United States Steel Corporation

Common stock
Under the Stock Option Incentive Plan approved
by stockholders in 1951 which made available up to
2,600,000 shares, options to purchase common stock
have been granted at various times beginning in 1951
to key management employes, such shares of stock to
be made available from authorized unissued or reacquired
common stock at market price on the date the
options are granted. An option may be exercised in
whole at any time, or in part, from time to time during
the option period, except that during the first year of
the option period it may be exercised only in the event
of death or retirement of the optionee. The option
period begins on the date the option is granted and
ends ten years thereafter, except in cases of death,
retirement or other earlier termination.
During 1960, options for 294,200 shares were
granted to 199 employes at the then market price of
$82.00 per share. By exercise of options granted in
prior years, 62 optionees purchased 2,500 shares at
$20.50 per share, 20,400 shares at $18.50 per share,
30,450 shares at $48.00 per share and 18,950 shares
at $55.00 per share during 1960.
At December 31, 1960, 277 optionees held options
to purchase 518,705 shares at prices ranging from
$18.50 to $82.00 per share for a total of $35,759,810
on options granted at various .times beginning in 1951,
and 267,500 shares were available for future options.
U. S. Government securities set aside
for property additions and replacements
At December 31, 1960, completion of authorized
additions to and replacements of facilities required an
estimated further expenditure of $500,000,000. To the
'end of 1959, $495,000,000 of U. S. Government securities
had been set aside to cover in part such authorjzed
expenditures. During 1960, $195,000,000 was used
for such purpose leaving a balance of $300,000,000
set aside at December 31, 1960.
Wear and exhaustion of facilities
For a number of years, U. S. Steel has followed
the policy of reflecting accelerated depreciation on the
33
Notes to
Financia.l Statements
cost of new facilities in the first few years of their lives
when the economic usefulness is greatest. As permitted
under the Internal Revenue Code the declining balance
method of depreciation is being applied to the cost of
certain facilities; and the cost of certain other facilities
is covered by Certificates of Necessity under the Defense
Production Act of 1950 and is being written off
at the rate of 20 per cent per year. The effect thereof
is to charge to income a greater portion of their cost
in the earlier years of life and, therefore, follows the
principle of accelerated depreciation.
The amount included in wear and exhaustion for the
cost of facilities not covered by the declining balance
method of depreciation or Certificates of Necessity
is for the most part related to U. S. Steel's rate of
operations.
Reserves for insurance, contingencies
and accident and hospital expenses
U. S. Steel is, for the most part, a self-insurer of
its assets against fire, windstorm, marine and related
losses. The insurance reserve of $50,000,000 is held
available for absorbing possible losses of this character,
and is considered adequate for this purpose.
The reserves for contingencies and accident and
hospital expenses of $64,455,398, provided mainly in
previous years by charges to operations, are held for
exceptional unanticipated losses other than those covered
by the insurance reserve.
Other items
Products and Services Sold - Products and services
sold includes interest, dividends and other income of
$49,637,579 in 1960 and $45,077,476 in 1959.
Wages and Salaries - Wages and salaries totaled
$1,503,971,235 in 1960 of which $1,453,317,932 was
included in costs of products and services sold and
the balance was charged to construction.
Products and Services Bought - Products and services
bought reflects the changes during the year in
inventories and deferred costs. These items increased
during 1960 approximately $143,000,000.