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United States Steel Corporation Reports Record Results for 2008 Third Quarter

October 28, 2008

PITTSBURGH, Oct. 28 /PRNewswire-FirstCall/ —

   --------------------------------------------------------------------------   Earnings Highlights   (Dollars in millions except per share data)     3Q 2008  2Q 2008  3Q 2007   --------------------------------------------------------------------------   Net sales                                        $7,312   $6,744   $4,354   ==========================================================================   Segment income from operations     Flat-rolled                                      $835     $478     $170     U. S. Steel Europe                                173      298      152     Tubular                                           420      177       74     Other Businesses                                   33        6       37   --------------------------------------------------------------------------   Total segment income from operations             $1,461     $959     $433   Retiree benefit expenses                             (6)       1      (46)   Other items not allocated to segments              (128)      (6)     (27)   --------------------------------------------------------------------------   Income from operations                           $1,327     $954     $360   ==========================================================================   Net interest and other financial costs               46       25       22   Income tax provision                                339      255       68    Net income                                         $919     $668     $269   --------------------------------------------------------------------------    - Per basic share                                $7.84    $5.69    $2.28    - Per diluted share                              $7.79    $5.65    $2.27   ==========================================================================    

United States Steel Corporation reported third quarter 2008 net income of $919 million, or $7.79 per diluted share, compared to second quarter 2008 net income of $668 million, or $5.65 per diluted share, and third quarter 2007 net income of $269 million, or $2.27 per diluted share.

Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, “U. S. Steel performed extremely well in the third quarter and recorded the most profitable quarter in our history. Our Flat-rolled and Tubular segments again posted record results, and tubular markets especially remained robust throughout the quarter.”

The company reported third quarter 2008 income from operations of $1,327 million, compared with income from operations of $954 million in the second quarter of 2008 and $360 million in the third quarter of 2007.

Other items not allocated to segments in the third quarter of 2008 consisted of a $105 million pre-tax charge for employee signing bonuses paid as provided in the new labor agreements with the United Steelworkers and a $23 million charge related to environmental remediation at a former production site. These items reduced net income by $79 million, or 67 cents per diluted share. Other items not allocated to segments in the second quarter of 2008 consisted of a charge for inventory transition effects related to the acquisition of U. S. Steel Canada (USSC) that reduced net income by $4 million, or 3 cents per diluted share. Discrete charges in the tax provision and an item not allocated to segments related to the Lone Star acquisition reduced third quarter 2007 net income by $28 million, or 23 cents per diluted share.

Net interest and other financial costs in the third quarter of 2008 included a foreign currency loss that decreased net income by $39 million, or 33 cents per diluted share, related to the remeasurement of an $840 million U.S. dollar-denominated intercompany loan to a European subsidiary, partially offset by euro-U.S. dollar derivatives activity. This compares to an immaterial effect for these items in the second quarter of 2008.

We repurchased 1.13 million shares of common stock for approximately $130 million during the third quarter.

Reportable Segments and Other Businesses

Management believes segment income from operations is a key measure in evaluating company performance. U. S. Steel’s reportable segments and Other Businesses reported segment income from operations of $1,461 million, or $227 per ton, in the third quarter of 2008, compared with $959 million, or $136 per ton, in the second quarter of 2008 and $433 million, or $78 per ton, in the third quarter of 2007.

Income from operations for Flat-rolled improved significantly from the second quarter, primarily reflecting higher average realized prices, partially offset by increased raw materials costs, decreased shipments and higher costs for profit sharing.

The decrease in European operating results was due primarily to higher raw materials costs, lower shipments due to market conditions and increased costs resulting from a planned reline of one of our three blast furnaces at U. S. Steel Kosice that began in early August. These were partially offset by higher average realized prices.

Production was reduced late in the third quarter to match declining order rates for the Flat-rolled and USSE segments. Raw steel production for the quarter was at 86 percent and 87 percent of capability in North America and Europe, respectively.

The substantial increase in Tubular income compared to the second quarter resulted primarily from higher average realized prices, partially offset by increased costs for semi-finished steel.

Outlook

Commenting on U. S. Steel’s outlook, Surma said, “The volatile global economic climate is having significant negative effects on our business and our forward view is limited because of low order backlogs and short leadtimes. We expect a decline in fourth quarter results mainly due to softening demand and prices for flat-rolled products in North America and Europe, and we expect to continue to operate at reduced production levels, corresponding with customer order rates.”

For Flat-rolled, fourth quarter results are expected to decrease from the third quarter due primarily to substantially lower shipments and lower average realized prices, partially offset by lower raw materials costs.

Based on very weak market conditions, we expect results to decline substantially for U. S. Steel Europe (USSE) in the fourth quarter.

Fourth quarter results for Tubular are currently expected to be comparable to the third quarter.

This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. U. S. Steel has been, and we expect will continue to be, negatively impacted by the current global credit and economic problems. Other more normal factors that could affect market conditions, costs, shipments and prices for both North American operations and USSE include, among others, global product demand, prices and mix; global and company steel production levels; plant operating performance; the timing and completion of facility projects; natural gas and electricity prices and usage; raw materials and transportation prices and availability; the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; changes in environmental, tax, pension and other laws; the terms of collective bargaining agreements; employee strikes or other labor issues; power outages; and U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies. Economic conditions and political factors in Europe and Canada that may affect USSE’s and USSC’s results include, but are not limited to, taxation, nationalization, inflation, currency fluctuations, government instability, political unrest, regulatory changes, export quotas, tariffs and other protectionist measures. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward- looking statements have been included in the Form 10-K of U. S. Steel for the year ended December 31, 2007, and in subsequent filings for U. S. Steel.

A Statement of Operations (Unaudited), Cash Flow Statement (Unaudited), Condensed Balance Sheet (Unaudited) and Preliminary Supplemental Statistics (Unaudited) for U. S. Steel are attached.

The company will conduct a conference call on third quarter earnings on Tuesday, October 28, at 2 p.m. EDT. To listen to the webcast of the conference call, visit the U. S. Steel web site, http://www.ussteel.com/, and click on the “Investors” button.

For more information on U. S. Steel, visit its web site at http://www.ussteel.com/.

                      UNITED STATES STEEL CORPORATION                    STATEMENT OF OPERATIONS (Unaudited)                    ------------------------------------                                       Quarter Ended          Nine Months Ended                              ---------------------------  ------------------                              Sept. 30  June 30  Sept. 30       Sept. 30   (Dollars in millions)        2008      2008     2007       2008     2007   --------------------------------------------------------------------------   NET SALES                   $7,312    $6,744   $4,354    $19,252  $12,338    OPERATING EXPENSES    (INCOME):     Cost of sales (excludes      items shown below)        5,752     5,497    3,749     15,892   10,523     Selling, general and      administrative      expenses                    151       171      134        464      411     Depreciation, depletion      and amortization            149       159      124        464      353     Income from investees        (51)      (34)      (7)       (92)     (19)     Net gains on disposal      of assets                    (6)       (1)      (7)        (8)     (20)     Other income, net            (10)       (2)       1        (15)      (7)                                -----     -----    -----     ------   ------       Total operating        expenses                5,985     5,790    3,994     16,705   11,241                                -----     -----    -----     ------   ------   INCOME FROM OPERATIONS       1,327       954      360      2,547    1,097   Net interest and other    financial costs                46        25       22         39       61                                -----     -----    -----     ------   ------    INCOME BEFORE INCOME TAXES    AND MINORITY INTERESTS      1,281       929      338      2,508    1,036   Income tax provision           339       255       68        652      187   Minority interests              23         6        1         34        5                                -----     -----    -----     ------   ------   NET INCOME                    $919      $668     $269     $1,822     $844                                =====     =====    =====     ======   ======     COMMON STOCK DATA:   --------------------------------------------------------------------------   Net income per share:       - Basic                  $7.84     $5.69    $2.28     $15.51    $7.15       - Diluted                $7.79     $5.65    $2.27     $15.43    $7.10    Weighted average shares,    in thousands       - Basic                117,169   117,507  118,086    117,423  118,183       - Diluted              117,826   118,217  118,755    118,051  118,896    Dividends paid per    common share                 $.30      $.25     $.20       $.80     $.60                         UNITED STATES STEEL CORPORATION                      CASH FLOW STATEMENT (Unaudited)                      --------------------------------                                                            Nine Months Ended                                                             September 30                                                         --------------------   (Dollars in millions)                                 2008           2007   --------------------------------------------------------------------------   Cash provided from operating activities:     Net income                                        $1,822           $844     Depreciation, depletion and amortization             464            353     Pensions and other postretirement benefits          (388)          (182)     Deferred income taxes                                262            113     Net gains on disposal of assets                       (8)           (20)     Changes in: Current receivables                   (1,264)          (300)         Inventories                                     (478)           243         Current accounts payable and accrued expenses    931            216         Bank checks outstanding                           (9)            61     Other operating activities                            (1)            82                                                        -----         ------       Total                                            1,331          1,410                                                        -----         ------   Cash used in investing activities:     Capital expenditures                                (633)          (460)     Acquisition of pickle lines                          (36)             -     Acquisition of Lone Star Technologies, Inc.            -         (1,990)     Acquisition of Stelco Inc.                            (1)             -     Disposal of assets                                    19             27     Other investing activities                           (14)             2                                                        -----         ------       Total                                             (665)        (2,421)                                                        -----         ------    Cash provided from (used in) financing activities:     Issuance of long-term debt                             -          1,583     Repayment of long-term debt                         (359)          (458)     Revolving credit facilities - borrowings             359              -                                 - repayments             (44)             -     Common stock issued                                   11             15     Common stock repurchased                            (214)           (87)     Dividends paid                                       (94)           (71)     Other financing activities                            68             (1)                                                        -----         ------       Total                                             (273)           981                                                        -----         ------    Effect of exchange rate changes on cash                 (1)            11                                                        -----         ------    Net increase (decrease) in cash and cash    equivalents                                           392            (19)   Cash at beginning of the year                          401          1,422                                                        -----         ------   Cash at end of the period                             $793         $1,403                                                        =====          =====                         UNITED STATES STEEL CORPORATION                    CONDENSED BALANCE SHEET (Unaudited)                    ------------------------------------                                                        Sept. 30        Dec. 31   (Dollars in millions)                                2008           2007   --------------------------------------------------------------------------   Cash and cash equivalents                             $793           $401   Receivables, net                                     3,287          2,077   Inventories                                          2,669          2,279   Other current assets                                   232            202                                                       ------         ------       Total current assets                             6,981          4,959   Property, plant and equipment, net                   6,732          6,688   Investments and long-term receivables, net             728            694   Prepaid pensions                                       252            734   Goodwill and intangible assets, net                  2,023          2,131   Other assets                                           552            426                                                       ------         ------       Total assets                                   $17,268        $15,632                                                       ======         ======   Accounts payable                                    $2,246         $1,730   Payroll and benefits payable                           950            995   Short-term debt and current maturities of    long-term debt                                         61            110   Other current liabilities                              437            168                                                       ------         ------       Total current liabilities                        3,694          3,003   Long-term debt, less unamortized discount            3,120          3,147   Employee benefits                                    3,542          3,187   Other long-term liabilities and minority    interests                                             733            764   Stockholders' equity                                 6,179          5,531                                                       ------         ------       Total liabilities and stockholders' equity     $17,268        $15,632                                                       ======         ======                         UNITED STATES STEEL CORPORATION              PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)              -----------------------------------------------                                       Quarter Ended          Nine Months Ended                              ---------------------------  ------------------                                Sept. 30  June 30  Sept. 30    September 30   (Dollars in millions)         2008      2008      2007      2008     2007   --------------------------------------------------------------------------    INCOME FROM OPERATIONS   Flat-rolled(a)                $835      $478     $170     $1,433     $337   U. S. Steel Europe             173       298      152        632      602   Tubular(b)                     420       177       74        648      273   Other Businesses( c )           33         6       37         34       40                                -----     -----    -----      -----    -----   Segment Income from    Operations                  1,461       959      433      2,747    1,252   Retiree benefit expenses(d)     (6)        1      (46)        (4)    (128)   Other items not allocated    to segments:     Labor agreement signing      bonuses                    (105)        -        -       (105)       -     Environmental remediation    (23)        -        -        (23)       -     Flat-rolled inventory      transition effects            -        (6)       -        (23)       -     Litigation reserve             -         -        -        (45)       -     Tubular inventory      transition effects            -         -      (27)         -      (27)                                -----     -----    -----      -----    -----       Total Income from        Operations             $1,327      $954     $360     $2,547   $1,097    CAPITAL EXPENDITURES   Flat-rolled(a)                $192      $145     $121       $420     $240   U. S. Steel Europe              62        49       52        143      129   Tubular(b)                       9         5       10         18       13   Other Businesses( c )           30        14       27         52       78                                -----     -----    -----      -----    -----       Total                     $293      $213     $210       $633     $460    -----------   (a)   Includes the results of the businesses acquired from Stelco Inc. as         of October 31, 2007, excluding the iron ore and real estate         interests, and includes the results of the pickle lines acquired         from Nelson Steel as of August 29, 2008.   (b)   Includes the results of the businesses acquired from Lone Star         Technologies, Inc. as of June 14, 2007.   ( c ) Includes the results of the iron ore and real estate interests         acquired from Stelco Inc. as of October 31, 2007.   (d)   The third quarter and first nine months of 2007 include certain         profit-based expenses for former National employees pursuant to         provisions of the 2003 labor agreement with the United Steelworkers.                         UNITED STATES STEEL CORPORATION              PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)              -----------------------------------------------                                       Quarter Ended          Nine Months Ended                              ---------------------------  ------------------                              Sept. 30  June 30  Sept. 30       September 30   (Dollars in millions)        2008      2008       2007      2008     2007   --------------------------------------------------------------------------    OPERATING STATISTICS     Average realized price:      ($/net ton)(a)       Flat-rolled(b)             907       777      643        775      648       U. S. Steel Europe       1,086       986      738        948      710       Tubular( c )             2,390     1,690    1,292      1,823    1,355     Steel Shipments:(a)(d)       Flat-rolled(b)           4,505     4,849    3,601     14,055   10,388       U. S. Steel Europe       1,409     1,696    1,486      4,743    4,754       Tubular( c )               519       500      466      1,452    1,001                                -----     -----    -----      -----    -----         Total Steel Shipments  6,433     7,045    5,553     20,250   16,143     Intersegment Shipments:(d)       Flat-rolled to Tubular     540       472      260      1,457      599     Raw Steel-Production:(d)       North American        facilities(b)           5,282     5,614    4,328     16,454   12,157       U. S. Steel Europe       1,623     1,925    1,661      5,456    5,325     Raw Steel-Capability      Utilization:(e)       North American        facilities(b)            86.2%     92.7%    88.5%      90.2%    83.8%       U. S. Steel Europe        87.0%    104.3%    88.7%      98.2%    95.9%    -----------   (a)   Excludes intersegment shipments.   (b)   Includes the results of the businesses acquired from Stelco Inc. as         of October 31, 2007, excluding the iron ore and real estate         interests, and includes the results of the pickle lines acquired         from Nelson Steel as of August 29, 2008.   ( c ) Includes the results of the businesses acquired from Lone Star         Technologies, Inc. as of June 14, 2007.   (d)   Thousands of net tons.   (e)   Based on annual raw steel production capability of 19.4 million net         tons for North American facilities prior to October 31, 2007 and         24.3 million net tons thereafter, and 7.4 million net tons for U. S.         Steel Europe.  

United States Steel Corporation

CONTACT: Media, John Armstrong, +1-412-433-6792; Investors-Analysts, DanLesnak, +1-412-433-1184

Web site: http://www.ussteel.com/

Company News On-Call: http://www.prnewswire.com/comp/929150.html