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* MONDAY EVENING, THE MINNEAPOLIS JOUBtfAL. APRIL 13, 1903. 9 FIRST ANNUAL REPORT -i; UNITED STATES STEEL CORPORATION

YEAR ENDING DECEMBER 31, 1902. •5

L.IABIL-|-rii£S. Property Account: Capital Stock of U. S. Steel Corporation: Properties owned and operated by the serertl companies $1,453,635.551.3J Common $508,302,500.00 Less Surplus and Subsidiary Companies at date Preferred... 510,281,100.00 $1,018,583,600.00 of acquirement of their StoekB by Ihe U. S. * Steel Corporation, April 1, 1901 $116,3*6,111.41 Charged off to Depreciation and Extinguish­ Capital Stock of Subsidiary Co's not held by U. S. Steel Corp'n (fiar val.) ment Funds 12.011,856 53 Common Stocks $44,400.00 128,367,967 94 $1,325,267,583.43 Preferred Stocks 72,800-00 Lake Superior Consolidated Iron Mines, Subsidiary Companies 98,714.38 215,914.38 Deferred Charges to Operations: Expenditures for Improvements, Explorations, Stripping and Development at Bonded and Debenture Debt: Mines, and for advanced Mining Royalties, chargeable to future operations of the properties 3,178,759.67 United States Steel Corporation Bonds $303,757,000.00 Less Redeemed and held by Trustee of Sinking Fund 2,698,000.00 Trustees of Sinking Funds: Balance held by tbt Public $301,059,000.00 Subsidiary Companies' Bonds $60,978,900.75 Cash held by trustees on account of Bond Sinking Funds 459,246.14 Less Bedeemed and held by Trustees of Sinking Funds... 1,824,000.00 ($4,022,000 par value of Redeemed Bonds held by Trustees not treated as an asset.) Balance held by the Pu blic, 59,654,900.75 Dsbenture Scrip, Illinois Steel Company 40,426.02 360,754,326.77 Investments:' Outside Real Estate and Other Property $1,874,872.39 Mortgages and Purchase Money Obligations of Subsidiary Cos.: Insurance Fund Assets , 929,615.84 2,804,488.23 Mortgages . , $2,901,182.07 Purchase Money Obligations 6,689,4ia83 9,590,550.60 Current Assets: Inventories $104,390,844 74 Current Liabilities: Accounts Receivable 48,944,189.68 Current Accounts Payable and Pay Bolls $18,675,080.13 Bills and Loans Payable .' 6,202,502,44 Bills Receivable . 4,153,291.13 Special Deposits Due Employees and Others 4,485,546.58 Agents' Balances 1,091,318.99 Accrued Taxes not yet d ue 1.051,601.42 * Sundry Marketable Stocks and Bonds 6,091,340.16 Accrued Interest and Unrepresented Coupons 5,398,572.96 Cash 50,163,172 48 Preferred Stock Dividend No. 7, payable February 16, 1903 8,929,919.25 A€% 0_^ __« _0 214,834,157.18 Common Stock Dividend No* 7, payable March 30,1903 5,083,025.00 49,o20,251.7o Total Capital and Current Liabilities $1,438,970,643.53 Sinking and Reserve Funds: Sinking Fund on U. S. Steel Corporation Bonds $1,773,383.33 Audited and found correct, Sinking Funds on Bonds of Subsidiary Companies 217,844.86 PBICE, WATBBHOUSE & CO., Depreciation and Extinguishment Funds 1,707,610.59 Auditors. improvement and Replacement Funds .' 16,566,190.90 New York, March 12, 1903. Contingent and Miscellaneous Operating Funds 3,413,783.50 Insurance Fund 1,539,485.25 25,217,747.93 Bond Sinking Funds with Accretions 4,481,246.14 Represented by Cash, and by redeemed bonds not treated as assets (see contra.) Undivided Surplus of U. S. Steel Corporation and Subsidiary Co's: Capital Surplus provided in organization of U. S. Steel Corporation $25,000,000.00 *T7 RVA 507 ft 5 Surplus accumulated by all companies since organization of U.S.Steel Corporation 62,874,597.05 /y,o/vy/iUJ Total Assets $1,546.54423465 Total Liabilities $1,546,544,234.65 •NOTE—In preliminary Report, submitted to stockholders at the First Annnal Meeting, February 17,1902, the accumulated "surplus of all subsidiary companies to November 30, 1901, was shown as $174,344,229.32. This total, however, included the surplus of the subsidiary companies at time of the original acquisition of their stocks by United States Steel Corporation in 1901, which surplus in this balance sheet is stated in diminution of Property Account.

MAINTENANCE, RENEWALS, AND EXTRAOR­ PURCHASE MONEY OBLIGATIONS, PILLS PAY­ INCOME ACCOUNT FOR THE YEAR. ABLE AND SPECIAL DEPOSITS. The total net earnings of all properties after deducting expenditures DINARY REPLACEMENTS. for ordinary repairs and maintenance (approximately $21,000, The physical condition of the properties has been fully maintained during the year, the The unsecured liabilities of the Subsidiary Companies of the above character were re­ 000*), also interest on Bonds and fixed charges of the subsidiary cost of which has been charged to current operations. The amount expended by all proper­ duced during the fiscal year of 1902, and also during the period from April 1, 1901 (date of companies, amounted to f 133,308,703-72 ties during the year for maintenance, renewals and extraordinary replacements aggregated organization of U. S. Steel Corporation), to December 31, *902, by the following respective Less Appropriations for the following purposes, \iz* # $29,157,010.73. amounts, viz: Sinking Funds on Bonds of Subsidiary Companies... f $624,064.43 Paid Off Between Paid Off Total Reduction, This total is apportioned as follows: April 1,1901, and During Year April l, 1901, to Depreciation and Extinguishment Funds (regular Ordinary Purchase Money Obligations and Bills Pay­ December 31,1901. of 1902. December 31,1902. provisions for the year) ., 4,834,710.28 Expended on Maintenance Extraordinary Keplaeementt).* Total. able $8,678,836.01 $12,884,558.85 $21,563,394.86 Extraordinary Replacement Funds (regular provi­ and Repairs. Manufacturing Properties $6,978,230.48 $23,077,448 42 Special Deposits 2,369,134.66 767,809.09 8,136,943.65 sions for the year) 9,315,614 76 .$16,099,217.94 Coal and Coke Properties 881,804.77 94,664.39 976,469.16 Total $11,047,970 57 $13,652,367 94 $24,700,338 51 Special Fund for Depreciation and Improvements 10,000,000.00 24,774,889.47 Iron Ore Properties , 355,220 12 355,220.12 The funds for the payment of the above liabilities were provided entirely from the sur­ Balance of Net Earnings for the year ."777777777717" $108,534,374 25 Transportation Properties: plus net earnings of the organization—no new capital or bonded or other liability has been Deduct * Railroads 3,544,654 27 607,967.88 4,152,622 15 created in lieu thereof, although practically all of such payments might properly be funded, Interest on U S. Steel Corporation Bonds for the Steamships and Docks 313,801.37 192,317.80 506,119 17 as the liabilities were those of the Subsidiary Companies prior to or at the time of organiza­ year $15,187,850 00 Miscellaneous Properties 35,619.66 53,612 05 89,131 71 tion of U. S. Steel Corporation for the acquirement of additional property or for moneys bor­ Sinking Fund on U. S. Steel Corporation Bonds for Total $21,230,218.13 $7,926,792 60 $29,157,010 73 rowed, which were in turn used for purchase of property and construction expenditures. 18,227,850 00 the y ear 3,040,000 00 •These expenditures were paid from funds provided from earnings to cover require- As shown by the General Balance Sheet, the amount of these liabilities outstanding on Balance $90,906,524 25 ments of the character included herein. December 31, 1902, Is as follows. Dividends for the year on U. S. Steel Corporation Stocks, -via: Preferred, 7 per cent $36,720,177 50 VOLUME OF BUSINESS. Purchase Money Obligations $6,689,418.53 Common, 4 per cent 20,332,690.00^ 56,052,867 50 Bills Payable 6,202,602.44 9 Special Deposits 4.485,546 58 Undivided Profits or Surplus for the year 834,253.656 75 The volume of business done by all companies during the y«ar, including sales between Total $17,377,467.55 •The actual expenditures for ordinary repairs and maintenance were $21,230,218 li. it ¥ the companies, and the gross receipts of transportation and miscellaneous properties, aggre* cannot be stated, however, that this specific sum was taken out of the net earnings for the gated the total sum of $560,510,479.39. year, because in the manufacturing and producing properties the expenses for repairs and PROPERTY ACCOUNT. maintenance enter into and form a part of production cost. And as the net earnings of such PRODUCTION. The expenditures made during the year by all the properties and charged to Property properties are stated on the basis of gross receipts for product shipped, leas the production follows. The production of the several properties for the year 1902 was as Account equaled, less credits for property sold, the total sum of $16,586,531.77. These outlays cost thereof, the income for the year is charged, with outlays for repairs and maintenance Tons. Tons. Iron Ore Mined: were made for the completion of construction work at manufacturing properties under way only to the extent that the production during such period was actually shipped But as the 1 487,370 From Marquette Range •when the U S. Steel Corporation was organized, also for necessary additions and extensions shipments in 1902 equaled practically the year's production, approximately the entire 2,675,754 From Menominee Range authorized since its organization, for the acquirement of additional ore and coal property, the amount of the expenditures in question has been deducted before stating the net earnings 2,064,49.5 From Gogebic Range • opening and development of new mines and plants, for additional equipment and facilities as above. 2.057,537 From Vermillion Range . demanded by the growing requirements of the business of the transportation properties* to 7',778 026 16 063,179 From Mesaba Range secure material reduction in cost of manufacture, transportation of raw and unfinished ma­ GENERAL PROFIT AND LOSS ACCOUNT. Coke Manufactured 9,521,567 terials, and distribution of finished products, etc. Coal Mined, not including that used in making coke 709,367 The outlays as above are classified by properties as follows. • GROSS RECEIPTS. Blast Furnace Products: Expended by +* Pig Iron ' 7,802,812 United States Steel Corporation, on account of acquirement of stock*! of M Gross Sales and Earnings • < $560,510 479 39 Spiegel 128,265 subsidiary companies * ' $258,473.31 Ferro-Manganese and Silicon 44,453 7,975,530 Manufacturing Properties 9,743,125 7$ f MANUFACTURING AND OPERATING EXPENSES. Steel Ingot Production: Ore Properties 1.971*542 08 Bessemer ingots 6.759,210 Coal and Coke Properties 2,043,168.61 Manufacturing and Producing Cost and Operating Expenses $411,408,818.36* 2,984,708 9,743,918 Open Hearth Ingots »•«• • Tiansportation Properties. y..... * 2,741,652.51 h Balance - • $149,101,661.03 Miscellaneous Properties .Cr. 171,430.52 it* Miscellaneous Manufacturing and Operating Gains and Total $16,586,531 77 Losses (Net) $2,654,189 22 ROLLED AND OTHER FINISHED PRODUCTS Rentals Received 474,781 49 3,128,970 71 FOR SALE. I1I1 $15^,230,631.74 Total Net Manufacturing, Producing and Operating Income.... Tdns. EMPLOYES AND PAY-ROLLS. Steel Rails r 1,920,786 The average number of employes in the service of all properties during the OTHER INCOME. Blooms, Billets, Slabs, Sheet and Tin Plate Bars 782,637 entire year was 168,127 49 541 Elates « ' The aggregate amount paid during the year for salaries and wages of em­ Proportion of Net Profits of Properties owned but whose ,254,560 Merchant Steel, Skelp, Shapes, Hoops, Bands and Cotton Ties... %. ployes was $120,528,343 operations (gross revenue, cost of product, expenses, 744,062 Tubing and Pipe > , The following shows the classification of the number of employes and pay rolls between etc ) are not included in this statement 1,972,316 45 109,330 Rods the several departments named: Interest and Dividends on Investments and Deposits, etc. 3,464,135.50 5,426,451 95 .,122,809 Wire and Products of Wire Employes of Number. ~ % 783,576 Total Income 7777777777777 $157,657,083-69 Sheets—Black, Galvanized and Tin Plates. Manufacturing Properties 125,326 481,029 Finished Structural Work Coal and Coke Properties J6.519 « 139,954 Angle and Splice Bars and Joints Iron Mining Properties 13.465 GENERAL EXPENSES. 42,984 Spikes, Bolts, Nuts and Riv ets Transportation Properties m 11,160 196,787 Administrative, Selling and General Expenses (not includ­ Axles Miscellaneous Properties ,.. 1,'657 ing Geneml Expenses of Transportation Companies)..$13,202,398 89 ' 29,177 Sundry iron and Steel Products. Total 168,127 Taxes r 2,391,465 74 Total 8,197,232 Commercial Discounts and Miscellaneous Interest 1,908,027.90 17,501,892.53 Spelter . * 23,982 $140,155,191.16 Balance of Income Copperas 14,224 NUMBER OF STOCKHOLDERS. 5r «| Bbls. The following shows the number of stockholders in the United States Steel Corporation INTEREST CHARGES, ETC. Cement 486,357 in March, 1903, in comparison with the number at corresponding date in preceding year: Interest on Bonds and Mortgage* of the Subsidiary Com­ 1902. 1908. Increase. panies $3,879,439.91 ORDERS ON HAND. Preferred 25,296 31,789 6.S03 Interest on Bills Payable and Purchase Money Obligations The tonnage of unfilled orders on the books at the close of 1902 equaled 5,347,253 tons Common 17,723 26,830 "9,107 of Subsidiary Cos. and Miscellaneous Interest 2,234,144.43 -r .of all kinds Of manufactured products. At the corresponding date in preceding years the Rentalls paid 732,843,10 6.846,427.44 orders booked equaled 4,497,749 tons. In many of the classes »f heavier products, like rails Total 43,019 58,629 15,610 The foregoing does not include the subscriptions for preferred stock by 27,979 employes Net Earning* for the Y««r * $133,308,763 72 plates and structural material, practically the entire capacity of the mills is sold up until under plan offered them under date of December 31, 1902. ^ * >• -• ? - * *Includes charges for ordinary maintenance and repairs. nearly the end of the year 1903. ' „ . Complete copies of the detailed Annual Report in pamphlet form will be mailed stockholders on and after April 13ttw\ Copies •* k' ***** \ i may also be obtained after that date at the office of the Secretary, 71 Broadway, New^York. mm * 1 Sh i MUM