United States Steel Corporation (NYSE: X) reported second quarter 2006
net income of $404 million, or $3.22 per diluted share, compared to first
quarter 2006 net income of $256 million, or $2.04 per diluted share, and
second quarter 2005 net income of $249 million, or $1.91 per diluted share.
Commenting on results, U. S. Steel Chairman and CEO John P. Surma said,
"Solid demand in our key end markets, outstanding operating performance,
strong shipments and firming prices, particularly in spot markets, resulted
in an excellent second quarter with earnings significantly higher than both
the previous quarter and the same quarter last year. We operated at high
rates of production capability in the U.S. and Europe, reflecting an
outstanding performance by our people and the benefits of our recent
capital programs."
The company reported second quarter 2006 income from operations of $514
million, compared with income from operations of $369 million in the first
quarter of 2006 and $421 million in the second quarter of 2005.
The income tax provision in the second quarter of 2006 included a
favorable adjustment of $15 million, or 12 cents per diluted share, related
to the 2005 estimated tax accrual.
During the second quarter of 2006, our 7.00% Series B Mandatory
Convertible Preferred Shares automatically converted into common stock,
increasing our common stock outstanding by approximately 16 million shares.
We repurchased 1.9 million shares of common stock for $117 million during
the second quarter, bringing the total shares repurchased to 7.7 million
for $371 million since our repurchase program was authorized in July 2005.
Reportable Segments and Other Businesses
Management believes segment income from operations is a key measure in
evaluating company performance. U. S. Steel's reportable segments and Other
Businesses reported segment income from operations of $579 million, or $99
per ton, in the second quarter of 2006, compared with $429 million, or $80
per ton, in the first quarter of 2006 and $495 million, or $102 per ton, in
the second quarter of 2005.
The increase in second quarter 2006 Flat-rolled income from operations
compared to the first quarter mainly resulted from higher average realized
prices and shipment volumes. Costs remained in line with first quarter
levels as lower energy and outage costs were offset by higher raw material
and profit-based costs. The improvement in European operating results was
due primarily to higher prices and record shipments. Tubular operating
results remained strong, but declined as expected from the first quarter
due to scheduled maintenance outages, which were completed as planned.

Outlook
Commenting on U. S. Steel's outlook, Surma said, "We expect continued
strong operating results for our three reportable segments in the third
quarter of 2006. Healthy steel consumption levels are expected during the
quarter along with further increases in flat-rolled prices in the U.S. and
in Europe."
For Flat-rolled, we expect increased third quarter 2006 average
realized prices, partially offset by increased costs for raw materials and
outages, and shipments are expected to be comparable to second quarter
levels.
Third quarter average realized prices are also expected to improve for
U. S. Steel Europe (USSE), partially offset by higher costs, primarily for
raw materials. Shipments are expected to remain at second quarter levels.
In Serbia, we are currently involved in discussions with our employees,
unions and government agencies regarding a workforce reduction plan that
may be initiated as early as the third quarter.
Shipments and average realized prices for the Tubular segment in the
third quarter of 2006 are expected to be in line with second quarter
levels, and costs are expected to improve due mainly to lower outage costs.
This release contains forward-looking statements with respect to market
conditions, operating costs, shipments and prices. Some factors, among
others, that could affect market conditions, costs, shipments and prices
for both domestic operations and USSE include global product demand, prices
and mix; global and company steel production levels; plant operating
performance; the timing and completion of facility projects; natural gas
and electricity prices and usage; raw materials availability and prices;
the impact of fixed prices in energy and raw materials contracts (many of
which have terms of one year or longer) as compared to shorter-term
contracts and spot prices of steel products; changes in environmental, tax
and other laws; employee strikes; power outages or curtailments; and U.S.
and global economic performance and political developments. Domestic steel
shipments and prices could be affected by import levels and actions taken
by the U.S. Government and its agencies. Economic conditions and political
factors in Europe that may affect USSE's results include, but are not
limited to, taxation, nationalization, inflation, currency fluctuations,
increased regulation, export quotas, tariffs, and other protectionist
measures. In accordance with "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, cautionary statements identifying
important factors, but not necessarily all factors, that could cause actual
results to differ materially from those set forth in the forward- looking
statements have been included in the Form 10-K of U. S. Steel for the year
ended December 31, 2005, and in subsequent filings for U. S. Steel.
A Statement of Operations (Unaudited), Other Financial Data (Unaudited)
and Preliminary Supplemental Statistics (Unaudited) for U. S. Steel are
attached.
The company will conduct a conference call on second quarter earnings
on Tuesday, July 25, at 2 p.m. EDT. To listen to the webcast of the
conference call, visit the U. S. Steel web site, http://www.ussteel.com, and click
on the "Investors" button.
For more information on U. S. Steel, visit its web site at
http://www.ussteel.com.

United States Steel's dividend
Corporation (NYSE: X) announced today that the Board of Directors declared
a dividend of 15 cents per share on U. S. Steel Common Stock. The dividend
is payable September 9, 2006, to stockholders of record at the close of
business August 16, 2006.