrued and unpaid interest on the 2029 Senior Notes, if any, to, but excluding, the applicable redemption date, if redeemed during the twelve-month period beginning on March 1 of each of the years indicated below.
|
|
|
|
|
|
|
|
Year
|
Redemption Price
|
|
2024
|
103.438
|
%
|
|
2025
|
101.719
|
%
|
|
2026 and thereafter
|
100.000
|
%
|
At any time prior to March 1, 2024, U. S. Steel may also redeem the 2029 Senior Notes, at our option, in whole or in part, or from time to time, at a price equal to the greater of 100 percent of the principal amount of the 2029 Senior Notes to be redeemed, or the sum of the present value of the redemption price of the 2029 Senior Notes if they were redeemed on March 1, 2024 plus interest payments due through March 1, 2024 discounted to the date of redemption on a semi-annual basis at the applicable treasury yield, plus 50 basis points and accrued and unpaid interest, if any.
At any time prior to March 1, 2024 we may also purchase up to 35% of the original aggregate principal amount of the 2029 Senior Notes at 106.875%, plus accrued and unpaid interest, if any, up to, but excluding the applicable date of redemption, with proceeds from equity offerings.
Similar to our other senior notes, the indenture governing the 2029 Senior Notes restricts our ability to create certain liens, to enter into sale leaseback transactions and to consolidate, merge, transfer or sell all, or substantially all of our assets. It also contains provisions requiring that U. S. Steel make an offer to purchase the 2029 Senior Notes from holders upon a change of control under certain specified circumstances, as well as other customary provisions.
2029 Senior Secured Notes
On September 18, 2020, Big River Steel's indirect subsidiaries, Big River Steel LLC and BRS Finance Corp. (Issuers), issued $900 million in aggregate principal amount of 6.625% Senior Secured Notes (Green Bonds) (2029 Senior Secured Notes). The 2029 Senior Secured Notes pay interest semi-annually in arrears on January 31 and July 31 of each year and will mature on January 31, 2029, unless earlier redeemed or repurchased.
On and after September 15, 2023, Big River Steel LLC may redeem the 2029 Senior Secured Notes at its option, at any time in whole or from time to time in part, at the redemption prices (expressed in percentages of principal amount) listed below, plus accrued and unpaid interest on the Notes, if any, to, but excluding, the applicable redemption date, if redeemed during the twelve-month period beginning on September 15 of each of the years indicated below.
|
|
|
|
|
|
|
|
Year
|
Redemption Price
|
|
2023
|
103.313
|
%
|
|
2024
|
101.656
|
%
|
|
2025 and thereafter
|
100.000
|
%
|
The obligations under the 2029 Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a secured basis by the Issuers’ parent company, BRS Intermediate Holdings LLC (BRS Intermediate), which is a direct subsidiary of Big River Steel, and by all future direct and indirect wholly owned domestic subsidiaries of the Issuers. Additionally, the 2029 Senior Secured Notes and related guarantees are secured by (i) first priority liens on most of the tangible and intangible assets of the Issuers and the guarantors and all of the equity interests of the Issuers held by BRS Intermediate (shared in equal priority with each other pari passu lien secured party) (ii) and second priority liens on accounts receivable, inventory and certain other related assets of the Issuers and the guarantors (shared in equal priority with each other pari passu lien secured party).
If the Issuers or BRS Intermediate experience specified change in control events, the Issuers must make an offer to purchase the 2029 Senior Secured Notes. If the Issuers sell assets under specified circumstances, the Issuers must make an offer to purchase the 2029 Senior Secured Notes at a price equal to 100% of the aggregate principal amount plus accrued and unpaid interest. The Indenture also limits the ability of the Issuers and their restricted subsidiaries to: incur or guarantee additional indebtedness; pay dividends and make other restricted payments; make investments; consummate certain asset sales; engage in transactions with affiliates; grant or assume liens; and consolidate, merge or transfer all or substantially all of their assets. The Indenture also includes other customary events of default.
Big River Steel Environmental Revenue Bonds - Series 2019
On May 31, 2019, Arkansas Development Finance Authority (ADFA) issued $487 million of tax-exempt bonds and loaned 100% of the proceeds to Big River Steel LLC under a bond financing agreement to finance the expansion of Big River Steel's electric arc furnace steel mill and fund the issuance cost of the bonds (2019 ADFA Bonds). The 2019 ADFA Bonds accrue interest at the rate of 4.50% per annum payable semiannually on March 1 and September 1 of each year with a final maturity of September 1, 2049.
The 2019 ADFA Bonds are subject to optional redemption during the periods and at the redemption prices shown below plus, in each case, accrued interest.
|
|
|
|
|
|
|
|
Year
|
Redemption Price
|
|
September 1, 2026 to August 31, 2027
|
103
|
%
|
|
September 1, 2027 to August 31, 2028
|
102
|
%
|
|
September 1, 2028 to August 31, 2029
|
101
|
%
|
|
On and after September 1, 2029
|
100
|
%
|
Prior to September 1, 2026, the 2019 ADFA Bonds are not redeemable.
The 2019 ADFA Bonds are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by first priority liens on most of the tangible and intangible assets and second priority liens on accounts receivable, inventory and certain other related assets of BRS Intermediate and by all future direct and indirect wholly owned domestic subsidiaries of the Issuers.
The 2019 ADFA Bonds are subject to certain mandatory sinking fund redemption provisions beginning in 2040, as well as extraordinary mandatory redemption, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date fixed for redemption, from surplus funds at the earlier of the completion of the tax-exempt project or expiration of a certain period for construction financings, and upon an event of taxability. The 2019 ADFA Bonds are subject to substantially similar asset sale offer and change of control offer provisions, affirmative and negative covenants, events of default and remedies as the Indenture governing the 2029 Senior Secured Notes.
Big River Steel Environmental Revenue Bonds - Series 2020
On September 10, 2020, ADFA issued $265 million of tax-exempt bonds with a green bond designation and loaned 100% of the proceeds to Big River Steel LLC under a bond financing agreement to finance or refinance the expansion of Big River Steel's electric arc furnace steel mill and fund the issuance cost of the bonds (2020 ADFA Bonds). The 2020 ADFA Bonds accrue interest at 4.75% per annum payable semi-annually on March 1 and September 1 of each year with final maturity on September 1, 2049.
The 2020 ADFA Bonds are subject to optional redemption during the periods and at the redemption prices shown below, plus, in each case accrued interest.
|
|
|
|
|
|
|
|
Year
|
Redemption Price
|
|
September 1, 2027 to August 31, 2028
|
103
|
%
|
|
September 1, 2028 to August 31, 2029
|
102
|
%
|
|
September 1, 2029 to August 31, 2030
|
101
|
%
|
|
On and after September 1, 2030
|
100
|
%
|
At any time prior to September 1, 2027, Big River Steel LLC may also redeem the 2020 ADFA Bonds, at its option, in whole or in part, or from time to time, at a price equal to the greater of 100 percent of the principal amount of the 2020 ADFA Bonds to be redeemed, or the present value of the redemption price of the 2020 ADFA Bonds if they were redeemed on September 1, 2027 plus interest payments due through September 1, 2027 discounted to the date of redemption on a semi-annual basis at the applicable tax exempt municipal bond rate and accrued and unpaid interest to the date fixed for redemption.
The 2020 ADFA Bonds are fully and unconditionally guaranteed, jointly and severally, on a secured basis by certain of Big River Steel's subsidiaries and subject to first priority liens and second priority liens on certain Big River Steel collateral.
The 2020 ADFA Bonds are subject to substantially similar asset sale offer and change of control offer provisions, affirmative and negative covenants, events of default and remedies as the Indenture governing the 2029 Senior Secured Notes.
Arkansas Teacher Retirement System Notes Payable
Big River Steel entered into three financing agreements with the Arkansas Teacher Retirement System during 2018 and 2019. The interest rates on the notes range from 5.50% to 7.75% at present. Interest on these agreements may be paid-in-kind through the respective dates of maturity and therefore requires no interim debt service by Big River Steel prior to the date of maturity or early repayment, as the case may be. Big River Steel may prepay amounts owed under these agreements at any time without penalty. One such agreement has the benefit of a pledge of future income streams generated through an anticipated monetization of recycling tax credits provided by the State of Arkansas in conjunction with the expansion of Big River Steel. As of June 30, 2021, the outstanding balance for these financing agreements was $106 million.
Big River Steel ABL Facility
On August 23, 2017, subsidiaries of Big River Steel entered into a senior secured asset-based revolving credit facility and subsequently amended such facility (Big River Steel ABL Facility) by entering into the First Amendment to the Big River Steel ABL Credit Agreement, dated as of September 10, 2020. The Big River Steel ABL Facility is secured by first-priority liens on accounts receivable and inventory and certain other assets and second priority liens on most tangible and intangible assets of Big River Steel in each case subject to permitted liens.
The Big River Steel ABL Facility provides for borrowings for working capital and general corporate purposes in an amount equal up to the lesser of (a) $350 million and (b) a borrowing base calculated based on specified percentages of eligible accounts receivables and inventory, subject to certain adjustments and reserves. The Big River Steel ABL Facility matures on August 23, 2022. The outstanding principal balance was zero at June 30, 2021. Availability under the Big River Steel ABL Facility, pursuant to the available borrowing base was $350 million at June 30, 2021.
The Big River Steel ABL Facility provides for borrowings at interest rates based on defined, short-term market rates plus a spread based on availability. The Big River Steel ABL Facility also requires a commitment fee on the unused portion of the Big River Steel ABL Facility, determined quarterly based on Big River Steel LLC's utilization levels.
Big River Steel LLC must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent twelve consecutive months when availability under the Big River Steel ABL Facility is less than the greater of ten percent of the borrowing base availability and $13 million. Based on the most recent four quarters as of March 31, 2021, Big River Steel would have met the fixed charge coverage ratio test. The Big River Steel ABL Facility includes affirmative and negative covenants that are customary for facilities of this type. The Big River Steel ABL Facility also includes customary events of default.
Credit Facility Agreement
As of June 30, 2021, there were approximately $5 million of letters of credit issued, and no loans drawn under the Fifth Amended and Restated Credit Facility Agreement (Credit Facility Agreement). U. S. Steel must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent four consecutive quarters when availability under the Credit Facility Agreement is less than the greater of ten percent of the total aggregate commitments and $200 million. Based on the most recent four quarters as of June 30, 2021, the Company would have met the fixed charge coverage ratio test. In
addition, since the value of our inventory and trade accounts receivable less specified reserves calculated in accordance with the Credit Facility Agreement do not support the full amount of the facility at June 30, 2021, the amount available to the Company under this facility was further reduced by $77 million. The availability under the Credit Facility Agreement was $1.918 billion as of June 30, 2021.
U. S. Steel Košice (USSK) Credit Facilities
At June 30, 2021, USSK had no borrowings under its €460 million (approximately $547 million) revolving credit facility (USSK Credit Agreement).
At June 30, 2021, USSK had no borrowings under its €20 million and €10 million credit facilities (collectively, approximately $36 million) and the availability was approximately $32 million due to approximately $4 million of customs and other guarantees outstanding.
16. Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, current accounts and notes receivable, accounts payable, bank checks outstanding, and accrued interest included in the Condensed Consolidated Balance Sheet approximate fair value. See Note 14 for disclosure of U. S. Steel’s derivative instruments, which are accounted for at fair value on a recurring basis.
Big River Steel
On October 31, 2019, a wholly owned subsidiary of U. S. Steel purchased a 49.9% ownership interest in Big River Steel. The transaction included a call option (U. S. Steel Call Option) to acquire the remaining equity interest within the next four years at an agreed-upon price formula. The investment purchase included other options that were marked to fair value during 2020. The net change in fair value of the options during the six months ended June 30, 2020 resulted in a $6 million decrease to other financial costs. When the U. S. Steel Call Option was exercised on December 8, 2020, the other options were legally extinguished and a new contingent forward asset was recorded for $11 million. As the contingent forward was a contract to purchase a business, it was no longer considered a derivative subject to ASC 815, Derivative Instruments and Hedging Activities, and was not subject to subsequent fair value adjustments. The contingent forward asset was removed with the recognition of the gain on the previously held investment in Big River Steel when the purchase of the remaining interest closed on January 15, 2021. See Note 20 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year-ended December 31, 2020 and Note 5 for further details.
Prior to exercise of the U. S. Steel Call Option, the options were marked to fair value each period using a Monte Carlo simulation which is considered a Level 3 valuation technique. Level 3 valuation techniques include inputs to the valuation methodology that are considered unobservable and significant to the fair value measurement. The simulation relied on assumptions that included Big River Steel's equity value, volatility, the risk-free interest rate and U. S. Steel's credit spread.
Stelco Option for Minntac Mine Interest
On April 30, 2020 (Effective Date), the Company entered into an Option Agreement with Stelco, Inc. (Stelco), that grants Stelco the option to purchase a 25 percent interest (Option Interest) in a to-be-formed entity (Joint Venture) that will own the Company’s current iron ore mine located in Mt. Iron, Minnesota (Minntac Mine). As consideration for the Option, Stelco paid the Company an aggregate amount of $100 million in five $20 million installments, which began on the Effective Date and ended on December 31, 2020 and are recorded net of transaction costs in noncontrolling interest in the Condensed Consolidated Balance Sheet. In the event Stelco exercises the option, Stelco will contribute an additional $500 million to the Joint Venture, which amount shall be remitted solely to U. S. Steel in the form of a one-time special distribution, and the parties will engage in good faith negotiations to finalize the master agreement (pursuant to which Stelco will acquire the Option Interest) and the limited liability company agreement of the Joint Venture.
The following table summarizes U. S. Steel’s financial liabilities that were not carried at fair value at June 30, 2021 and December 31, 2020. The fair value of long-term debt was determined using Level 2 inputs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
(In millions)
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
Short-term and long-term debt (a)
|
$
|
6,005
|
|
|
$
|
5,265
|
|
|
$
|
5,323
|
|
|
$
|
4,806
|
|
(a) Excludes finance lease obligations.
17. Statement of Changes in Stockholders’ Equity
The following table reflects the first six months of 2021 and 2020 reconciliation of the carrying amount of total equity, equity attributable to U. S. Steel and equity attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021 (In millions)
|
Total
|
(Accumulated Deficit) Retained Earnings
|
Accumulated
Other
Comprehensive
(Loss) Income
|
Common
Stock
|
Treasury
Stock
|
Paid-in
Capital
|
Non-
Controlling
Interest
|
|
Balance at beginning of year
|
$
|
3,879
|
|
$
|
(623)
|
|
$
|
(47)
|
|
$
|
229
|
|
$
|
(175)
|
|
$
|
4,402
|
|
$
|
93
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net earnings
|
91
|
|
91
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Pension and other benefit adjustments
|
24
|
|
—
|
|
24
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Currency translation adjustment
|
(47)
|
|
—
|
|
(47)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Derivative financial instruments
|
(20)
|
|
—
|
|
(20)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Employee stock plans
|
6
|
|
—
|
|
—
|
|
2
|
|
(7)
|
|
11
|
|
—
|
|
|
Common Stock Issued
|
790
|
|
—
|
|
—
|
|
48
|
|
—
|
|
742
|
|
—
|
|
|
Dividends paid on common stock
|
(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
—
|
|
|
Balance at March 31, 2021
|
$
|
4,720
|
|
$
|
(532)
|
|
$
|
(90)
|
|
$
|
279
|
|
$
|
(182)
|
|
$
|
5,152
|
|
$
|
93
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net earnings
|
1,012
|
|
1,012
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Pension and other benefit adjustments
|
205
|
|
—
|
|
205
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Currency translation adjustment
|
23
|
|
—
|
|
23
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Derivative financial instruments
|
(31)
|
|
—
|
|
(31)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Employee stock plans
|
17
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
18
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on common stock
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
|
Balance at June 30, 2021
|
$
|
5,943
|
|
$
|
480
|
|
$
|
107
|
|
$
|
279
|
|
$
|
(183)
|
|
$
|
5,168
|
|
$
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 (In millions)
|
Total
|
Retained Earnings (Accumulated Deficit)
|
Accumulated
Other
Comprehensive
Loss
|
Common
Stock
|
Treasury
Stock
|
Paid-in
Capital
|
Non-
Controlling
Interest
|
|
Balance at beginning of year
|
$
|
4,093
|
|
$
|
544
|
|
$
|
(478)
|
|
$
|
179
|
|
$
|
(173)
|
|
$
|
4,020
|
|
$
|
1
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net loss
|
(391)
|
|
(391)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Pension and other benefit adjustments
|
52
|
|
—
|
|
52
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Currency translation adjustment
|
(23)
|
|
—
|
|
(23)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Derivative financial instruments
|
(5)
|
|
—
|
|
(5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Employee stock plans
|
2
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
4
|
|
—
|
|
|
Dividends paid on common stock
|
(2)
|
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Balance at March 31, 2020
|
$
|
3,726
|
|
$
|
151
|
|
$
|
(454)
|
|
$
|
179
|
|
$
|
(175)
|
|
$
|
4,024
|
|
$
|
1
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net loss
|
(589)
|
|
(589)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Pension and other benefit adjustments
|
29
|
|
—
|
|
29
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Currency translation adjustment
|
20
|
|
—
|
|
20
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Derivative financial instruments
|
15
|
|
—
|
|
15
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Employee stock plans
|
8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8
|
|
—
|
|
|
Common Stock Issued
|
410
|
|
—
|
|
—
|
|
50
|
|
—
|
|
360
|
|
—
|
|
|
Dividends paid on common stock
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
—
|
|
|
Stelco Option Agreement
|
37
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
37
|
|
|
Other
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
|
Balance at June 30, 2020
|
$
|
3,654
|
|
$
|
(438)
|
|
$
|
(390)
|
|
$
|
229
|
|
$
|
(175)
|
|
$
|
4,391
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18. Reclassifications from Accumulated Other Comprehensive Income (AOCI)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Pension and
Other Benefit
Items
|
|
Foreign
Currency
Items
|
|
Unrealized Gain (Loss) on Derivatives
|
|
Total
|
|
Balance at December 31, 2020
|
$
|
(458)
|
|
|
$
|
449
|
|
|
$
|
(38)
|
|
|
$
|
(47)
|
|
|
Other comprehensive income (loss) before reclassifications
|
191
|
|
|
(24)
|
|
|
(79)
|
|
|
88
|
|
|
Amounts reclassified from AOCI (a)
|
38
|
|
|
—
|
|
|
28
|
|
|
66
|
|
|
Net current-period other comprehensive income (loss)
|
229
|
|
|
(24)
|
|
|
(51)
|
|
|
154
|
|
|
Balance at June 30, 2021
|
$
|
(229)
|
|
|
$
|
425
|
|
|
$
|
(89)
|
|
|
$
|
107
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
$
|
(843)
|
|
|
$
|
381
|
|
|
$
|
(16)
|
|
|
$
|
(478)
|
|
|
Other comprehensive income (loss) before reclassifications
|
8
|
|
|
(3)
|
|
|
(8)
|
|
|
(3)
|
|
|
Amounts reclassified from AOCI (a)
|
73
|
|
|
—
|
|
|
18
|
|
|
91
|
|
|
Net current-period other comprehensive income (loss)
|
81
|
|
|
(3)
|
|
|
10
|
|
|
88
|
|
|
Balance at June 30, 2020
|
$
|
(762)
|
|
|
$
|
378
|
|
|
$
|
(6)
|
|
|
$
|
(390)
|
|
(a) See table below for further details.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount reclassified from AOCI (a)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Details about AOCI components (in millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Amortization of pension and other benefit items
|
|
|
|
|
|
|
|
|
Prior service credits (a)
|
$
|
(6)
|
|
|
$
|
(1)
|
|
|
$
|
(13)
|
|
|
$
|
(3)
|
|
|
Actuarial losses (a)
|
32
|
|
|
32
|
|
|
63
|
|
|
64
|
|
|
Settlement, termination and curtailment losses (a)
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
UPI Purchase Accounting Adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
Total pensions and other benefits items
|
27
|
|
|
31
|
|
|
51
|
|
|
84
|
|
|
Derivative reclassifications to Condensed Consolidated Statements of Operations
|
22
|
|
|
10
|
|
|
37
|
|
|
22
|
|
|
Total before tax
|
49
|
|
|
41
|
|
|
88
|
|
|
106
|
|
|
Tax provision
|
(21)
|
|
|
(7)
|
|
|
(22)
|
|
|
(15)
|
|
|
Net of tax
|
$
|
28
|
|
|
$
|
34
|
|
|
$
|
66
|
|
|
$
|
91
|
|
(a) These AOCI components are included in the computation of net periodic benefit cost. See Note 10 for additional details.
19. Transactions with Related Parties
Related party sales and service transactions are primarily related to equity investees and were $341 million and $91 million for the three months ended June 30, 2021 and 2020, respectively and $636 million and $442 million for the six months ended June 30, 2021 and 2020, respectively.
Accounts payable to related parties include balances due to PRO-TEC Coating Company, LLC (PRO-TEC) of $143 million and $86 million at June 30, 2021 and December 31, 2020, respectively for invoicing and receivables collection services provided by U. S. Steel on PRO-TEC's behalf. U. S. Steel, as PRO-TEC’s exclusive sales agent, is responsible for credit risk related to those receivables. U. S. Steel also provides PRO-TEC marketing, selling and customer service functions. Payables to other related parties totaled $1 million and $19 million for the periods ending June 30, 2021 and December 31, 2020, respectively.
Purchases from related parties for outside processing services provided by equity investees amounted to $6 million and $10 million for the three months ended June 30, 2021 and 2020, respectively and $26 million and $38 million for the six months ended June 30, 2021 and 2020, respectively. Purchases of iron ore pellets from related parties amounted to $30 million and $16 million for the three months ended June 30, 2021 and 2020, respectively and $54 million and $34 million for the six months ended June 30, 2021 and 2020, respectively.
20. Restructuring and Other Charges
During the three months ended June 30, 2021, the Company recorded restructuring and other charges of $31 million, which consist of $25 million for Great Lakes Works and $6 million for environmental and other charges. Cash payments were made related to severance and exit costs of approximately $15 million.
During the six months ended June 30, 2021, the Company recorded restructuring and other charges of $37 million, which consists of $27 million for Great Lakes Works and $10 million for environmental related charges at other facilities and costs related to severance. Cash payments were made related to severance and exit costs of approximately $44 million.
During the three months ended June 30, 2020, the Company recorded restructuring and other charges of $89 million, which consists of charges of $47 million for the indefinite idling of our Keetac mining operations and a significant portion of Great Lakes Works, $2 million for other charges, $8 million for employee benefit costs related to Company-wide headcount reductions and $32 million headcount reductions under a Voluntary Early Retirement Program (VERP) offered at USSK.
During the six months ended June 30, 2020, the Company recorded restructuring and other charges of $130 million, which consists of charges of $72 million for the indefinite idling of our Keetac mining operations and a significant portion of Great Lakes Works, $13 million for the indefinite idling of Lorain Tubular Operations and Lone Star Tubular Operations, $13 million and $32 million for employee benefit costs related to Company-wide headcount reductions and headcount reductions under a VERP offered at USSK, respectively. Cash payments were made related to severance and exit costs of approximately $33 million.
The activity in the accrued balances incurred in relation to restructuring programs during the six months ended June 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Employee Related Costs
|
Exit Costs
|
Non-cash Charges
|
Total
|
|
Balance at December 31, 2020
|
$
|
51
|
|
$
|
126
|
|
$
|
—
|
|
$
|
177
|
|
|
Additional charges
|
3
|
|
33
|
|
1
|
|
37
|
|
|
Cash payments/utilization (a)
|
(27)
|
|
(23)
|
|
(1)
|
|
(51)
|
|
|
Balance at June 30, 2021
|
$
|
27
|
|
$
|
136
|
|
$
|
—
|
|
$
|
163
|
|
|
(a)Payments of $6 million were made from the pension fund trust.
|
Accrued liabilities for restructuring programs are included in the following balance sheet lines:
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
June 30, 2021
|
December 31, 2020
|
|
Accounts payable
|
$
|
38
|
|
$
|
34
|
|
|
Payroll and benefits payable
|
11
|
|
29
|
|
|
Employee benefits
|
16
|
|
22
|
|
|
Deferred credits and other noncurrent liabilities
|
98
|
|
92
|
|
|
Total
|
$
|
163
|
|
$
|
177
|
|
21. Contingencies and Commitments
U. S. Steel is the subject of, or party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Certain of these matters are discussed below. The ultimate resolution of these contingencies could, individually or in the aggregate, be material to the Condensed Consolidated Financial Statements. However, management believes that U. S. Steel will remain a viable and competitive enterprise even though it is possible that these contingencies could be resolved unfavorably.
U. S. Steel accrues for estimated costs related to existing lawsuits, claims and proceedings when it is probable that it will incur these costs in the future and the costs are reasonably estimable.
Asbestos matters – As of June 30, 2021, U. S. Steel was a defendant in approximately 935 active cases involving approximately 2,525 plaintiffs. The vast majority of these cases involve multiple defendants. About 1,545, or approximately 61 percent, of these plaintiff claims are currently pending in a jurisdiction which permits filings with massive numbers of plaintiffs. At December 31, 2020, U. S. Steel was a defendant in approximately 855 cases involving approximately 2,445 plaintiffs. Based upon U. S. Steel’s experience in such cases, it believes that the actual number of plaintiffs who ultimately assert claims against U. S. Steel will likely be a small fraction of the total number of plaintiffs.
The following table shows the number of asbestos claims in the current period and the prior three years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period ended
|
|
Opening
Number
of Claims
|
|
Claims
Dismissed,
Settled and
Resolved (a)
|
|
New Claims
|
|
Closing
Number
of Claims
|
|
December 31, 2018
|
|
3,315
|
|
1,285
|
|
290
|
|
2,320
|
|
December 31, 2019
|
|
2,320
|
|
195
|
|
265
|
|
2,390
|
|
December 31, 2020
|
|
2,390
|
|
240
|
|
295
|
|
2,445
|
|
June 30, 2021
|
|
2,445
|
|
75
|
|
155
|
|
2,525
|
(a) The period ending December 31, 2018 includes approximately 1,000 dismissed cases previously pending in the State of Texas.
The amount U. S. Steel accrues for pending asbestos claims is not material to U. S. Steel’s financial condition. However, U. S. Steel is unable to estimate the ultimate outcome of asbestos-related claims due to a number of uncertainties, including: (1) the rates at which new claims are filed, (2) the number of and effect of bankruptcies of other companies traditionally defending asbestos claims, (3) uncertainties associated with the variations in the litigation process from jurisdiction to jurisdiction, (4) uncertainties regarding the facts, circumstances and disease process with each claim, and (5) any new legislation enacted to address asbestos-related claims.
Further, U. S. Steel does not believe that an accrual for unasserted claims is required. At any given reporting date, it is probable that there are unasserted claims that will be filed against the Company in the future. In 2020 and 2019, the Company engaged an outside valuation consultant to assist in assessing its ability to estimate an accrual for unasserted claims. This assessment was based on the Company's settlement experience, including recent claims trends. The analysis focused on settlements made over the last several years as these claims are likely to best represent future claim characteristics. After review by the valuation consultant and U. S. Steel management, it was determined that the Company could not estimate an accrual for unasserted claims.
Despite these uncertainties, management believes that the ultimate resolution of these matters will not have a material adverse effect on U. S. Steel’s financial condition.
Environmental matters – U. S. Steel is subject to federal, state, local and foreign laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites. Penalties may be imposed for noncompliance. Changes in accrued liabilities for remediation activities where U. S. Steel is identified as a named party are summarized in the following table:
|
|
|
|
|
|
|
|
(In millions)
|
Six Months Ended June 30, 2021
|
|
Beginning of period
|
$
|
146
|
|
|
Accruals for environmental remediation deemed probable and reasonably estimable
|
2
|
|
|
Obligations settled
|
(10)
|
|
|
End of period
|
$
|
138
|
|
Accrued liabilities for remediation activities are included in the following Condensed Consolidated Balance Sheet lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Accounts payable and other accrued liabilities
|
|
$
|
42
|
|
|
$
|
43
|
|
|
Deferred credits and other noncurrent liabilities
|
|
96
|
|
|
103
|
|
|
Total
|
|
$
|
138
|
|
|
$
|
146
|
|
Expenses related to remediation are recorded in cost of sales and were immaterial for both the six-month periods ended June 30, 2021 and June 30, 2020. It is not currently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties that may be imposed. Due to uncertainties inherent in remediation projects and the associated liabilities, it is reasonably possible that total remediation costs for active matters may exceed the accrued liabilities by as much as 40 to 60 percent.
Remediation Projects
U. S. Steel is involved in environmental remediation projects at or adjacent to several current and former U. S. Steel facilities and other locations that are in various stages of completion ranging from initial characterization through post-closure monitoring. Based on the anticipated scope and degree of uncertainty of projects, the Company categorizes projects as follows:
(1)Projects with Ongoing Study and Scope Development - Projects which are still in the development phase. For these projects, the extent of remediation that may be required is not yet known, the remediation methods and plans are not yet developed, and/or cost estimates cannot be determined. Therefore, significant costs, in addition to the accrued liabilities for these projects, are reasonably possible. There are five environmental remediation projects where additional costs for completion are not currently estimable, but could be material. These projects are at Fairfield Works, Lorain Tubular, USS-POSCO Industries (UPI), Duluth Works and the former steelmaking plant at Joliet, Illinois. As of June 30, 2021, accrued liabilities for these projects totaled $34 million for the costs of studies, investigations, interim measures, design and/or remediation. It is reasonably possible that additional liabilities associated with future requirements regarding studies, investigations, design and remediation for these projects could be as much as $50 million to $75 million.
(2)Significant Projects with Defined Scope - Projects with significant accrued liabilities with a defined scope. As of June 30, 2021, there are two significant projects with defined scope greater than or equal to $5 million each, with a total accrued liability of $43 million. These projects are Gary Resource Conservation and Recovery Act (RCRA) (accrued liability of $24 million) and the former Geneva facility (accrued liability of $19 million).
(3)Other Projects with a Defined Scope - Projects with relatively small accrued liabilities for which we believe that, while additional costs are possible, they are not likely to be significant, and also include those projects for which we do not yet possess sufficient information to estimate potential costs to U. S. Steel. There are three other environmental remediation projects which each had an accrued liability of between $1 million and $5 million. The total accrued liability for these projects at June 30, 2021 was $7 million. These projects have progressed through a significant portion of the design phase and material additional costs are not expected.
The remaining environmental remediation projects each have an accrued liability of less than $1 million each. The total accrued liability for these projects at June 30, 2021 was approximately $6 million. The Company does not foresee material additional liabilities for any of these sites.
Post-Closure Costs – Accrued liabilities for post-closure site monitoring and other costs at various closed landfills totaled $23 million at June 30, 2021 and were based on known scopes of work.
Administrative and Legal Costs – As of June 30, 2021, U. S. Steel had an accrued liability of $13 million for administrative and legal costs related to environmental remediation projects. These accrued liabilities were based on projected administrative and legal costs for the next three years and do not change significantly from year to year.
Capital Expenditures – For a number of years, U. S. Steel has made substantial capital expenditures to comply with various regulations, laws and other requirements relating to the environment. Such capital expenditures totaled $7 million in both the first six months of 2021 and 2020. U. S. Steel anticipates making additional such expenditures in the future, which may be material; however, the exact amounts and timing of such expenditures are uncertain because of the continuing evolution of specific regulatory requirements.
European Union (EU) Environmental Requirements - Phase IV of the EU Emissions Trading System (EU ETS) commenced on January 1, 2021 and will finish on December 31, 2030. The European Commission issued final approval of the Slovak National Allocation table in July 2021. The Slovak Ministry of Environment's decision on USSE’s free allocation for the first five years of the Phase IV period is expected by the end of September 2021. In the fourth quarter of 2020 USSE started purchasing European Union Allowances (EUA) for the Phase IV period. As of June 30, 2021, we have pre-purchased approximately 2.0 million EUA totaling €67 million (approximately $79 million).
The EU’s Industrial Emissions Directive requires implementation of EU-determined best available techniques (BAT) for Iron and Steel production to reduce environmental impacts as well as compliance with BAT associated emission levels. Total capital expenditures for projects to comply with or go beyond BAT requirements were €138 million (approximately $164 million) over the actual program period. These costs were partially offset by the EU funding received and may be mitigated over the next measurement periods if USSK complies with certain financial covenants, which are assessed annually. USSK complied with these covenants as of June 30, 2021. If we are unable to meet these covenants in the future, USSK might be required to provide additional collateral (e.g. bank guarantee) to secure 50 percent of the EU funding received.
Environmental indemnifications – Throughout its history, U. S. Steel has sold numerous properties and businesses and many of these sales included indemnifications and cost sharing agreements related to the assets that were divested. The amount of potential environmental liability associated with these transactions and properties is not estimable due to the nature and extent of the unknown conditions related to the properties divested and deconsolidated. Aside from the environmental liabilities already recorded as a result of these transactions due to specific environmental remediation activities and cases (included in the $138 million of accrued liabilities for remediation discussed above), there are no other known probable and estimable environmental liabilities related to these transactions.
Guarantees – The maximum guarantees of the indebtedness of unconsolidated entities of U. S. Steel totaled $7 million at June 30, 2021.
Other contingencies – Under certain lease agreements covering various equipment, U. S. Steel has the option to renew the lease or to purchase the equipment at the end of the lease term. If U. S. Steel does not exercise the purchase option by the end of the lease term, U. S. Steel guarantees a residual value of the equipment as determined at the lease inception date (totaling approximately $21 million at June 30, 2021). No liability has been recorded for these guarantees as the potential loss is not probable.
Insurance – U. S. Steel maintains insurance for certain property damage, equipment, business interruption and general liability exposures; however, insurance is applicable only after certain deductibles and retainages. U. S. Steel is self-insured for certain other exposures including workers’ compensation (where permitted by law) and auto liability. Liabilities are recorded for workers’ compensation and personal injury obligations. Other costs resulting from losses under deductible or retainage amounts or not otherwise covered by insurance are charged against income upon occurrence.
U. S. Steel uses surety bonds, trusts and letters of credit to provide whole or partial financial assurance for certain obligations such as workers’ compensation. The total amount of active surety bonds, trusts and letters of credit being used for financial assurance purposes was approximately $215 million as of June 30, 2021, which reflects U. S. Steel’s maximum exposure under these financial guarantees, but not its total exposure for the underlying obligations. A significant portion of our trust arrangements and letters of credit are collateralized by the Credit Facility Agreement. The remaining trust arrangements and letters of credit are collateralized by restricted cash. Restricted cash, which is recorded in other current and noncurrent assets, totaled $142 million and $133 million at June 30, 2021 and December 31, 2020, respectively.
Capital Commitments – At June 30, 2021, U. S. Steel’s contractual commitments to acquire property, plant and equipment totaled $573 million.
Contractual Purchase Commitments – U. S. Steel is obligated to make payments under contractual purchase commitments, including unconditional purchase obligations. Payments for contracts with remaining terms in excess of one year are summarized below (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
Later
Years
|
|
Total
|
|
$616
|
|
$1,136
|
|
$464
|
|
$227
|
|
$204
|
|
$842
|
|
$3,489
|
The majority of U. S. Steel’s unconditional purchase obligations relates to the supply of industrial gases, and certain energy and utility services with terms ranging from two to 15 years. Unconditional purchase obligations also include coke and steam purchase commitments related to a coke supply agreement with Gateway Energy & Coke Company LLC (Gateway) under which Gateway is obligated to supply a minimum volume of the expected targeted annual production of the heat recovery coke plant, and U. S. Steel is obligated to purchase the coke from Gateway at the contract price. As of June 30, 2021, if U. S. Steel were to terminate the agreement, it may be obligated to pay in excess of $95 million.
Total payments relating to unconditional purchase obligations were $169 million and $134 million for the three months ended June 30, 2021 and 2020, respectively, and $369 million and $302 million for the six months ended June 30, 2021 and 2020, respectively.
22. Common Stock Issued
In February 2021, U. S. Steel issued 48,300,000 shares of common stock for net proceeds of approximately $790 million.
In June 2020, U. S. Steel issued 50 million shares of common stock for net proceeds of approximately $410 million.
23. Subsequent Event
On July 23, 2021, U. S. Steel announced changes to its Credit Facility Agreement and Big River Steel ABL Facility that reward performance in meeting sustainability targets, part of the ongoing execution of the company’s Best for All℠ strategy of creating profitable pathways to sustainable steelmaking. The Credit Facility Agreement has been amended to include an increase or decrease in the margin payable based on achievement targets related to carbon reduction, safety performance and facility certifications by ResponsibleSteelTM. In addition to the new sustainability link, the Credit Facility Agreement has been amended to reduce the credit line to $1.75 billion from $2.0 billion, which is consistent with the Company's efforts to optimize its global liquidity position.