UNITED STATES STEEL CORP [X] Filings

10-Q 1 x-20220630.htm 10-Q x-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the Quarterly Period Ended June 30, 2022


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

For the transition period from to

Commission file number 1-16811

United States Steel Corporation

(Exact name of registrant as specified in its charter)

Delaware

25-1897152

(State or other jurisdiction of incorporation)

(IRS Employer Identification No.)

600 Grant Street,

Pittsburgh,

15219-2800

(Address of principal executive offices)

(Zip Code)

(412) 433-1121

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
United States Steel Corporation Common Stock	X	New York Stock Exchange
United States Steel Corporation Common Stock	X	Chicago Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

Common stock outstanding at July 25, 2022 – 237,226,996 shares

INDEX


			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Statement of Operations (Unaudited)	1
		Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	2
		Condensed Consolidated Balance Sheet (Unaudited)	3
		Condensed Consolidated Statement of Cash Flows (Unaudited)	4
		Notes to Condensed Consolidated Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
	Item 4.	Controls and Procedures	38
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	39
	Item 1A.	Risk Factors	43
	Item 2	Purchases of Equity Securities by Issuer and Affiliated Purchasers	44
	Item 3	Defaults upon Senior Securities	44
	Item 4.	Mine Safety Disclosure	44
	Item 5.	Other Information	44
	Item 6.	Exhibits	45
SIGNATURE			46
WEB SITE POSTING			46

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,” “should,” “plan,” “goal,” “future,” “will,” "may" and similar expressions or by using future dates in connection with any discussion of, among other things, the construction or operation of new or existing facilities, the timing, size and form of share repurchase transactions, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational cash improvements, changes in global supply and demand conditions and prices for our products, international trade duties and other aspects of international trade policy, statements regarding our future strategies, products and innovations, statements regarding our greenhouse gas emissions reduction goals and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in this report and in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and those described from time to time in our future reports filed with the Securities and Exchange Commission.

References in this Quarterly Report on Form 10-Q to (i) "U. S. Steel," "the Company," "we," "us," and "our" refer to United States Steel Corporation and its consolidated subsidiaries unless otherwise indicated by the context, (ii) “Big River Steel” refers to Big River Steel Holdings LLC and its direct and indirect subsidiaries unless otherwise indicated by the context and (iii) ”Transtar” refers to Transtar LLC and its direct and indirect subsidiaries unless otherwise indicated by the context.

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions, except per share amounts)	2022		2021		2022		2021
Net sales:
Net sales	$	5,794	$	4,684	$	10,637	$	8,053
Net sales to related parties (Note 19)	496		341		887		636
Total (Note 6)	6,290		5,025		11,524		8,689
Operating expenses (income):
Cost of sales	4,661		3,678		8,484		6,752
Selling, general and administrative expenses	112		106		229		208
Depreciation, depletion and amortization	198		202		396		391
Earnings from investees	(95)		(35)		(131)		(49)

Asset impairment charges (Note 1)	151		28		157		28
Gain on equity investee transactions (Note 5)	—		—		—		(111)
Restructuring and other charges (Note 20)	17		31		34		37
Net gain on sale of assets	(2)		(15)		(4)		(15)
Other gains, net	(6)		(4)		(13)		(11)
Total	5,036		3,991		9,152		7,230
Earnings before interest and income taxes	1,254		1,034		2,372		1,459
Interest expense	39		84		89		176
Interest income	(4)		(1)		(5)		(2)
Loss on debt extinguishment	2		1		2		256
Other financial costs	16		4		18		22
Net periodic benefit income	(61)		(29)		(122)		(60)
Net interest and other financial (benefits) costs	(8)		59		(18)		392
Earnings before income taxes	1,262		975		2,390		1,067
Income tax expense (benefit) (Note 12)	284		(37)		530		(36)
Net earnings	978		1,012		1,860		1,103
Less: Net earnings attributable to noncontrolling interests	—		—		—		—
Net earnings attributable to United States Steel Corporation	$	978	$	1,012	$	1,860	$	1,103
Earnings per common share (Note 13):
Earnings per share attributable to United States Steel Corporation stockholders:
'-Basic	$	3.80	$	3.75	$	7.17	$	4.25
'-Diluted	$	3.42	$	3.53	$	6.45	$	4.02

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

-1-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Net earnings	$	978	$	1,012	$	1,860	$	1,103
Other comprehensive income (loss), net of tax:
Changes in foreign currency translation adjustments	(100)		23		(128)		(24)
Changes in pension and other employee benefit accounts	1		205		(2)		229
Changes in derivative financial instruments	14		(31)		36		(51)
Total other comprehensive loss, net of tax	(85)		197		(94)		154
Comprehensive income including noncontrolling interest	893		1,209		1,766		1,257
Comprehensive income attributable to noncontrolling interest	—		—		—		—
Comprehensive income attributable to United States Steel Corporation	$	893	$	1,209	$	1,766	$	1,257

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

-2-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


(Dollars in millions)	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents (Note 7)	$	3,035	$	2,522
Receivables, less allowance of $43 and $44	2,428		1,968
Receivables from related parties (Note 19)	174		121
Inventories (Note 8)	3,014		2,210
Other current assets	384		331
Total current assets	9,035		7,152
Long-term restricted cash (Note 7)	64		76
Operating lease assets	163		185
Property, plant and equipment	19,841		19,676
Less accumulated depreciation and depletion	12,398		12,422
Total property, plant and equipment, net	7,443		7,254
Investments and long-term receivables, less allowance of $4 in both periods	778		694
Intangibles, net (Note 9)	497		519
Deferred income tax benefits (Note 12)	2		32
Goodwill (Note 9)	920		920
Other noncurrent assets	956		984
Total assets	$	19,858	$	17,816
Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	3,228	$	2,809
Accounts payable to related parties (Note 19)	157		99
Payroll and benefits payable	488		425
Accrued taxes	523		365
Accrued interest	65		68
Current operating lease liabilities	53		58
Short-term debt and current maturities of long-term debt (Note 15)	54		28
Total current liabilities	4,568		3,852
Noncurrent operating lease liabilities	119		136
Long-term debt, less unamortized discount and debt issuance costs (Note 15)	3,869		3,863
Employee benefits	206		235
Deferred income tax liabilities (Note 12)	299		122
Deferred credits and other noncurrent liabilities	506		505
Total liabilities	9,567		8,713
Contingencies and commitments (Note 21)
Stockholders’ Equity (Note 17):
Common stock (282,420,032 and 279,522,227 shares issued) (Note 13)	282		280
Treasury stock, at cost (39,042,398 shares and 15,708,839 shares)	(877)		(334)
Additional paid-in capital	5,166		5,199
Retained earnings	5,390		3,534
Accumulated other comprehensive income (Note 18)	237		331
Total United States Steel Corporation stockholders’ equity	10,198		9,010
Noncontrolling interests	93		93
Total liabilities and stockholders’ equity	$	19,858	$	17,816

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

-3-

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(Dollars in millions)	2022		2021
Increase (decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net earnings	$	1,860	$	1,103
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, depletion and amortization	396		391

Asset impairment charges (Note 1)	157		28
Gain on equity investee transactions	—		(111)
Restructuring and other charges (Note 20)	34		37
Loss on debt extinguishment	2		256
Pensions and other postretirement benefits	(106)		(46)
Deferred income taxes (Note 12)	247		(77)
Net gain on sale of assets	(4)		(15)
Equity investee earnings, net of distributions received	(110)		(49)
Changes in:
Current receivables	(615)		(875)
Inventories	(885)		(343)
Current accounts payable and accrued expenses	575		789
Income taxes receivable/payable	229		47
All other, net	(104)		(32)
Net cash provided by operating activities	1,676		1,103
Investing activities:
Capital expenditures	(660)		(284)
Acquisition of Big River Steel, net of cash acquired (Note 5)	—		(625)

Proceeds from cost reimbursement government grants (Note 21)	53		—
Proceeds from sale of assets	12		25
Other investing activities	(7)		(1)
Net cash used in investing activities	(602)		(885)
Financing activities:
Repayment of short-term debt (Note 15)	—		(180)
Revolving credit facilities - borrowings, net of financing costs (Note 15)	—		50
Revolving credit facilities - repayments (Note 15)	—		(911)
Issuance of long-term debt, net of financing costs (Note 15)	4		825
Repayment of long-term debt (Note 15)	(73)		(1,418)
Net proceeds from public offering of common stock (Note 22)	—		790
Common stock repurchased (Note 22)	(522)		—
Proceeds from government incentives (Note 21)	82		—
Other financing activities	(39)		(11)
Net cash used in financing activities	(548)		(855)
Effect of exchange rate changes on cash	(27)		(9)
Net increase (decrease) in cash, cash equivalents and restricted cash	499		(646)
Cash, cash equivalents and restricted cash at beginning of year (Note 7)	2,600		2,118
Cash, cash equivalents and restricted cash at end of period (Note 7)	$	3,099	$	1,472


Non-cash investing and financing activities:
Change in accrued capital expenditures	$	104	$	(26)
U. S. Steel common stock issued for employee/non-employee director stock plans	46		27
Capital expenditures funded by finance lease borrowings	26		10
Export Credit Agreement (ECA) financing	—		23

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

-4-

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation and Significant Accounting Policies

The year-end Consolidated Balance Sheet data was derived from audited statements but does not include all disclosures required for complete financial statements by accounting principles generally accepted in the United States of America (U.S. GAAP). The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair statement of the results for the periods covered, including assessment of certain accounting matters using all available information such as consideration of forecasted financial information in context with other information reasonably available to us. However, our future assessment of our current expectations, including consideration of the unknown future impacts of the COVID-19 pandemic, could result in material impacts to our consolidated financial statements in future reporting periods. All such adjustments are of a normal recurring nature unless disclosed otherwise. These condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. Additional information is contained in the United States Steel Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which should be read in conjunction with these condensed financial statements.

Asset Impairments

In the second quarter 2022, the Company recognized charges of approximately $151 million for the write-off of the blast furnaces and related fixed assets for the permanent idling of the iron making process at the Company's Great Lakes Works facility, which had been idled on an indefinite basis during 2020. The coil finishing process at Great Lakes Works continues to operate and remains a component of the Company's operating plans.

In May 2019, U. S. Steel announced that it planned to construct a new endless casting and rolling facility at its Edgar Thomson Plant in Braddock, Pennsylvania, and a cogeneration facility at its Clairton Plant in Clairton, Pennsylvania, both part of the Company's Mon Valley Works. The Company purchased certain equipment for this project before delaying groundbreaking in March 2020 in response to COVID-19. In April 2021, the Company determined not to pursue this project, re-evaluated the use of the already purchased equipment, and subsequently transferred suitable equipment to the Mini Mill segment to be used on the new three-million-ton mini mill flat-rolled facility under construction in Osceola, Arkansas (BR2). Total impairments of $56 million were recognized for this project in 2021, $28 million of which was recognized during the three-month period ended June 30, 2021.

There were no triggering events that required an impairment evaluation of our long-lived asset groups as of June 30, 2022.

2. New Accounting Standards

In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). ASU 2021-08 requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for public companies with fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption of all amendments in the same period permitted. The Company is currently assessing the impact of ASU 2021-08 but does not believe it will have a material impact on its Condensed Consolidated Financial Statements.

3. Recently Adopted Accounting Standards

In August 2020, the FASB issued Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 also requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance in ASC 260 on the computation of earnings per share (EPS) for convertible instruments and contracts on an entity’s own equity. The update requires entities to use the If-Converted Method for calculating diluted earnings per share, retiring the previous alternative calculation of the Treasury Stock Method for calculating diluted earnings per share for convertible instruments.

U. S. Steel has adopted this guidance using the modified retrospective implementation method as of January 1, 2022. The cumulative effect of the changes made to our consolidated January 1, 2022, balance sheet for the adoption of ASU 2020-06 was as follows:

-5-


(in millions)	Balance as of December 31, 2021	Adjustments due to ASU 2020-06	Balance as of January 1, 2022
Condensed Consolidated Balance Sheet
Assets
Deferred income tax benefits	32	4	36

Liabilities
Long-term debt, less unamortized discount and debt issuance costs	3,863	74	3,937
Deferred income tax liabilities	122	(15)	107

Equity
Additional paid-in capital	5,199	(78)	5,121
Retained Earnings	3,534	22	3,556

In November 2021, the FASB issued Accounting Standards Update 2021-10, Disclosures by Business Entities about Government Assistance (ASU 2021-10). ASU 2021-10 provides expanded annual disclosure requirements for business entities that account for a transaction with a government by applying a grant or contribution accounting model by analogy. U. S. Steel adopted this guidance effective January 1, 2022. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements.

4. Segment Information

U. S. Steel has four reportable segments: North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE); and Tubular Products (Tubular). The Mini Mill segment reflects the acquisition of Big River Steel after the purchase of the remaining equity interest on January 15, 2021 (see Note 5 for further details) and BR2 which is under construction in Osceola, Arkansas. The Tubular segment includes the electric arc furnace at our Fairfield Tubular Operations in Fairfield, Alabama. The results of our real estate businesses and of our former railroad business are combined and disclosed in the Other category.

The results of segment operations for the three months ended June 30, 2022 and 2021 are:


(In millions) Three Months Ended June 30, 2022	Customer Sales		Intersegment Sales		Net Sales		Earnings from investees		Earnings (loss) before interest and income taxes
Flat-Rolled	$	3,724	$	147	$	3,871	$	86	$	777
Mini Mill	838		147		985		—		270
USSE	1,342		4		1,346		—		280
Tubular	381		2		383		9		107
Total reportable segments	6,285		300		6,585		95		1,434
Other	5		—		5		—		(12)
Reconciling Items and Eliminations	—		(300)		(300)		—		(168)
Total	$	6,290	$	—	$	6,290	$	95	$	1,254

Three Months Ended June 30, 2021
Flat-Rolled	$	2,991	$	63	$	3,054	$	32	$	579
Mini Mill	759		142		901		—		284
USSE	1,078		1		1,079		—		207
Tubular	184		3		187		3		—
Total reportable segments	5,012		209		5,221		35		1,070
Other	13		27		40		—		14
Reconciling Items and Eliminations	—		(236)		(236)		—		(50)
Total	$	5,025	$	—	$	5,025	$	35	$	1,034

-6-

The results of segment operations for the six months ended June 30, 2022 and 2021 are:


(In millions) Six Months Ended June 30, 2022	Customer Sales		Intersegment Sales		Net Sales		Earnings from investees		Earnings (loss) before interest and income taxes
Flat-Rolled	$	6,678	$	199	$	6,877	$	116	$	1,290
Mini Mill	1,556		277		1,833		—		548
USSE	2,593		8		2,601		—		544
Tubular	690		5		695		15		184
Total reportable segments	11,517		489		12,006		131		2,566
Other	7		—		7		—		(5)
Reconciling Items and Eliminations	—		(489)		(489)		—		(189)
Total	$	11,524	$	—	$	11,524	$	131	$	2,372

Six Months Ended June 30, 2021
Flat-Rolled	$	5,263	$	106	$	5,369	$	37	$	725
Mini Mill	1,209		204		1,413		—		416
USSE	1,876		2		1,878		—		312
Tubular	318		7		325		6		(29)
Total reportable segments	8,666		319		8,985		43		1,424
Other	23		56		79		6		22
Reconciling Items and Eliminations	—		(375)		(375)		—		13
Total	$	8,689	$	—	$	8,689	$	49	$	1,459

A summary of total assets by segment is as follows:


(In millions)	June 30, 2022		December 31, 2021
Flat-Rolled	$	7,867	$	7,337
Mini Mill(a)	5,394		4,715
USSE	6,443		6,111
Tubular	1,070		1,054
Total reportable segments	$	20,774	$	19,217
Other	$	110	$	88
Corporate, reconciling items, and eliminations(b)	(1,026)		(1,489)
Total assets	$	19,858	$	17,816

(a)Includes assets of $697 million and $347 million at June 30, 2022 and December 31, 2021, respectively, related to BR2 under construction in Osceola, Arkansas.

(b)The majority of corporate, reconciling items, and eliminations is comprised of cash and the elimination of intersegment amounts.

The following is a schedule of reconciling items to consolidated earnings before interest and income taxes:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Items not allocated to segments:
Restructuring and other charges (Note 20)	$	(17)	$	(31)	$	(34)	$	(37)
Asset impairment charges (Note 1)	(151)		(28)		(157)		(28)
Other charges, net	—		(6)		2		(48)
Gains on assets sold and previously held investments	—		15		—		126
Total reconciling items	$	(168)	$	(50)	$	(189)	$	13

-7-

5. Acquisitions and Dispositions

Big River Steel Acquisition

On January 15, 2021, U. S. Steel purchased the remaining equity interest in Big River Steel for approximately $625 million in cash net of $36 million and $62 million in cash and restricted cash received, respectively, and the assumption of liabilities of approximately $50 million. There were acquisition related costs of approximately $9 million recorded in 2021.

Prior to the closing of the acquisition on January 15, 2021, U. S. Steel accounted for its 49.9% equity interest in Big River Steel under the equity method. As a result of the acquisition, the Company adjusted the carrying amount of its previously held equity investment to its fair value of $770 million which resulted in a gain of approximately $111 million. The gain was recorded in gain on equity investee transactions in the Condensed Consolidated Statement of Operations.

The following unaudited pro forma information for U. S. Steel includes the results of the Big River Steel acquisition as if it had been consummated on January 1, 2020. The unaudited pro forma information is based on historical information and is adjusted for amortization of intangible asset, property, plant and equipment and debt fair value step-ups. The pro forma information does not include any anticipated cost savings or other effects of the integration of Big River Steel. Accordingly, the unaudited pro forma information does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations.


	Six Months Ended June 30,
(in millions)	2021
Net sales	$	8,761
Net earnings (loss)	$	1,033

Transtar Disposition

On July 28, 2021, U. S. Steel completed the sale of 100 percent of its equity interests in its wholly-owned short-line railroad, Transtar, LLC (Transtar) to an affiliate of Fortress Transportation and Infrastructure Investors, LLC. The Company received net cash proceeds of $627 million, subject to certain customary adjustments as set forth in the Membership Interest Purchase Agreement, and recognized a pretax gain of approximately $506 million in 2021. In connection with the closing of the transaction, the Company entered into certain ancillary agreements including a railway services agreement, providing for continued rail services for its Gary and Mon Valley Works facilities, and a transition services agreement. Because Transtar does not represent a significant component of U. S. Steel's business and does not constitute a reportable business segment, its results through the date of disposition are reported in the Other category. See Note 4 for further details.

Other Transactions

In December 2021, the Company entered into an agreement to sell certain assets related to a component of its flat-roll business. As a result of this commitment, the Company has recognized a total of $119 million in restructuring-related charges during the fourth quarter 2021 and six months ended June 30, 2022. These charges are expected to be paid out on a long-term basis. This transaction is expected to result in a gain upon closure, which is subject to customary closing conditions.

6. Revenue

Revenue is generated primarily from contracts to produce, ship and deliver steel products, and to a lesser extent, raw materials sales such as iron ore pellets and coke by-products and real estate sales. Generally, U. S. Steel’s performance obligations are satisfied and revenue is recognized when title transfers to our customer for product shipped or services are provided. Revenues are recorded net of any sales incentives. Shipping and other transportation costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Costs related to obtaining sales contracts are incidental and are expensed when incurred. Because customers are invoiced at the time title transfers and U. S. Steel’s right to consideration is unconditional at that time, U. S. Steel does not maintain contract asset balances. Additionally, U. S. Steel does not maintain contract liability balances, as performance obligations are satisfied prior to customer payment for product. U. S. Steel offers industry standard payment terms.

The following tables disaggregate our revenue by product for each of the reportable business segments for the three months and six months ended June 30, 2022 and 2021, respectively:

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Net Sales by Product (In millions):

Three Months Ended June 30, 2022

Flat-Rolled

Mini Mill

USSE

Tubular

Other

Total

Semi-finished