UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended September 30, 2013

Or

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

For the transition period from                      to                     .

(Exact name of registrant as specified in its charter)

Delaware	1-16811	25-1897152
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

600 Grant Street, Pittsburgh, PA	15219-2800
(Address of principal executive offices)	(Zip Code)

(412) 433-1121

(Registrant’s telephone number,

including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [P] No []

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

Large accelerated filer P	Accelerated filer	Non-accelerated filer	Smaller reporting company
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

YesNoP

Common stock outstanding at October 24, 2013 – 144,666,868 shares

INDEX

			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Consolidated Statement of Operations (Unaudited)	1
		Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	2
		Consolidated Balance Sheet (Unaudited)	3
		Consolidated Statement of Cash Flows (Unaudited)	4
		Notes to Consolidated Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48
	Item 4.	Controls and Procedures	49
		Supplemental Statistics (Unaudited)	50
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	51
	Item 4.	Mine Safety Disclosure	58
	Item 6.	Exhibits	59
SIGNATURE			60
WEB SITE POSTING			60

UNITED STATES STEEL CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

	Three Months Ended   September 30,						Nine Months Ended   September 30,
(Dollars in millions, except per share amounts)	2013			2012			2013			2012
Net sales:
Net sales	$	3,856		$	4,310		$	12,292		$	13,838
Net sales to related parties (Note 19)	275			342			863			1,003
Total	4,131			4,652			13,155			14,841
Operating expenses (income):
Cost of sales (excludes items shown below)	3,749			4,318			12,105			13,436
Selling, general and administrative expenses	153			159			449			490
Depreciation, depletion and amortization	173			163			514			490
Income from investees	(26		)	(48		)	(31		)	(116		)
Impairment of goodwill (Note 5)	1,783			—			1,783			—
Net (gain) loss on disposal of assets (Note 4)	—			(1		)	—			308
Other expense (income), net	1			(1		)	6			(9		)
Total	5,833			4,590			14,826			14,599
(Loss) income from operations	(1,702		)	62			(1,671		)	242
Interest expense	61			45			204			160
Interest income	—			(1		)	(2		)	(6		)
Other financial costs	24			1			55			23
Net interest and other financial costs (Note 7)	85			45			257			177
(Loss) income before income taxes and noncontrolling interests	(1,787		)	17			(1,928		)	65
Income tax provision (benefit) (Note 9)	4			(27		)	14			139
Net (loss) income	(1,791		)	44			(1,942		)	(74		)
Less: Net income attributable to noncontrolling interests	—			—			—			—
Net (loss) income attributable to United States Steel Corporation	$	(1,791	)	$	44		$	(1,942	)	$	(74	)
Earnings per common share (Note 11):
Earnings per share attributable to United States Steel Corporation shareholders:
-Basic	$	(12.38	)	$	0.30		$	(13.44	)	$	(0.51	)
-Diluted	$	(12.38	)	$	0.28		$	(13.44	)	$	(0.51	)

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

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UNITED STATES STEEL CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended   September 30,					Nine Months Ended   September 30,
(Dollars in millions)	2013			2012		2013			2012
Net (loss) income	$	(1,791	)	$	44	$	(1,942	)	$	(74	)
Other comprehensive income, net of tax:
Changes in foreign currency translation adjustments	31			60		13			76
Changes in pension and other employee benefit accounts	59			224		197			360
Total other comprehensive income, net of tax	90			284		210			436
Comprehensive (loss) income including noncontrolling interest	(1,701		)	328		(1,732		)	362
Comprehensive income attributable to noncontrolling interest	—			—		—			—
Comprehensive (loss) income attributable to United States Steel Corporation	$	(1,701	)	$	328	$	(1,732	)	$	362

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

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UNITED STATES STEEL CORPORATION

CONSOLIDATED BALANCE SHEET

(Dollars in millions)	(Unaudited)   September 30,   2013			December 31,    2012
Assets
Current assets:
Cash and cash equivalents	$	697		$	570
Receivables, less allowance of $53 and $55	1,819			1,872
Receivables from related parties (Note 19)	138			218
Inventories (Note 12)	2,480			2,503
Deferred income tax benefits (Note 9)	162			171
Other current assets	58			40
Total current assets	5,354			5,374
Property, plant and equipment	17,031			16,906
Less accumulated depreciation and depletion	10,864			10,498
Total property, plant and equipment, net	6,167			6,408
Investments and long-term receivables, less allowance of $3 in both periods	607			609
Intangibles – net (Note 5)	276			253
Goodwill (Note 5)	4			1,822
Deferred income tax benefits (Note 9)	311			424
Other noncurrent assets	287			327
Total assets	$	13,006		$	15,217
Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	1,630		$	1,722
Accounts payable to related parties (Note 19)	93			78
Bank checks outstanding	56			15
Payroll and benefits payable	965			977
Accrued taxes	140			146
Accrued interest	80			50
Short-term debt and current maturities of long-term debt (Note 14)	322			2
Total current liabilities	3,286			2,990
Long-term debt, less unamortized discount (Note 14)	3,618			3,936
Employee benefits	3,919			4,416
Deferred credits and other noncurrent liabilities	408			397
Total liabilities	11,231			11,739
Contingencies and commitments (Note 20)
Stockholders’ Equity (Note 17):
Common stock (150,925,911 shares issued) (Note 11)	151			151
Treasury stock, at cost (6,267,004 and 6,643,553 shares)	(481		)	(521		)
Additional paid-in capital	3,665			3,652
Retained earnings	1,497			3,463
Accumulated other comprehensive loss (Note 18)	(3,058		)	(3,268		)
Total United States Steel Corporation stockholders’ equity	1,774			3,477
Noncontrolling interests	1			1
Total liabilities and stockholders’ equity	$	13,006		$	15,217

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

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UNITED STATES STEEL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Nine Months Ended   September 30,
(Dollars in millions)	2013			2012
Increase (decrease) in cash and cash equivalents
Operating activities:
Net loss	$	(1,942	)	$	(74	)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, depletion and amortization	514			490
Impairment of goodwill (Note 5)	1,783			—
Provision for doubtful accounts	(2		)	(3		)
Pensions and other postretirement benefits	(143		)	(112		)
Deferred income taxes	3			86
Net loss on disposal of assets (Note 4)	—			308
Currency remeasurement loss (gain)	8			(13		)
Distributions received, net of equity investees income	(20		)	(33		)
Changes in:
Current receivables	137			(86		)
Inventories	15			168
Current accounts payable and accrued expenses	(34		)	108
Income taxes receivable/payable	1			27
Bank checks outstanding	40			25
All other, net	61			67
Net cash provided by operating activities	421			958
Investing activities:
Capital expenditures	(328		)	(536		)
Acquisition of intangible assets (Note 5)	(12		)	—
Disposal of assets	—			141
Change in restricted cash, net	39			(67		)
Investments, net	(8		)	(4		)
Net cash used in investing activities	(309		)	(466		)
Financing activities:
Revolving credit facilities – borrowings	—			523
– repayments	—			(653		)
Receivables Purchase Agreement payments	—			(380		)
Issuance of long-term debt, net of financing costs	575			485
Repayment of long-term debt	(542		)	(319		)
Dividends paid	(22		)	(22		)
Net cash provided by (used in) financing activities	11			(366		)
Effect of exchange rate changes on cash	4			2
Net increase in cash and cash equivalents	127			128
Cash and cash equivalents at beginning of year	570			408
Cash and cash equivalents at end of period	$	697		$	536

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

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Notes to Consolidated Financial Statements (Unaudited)

1.    Basis of Presentation

United States Steel Corporation (U. S. Steel) produces and sells steel mill products, including flat-rolled and tubular products, in North America and Central Europe. Operations in North America also include transportation services (railroad and barge operations) and real estate operations.

The year-end consolidated balance sheet data was derived from audited statements but does not include all disclosures required for complete financial statements by accounting principles generally accepted in the United States of America (U.S. GAAP). The other information in these financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. These financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. Additional information is contained in the United States Steel Corporation Annual Report on Form 10-K for the year ended December 31, 2012 which should be read in conjunction with these financial statements.

Reclassifications

Certain reclassifications of prior years’ data have been made to conform to the current year presentation.

2.    New Accounting Standards

On February 5, 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). ASU 2013-02 requires companies to present information about reclassification adjustments from accumulated other comprehensive income, including the amount of the reclassification and the income statement line items affected by the reclassification. The information must be presented in the financial statements in a single note or on the face of the financial statements. ASU 2013-02 is effective for interim and annual periods beginning after December 15, 2012. U. S. Steel adopted ASU 2013-02 effective January 1, 2013 and has provided the required disclosures in Note 18.

On July 18, 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11). ASU 2013-11 requires the netting of unrecognized tax benefits (UTBs) against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. UTBs are required to be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the UTBs. ASU 2013-11 is effective for interim and annual periods beginning after December 15, 2013. U. S. Steel early adopted ASU 2013-11 in the second quarter of 2013 on a prospective basis. The adoption did not have a significant impact on U. S. Steel's financial statements.

3.    Segment Information

U. S. Steel has three reportable segments: Flat-rolled Products (Flat-rolled), U. S. Steel Europe (USSE), and Tubular Products (Tubular). The results of several other operating segments that do not constitute reportable segments, which include transportation services and real estate operations, are combined and disclosed in the Other Businesses category. Prior to January 31, 2012, our USSE reportable segment consisted of U. S. Steel Košice (USSK) and U. S. Steel Serbia (USSS). On January 31, 2012, U. S. Steel sold USSS (see Note 4). The USSE segment information subsequent to January 31, 2012 reflects the results of USSK only.

The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measure being income (loss) from operations. Income (loss) from operations for reportable segments and Other Businesses does not include net interest and other financial costs (income), income taxes, postretirement benefit expenses (other than service cost and amortization of prior service cost for active employees) and certain other items that management believes are not indicative of future results. Information on segment assets is not disclosed, as it is not reviewed by the chief operating decision maker.

The accounting principles applied at the operating segment level in determining income (loss) from operations are generally the same as those applied at the consolidated financial statement level. The transfer value for steel rounds from Flat-rolled to Tubular is based on cost. All other intersegment sales and transfers are

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accounted for at market-based prices and are eliminated at the corporate consolidation level. Corporate-level selling, general and administrative expenses and costs related to certain former businesses are allocated to the reportable segments and Other Businesses based on measures of activity that management believes are reasonable.

The results of segment operations for the three months ended September 30, 2013 and 2012 are:

(In millions) Third Quarter 2013	Customer Sales		Intersegment Sales			Net Sales			Income (loss) from investees			Income (loss) from operations
Flat-rolled	$	2,731	$	324		$	3,055		$	28		$	82
USSE	643		1			644			—			(32		)
Tubular	731		2			733			(1		)	49
Total reportable segments	4,105		327			4,432			27			99
Other Businesses	26		32			58			(1		)	14
Reconciling Items and Eliminations	—		(359		)	(359		)	—			(1,815		)
Total	$	4,131	$	—		$	4,131		$	26		$	(1,702	)
Third Quarter 2012
Flat-rolled	$	3,142	$	415		$	3,557		$	49		$	29
USSE	696		68			764			—			27
Tubular	787		3			790			(1		)	102
Total reportable segments	4,625		486			5,111			48			158
Other Businesses	27		13			40			—			13
Reconciling Items and Eliminations	—		(499		)	(499		)	—			(109		)
Total	$	4,652	$	—		$	4,652		$	48		$	62

The results of segment operations for the nine months ended September 30, 2013 and 2012 are:

(In millions) First Nine Months 2013	Customer Sales		Intersegment Sales			Net Sales			Income (loss) from investees			Income (loss) from operations
Flat-rolled	$	8,710	$	985		$	9,695		$	41		$	18
USSE	2,204		3			2,207			—			16
Tubular	2,126		4			2,130			(7		)	158
Total reportable segments	13,040		992			14,032			34			192
Other Businesses	115		101			216			(3		)	62
Reconciling Items and Eliminations	—		(1,093		)	(1,093		)	—			(1,925		)
Total	$	13,155	$	—		$	13,155		$	31		$	(1,671	)
First Nine Months 2012
Flat-rolled	$	9,798	$	1,297		$	11,095		$	122		$	389
USSE	2,274		143			2,417			—			27
Tubular	2,604		6			2,610			(4		)	334
Total reportable segments	14,676		1,446			16,122			118			750
Other Businesses	165		105			270			(2		)	46
Reconciling Items and Eliminations	—		(1,551		)	(1,551		)	—			(554		)
Total	$	14,841	$	—		$	14,841		$	116		$	242

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The following is a schedule of reconciling items to income (loss) from operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2013			2012			2013			2012
Items not allocated to segments:
Postretirement benefit expense(a)	$	(55	)	$	(74	)	$	(165	)	$	(228	)
Other items not allocated to segments:
Impairment of goodwill (Note 5)	$	(1,783	)	—			$	(1,783	)	—
Supplier contract dispute settlement	23			$	—		23			$	—
Labor agreement lump sum payments(b)	—			(35		)	—			(35		)
Net loss on the sale of assets (Note 4)	—			—			—			(310		)
Property tax settlements	—			—			—			19
Total other items not allocated to segments	(1,760		)	(35		)	(1,760		)	(326		)
Total reconciling items	$	(1,815	)	$	(109	)	$	(1,925	)	$	(554	)

^(a) Consists of the net periodic benefit cost elements, other than service cost and amortization of prior service cost for active employees, associated with our pension, retiree health care and life insurance benefit plans.

^(b) Effective September 1, 2012, U. S. Steel and its U. S. Steel Tubular Products, Inc. subsidiary reached new labor agreements (the 2012 Labor Agreements) with the United Steel Workers (USW). The 2012 Labor Agreements provided for a $2,000 lump sum payment for each covered active USW member, which resulted in U. S. Steel recognizing a pretax charge of $35 million in the third quarter of 2012.

4.    Dispositions

The net loss on disposal of assets for the first nine months of 2012 primarily relates to the following dispositions:

U. S. Steel Serbia

On January 31, 2012, U. S. Steel sold USSS to the Republic of Serbia for a purchase price of one dollar. In addition, USSK received a $40 million payment for certain intercompany balances owed by USSS for raw materials and support services. As a result of this transaction, U. S. Steel recorded a total non-cash pretax charge of $399 million.

Birmingham Southern Railroad Company

On February 1, 2012, U. S. Steel completed the sale of the majority of the operating assets of Birmingham Southern Railroad Company and the Port Birmingham Terminal. As a result of the transaction, U. S. Steel recorded a pretax gain of $89 million.

5.     Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2013 are as follows:

	Flat-rolled Segment			USSE Segment		Tubular Segment			Total
Balance at December 31, 2012	$	984		$	4	$	834		$	1,822
Goodwill from acquisitions	—			—		3			$	3
Impairment	(946		)	—		(837		)	(1,783		)
Currency translation	(38		)	—		—			(38		)
Balance at September 30, 2013	$	—		$	4	$	—		$	4

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Goodwill represents the excess of the cost over the fair value of acquired identifiable tangible and intangible assets and liabilities assumed from businesses acquired.

Goodwill is tested for impairment at the reporting unit level annually in the third quarter and whenever events or circumstances indicate the carrying value may not be recoverable. The evaluation of goodwill impairment involves using either a qualitative or quantitative approach as outlined in Accounting Standards Codification (ASC) Topic 350. U. S. Steel completed its annual goodwill impairment evaluation using the two-step quantitative analysis during the third quarter of 2013. We had two reporting units that included nearly all of our goodwill: our Flat-rolled reporting unit and our Texas Operations reporting unit, which is part of our Tubular operating segment.

In the first step of the analysis, U. S. Steel compared the estimated fair value of each reporting unit to its carrying value, including goodwill. The fair value of the reporting units was determined based on a weighting of income and market approaches. Since the carrying value of both the Flat-rolled and Texas Operations reporting units exceeded the fair value, U. S. Steel performed the second step of the impairment analysis in order to determine the implied fair value of the reporting units’ goodwill. The implied fair value of goodwill represents the excess of fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of the reporting unit as if it were to be acquired in a business combination and the current fair value of the reporting unit (as calculated in the first step) was the purchase price. Any amount remaining after this allocation represents the implied fair value of goodwill. The implied fair value of the respective reporting units’ goodwill was then compared to the carrying value of the goodwill and any excess of carrying value over the implied fair value represents the non-cash impairment charge. The results of the second step preliminary analysis showed that the implied fair value of goodwill was zero for both reporting units. Therefore, in the third quarter of 2013, U. S. Steel recorded a goodwill impairment charge of $946 million and $837 million for the Flat-rolled and Texas Operations reporting units, respectively. As a result of the goodwill impairment charge, there is no goodwill remaining within the Flat-rolled and Tubular segments, and goodwill remaining on our consolidated balance sheet at September 30, 2013 is $4 million.

The impairment of the Flat-rolled reporting unit’s goodwill was primarily driven by the valuation effects of the protracted economic recovery and excess global steelmaking capacity. The impairment of the Texas Operations reporting unit’s goodwill was primarily driven by the adverse price and volume effects of an increased supply of welded tubular products in the U.S. market from the continued high level of tubular product imports and announced additional domestic tubular manufacturing capacity. Due to these factors, U. S. Steel decreased the long term estimates of its operating results and cash flows utilized in assessing goodwill for impairment. The valuation of goodwill for the second step of the goodwill impairment analysis is considered a level 3 fair value measurement, which means that the valuation of the assets and liabilities reflect U. S. Steel's own assumptions about the assumptions that market participants would use in pricing the assets and liabilities.

The valuation methodologies used for the 2013 impairment analysis to determine fair value under step one, with the assistance of a third party valuation specialist in the case of the Texas Operations reporting unit, were a market approach and an income approach.

For purposes of the income approach, fair value was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate (DCF analysis). U. S. Steel made assumptions about the amount and timing of future expected cash flows, terminal value growth rates and appropriate discount rates. The amount and timing of future cash flows within U. S. Steel’s DCF analysis was based on its most recent operational budgets, long range strategic plans and other estimates including probability weighting of cash flow scenarios. A three percent perpetual growth rate was used to calculate the value of cash flows beyond the last projected period in U. S. Steel’s DCF analysis and reflects its best estimates for stable, perpetual growth of its reporting units. Actual results may differ from those assumed in U. S. Steel’s forecasts. U. S. Steel used estimates of market participant weighted average cost of capital (WACC) as a basis for determining the discount rates applied to its reporting units’ future expected cash flows, adjusted for risks and uncertainties inherent in the steel industry and in its internally developed forecasts. A discount rate of 10 percent was used for both reporting units.

The market approach is based upon an analysis of valuation metrics for companies comparable to each reporting unit. Fair values for the Flat-rolled and Texas Operations reporting units were estimated using an appropriate valuation multiple, as well as estimated normalized earnings and an estimated control premium.

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In order to validate the reasonableness of the estimated fair values of the reporting units as of the valuation date, a reconciliation of the aggregate fair values of all reporting units to market capitalization was performed using a reasonable control premium. We further validated the reasonableness of the estimated fair values of our reporting units using other valuation metrics that included data from U. S Steel's historical transactions as well as published industry analyst reports.

Goodwill impairment tests in prior years indicated that goodwill was not impaired for any of U. S. Steel's reporting units and there were no triggering events since that time that necessitated an impairment test.

Amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives and are detailed below:

		As of September 30, 2013						As of December 31, 2012
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	22-23 Years	$	218	$	61	$	157	$	221	$	54	$	167
Other	2-20 Years	23		12		11		22		11		11
Total amortizable intangible assets		$	241	$	73	$	168	$	243	$	65	$	178

The carrying amount of acquired water rights with indefinite lives as of September 30, 2013 and December 31, 2012 totaled $75 million. The water rights are tested for impairment annually in the third quarter. U. S. Steel performed a qualitative impairment evaluation of its water rights for 2013. The 2013 and prior year tests indicated the water rights were not impaired.

During the first nine months of 2013, U. S. Steel acquired indefinite-lived intangible assets for $12 million and entered into an agreement to make future payments contingent upon certain factors. The aggregate purchase price was $36 million, and U. S. Steel allocated $33 million to indefinite-lived intangible assets, based upon their estimated fair value. The liability for contingent consideration will be reassessed each quarter. The maximum potential liability for contingent consideration is $53 million. As of September 30, 2013, U. S. Steel has recorded a liability of $24 million to reflect the estimated fair value of the contingent consideration. Contingent consideration was valued using a probability weighted discounted cash flow using both level 2 inputs based on 2013 Standard and Poor’s Bond Guide as well level 3, significant other unobservable inputs, based on internal forecasts and weighted average cost of capital derived from market data.

Identifiable intangible assets with finite lives are reviewed for impairment whenever events or circumstances indicate that the carrying value may not be recoverable. During the third quarter of 2013, U. S. Steel completed a review of its identifiable intangible assets with finite lives and determined that the assets were not impaired.

Amortization expense was $3 million in both the three months ended September 30, 2013 and 2012 and was $8 million in both the nine months ended September 30, 2013 and 2012. The estimated future amortization expense of identifiable intangible assets during the next five years is $3 million for the remaining portion of 2013 and $11 million each year from 2014 to 2017.

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6.    Pensions and Other Benefits

The following table reflects the components of net periodic benefit cost for the three months ended September 30, 2013 and 2012:

	Pension Benefits						Other Benefits
(In millions)	2013			2012			2013			2012
Service cost	$	32		$	29		$	7		$	7
Interest cost	100			117			35			42
Expected return on plan assets	(152		)	(154		)	(33		)	(29		)
Amortization of prior service cost	6			6			(3		)	3
Amortization of actuarial net loss	92			88			8			1
Net periodic benefit cost, excluding below	78			86			14			24
Multiemployer plans	19			18			—			—
Settlement, termination and curtailment losses	$	3		$	—		$	—		$	—
Net periodic benefit cost	$	100		$	104		$	14		$	24

The following table reflects the components of net periodic benefit cost for the nine months ended September 30, 2013 and 2012:

	Pension Benefits						Other Benefits
(In millions)	2013			2012			2013			2012
Service cost	$	96		$	88		$	21		$	22
Interest cost	303			350			106			133
Expected return on plan assets	(459		)	(460		)	(98		)	(86		)
Amortization of prior service cost	18			15			(10		)	14
Amortization of actuarial net loss	275			264			23			1
Net periodic benefit cost, excluding below	233			257			42			84
Multiemployer plans	55			52			—			—
Settlement, termination and curtailment losses (gains)	3			(2		)	—			—
Net periodic benefit cost	$	291		$	307		$	42		$	84

Employer Contributions

During the first nine months of 2013, U. S. Steel made a voluntary contribution of $140 million to its main defined benefit pension plan. U. S. Steel also made $63 million in required cash contributions to the USSC pension plans, cash payments of $56 million to the Steelworkers’ Pension Trust and $18 million of pension payments not funded by trusts.

During the first nine months of 2013, cash payments of $188 million were made for other postretirement benefit payments not funded by trusts. In addition, U. S. Steel made a required contribution of $10 million to our trust for represented retiree health care and life insurance benefits.

Company contributions to defined contribution plans totaled $11 million and $10 million in the three months ended September 30, 2013 and 2012, respectively. Company contributions to defined contribution plans totaled $33 million and $31 million for the nine months ended September 30, 2013 and 2012, respectively.

Pension Funding

In January 2013, U. S. Steel's Board of Directors authorized voluntary contributions to U. S. Steel's trusts for pensions and other benefits of up to $300 million through the end of 2014. U. S. Steel made voluntary contributions to our main U.S. defined benefit plan of $140 million during the first nine months of 2013 and

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2012. U. S. Steel will likely make voluntary contributions of similar amounts in future periods in order to mitigate potentially larger mandatory contributions in later years. Assuming future asset performance consistent with our expected long-term earnings rate assumption of 7.75%, we anticipate that the interest rate formula changes in the pension stabilization legislation enacted in 2012 will allow us to continue to make voluntary contributions of approximately $140 million per year through 2015 to our main U.S. defined benefit plan before we could be required to contribute more than that amount should the current low interest rate environment continue.

7.    Net Interest and Other Financial Costs

Net interest and other financial costs includes interest expense (net of capitalized interest), interest income, financing costs, derivatives gains and losses and foreign currency remeasurement gains and losses. Foreign currency gains and losses are a result of foreign currency denominated assets and liabilities that require remeasurement. During the three months ended September 30, 2013 and 2012, net foreign currency remeasurement gains of $3 million and $6 million, respectively, were recorded in other financial costs. During the nine months endedSeptember 30, 2013 and 2012, net foreign currency remeasurement losses of $9 million and $2 million, respectively, were recorded in other financial costs.

For the three and nine months ended September 30, 2013, net interest and other financial costs includes a charge of $22 million related to a guarantee of an unconsolidated equity investment for which payment by U. S. Steel is probable (see Note 20). Also included in the nine months endedSeptember 30, 2013 is a charge of $34 million related to repurchases of approximately $542 million aggregate principal amount of our 4.00% Senior Convertible Notes due May 15, 2014 (see Note 14 for further details). For the nine months ended September 30, 2012, net interest and other financial costs also includes a charge of $18 million associated with the April 2012 redemption of all of our $300 million Senior Notes due June 1, 2013.

See Note 13 for additional information on U. S. Steel’s use of derivatives to mitigate its foreign currency exchange rate exposure.

8.    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 (the Committee) under several stock-based employee compensation plans, which are more fully described in Note 12 of the United States Steel Corporation 2012 Annual Report on Form 10-K. An aggregate of 15,450,000 shares of U. S. Steel common stock may be issued under the plans. As of September 30, 2013, 1,325,239 shares are available for future grants.

U. S. Steel recognized pre-tax stock-based compensation cost in the amount of $9 million and $10 million in the three months ended September 30, 2013 and 2012, respectively, and $28 million and $29 million in the first nine months of 2013 and 2012, respectively.

Recent grants of stock-based compensation consist of stock options, restricted stock units and performance awards. Historically, the Committee has granted traditional stock options with an exercise price equal to the stock price on the date of grant. For the 2013 grants, premium-priced stock options with an exercise price of $25 per share were awarded to executives in lieu of traditional stock options. The following table is a general summary of the awards made under the Plan.

	2013 Grants			2012 Grants
Grant Details	Shares (a)	Fair Value (b)		Shares (a)	Fair Value (b)
Executive Stock Options	826,340	$	8.37	510,570	$	11.93
Non-executive Stock Options	970,640	$	9.70	993,310	$	11.93
Restricted Stock Units	1,033,210	$	18.58	910,011	$	22.28
Performance Awards (c)	271,960	$	21.26	328,780	$	25.26

^(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 year.

^(c) The number of Performance Awards shown represents the target value of the award.

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As of September 30, 2013, total future compensation cost related to nonvested stock-based compensation arrangements was $50 million, and the weighted average period over which this cost is expected to be recognized is approximately 1.3 years.

Compensation expense for stock options is recorded over the vesting period based on the fair value on the date of grant, as calculated by U. S. Steel using the Black-Scholes model and the assumptions listed below. The stock options vest ratably over a three-year service period and have a term of ten years.

Black-Scholes Assumptions(a)	2013 Executive Grants			2013 Non-Executive Grants			2012 Grants
Grant date price per share of option award	$	18.48		$	18.64		$	22.28
Exercise price per share of option award	$	25.00		$	18.64		$	22.28
Expected annual dividends per share, at grant date	$	0.20		$	0.20		$	0.20
Expected life in years	5.0			5.0			5.0
Expected volatility	66		%	67		%	68		%
Risk-free interest rate	1.315		%	1.049		%	0.8		%
Grant date fair value per share of unvested option awards as calculated from above	$	8.37		$	9.70		$	11.93

^(a) The assumptions represent a weighted average of all grants during the year.

The expected annual dividends per share are based on the latest annualized dividend rate at the date of grant; the expected life in years is determined primarily from historical stock option exercise data; the expected volatility is based on the historical volatility of U. S. Steel stock; and the risk-free interest rate is based on the U.S. Treasury strip rate for the expected life of the option.

Restricted stock units generally vest ratably over three years. The fair value of the restricted stock units is the market price of the underlying common stock on the date of the grant.

Performance awards vest at the end of a three-year performance period as a function of U. S. Steel's total shareholder return compared to the total shareholder return of a group of peer companies over the three-year performance period. Performance awards can vest at between zero and 200 percent of the target award. The fair value of the performance awards is calculated using a Monte-Carlo simulation.

9.    Income Taxes

Tax provision

For the nine months endedSeptember 30, 2013 and 2012, we recorded a tax provision of $14 million on our pretax loss of $1.9 billion and a tax provision of $139 million on our pretax income of $65 million, respectively. The tax provision does not reflect any tax benefit for pretax losses in Canada and Serbia (USSS was sold on January 31, 2012), which are jurisdictions where we have, or had, recorded full valuation allowances on deferred tax assets, and also does not reflect any tax provision or benefit for certain foreign currency remeasurement gains and losses that are not recognized in any tax jurisdiction. For the nine months ended September 30, 2013, there was essentially no tax benefit recorded on the $1.8 billion goodwill impairment charge. For the nine months ended September 30, 2012, no significant tax benefit was recorded on the $399 million loss on the sale of USSS.

The tax provision for the first nine months of 2013 is based on an estimated annual effective rate, which requires management to make its best estimate of annual pretax income or loss. During 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 2013 pretax results for U.S. and foreign income or loss vary from estimates applied herein, the actual tax provision or benefit recognized in 2013 could be materially different from the forecasted amount used to estimate the tax provision for the nine months endedSeptember 30, 2013.

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Unrecognized tax benefits

Unrecognized tax benefits are the differences between a tax position taken, or expected to be taken, in a tax return and the benefit recognized for accounting purposes pursuant to the guidance in ASC Topic 740 on income taxes. The total amount of gross unrecognized tax benefits was $85 million at both September 30, 2013 and December 31, 2012. The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $65 million as of both September 30, 2013 and December 31, 2012.

U. S. Steel records interest related to uncertain tax positions as a part of net interest and other financial costs in the Consolidated Statement of Operations. Any penalties are recognized as part of selling, general and administrative expenses. As of both September 30, 2013 and December 31, 2012, U. S. Steel had accrued liabilities of $7 million for interest related to uncertain tax positions. U. S. Steel currently does not have a liability for tax penalties.

It is reasonably expected that during the next 12 months unrecognized tax benefits related to income tax issues will decrease by approximately $8 million.

Deferred taxes

As of September 30, 2013, the net domestic deferred tax asset was $411 million compared to $538 million at December 31, 2012. A substantial amount of U. S. Steel’s domestic deferred tax assets relates to employee benefits that will become deductible for tax purposes over an extended period of time as cash contributions are made to employee benefit plans and retiree benefits are paid in the future. We continue to believe it is more likely than not that the net domestic deferred tax asset will be realized.

As of September 30, 2013, the net foreign deferred tax asset was $62 million, net of established valuation allowances of $1,184 million. At December 31, 2012, the net foreign deferred tax asset was $57 million, net of established valuation allowances of $1,099 million. The net foreign deferred tax asset will fluctuate as the value of the U.S. dollar changes with respect to the euro and the Canadian dollar. At December 31, 2012, a full valuation allowance was recorded for the net Canadian deferred tax asset primarily due to cumulative losses in Canada in recent years.

If evidence changes and it becomes more likely than not that the Company will realize the net Canadian deferred tax asset, the valuation allowance would be partially or fully reversed. Any reversal of this amount would result in a decrease to income tax expense. The Slovak income tax rate increased from 19% to 23% starting in 2013. This change had an insignificant impact on deferred taxes at the end of 2012.

10.    Significant Equity Investments

Summarized unaudited income statement information for our significant equity investments for the nine months endedSeptember 30, 2013 and 2012 is reported below (amounts represent 100% of investee financial information):

(In millions)	2013		2012
Net sales	$	1,841	$	1,982
Cost of sales	1,395		1,421
Operating income	399		533
Net income	382		521
Net income attributable to significant equity investments	382		521

U. S. Steel’s portion of the equity in net income of the significant equity investments above was $50 million and $121 million for the nine months endedSeptember 30, 2013 and 2012, respectively, which is included in the income from investees line on the Consolidated Statement of Operations.

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11.    Earnings and Dividends Per Common Share

Earnings Per Share Attributable to United States Steel Corporation Shareholders

Basic earnings per common share is based on the weighted average number of common shares outstanding during the period.

Diluted earnings per common share assumes the exercise of stock options, the vesting of restricted stock units and performance awards and the conversion of convertible notes, provided in each case the effect is dilutive. The “if-converted” method is used to calculate the dilutive effect of the Senior Convertible Notes due in 2014 and the “treasury stock” method is used to calculate the dilutive effect of the Senior Convertible Notes due in 2019 (due to our current intent and policy, among other factors, to settle the principal amount of the 2019 Senior Convertible Notes in cash upon conversion).

The computations for basic and diluted earnings per common share from continuing operations are as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(Dollars in millions, except per share amounts)	2013			2012		2013			2012
Net (loss) income attributable to United States Steel
Corporation shareholders	$	(1,791	)	$	44	$	(1,942	)	$	(74	)
Plus income effect of assumed conversion-interest on convertible notes	—			5		—			—
Net (loss) income after assumed conversion	$	(1,791	)	$	49	$	(1,942	)	$	(74	)
Weighted-average shares outstanding (in thousands):
Basic	144,727			144,350		144,523			144,199
Effect of convertible notes	—			27,059		—			—
Effect of stock options, restricted stock units and performance awards	—			264		—			—
Adjusted weighted-average shares outstanding, diluted	144,727			171,673		144,523			144,199
Basic earnings per common share	$	(12.38	)	$	0.30	$	(13.44	)	$	(0.51	)
Diluted earnings per common share	$	(12.38	)	$	0.28	$	(13.44	)	$	(0.51	)

The following table summarizes the securities that were antidilutive, and therefore, were not included in the computations of diluted earnings per common share:

	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2013	2012	2013		2012
Securities granted under the 2005 Stock Incentive Plan	7,621	4,352	7,621		4,353
Securities convertible under the Senior Convertible Notes	10,058	—	15,351	(a)	27,059
Total	17,679	4,352	22,972		31,412

(a) On March 27, 2013, we repurchased approximately $542 million aggregate principal amount of our 4% Senior Convertible Notes due in 2014. If the repurchases had occurred on January 1, 2013, the antidilutive securities would be 10,058 for the nine months ended September 30, 2013.

Dividends Paid Per Share

The dividend for each of the first three quarters of 2013 and 2012 was five cents per common share.

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12.    Inventories

Inventories are carried at the lower of cost or market. The first-in, first-out method is the predominant method of inventory costing in Europe and Canada. The last-in, first-out (LIFO) method is the predominant method of inventory costing in the United States. At September 30, 2013 and December 31, 2012, the LIFO method accounted for 61 percent and 56 percent of total inventory values, respectively.

(In millions)	September 30, 2013		December 31, 2012
Raw materials	$	968	$	945
Semi-finished products	877		883
Finished products	535		573
Supplies and sundry items	100		102
Total	$	2,480	$	2,503

Current acquisition costs were estimated to exceed the above inventory values by $1.1 billion and $1.0 billion at September 30, 2013 and December 31, 2012, respectively. Cost of sales was increased by $3 million and reduced by $5 million in the three months ended September 30, 2013 and 2012, respectively, as a result of the liquidation of LIFO inventories. Cost of sales was increased by $3 million and reduced by $16 million in the nine months ended September 30, 2013 and 2012, respectively, as a result of liquidation of LIFO inventories.

Inventory includes $84 million and $86 million of property held for residential or commercial development as of September 30, 2013 and December 31, 2012, respectively.

13.    Derivative Instruments

U. S. Steel is exposed to foreign currency exchange rate risks as a result of our European and Canadian operations. USSE’s revenues are primarily in euros and costs are primarily in U.S. dollars and euros. USSC’s revenues and costs are denominated in both Canadian and U.S. dollars. In addition, foreign cash requirements have been, and in the future may be, funded by intercompany loans, creating intercompany monetary assets and liabilities in currencies other than the functional currency of the entities involved, which can affect income when remeasured at the end of each period.

U. S. Steel uses euro forward sales contracts with maturities no longer than 12 months to exchange euros for U.S. dollars to manage our currency requirements and exposure to foreign currency exchange rate fluctuations. Derivative instruments are required to be recognized at fair value in the balance sheet. U. S. Steel has not elected to designate these euro forward sales contracts as hedges. Therefore, changes in their fair value are recognized immediately in the results of operations. The gains and losses recognized on these euro forward sales contracts may also partially offset the accounting remeasurement gains and losses recognized on intercompany loans.

As of September 30, 2013, U. S. Steel held euro forward sales contracts with a total notional value of approximately $333 million. We mitigate the risk of concentration of counterparty credit risk by purchasing our forward sales contracts from several counterparties.

Additionally, we routinely enter into fixed-price forward physical purchase contracts to partially manage our exposure to price risk related to the purchases of natural gas, electricity and certain nonferrous metals used in the production process. During 2013 and 2012, the forward physical purchase contracts for natural gas and nonferrous metals qualified for the normal purchases and normal sales exemption described in ASC Topic 815 and were not subject to mark-to-market accounting.

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The following summarizes the location and amounts of the fair values and gains or losses related to derivatives included in U. S. Steel’s financial statements as of September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012:

		Fair Value		Fair Value
(In millions)	Balance Sheet Location	September 30, 2013		December 31, 2012
Foreign exchange forward contracts	Accounts payable	$	9	$	12

	Statement of Operations Location	Amount of Gain (Loss)			Amount of Gain (Loss)
(In millions)		Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Foreign exchange forward contracts	Other financial costs	$	(11	)	$	(7	)

	Statement of Operations Location	Amount of Gain (Loss)			Amount of Gain (Loss)
(In millions)		Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
Foreign exchange forward contracts	Other financial costs	$	(12	)	$	1

In accordance with the guidance found in ASC Topic 820 on fair value measurements and disclosures, the fair value of our euro forward sales contracts was determined using Level 2 inputs, which are defined as “significant other observable” inputs. The inputs used are from market sources that aggregate data based upon market transactions.

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14.    Debt

(In millions)	Interest Rates %	Maturity	September 30, 2013		December 31, 2012
2037 Senior Notes	6.65	2037	$	350	$	350
2022 Senior Notes	7.50	2022	400		400
2021 Senior Notes	6.875	2021	275		—
2020 Senior Notes	7.375	2020	600		600
2018 Senior Notes	7.00	2018	500		500
2017 Senior Notes	6.05	2017	450		450
2019 Senior Convertible Notes	2.75	2019	316		—
2014 Senior Convertible Notes	4.00	2014	322		863
Province Note (C$150 million)	1.00	2015	146		151
Environmental Revenue Bonds	5.38 - 6.88	2015 - 2042	549		549
Recovery Zone Facility Bonds	6.75	2040	70		70
Fairfield Caster Lease		2022	35		35
Other capital leases and all other obligations		2013 - 2014	—		1
Amended Credit Agreement	Variable	2016	—		—
USSK Revolver	Variable	2016	—		—
USSK credit facility	Variable	2015	—		—
Total Debt			4,013		3,969
Less Province Note fair value adjustment			17		23
Less unamortized discount			56		8
Less short-term debt and long-term debt due within one year			322		2
Long-term debt			$	3,618	$	3,936

To the extent not otherwise discussed below, information concerning the Senior Notes, the 2014 Senior Convertible Notes and other listed obligations can be found in Note 14 of the audited financial statements in the 2012 Annual Report on Form 10-K.

2021 Senior Notes

On March 26, 2013, U. S. Steel issued $275 million of 6.875% Senior Notes due April 1, 2021 (2021 Senior Notes). U. S. Steel received net proceeds from the offering of $270 million after fees of $5 million related to the underwriting discount and third party expenses. The net proceeds from the issuance of the 2021 Senior Notes, together with the net proceeds of the concurrent 2019 Senior Convertible Notes offering (see below), were used to repurchase a portion of our 4.00% Senior Convertible Notes due May 15, 2014 (the 2014 Senior Convertible Notes). Interest on the 2021 Senior Notes is payable semi-annually on April 1^stand October 1^stof each year, commencing on October 1, 2013.

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U. S. Steel may redeem the 2021 Senior Notes, in whole or in part, at our option at any time and from time to time on or after April 1, 2017 at the redemption price for such notes set forth below as a percentage of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, if redeemed during the twelve-month period beginning April 1 of the years indicated below:

Year	Redemption Price
2017	103.438	%
2018	101.719	%
2019 and thereafter	100.000	%

2019 Senior Convertible Notes

On March 26, 2013, U. S. Steel issued $316 million of 2.75% Senior Convertible Notes due April 1, 2019 (the 2019 Senior Convertible Notes). U. S. Steel received net proceeds from the offering of $306 million after fees of $10 million related to the underwriting discount and third party expenses. The net proceeds from the issuance of the 2019 Senior Convertible Notes, together with the net proceeds of the concurrent 2021 Senior Notes offering (see above), were used to repurchase a portion of our 2014 Senior Convertible Notes. Interest on the 2019 Senior Convertible Notes is payable semi-annually on April 1^stand October 1^stof each year, commencing on October 1, 2013.

The initial conversion rate for the 2019 Senior Convertible Notes is 39.5491 shares of U. S. Steel common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $25.29 per share of common stock, subject to adjustment as defined in the 2019 Senior Convertible Notes. On the issuance date of the 2019 Senior Convertible Notes, the market price of U. S. Steel’s common stock was below the stated conversion price of $25.29 so there was no beneficial conversion option to the holders. Based on the initial conversion rate, the 2019 Senior Convertible Notes are convertible into 12,507,403 shares of U. S. Steel common stock and we reserved for the possible issuance of 16,259,615 shares, which is the maximum amount that could be issued upon conversion. Holders may convert their notes at their option prior to the close of business on the business day immediately preceding October 1, 2018 only under certain circumstances (as described in the 2019 Senior Convertible Notes). On or after October 1, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2019 Senior Convertible Notes at any time. Upon conversion, we will satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock at our election. Any unconverted 2019 Senior Convertible Notes mature at par on April 1, 2019.

U. S. Steel may not redeem the 2019 Senior Convertible Notes prior to April 5, 2017. On or after April 5, 2017, we may redeem for cash all or part of the 2019 Senior Convertible Notes, at our option, under certain circumstances. The redemption price will equal 100% of the principal amount of the 2019 Senior Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If U. S. Steel undergoes a fundamental change, as defined in the 2019 Senior Convertible Notes, holders may require us to repurchase the 2019 Senior Convertible Notes in whole or in part for cash at a price equal to 100% of the principal amount of the 2019 Senior Convertible Notes to be purchased plus any accrued and unpaid interest (including additional interest, if any) up to, but excluding the repurchase date.

Although the 2019 Senior Convertible Notes were issued at par, for accounting purposes the proceeds received from the issuance of the notes are allocated between debt and equity to reflect the fair value of the conversion option embedded in the notes and the fair value of similar debt without the conversion option. As a result, $53 million of the gross proceeds of the 2019 Senior Convertible Notes was recorded as an increase in additional paid-in capital with the offsetting amount recorded as a debt discount. The debt discount will be amortized over the term of the 2019 Senior Convertible Notes using an interest rate of 6.2% (the estimated effective borrowing rate for nonconvertible debt at the time of issuance) which will accrete the carrying value of the notes to the principal amount at maturity. As of September 30, 2013, the remaining unamortized debt discount was $49 million and the net carrying amount of the 2019 Senior Convertible Notes was $267 million.

Similar to our other senior notes, the 2019 Senior Convertible Notes and the 2021 Senior Notes contain covenants limiting our ability to create liens, to enter into sale-leaseback transactions and to consolidate, merge or transfer all, or substantially all of our assets. They also contain provisions requiring the purchase of the notes

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upon a change in control under certain specified circumstances, as well as other customary provisions. In addition, certain payment defaults on other indebtedness are a default under the 2019 Senior Convertible Notes.

2014 Senior Convertible Notes

In March 2013, U. S. Steel repurchased approximately $542 million aggregate principal amount of our 4.00% Senior Convertible Notes due 2014, reducing the outstanding principal amount of the notes to $322 million.

The repurchases were funded with the net proceeds from the 2021 Senior Notes and the 2019 Senior Convertible Notes and cash. The aggregate purchase price, including accrued and unpaid interest and fees, for the convertible notes repurchased was approximately $580 million. U. S. Steel recorded a pretax charge of $34 million to net interest and other financial costs (see Note 7) in the first nine months of 2013 related mainly to the repurchase premiums.

Amended Credit Agreement

As of September 30, 2013, there were no amounts drawn on the Amended Credit Agreement, which expires July 20, 2016, and inventory values calculated in accordance with the Amended Credit Agreement supported the full $875 million of the facility. Under the Amended Credit Agreement, U. S. Steel must maintain a fixed charge coverage ratio (as further defined in the Amended Credit Agreement) of at least 1.00 to 1.00 for the most recent four consecutive quarters when availability under the Amended Credit Agreement is less than the greater of 10% of the total aggregate commitments and $87.5 million. Since availability was greater than $87.5 million, compliance with the fixed charge coverage ratio covenant was not applicable. Based on the most recent four quarters as of September 30, 2013, we would not meet this covenant. If the value of inventory does not support the full amount of the facility or we remain unable to meet this covenant in the future, the full amount of this facility would not be available to the Company.

Receivables Purchase Agreement

As of September 30, 2013, U. S. Steel has a Receivables Purchase Agreement (RPA) under which eligible trade accounts receivable are sold, on a daily basis without recourse, to U. S. Steel Receivables, LLC (USSR), a wholly owned, bankruptcy-remote, special purpose entity used only for the securitization program. As U. S. Steel accesses this facility, USSR sells senior undivided interests in the receivables to certain third-party commercial paper conduits, while maintaining a subordinated undivided interest in a portion of the receivables. U. S. Steel has agreed to continue servicing the sold receivables at market rates.

At both September 30, 2013 and December 31, 2012, eligible accounts receivable supported $625 million of availability under the RPA and there were no receivables sold to third-party conduits under this facility.

USSR pays the conduits a discount based on the conduits’ borrowing costs plus incremental fees. We paid $1 million in each of the three month periods ended September 30, 2013 and 2012 and $3 million in each of the nine month periods ended September 30, 2013 and 2012 relating to fees on the RPA. These costs are included in other financial costs in the Consolidated Statement of Operations.

Generally, the facility provides that as payments are collected from the sold accounts receivables, USSR may elect to have the conduits reinvest the proceeds in new eligible accounts receivable. As there was no activity under this facility during the nine months ended September 30, 2013, there were no collections reinvested. During the nine months ended September 30, 2012, collection of accounts receivable of approximately $1,175 million were reinvested.

The eligible accounts receivable and receivables sold to third-party conduits are summarized below:

(In millions)	September 30, 2013		December 31, 2012
Balance of accounts receivable-net, eligible for sale to third-party conduits	$	1,053	$	1,127
Accounts receivable sold to third-party conduits	—		—
Balance included in Receivables on the balance sheet of U. S. Steel	$	1,053	$	1,127

The net book value of U. S. Steel’s retained interest in the receivables represents the best estimate of the fair market value due to the short-term nature of the receivables. The retained interest in the receivables is recorded net of the allowance for bad debts, which historically have not been significant.

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The facility may be terminated on the occurrence and failure to cure certain events, including, among others, failure of USSR to maintain certain ratios related to the collectability of the receivables and failure to make payment under its material debt obligations. The facility may also be terminated upon a change of control. The facility expires in July 2016.

Change in control event

If there is a change in control of U. S. Steel, the following may occur: (a) debt obligations totaling $3,212 million as of September 30, 2013 (including the Senior Notes and Senior Convertible Notes) may be declared immediately due and payable; (b) the Amended Credit Agreement, the RPA and USSK’s €200 million revolving credit agreement may be terminated and any amounts outstanding declared immediately due and payable; and (c) U. S. Steel may be required to either repurchase the leased Fairfield Works slab caster for $41 million or provide a letter of credit to secure the remaining obligation.

U. S. Steel Košice (USSK) credit facilities

At September 30, 2013, USSK had no borrowings under its €200 million (approximately $270 million) unsecured revolving credit facility.

On July 15, 2013, USSK entered into a €200 million revolving credit facility agreement (the Credit Agreement) that replaced USSK's €200 million credit facility that was scheduled to expire in August 2013. The Credit Agreement contains certain USSK financial covenants (as further defined in the Credit Agreement) as well as other customary terms and conditions. The Credit Agreement expires in July 2016.

At September 30, 2013, USSK had no borrowings under its €20 million unsecured credit facility (approximately $27 million) and the availability was approximately $25 million due to approximately $2 million of customs and other guarantees outstanding.

15.    Asset Retirement Obligations

U. S. Steel’s asset retirement obligations (AROs) primarily relate to mine and landfill closure and post-closure costs. The following table reflects changes in the carrying values of AROs:

(In millions)	September 30, 2013			December 31, 2012
Balance at beginning of year	$	33		$	38
Additional obligations incurred	5			2
Obligations settled	(7		)	(9		)	(a)
Accretion expense	4			2
Balance at end of period	$	35		$	33

(a) Includes $2 million as a result of the sale of USSS on January 31, 2012. See Note 4 for additional details.

Certain AROs related to disposal costs of the majority of fixed assets at our integrated steel facilities have not been recorded because they have an indeterminate settlement date. These AROs will be initially recognized in the period in which sufficient information exists to estimate their fair value.

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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 Consolidated Balance Sheet approximate fair value. See Note 5 for disclosure of U. S. Steel's contingent consideration arrangement and Note 13 for disclosure of U. S. Steel’s derivative instruments, which are both accounted for at fair value on a recurring basis.

The following table summarizes U. S. Steel’s financial assets and liabilities that were not carried at fair value at September 30, 2013 and December 31, 2012.

	September 30, 2013				December 31, 2012
(In millions)	Fair Value		Carrying Amount		Fair Value		Carrying Amount
Financial assets:
Investments and long-term receivables(a)	$	66	$	66	$	39	$	39
Financial liabilities:
Debt(b)	$	4,010	$	3,904	$	4,113	$	3,902

(a) Excludes equity method investments.

(b) Excludes capital lease obligations.

The following methods and assumptions were used to estimate the fair value of financial instruments included in the table above:

Investments and long-term receivables: Fair value was based on Level 2 inputs which were discounted cash flows. U. S. Steel is subject to market risk and liquidity risk related to its investments.

Long-term debt instruments: Fair value was determined using Level 2 inputs which were derived from quoted market prices and is based on the yield on public debt where available or current borrowing rates available for financings with similar terms and maturities.

Fair value of the financial assets and liabilities disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

Financial guarantees are U. S. Steel’s only unrecognized financial instrument. For details relating to financial guarantees see Note 20.

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17.    Statement of Changes in Stockholders’ Equity

The following table reflects the first nine months of 2013 and 2012 reconciliation of the carrying amount of total equity, equity attributable to United States Steel Corporation and equity attributable to the noncontrolling interests:

Nine Months Ended September 30, 2013 (In millions)	Total			Comprehensive Income (Loss)			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock		Treasury Stock			Paid-in Capital			Non- Controlling Interest
Balance at beginning of year	$	3,478					$	3,463		$	(3,268	)	$	151	$	(521	)	$	3,652		$	1
Comprehensive income:
Net loss	(1,942		)	(1,942		)	(1,942		)
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments	197			197						197
Currency translation adjustment	13			13						13
Issuance of conversion option in 2019 Senior Convertible Notes, net of tax	31																	31
Employee stock plans	22														40			(18		)
Dividends paid on common stock	(22		)				(22		)
Other	(2		)				$	(2	)
Balance at September 30, 2013	$	1,775		$	(1,732	)	$	1,497		$	(3,058	)	$	151	$	(481	)	$	3,665		$	1

Nine Months Ended September 30, 2012 (In millions)	Total			Comprehensive Income (Loss)		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock		Treasury Stock			Paid-in Capital			Non- Controlling Interest
Balance at beginning of year	$	3,501				$	3,616		$	(3,367	)	$	151	$	(550	)	$	3,650		$	1
Comprehensive income:
Net loss	(74		)	(74	)	(74		)
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments	360			360					360
Currency translation adjustment	76			76					76
Employee stock plans	21													29			(8		)
Dividends paid on common stock	(22		)			(22		)