<PAGE>
Rule 424(b)(2)
Registration No. 33-51621
PROSPECTUS SUPPLEMENT
(To Prospectus Dated January 6, 1994)
5,000,000 Shares
USX-U.S. Steel Group Common Stock
of
USX Corporation
---------------
The USX-U.S. Steel Group Common Stock, par value $1.00 per share (the "Steel
Stock"), is common stock of USX Corporation ("USX" or the "Corporation") and
is intended to reflect the performance of the steel and other businesses that
constitute the U.S. Steel Group of USX. The Steel Stock is one of three
classes of common stock of USX, the others being USX-Marathon Group Common
Stock ("Marathon Stock") and USX-Delhi Group Common Stock ("Delhi Stock").
Holders of Steel Stock, Marathon Stock and Delhi Stock are holders of common
stock of USX and continue to be subject to all of the risks associated with an
investment in USX and all of its businesses and liabilities.
Dividends on the Steel Stock will be payable when, as and if declared by the
Board of Directors of USX (the "Board") out of the lesser of (i) legally
available funds of USX and (ii) the Available Steel Dividend Amount (as
defined in the accompanying Prospectus). The Board intends to declare and pay
dividends on the Steel Stock based on the financial condition and results of
operations of the U.S. Steel Group. The voting power of one share of Steel
Stock relative to one share of each of the other classes of USX common stock
will fluctuate based upon the relative market values thereof. Upon the
liquidation of USX, the rights of the holders of the Steel Stock and each of
the other classes of USX common stock will be based on their relative market
capitalizations. Subject to certain conditions, the Steel Stock may be
exchanged, at USX's option, for shares of the common stock of a wholly-owned
subsidiary of USX to which the assets and liabilities of the U.S. Steel Group
have been transferred as described herein. In the event of a disposition by
USX of all or substantially all of the properties and assets of the U.S. Steel
Group, USX will, subject to certain conditions, be required to (i) subject to
the limitations on dividends described above, pay a dividend on the Steel
Stock, or (ii) to the extent of legally available funds of USX, redeem shares
of Steel Stock, in the case of any such dividend or redemption, in an amount
equal to the net proceeds of such disposition, or (iii) exchange all
outstanding shares of Steel Stock for Marathon Stock or, if there are no
shares of Marathon Stock outstanding, Delhi Stock.
The features of the Steel Stock, as well as other special considerations,
are more fully discussed under "Summary--The Steel Stock" and "Price Range of
Steel Stock, Dividends and Dividend Policy" in this Prospectus Supplement and
under "Special Considerations" and "Description of Capital Stock" in the
accompanying Prospectus.
The outstanding Steel Stock is listed on the New York, Chicago and Pacific
Stock Exchanges. Application has been made to list the shares of Steel Stock
offered by this Prospectus Supplement. On July 20, 1995, the reported last
sale price of the Steel Stock on the New York Stock Exchange was $36 1/8 per
share.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
PRICE $34.50 A SHARE
---------------
<TABLE>
<S> <C> <C> <C>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) USX(2)
------------ -------------- ------------
Per Share.............................. $34.50 $.69 $33.81
Total(3)............................... $172,500,000 $3,450,000 $169,050,000
</TABLE>
- -------
(1) USX has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deduction of expenses payable by USX estimated at $150,000.
(3) USX has granted to the Underwriter an option exercisable within 30
days of the date hereof to purchase up to an aggregate of 750,000
additional shares at the price to public less underwriting discounts
and commissions for the purpose of covering over-allotments, if any.
If the Underwriter exercises such option in full, the total price to
public, underwriting discounts and commissions and proceeds to USX
will be $198,375,000, $3,967,500, and $194,407,500, respectively. See
"The Underwriter" herein.
---------------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriter named herein and subject to approval of certain legal matters
by Simpson Thacher & Bartlett, counsel for the Underwriter. It is expected
that delivery of the Shares will be made on or about July 26, 1995 at the
office of Morgan Stanley & Co. Incorporated, New York, N.Y., against payment
therefor in New York funds.
---------------
MORGAN STANLEY & CO.
Incorporated
July 21, 1995
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE CORPORATION OR BY ANY UNDERWRITER. NEITHER THIS PROSPECTUS
SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
OFFERS AND SALES OF THE STEEL STOCK IN THE UNITED KINGDOM AND ADVERTISEMENTS
THEREIN IN CONNECTION THEREWITH, ARE SUBJECT TO CERTAIN RESTRICTIONS. SEE "THE
UNDERWRITER" HEREIN.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary.................................................................... S-3
Use of Proceeds............................................................ S-10
Capitalization............................................................. S-10
Price Range of Steel Stock,
Dividends and Dividend Policy............................................. S-11
U.S. Steel Group--Selected Financial
Information............................................................... S-12
USX Corporation--Selected Consolidated Financial Information............... S-16
Certain United States Tax Consequences
to Non-United States Holders.............................................. S-19
The Underwriter............................................................ S-21
Legal Matters.............................................................. S-22
Experts.................................................................... S-22
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents
by Reference............................................................. 2
USX Corporation........................................................... 3
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Divi-
dends.................................................................... 3
Use of Proceeds........................................................... 4
Special Considerations.................................................... 4
Management and Accounting Policies........................................ 7
Description of the Debt Securities........................................ 8
Description of Capital Stock.............................................. 15
Plan of Distribution...................................................... 29
Validity of Securities.................................................... 29
Experts................................................................... 29
Appendix I--Summary of USX Common Stock................................... A-1
</TABLE>
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE STEEL STOCK AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in this
Prospectus Supplement and in the accompanying Prospectus and is qualified in
its entirety by reference to the Prospectus and the documents incorporated
therein under "Incorporation of Certain Documents by Reference." Readers are
encouraged to refer to such incorporated documents for a more complete
description of USX.
U.S. STEEL GROUP
The U.S. Steel Group includes U.S. Steel, the largest integrated steel
producer in the United States (referred to hereinafter as "U.S. Steel"), which
is primarily engaged in the production and sale of steel mill products, coke
and taconite pellets. The U.S. Steel Group also includes the management of
mineral resources, domestic coal mining, engineering and consulting services
and technology licensing (together with U.S. Steel, the "Steel and Related
Businesses"). Other businesses that are part of the U.S. Steel Group include
real estate development and management and leasing and financing activities.
The domestic steel industry is cyclical and highly competitive and continues
to be adversely affected by excess world steel capability. U.S. Steel has
responded to competition resulting from this excess capability by eliminating
less efficient facilities, modernizing those that remain and entering into
joint ventures, all with the objective of focusing production on higher value-
added products. Since 1982, U.S. Steel has reduced its annual raw steel
capability from 33 million to 12.5 million tons and has recognized
restructuring charges aggregating $2.8 billion as its less efficient facilities
have been shut down. During that period, it has also invested approximately
$3.4 billion in capital facilities for its steel operations. U.S. Steel
believes these expenditures have made its remaining steel operations among the
most modern, efficient and competitive in the world. In both 1994 and 1993,
U.S. Steel continuously cast nearly 100% of its raw steel production. This
method produces higher quality steel at lower cost than the previously used
ingot method. Capital expenditures for the U.S. Steel Group in 1994 were $248
million compared with $198 million in 1993 and $298 million in 1992. Spending
over this period included completion of the continuous caster at Mon Valley
Works and modernization of the hot strip mill and electrogalvanizing line at
Gary Works. Capital expenditures for 1995 are currently estimated at $340
million and will include certain spending related to the Gary Works' No. 8
blast furnace, spending on a galvanizing line in the southern United States, as
well as continued spending on a degasser at Mon Valley Works and a granulated
coal injection facility at Fairfield Works' blast furnace. Capital expenditures
in 1996 and 1997 are currently expected to be in the range of $300 million
annually.
In addition to the modernization of its production facilities, USX has
entered into a number of joint ventures with domestic and foreign partners to
take advantage of market or manufacturing opportunities in various steel
related industries.
The objective of the modernization and the joint ventures is to focus on
production of higher value-added products, where superior quality and special
characteristics are of critical importance to customers. These products include
bake hardenable steels and coated sheets for the automobile industry,
lamination sheet for the manufacture of motors and electrical equipment,
improved tin mill products for the container industry and oil country tubular
goods.
See "Recent Developments and Outlook" for a discussion of factors affecting
recent operating income.
USX CORPORATION
USX is a diversified company engaged in the steel business through its U.S.
Steel Group, in the energy business through its Marathon Group and in the gas
gathering and processing business through its Delhi Group.
S-3
<PAGE>
USX has three classes of common stock, USX-U.S. Steel Group Common Stock
("Steel Stock"), USX-Marathon Group Common Stock ("Marathon Stock") and USX-
Delhi Group Common Stock ("Delhi Stock"). The Steel Stock, the Marathon Stock
and the Delhi Stock are together referred to as "Common Stock." Each class of
Common Stock is intended to provide the stockholders of such class with a
separate security reflecting the performance of the related group. Holders of
Steel Stock, Marathon Stock and Delhi Stock are holders of common stock of USX
and continue to be subject to all of the risks associated with an investment in
USX and all of its businesses and liabilities.
The U.S. Steel Group includes U.S. Steel and certain steel-related and other
businesses described above under "U.S. Steel Group." U.S. Steel Group sales as
a percentage of total consolidated USX sales were 31% in each of 1994 and 1993
and 28% in 1992.
The Marathon Group includes the operations of Marathon Oil Company
("Marathon"), a wholly owned subsidiary of USX which is engaged in worldwide
exploration, production, transportation and marketing of crude oil and natural
gas; and domestic refining, marketing and transportation of petroleum products.
Marathon Group sales (excluding sales from the operations now included in the
Delhi Group) as a percentage of total consolidated USX sales were 66% in each
of 1994 and 1993 and 69% in 1992.
The Delhi Group consists of Delhi Gas Pipeline Corporation and certain
related companies which are engaged in the purchasing, gathering, processing,
transporting and marketing of natural gas. Prior to October 2, 1992, the
businesses which are now included in the Delhi Group were included in the
Marathon Group. Delhi Group sales as a percentage of total USX consolidated
sales were 3% in each of 1994, 1993 and 1992.
USX was incorporated in 1901 and is a Delaware corporation. Its executive
offices are located at 600 Grant St., Pittsburgh, PA 15219-4776 (tel: (412)
433-1121). The terms "USX" and the "Corporation" when used herein refer to USX
Corporation or USX Corporation and its subsidiaries as required by the context.
THE OFFERING*
<TABLE>
<S> <C>
Steel Stock offered....................................... 5,000,000 shares
Steel Stock to be outstanding after the offering.......... 81,746,772 shares**
Use of Proceeds........................................... Funding 1994 and 1995
plan year pension
contributions of the
U.S. Steel Group
New York Stock Exchange Symbol............................ X
</TABLE>
- --------
* Assuming no exercise of the over-allotment option.
** Based on shares outstanding at June 30, 1995.
THE STEEL STOCK
The Steel Stock is intended to reflect the performance of the Steel and
Related Businesses and other businesses which constitute the U.S. Steel Group.
The Steel Stock is one of the three classes of USX common stock described
above. A portion of USX's corporate assets and liabilities is attributed to the
U.S. Steel Group, the Marathon Group and the Delhi Group. References in this
Prospectus Supplement and the accompanying Prospectus to the "Certificate of
Incorporation" refer to the Restated Certificate of Incorporation of USX. For a
more complete description of the terms of the Steel Stock and the Board's
dividend policy and other considerations relating thereto, see "Price Range of
Steel Stock, Dividends and Dividend Policy" herein and "Description of Capital
Stock," "Special Considerations" and "Management and Accounting Policies" in
the accompanying Prospectus.
S-4
<PAGE>
CERTAIN SPECIAL CONSIDERATIONS
STOCKHOLDERS OF ONE COMPANY; FINANCIAL IMPACTS FROM THE MARATHON GROUP OR THE
DELHI GROUP COULD AFFECT THE U.S. STEEL GROUP
Although the financial statements of the U.S. Steel Group, the Marathon Group
and the Delhi Group separately report the assets, liabilities (including
contingent liabilities) and stockholders' equity of USX attributed to each such
Group, such attribution does not affect legal title to such assets or
responsibility for such liabilities. Holders of Steel Stock, Marathon Stock and
Delhi Stock are holders of common stock of USX and continue to be subject to
all of the risks associated with an investment in USX and all of its businesses
and liabilities. Financial impacts arising from the Marathon Group or the Delhi
Group which affect the overall cost of USX's capital could affect the results
of operations and financial condition of the U.S. Steel Group. In addition, net
losses of any Group, as well as dividends or distributions on any class of USX
common stock or series of Preferred Stock, and repurchases of any class of USX
common stock or series of Preferred Stock at prices in excess of par or stated
value, will reduce the legally available funds of USX available for payment of
dividends on the Steel Stock. Accordingly, the USX consolidated financial
information should be read in connection with the financial information of the
U.S. Steel Group. USX prepares and provides consolidated financial statements,
as well as financial statements of the U.S. Steel Group, to the holders of
Steel Stock.
NO RIGHTS OR ADDITIONAL DUTIES WITH RESPECT TO THE GROUPS; POTENTIAL CONFLICTS
Holders of Steel Stock, Marathon Stock and Delhi Stock have only the rights
of stockholders of USX, and, except as described below under "Voting" and
"Exchange and Redemption," holders of Steel Stock are not provided any rights
specifically related to the U.S. Steel Group. In addition, principles of
Delaware law established in cases involving differing treatment of classes of
capital stock or groups of holders of the same class of capital stock provide
that a board of directors owes an equal duty to all stockholders regardless of
class or series and does not have separate or additional duties to any group of
stockholders.
The existence of separate classes of Common Stock may give rise to occasions
when the interests of holders of Steel Stock, Marathon Stock and Delhi Stock
may diverge or appear to diverge. Although USX is not aware of any precedent
involving the fiduciary duties of directors of corporations having classes of
common stock or separate classes or series of capital stock the rights of which
are defined by reference to specified operations of the corporation, under the
principles of Delaware law referred to above and the "business judgment rule,"
absent abuse of discretion, a good faith determination made by a disinterested
and adequately informed Board with respect to any matter having disparate
impacts upon holders of Steel Stock, Marathon Stock or Delhi Stock would be a
defense to any challenge to such determination made by or on behalf of the
holders of any class of Common Stock.
LIMITED SEPARATE VOTING RIGHTS
Holders of shares of Steel Stock, Marathon Stock and Delhi Stock vote
together as a single class on all matters as to which all USX common
stockholders are entitled to vote. Holders of Steel Stock, Marathon Stock or
Delhi Stock will have no rights to vote on matters as a separate group except
as described under "Voting" below and in certain limited circumstances as
currently provided under Delaware law. Separate meetings for the holders of
each class of Common Stock will not be held. If, when a stockholder vote is
taken on any matter as to which a separate vote by any class would not be
required under the Certificate of Incorporation or Delaware law, the holders of
one or more classes of Common Stock would have more than the number of votes
required to approve any such matter, the holders of that class or classes would
be in a position to control the outcome of the vote on such matter. On all
matters where the holders of Common Stock vote together as a single class, a
share of Marathon Stock will have one vote and each share of Steel
S-5
<PAGE>
Stock and Delhi Stock will have a fluctuating vote per share based on relative
time-weighted average ratios of their Market Values. Immediately after
consummation of the offering, holders of the Marathon Stock are expected to
have approximately 65% of the total voting power of USX.
MANAGEMENT AND ACCOUNTING POLICIES SUBJECT TO CHANGE
In preparing financial statements for the U.S. Steel Group, the Marathon
Group and the Delhi Group, USX applies certain management and accounting
policies adopted by the Board and described herein, which policies may be
modified or rescinded in the sole discretion of the Board without approval of
stockholders, although there is no present intention to do so. The Board may
also adopt additional policies depending upon the circumstances. Any
determination of the Board of Directors to modify or rescind such policies, or
to adopt additional policies, including any such decision that would have
disparate impacts upon holders of Steel Stock, Marathon Stock or Delhi Stock,
would be made by the Board in good faith and in the honest belief that such
decision is in the best interests of all stockholders of USX. In addition,
generally accepted accounting principles require that any change in accounting
policy be preferable (in accordance with such principles) to the policy
previously established.
LIMITATIONS ON POTENTIAL UNSOLICITED ACQUISITIONS
If the U.S. Steel Group were a separate company, any person interested in
acquiring the U.S. Steel Group without negotiation with management could seek
to obtain control of it by means of a tender offer or proxy contest. Any person
interested in acquiring only the U.S. Steel Group without negotiation with USX
management would be required to seek control of the voting power representing
all of the outstanding capital stock of USX entitled to vote on such
acquisition, including the Marathon Stock and the Delhi Stock. See "Limited
Separate Voting Rights" above.
----------------
For further discussion of the foregoing and certain other considerations, see
"Special Considerations" in the accompanying Prospectus.
----------------
TERMS OF THE STEEL STOCK
DIVIDENDS
The Board intends to declare and pay dividends on the Steel Stock based on
the financial condition and results of operations of the U.S. Steel Group,
although under Delaware law it has no obligation to do so. Since May 6, 1991,
the Board has declared a dividend each quarter on the Steel Stock of $.25 per
share. See "Price Range of Steel Stock, Dividends and Dividend Policy" herein.
Dividends on the Steel Stock are limited by the Certificate of Incorporation
and, subject to any prior rights of the holders of Preferred Stock, will be
payable when, as and if declared by the Board out of the lesser of (i) the
Available Steel Dividend Amount and (ii) legally available funds of USX. The
Available Steel Dividend Amount will be increased or decreased as appropriate
by, among other things, Steel Net Income (as defined under "Description of
Capital Stock--Steel Stock--Dividends" in the accompanying Prospectus). In
accordance with the Certificate of Incorporation, the Available Steel Dividend
Amount was adjusted to eliminate certain effects of the adoption in 1992 of
certain accounting standards. See "U.S. Steel Group--Selected Financial
Information-footnote (a)." For information concerning policies governing the
attribution of corporate activities to the U.S. Steel Group that are followed
by USX in determining Steel Net Income, see "Management and Accounting
Policies" in the accompanying Prospectus.
Assuming the offering had been completed as of June 30, 1995 at a price of
$34.50 per share, the Available Steel Dividend Amount at such date would have
been at least $2,464 million, assuming the over-allotment option was not
exercised, or at least $2,489 million, assuming that such option was exercised
in
S-6
<PAGE>
full. See "Description of Capital Stock--Steel Stock--Dividends" in the
accompanying Prospectus. Payment of dividends on any Preferred Stock attributed
to the U.S. Steel Group will decrease the Available Steel Dividend Amount.
The Board may in its sole discretion declare and pay dividends exclusively on
any class of USX Common Stock in equal or unequal amounts, notwithstanding the
respective amount of funds available for dividends on each class, the amount of
prior dividends declared on each class or any other factor, subject to
limitations set forth in the Certificate of Incorporation. See "Price Range of
Steel Stock, Dividends and Dividend Policy" herein.
VOTING
The holders of Steel Stock, Marathon Stock and Delhi Stock will vote together
as a single class on all matters as to which all USX common stockholders are
entitled to vote, except under certain circumstances. On all such matters, each
share of Marathon Stock will have one vote, and each share of Steel Stock and
of Delhi Stock will have a fluctuating vote based on the relative Market Values
of one share of such class to one share of Marathon Stock, calculated during a
specified period prior to the record date.
The approval of the holders of at least 66 2/3% of the outstanding Steel
Stock, Marathon Stock or Delhi Stock, as the case may be, is necessary for the
use of proceeds from the sale of any of the properties or assets of the Group
to which such class of Common Stock relates, (i) in any business of either of
the other Groups or (ii) for the declaration or payment of any dividend or
distribution on either of the other classes of Common Stock, subject to certain
exceptions. See "Description of Capital Stock--Steel Stock--Voting" in the
accompanying Prospectus.
EXCHANGE AND REDEMPTION
At any time after USX has transferred all of the assets and liabilities of
the U.S. Steel Group to a wholly owned subsidiary of USX, the Board, in its
sole discretion, subject to certain conditions, may declare that all of the
outstanding shares of Steel Stock shall be exchanged for a number of shares of
common stock of such subsidiary on a pro rata basis.
In the event of a Disposition of all or substantially all of the assets of
the U.S. Steel Group, USX will, subject to certain conditions, be required to
(i) subject to the limitation on dividends described above, pay a dividend on
the Steel Stock in an amount equal to the Net Proceeds of such Disposition,
(ii) to the extent of legally available funds of USX, redeem shares of Steel
Stock having an aggregate average Market Value closest to the value of such Net
Proceeds for an amount equal to such Net Proceeds or (iii) exchange Steel Stock
for a number of shares of Marathon Stock or, if no Marathon Stock is
outstanding, of Delhi Stock, equal to 110% of the ratio of the average Market
Values of one share of Steel Stock to one share of Marathon Stock or of Delhi
Stock, as the case may be. Such ratio will be determined using Market Values
during the ten-Business Day period after consummation of such Disposition. See
"Description of Capital Stock--Steel Stock--Exchange and Redemption" in the
accompanying Prospectus.
LIQUIDATION
After payment of creditors and after the holders of the Preferred Stock
receive the full preferential amounts to which they are entitled, the holders
of the outstanding shares of each class of Common Stock will receive the funds
remaining for distribution to the common stockholders in proportion to the
relative time-weighted average aggregate market capitalizations of each class.
See "Description of Capital Stock--Steel Stock--Liquidation" in the
accompanying Prospectus.
S-7
<PAGE>
RECENT DEVELOPMENTS AND OUTLOOK
The U.S. Steel Group reported second quarter 1995 net income of $81 million
or $.99 per share, on sales of $1.6 billion. These results included a $35
million unfavorable estimated aftertax effect ($.45 per share) of charges
related to the Pickering v. USX litigation and the repair of the Gary Works'
No. 8 blast furnace which was damaged by an explosion on April 5, 1995. The
results compare with first quarter 1995 net income of $74 million or $.89 per
share, on sales of $1.6 billion, and second quarter 1994 net income of $56
million or $.65 per share, on sales of $1.5 billion. The first quarter 1995 and
second quarter 1994 results included no significant special items.
The U.S. Steel Group reported first six months 1995 net income of $155
million or $1.87 per share, on sales of $3.2 billion. These results included a
$35 million unfavorable estimated aftertax effect ($.45 per share) of the above
mentioned charges. The results compare with first six months 1994 net income of
$21 million or $.11 per share, on sales of $2.9 billion. These results included
a $33 million unfavorable estimated aftertax effect ($.45 per share) of several
special items, including utility curtailments and other severe winter weather
complications, an equipment failure which shut down steel production at Mon
Valley Works for 13 days, environmental remediation accruals, a signing bonus
paid under terms of the new labor agreement with the United Steelworkers of
America and outages related to the modernization of the Gary Works hot strip
mill.
The U.S. Steel Group's second quarter 1995 operating income, before the
negative effects of $56 million in pretax charges related to the aforementioned
litigation and blast furnace repair work, was $185 million compared to $134
million in the first quarter of 1995 and $88 million in the second quarter of
1994. Additional pretax charges of approximately $10 million to complete the
repairs to the blast furnace are expected to negatively impact the U.S. Steel
Group's third quarter 1995 operating income.
The U.S. Steel Group's operating income for the first six months of 1995,
before the negative effects of $56 million in pretax charges noted above, was
$319 million. These results compare to first six months 1994 operating income,
before $54 million unfavorable pretax effect of several special items listed
above, of $118 million.
Steel shipments of 2.8 million tons in the second quarter exceeded the first
quarter level of 2.7 million tons and the 2.6 million tons shipped in the
second quarter of 1994. Shipments remained at high levels despite the effects
of the general domestic economic slowdown and customer efforts to reduce
inventories. Export shipments increased in the second quarter to almost 0.3
million tons from the first quarter level of nearly 0.2 million tons.
For the third quarter of 1995, there are indications that domestic steel
markets will be somewhat weaker than in the first two quarters of 1995, with
automotive manufacturers scheduling annual production breaks and model
changeovers, in addition to customers continuing to reduce inventories.
Consequently, a reduction in the U.S. Steel Group's domestic shipments is
anticipated. Export shipments for the U.S. Steel Group, which are generally
less profitable than domestic shipments, are expected to increase to
approximately 0.5 million tons for the third quarter of 1995.
With the domestic market supply of steel currently exceeding demand, spot
market prices on some products have shown some erosion, and the previously
announced July 2, 1995 price increases on sheet products are not currently
being realized on most products.
Steel imports to the United States accounted for an estimated 24% of the
domestic steel market in the first four months of 1995. Imports have recently
included steel from non-traditional sources, such as Russia
S-8
<PAGE>
and Romania. The domestic steel industry has, in the past, been adversely
affected by unfairly traded imports, and higher levels of imported steel may
ultimately have an adverse effect on product prices and shipment levels.
Oil country tubular goods ("OCTG") accounted for 3.6% of U. S. Steel Group
shipments in 1994. On June 30, 1994, in conjunction with six other domestic
producers, USX filed antidumping and countervailing duty cases with the U.S.
Department of Commerce ("Commerce") and the International Trade Commission
("ITC") asserting that seven foreign nations have engaged in unfair trade
practices with respect to the export of OCTG. On August 15, 1994, the ITC
unanimously issued a preliminary ruling that there is a reasonable indication
that domestic OCTG producers may have been injured by illegal subsidies and
dumping. In June 1995, Commerce issued its final affirmative determinations of
the applicable margins of dumping and/or subsidies in the OCTG cases against
producers in all seven countries. It is presently anticipated that the ITC will
vote on July 24, 1995 as to whether the domestic industry has been materially
injured by reason of these imports. By statute, the ITC final determination
must be issued on or before August 7, 1995. USX is obviously unable to predict
the ultimate resolution of the OCTG cases.
USX will file additional antidumping and countervailing duty petitions if
unfairly traded imports adversely impact, or threaten to adversely impact, the
results of the U. S. Steel Group.
S-9
<PAGE>
USE OF PROCEEDS
Based on the offering price of $34.50 per share, the net proceeds to USX from
the offering (prior to deduction of estimated expenses) will be $169,050,000
($194,407,500 if the over-allotment option is exercised in full). The net
proceeds to USX from the offering will be used to fund the U.S. Steel Group's
principal pension plan for the 1994 and 1995 plan years.
CAPITALIZATION
The following table sets forth the total capitalization of the U.S. Steel
Group and the total consolidated capitalization of USX as of June 30, 1995, and
as adjusted to give effect to the net proceeds from the offering (assuming no
exercise of the over-allotment option). The net proceeds will be reflected
entirely in the financial statements of the U.S. Steel Group.
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------------------------
U.S. STEEL
GROUP USX CONSOLIDATED
--------------- ----------------
AS AS
ACTUAL ADJUSTED ACTUAL ADJUSTED
------ -------- ------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
SHORT-TERM OBLIGATIONS (including notes pay-
able and current maturities of long-term
debt)....................................... $ 98 $ 98 $ 425 $ 425
LONG-TERM DEBT DUE AFTER ONE YEAR(A)......... 1,147 1,147 4,975 4,975
PREFERRED STOCK OF SUBSIDIARY................ 64 64 250 250
STOCKHOLDERS' EQUITY(B)...................... 1,074 1,243 4,519 4,688
------ ------ ------- -------
TOTAL CAPITALIZATION......................... $2,383 $2,552 $10,169 $10,338
====== ====== ======= =======
</TABLE>
- --------
(a) At June 30, 1995, certain debt due within one year of $428 million was
included in long-term debt of USX since unused long-term credit agreements
of $2.325 billion were available for refinancing if needed.
(b) If the over-allotment option is exercised in full, stockholders' equity for
the U.S. Steel Group and for USX as adjusted would be $1,268 million and
$4,713 million, respectively.
S-10
<PAGE>
PRICE RANGE OF STEEL STOCK, DIVIDENDS AND DIVIDEND POLICY
The Steel Stock is listed on the New York Stock Exchange (the "NYSE") and the
Chicago and Pacific Stock Exchanges. The following table sets forth the range
of high and low sales prices of the Steel Stock on the NYSE Composite Tape for
the stated periods.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1993
First Quarter................................................ 41 1/2 31 1/2
Second Quarter............................................... 46 35 1/2
Third Quarter................................................ 40 3/4 27 1/2
Fourth Quarter............................................... 43 3/8 30 3/8
1994
First Quarter................................................ 45 5/8 36 1/8
Second Quarter............................................... 38 1/2 30 1/4
Third Quarter................................................ 43 32 7/8
Fourth Quarter............................................... 42 3/8 32 7/8
1995
First Quarter................................................ 39 1/8 30
Second Quarter............................................... 34 3/4 29 1/4
Third Quarter (through July 20).............................. 39 33 7/8
</TABLE>
On July 20, 1995, the reported last sale price of the Steel Stock on the NYSE
was $36 1/8 per share.
Since May 6, 1991, the Board has declared a dividend each quarter on the
Steel Stock of $.25 per share. The Board reserves the right to change the
dividend rate at any time and from time to time. The Board intends to declare
and pay dividends on the Steel Stock based on the financial condition and
results of operations of the U.S. Steel Group, although it has no obligation
under Delaware law to do so. Dividends on the Steel Stock will be payable when,
as and if declared by the Board out of the lesser of (i) the Available Steel
Dividend Amount (as defined in "Description of Capital Stock--Steel Stock--
Dividends" in the accompanying Prospectus) and (ii) legally available funds of
USX (as defined under Delaware law). In making its dividend decisions, the
Board will rely on the financial statements of the U.S. Steel Group. In
determining its dividend policy, the Board will consider, among other things,
the long-term earnings and cash flow capabilities of the U.S. Steel Group, as
well as the dividend policies of publicly traded steel companies. See "U.S.
Steel Group--Selected Financial Information--footnote (a)", herein and "Special
Considerations--Dividends and Earnings Per Share" and "Description of Capital
Stock--Steel Stock--Dividends" in the accompanying Prospectus.
S-11
<PAGE>
U.S. STEEL GROUP
SELECTED FINANCIAL INFORMATION
The following selected financial information has been derived from the
financial statements of the U.S. Steel Group for each of the five years in the
period ended December 31, 1994 and for the six-month periods ended June 30,
1995 and 1994. The information set forth below should be read in connection
with the U.S. Steel Group financial statements and notes thereto and
accompanying "Management's Discussion and Analysis" contained in the USX Annual
Report on Form 10-K for the year ended December 31, 1994, which is incorporated
herein by reference. The data for the six-month periods ended June 30, 1995 and
1994, have been derived from unaudited financial statements which, in the
opinion of management, reflect all adjustments necessary to a fair statement of
results for the period covered. All such adjustments are of a normal recurring
nature except as described herein. Specific reference is made to footnotes (a)
and (b) regarding basis of presentation and corporate activities. The financial
information of the U.S. Steel Group supplements the consolidated financial
information of USX and, taken together with the financial information of the
Marathon Group and the Delhi Group, includes all accounts which comprise the
corresponding consolidated financial information of USX.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------- ----------------------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ------ ------ ------- ------- ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Sales.................. $3,200 $2,918 $6,066 $5,612 $ 4,919 $ 4,864 $6,073
Operating income
(loss)(c)............. 263 64 313 (149) (241) (617) 475
Operating costs
include:
Depreciation, deple-
tion and amortiza-
tion................ 161 158 314 314 288 253 278
Pension credits(d)... (67) (61) (120) (202) (231) (196) (262)
Restructuring
charges............. -- -- -- 42 10 402 --
Total income (loss)
before cumulative
effect of
changes in accounting
principles(c)......... 155 21 201 (169) (271) (507) 310
Net income (loss) be-
fore preferred divi-
dends................. $ 155 $ 21 $ 201 $ (238) $(1,606) $ (507) $ 310
Dividends on preferred
stock................. (13) (13) (25) (21) (3) (2) (4)
------ ------ ------ ------ ------- ------- ------
Net income (loss) ap-
plicable to Steel
Stock................. $ 142 $ 8 $ 176 $ (259) $(1,609) $ (509) $ 306
====== ====== ====== ====== ======= ======= ======
BALANCE SHEET DATA (AT
PERIOD END):(E)
Total assets........... $6,503 $6,480 $6,629 $ 6,251 $ 5,627 $5,582
Capitalization:
Notes payable......... $ 25 $ -- $ -- $ 15 $ 23 $ 32
Total long-term debt.. 1,220 1,453 1,562 2,259 2,019 1,468
Minority interest
including preferred
stock of subsidiary.. 64 64 5 16 37 67
Stockholders' equity.. 1,074 945 617 247 1,692 2,244
------ ------ ------ ------- ------- ------
Total capitalization. $2,383 $2,462 $2,184 $ 2,537 $ 3,771 $3,811
====== ====== ====== ======= ======= ======
CASH FLOW DATA:
Cash provided from
(used in) operating
activities............ $ 346 $ (182) $ 44 $ 86 $ (89) $ 9 $ 419
Capital expenditures... 142 108 248 198 298 432 391
Cash from disposal of
assets................ 42 13 19 291 39 26 49
COMMON SHARE DATA--STEEL
STOCK:(F)
Total income (loss)
before cumulative
effect of changes in
accounting principles:
--primary............. $ 1.87 $ .11 $ 2.35 $(2.96) $ (4.92) $(10.00) $ 6.00
--fully diluted....... 1.80 .11 2.33 (2.96) (4.92) (10.00) 5.83
Net income (loss):
--primary............. 1.87 .11 2.35 (4.04) (28.85) (10.00) 6.00
--fully diluted....... 1.80 .11 2.33 (4.04) (28.85) (10.00) 5.83
Dividends paid per
share................. .50 .50 1.00 1.00 1.00 .94 .88
Book value per share at
period end............ 13.58 10.12 12.01 8.32 3.72 32.68 43.59
</TABLE>
The footnotes appearing on the following three pages are an integral part of
this information.
S-12
<PAGE>
- --------
(a) Basis of Presentation
The financial statements of the U.S. Steel Group include the financial
position, results of operations and cash flows for all businesses of USX
other than the businesses, assets and liabilities included in the Marathon
Group or the Delhi Group, and a portion of the corporate assets and
liabilities and related transactions which are not separately identified
with ongoing operating units of USX. The financial statements of the U.S.
Steel Group have been prepared using the amounts included in the USX
consolidated financial statements. Corporate amounts reflected in these
financial statements are determined based upon methods which management
believes to be reasonable (see following footnote). The accounting policies
applicable to the preparation of the financial statements of the U.S. Steel
Group may be modified or rescinded in the sole discretion of the Board,
although the Board has no present intention to do so. The Board may also
adopt additional policies depending on the circumstances.
Although the financial statements of the U.S. Steel Group, the Marathon
Group and the Delhi Group separately report the assets, liabilities
(including contingent liabilities) and stockholders' equity of USX
attributed to each such Group, such attribution of assets, liabilities
(including contingent liabilities) and stockholders' equity among the U.S.
Steel Group, the Marathon Group and the Delhi Group for the purpose of
preparing their respective financial statements does not affect legal title
to such assets or responsibility for such liabilities. Holders of Steel
Stock, Marathon Stock and Delhi Stock are stockholders of USX and continue
to be subject to all the risks associated with an investment in USX and all
of its businesses and liabilities. Financial impacts arising from the
Marathon Group or the Delhi Group which affect the overall cost of USX's
capital could affect the results of operations and financial condition of
the U.S. Steel Group. In addition, net losses of any Group, as well as
dividends or distributions on any class of USX common stock or series of
Preferred Stock, and repurchases of any class of USX common stock or series
of Preferred Stock at prices in excess of par or stated value will reduce
the legally available funds of USX available for payment of dividends on
the Steel Stock. Accordingly, the USX consolidated financial statements and
related notes should be read in connection with the U.S. Steel Group
financial information. See "USX Corporation--Selected Consolidated
Financial Information".
The Board intends to declare and pay dividends on the Steel Stock based on
the financial condition and results of operations of the U.S. Steel Group,
although it has no obligation under Delaware law to do so. Dividends on the
Steel Stock will be payable when, as and if declared by the Board out of
the lesser of (i) the Available Steel Dividend Amount and (ii) legally
available funds of USX. The Available Steel Dividend Amount is increased or
decreased, as appropriate, to reflect Steel Net Income, dividends,
repurchases or issuances with respect to the Steel Stock and Preferred
Stock attributed to the U.S. Steel Group and certain other items. In
accordance with the Certificate of Incorporation, the Available Steel
Dividend Amount was increased by $1.335 billion in 1992 to eliminate the
effect of the recognition of the transition obligation of the adoption of
Statement of Financial Accounting Standards No. 106--Employer's Accounting
for Postretirement Benefits Other Than Pension and the unfavorable
cumulative effect of the adoption of Statement of Financial Accounting
Standards No. 109--Accounting for Income Taxes. At June 30, 1995, the
Available Steel Dividend Amount was at least $2.300 billion.
(b) Corporate Activities
Financial activities--As a matter of policy, USX manages most financial
activities on a centralized, consolidated basis. Such financial activities
include the investment of surplus cash; the issuance, repayment and
repurchase of short-term and long-term debt; the issuance, repurchase and
redemption of preferred stock; and the issuance and repurchase of common
stock. Transactions related primarily to invested cash, short-term and
long-term debt (including convertible debt), related net interest and other
financial costs, and preferred stock and related dividends are attributed
to the U.S. Steel Group, the Marathon Group and the Delhi Group based upon
the cash flows of each group for the periods presented and the initial
capital structure of each group. Most financing transactions are attributed
to and reflected
S-13
<PAGE>
in the financial statements of the three groups. However, certain
transactions such as leases, production payment financings, financial
activities of consolidated entities which are less than wholly owned by USX
and transactions related to securities convertible solely into any one
class of common stock are or will be specifically attributed to and
reflected in their entirety in the financial statements of the group to
which they relate.
Corporate general & administrative costs--Corporate general and
administrative costs are allocated to the U.S. Steel Group, the Marathon
Group and the Delhi Group based upon methods management believes to be
reasonable and which consider certain measures of business activities, such
as employment, investments and sales. The costs allocated to the U.S. Steel
Group primarily consist of employment costs including pension effects,
professional services, facilities and other related costs associated with
corporate activities.
Common stock transactions--All financial statement impacts of purchases and
issuances of Steel Stock after the change of USX common stock into Marathon
Stock and the distribution of Steel Stock on May 6, 1991, are reflected in
their entirety in the U.S. Steel Group financial statements. Financial
statement impacts of treasury stock transactions occurring before May 7,
1991, have been attributed to the two groups in relationship to their
respective common equity. The initial dividend on the Steel Stock was paid
on September 10, 1991. Dividends paid by USX prior to September 10, 1991,
were attributed to the U.S. Steel Group and the Marathon Group based upon
the relationship of the initial dividends on Steel Stock and Marathon
Stock.
Income taxes--All members of the USX affiliated group are included in the
consolidated U.S. federal income tax return filed by USX. Accordingly, the
provision for federal income taxes and the related payments or refunds of
tax are determined on a consolidated basis. The financial statement
provision and the related tax payments or refunds have been reflected in
the U.S. Steel Group, the Marathon Group and the Delhi Group financial
statements in accordance with USX's tax allocation policy for such groups.
In general, such policy provides that the consolidated tax provision and
related tax payments or refunds are allocated among the U.S. Steel Group,
the Marathon Group and the Delhi Group for group financial statement
purposes, based principally upon the financial income, taxable income,
credits, preferences and other amounts directly related to the respective
groups.
For financial statement provision and tax settlement purposes, tax benefits
resulting from attributes (principally net operating losses), which cannot
be utilized by one of the three groups on a separate return basis but which
can be utilized on a consolidated basis in that year or in a carryback
year, are allocated to the group that generated the attributes. However, if
such tax benefits cannot be utilized on a consolidated basis in that year
or in a carryback year, the prior years' allocations of such consolidated
tax effects are adjusted in a subsequent year to the extent necessary to
allocate the tax benefits to the group that would have realized the tax
benefits on a separate return basis.
The allocated group amounts of taxes payable or refundable are not
necessarily comparable to those that would have resulted if the groups had
filed separate tax returns; however, such allocations should not result in
any of the three groups paying more income taxes over time than it would if
it filed separate tax returns and, in certain situations, could result in
any of the three groups paying less income taxes.
(c) Pretax income (loss) in 1993 included a $506 million charge related to the
Lower Lake Erie Iron Ore Antitrust Litigation against the Bessemer & Lake
Erie Railroad ("B&LE"). Charges of $342 million were included in operating
costs and $164 million included in interest and other financial costs. The
effect on net income (loss) was $325 million unfavorable ($5.04 per share
of Steel Stock). See "Legal proceedings" below.
(d) Operating income included pension credits, which were primarily noncash,
for each of the periods presented. The pension credits primarily reflect
the investment performance of defined benefit plan assets. The expected
long-term rate of return on plan assets, which is reflected in the
calculation of net periodic pension credits, was increased to 10% in 1995
from 9% in 1994.
(e) USX is the subject of, or a party to a number of pending or threatened
legal actions, contingencies and commitments relating to the U.S. Steel
Group involving a variety of matters, including laws and
S-14
<PAGE>
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 U.S. Steel Group
financial statements. However, management believes that USX will remain a
viable and competitive enterprise, even though it is possible that these
contingencies could be resolved unfavorably to the U.S. Steel Group.
Legal proceedings--
B&LE Antitrust Litigation
In 1994, USX paid $367 million in judgments against the B&LE in the Lower
Lake Erie Iron Ore Antitrust Litigation (MDL-587). Two remaining plaintiffs
in this case have had their damage claims remanded for retrial. A new trial
may result in awards more or less than the original asserted claims of $8
million and would be subject to trebling.
Pickering Litigation
In 1992, the United States District Court for the District of Utah Central
Division issued a Memorandum Opinion and Order in Pickering v. USX relating
to pension and compensation claims by approximately 1,900 employees of
USX's former Geneva (Utah) Works. Although the court dismissed a number of
the claims by the plaintiffs, it found that USX had violated the Employee
Retirement Income Security Act by interfering with the accrual of pension
benefits of certain employees and amending a benefit plan to reduce the
accrual of future benefits without proper notice to plan participants. On
May 5, 1995, the Court issued its Opinion on the damage issues concerning
the claims of a sample group of 23 plaintiffs. A settlement requiring USX
to make payments of $47 million (which had been partially accrued in prior
periods) has been approved by the attorneys for substantially all of the
remaining plaintiffs.
Environmental matters--
The U.S. Steel Group is subject to federal, state and local 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. The U.S. Steel Group provides
for remediation costs and penalties when the responsibility to remediate is
probable and the amount of associated costs is reasonably determinable.
Accrued liabilities for remediation totaled $120 million and $141 million
at June 30, 1995 and December 31, 1994, respectively. It is not presently
possible to estimate the ultimate amount of all remediation costs that
might be incurred or the penalties that may be imposed.
For a number of years, the U.S. Steel Group has made substantial capital
expenditures to bring existing facilities into compliance with various laws
relating to the environment. In the first six months of 1995 and for the
years 1994 and 1993, such capital expenditures for environmental controls
totaled $19 million, $57 million and $53 million, respectively. The U.S.
Steel Group anticipates making additional such expenditures in the future;
however, the exact amounts and timing of such expenditures are uncertain
because of the continuing evolution of specific regulatory requirements.
Guarantees--
Guarantees by USX of the liabilities of affiliated entities of the U.S.
Steel Group totaled $161 million at June 30, 1995. In the event that any
defaults of guaranteed liabilities occur, USX has access to its interest in
the assets of most of the affiliates to reduce losses resulting from these
guarantees. As of June 30, 1995, the largest guarantee for a single
affiliate was $82 million.
(f) For purposes of computing per share data for periods prior to May 7, 1991,
the numbers of shares of Steel Stock are assumed to be one-fifth of the
corresponding numbers of shares of USX common stock.
S-15
<PAGE>
USX CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information has been derived
from the consolidated financial statements of USX for each of the five years
in the period ended December 31, 1994, and for the six-month periods ended
June 30, 1995 and 1994. The information set forth below should be read in
connection with the USX consolidated financial statements and notes thereto
and accompanying "Management's Discussion and Analysis" contained in the USX
Annual Report on Form 10-K for the year ended December 31, 1994, which is
incorporated herein by reference. The data for the six-month periods ended
June 30, 1995 and 1994, have been derived from unaudited financial statements
which, in the opinion of management, reflect all adjustments necessary to a
fair statement of results for the periods covered. All such adjustments are of
a normal recurring nature except as described herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- ------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:(A)
Sales.................. $ 10,316 $ 9,034 $19,341 $18,064 $17,813 $18,825 $20,659
Operating income
(loss)(b)............. 737 402 861 56 70 (259) 1,556
Operating costs
include:
Inventory market
valuation charges
(credits)........... (86) (221) (160) 241 (62) 260 (140)
Restructuring charges
(credits)........... (6) 37 37 42 125 426 --
Total income (loss)
before cumulative
effect of changes in
accounting
principles(b)......... 344 182 501 (167) (160) (578) 818
Net income (loss)
before preferred
dividends............. $ 344 $ 182 $ 501 $ (259) $(1,826) $ (578) $ 818
Dividends on preferred
stock................. (16) (16) (31) (27) (9) (9) (18)
-------- ------- ------- ------- ------- ------- -------
Net income (loss)
applicable to common
stocks................ $ 328 $ 166 $ 470 $ (286) $(1,835) $ (587) $ 800
======== ======= ======= ======= ======= ======= =======
BALANCE SHEET DATA (AT
PERIOD END):(A)(C)
Capital expenditures--
current period........ $ 413 $ 1,033 $ 1,151 $ 1,505 $ 1,392 $ 1,391
Total assets........... 17,362 17,517 17,414 17,252 17,039 17,268
Capitalization:
Notes payable......... $ 111 $ 1 $ 1 $ 47 $ 79 $ 138
Total long-term debt.. 5,289 5,599 5,970 6,302 6,438 5,527
Total proceeds from
production
agreements........... -- -- -- -- 17 142
Minority interest
including preferred
stock of subsidiary.. 250 250 5 16 37 67
Stockholders' equity.. 4,519 4,302 3,864 3,709 4,987 5,869
-------- ------- ------- ------- ------- -------
Total capitalization. $ 10,169 $10,152 $ 9,840 $10,074 $11,558 $11,743
======== ======= ======= ======= ======= =======
COMMON SHARE DATA--STEEL
STOCK:(D)
Total income (loss)
before cumulative
effect of changes in
accounting
principles:........... $ 142 $ 8 $ 176 $ (190) $ (274) $ (509) $ 306
Per share--primary.... 1.87 .11 2.35 (2.96) (4.92) (10.00) 6.00
--fully diluted...... 1.80 .11 2.33 (2.96) (4.92) (10.00) 5.83
Net income (loss):..... 142 8 176 (259) (1,609) (509) 306
Per share--primary.... 1.87 .11 2.35 (4.04) (28.85) (10.00) 6.00
--fully diluted...... 1.80 .11 2.33 (4.04) (28.85) (10.00) 5.83
Dividends paid per
share................. .50 .50 1.00 1.00 1.00 .94 .88
Book value per share at
period end............ 13.58 10.12 12.01 8.32 3.72 32.68 43.59
COMMON SHARE DATA--
MARATHON STOCK:(D)
Total income (loss)
before cumulative
effect of changes in
accounting
principles:........... $ 182 $ 179 $ 315 $ (12) $ 103 $ (78) $ 494
Per share--primary.... .63 .63 1.10 (.04) .37 (.31) 1.94
--fully diluted...... .63 .63 1.10 (.04) .37 (.31) 1.92
Net income (loss):..... 182 179 315 (35) (228) (78) 494
Per share--primary.... .63 .63 1.10 (.12) (.80) (.31) 1.94
--fully diluted...... .63 .63 1.10 (.12) (.80) (.31) 1.92
Dividends paid per
share................. .34 .34 .68 .68 1.22 1.31 1.22
Book value per share at
period end............ 11.31 10.87 11.01 10.58 11.37 12.45 13.92
COMMON SHARE DATA--DELHI
STOCK:(E)
Net income (loss) ..... $ 4.0 $ (21.1) $ (20.9) $ 7.8 $ 2.0
--Per share: primary &
fully diluted........ .42 (2.25) (2.22) .86 .22
Dividends paid per
share................. .10 .10 .20 .20 .05
Book value per share at
period end............ 12.30 12.16 12.09 14.50 13.83
</TABLE>
The footnotes on the following two pages are an integral part of this
information.
S-16
<PAGE>
- --------
(a) USX follows the successful efforts method of accounting for oil and gas
exploration and development.
(b) Pretax income (loss) in 1993 included a $506 million charge related to the
Lower Lake Erie Iron Ore Antitrust Litigation against the Bessemer & Lake
Erie Railroad ("B&LE"). Charges of $342 million were included in operating
costs and $164 million included in interest and other financial costs. See
"Legal proceedings" below.
(c) USX 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
which are discussed below). The ultimate resolution of these contingencies
could, individually or in the aggregate, be material to the consolidated
financial statements. However, management believes that USX will remain a
viable and competitive enterprise even though it is possible that these
contingencies could be resolved unfavorably.
Legal proceedings--
B&LE Antitrust Litigation
In 1994, USX paid $367 million in judgments against the B&LE in the Lower
Lake Erie Iron Ore Antitrust Litigation (MDL-587). Two remaining plaintiffs
in this case have had their damage claims remanded for retrial. A new trial
may result in awards more or less than the original asserted claims of $8
million and would be subject to trebling.
Pickering Litigation
In 1992, the United States District Court for the District of Utah Central
Division issued a Memorandum Opinion and Order in Pickering v. USX relating
to pension and compensation claims by approximately 1,900 employees of
USX's former Geneva (Utah) Works. Although the court dismissed a number of
the claims by the plaintiffs, it found that USX had violated the Employee
Retirement Income Security Act by interfering with the accrual of pension
benefits of certain employees and amending a benefit plan to reduce the
accrual of future benefits without proper notice of plan participants. On
May 5, 1995, the Court issued its Opinion on the damage issues concerning
the claims of a sample group of 23 plaintiffs. A settlement requiring USX
to make payments of $47 million (which had been partially accrued in prior
periods) has been approved by the attorneys for substantially all of the
remaining plaintiffs.
Environmental matters--
USX 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 air and water and require responsible parties
to undertake remediation of hazardous waste disposal sites. Civil penalties
may be imposed for noncompliance. USX provides for remediation costs and
penalties when a loss is probable and the amount is reasonably
determinable. Accrued liabilities for remediation totaled $164 million and
$186 million at June 30, 1995 and December 31, 1994, respectively. It is
not presently possible to estimate the ultimate amount of all remediation
costs that might be incurred or the penalties that may be imposed.
For a number of years, USX has made substantial capital expenditures to
bring existing facilities into compliance with various laws relating to the
environment. In the first six months of 1995 and for the years 1994 and
1993, such capital expenditures for environmental controls totaled $41
million, $132 million and $181 million, respectively. USX anticipates
making additional such expenditures in the future; however, the exact
amounts and timing of such expenditures are uncertain because of the
continuing evolution of specific regulatory requirements.
At June 30, 1995, and December 31, 1994, accrued liabilities for platform
abandonment and dismantlement totaled $124 million and $127 million,
respectively.
S-17
<PAGE>
Libyan operations--
By reason of Executive Orders and related regulations under which the U.S.
Government is continuing economic sanctions against Libya, Marathon was
required to discontinue performing its Libyan petroleum contracts on June
30, 1986. In June 1989, the Department of the Treasury authorized Marathon
to resume performing under those contracts. Pursuant to that authorization,
Marathon has engaged the Libyan National Oil Company and the Secretary of
Petroleum in continuing negotiations to determine when and on what basis
they are willing to allow Marathon to resume realizing revenue from
Marathon's investment of $107 million in Libya. Marathon is uncertain when
these negotiations can be completed or how the negotiations will be
affected by the United Nations' sanctions against Libya.
Guarantees--
Guarantees by USX of the liabilities of affiliated and other entities
totaled $179 million at June 30, 1995. In the event that any defaults of
guaranteed liabilities occur, USX has access to its interest in the assets
of most of the affiliates to reduce losses resulting from these guarantees.
As of June 30, 1995, the largest guarantee for a single affiliate was $82
million.
At June 30, 1995, Marathon's pro rata share of obligations of LOOP INC. and
various pipeline affiliates secured by throughput and deficiency agreements
totaled $195 million. Under the agreements, Marathon is required to advance
funds if the affiliates are unable to service debt. Any such advances are
prepayments of future transportation charges.
(d) For purposes of computing per share data for periods prior to May 7, 1991,
the numbers of shares of Marathon Stock are assumed to be the same as the
corresponding numbers of shares of USX common stock, while the numbers of
shares of Steel Stock are assumed to be one-fifth of the corresponding
numbers of shares of USX common stock. The initial dividends on the Steel
Stock and the Marathon Stock were paid on September 10, 1991. Dividends
paid prior to that date were attributed to the U.S. Steel Group and the
Marathon Group based upon the relationship of the initial dividends on the
Steel Stock and the Marathon Stock.
(e) On October 2, 1992, USX sold 9,000,000 shares of Delhi Stock in its initial
public offering. Net income and dividends per share applicable to
outstanding Delhi Stock are presented for the periods subsequent to October
2, 1992.
S-18
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a discussion of certain anticipated United States income and
estate tax consequences of the ownership and disposition of the Steel Stock
applicable to Non-United States Holders of such Steel Stock. For the purpose of
this discussion, a "Non-United States Holder" is any corporation, individual,
partnership, estate or trust that is, as to the United States, a foreign
corporation, a non-resident alien individual, a foreign partnership or a
foreign estate or trust as such terms are defined in the U.S. Internal Revenue
Code of 1986, as amended (the "Code"). This discussion does not deal with all
aspects of United States income and estate taxation and does not deal with
foreign, state and local tax consequences that may be relevant to Non-United
States Holders in light of their personal circumstances. Furthermore, the
following discussion is based on current provisions of the Code and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change. Prospective foreign investors are urged to consult their
tax advisors regarding the United States federal, state, local and non-United
States income and other tax consequences of owning and disposing of Steel
Stock.
An individual may, subject to certain exceptions, be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States on at least 31 days in the calendar year and for an aggregate of
at least 183 days during a three-year period ending in the current calendar
year (counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second preceding year). Resident aliens are subject
to U.S. federal tax as if they were U.S. citizens.
DIVIDENDS
Generally, any dividend paid to a Non-United States Holder of Steel Stock
will be subject to United States withholding tax at a rate of 30% of the gross
amount of the dividend, or at a lesser applicable treaty rate. Dividends
received by a Non-United States Holder that are effectively connected with a
United States trade or business conducted by such Non-United States Holder are
exempt from such withholding tax. However, such effectively connected
dividends, net of certain deductions and credits, are taxed at the same
graduated rates applicable to United States persons.
In addition to the graduated tax described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a United
States trade or business of the corporate Non-United States Holder may also be
subject to a branch profits tax at a rate of 30% or at a lesser applicable
treaty rate.
Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above and, under the current
interpretation of United States Treasury regulations, for purposes of
determining the applicability of a tax treaty rate. However, under proposed
United States Treasury regulations not currently in effect, a Non-United States
Holder of Steel Stock who wishes to claim the benefit of an applicable treaty
rate would be required to satisfy applicable certification and other
requirements. A Non-United States Holder may claim exemption from withholding
under the effectively connected income exception by filing Form 4224 (Statement
Claiming Exemption from Withholding of Tax on Income Effectively Connected With
the Conduct of Business in the United States) with USX or its paying agent.
A Non-United States Holder of Steel Stock eligible for a reduced rate of
United States withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service ("IRS").
S-19
<PAGE>
SALE OF STEEL STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax on any gain realized upon the sale or other disposition of
his Steel Stock unless (i) such gain is effectively connected with a United
States trade or business of the Non-United States Holder, (ii) the Non-United
States Holder is an individual who is present in the United States for a
period or periods aggregating 183 days or more during the calendar year in
which such sale occurs and certain other conditions are met or (iii) USX is or
has been a "United States real property holding corporation" for federal
income tax purposes.
USX has not determined whether it is a "United States real property holding
corporation" for federal income tax purposes. If USX is or becomes a "United
States real property holding corporation," so long as the Steel Stock
continues to be regularly traded on an established securities market, only a
Non-United States Holder who holds or held (during the five year period
preceding such disposition) more than 5% of the Steel Stock will be subject to
federal income tax on the sale or other disposition of such stock.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under Treasury regulations, USX must report annually to the IRS and to each
Non-United States Holder the amount of dividends paid to such holder and the
tax withheld with respect to such dividends. These information reporting
requirements apply even if withholding was not required because the dividends
were effectively connected with a United States trade or business of the Non-
United States Holder or withholding was reduced or eliminated by an applicable
treaty. Copies of the information returns reporting such dividends and
withholding may also be made available to the tax authorities in the country
in which the Non-United States Holder resides under the provisions of an
applicable income tax treaty.
Payments of dividends to a Non-United States Holder at an address outside
the United States will generally not be subject to information reporting and
backup withholding. The payment of the proceeds of the disposition of Steel
Stock to or through the United States office of a broker is subject to
information reporting and backup withholding at a rate of 31% unless the owner
certifies its non-United States status under penalties or perjury or otherwise
establishes an exemption. The payment of the proceeds of the disposition by a
Non-United States Holder of Steel Stock to or through a foreign office of a
broker will not be subject to backup withholding unless the broker is (a) a
United States person, (b) a United States controlled foreign corporation or
(c) a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business. Moreover, in the case of
foreign offices of such brokers, information reporting will apply to such
payments of proceeds unless such broker has documentary evidence in its files
of the owner's foreign status and does not have actual knowledge to the
contrary.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
ESTATE TAX
Steel Stock owned, or treated as owned, by a nonresident alien individual at
the time of his death will be included in such holder's gross estate for
United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
S-20
<PAGE>
THE UNDERWRITER
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, Morgan Stanley & Co. Incorporated (the
"Underwriter") has agreed to purchase, and the Corporation has agreed to sell
to the Underwriter, 5,000,000 shares of Steel Stock.
The Underwriting Agreement provides that the obligation of the Underwriter to
pay for and accept delivery of the Steel Stock is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is obligated to take and pay for all the Steel Stock if any is
taken.
The Underwriter proposes to offer part of the Steel Stock directly to the
public at the public offering price set forth on the cover page hereof and part
to certain dealers at a price that represents a concession not in excess of
$.35 per share.
The Corporation has granted to the Underwriter an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an additional 750,000
shares of Steel Stock at the public offering price set forth on the cover page
hereof, less underwriting discounts and commissions. The Underwriter may
exercise such option solely for the purpose of covering over-allotments, if
any, incurred in the sale of the Steel Stock.
The Underwriter has represented and agreed that (i) it has not offered or
sold and will not offer or sell any Steel Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 (the
"Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the Steel Stock in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and
will only issue or pass on to any person in the United Kingdom any document
received by it in connection with the issue of the Steel Stock if that person
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
Except with respect to the United States, no action has been taken by the
Corporation or the Underwriter that would permit a public offering of the Steel
Stock in any country or jurisdiction where action for that purpose is required.
Accordingly, the Steel Stock may not be offered, sold or delivered, directly or
indirectly, and neither this document nor any offering circular, prospectus,
form of application, advertisement or other offering material may be
distributed or published in any other such country or jurisdiction except under
circumstances that will result in compliance with any applicable laws and
regulations and the Underwriter has represented that all offers, sales and
deliveries by them will be made on these terms.
Purchasers of the shares offered pursuant to the Offering may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the public offering price.
The Corporation has agreed, with certain exceptions, that it will not sell or
otherwise dispose of any shares of Steel Stock (other than pursuant to employee
stock options, employee benefit plans and any dividend reinvestment plan) for a
period of 90 days from the date of this Prospectus without the written consent
of the Underwriter.
The Corporation has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
From time to time, the Underwriter has provided, and continues to provide,
investment banking services to the Corporation.
S-21
<PAGE>
LEGAL MATTERS
The validity of the issuance of the Steel Stock will be passed upon for the
Corporation by Dan D. Sandman, Esq., General Counsel of USX, or by J.A.
Hammerschmidt, Esq., Assistant General Counsel--Corporate of USX. Mr. Sandman
and Mr. Hammerschmidt, in their respective capacities as General Counsel and
Assistant General Counsel, are paid a salary by USX and participate in various
employee benefit plans offered to officers of USX generally. Certain legal
matters will be passed upon for the Underwriter by Simpson Thacher & Bartlett
(a partnership which includes professional corporations), 425 Lexington Avenue,
New York, New York 10017.
EXPERTS
The consolidated financial statements of USX, the financial statements of the
Marathon Group, the financial statements of the U.S. Steel Group and the
financial statements of the Delhi Group as of December 31, 1994 and 1993 and
for each of the three years in the period ended December 31, 1994, incorporated
in this Prospectus by reference to USX's Annual Report on Form 10-K for the
year ended December 31, 1994, have been so incorporated in reliance on the
reports of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
S-22
<PAGE>
USX Corporation
Debt Securities
Preferred Stock
USX-Marathon Group Common Stock
USX-U.S. Steel Group Common Stock
USX-Delhi Group Common Stock
----------------
USX Corporation ("USX") proposes to issue and offer from time to time (1)
unsecured debt securities of USX (the "Debt Securities"); (2) USX Corporation
Preferred Stock ("Preferred Stock"); (3) USX-Marathon Group Common Stock of USX
Corporation ("Marathon Stock"); (4) USX-U.S. Steel Group Common Stock of USX
Corporation ("Steel Stock"); (5) USX-Delhi Group Common Stock of USX
Corporation ("Delhi Stock") or any combination of the foregoing at an aggregate
public offering price of $850,000,000 (or the equivalent thereof in foreign
denominated currency (or units based on or related thereto) in the case of Debt
Securities), at prices and on terms to be determined at or prior to the time or
times of sale.
Specific terms of the securities in respect to which this Prospectus is being
delivered ("Offered Securities") shall be set forth in an accompanying
Prospectus Supplement, together with the terms of the offering of the Offered
Securities, the initial price thereof and net proceeds from the sale thereof.
All such Prospectus Supplement(s) shall also set forth with regard to the
particular Offered Securities, without limitation, the following: (1) in the
case of Debt Securities, the designation of each separate series and the
aggregate principal amount, maturity, interest rate, if any, whether fixed or
variable (or the manner of calculation thereof), redemption and sinking fund
provisions or other repayment obligations, currency in which denominated,
amounts determined by reference to an index, purchase price and any listing on
a securities exchange, (2) in the case of Marathon Stock, Steel Stock or Delhi
Stock, the number of shares offered, the number of shares to be outstanding
after the offering, the price range and dividend history of the relevant stock
and any listing on a securities exchange, and (3) in the case of Preferred
Stock, the designation, number of shares offered, liquidation preference per
share, dividend rate, dates on which dividends are to be payable and dates from
which dividends accrue, any redemption or sinking fund provisions, any
conversion features, and any listing on a securities exchange.
USX may sell the Offered Securities to or through underwriters or directly to
other purchasers or through agents or through and to brokers or dealers acting
as underwriters who will be named in the accompanying Prospectus Supplement(s)
along with terms of the public offering, including the offering price, the
principal amounts, if any, to be purchased by underwriters, the commission or
discount to the underwriters and the amount of other expenses attributable to
the issuance and distribution of the Debt Securities.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is January 6, 1994.
<PAGE>
AVAILABLE INFORMATION
USX Corporation ("USX") is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by USX can be inspected and copied
at prescribed rates at the Public Reference Room of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the public
reference facilities maintained by the Commission at 75 Park Place, New York,
New York 10007, and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Documents filed by USX can also be inspected at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), The Chicago
Stock Exchange and the Pacific Stock Exchange.
USX has filed a Registration Statement on Form S-3 (the "Registration
Statement") with the Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto, to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by USX with the Commission (file no.
1-5153) are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1992.
(b) Quarterly Reports on Form 10-Q for the periods ended March 31, 1993,
June 30, 1993 and September 30, 1993.
(c) Current Reports on Form 8-K dated January 26, and February 11,
February 24, May 27, June 11, June 29, and July 27, 1993.
(d) The description of the Marathon Stock included in USX's Form 8
Amendment to a Registration Statement on Form 8-A filed on April 11,
1991.
(e) The description of Steel Stock included in USX's Form 8-A
Registration Statement filed on April 11, 1991.
(f) The description of the Delhi Stock included in USX's Form 8-A
Registration Statement filed on August 11, 1992.
All reports and other documents filed by USX pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
shall be deemed to be incorporated by reference herein. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
USX undertakes to provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of such person, a copy of any or
all of the information incorporated by reference in this Prospectus, other than
exhibits to such information (unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to the Office of the
Corporate Secretary, USX Corporation, 600 Grant Street, Pittsburgh,
Pennsylvania 15219-4776 (telephone: 412-433-2885).
2
<PAGE>
USX CORPORATION
USX is a diversified company which is principally engaged in the energy
business through its Marathon Group, in the steel business through its U.S.
Steel Group and in the gas gathering and processing business through its Delhi
Group.
USX has three classes of common stock, USX--Marathon Group Common Stock
("Marathon Stock"), USX--U.S. Steel Group Common Stock ("Steel Stock") and
USX--Delhi Group Common Stock ("Delhi Stock"). The Marathon Stock, the Steel
Stock and the Delhi Stock are together referred to as "Common Stock." Each
class of common stock is intended to provide the stockholders of such class
with a separate security reflecting the performance of the related group.
Holders of Marathon Stock, Steel Stock and Delhi Stock are holders of common
stock of USX and continue to be subject to all of the risks associated with an
investment in USX and all of its businesses and liabilities.
The Marathon Group includes the operations of Marathon Oil Company, a wholly
owned subsidiary of USX, which is engaged in worldwide exploration, production
and transportation of crude oil and natural gas, and domestic refining,
marketing and transportation of crude oil and petroleum products. Marathon
Group sales (excluding sales from the businesses included in the Delhi Group)
as a percentage of total USX consolidated sales were 67% in the first nine
months of 1993 and 69%, 72% and 69% in the years 1992, 1991 and 1990,
respectively.
The U.S. Steel Group includes U.S. Steel, one of the largest integrated steel
producers in the United States, which is primarily engaged in the production
and sale of a wide range of steel mill products, coke and taconite pellets. The
U.S. Steel Group also includes the management of mineral resources, domestic
coal mining and engineering and consulting services and technology licensing.
Other businesses that are part of the U.S. Steel Group include real estate
development and management, fencing products, leasing and financing activities
and a majority interest in a titanium metal products company. U.S. Steel Group
sales as a percentage of total USX consolidated sales were 30% in the first
nine months of 1993 and 28%, 26% and 29% in the years 1992, 1991 and 1990,
respectively.
The Delhi Group consists of Delhi Gas Pipeline Corporation and certain
related companies which are engaged in the purchasing, gathering, processing,
transporting and marketing of natural gas. Prior to October 2, 1992, the
businesses which are now included in the Delhi Group were included in the
Marathon Group and data regarding the Delhi Group for periods prior to that
date reflect the combined historical financial data of the businesses
comprising the Delhi Group. Delhi Group sales as a percentage of total USX
consolidated sales were 3% in the first nine months of 1993, 3% in the year
1992 and 2% in each of the years 1991 and 1990.
USX was incorporated in 1901 and is a Delaware corporation. Its executive
offices are located at 600 Grant St., Pittsburgh, PA 15219-4776 (tel: (412)
433-1121). The term "USX" and the "Corporation" when used herein refer to USX
Corporation or USX Corporation and its subsidiaries, as required by the
context.
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
----------------- ------------------------
1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.. (a) (a) (a) 2.80 2.57 2.04
=== === === ==== ==== ====
Ratio of earnings to combined fixed
charges and preferred stock divi-
dends.............................. (b) (b) (b) 2.69 2.33 1.83
=== === === ==== ==== ====
</TABLE>
- --------
(a) Earnings did not cover fixed charges by $340 million for the first nine
months of 1993, by $197 million for 1992 and by $681 million for 1991.
(b) Earnings did not cover combined fixed charges and preferred stock dividends
by $372 million for the first nine months of 1993, by $211 million for 1992
and by $696 million for 1991.
3
<PAGE>
USE OF PROCEEDS
USX intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, the refunding of outstanding long-term
indebtedness and other financial obligations, interest rate management and
leveling of its debt maturity schedule.
SPECIAL CONSIDERATIONS
CONSIDERATIONS RELATING TO COMMON STOCK
Stockholders of One Company; Financial Impacts from One Group Could Affect
the other Groups
Although the financial statements of the Marathon Group, the U.S. Steel Group
and the Delhi Group separately report the assets, liabilities (including
contingent liabilities) and stockholders' equity of USX attributed to each such
Group, such attribution of assets, liabilities (including contingent
liabilities) and stockholders' equity among the Marathon Group, the U.S. Steel
Group and the Delhi Group for the purpose of preparing their respective
financial statements does not affect legal title to such assets or
responsibility for such liabilities. Holders of Marathon Stock, Steel Stock and
Delhi Stock are holders of common stock of USX, and continue to be subject to
all of the risks associated with an investment in USX and all of its businesses
and liabilities. Financial impacts arising from one Group that affect the
overall cost of USX's capital could affect the results of operations and
financial condition of the other Groups. In addition, net losses of any Group,
as well as dividends and distributions on any class of USX common stock or
series of Preferred Stock and repurchases of any class of USX common stock or
series of Preferred Stock, will reduce the funds of USX legally available for
payment of dividends on the Common Stock of all the Groups. Accordingly, the
USX consolidated financial information should be read in connection with the
Group financial information. USX prepares and provides consolidated financial
statements, as well as financial statements of each Group, to the holders of
the respective classes of Common Stock. See "Management and Accounting
Policies."
No Rights or Additional Duties With Respect to the Groups; Potential
Conflicts
Holders of Marathon Stock, Steel Stock and Delhi Stock have only the rights
of stockholders of USX, and, except as described under "Description of Capital
Stock--Marathon Stock--Exchange and Redemption" and "--Voting," under
"Description of Capital Stock--Steel Stock--Exchange and Redemption" and
"--Voting" and under "Description of Capital Stock--Delhi Stock--Exchange and
Redemption" and "--Voting," holders of Common Stock are not provided any rights
specifically related to any Group. In addition, principles of Delaware law
established in cases involving differing treatment of classes of capital stock
or groups of holders of the same class of capital stock provide that a board of
directors owes an equal duty to all stockholders regardless of class or series
and does not have separate or additional duties to any group of stockholders.
The existence of separate classes of Common Stock may give rise to occasions
when the interests of holders of Marathon Stock, Steel Stock and Delhi Stock
may diverge or appear to diverge. Examples include the optional exchange of the
Delhi Stock for Marathon Stock or Steel Stock at the 10% premium or 15%
premium, as the case may be, the determination of the record date of any such
exchange or for the redemption of any Steel Stock or Delhi Stock, the
establishing of the date for public announcement of the liquidation of USX; and
the commitment of capital among the Marathon Group, the U.S. Steel Group and
the Delhi Group. Although USX is not aware of any precedent involving the
fiduciary duties of directors of corporations having classes of common stock or
separate classes or series of capital stock the rights of which are defined by
reference to specified operations of the corporation, under the principles of
Delaware law referred to above and the "business judgment rule," absent abuse
of discretion, a good faith determination made by a disinterested and
adequately informed Board with respect to any matter having disparate impacts
upon holders of Marathon Stock, Steel Stock or Delhi Stock would be a defense
to any challenge to such determination made by or on behalf of the holders of
any class of Common Stock.
4
<PAGE>
Because the Board owes an equal duty to all stockholders regardless of class,
the Board is the appropriate body to deal with these matters. In order to
assist the Board in this regard, USX has formulated policies to serve as
guidelines for the resolution of matters involving a conflict or a potential
conflict, including policies dealing with the payment of dividends, limiting
capital investment in the Steel Group over the long term to its internally
generated cash flow, the use of capital generated by the Delhi Group for the
expansion of its business, and allocation of corporate expenses and other
matters. See "Management and Accounting Policies." The Board has been advised
concerning the applicable law relating to the discharge of its fiduciary duties
to the common stockholders in the context of the separate classes of Common
Stock and has delegated to the Audit Committee of the Board the responsibility
to review matters which relate to this subject and report to the Board.
Limited Separate Voting Rights
Holders of shares of Marathon Stock, Steel Stock and Delhi Stock vote
together as a single class on all matters as to which all USX common
stockholders are entitled to vote. Holders of Marathon Stock, Steel Stock or
Delhi Stock will have no rights to vote on matters as a separate Group except
as described under "Description of Capital Stock--Marathon Stock--Voting,"
under "Description of Capital Stock--Steel Stock--Voting" and under
"Description of Capital Stock--Delhi Stock--Voting" and in certain limited
circumstances as currently provided under Delaware law. Separate meetings for
the holders of each class of Common Stock will not be held. Accordingly,
subject to such exceptions, holders of shares of Marathon Stock, Steel Stock or
Delhi Stock, cannot bring a proposal to a vote of the holders of Marathon
Stock, Steel Stock or Delhi Stock only, but are required to bring any proposal
to a vote of all holders of capital stock of USX entitled to vote generally
voting together as a single class.
The interests of the holders of the Marathon Stock, Steel Stock and Delhi
Stock may diverge or appear to diverge with respect to certain matters as to
which such holders are entitled to vote. If, when a stockholder vote is taken
on any matter as to which a separate vote by any class would not be required
under the Certificate of Incorporation or Delaware law, the holders of one or
more classes of Common Stock would have more than the number of votes required
to approve any such matter, the holders of that class or classes would be in a
position to control the outcome of the vote on such matter. The Certificate of
Incorporation provides that neither the increase nor the decrease of the
authorized number of shares of any class of Common Stock requires a separate
vote of any such class. Thus, it is possible that the holders of a majority of
any class or two classes of Common Stock could constitute a majority of the
voting power of all classes of Common Stock and approve the increase or
decrease of the authorized amount of another class or classes of Common Stock
without the approval of the holders of such other class or classes of Common
Stock.
On all matters where the holders of Common Stock vote together as a single
class, a share of Marathon Stock will have one vote and each share of Steel
Stock and Delhi Stock will have a fluctuating vote per share based on relative
time-weighted average ratios of their Market Values. Assuming that the time
weighted averages of the Market Values of Marathon Stock, Steel Stock and Delhi
Stock were $17, $39 and $16, respectively, the per share voting rights of
Marathon Stock, Steel Stock and Delhi Stock would be one vote, 2.29 votes and
.94 vote per share, respectively. If the Marathon Stock, the Steel Stock and
the Delhi Stock had such per share voting rights as of December 9, 1993, the
holders of Marathon Stock, Steel Stock and Delhi Stock would have approximately
62%, 35% and 3% respectively, of the total voting power of USX.
Management and Accounting Policies Subject to Change
Since 1991 USX has applied certain management and accounting policies adopted
by the Board and described herein, which policies may be modified or rescinded
in the sole discretion of the Board without approval of stockholders, although
the Board has no present intention to do so. See "Management and Accounting
Policies." The Board may also adopt additional policies depending upon the
circumstances. Any determination of the Board to modify or rescind such
policies, or to adopt additional policies, including any such decision that
would have disparate impacts upon holders of Marathon Stock, or Steel Stock or
Delhi Stock, would be made by the Board in good faith and in the honest belief
that such decision is in the best interests of all stockholders of USX. In
addition, generally accepted accounting principles require that any change in
accounting policy be preferable (in accordance with such principles) to the
policy previously established.
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Limitations on Potential Unsolicited Acquisitions
If the Marathon Group, the Steel Group and the Delhi Group were separate
companies, any person interested in acquiring one of them without negotiation
with management could seek to obtain control of it by means of a tender offer
or proxy contest. Because each Group is not a separate company, any person
interested in acquiring only one Group without negotiation with USX management
would be required to seek control of the voting power representing all of the
outstanding capital stock of USX entitled to vote on such acquisition. See
"Limited Separate Voting Rights" above.
Because of fluctuations in the relative Market Values of shares of the three
classes of Common Stock, the voting power of a particular stockholder may be
increased or decreased from that held at the time the stockholder acquired the
stock or from that held at the time of the previous vote. The fluctuating
voting powers of the three classes of Common Stock may influence a purchaser
interested in acquiring and maintaining control of USX to acquire equivalent
holdings in all classes of Common Stock.
Dividends and Earnings Per Share
The Board intends to declare and pay dividends on the Marathon Stock, Steel
Stock and Delhi Stock based on the financial condition and results of
operations of the respective Group, although it has no obligation under
Delaware law to do so. Subject to any prior rights of the holders of Preferred
Stock: (a) Marathon Stock will be payable out of legally available funds of USX
(as defined under Delaware law); (b) dividends on Steel Stock will be payable
out of the lesser of (i) the Available Steel Dividend Amount and (ii) legally
available funds; and (c) dividends on Delhi Stock will be payable when, as and
if declared by the Board out of the lesser of (i) the Available Delhi Dividend
Amount and (ii) legally available funds. In making its dividend decisions, the
Board will rely on the financial statements of each Group. In determining its
dividend policy, the Board will consider, among other things, the long-term
earnings and cash flow capabilities of each Group, as well as the dividend
policies of similar publicly traded companies.
The method of calculating earnings per share for the Marathon Stock, the
Steel Stock and the Delhi Stock reflects the Board's intent that the separately
reported earnings and surplus of the Marathon Group, the Steel Group and the
Delhi Group as determined consistent with the Certificate of Incorporation, are
available for payment of dividends to the respective classes of stock, although
legally available funds and liquidation preferences of these classes of stock
do not necessarily correspond with these amounts. Dividends on all classes of
Preferred Stock and USX common stock are limited to legally available funds of
USX, which are determined on the basis of the entire Corporation. Distribution
on the Marathon Stock, the Steel Stock and the Delhi Stock would be precluded
by a failure to pay dividends on any series of Preferred Stock. Net losses of
any group as well as dividends and distributions on any class of common stock
or series of Preferred Stock and repurchases of any class of common stock or
series of Preferred Stock, will reduce the funds of USX legally available for
payment of dividends on all classes of common stock.
Under Delaware law, a corporation may declare and pay dividends on its
capital stock either (1) out of its surplus or (2) in case there is no surplus,
out of its net profits for the year in which the dividend is declared and/or
the proceeding fiscal year. "Surplus" is the amount by which the total assets
of the corporation exceed total liabilities and capital. Capital for USX is the
sum of (a) the aggregate par value of the outstanding shares of Common Stock
(equal to $1 per share), (b) the aggregate stated capital of the outstanding
shares of Adjustable Rate Preferred Stock ($50 per share) and (c) the aggregate
stated capital of the outstanding shares of 6.50% Convertible Preferred Stock
($1 per share). If the capital of a corporation is diminished by depreciation
in the value of its properties, or by losses, or otherwise, to an amount less
than the aggregate amount of capital represented by the outstanding stock of
all classes having a preference upon the distribution of assets, dividends may
not be paid out of net profits (that is pursuant to clause (2) above) until the
deficiency in capital shall have been repaired. For purposes of determining
surplus, the assets and liabilities of a corporation are to be valued on the
basis of market value.
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Potential Effects of Exchange and Redemption of Common Stock
Under various conditions, the Steel Stock may be exchanged, at USX's option,
for shares of Marathon Stock, or if there are no shares of Marathon Stock
outstanding, Delhi Stock at a 10% premium. Any exchange of Steel Stock for
Marathon Stock or Delhi Stock would preclude holders of Steel Stock from
retaining their investment in a security reflecting USX's steel and other
businesses that constitute the U.S. Steel Group. Any exchange of Delhi Stock
for Steel Stock would dilute the interests of holders of Steel Stock. See
"Description of Capital Stock--Steel Stock--Exchange and Redemption."
Under various conditions, the Delhi Stock may be exchanged, at USX's option,
for shares of Marathon Stock, or if there are no shares of Marathon Stock
outstanding, Steel Stock at a 10% premium. In addition, the Board may at any
time exchange each outstanding share of Delhi Stock for a number of shares of
Marathon Stock or, if there are no shares of Marathon Stock outstanding and
shares of Steel Stock are outstanding, of Steel Stock at a 15% premium. USX
cannot predict the impact on the market price of the Delhi Stock of its ability
to effect any such exchange. In addition, any exchange of Delhi Stock for
Marathon Stock or Steel Stock would preclude holders of Delhi Stock from
retaining their investment in a security reflecting USX's natural gas
purchasing, gathering, processing, transporting and marketing operations, and
any exchange of Steel Stock for Delhi Stock would dilute the interests of
holders of Delhi Stock. See "Description of Capital Stock--Delhi Stock--
Exchange and Redemption."
MANAGEMENT AND ACCOUNTING POLICIES
MANAGEMENT POLICIES
The Board has adopted certain policies with respect to the Marathon Group,
the U.S. Steel Group and the Delhi Group including, without limitation, the
intention to: (i) limit capital expenditures of the U.S. Steel Group over the
long term to an amount equal to the internally generated cash flow of the U.S.
Steel Group, including funds generated by sales of assets of the U.S. Steel
Group, (ii) sell assets and provide services among the groups only on an arm's-
length basis and (iii) treat funds generated by sale of Marathon Stock, Steel
Stock and Delhi Stock (except for the sale of shares deemed to represent the
Retained Interest) and securities convertible into such stock as assets of the
respective Group and apply such funds to acquire assets or reduce liabilities
of the Marathon Group, the U.S. Steel Group or the Delhi Group, respectively,
as the case may be.
The above policies may be modified or rescinded in the sole discretion of the
Board without approval of the stockholders, although the Board has no present
intention to do so. The Board may also adopt additional policies depending upon
the circumstances. Any determination of the Board to modify or rescind such
policies, or to adopt additional policies, including any such decision that
would have disparate impacts upon holders of the separate classes of Common
Stock, would be made by the Board in good faith and in the honest belief that
such decision is in the best interest of all stockholders of USX.
ACCOUNTING MATTERS AND POLICIES
USX prepares the Marathon Group, the U.S. Steel Group and the Delhi Group
financial statements in accordance with generally accepted accounting
principles, and these financial statements, taken together, comprise all of the
accounts included in the corresponding consolidated financial statements of
USX. The financial statements of the Marathon Group, the U.S. Steel Group and
the Delhi Group principally reflect the financial position and results of
operations of the businesses included therein. Consistent with the Certificate
of Incorporation and related policies, such group financial statements also
include portions of USX's corporate assets and liabilities (including
contingent liabilities). Principal corporate activities attributed to the
groups and reflected in their financial statements include financial
activities, corporate general and administrative costs, common stock
transactions and income taxes.
The above policies may be modified or rescinded in the sole discretion of the
Board without approval of the stockholders, although the Board has no present
intention to do so. The Board may also adopt additional policies
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depending upon the circumstances. Any determination of the Board to modify or
rescind such policies, or to adopt additional policies, including any such
decision that would have disparate impacts upon holders of the separate classes
of Common Stock, would be made by the Board in good faith and in the honest
belief that such decision is in the best interest of all stockholders of USX.
In addition, generally accepted accounting principles require that any change
in an accounting policy be preferable (in accordance with such principles) to
the previous policy.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will be general unsecured obligations of USX and will
rank pari passu with the other general unsecured obligations of USX. The Debt
Securities will be issued under an Indenture, dated as of March 15, 1993,
between PNC Bank, National Association (the "Trustee") and USX (the
"Indenture"). A copy of the Indenture is filed as an exhibit to the
Registration Statements. The following summaries of certain provisions of the
Indenture do not purport to be complete and are qualified in their entirety by
reference to the provisions of the Indenture, which are incorporated by
reference herein. Certain capitalized terms used herein are defined in the
Indenture. The Section numbers referred to in the following summaries are
references to relevant sections of the Indenture.
GENERAL
The Indenture does not limit the principal amount of Debt Securities or other
indebtedness which may be issued thereunder from time to time by USX and USX
may in the future issue additional Debt Securities (in addition to those
offered hereby) under the Indenture. As of September 30, 1993, an aggregate
principal amount of $600,000,000 of Debt Securities had been issued, and were
outstanding under, the Indenture.
The Debt Securities of any Series may be issued in definitive form or, if
provided in the Prospectus Supplement relating thereto, may be represented in
whole or in part by a Global Security or Securities, registered in the name of
a Depositary designated by USX. Each Debt Security represented by a Global
Security is referred to herein as a "Book-Entry Security."
Debt Securities may be issued from time to time pursuant to this Prospectus
in an aggregate principal amount or initial public offering price of up to
$850,000,000 or the equivalent thereof in foreign denominated currency or units
based on or relating to foreign denominated currencies, including European
Currency Units ("ECU"), and will be offered independently or together on terms
determined by market conditions at the time of sale. The Debt Securities may be
issued in one or more series with the same or various maturities and may be
sold at par, a premium or an original issue discount. Debt Securities sold at
an original issue discount may bear no interest or interest at a rate which is
below market rates.
Reference is made to the Prospectus Supplement for the specific terms of the
Debt Securities offered hereby, including the following (to the extent
applicable to a particular series of Debt Securities): (i) designation,
aggregate principal amount, purchase price (expressed as a percentage of the
principal amount thereof), and denomination; (ii) date of maturity; (iii) if
other than currency of the United States, the currency or units based on or
relating to currencies for which Debt Securities may be purchased and in which
principal and any premium or interest will or may be payable; (iv) interest
rate or rates (or the manner of calculation thereof), if any; (v) the times at
which any such interest will be payable; (vi) the place or places where
principal and any premium and interest will be payable; (vii) any redemption or
sinking fund provisions or other repayment obligations and any remarketing
arrangements related thereto; (viii) any index used to determine the amount of
payment of principal of and any premium and interest on the Debt Securities;
(ix) the application, if any, of the defeasance provisions to the Debt
Securities; (x) if other than the principal amount thereof, the portion of the
principal amount of the Debt Securities which shall be payable upon declaration
of acceleration of the maturity thereof; (xi) if other than 100% of the
principal amount thereof plus accrued interest, the Change in Control Purchase
Price or Prices applicable to purchases of Debt Securities upon the occurrence
of a Change in Control; (xii) whether the Debt Securities will be issued in
whole or in part in the form of one or more Global Securities and, in such
case, the Depositary for such Global Securities; and (xiii) any other specific
terms of the Debt Securities, including any terms which may be required by or
advisable under United States laws or regulations.
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Except with respect to Book-Entry Securities, Debt Securities may be
presented for exchange or registration of transfer, in the manner, at the
places and subject to the restrictions set forth in the Debt Securities and the
Prospectus Supplement. Such services will be provided without charge, other
than any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the Indenture. For a description of
payments of principal of and any premium and interest on, and transfer of,
Book-Entry Securities, and exchanges of Global Securities representing Book-
Entry Securities, see "Book-Entry Securities"hereunder.
CERTAIN COVENANTS OF USX
Creation of Certain Liens
If USX or any Subsidiary of USX shall mortgage, pledge, encumber or subject
to a lien (hereinafter to "Mortgage" or a "Mortgage," as the context may
require) as security for any indebtedness for money borrowed (i) any blast
furnace facility or raw steel producing facility, or rolling mills which are a
part of a plant which includes such a facility, or (ii) any property capable of
producing oil or gas; and which, in either case, is located in the United
States and is determined to be a principal property by the Board of Directors
of USX in its discretion, USX will secure or will cause such Subsidiary to
secure each Series of the Debt Securities equally and ratably with all
indebtedness or obligations secured by the Mortgage then being given and with
any other indebtedness of USX or such Subsidiary then entitled thereto;
provided, however, that this covenant shall not apply in the case of: (a) any
Mortgage existing on the date of the Indenture (whether or not such Mortgage
includes an after-acquired property provision); (b) any Mortgage, including a
purchase money Mortgage, incurred in connection with the acquisition of any
property (any Mortgage incurred within 180 days after such acquisition or the
completion of construction shall be deemed to be in connection with such
acquisition), the assumption of any Mortgage previously existing on such
acquired property or any Mortgage existing on the property of any corporation
when it becomes a Subsidiary of USX; (c) any Mortgage on such property in favor
of the United States, or any State, or instrumentality of either, to secure
partial, progress or advance payments to USX or any Subsidiary of USX pursuant
to the provisions of any contract or any statute; (d) any Mortgage on such
property in favor of the United States, any State, or instrumentality of
either, to secure borrowings for the purchase or construction of the property
Mortgaged; (e) any Mortgage in connection with a sale or other transfer of oil
or gas in place for a period of time or in an amount such that the purchaser
will realize therefrom a specified amount of money or specified amount of
minerals or any interest in property of the character commonly referred to as
an "oil payment" or "production payment"; (f) any Mortgage on any property
arising in connection with or to secure all or any part of the cost of the
repair, construction, improvement, alteration, exploration, development or
drilling of such property or any portion thereof; (g) any Mortgage on any
pipeline, gathering system, pumping or compressor station, pipeline storage
facility, other pipeline facility, drilling equipment, drilling platform,
drilling barge, any movable railway, marine or automotive equipment, gas plant,
office building, storage tank, or warehouse facility, any of which is located
on any property included under clause (ii) above; (h) any Mortgage on any
equipment or other personal property used in connection with any property
included under clause (ii) above; (i) any Mortgage on any property included
under clause (ii) above arising in connection with the sale of accounts
receivable resulting from the sale of oil or gas at the wellhead; or (j) any
renewal of or substitution for any Mortgage permitted under the preceding
clauses. Notwithstanding the foregoing, USX may and may permit its Subsidiaries
to grant Mortgages or incur liens on property covered by the restriction
described above so long as the net book value of the property so encumbered,
together with all property subject to the restriction on certain sale and
leasebacks described below, does not at the time such Mortgage or lien is
granted exceed five percent (5%) of Consolidated Net Tangible Assets, (as such
term is defined in the Indenture). (Section 4.03)
"Consolidated Net Tangible Assets" means the aggregate value of all assets of
USX and its subsidiaries after deducting therefrom (a) all current liabilities
(excluding all long-term debt due within one year), (b) all investments in
unconsolidated subsidiaries and all investments accounted for on the equity
basis and (c) all goodwill, patent and trademarks, unamortized debt discount
and other similar intangibles (all determined in conformity with generally
accepted accounting principles and calculated on a basis consistent with USX's
most recent audited consolidated financial statements). (Section 1.01)
As of the date of this Prospectus, neither USX nor any subsidiary of USX has
any property referred to in either clause (i) or (ii) above and in the
following subsection "Limitations on Certain Sales and Leasebacks" which has
been determined by the Board of Directors of USX to be a principal property.
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Limitations on Certain Sale and Leasebacks
USX will not, nor will it permit any Subsidiary to, sell or transfer (i) any
blast furnace facility or raw steel producing facility, or rolling mills which
are a part of a plant which includes such a facility, or (ii) any property
capable of producing oil or gas; and which, in either case, is located in the
United States and is determined to be a principal property by the Board of
Directors of USX in its discretion, with the intention of taking back a lease
thereof, provided, however, this covenant shall not apply if (a) the lease is
to a Subsidiary (or to USX in the case of a Subsidiary); (b) the lease is for a
temporary period by the end of which it is intended that the use of the
property by the lessee will be discontinued; (c) USX or a Subsidiary could, in
accordance with Section 4.03, heretofore described, Mortgage such property
without equally and ratably securing the Debt Securities; (d) the transfer is
incident to or necessary to effect any operating, farm out, farm in,
unitization, acreage exchange, acreage contributions, bottom hole or dry hole
arrangements or pooling agreement or any other agreement of the same general
nature relating to the acquisition, exploration, maintenance, development and
operation of oil and gas properties in the ordinary course of business or as
required by regulatory agencies having jurisdiction over the property; or (e)
USX promptly informs the Trustee of such sale, the net proceeds of such sale
are at least equal to the fair value (as determined by resolution adopted by
the Board of Directors of USX) of such property and USX within 180 days after
such sale applies an amount equal to such net proceeds (subject to reduction by
reason of credits to which USX is entitled, under the conditions specified in
the Indenture) to the retirement or in substance defeasance of funded debt of
USX or a Subsidiary. (Section 4.04)
Merger and Consolidation
USX will not merge or consolidate with any other corporation or sell or
convey all or substantially all of its assets to any person, firm or
corporation, except that USX may merge or consolidate with, or sell or convey
all or substantially all of its assets to, any other corporation, provided that
(i) USX shall be the continuing corporation or the successor corporation (if
other than USX, as the case may be) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof and
such corporation shall expressly assume the due and punctual payment of the
principal of and any premium and interest on all the Debt Securities, according
to their tenor, and the due and punctual performance and observance of all of
the covenants and conditions of the Indenture to be performed by USX and (ii)
USX or such successor corporation, as the case may be, shall not, immediately
after such merger, consolidation, sale or conveyance, be in default in the
performance of any such covenant or condition and no event which with the lapse
of time, the giving of notice or both would constitute an Event of Default
shall have occurred and be continuing. (Section 11.01)
If upon any consolidation or merger of USX with or into any other
corporation, or upon any sale or conveyance of substantially all of the
properties of USX, or upon any acquisition by USX of all or any part of the
property of another corporation, any property owned immediately prior thereto
would thereupon become subject to any mortgage, lien, pledge, charge or
encumbrance, USX, prior to such event, will secure the Debt Securities (equally
and ratably with any other indebtedness of USX secured thereby) by a lien on
all of such property of USX, prior to all liens, charges and encumbrances other
than any theretofore existing thereon. (Section 11.03)
PURCHASE OF DEBT SECURITIES UPON A CHANGE IN CONTROL
In the event of any Change in Control (as defined below) of USX, each holder
of Debt Securities will have the right, at that holder's option, subject to the
terms and conditions of the Indenture, to require USX to become obligated to
purchase all of that holder's Debt Securities on the date that is 35 Business
Days after the occurrence of such Change in Control (the "Change in Control
Purchase Date") at a cash price equal to (i) unless otherwise specified in the
terms of such Debt Securities, 100% of the principal amount thereof, together
with accrued interest to such Change in Control Purchase Date (except that
interest installments due prior to such Change in Control Purchase Date will be
payable to the holders of such Debt Securities of record at the close of
business on the relevant record dates according to their terms and the
provisions of the Indenture), or (ii) such other price or prices as may be
specified in the terms of such Debt Securities (the "Change in Control Purchase
Price"). (Section 4.07)
Within 15 Business Days after a Change in Control, USX is obligated to mail
to the Trustee and to all holders of Debt Securities of any Series at their
addresses shown in the Debt Security register (and to beneficial owners as
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required by applicable law) a notice regarding the Change in Control, stating,
among other things: (i) the last date on which the Change in Control purchase
right may be exercised, (ii) the Change in Control Purchase Price, (iii) the
Change in Control Purchase Date, (iv) the name and address of the Paying Agent,
and (iv) the procedures that holders must follow to exercise these rights. USX
will cause a copy of such notice to be published in a daily newspaper of
national circulation. (Section 4.07)
To exercise this right, a holder of Debt Securities of any Series must
deliver a Change in Control Purchase Notice to the Paying Agent for that Series
at its address set forth in USX's notice regarding the Change in Control at any
time prior to the close of business on the Change in Control Purchase Date. The
Change in Control Purchase Notice shall state (i) the certificate numbers of
the Debt Securities to be delivered by the holder thereof for purchase by USX
and (ii) that such Debt Securities are to be purchased by USX pursuant to the
applicable provisions of the Debt Securities and USX's notice regarding the
Change in Control. (Section 4.07)
Upon receipt by USX of the Change in Control Purchase Notice, the holder of
the Debt Security in respect of which such notice was given shall (unless such
notice is withdrawn as specified in the Indenture) thereafter be entitled to
receive solely the Change in Control Purchase Price with respect to such Debt
Security. Any Change in Control Purchase Notice may be withdrawn by the holder
of Debt Securities of any Series by a written notice of withdrawal delivered to
the Paying Agent for that Series at any time prior to the close of business on
the Change in Control Purchase Date. The notice of withdrawal shall state the
certificate numbers of the Debt Securities as to which the withdrawal notice
relates. (Section 4.08)
Payment of the Change in Control Purchase Price for a Debt Security of any
Series for which a Change in Control Purchase Notice has been delivered and not
withdrawn is conditioned upon delivery of such Debt Security (together with
necessary endorsements) to the Paying Agent for that Series at its address set
forth in USX's notice regarding the Change in Control, at any time (whether
prior to, on or after the Change in Control Purchase Date) after the delivery
of such Change in Control Purchase Notice. (Section 4.07) Payment of the Change
in Control Purchase Price for such Debt Security will be made promptly
following the later of the Change in Control Purchase Date or the time of
delivery of such Debt Security. (Section 4.08)
Under the Indenture, a "Change in Control" of USX is deemed to have occurred
at such time as (i) any "person" or "group" of persons (excluding USX, any
Subsidiary, any employee stock ownership plan or any other employee benefit
plan of USX) shall have acquired "beneficial ownership" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act and the applicable rules and
regulations thereunder) of shares of Voting Stock representing at least 35% of
the outstanding Voting Power of USX, (ii) during any period of twenty-five
consecutive months, commencing before or after the date of the Indenture,
individuals who at the beginning of such twenty-five month period were
directors of USX (together with any replacement or additional directors whose
election was recommended by incumbent management of USX or who were elected by
a majority of directors then in office) cease to constitute a majority of the
board of directors of USX, or (iii) any person or group of related persons
shall acquire all or substantially all of the assets of USX; provided, that a
Change in Control shall not be deemed to have occurred pursuant to clause (iii)
above if USX shall have merged or consolidated with or transferred all or
substantially all of its assets to another corporation in compliance with the
provisions of Section 11.01 of the Indenture (relating to when USX may merge or
transfer assets) and the surviving or successor or transferee corporation is no
more leveraged than was USX immediately prior to such event. For purposes of
this definition, the term "leveraged" when used with respect to any corporation
shall mean the percentage represented by the total assets of that corporation
divided by its stockholders' equity, in each case determined and as would be
shown in a consolidated balance sheet of such corporation prepared in
accordance with generally accepted accounting principles in the United States
of America. The term "substantially all" in clause (iii) above has not been
quantified for purposes of defining Change in Control and, depending upon the
factual circumstances, there may be uncertainty as to when a Change in Control
has occurred for purposes of determining the rights of holders of Debt
Securities pursuant to this provsion.
Notwithstanding the foregoing, a Change in Control will not be deemed to have
occurred by virtue of (i) USX, any Subsidiary of USX, any employee stock
ownership plan or any other employee benefit plan of USX or any such
Subsidiary, or any Person holding Voting Stock for or pursuant to the terms of
any such employee benefit
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plan, acquiring beneficial ownership of shares of Voting Stock, whether
representing 35% or more of the outstanding Voting Power of USX or otherwise or
(ii) any Person whose ownership of shares of Voting Stock representing 35% or
more of the outstanding Voting Power of USX results solely from USX's
calculation from time to time of the relative voting rights of Marathon Stock,
Steel Stock and Delhi Stock.
"Voting Stock" means stock of USX of any class or classes (however
designated) having ordinary voting power for the election of the directors of
USX, other than stock having such power only by reason of the happening of a
contingency. "Voting Power" means the total voting power represented by all
outstanding shares of all classes of Voting Stock. (Section 4.07)
In the event a Change in Control occurs, USX intends to comply with any
applicable securities laws or regulations, including any applicable
requirements of Rule 14e-1 under the Exchange Act. The Change in Control
purchase feature of the Debt Securities may in certain circumstances make more
difficult or discourage a takeover of USX. The Change in Control purchase
feature, however, is not the result of management's knowledge of any specific
effort to accumulate shares of Common Stock or to obtain control of USX by
means of a merger, tender offer, solicitation or otherwise, or part of a plan
by management to adopt a series of anti-takeover provisions. The Change in
Control purchase feature is similar to that contained in other debt offerings
of USX as a result of negotiations between USX and the underwriters thereof.
Except as described above, the Change in Control purchase feature does not
afford holders of the Debt Securities protection against possible adverse
effects of a reorganization, restructuring, merger or similar transaction
involving USX.
Although USX's existing indebtedness does not limit USX's ability to purchase
Debt Securities, USX's ability to purchase Debt Securities in the future may be
limited by the terms of any then existing borrowing arrangements and by its
financial resources.
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any Series is defined
in the Indenture as being: (i) default in the payment of the principal of or
premium, if any, on any of the Debt Securities of such Series when due and
payable; (ii) default in the payment of interest on the Debt Securities of such
Series when due, continuing for 30 days; (iii) default in the payment of the
Change in Control Purchase Price of any of the Debt Securities of such Series
as and when the same shall become due and payable; (iv) default in the deposit
of any sinking fund payment with respect to any Debt Security of such Series
when due; (v) failure by USX in the performance of any other covenant or
agreement in the Debt Securities of such Series or in the Indenture continued
for a period of 90 days after notice of such failure as provided in the
Indenture; (vi) certain events of bankruptcy, insolvency, or reorganization
with respect to USX; or (vii) any other Event of Default provided with respect
to Debt Securities of that Series. (Section 6.01)
USX is required annually to deliver to the Trustee officers' certificates
stating whether or not the signers have any knowledge of any default in the
performance by USX of certain covenants. (Section 4.06)
In case an Event of Default shall occur and be continuing with respect to any
Series, the Trustee or the holders of not less than 25% in principal amount of
the Debt Securities of such Series then outstanding may declare the Debt
Securities of such Series to be due and payable. (Section 6.01) The Trustee is
required to give holders of the Debt Securities of any Series written notice of
a default with respect to such Series as and to the extent provided by the
Trust Indenture Act. (Section 6.07)
If, however, at any time after the Debt Securities of such Series have been
declared due and payable, and before any judgment or decree for the moneys due
has been obtained or entered, USX shall pay or deposit with the Trustee amounts
sufficient to pay all matured installments of interest upon the Debt Securities
of such Series and the principal of all Debt Securities of such Series which
shall have become due, otherwise than by acceleration, together with interest
on such principal and, to the extent legally enforceable, on such overdue
installments of interest and all other amounts due under the Indenture shall
have been paid, and any and all defaults with respect
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to such Series under the Indenture shall have been remedied, then the holders
of a majority in aggregate principal amount of the Debt Securities of such
Series then outstanding, by written notice to USX and the Trustee, may waive
all defaults with respect to such Series and rescind and annul the declaration
that the Debt Securities of such Series are due and payable. (Section 6.01) In
addition, prior to any such declaration that the Debt Securities of such Series
are due and payable, the holders of a majority in aggregate principal amount of
the Debt Securities of such Series may waive any past default and its
consequences with respect to such Series, except a default in the payment of
the principal of or any premium or interest on any Debt Securities of such
Series. (Section 6.06)
The Trustee is under no obligation to exercise any of the rights or powers
under the Indenture at the request, order or direction of any of the holders of
Debt Securities, unless such holders shall have offered to the Trustee
reasonable security or indemnity. (Section 7.02) Subject to such provisions for
the indemnification of the Trustee and certain limitations contained in the
Indenture, the holders of a majority in aggregate principal amount of the Debt
Securities of each Series at the time outstanding shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of such Series. (Section 6.06)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting USX and the Trustee to modify
the Indenture or enter into or modify any supplemental indenture without the
consent of the holders of the Debt Securities in regard to matters as shall not
adversely affect the interests of the holders of the Debt Securities,
including, without limitation, the following: (a) to evidence the succession of
another corporation to USX; (b) to add to the covenants of USX further
covenants, restrictions, conditions or provisions for the benefit or protection
of the holders of any or all Series of Debt Securities or to surrender any
right or power conferred upon USX by the Indenture; (c) to cure any ambiguity
or to correct or supplement any provision of the Indenture (or supplements)
which may be defective or inconsistent with any other provision in the
Indenture (or supplements); to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee; or to make such other provisions in regard to
matters or questions arising under the Indenture as shall not adversely affect
the interests of the holders of the Debt Securities then outstanding; (d) to
add to, change or eliminate any of the provisions of the Indenture in respect
of one or more Series of Debt Securities thereunder, under certain conditions
specified therein; (e) to evidence the appointment of a successor trustee and
to add to or change provisions of the Indenture necessary to provide for or
facilitate the administration of the trusts under the Indenture by more than
one trustee; (f) to set forth the form and any terms of any Series of Debt
Securities which USX and the Trustee deem necessary or desirable to include in
a supplemental indenture; and (g) to add to or change any of the provisions of
the Indenture to such extent as shall be necessary or desirable to permit or
facilitate the issuance of Debt Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons. USX and the
Trustee may otherwise modify the Indenture or any supplemental indenture with
the consent of the holders of not less than 66 2/3% in aggregate principal
amount of each Series of Debt Securities affected thereby at the time
outstanding, except that no such modifications shall (i) extend the fixed
maturity of any Debt Securities, or reduce the principal amount thereof or
reduce the rate or extend the time of payment of any premium or interest
thereon, or change the currency in which the Debt Securities are payable,
without the consent of the holder of each Debt Security so affected, or (ii)
reduce the aforesaid percentage of Debt Securities of any Series, the consent
of the holders of which is required for any such modifications or supplemental
indenture, without the consent of the holders of all Debt Securities affected
thereby then outstanding. (Article Ten)
SATISFACTION AND DISCHARGE; DEFEASANCE AND COVENANT DEFEASANCE
The Indenture shall be satisfied and discharged if (i) USX shall deliver to
the Trustee all Debt Securities then outstanding for cancellation or (ii) all
Debt Securities shall have become due and payable or are to become due and
payable within one year and USX shall deposit an amount sufficient to pay the
principal, premium, if any, and interest to the date of maturity, provided that
in either case USX shall have paid all other sums payable under the Indenture.
(Section 12.01)
The Indenture provides, if such provision is made applicable to the Debt
Securities of a Series, that USX may elect either (A) to defease and be
discharged from any and all obligations with respect to any Debt Security of
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such Series (except for the obligations to register the transfer or exchange of
such Debt Security, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B) to be
released from its obligations with respect to such Debt Security under Sections
4.03, 4.04, 4.07, 4.09, 11.01 and 11.03 of the Indenture (being the
restrictions described above under "Certain Covenants of USX" and USX's
obligations described under "Purchase of Debt Securities upon a Change in
Control") and (ii) that Sections 6.01(d), 6.01(e) (as to Sections 4.03, 4.04,
4.07, 4.09, 11.01 and 11.03) and 6.01(h), as described in clauses (iv), (v) and
(vii) under "Events of Default" above, shall not be deemed to be Events of
Default under the Indenture with respect to such Series ("covenant
defeasance"), upon the deposit with the Trustee (or other qualifying trustee),
in trust for such purpose, of money and/or Government Obligations (as defined)
which through the payment of principal and interest in accordance with their
terms will provide money, in an amount sufficient to pay the principal of (and
premium, if any) and interest on such Debt Security, on the scheduled due dates
therefor. In the case of defeasance, the holders of such Debt Securities are
entitled to receive payments in respect of such Debt Securities solely from
such Trust. Such a trust may only be established if, among other things, USX
has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the holders of the Debt Securities affected
thereby will not recognize income, gain or loss for Federal income tax purposes
as a result of such defeasance or covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance or covenant defeasance had
not occurred. Such Opinion of Counsel, in the case of defeasance under clause
(A) above, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable Federal income tax law occurring after the
date of the Indenture. (Section 12.02)
RECORD DATES
The Indenture provides that in certain circumstances USX or the Trustee may
establish a record date for determining the holders of outstanding Debt
Securities of a Series entitled to join in the giving of notice or the taking
of other action under the Indenture by the holders of the Debt Securities of
such Series.
BOOK-ENTRY SECURITIES
The following description of Book-Entry Securities will apply to any Series
of Debt Securities issued in whole or in part in the form of a Global Security
or Securities except as otherwise provided in the Prospectus Supplement
relating thereto.
Upon issuance, all Book-Entry Securities of like tenor and having the same
date of original issue will be represented by a single Global Security. Each
Global Security representing Book-Entry Securities will be deposited with, or
on behalf of, the Depositary, which will be a clearing agent registered under
the Exchange Act. The Global Security will be registered in the name of the
Depositary or a nominee of the Depositary.
Ownership of beneficial interest in a Global Security representing Book-Entry
Securities will be limited to institutions that have accounts with the
Depositary or its nominee ("participants") or persons that may hold interests
through participants. In addition, ownership of beneficial interests by
participants in such a Global Security will only be evidenced by, and the
transfer of that ownership interest will only be effected through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interest in such a Global Security by persons that hold through
participants will only be evidenced by, and the transfer of that ownership
interest within such participant will only be effected through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair this ability to transfer beneficial
interests in such a Global Security.
Payment of principal of and any premium and interest on Book-Entry Securities
represented by any Global Security registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owners and holder of the Global Security
representing such Book-Entry Securities. None of USX, the Trustee or any agent
of USX or the Trustee will have any responsibility or liability for any aspect
of the Depositary's records or any participant's records relating to or
payments made on account of beneficial ownership interests in a Global Security
representing such Book-Entry Securities or for maintaining, supervising or
reviewing any of the Depositary's records or any participant's records relating
to such
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beneficial ownership interests. Payments by participants to owners of
beneficial interests in a Global Security held through such participants will
be governed by the Depositary's procedures, as is now the case with securities
held for the accounts of customers registered in "street name," and will be the
sole responsibility of such participants.
No Global Security may be transferred except as a whole by the Depositary for
such Global Security to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary.
A Global Security representing Book-Entry Securities of any Series is
exchangeable for definitive Debt Securities of such Series in registered form,
of like tenor and of an equal aggregate principal amount, only if (a) the
Depositary notifies USX that it is unwilling or unable to continue as
Depositary for such Global Security or the Depositary ceases to be a clearing
agency registered under the Exchange Act, (b) USX in its sole discretion
determines that such Global Security shall be exchangeable for definitive Debt
Securities in registered form, or (c) there shall have occurred and be
continuing an Event of Default with respect to the Debt Securities of that
Series. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable in whole for definitive Debt Securities in
registered form, of like tenor and of an equal aggregate principal amount, and
in the authorized denominations for that Series. Such definitive Debt
Securities shall be registered in the name or names of such person or persons
as the Depositary shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by the Depositary from its
participants with respect to ownership of beneficial interests in such Global
Security.
Except as provided above, owners of beneficial interests in such Global
Security will not be entitled to receive physical delivery of Debt Securities
in definitive form and will not be considered the holders thereof for any
purpose under the Indenture, and no Global Security representing Book-Entry
Securities shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the Depositary or its
nominee. Accordingly, each person owning a beneficial interest in such Global
Security must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. USX understands that under existing industry practices, in the event
that USX requests any action of holders or an owner of a beneficial interest in
such Global Security desires to give or take any action that a holder is
entitled to give or take under the Indenture, the Depositary would authorize
the participants holding the relevant beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participant to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
CONCERNING THE TRUSTEE
PNC Bank, National Association is also trustee for Marathon Oil Company's
9 1/2% Guaranteed Notes due 1994, its 9 3/4% Guaranteed Notes due 1999, and its
Monthly Interest Guaranteed Notes Due 2002 9 3/4% to March 1, 1994 and 7%
Thereafter all of which are guaranteed by USX, for eighteen series of
obligations issued by various governmental authorities relating to
environmental projects at various USX facilities, for an aggregate principal
amount of $1,500,000,000 of debt securities issued by USX under an Indenture
between USX and the Trustee dated July 1, 1991 and for $600,000,000 of Debt
Securities which have heretofore been issued by USX under the Indenture. USX
and its subsidiaries maintain ordinary banking relationships, including loans
and deposit accounts, with PNC Bank, National Association and anticipate that
they will continue to do so.
DESCRIPTION OF CAPITAL STOCK
The following is a description of the terms of the capital stock of USX
included in the Certificate of Incorporation. This description does not purport
to be complete and is qualified in its entirety by reference to the Certificate
of Incorporation, and the Amended and Restated Rights Agreement (the "Restated
Rights Agreement") between USX and Mellon Bank, N.A., as Rights Agent (the
"Rights Agent"), which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.
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GENERAL
The authorized capital stock of USX consists of (i) 40 million shares of
preferred stock, without par value (the "Preferred Stock"), of which four
million shares are designated as Adjustable Rate Cumulative Preferred Stock
("Adjustable Rate Preferred Stock"), 6,900,000 are designated as 6.50%
Cumulative Convertible Preferred Stock ("6.50% Convertible Preferred Stock")
and eight million shares are designated as Series A Junior Preferred Stock,
(ii) 550 million shares of a class of common stock designated as USX-Marathon
Group Common Stock, par value $1.00 per share, (iii) 200 million shares of a
class of common stock designated as USX-U.S. Steel Group Common Stock, par
value $1.00 per share and (iv) 50 million shares of a class of common stock
designated as USX-Delhi Group Common Stock, par value $1.00 per share. As of
December 9, 1993, there were 2,099,970 shares of Adjustable Rate Preferred
Stock, 6,900,000 shares of 6.50% Convertible Preferred Stock, 286,581,539
shares of Marathon Stock, 70,289,545 shares of Steel Stock and 9,187,058 shares
of Delhi Stock issued and outstanding. No shares of Series A Junior Preferred
Stock are outstanding. The Marathon Stock, the Steel Stock and the Delhi Stock
are together referred to as "Common Stock."
As used herein:
"Delhi Group" shall mean, (i) all of the businesses in which any of Delhi
Gas Pipeline Corporation ("DGPC"), The Nueces Company, Delhi Gasmark, Inc.
(previously Texas Gasmark, Inc.), Tonkawa Gas Processing Company, Delhi Gas
Marketing Corp. (previously TXO Gas Marketing Corp.), Delhi Gas Ventures
Corp. (previously TXO Gas Ventures Corp.), Red River Gas Pipeline
Corporation, Ozark Gas Pipeline Corporation, Sweetwater Pipeline
Corporation, Western Gas Transmission, Inc., and Western Gas Corporation
(or any of their predecessors or successors) is or has been engaged,
directly or indirectly, (ii) all assets and liabilities of USX to the
extent attributed to any of such businesses, whether or not such assets or
liabilities are or were assets and liabilities of such companies and (iii)
such businesses, assets and liabilities acquired by USX for the Delhi Group
as determined by the Board to be included in the Delhi Group; provided
that, from and after any dividend or distribution with respect to any
shares of Delhi Stock, or any repurchase of shares of Delhi Stock from
holders of Delhi Stock generally, the Delhi Group shall no longer include
an amount of assets or properties of the Delhi Group equal to the aggregate
amount of such kind of properties or assets so paid in respect of shares of
Delhi Stock multiplied by a fraction, the numerator of which is equal to
one less the Delhi Fraction and the denominator of which is equal to the
Delhi Fraction. If all of the outstanding shares of Steel Stock are
exchanged for shares of Delhi Stock as set forth under "Steel Stock
Exchange and Redemption" below, all of the businesses, assets and
liabilities of the U.S. Steel Group shall be included in the Delhi Group.
"Delhi Fraction" means, on any date, a fraction the numerator of which
shall be the number of shares of Delhi Stock outstanding on such date and
the denominator of which shall be initially 14,000,000 shares; provided
that such fraction shall not be greater than one. The denominator of the
Delhi Fraction shall be adjusted to reflect subdivisions, combinations and
other reclassifications of Delhi Stock, stock dividends payable in shares
of Delhi Stock to holders thereof, the issuance of shares of Delhi Stock
the proceeds of which are attributed to the Delhi Group and repurchases by
USX of shares of Delhi Stock.
"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) of properties or assets.
"Marathon Group" means, at any time, (w) all businesses in which any of
Marathon Oil Company, Texas Oil & Gas Corp., Carnegie Natural Gas Company
and Apollo Gas Company (or any of their predecessors or successors) is or
has been engaged, directly or indirectly, other than the businesses of the
Delhi Group after October 2, 1992 (the date of first issuance of Delhi
Stock), (x) all assets and liabilities of USX to the extent attributed to
any of such businesses, whether or not such assets or liabilities are or
were assets or liabilities of such companies, (y) a proportionate interest
in the business, assets and liabilities of the Delhi Group equal to one
less the Delhi Fraction and (z) such businesses, assets and liabilities
acquired by USX for the Marathon Group after May 6, 1991, as determined by
the Board to be included in the Marathon Group; provided that after any
dividend or distribution with respect to any shares of Delhi Stock, or any
repurchase of shares of Delhi Stock from holders of Delhi Stock generally,
the Marathon Group shall include an amount of assets or
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properties of the Delhi Group equal to the aggregate amount of such kind of
assets or properties so paid in respect of shares of Delhi Stock multiplied
by a fraction, the numerator of which is equal to one less the Delhi
Fraction and the denominator of which is equal to the Delhi Fraction.
"Market Value" of any class of Common Stock of USX on any Business Day
means the average of the high and low reported sales prices regular way of
a share of such class on such Business Day or, in case no such reported
sale takes place on such Business Day, the average of the reported closing
bid and asked prices regular way of a share on such class on such Business
Day, in either case on the Composite Tape, or if the shares of such class
are not listed or admitted to trading on the NYSE on such Business Day, on
specified alternative markets, or, if not listed or admitted to trading on
such markets, the market value as determined by the Board, subject to
adjustments necessary to reflect any dividends (other than regular cash
dividends) or distributions on, or subdivisions or combinations of,
outstanding shares of such class. "Business Day" means each weekday other
than any day on which any relevant class of Common Stock is not traded on
any national securities exchange or the National Association of Securities
Dealers Automated Quotations National Market System or in the over-the-
counter market.
"Net Proceeds," as of any date, from any Disposition of any of the
properties and assets of the U.S. Steel Group or the Delhi Group, as the
case may be, shall mean an amount, if any, equal to the gross proceeds of
such Disposition after payment of, or reasonable provision for (i) any
taxes payable by USX in respect of such Disposition, (ii) any taxes payable
by USX in respect of any dividend or redemption pursuant to a dividend or
redemption paid to holders of Steel Stock or Delhi Stock, as the case may
be, in connection with such Disposition, (iii) any transaction costs,
including, without limitation, any legal, investment banking and accounting
fees and expenses and (iv) any liabilities (contingent or otherwise) of, or
allocated to, the U.S. Steel Group or the Delhi Group, as the case may be,
including, without limitation any indemnity obligations incurred in
connection with the Disposition. For purposes of this definition, any
properties and assets of the U.S. Steel Group or the Delhi Group, as the
case may be, remaining after such Disposition shall constitute "reasonable
provision" for such amount of taxes, costs and liabilities (contingent or
otherwise) as can be supported by such properties and assets. To the extent
the proceeds of any Disposition include any securities or other property
other than cash, the Board of Directors shall determine the value of such
securities or property.
"U.S. Steel Group" means, at any time, all of the businesses in which USX
is or has been engaged, directly or indirectly, and all assets and
liabilities of USX, other than any businesses, assets or liabilities of the
Marathon Group or the Delhi Group if any shares of Marathon Stock or Delhi
Stock are outstanding.
PREFERRED STOCK
The authorized Preferred Stock may be issued without the approval of the
holders of Common Stock in one or more series, from time to time, with each
such series to have such designation, powers, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in a resolution
providing for the issue of any such series adopted by the Board and as
described in the appropriate Prospectus Supplement (if any). The future
issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of USX.
Holders of the Adjustable Rate Preferred Stock are entitled to receive
cumulative dividends, to be declared and paid before declaration and payment of
dividends on USX's common stock, at an adjustable rate within a range of 7 1/2%
to 15 3/4% per annum. The Adjustable Rate Preferred Stock can be redeemed by
USX at its sole option at any time or from time to time, in whole or in part,
at a redemption price of $50 per share, plus accrued and unpaid dividends
thereon. See "Amended and Restated Rights Plan" below.
Holders of the 6.50% Convertible Preferred Stock are entitled to receive
cumulative dividends, to be declared and paid before declaration and payment of
dividend on USX's common stock, at the rate of 6.50% per annum. The 6.50%
Convertible Preferred Stock is not redeemable prior to April 1, 1996, except as
described below. On and after such date, the 6.50% Convertible Preferred Stock
is redeemable at the option of USX under certain circumstances, in whole or in
part, for cash, initially at a price of $52.275 per share, and thereafter at
prices
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declining annually on each April 1 to an amount equal to $50.00 per share on
and after April 1, 2003, plus, in each case, an amount equal to accrued and
unpaid dividends to the redemption date. If USX exchanges all of the
outstanding Steel Stock for shares of a wholly owned subsidiary of USX to which
all of the assets and liabilities of the U.S. Steel Group have been
transferred, pays a dividend on or redeems shares of Steel Stock with the Net
Proceeds from the Disposition of all or substantially all of the assets of the
U.S. Steel Group, pays a dividend on, or USX or any of its subsidiaries
consummates a tender or exchange offer for, Steel Stock, and the aggregate
amount of such dividend or the consideration paid in such tender or exchange
offer is an amount equal to all or substantially all of the assets, the 6.50%
Convertible Preferred Stock is required to be redeemed, in whole, for $50.00
per share, plus dividends accrued and unpaid to the redemption date. The 6.50%
Convertible Preferred Stock is required to be redeemed under certain other
limited circumstances. The 6.50% Convertible Preferred Stock will not be
entitled to the benefit of any sinking fund.
Shares of the 6.50% Convertible Preferred Stock are convertible at any time
at the option of the holder, unless previously redeemed, into shares of Steel
Stock, at a conversion price of $46.125 per share of Steel Stock (equivalent to
a conversion rate of 1.084 shares of Steel Stock for each share of 6.50%
Convertible Preferred Stock), subject to adjustment in certain circumstances.
The holders of the Adjustable Rate Preferred Stock and the 6.50% Convertible
Preferred Stock have no vote except certain class votes in limited
circumstances. Upon the dissolution, liquidation or winding-up of USX, the
holders of the Adjustable Rate Preferred Stock and the 6.50% Convertible
Preferred Stock are entitled to receive out of the assets of USX available for
distribution to stockholders, before any payment or distribution shall be made
on USX's Common Stock or any other class of stock ranking junior to such series
upon liquidation, the amount of $50 per share plus all accrued and unpaid
dividends thereon.
MARATHON STOCK
DIVIDENDS--DIVIDENDS ON THE MARATHON STOCK ARE INTENDED TO BE PAID BASED ON
THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE MARATHON GROUP.
Subject to any prior rights of the holders of the Preferred Stock, dividends
may be paid on the Marathon Stock as determined by the Board out of funds of
USX legally available therefor.
The Board may, in its sole discretion, declare and pay dividends exclusively
on the Marathon Stock, exclusively on the Steel Stock, exclusively on the Delhi
Stock or on such classes in equal or unequal amounts, notwithstanding the
respective amount of funds available for dividends on each class, the
respective voting and liquidation rights of each class, the amount or prior
dividends declared on each class or any other factor.
EXCHANGE AND REDEMPTION--MARATHON STOCK MAY BE EXCHANGED FOR SHARES OF A
SUBSIDIARY OF USX TO WHICH USX WOULD HAVE TRANSFERRED ALL OF THE ASSETS AND
LIABILITIES OF THE MARATHON GROUP.
At any time after the transfer of all the assets and liabilities of the
Marathon Group to a wholly-owned subsidiary of USX (the "Marathon Group
Subsidiary"), the Board may, in its sole discretion and by a majority vote of
the directors then in office, provided that there are funds of USX legally
available therefor, exchange all of the outstanding shares of Marathon Stock
for all of the outstanding shares of the common stock of the Marathon Group
Subsidiary (the "Marathon Group Subsidiary Stock"), on a pro rata basis.
General Redemption Provisions: In the event of any exchange or redemption of
a class of Common Stock, USX shall cause to be given to each holder of such
Common Stock a notice stating (A) that shares of such Common Stock shall be
exchanged or redeemed, as the case may be, (B) the date of the exchange or
redemption, (C) in the event of a partial redemption, the number of shares of
Steel Stock or Delhi Stock, as the case may be, to be redeemed, (D) the kind
and amount of shares of capital stock or cash and/or securities or other
property to be received by such holder with respect to each share of such class
of Common Stock held by such holder, including details as to the calculation
thereof, (E) the place or places where certificates for shares of such class of
Common Stock, properly endorsed or assigned for transfer (unless USX waives
such requirement), are to be surrendered for
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delivery of certificates for shares of such capital stock or cash and/or
securities or other property and (F) that, except as provided in the second
following paragraph, dividends on such shares of Common Stock will cease to be
paid as of such exchange date or redemption date. Such notice shall be sent by
first-class mail, postage prepaid, not less than 30 nor more than 60 days prior
to the exchange date or redemption date, as the case may be, and in any case to
each holder of such class of Common Stock to be exchanged or redeemed, at such
holder's address as the same appears on the stock transfer books of USX.
Neither the failure to mail such notice to any particular holder of such class
of Common Stock nor any defect therein shall affect the sufficiency thereof
with respect to any other holder of such class of Common Stock.
If less than all of the outstanding shares of Steel Stock or Delhi Stock, as
the case may be, are to be redeemed, such shares shall be redeemed by USX pro
rata among the holders of such class of Common Stock or by such other method as
may be determined by the Board to be equitable.
No adjustments in respect of dividends shall be made upon the exchange or
redemption of any shares of any class of Common Stock; provided, however, that
if such shares are exchanged or redeemed by USX after the record date for
determining holders of such class of Common Stock entitled to any dividend or
distribution thereon, such dividend or distribution shall be payable to the
holders of such shares at the close of business on such record date
notwithstanding such exchange or redemption.
Before any holder of shares of any class of Common Stock shall be entitled to
receive certificates representing shares of any kind of capital stock or cash
and/or securities or other property to be received by such holder with respect
to any exchange or redemption of such class of Common Stock, such holder shall
surrender at such office as USX shall specify certificates for such shares of
such class of Common Stock, properly endorsed or assigned for transfer (unless
USX shall waive such requirement). As soon as practicable after surrender of
certificates for shares of such class of Common Stock, USX will deliver to the
holder of such shares so surrendered the certificates representing the number
of whole shares of the kind of capital stock or cash and/or securities or other
property to which such holder is entitled, together with any fractional payment
referred to below. If less than all of the shares of such class of Common Stock
represented by any one certificate are to be redeemed, USX will issue and
deliver a new certificate for the shares of such class of Common Stock not
redeemed.
USX shall not be required to issue or deliver fractional shares of any class
of capital stock or any fractional securities to any holder of any class of
Common Stock upon any exchange, redemption, dividend or other distribution. If
more than one share of such class of Common Stock shall be held at the same
time by the same holder, USX may aggregate the number of shares of any class of
capital stock that shall be issuable or the amount of securities that shall be
deliverable to such holder upon any exchange, redemption, dividend or other
distribution (including any fractions of shares or securities). If the number
of shares of any class of capital stock or the amount of securities remaining
to be issued or delivered to any holder of any class of Common Stock is a
fraction, USX shall, if such fraction is not issued or delivered to such
holder, pay a cash adjustment in respect of such fraction in an amount equal to
the fair market value of such fraction on the fifth Business Day prior to the
date such payment is to be made. For purposes of the preceding sentence, "fair
market value" of any fraction shall be (i) in the case of any fraction of a
share of capital stock of USX, the product of such fraction and the Market
Value of one share of such capital stock and (ii) in the case of any other
fractional security, such value as is determined by the Board.
VOTING--SHARES OF MARATHON STOCK SHALL HAVE ONE VOTE PER SHARE. SHARES OF
STEEL STOCK AND DELHI STOCK WILL, WHEN VOTING TOGETHER WITH ALL OTHER CLASSES
OF COMMON STOCK, HAVE A NUMBER OF VOTES PER SHARE BASED UPON THE TIME WEIGHTED
AVERAGE RATIOS OF THE MARKET VALUE OF A SHARE OF STEEL STOCK OR DELHI STOCK, AS
THE CASE MAY BE, TO THE MARKET VALUE OF A SHARE OF MARATHON STOCK.
Except as set forth below and under "Steel Stock--Voting" and "Delhi Stock--
Voting" below, holders of all classes of Common Stock vote together as a single
class on all matters as to which all holders of Common Stock are entitled to
vote. On all matters to be voted on by the holders of all classes of Common
Stock together as a single class, (i) each share of outstanding Marathon Stock
has one vote and (ii) each share of Delhi Stock and Steel Stock has a number of
votes equal to the quotient (calculated to the nearest three decimal places),
as of the fifth Business Day prior to the applicable record date, of (A) the
sum of (1) four times the average ratio of X/Y for the five-Business Day period
ending on such fifth Business Day, (2) three times the average ratio of X/Y for
the next preceding five-Business Day period, (3) two times the average ratio of
X/Y for the next preceding five-Business
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Day period and (4) the average ratio of X/Y for the next preceding five-
Business Day period, divided by (B) ten, where X is the Market Value of the
Delhi Stock or the Steel Stock, as the case may be, and Y is the Market Value
of the Marathon Stock, or if there are no shares of Marathon Stock outstanding
on such record date or on any of the 25 Business Days prior thereto, the sum of
the Market Values of the Steel Stock and of the Delhi Stock. If shares of only
one class of Common Stock are outstanding, each share of that class shall have
one vote.
Assuming that the time weighted averages of the Market Values of Marathon
Stock, Steel Stock and Delhi Stock were $17, $39 and $16, respectively the per
share voting rights of Marathon Stock, Steel Stock and Delhi Stock would be one
vote, 2.29 votes and .94 vote per share, respectively. If the Marathon Stock,
the Steel Stock and the Delhi Stock had such per share voting rights as of
December 9, 1993, the holders of Marathon Stock, Steel Stock and Delhi Stock
would have approximately 62%, 35% and 3% respectively, of the total voting
power of USX.
In addition, the approval of the holders of at least 66 2/3% of the
outstanding Marathon Stock, voting as a separate class, shall be necessary for:
(i) the declaration or payment of any dividend, or the making of any
other payment or distribution on or with respect to, any shares of any
other class of Common Stock, if such dividend, payment or distribution is
to be made with (A) proceeds from the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) (a "Disposition") of any of the properties
and assets of the Marathon Group or (B) any portion of an equity interest
in a person, entity or group that owns any of the properties and assets of
the Marathon Group; or
(ii) the use, or reservation for use, of any proceeds from the
Disposition of any of the properties and assets of the Marathon Group, or
any of the properties and assets acquired with such proceeds, in any
business of the Corporation other than the Marathon Group.
Notwithstanding the foregoing, however, such vote shall not be required if such
proceeds are loaned at a rate or rates representative of actual borrowings and
short-term investments by USX.
The vote or consent of the holders of a majority of all of the outstanding
shares of any class of Common Stock, voting as a separate class, is currently
required under Delaware law for any amendment to the Certificate of
Incorporation that would increase or decrease the par value of the shares of
such class or alter or change the powers or special rights of the shares of
such class so as to affect them adversely. The Certificate of Incorporation
provides that neither the increase nor decrease of the authorized number of
shares of any class of Common Stock shall require a separate vote of any class.
Thus, it is possible that the holders of a majority of one or more classes of
Common Stock could constitute a majority of the voting power of all classes and
approve the increase or decrease of the authorized amount of any other class of
Common Stock without the approval of the holders of such other class of Common
Stock.
The Certificate of Incorporation also provides that unless the vote or
consent of a greater number of shares shall then be required by law, the
approval of the holders of a majority of the outstanding shares of any class of
Common Stock, voting as a separate class, shall be necessary for authorizing,
effecting or validating the merger or consolidation of USX into or with any
other corporation if such merger or consolidation would adversely affect the
powers or special rights of such class of Common Stock, either directly or
indirectly.
LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF USX, HOLDERS OF EACH CLASS OF
COMMON STOCK WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS DISTRIBUTABLE
TO HOLDERS OF ALL CLASSES OF COMMON STOCK BASED UPON THE TIME-WEIGHTED AVERAGE
AGGREGATE MARKET CAPITALIZATION OF EACH SUCH CLASS OF COMMON STOCK TO THE
AGGREGATE MARKET CAPITALIZATION OF ALL CLASSES OF COMMON STOCK.
The Certificate of Incorporation provides that, in the event of a
dissolution, liquidation or winding-up of USX, whether voluntary or
involuntary, after payment of creditors and after the holders of Preferred
Stock receive the full preferential amounts to which they are entitled, the
holders of outstanding shares of each class of Common Stock will share the
funds remaining for distribution to the holders of Common Stock. The holders of
the outstanding Common Stock will each be entitled to receive a fraction of
such funds equal to the quotient of (i) the
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sum of (A) four times the average ratio of X/Y for the five-Business Day period
ending on the Business Day prior to the date of the public announcement of (1)
a voluntary dissolution, liquidation or winding-up by USX or (2) the
institution of any proceeding for the involuntary dissolution, liquidation or
winding-up of USX, (B) three times the average ratio of X/Y for the next
preceding five-Business Day period, (C) two times the average ratio of X/Y for
the next preceding five-Business Day period and (D) the average ratio of X/Y
for the next preceding five-Business Day period, divided by (ii) ten, where X
is the market capitalization of such class of Common Stock and Y is the
aggregate market capitalization of all classes of Common Stock. For purposes of
the preceding sentence, "Market Capitalization" of any class of Common Stock on
any day shall mean the product of (i) the Market Value of such class of Common
Stock on such day and (ii) the number of shares of such class of Common Stock
outstanding on such day.
STEEL STOCK
DIVIDENDS--DIVIDENDS ON THE STEEL STOCK ARE INTENDED TO BE PAID BASED UPON
THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE U.S. STEEL GROUP.
Subject to any prior rights of the holders of the Preferred Stock, dividends
on the Steel Stock may be declared and paid only out of the lesser of (i) funds
of USX legally available therefor and (ii) the Available Steel Dividend Amount.
The "Available Steel Dividend Amount," on any date, means either:
(a) the greater of:
(i) an amount equal to (x) $2.244 billion, increased or decreased, as
appropriate, to reflect: (A) Steel Net Income from the close of business
on December 31, 1990, (B) any dividends or other distributions declared
or paid with respect to, or repurchases or issuances of, any shares of
common stock of USX after December 31, 1990 and prior to the close of
business on May 6, 1991 attributed to the U.S. Steel Group, (C) any
dividends or other distributions declared or paid with respect to, or
repurchases or issuances of, any shares of Steel Stock or any shares of
Preferred Stock attributed to the U.S. Steel Group and (D) any other
adjustments to stockholders' equity of the U.S. Steel Group made in
accordance with generally accepted accounting principles, less (y) the
sum of the aggregate par value of all outstanding Steel Stock and the
aggregate stated capital of all outstanding Preferred Stock attributed
to the U.S. Steel Group; and
(ii) the excess of the fair market value of the net assets of the U.S.
Steel Group over the sum of the aggregate par value of all outstanding
Steel Stock and the aggregate stated capital of all outstanding
Preferred Stock attributed to the U.S. Steel Group,
in the case of each of clauses (i) and (ii) increased by an amount equal
to any effects of the recognition of the transition obligation upon the
adoption of SFAS No. 106 (including any amendments thereto) and any
cumulative effects of the adoption of SFAS No. 109 (including any
amendments thereto) in the year of adoption; or
(b) in case there shall be no such amount, an amount equal to Steel Net
Income (if positive) for the fiscal year in which the dividend is declared
and/or the preceding fiscal year.
The amount of $2.244 billion in clause (a)(i) above represents the amount of
total stockholders' equity of USX as of December 31, 1990 assigned to the U.S.
Steel Group by the Board after giving consideration to the historical debt and
equity structure of USX.
The Available Steel Dividend Amount as of September 30, 1993 was at least
$1.837 billion, as calculated under the preceding clause (a)(i).
Although net income and stockholders' equity of the U.S. Steel Group was
reduced when USX adopted the accounting changes required by SFAS No. 106 and
SFAS No. 109, such changes did not affect cash flows of the U.S. Steel Group.
As a result, in order to preclude dividends on the Steel Stock from being
limited by such noncash accounting changes, the amounts in each of clause
(a)(i) and clause (a)(ii) of the definition of "Available Steel Dividend
Amount" were adjusted to eliminate the effects of such changes, as set forth
above.
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Clause (b) in the definition of "Available Steel Dividend Amount" will permit
the payment of dividends on the Steel Stock in any fiscal year to the extent
there is positive Steel Net Income in such fiscal year or in the preceding
fiscal year or to the extent of the sum of positive Steel Net Income, if any,
in both such years. Any loss in either such year would not reduce positive
Steel Net Income, if any, in the other year for purposes of determining the
applicable limitation on dividends. Such provision is comparable to Section 170
of the Delaware General Corporation Law, which allows the payment of dividends
on common stock of any Delaware corporation in any fiscal year to the extent of
consolidated net income of the corporation for such fiscal year and/or the
preceding fiscal year.
As used herein, "Steel Net Income" means the net income or loss of the U.S.
Steel Group determined in accordance with generally accepted accounting
principles, including income and expenses of USX attributed to the U.S. Steel
Group, on a substantially consistent basis, including, without limitation,
corporate administrative costs, net interest and other financial costs and
income taxes. For information concerning the policies governing the attribution
of corporate activities to the U.S. Steel Group which are being followed by USX
in determining Steel Net Income, see "Management and Accounting Policies."
The Board may, in its sole discretion, declare and pay dividends exclusively
on the Marathon Stock, exclusively on the Steel Stock, exclusively on the Delhi
Stock or on such classes in equal or unequal amounts, notwithstanding the
respective amount of funds available for dividends on each class, the
respective voting and liquidation rights of each class, the amount or prior
dividends declared on each class or any other factor.
EXCHANGE AND REDEMPTION--IN THE EVENT OF A DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE U.S. STEEL GROUP, USX IS REQUIRED TO (1)
PAY A DIVIDEND, (2) REDEEM STEEL STOCK OR (3) EXCHANGE STEEL STOCK FOR MARATHON
STOCK OR, IF THERE ARE NO SHARES OF MARATHON STOCK OUTSTANDING, DELHI STOCK,
SUBJECT TO CERTAIN LIMITATIONS.
If USX transfers all the assets and liabilities of the U.S. Steel Group to a
wholly owned subsidiary of USX (the "U.S. Steel Group Subsidiary"), Steel Stock
may be exchanged, at the sole discretion of the Board, by a majority vote of
the directors then in office, provided that there are funds of USX legally
available therefor, for all of the outstanding stock of the U.S. Steel Group
Subsidiary, on a pro rata basis on the same terms and conditions as on the
Marathon Stock.
In addition, upon the Disposition, in one transaction or a series of related
transactions, of all or substantially all of the properties and assets of the
U.S. Steel Group (other than in connection with the Disposition by USX of all
of its properties and assets in one transaction) to any person, entity or group
(other than to the holders of all outstanding shares of Steel Stock on a pro
rata basis or to a person, entity or group in which USX, directly or
indirectly, owns a majority equity interest), USX shall, within 60 days
following the consummation of such Disposition, either (i) subject to the
limitations on dividends on Steel Stock set forth above, declare and pay a
dividend in cash and/or in securities or other property received as proceeds of
such Disposition to the holders of the Steel Stock in an amount equal to the
Net Proceeds of such Disposition, (ii) to the extent that there are funds of
USX legally available therefor, redeem the number of whole shares of Steel
Stock having an aggregate average Market Value during the ten-Business Day
period following consummation of such Disposition, closest to the value of the
Net Proceeds of such Disposition, for cash and/or securities or other property
received as proceeds of such Disposition in an amount equal to the Net Proceeds
or (iii) exchange each outstanding share of Steel Stock for a number of shares
of Marathon Stock or, if there are no shares of Marathon Stock outstanding and
shares of Delhi Stock are outstanding, of Delhi Stock, equal to 110% of the
average daily ratio (calculated to the nearest five decimal places) of the
Market Value of one share of Steel Stock to the Market Value of one share of
Marathon Stock or one share of Delhi Stock, as the case may be, during such
period.
If, immediately after any event, USX, directly or indirectly, owns less than
a majority equity interest in any person, entity or group in which USX,
directly or indirectly, owned a majority equity interest immediately prior to
the occurrence of such event, a Disposition of all of the properties and assets
of the U.S. Steel Group owned by such person, entity or group shall be deemed
to have occurred. In the case of a Disposition of properties or assets in a
series of related transactions, such Disposition shall not be deemed to have
been consummated until the consummation of the last of such transactions.
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"Substantially all of the properties and assets of the U.S. Steel Group," as
of any date, means a portion of such properties and assets that represents at
least 80% of either of the then-current market value of, or the aggregate
revenues for the immediately preceding twelve fiscal quarterly periods of USX
derived from, the properties and assets of the U.S. Steel Group as of such date
(excluding the assets and properties of any person, entity or group in which
USX, directly or indirectly, owns less than a majority equity interest).
After any such special dividend or redemption pursuant to clause (i) or (ii)
in the third preceding paragraph, the Board may, by a majority vote of the
directors then in office, exchange each outstanding share of Steel Stock for a
number of shares of Marathon Stock or, if there are no shares of Marathon Stock
outstanding and shares of Delhi Stock are outstanding, of Delhi Stock, equal to
110% of the Market Value Ratio as of the fifth Business Day prior to the date
notice of such exchange is mailed to the holders of Steel Stock. For purposes
of the preceding sentence, "Market Value Ratio", as of any date, means the
highest of the following (calculated to the nearest five decimal places): (A)
the average ratio of S/X for the five-Business Day period ending on such date.
(B) the quotient of (1) the sum of (w) four times the average ratio of S/X for
the five-Business Day period ending on such date, (x) three times the average
ratio of S/X for the next preceding five-Business Day period, (y) two times the
average ratio of S/X for the next preceding five-Business Day period and (z)
the average ratio of S/X for the next preceding five-Business Day period,
divided by (2) ten and (C) if the special dividend pursuant to clause (i) of
the third preceding paragraph was declared and paid or the redemption pursuant
to clause (ii) thereof was made prior to the commencement of the most recently
completed fiscal quarter of USX, the average ratio of S/X for such fiscal
quarter, where S is the Market Value of one share of the Steel Stock and X is
the Market Value of one share of the Marathon Stock or one share of Delhi
Stock, as the case may be. In determining whether to effect such an exchange,
the Board, in addition to other matters, would likely consider whether the
remaining properties and assets of the U.S. Steel Group constitute a viable
business. Other considerations could include the number of shares of Steel
Stock remaining outstanding following any such redemption, the per share market
price of the Steel Stock following the payment of such a dividend or such a
redemption and the cost of maintaining stockholder accounts.
An exchange or redemption of Steel Stock for Marathon Stock or Delhi Stock,
as the case may be, would be made on the same general terms and conditions as
described above under "Marathon Stock--Exchange and Redemption--General
Provisions."
VOTING--SHARES OF STEEL STOCK WILL, WHEN VOTING TOGETHER WITH ALL OTHER
CLASSES OF COMMON STOCK, HAVE A NUMBER OF VOTES PER SHARE BASED UPON TIME-
WEIGHTED AVERAGE RATIOS OF THE MARKET VALUE OF A SHARE OF STEEL STOCK TO THE
MARKET VALUE OF A SHARE OF MARATHON STOCK.
The holders of shares of the Steel Stock have the voting rights described
above under the caption "Marathon Stock--Voting."
In addition, as is the case with the use of the proceeds from the Disposition
of any properties or assets of the Marathon Group or the Delhi Group, unless
the vote or consent of a greater number of shares shall then be required by
law, the approval of the holders of at least 66 2/3% of the outstanding Steel
Stock, voting as a separate class, shall be necessary for:
(i) the declaration or payment of any dividend on, or the making of any
other payment or distribution on or with respect to, any shares of any
other class of common stock, if such dividend, payment or distribution is
to be made with (A) proceeds from the Disposition of any of the properties
and assets of the U.S. Steel Group or (B) any portion of an equity interest
in a person, entity or group that owns any of the properties and assets of
the U.S. Steel Group; or
(ii) the use, or reservation for use, of any proceeds from the
Disposition of any of the properties and assets of the U.S. Steel Group, or
any of the properties and assets acquired with such proceeds, in any
business of USX other than a business of the U.S. Steel Group.
Notwithstanding the foregoing, however, such vote shall not be required if
such proceeds are loaned at a rate or rates representative of actual
borrowings and short-term investments by USX.
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LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF USX, HOLDERS OF STEEL STOCK
WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS DISTRIBUTABLE TO HOLDERS OF
COMMON STOCK BASED ON THE RELATIVE TIME-WEIGHTED AVERAGE AGGREGATE MARKET
CAPITALIZATION OF THE STEEL STOCK TO THE AGGREGATE MARKET CAPITALIZATION OF ALL
CLASSES OF COMMON STOCK.
In the event of a dissolution, liquidation or winding-up of USX, the holders
of shares of Steel Stock are entitled to receive funds in the amounts described
above under "Marathon Stock--Liquidation."
DELHI STOCK
DIVIDENDS--DIVIDENDS ON THE DELHI STOCK ARE INTENDED TO BE PAID BASED UPON
THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE DELHI GROUP.
Subject to any prior rights of the holders of the Preferred Stock, dividends
on the Delhi Stock may be declared and paid only out of the lesser of (i) funds
of USX legally available therefor and (ii) the Available Delhi Dividend Amount.
The "Available Delhi Dividend Amount," on any date, means the product of the
Delhi Fraction and either:
(a) the greater of:
(i) an amount equal to (X) $172.9 million, increased or decreased, as
appropriate, to reflect, from June 30, 1992, (A) Delhi Net Income, (B)
any dividends or other distributions declared or paid with respect to,
or repurchases or issuances of, any shares of Marathon Stock prior to
the close of business on October 2, 1992 attributed to the Delhi Group,
(C) any dividends or other distributions declared or paid with respect
to, or repurchases or issuances of, any shares of Delhi Stock or any
shares of Preferred Stock attributed to the Delhi Group, (D) assets or
properties of the Delhi Group that are no longer included as part of the
Delhi Group as a result of any such dividend, distribution or repurchase
pursuant to the proviso to the definition of "Delhi Group" set forth
above and (E) any other adjustments to stockholders' equity of the Delhi
Group made in accordance with generally accepted accounting principles
less (Y) the sum of the aggregate stated capital of all outstanding
Preferred Stock attributed to the Delhi Group and the quotient of the
aggregate par value of all outstanding Delhi Stock divided by the Delhi
Fraction; and
(ii) the excess of the fair market value of the net assets of the
Delhi Group over the sum of the aggregate stated capital of all
outstanding Preferred Stock attributed to the Delhi Group, and the
quotient of the aggregate par value of all outstanding Delhi Stock
divided by the Delhi Fraction; or
(b) in case there shall be no such amount, an amount equal to Delhi Net
Income (if positive) for the fiscal year in which the dividend is declared
and/or the preceding fiscal year.
The amount of $172.9 million in clause (a) (i) above represents the amount of
the stockholders' equity of USX as of June 30, 1992 attributable to the Delhi
Group based upon a capital structure that reflects attribution to the Delhi
Group of a total amount of $128.0 million of debt, as determined by the Board
pursuant to the Certificate of Incorporation.
The Available Delhi Dividend Amount as of September 30, 1993 was at least
$121.6 million, as calculated under the preceding clause (a) (i).
"Delhi Net Income" means the net income or loss of the Delhi Group determined
in accordance with generally accepted accounting principles, including income
and expenses of USX attributed to the Delhi Group on a substantially consistent
basis, including, without limitation, corporate administrative costs, net
interest and other financial costs and income taxes. For information concerning
the policies governing the attribution of corporate activities to the Delhi
Group which will be followed by USX in determining Delhi Net Income, see
"Management and Accounting Policies."
Clause (b) in the definition of "Available Delhi Dividend Amount" will permit
the payment of dividends on the Delhi Stock in any fiscal year to the extent
there is positive Delhi Net Income in such fiscal year or in the preceding
fiscal year or to the extent of the sum of positive Delhi Net Income, if any,
in both such years. Any loss in either such year would not reduce positive
Delhi Net Income, if any, in the other year for purposes of
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determining the applicable limitation on dividends. Such provision is
comparable to Section 170 of the Delaware General Corporation Law, which is
applicable to the Delhi Stock, and which allows the payment of dividends on
common stock of any Delaware corporation in any fiscal year to the extent of
consolidated net income of the corporation for such fiscal year and/or the
preceding fiscal year.
The Board may, in its sole discretion, declare and pay dividends exclusively
on the Marathon Stock, exclusively on the Steel Stock, exclusively on the Delhi
Stock or on such classes in equal or unequal amounts, notwithstanding the
respective amount of funds available for dividends on each class, the
respective voting and liquidation rights of each class, the amount or prior
dividends declared on each class or any other factor.
EXCHANGE AND REDEMPTION--IN THE EVENT OF A DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE DELHI GROUP, USX IS REQUIRED TO (1) PAY
A DIVIDEND, (2) REDEEM DELHI STOCK OR (3) EXCHANGE DELHI STOCK FOR MARATHON
STOCK OR, IF THERE ARE NO SHARES OF MARATHON STOCK OUTSTANDING, STEEL STOCK,
SUBJECT TO CERTAIN LIMITATIONS. ALSO, THE BOARD MAY REQUIRE THAT THE DELHI
STOCK BE EXCHANGED FOR MARATHON STOCK, OR IF THERE ARE NO SHARES OF MARATHON
STOCK OUTSTANDING, STEEL STOCK, IN CERTAIN CIRCUMSTANCES.
If USX transfers all of the assets and liabilities of the Delhi Group to a
wholly owned subsidiary of USX (the "Delhi Group Subsidiary"), the Delhi Stock
may be exchanged, at the sole discretion of the Board, by a majority vote of
the directors then in office, provided that there are funds of USX legally
available therefor, for a number of shares of common stock of the Delhi Group
Subsidiary equal to the product of the Delhi Fraction and the number of all
outstanding shares of the Delhi Group Subsidiary, on a pro rata basis. USX
would retain the balance of the outstanding shares of common stock of the Delhi
Group Subsidiary if the Delhi Fraction were less than one, which balance would
be attributed to the Marathon Group.
In addition, upon the Disposition, in one transaction or a series of related
transactions, of all or substantially all of the properties and assets of the
Delhi Group (other than in connection with the Disposition by USX of all of its
properties or assets in one transaction) to any person, entity or group (other
than to the holders of all outstanding shares of Delhi Stock on a pro rata
basis or to any person, entity or group in which USX, directly or indirectly,
owns a majority equity interest), USX shall, within 60 days following the
consummation of such Disposition, either (i) subject to the limitations on
dividends on Delhi Stock set forth under "Dividends" above, declare and pay a
dividend in cash and/or in securities or other property received as proceeds of
such Disposition to the holders of Delhi Stock in an amount equal to the
product of the Delhi Fraction and the Net Proceeds of such Disposition, (ii) to
the extent that there are funds of USX legally available therefor, redeem the
number of whole shares of Delhi Stock that has an aggregate average Market
Value, during a specified period, closest to the value of the product of the
Delhi Fraction and the Net Proceeds of such Disposition, for cash and/or
securities or other property received as proceeds of such Disposition in an
amount equal to such product or (iii) exchange each outstanding share of Delhi
Stock for a number of shares of Marathon Stock, or if there are no shares of
Marathon Stock outstanding and shares of Steel Stock are outstanding, of Steel
Stock, equal to 110% of the average daily ratio (calculated to the nearest five
decimal places) of the Market Value of one share of Marathon Stock or one share
of Steel Stock, as the case may be, during such period.
If, immediately after any event, USX, directly or indirectly, owns less than
a majority equity interest in any person, entity or group in which USX,
directly or indirectly, owned a majority equity interest immediately prior to
the occurrence of such event, a Disposition of all of the properties and assets
of the Delhi Group owned by such person shall be deemed to have occurred. In
the case of a Disposition of properties or assets in a series of related
transactions, such Disposition shall not be deemed to have been consummated
until the consummation of the last of such transactions.
"Substantially all of the properties and assets of the Delhi Group," as of
any date, means a portion of such properties and assets that represents at
least 80% of either of the then-current market value of, or the aggregate
revenues for the immediately preceding twelve fiscal quarterly periods of USX
derived from, the properties and assets of the Delhi Group as of such date
(excluding the assets and properties of any person, entity or group in which
USX, directly or indirectly, owns less than a majority equity interest).
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After any such special dividend or redemption pursuant to clause (i) or (ii)
in the third preceding paragraph, the Board may, by a majority vote of the
directors then in office, exchange each outstanding share of Delhi Stock for a
number of shares of Marathon Stock or, if there are no shares of Marathon Stock
outstanding and shares of Steel Stock are outstanding, of Steel Stock, equal to
110% of the Market Value Ratio as of the fifth Business Day prior to the date
notice of such exchange is mailed to the holders of Delhi Stock. In determining
whether to effect such an exchange, the Board, in addition to other matters,
would likely consider whether the remaining properties and assets of the Delhi
Group constitute a viable business. Other considerations could include the
number of shares of Delhi Stock remaining outstanding following any such
redemption, the per share market price of the Delhi Stock following the payment
of such a dividend or such a redemption and the cost of maintaining stockholder
accounts.
In addition, the Board may, by a majority vote of the directors then in
office, at any time exchange each outstanding share of Delhi Stock for a number
of shares of Marathon Stock or, if there are no shares of Marathon Stock
outstanding and shares of Steel Stock are outstanding, of Steel Stock, equal to
115% of the Market Value Ratio as of the fifth Business Day prior to the date
such notice is mailed to the holders of Delhi Stock.
For purposes of the two preceding paragraphs, "Market Value Ratio," as of any
date, means the highest of the following (calculated to the nearest five
decimal places): (A) the average ratio of D/X for the five-Business Day period
ending on such date, (B) the quotient of (1) the sum of (w) four times the
average ratio of D/X for the five-Business Day period ending on such date, (x)
three times the average ratio of D/X for the next preceding five-Business Day
period, (y) two times the average ratio of D/X for the next preceding five-
Business Day period and (z) the average ratio of D/X for the next preceding
five-Business Day period, divided by (2) ten and (C) if the special dividend
pursuant to clause (i) of the seventh preceding paragraph was declared and paid
or the redemption pursuant to clause (ii) thereof was made prior to the
commencement of the most recently completed fiscal quarter of USX, the average
ratio of D/X for such fiscal quarter, where D is the Market Value of one share
of the Delhi Stock and X is the Market Value of one share of the Marathon Stock
or Steel Stock, as the case may be.
An exchange or redemption of Delhi Stock for Marathon Stock or Steel Stock,
as the case may be, would be made on the same general terms and conditions as
described above under "Marathon Stock--Exchange and Redemption--General
Provisions."
VOTING--SHARES OF DELHI STOCK WILL, WHEN VOTING TOGETHER WITH ALL OTHER
CLASSES OF COMMON STOCK, HAVE A NUMBER OF VOTES PER SHARE BASED UPON TIME-
WEIGHTED AVERAGE RATIOS OF THE MARKET VALUE OF A SHARE OF DELHI STOCK TO THE
MARKET VALUE OF A SHARE OF MARATHON STOCK.
The holders of shares of the Delhi Stock have the voting rights described
above under the caption "Marathon Stock--Voting."
In addition, as is the case with the use of the proceeds from the Disposition
of any properties or assets of the Marathon Group or the U.S. Steel Group, the
approval of the holders of at least 66 2/3% of the outstanding Delhi Stock,
voting as a separate class, shall be necessary for:
(i) the declaration or payment of any dividend on, or the making of any
other payment or distribution on or with respect to, any shares of any
other class of Common Stock, if such dividend, payment or distribution is
to be made with (A) proceeds from the Disposition of any of the properties
and assets of the Delhi Group or (B) any portion of an equity interest in a
person, entity or group that owns any of the properties and assets of the
Delhi Group; or
(ii) the use, or reservation for use, of any proceeds from the
Disposition of any of the properties and assets of the Delhi Group, or any
of the properties and assets acquired with such proceeds, in any business
of USX other than a business of the Delhi Group. Notwithstanding the
foregoing, however, such vote shall not be required if such proceeds are
loaned at a rate or rates representative of actual borrowings and short-
term investments by USX.
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LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF USX, HOLDERS OF DELHI STOCK
WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS DISTRIBUTABLE TO HOLDERS OF
COMMON STOCK BASED ON THE RELATIVE TIME-WEIGHTED AVERAGE AGGREGATE MARKET
CAPITALIZATION OF THE DELHI STOCK TO THE AGGREGATE MARKET CAPITALIZATION OF ALL
CLASSES OF COMMON STOCK.
In the event of a dissolution, liquidation or winding-up of USX, the holders
of shares of Delhi Stock are entitled to receive funds in the amounts described
above under "Marathon Stock--Liquidation."
Retained Interest of the Marathon Group
Prior to October 2, 1992, all of the businesses that constituted the Delhi
Group were part of the Marathon Group and their results of operations and
financial condition were reflected in their entirety in the financial
statements of the Marathon Group. As of that date, these businesses ceased to
be included in the Marathon Group. Their results of operations and financial
condition were reflected in the financial statements of the Delhi Group and
ceased to be reflected in the financial statements of the Marathon Group,
except to the extent of any Retained Interest, as described below, and as
appropriate in accordance with generally accepted accounting principles.
In connection with the establishment of the Delhi Group and the initial
public offering of Delhi Stock, the Board designated 14,000,000 shares of Delhi
Stock as the total number of shares of Delhi Stock which it deemed to represent
100% of the common stockholders' equity value of USX attributable to the Delhi
Group, all of which were attributed to the Marathon Group. This number was
established by taking into account, among other factors, the initial level of
USX debt and equity capitalization to be assigned to the Delhi Group, Delhi's
recent historical unleveraged financial performance relative to its competitors
that are publicly traded and the state of the markets for public offerings and
other stock transactions.
Since the 9,000,000 shares of Delhi Stock sold in the initial public offering
represented less than the entire equity value of USX attributable to the Delhi
Group, the Marathon Group has been deemed to have a Retained Interest in the
business, assets and liabilities of the Delhi Group equal to the balance of
such equity value (deemed to be represented by 5,000,000 shares at the time of
the initial public offering). As of December 9, 1993, an additional 184,058
shares of Delhi Stock deemed to represent part of the Retained Interest had
been issued in connection with certain employee benefit plans. This reduced the
number of shares deemed to represent the Retained Interest to 4,815,942 and
increased the number of shares outstanding to 9,184,058. In addition, 3,000
shares representing an additional equity interest in the Delhi Group were
issued in connection with employee stock grants, increasing the number of
shares outstanding at December 9, 1993 to 9,187,058.
The 35,997,000 authorized shares of Delhi Stock in excess of the total of the
shares outstanding and the shares deemed to represent the Retained Interest are
available for issuance as additional equity for the Delhi Group. Authorized but
unissued shares may be issued without approval of the holders of Delhi Stock
and may be issued in the future at prices which could dilute the equity
interest of existing holders of Delhi Stock at that time. See "Special
Considerations--Considerations Relating to Common Stock--No Rights or
Additional Duties with Respect to the Groups; Potential Conflicts" and
"Description of Capital Stock--Delhi Stock--Dividends."
On September 9, 1993, USX filed a registration statement with the Commission
with respect to the sale of up to 5 million shares of Delhi Stock, including
all shares representing the Retained Interest. That offering was postponed in
December 1993 due to market conditions.
DETERMINATIONS BY BOARD
Any determinations made by the Board under the foregoing provisions will be
final and binding on all stockholders of USX.
OTHER RIGHTS
The holders of Common Stock do not have any preemptive rights or any rights
to convert their shares into any other securities of USX.
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STOCK TRANSFER AGENT AND REGISTRAR
USX maintains its own stock transfer department at the following address: USX
Corporation, Shareholders Services Department, 600 Grant Street, Room 611,
Pittsburgh, PA 15219-4776. Certificates representing shares can also be
presented for registration of transfer at Chemical Bank, 55 Water Street, New
York, New York.
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, PA 15258 is the
Registrar for all the Common Stock.
AMENDED AND RESTATED RIGHTS PLAN
The following is a brief description of the terms of the Stockholders Rights
Plan set forth in the Restated Rights Agreement between USX and the Rights
Agent.
Under the Restated Rights Agreement, the right (each a "Right") to purchase
from USX a unit consisting of one one-hundredth of a share (a "Unit") of Series
A Junior Preferred Stock, no par value (the "Junior Preferred Stock"), at a
purchase price of $120 in cash per Unit, subject to adjustment, is attached to
each share of Marathon Stock, Steel Stock and Delhi Stock (sometimes
hereinafter referred to together as the "Voting Stock"). A Right attached to a
share of Marathon Stock is hereinafter referred to as a "Marathon Right," a
Right attached to a share of Steel Stock is hereinafter referred to as a "Steel
Right" and a Right attached to a share of Delhi Stock is hereinafter referred
to as a "Delhi Right."
The Rights will separate from the Voting Stock and a Rights distribution date
will occur upon the earlier of (i) 15 days following a public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
has acquired (except pursuant to a Qualifying Offer (defined in the Restated
Rights Agreement as an all-cash tender offer for all outstanding shares of
Voting Stock meeting certain prescribed requirements)), or obtained the right
to acquire, beneficial ownership of Voting Stock representing 15% or more of
the total voting power of all outstanding shares of Voting Stock (the "Stock
Acquisition Date"), or (ii) 15 days (or upon such later date as may be
determined by the Board) following the commencement of a tender offer or
exchange offer (other than a Qualifying Offer) that would result in a person or
a group beneficially owning Voting Stock representing 15% or more of the total
voting power of all outstanding shares of Voting Stock. For purposes of the
Restated Rights Agreement, total voting power of Voting Stock shall be
determined based upon the most recent calculation announced by USX. See
"Marathon Stock--Voting," "Steel Stock--Voting" and "Delhi Stock--Voting"
above. If a person inadvertently becomes the beneficial owner of Voting Stock
representing 15% or more of the total voting power of the Voting Stock due to
the recalculation by USX of the relative voting power of Marathon Stock, Steel
Stock and Delhi Stock, such person will not be an Acquiring Person unless and
until such person acquires any additional shares of Voting Stock.
In the event that a person or group becomes the beneficial owner of Voting
Stock representing 15% or more of the total voting power of all outstanding
shares of Voting Stock (except pursuant to a Qualifying Offer), the Rights
"flip-in" and entitle each holder of a Right (other than the Acquiring Person
and certain related parties) to receive, upon exercise, Marathon Stock, Steel
Stock or Delhi Stock, as the case may be (or in certain circumstances, cash,
property, or other securities of USX), having a value equal to two times the
exercise price of the Marathon Right, Steel Right or Delhi Right, respectively.
However, Rights are not exercisable until such time as the Rights are no longer
redeemable by USX as set forth below.
In the event that, any time following the Stock Acquisition Date, (i) USX is
acquired in a merger or other business combination transaction in which USX is
not the surviving corporation (other than a merger that follows a Qualifying
Offer) or its Voting Stock is changed or exchanged, or (ii) 50% or more of
USX's assets, earning power or cash flow is sold or transferred, the Rights
"flip-over" and entitle each holder of a Right (other than an Acquiring Person
and certain related parties) to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right.
At any time until 15 days following the Stock Acquisition Date (subject to
extension), USX may redeem the Rights in whole, but not in part, at a price of
$.01 per whole Right payable in stock or cash or any other form of
consideration deemed appropriate by the Board (the "Redemption Price").
Immediately upon the action of the Board ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of the Rights will be
to receive the Redemption Price.
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The Board may, at its option, at any time after any person becomes an
Acquiring Person, exchange all or part of the outstanding and exercisable
Marathon Rights, Steel Rights and Delhi Rights (other than Rights held by the
Acquiring Person and certain related parties) for shares of Marathon Stock,
Steel Stock and Delhi Stock, respectively, at an exchange ratio of one share of
Marathon Stock for each Marathon Right, one share of Steel Stock for each Steel
Right and one share of Delhi Stock for each Delhi Right (subject to certain
anti-dilution adjustments). However, the Board may not effect such an exchange
at any time any person or group owns Voting Stock representing 50% or more of
the total voting power of the Voting Stock then outstanding.
As long as the Rights are attached to shares of Voting Stock, USX will issue
Marathon Rights on each share of Marathon Stock, Steel Rights on each share of
Steel Stock and Delhi Rights on each share of Delhi Stock issued prior to the
Rights distribution date so that all such shares will have attached Rights.
A copy of the Restated Rights Agreement is available free of charge from the
Rights Agent.
PLAN OF DISTRIBUTION
USX may sell the Offered Securities to or through underwriters or directly to
purchasers, agents or dealers or through brokers.
Offers to purchase Offered Securities may be solicited directly by USX or
brokers or dealers designated by USX from time to time. Any such broker or
dealer may be deemed to be an underwriter as that term is defined in the
Securities Act, and will be named in the Prospectus Supplement, together with
the compensation payable thereto by USX in connection with the sale of the
Offered Securities.
Underwriters, agents, brokers and dealers may be entitled under agreements
which may be entered into with USX to indemnification by USX against certain
civil liabilities, including liabilities under the Securities Act. Such
underwriters, agents, brokers and dealers may engage in transactions with, or
perform services for, USX in the ordinary course of business.
The place and time of delivery for the Offered Securities in respect of which
this Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
VALIDITY OF SECURITIES
The validity of the issuance of the Offered Securities will be passed upon
for USX by D. D. Sandman, Esq., General Counsel and Secretary of USX or by J.A.
Hammerschmidt, Esq., Assistant General Counsel of USX. Messrs. Sandman and
Hammerschmidt in their respective capacities as General Counsel and Secretary,
and Assistant General Counsel are paid salaries by USX and participate in
various employee benefit plans offered to officers of USX generally.
EXPERTS
The consolidated financial statements of USX, the financial statements of the
Marathon Group, the financial statements of the U.S. Steel Group and the
financial statements of the Delhi Group as of December 31, 1992 and 1991 and
for each of the three years in the period ended December 31, 1992, incorporated
in this Prospectus by reference to USX's Annual Report on Form 10-K for the
year ended December 31,1992, have been so incorporated in reliance on the
reports (the report pertaining to the U.S. Steel Group financial statements
contains an explanatory paragraph referring to the U.S. Steel Group's
involvement in certain contingencies as described in Note 24 to the U.S. Steel
Group financial statements) of Price Waterhouse, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
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APPENDIX I
SUMMARY OF USX COMMON STOCK
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in, or incorporated by reference in, this
Prospectus. Capitalized terms used in this summary have the respective meanings
ascribed to them elsewhere in this Prospectus.
<TABLE>
<CAPTION>
USX COMMON STOCK
-------------------------------------------------------------------------------------
USX-MARATHON GROUP USX-U.S. STEEL GROUP USX-DELHI GROUP
COMMON STOCK COMMON STOCK COMMON STOCK
------------------ -------------------- ---------------
<S> <C> <C> <C>
BUSINESS: Energy business. Steel and other businesses. Gas gathering and
processing business.
NUMBER OF 286,581,539 70,289,545 9,187,058
SHARES
OUTSTANDING AS
OF
DECEMBER 9,
1993:
VOTING RIGHTS: Except as otherwise Except as otherwise Except as otherwise
described herein, the described herein, the Steel described herein, the Delhi
Marathon Stock will vote as Stock will vote as a single Stock will vote as a single
a single class with the class with the Marathon class with the Marathon
Steel Stock and the Delhi Stock and the Delhi Stock. Stock and the Steel Stock.
Stock. The Marathon Stock Each share of Steel Stock Each share of Delhi Stock
will have one vote per will have a variable number will have a variable number
share. of votes based upon the of votes based upon the
relative Market Values of relative Market Values of
one share of Steel Stock one share of Delhi Stock
and one share of Marathon and one share of Marathon
Stock, and may have more Stock, and may have more
than, less than or exactly than, less than or exactly
one vote per share. one vote per share.
DIVIDENDS: Dividends on the Marathon Dividends on the Steel Dividends on the Delhi
Stock will be paid at the Stock will be paid at the Stock will be paid at the
discretion of the Board discretion of the Board discretion of the Board
based primarily upon the based primarily upon the based primarily upon the
long-term earnings and cash long-term earnings and cash long-term earnings and cash
flow capabilities of the flow capabilities of the flow capabilities of the
Marathon Group, as well as U.S. Steel Group, as well Delhi Group, as well as on
on the dividend policies of as on the dividend policies the dividend policies of
publicly traded energy of publicly traded steel similar publicly traded
companies. Dividends will companies. Dividends will companies. Dividends will
be payable out of all funds be payable out of the be payable out of the
of USX legally available lesser of lesser of (i) all funds of
therefor. (i) all funds of USX USX legally available
legally available therefor therefor and (ii) the
and (ii) the Available Available Delhi Dividend
Steel Dividend Amount. Amount.
EXCHANGE AND USX may exchange the USX may exchange the Steel USX may exchange the Delhi
REDEMPTION: Marathon Stock for shares Stock for shares of a Stock for shares of a
of a wholly owned wholly owned subsidiary wholly owned subsidiary
subsidiary that holds all that holds all the assets that holds all the assets
the assets and liabilities and liabilities of the U.S. and liabilities of the
of the Marathon Group. Steel Group. Delhi Group.
If USX sells all or If USX sells all or
substantially all of the substantially all of the
properties and assets of properties and assets of
the U.S. Steel Group, USX the Delhi Group, USX must
must either: either; (i) pay a special
(i) pay a special dividend dividend to holders of
to holders of Steel Stock Delhi Stock equal to the
equal to the Net Proceeds; Net Proceeds; or (ii)
or (ii) redeem shares of redeem shares of Delhi
Steel Stock having an Stock having an aggregate
aggregate Market Value Market Value closest to the
closest to the value of the value of the Net Proceeds
Net Proceeds for an amount for an amount equal to the
equal to the Net Proceeds; Net Proceeds; or (iii)
or exchange each share of
(iii) exchange each share Delhi Stock for a number of
of Steel Stock for a number shares of Marathon Stock
of shares of Marathon Stock or, if no Marathon Stock is
equal to 110% of the ratio outstanding, of Steel
of the Market Values of one Stock, equal to 110% of the
share of Steel Stock to one ratio of the Market Values
share of Marathon Stock. of one share of Delhi Stock
to one share of Marathon
Stock or one share of Steel
Stock, as the case may be.
The Board may, at any time,
exchange each outstanding
share of Delhi Stock for a
number of shares of
Marathon Stock or, if there
are no shares of Marathon
Stock outstanding, Steel
Stock equal to 115% of the
Market Value of one share
of Delhi Stock to one share
of Marathon Stock or one
share of Steel Stock, as
the case may be.
LIQUIDATION: In the event of the In the event of the In the event of the
liquidation of USX, holders liquidation of USX, holders liquidation of USX, holders
of Marathon Stock will of Steel Stock will share of Delhi Stock will share
share the funds, if any, the funds, if any, funds, if any, remaining
remaining for distribution remaining for distribution for distribution to common
to common stockholders with to common stockholders with stockholders with holders
holders of Steel Stock and holders of Marathon Stock of Marathon Stock and Steel
Delhi Stock based upon the and Delhi Stock based upon Stock based upon the
relative market the relative market relative market
capitalizations of each. capitalizations of each. capitalizations of each.
LISTING: NYSE under the symbol NYSE under the symbol "X". NYSE under the symbol
"MRO". "DGP".
</TABLE>
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