1
EXHIBIT 99.1
Contact: William E. Keslar
Don H. Herring
(412) 433-6870
FOR IMMEDIATE RELEASE
USX ANNOUNCES FOURTH QUARTER AND FULL YEAR
MARATHON GROUP FINANCIAL RESULTS
PITTSBURGH, January 21, 1994 -- USX Corporation reported
a significant improvement in its Marathon Group's (NYSE:MRO)
fourth quarter 1993 downstream operating results, compared to
the same period in 1992. However, an inventory market
valuation charge and certain environmental remediation charges
resulted in a fourth quarter 1993 Marathon Group net loss of
$88 million, or $.31 per share. These charges, combined with
the positive effects of certain asset sales, reduced net income
by an estimated $117 million. Comparable results in the fourth
quarter of 1992 reflected a net loss of $120 million, or $.42
per share, which included an estimated net charge of
$62 million for the aftertax effect of an inventory market
valuation charge, certain litigation accruals, and a benefit
from a natural gas contract settlement.
Sales were $2.9 billion in the fourth quarter of 1993,
compared with $3.2 billion in the fourth quarter of 1992.
Sales for the year 1993 totaled $12.0 billion, compared with
$12.8 billion in 1992.
For the fourth quarter of 1993 the Marathon Group
reported an operating loss of $115 million, compared with a
restated operating loss of $104 million in the fourth quarter
of 1992. The operating losses in the 1993 and 1992 fourth
quarters reflected increases in the inventory market valuation
reserve of $187 million and $98 million, respectively. Total
year 1993 operating income was $169 million, compared with
restated operating income of $304 million in 1992. Operating
income in 1993 included a $241 million charge for an increase
in the inventory market valuation reserve, while 1992 total
year operating income included a $62 million credit for a
decrease in the reserve and a production tax refund of $119
million, partially offset by a restructuring charge of
$115 million related to the disposition of certain domestic
exploration and production properties.
2
USX Corporation Board Chairman Charles A. Corry
commented, "Downstream results for both the fourth quarter and
total year showed strong improvement from comparable periods
last year, despite little improvement in the economy.
Upstream results reflected the depressed prices which
prevailed in world crude markets."
Operating income from refining, marketing and
transportation, or downstream operations totaled $111 million
in the fourth quarter of 1993 and $407 million for the year
1993, compared with $3 million and $128 million for the fourth
quarter and total year 1992, respectively. Downstream
operating income in 1993 included a fourth quarter charge for
environmental remediation of $17 million.
Corry noted, "The improvement in our fourth quarter
downstream results stemmed from higher refined product margins
reflecting lower crude costs, stronger retail margins and
decreased refinery maintenance costs for turnaround activity
which were partially offset by lower refined product prices."
3
Worldwide exploration and production, or upstream
operations, reported an operating loss of $19 million in the
fourth quarter of 1993 and operating income for the year of
$80 million, compared with operating income of $28 million and
$172 million for the fourth quarter and total year 1992,
respectively. Domestic upstream reported operating income of
$3 million for the fourth quarter of 1993, compared with $27
million in the fourth quarter of 1992. Domestic upstream
operating income for the year 1993 was $117 million, versus
$123 million in the prior year. Excluding the effects of a $5
million fourth quarter 1993 charge for environmental
remediation accruals, and a $20 million gain recognized as a
result of a natural gas contract settlement in the fourth
quarter of 1992, domestic upstream operating income improved
in the fourth quarter and total year 1993 primarily reflecting
lower production and depletion expenses and higher natural gas
prices, partially offset by lower crude oil prices and
volumes.
During the fourth quarter of 1993, Marathon began to
benefit from an aggressive domestic natural gas development
program in which net wells drilled in 1993 were nearly double
that of 1992 activity. This level of development will
continue in 1994.
International upstream reported operating losses of
$22 million in the fourth quarter of 1993 and $37 million for
the total year 1993, compared with operating income of $1
million and $49 million, respectively, in 1992. The declines
for the fourth quarter and year 1993 resulted mainly from
lower average international crude oil prices, reduced average
natural gas prices and decreased liquid hydrocarbon liftings
from the United Kingdom sector of the North Sea. The total
year results for 1993 included a $17 million charge recorded
in the third quarter related to the relinquishment of
Marathon's interest in the Arzanah Oil Field, Abu Dhabi.
The East Brae field in the U.K. North Sea was brought on
stream by Marathon in late December. East Brae liquids
production is expected to peak at 115,000 barrels daily in
November 1994. Marathon's interest in East Brae is approximately 36%.
4
Other income in the fourth quarter of 1993 included
pretax gains of $25 million for the disposal of assets,
including the sale of two tug/barge units and the assets of
the Bosart Co. subsidiary.
Marathon Group cash flow from operations before the
effects of working capital changes was $910 million for the
year 1993.
For the year 1993, the Marathon Group recorded a loss
before the cumulative effect of changes in accounting
principles of $6 million, or $.04 per share, compared with
income before the cumulative effect of changes in accounting
principles of $109 million, or $.37 per share, in 1992.
The Marathon Group recorded a total year 1993 net loss of
$29 million, or $.12 per share, which included the $17 million
unfavorable cumulative noncash effect of adopting Statement of
Financial Accounting Standards (SFAS) No. 112 -- Employers'
Accounting for Postemployment Benefits and the $6 million
unfavorable cumulative effect of adopting Emerging Issues Task
Force Consensus No. 93-14 -- Accounting for Multiple-Year
Retrospectively Rated Insurance Contracts. The cumulative
effect of adopting these standards was reported as a change in
accounting principles and reflected as a restatement of the
Marathon Group's previously reported first quarter 1993 net
income.
5
The net loss in 1993 included the effects of the
previously mentioned accounting changes, an inventory market
valuation charge, certain environmental remediation charges, a
charge related to the relinquishment of an interest in Abu
Dhabi and the remeasurement of deferred tax liabilities
associated with the increase in the federal income tax rate.
These charges, combined with the positive effects of certain
asset sales, and tax adjustments related to USX's ability to
elect to credit, rather than deduct, certain foreign income
taxes for U. S. income tax purposes, had an estimated
unfavorable aftertax effect of $154 million. For the year
1992 the Marathon Group had a net loss of $222 million, or
$.80 per share which included the combined unfavorable
cumulative noncash effect of adopting SFAS No. 106 and
SFAS No. 109, certain restructuring and litigation charges, a
charge for the impairment of an investment and the benefits of
an inventory market valuation credit, a refund of prior years'
production taxes and a natural gas contract settlement. The
estimated unfavorable aftertax effect of these items on 1992
net income was $190 million.
* * * * * * * *
Supplemental information and statistics and condensed
financial statements for the Marathon Group and condensed
consolidated financial statements for USX Corporation are
attached.
6
MARATHON GROUP OF USX CORPORATION
CONDENSED STATEMENT OF OPERATIONS (Unaudited)
Fourth Quarter Year
Ended Ended
December 31 December 31
(In Millions Except Per Share Data) 1993 1992* 1993 1992*
- -----------------------------------------------------------------------------------------------------------------
SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,922 $ 3,238 $11,962 $12,782
Total operating costs . . . . . . . . . . . . . . . . . . . . (3,037) (3,342) (11,793) (12,478)
------ ------ ------- -------
Operating income (loss) . . . . . . . . . . . . . . . . . . . (115) (104) 169 304
Other income (loss) . . . . . . . . . . . . . . . . . . . . . 25 (4) 46 (7)
Net interest and other financial costs. . . . . . . . . . . . (71) (73) (270) (96)
------ ------ -------- -------
TOTAL INCOME (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES . . . . . . . . . . . . . . . . . . . (161) (181) (55) 201
Less provision (credit) for estimated
income taxes
- United States . . . . . . . . . . . . . . . . . . . . . . (138) (71) (133) 59
- Foreign . . . . . . . . . . . . . . . . . . . . . . . . 65 10 84 33
------ ------ ------- -------
TOTAL INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES . . . . . . . . . . . . . . . . . . . . . . . . (88) (120) (6) 109
Cumulative effect of changes in
accounting principles . . . . . . . . . . . . . . . . . . . - - (23) (331)
------ ------ ------- -------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . (88) (120) (29) (222)
Dividends on preferred stock . . . . . . . . . . . . . . . . (2) (1) (6) (6)
------ ------ ------- -------
NET INCOME (LOSS) APPLICABLE TO MARATHON
STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (90) $ (121) $ (35) $ (228)
====== ======= ======= =======
Per common share data:
Weighted average shares, in thousands:
- Primary. . . . . . . . . . . . . . . . . . . . . . . . . . 286,582 286,276 286,594 283,494
- Fully diluted. . . . . . . . . . . . . . . . . . . . . . . 286,582 286,276 286,594 283,495
Primary and fully diluted:
Total income (loss) before cumulative effect
of changes in accounting principles . . . . . . . . . . . $ (.31) $ (.42) $ (.04) $ .37
Cumulative effect of changes in
accounting principles . . . . . . . . . . . . . . . . . . . - - (.08) (1.17)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . (.31) (.42) (.12) (.80)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . .17 .17 .68 1.22
<FN>
* Certain reclassifications of data have been made to conform to 1993
classifications.
The following notes are an integral part of these financial statements.
7
MARATHON GROUP OF USX CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
December 31 December 31
(In Millions) 1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------------------------
ASSETS LIABILITIES AND
Cash and cash STOCKHOLDERS' EQUITY
equivalents . . . . . . . $ 185 $ 35 Current liabilities . . . . $ 1,668 $ 2,278
Receivables - net . . . . . 337 525 Long-term debt . . . . . . . 4,239 3,743
Inventories . . . . . . . . 987 1,278 Other liabilities . . . . . 1,788 1,785
Other current asset . . . . 89 96
------- ------- ------- -------
Total current assets . . . 1,598 1,934 Total liabilities. . . . . . 7,695 7,806
Property, plant and Preferred stock . . . . . . . 78 78
equipment - net . . . . . 8,428 8,433 Common stockholders'
Other assets . . . . . . . 779 774 equity . . . . . . . . . . . 3,032 3,257
------- ------- ------- -------
Total . . . . . . . . . $10,805 $11,141 Total . . . . . . . . . . $10,805 $11,141
======= ======= ======= =======
<FN>
Revised January 25, 1994 to reflect minor reclassifications.
The following notes are an integral part of these financial statements.
8
MARATHON GROUP OF USX CORPORATION
SELECTED NOTES TO CONDENSED FINANCIAL STATEMENT
The condensed financial statements of the Marathon Group include the results of
operations and financial position for the businesses of Marathon Oil Company
and certain other subsidiaries of USX, and a portion of the corporate assets,
liabilities and related transactions that are not separately identified with
ongoing operating units of USX. These condensed financial statements should be
read in connection with the condensed consolidated financial statements of USX.
USX adopted two new accounting standards in the fourth quarter of 1993 which
resulted in restatement of the first nine months of 1993. Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," requires employers to recognize the obligation to
provide postemployment benefits on an accrual basis if certain conditions are
met. The cumulative effect of adopting this standard is reported as a change
in accounting principle effective January 1, 1993, and decreased 1993 net
income of the Marathon Group by $17 million, net of $10 million income tax
effect.
The second accounting standard, Emerging Issues Task Force (EITF) Consensus
No. 93-14, "Accounting for Multiple-Year Retrospectively Rated Insurance
Contracts," requires accrual of retrospective premium adjustments when the
insured has an obligation to pay cash to the insurer that would not have been
required absent experience under the contract. The cumulative effect of this
change in accounting principle determined as of January 1, 1993, decreased net
income by $6 million, net of $3 million income tax effect.
In 1992, USX adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS
No. 106), and Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS No. 109). The cumulative effect of these changes in
accounting principles decreased first quarter 1992 net income of the Marathon
Group by $147 million, net of $86 million income tax effect, for SFAS No. 106
and $184 million for SFAS No. 109.
Changes in the inventory market valuation reserve resulted in a $241 million
charge against operating income in 1993 ($187 million charge in the fourth
quarter) and a $62 million credit to operating income in 1992 ($98 million
charge in the fourth quarter).
Operating income in 1992 included second quarter restructuring charges of $115
million involving the disposition of certain domestic exploration and
production properties.
9
Pretax income in 1992 included the settlement of a production tax refund claim
for the years 1982 through 1985. The refund resulted in credits to operating
income of $119 million and interest income of $177 million in the second
quarter of 1992.
Other income in 1993 included a pretax gain of $34 million from disposal of
assets, primarily related to the fourth quarter sale of two product tug/barge
units and the sale of assets of a wholesale distributor subsidiary, Bosart Co.
Other income in 1992 included a $19 million first quarter charge for impairment
of a 25% interest in a natural gas transmission partnership.
10
MARATHON GROUP OF USX CORPORATION
SELECTED NOTES TO CONDENSED FINANCIAL STATEMENTS
(Continued)
The provision for estimated U.S. and foreign income taxes for interim periods
is based on tax rates and amounts which recognize management's best estimate of
current and deferred tax assets and liabilities in accordance with USX's tax
allocation policy. The 1993 U.S. income tax provision included a credit of $64
million related to recognition of future U.S. income tax benefits for deferred
foreign income taxes. This favorable adjustment results from USX's ability to
elect to credit, rather than deduct, foreign income taxes for U.S. federal
income tax purposes in future periods. The 1993 U.S. income tax provision also
included a $40 million charge associated with an increase in the federal income
tax rate from 34% to 35%, reflecting remeasurement of deferred income tax
liabilities as of January 1, 1993.
January 21, 1994
11
MARATHON GROUP OF USX CORPORATION
SUPPLEMENTAL INFORMATION
($'s in Millions)
Fourth Quarter Year
Ended Ended
December 31 December 31
---------------- -----------------
1993 1992 1993 1992
------ ------ ------ ------
SALES (A) $2,922 $3,238 $11,962 $12,782
- ---------------------------
OPERATING INCOME (LOSS) (B)
- ---------------------------
Exploration & Production $ (19) $ 28 $ 80 $ 172
Refin., Market. & Trans. 111 3 407 128
Gas Gathering & Processing (A) - - - 21
Administrative (C) (20) (37) (77) (83)
Special Items (187) (98) (241) 66
------ ------ ------ -------
Total Marathon Group $ (115) $ (104) $ 169 $ 304
====== ====== ====== =======
ITEMS INCLUDED IN OPERATING
INCOME
Exploration & Production
------------------------
Environ. Remed. Accrual (5) - (5) -
Nat. Gas Contract Buyout - 20 - 20
Abu Dhabi Relinquishment - - (17) -
Refin., Market. & Trans.
------------------------
Environ. Remed. Accrual (17) - (17) -
Special Items
-------------
Inventory Market Valuation Adj. (187) (98) (241) 62
Production Tax Refund - - - 119
Restructuring Charge - - - (115)
------ ------ ------- -------
Total (209) (78) (280) 86
====== ====== ======= =======
CAPITAL EXPENDITURES (A) $ 264 $ 415 $ 910 $ 1,193
EXPLORATION EXPENSE $ 37 $ 62 $ 145 $ 172
- --------------------------- ====== ======= ======= =======
<FN>
(A) Information presented for periods prior to October 2, 1992 included
the businesses of the Delhi Group. Beginning October 2, 1992, such
data excludes the results of the Delhi Group.
(B) Operating income (loss) for 1992 includes certain reclassifications
to conform to 1993 classifications.
(C) Includes the portion of Marathon's administrative costs not allocated
to the individual business components and the portion of USX corporate
general and administrative costs allocated to the Marathon Group.
12
MARATHON GROUP OF USX CORPORATION
SUPPLEMENTAL INFORMATION (Continued)
Fourth Quarter Year
Ended Ended
December 31 December 31
---------------- -----------------
1993 1992 1993 1992
------ ------ ------ ------
OPERATING STATISTICS
Net Liquids Production (A):
Domestic 110.9 113.7 111.1 118.0
International 42.7 54.6 44.9 56.5
------ ------ ------ ------
Worldwide 153.6 168.3 156.0 174.5
Net Natural Gas Production (B):
Domestic 523.5 521.2 529.2 593.3
International 385.1 349.0 373.0 338.1
------ ------ ------ ------
Worldwide 908.6 870.2 902.2 931.4
Average Sales Prices:
Liquid Hydrocarbons (per Bbl)
Domestic $12.45 $16.49 $14.54 $16.47
International 14.11 18.66 16.22 $18.95
Natural Gas (per Mcf)
Domestic $ 2.02 $ 1.94 $ 1.94 $ 1.60
International 1.45 1.70 1.52 1.77
Crude Oil Refined (A) 507.4 529.1 549.0 546.2
Refined Products Sold (A) 745.3 742.3 725.8 707.0
<FN>
(A) Thousands of barrels per day
(B) Millions of cubic feet per day
13
USX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Fourth Quarter Year
Ended Ended
December 31 December 31
(In Millions Except Per Share Data) 1993 1992* 1993 1992*
- -----------------------------------------------------------------------------------------------------------------
SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,604 $ 4,575 $ 18,064 $ 17,813
Total operating costs . . . . . . . . . . . . . . . . . . . . (4,576) (4,960) (18,008) (17,743)
------- ------- -------- --------
Operating income (loss) . . . . . . . . . . . . . . . . . . . 28 (385) 56 70
Other income (loss) . . . . . . . . . . . . . . . . . . . . . 102 (2) 257 (2)
Net interest and other financial costs . . . . . . . . . . . (40) (116) (552) (257)
------- ------- -------- --------
TOTAL INCOME (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES . . . . . . . . . . . . . . . . . . . 90 (503) (239) (189)
Less provision (credit) for estimated
income taxes
- United States . . . . . . . . . . . . . . . . . . . . . . (12) (171) (156) (64)
- Foreign . . . . . . . . . . . . . . . . . . . . . . . . . 65 11 84 35
------- ------- -------- --------
TOTAL INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES . . . . . . . . . . . . . . . . . . . . . . . . . 37 (343) (167) (160)
Cumulative effect of changes in accounting
principles . . . . . . . . . . . . . . . . . . . . . . . . . -- -- (92) (1,666)
------- ------- ------- -------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . 37 (343) (259) (1,826)
Dividends on preferred stock . . . . . . . . . . . . . . . . (7) (2) (27) (9)
------- ------- ------- -------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30 $ (345) $ (286) $(1,835)
====== ======= ======= ========
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
December December
(In Millions) 1993 1992 1993 1992
- ------------------------------------------------------------------------------------------------------------------
ASSETS LIABILITIES AND
Cash and cash STOCKHOLDERS' EQUITY
equivalents . . . . . . . $ 268 $ 57 Current liabilities . . . . . $ 3,334 $ 3,470
Receivables - net . . . . . 932 924 Long-term debt . . . . . . . . 5,888 5,968
Inventories . . . . . . . . 1,626 1,930 Other liabilities . . . . . . 4,234 4,105
Other current assets . . . 354 189
------- ------- ------- -------
Total current assets . . 3,180 3,100 Total liabilities . . . . . 13,456 13,543
Property, plant and Preferred stock . . . . . . 112 105
equipment - net . . . . . 11,603 11,759 Common stockholders'
Other assets . . . . . . . 2,537 2,393 equity . . . . . . . . . . 3,752 3,604
------- ------- ------- -------
Total . . . . . . . . . . $17,320 $17,252 Total . . . . . . . . . . $17,320 $17,252
======= ======= ======= =======
<FN>
* Certain reclassifications of data have been made to conform to 1993
classifications.
The following common share data and notes are an integral part of these
financial statements.
14
USX CORPORATION AND SUBSIDIARY COMPANIES
COMMON SHARE DATA (Unaudited)
Fourth Quarter Year
Ended Ended
December 31 December 31
(In Millions Except Per Share Data) 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------
Common share data - Marathon Stock
Total income (loss) before cumulative effect
of changes in accounting principles
applicable to Marathon Stock . . . . . . . . . . . . . . . . $ (90) $(121) $ (12) $ 103
--Per share - primary and fully diluted . . . . . . . . . . (.31) (.42) (.04) .37
Cumulative effect of changes in accounting
principles . . . . . . . . . . . . . . . . . . . . . . . . . - - (23) (331)
--Per share - primary and fully diluted . . . . . . . . . . - - (.08) (1.17)
Net income (loss) applicable to Marathon
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90) (121) (35) (228)
--Per share - primary and fully diluted . . . . . . . . . . . (.31) (.42) (.12) (.80)
Dividends paid per share. . . . . . . . . . . . . . . . . . . . .17 .17 .68 1.22
Common share data - Steel Stock
Total income (loss) before cumulative effect
of changes in accounting principles
applicable to Steel Stock . . . . . . . . . . . . . . . . . . $ 119 $(226) $(190) $ (274)
--Per share - primary . . . . . . . . . . . . . . . . . . . . 1.67 (3.80) (2.96) (4.92)
- fully diluted . . . . . . . . . . . . . . . . . 1.53 (3.80) (2.96) (4.92)
Cumulative effect of changes in accounting
principles. . . . . . . . . . . . . . . . . . . . . . . . . - - (69) (1,335)
--Per share - primary . . . . . . . . . . . . . . . . . . . . - - (1.08) (23.93)
- fully diluted . . . . . . . . . . . . . . . . . - - (1.08) (23.93)
Net income (loss) applicable to Steel
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 (226) (259) (1,609)
--Per share - primar. . . . . . . . . . . . . . . . . . . . . 1.67 (3.80) (4.04) (28.85)
- fully diluted . . . . . . . . . . . . . . . . . 1.53 (3.80) (4.04) (28.85)
Dividends paid per share . . . . . . . . . . . . . . . . . . . .25 .25 1.00 1.00
Common share data - Delhi Stock
Net income applicable to outstanding Delhi
Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.4 $ 2.0 $7.8
--Per share - primary and fully diluted . . . . . . . . . . . .15 .22 .86
Dividends paid per share . . . . . . . . . . . . . . . . . . . . .05 .05 .20
<FN>
The following notes are an integral part of these financial statements.
15
USX CORPORATION AND SUBSIDIARY COMPANIES
SELECTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The financial information for the Marathon Group, the U. S. Steel Group and the
Delhi Group, taken together, includes all accounts which comprise the
corresponding consolidated financial information for USX.
USX adopted two new accounting standards in the fourth quarter of 1993 which
resulted in restatement of the first nine months of 1993. Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," requires employers to recognize the obligation to
provide postemployment benefits on an accrual basis if certain conditions are
met. The cumulative effect of adopting this standard is reported as a change
in accounting principle effective January 1, 1993, and decreased net income by
$86 million, net of $50 million income tax effect. The increase to 1993
operating costs as a result of adopting this standard was $23 million.
The second accounting standard, Emerging Issues Task Force (EITF) Consensus
No. 93-14, "Accounting for Multiple-Year Retrospectively Rated Insurance
Contracts," requires accrual of retrospective premium adjustments when the
insured has an obligation to pay cash to the insurer that would not have been
required absent experience under the contract. The cumulative effect of this
change in accounting principle determined as of January 1, 1993, decreased net
income by $6 million, net of $3 million income tax effect.
In 1992, USX adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS
No. 106), and Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS No. 109). The cumulative effect of these changes in
accounting principles decreased first quarter 1992 net income by $1.306
billion, net of $764 million income tax effect, for SFAS No. 106 and $360
million for SFAS No. 109.
Pretax income (loss) in 1993 included a $506 million charge ($127 million
credit in the fourth quarter) related to an adverse decision in the Lower Lake
Erie Iron Ore Antitrust Litigation against a former USX subsidiary, the
Bessemer & Lake Erie Railroad. Charges of $342 million were included in
operating costs ($96 million credit in the fourth quarter) and $164 million
included in net interest and other financial costs ($31 million credit in the
fourth quarter). The effect on 1993 net income (loss) was $325 million
unfavorable ($5.04 per share of Steel Stock) for 1993.
Changes in the inventory market valuation reserve resulted in a $241 million
charge against operating income in 1993 ($187 million charge in the fourth
quarter) and a $62 million credit to operating income in 1992 ($98 million
charge in the fourth quarter).
Operating income in the fourth quarter of 1993 included a restructuring charge
of $42 million for the planned permanent closure of a Pennsylvania coal mine.
In 1992, operating income included restructuring charges of $125 million ($10
million in the fourth quarter).
Pretax income (loss) in 1992 included the settlement of a production tax refund
claim for the years 1982 through 1985. The refund resulted in credits to
operating income of $119 million and interest income of $177 million in the
second quarter of 1992.
16
USX CORPORATION AND SUBSIDIARY COMPANIES
SELECTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Other income in 1993 included pretax gains of $253 million from disposal of
assets ($102 million in the fourth quarter), primarily related to the sale of
the Cumberland Coal Mine, an investment in an insurance company and the fourth
quarter gain from the realization of proceeds from a subordinated note related
to the 1988 sale of Transtar, Inc. The collection of the Transtar note also
resulted in $37 million of interest income. Other income in 1992 included a
$19 million charge for impairment of a 25% interest in a natural gas
transmission partnership.
The provision for estimated U.S. and foreign income taxes for interim periods
is based on tax rates and amounts which recognize management's best estimate of
current and deferred tax assets and liabilities. The 1993 U.S. income tax
provision included a credit of $64 million related to recognition of additional
future U.S. income tax benefits for deferred foreign income taxes. This
favorable adjustment results from USX's ability to elect to credit, rather than
deduct, foreign income taxes for U.S. federal income tax purposes in future
periods. The U.S. income tax provision for 1993 also included a $29 million
charge associated with an increase in the federal income tax rate from 34% to
35%, reflecting remeasurement of deferred income tax liabilities as of January
1, 1993. Adjustments to the fourth quarter 1993 tax provision relate primarily
to prior years' Internal Revenue Service examinations and the establishment of
valuation allowances for certain tax credits which USX is not expected to be
able to fully utilize.
In 1993, USX sold 10,000,000 shares of Steel Stock to the public for net
proceeds of $350 million.
In 1993, USX also sold 6,900,000 shares of 6.50% Cumulative Convertible
Preferred Stock (stated value of $1.00 per share; initial liquidation
preference of $50 per share) to the public for net proceeds of $336 million.
The Convertible Preferred Stock is convertible at any time into shares of Steel
Stock at a conversion price of $46.125 per share of Steel Stock.
On October 2, 1992, USX sold the initial 9,000,000 shares of Delhi Stock to the
public. Net income and dividends per share applicable to outstanding Delhi
Stock are presented for the periods subsequent to October 2, 1992.
The numbers of shares used in the computation of earnings per share were as
follows:
(In Thousands)
------------------------------------------------------------
Fourth Quarter Ended Year Ended
December 31 December 31
------------------------ -----------------------
1993 1992 1993 1992
---- ---- ---- ----
Marathon Stock - primary . . . . . . . . . . . 286,582 286,276 286,594 283,494
- fully diluted . . . . . . . . 286,582 286,276 286,594 283,495
Steel Stock - primary. . . . . . . . . . . . . 70,311 59,551 64,370 55,764
- fully diluted. . . . . . . . . . 81,233 59,551 64,370 55,764
Delhi Stock - primary and fully
diluted. . . . . . . . . . . . . 9,155 9,001 9,067
January 21, 1994