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UBS Investment Research First Read: United States Steel
Q4 Light; Q1 Outlook Disappoints
Q4 loss of $1.83, excluding a net $0.03 hit from 1x items, misses consensus X posted a Q4 loss of $1.83/shr, excluding a net $0.03 hit from 1x items vs UBSe $1.12 loss and consensus $1.44 loss. Results were worse-than-expected for its mill ops in the US and Europe, while Tubular was better with a swing back to profits. X saw a $53/t EBIT loss vs $91 in Q3 and US sheet tons rose 18% q/q as prices rose 5% for 64% vs Q3’s 58% utilization. Mgmt had guided to a smaller q/q EBIT loss. Q1 seen flat with Q4 as results lag mkt recovery Mgmt’s flat sequential outlook was worse than expected given consensus Q1 of a $0.46 loss and UBSe $0.57 loss. It saw US sheet ops flat with Q4 as better prices and lower facility repairs are offset by less LIFO benefit and employee layoff benefit. Europe’s outlook was also flat as higher prices are matched by rising costs. Maintenance costs can weigh on Q1. Tubular profits were seen slipping on mix. Higher costs for pension/OPEB, capex into 2010 Free cash used was $328M vs $353M in Q3, but $1.2B in cash looks solid. Capex guidance of $530M vs UBSe $450M and 2010 pension/OPEB costs were seen up $50M y/y. Underfunded pension/healthcare fell y/y to $4.6B vs $5.1B at year end. Valuation: Sell rating, we plan to review estimates after 3 pm conf call Our $34 target blends 11x ‘10E EV/EBITDA or 7.5x ‘11E. X’s historical forward avg multiple is 5.5x. While we know results will improve, especially Tubular, we see a structural inability to ramp up much more volume given mkt oversupply. We think ‘10 $1.46/shr consensus looks high. Our more normalized forecast EPS is $4-5 in 2011-13. Book value adjusted for convert dilution is ~$31/shr.

Global Equity Research
Americas Steel 12-month rating 12m price target Price
RIC: X.N BBG: X US

Sell *
Unchanged
US$34.00 Unchanged US$40.58

26 January 2010
Trading data 52-wk range Market cap. Shares o/s Free float Avg. daily volume ('000) Avg. daily value (m) Balance sheet data 12/09E Shareholders' equity P/BV (UBS) Net Cash (debt) Forecast returns Forecast price appreciation Forecast dividend yield Forecast stock return Market return assumption Forecast excess return EPS (UBS, US$) 12/09E Q1 Q2 Q3 Q4E 12/09E 12/10E UBS (3.84) (3.28) (2.11) (1.12) (10.06) (0.75) Cons. (3.84) (3.28) (2.11) (1.44) (10.40) 1.48 12/08 Actual 1.77 5.68 7.79 2.00 -38.4% 0.5% -37.9% 5.8% -43.7% US$4.58bn 1.2x (US$1.90bn) US$50.24-16.88 US$5.46bn 135m (COM) 97% 2,318 US$102.3

Highlights (US$m) Revenues EBIT (UBS) Net Income (UBS) EPS (UBS, US$) Net DPS (UBS, US$) Profitability & Valuation EBIT margin % ROIC (EBIT) % EV/EBITDA (core) x PE (UBS) x Net dividend yield %

12/07 16,873.00 1,213.00 907.00 7.64 0.80 5-yr hist av. 8.2 44.8 5.0 6.8 0.9

12/08 23,817.00 3,096.00 2,031.84 17.24 1.10 12/08 13.0 44.8 5.1 6.4 1.0

12/09E 10,935.25 (1,508.16) (1,351.24) (10.06) 0.45 12/09E -13.8 (23.5) -13.8 NM 1.1

12/10E 15,472.91 48.80 (108.22) (0.75) 0.20 12/10E 0.3 0.8 15.3 NM 0.5

12/11E 17,389.94 621.96 322.17 2.25 0.20 12/11E 3.6 9.2 8.7 18.1 0.5

Performance (US$)
250 200 150 100 50 0
01/07 04/07 07/07 10/07 01/08 04/08 07/08 10/08 01/09 04/09 07/09 10/09 01/10

Stock Price (US$)

Rel. S & P 500

300 250 200 150 100 50 0

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$40.58 on 26 Oct 2009 19:41 EDT

Price Target (US$) (LHS) Rel. S & P 500 (RHS)

Stock Price (US$) (LHS)

Source: UBS

Timna Tanners
Analyst timna.tanners@ubs.com +1-212-713 2927

PT Luther
Associate Analyst pt.luther@ubs.com +1-212-713 2481

www.ubs.com/investmentresearch

This report has been prepared by UBS Securities LLC ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 4. * Exception to core rating bands; See page6 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

United States Steel Corp
Income statement (US$m)
Revenues Operating expenses (ex depn) EBITDA (UBS) Depreciation Operating income (EBIT, UBS) Other income & associates Net interest Abnormal items (pre-tax) Profit before tax Tax Profit after tax Abnormal items (post-tax) Minorities / pref dividends Net income (local GAAP) Net Income (UBS) Tax rate (%) Pre-abnormal tax rate (%)

12/04
13,951.00 (12,124.00) 1,966.00 (382.00) 1,584.00 0.00 (119.00) 0.00 1,465.00 (361.00) 1,104.00 14.00 (51.00) 1,067.00 1,053.00 24.64 24.64

12/05
14,013.00 (12,278.00) 1,800.00 (366.00) 1,434.00 0.00 (115.00) 0.00 1,319.00 (366.00) 953.00 (18.00) (37.00) 898.00 916.00 27.75 27.75

12/06
15,715.00 (13,572.00) 2,226.00 (441.00) 1,785.00 0.00 (62.00) 0.00 1,723.00 (324.40) 1,398.60 (1.00) (25.00) 1,372.60 1,356.60 18.83 18.83

12/07
16,873.00 (15,222.00) 1,719.00 (506.00) 1,213.00 0.00 (105.00) 0.00 1,108.00 (218.00) 890.00 0.00 (11.00) 879.00 907.00 19.68 17.15

12/08
23,817.00 (20,398.00) 3,701.00 (605.00) 3,096.00 0.00 (62.00) 0.00 3,034.00 (862.00) 2,172.00 0.00 (42.00) 2,130.00 2,031.84 28.41 28.41

12/09E
10,935.25 (11,942.20) (862.95) (645.21) (1,508.16) 0.00 (148.52) 0.00 (1,656.68) 357.40 (1,299.28) 0.00 4.00 (1,295.28) (1,351.24) 0.00 0.00

% ch
-54.1 -41.5 6.6 139.5 -

12/10E
15,472.91 (14,761.09) 711.81 (663.01) 48.80 0.00 (180.33) 0.00 (131.53) 26.31 (105.22) 0.00 (3.00) (108.22) (108.22) 0.00 0.00

% ch
41.5 23.6 2.8 21.4 -92.1 -92.6 -91.9 -91.6 -92.0 -

12/11E
17,389.94 (16,122.98) 1,291.96 (670.00) 621.96 0.00 (190.42) 0.00 431.54 (99.37) 332.17 0.00 (10.00) 322.17 322.17 23.03 23.03

% ch
12.4 9.2 81.5 1.1 1174.5 5.6 233.3 -

Per share (US$)
EPS (local GAAP) EPS (UBS) Net DPS Cash EPS BVPS

12/04
8.19 8.08 0.20 16.24 30.53

12/05
7.01 7.15 0.38 11.26 25.94

12/06
11.17 11.04 0.60 15.64 35.79

12/07
7.40 7.64 0.80 11.97 46.57

12/08
18.08 17.24 1.10 22.52 41.54

12/09E
(9.64) (10.06) 0.45 (5.25) 34.02

% ch
-59.1 -18.1

12/10E
(0.75) (0.75) 0.20 3.87 33.01

% ch
-92.2 -92.5 -55.6 -3.0

12/11E
2.25 2.25 0.20 6.92 39.95

% ch
0.0 78.8 21.0

Balance sheet (US$m)
Cash and equivalents Other current assets Total current assets Net tangible fixed assets Net intangible fixed assets Investments / other assets Total assets Trade payables & other ST liabilities Short term debt Total current liabilities Long term debt Other long term liabilities Total liabilities Equity & minority interests Total liabilities & equity

12/04
1,037.00 3,206.00 4,243.00 3,627.00 0.00 3,086.00 10,956.00 2,523.00 8.00 2,531.00 1,363.00 3,064.00 6,958.00 3,998.00 10,956.00

12/05
1,479.00 3,352.00 4,831.00 4,015.00 0.00 976.00 9,822.00 2,500.00 249.00 2,749.00 1,363.00 2,354.00 6,466.00 3,356.00 9,822.00

12/06
1,422.00 3,774.00 5,196.00 4,413.00 0.00 977.00 10,586.00 2,620.00 82.00 2,702.00 943.00 2,538.00 6,183.00 4,403.00 10,586.00

12/07
401.00 4,558.00 4,959.00 6,688.00 0.00 3,985.00 15,632.00 2,893.00 110.00 3,003.00 3,147.00 3,863.00 10,013.00 5,619.00 15,632.00

12/08
724.00 5,008.00 5,732.00 6,676.00 0.00 3,679.00 16,087.00 2,697.00 81.00 2,778.00 3,064.00 5,186.00 11,028.00 5,059.00 16,087.00

12/09E
1,469.92 3,509.09 4,979.02 6,823.79 0.00 3,733.00 15,535.81 2,302.25 19.00 2,321.25 3,346.00 4,998.00 10,665.25 4,870.56 15,535.81

% ch
103.0 -29.9 -13.1 2.2 1.5 -3.4 -14.6 -76.5 -16.4 9.2 -3.6 -3.3 -3.7 -3.4

12/10E
715.58 3,778.40 4,493.98 6,610.78 0.00 3,733.00 14,837.76 1,891.10 19.00 1,910.10 3,346.00 4,848.00 10,104.10 4,733.66 14,837.76

% ch
-51.3 7.7 -9.7 -3.1 0.0 -4.5 -17.9 0.0 -17.7 0.0 -3.0 -5.3 -2.8 -4.5

12/11E
834.64 4,205.75 5,040.39 6,490.78 0.00 3,733.00 15,264.17 2,224.00 19.00 2,243.00 3,346.00 4,648.00 10,237.00 5,027.16 15,264.17

% ch
16.6 11.3 12.2 -1.8 0.0 2.9 17.6 0.0 17.4 0.0 -4.1 1.3 6.2 2.9

Cash flow (US$m)
Net income Depreciation Net change in working capital Other (operating) Net cash from operations Capital expenditure Net (acquisitions) / disposals Other changes in investments Cash from investing activities Increase/(decrease) in debt Share issues / (repurchases) Dividends paid Other cash from financing Cash from financing activities Cash flow chge in cash & equivalents FX / non cash items Bal sheet chge in cash & equivalents Core EBITDA Maintenance capital expenditure Maintenance net working capital Operating free cash flow, pre-tax

12/04
1,067.00 382.00 (60.00) 61.00 1,468.00 (581.00) 98.00 5.00 (478.00) (572.00) 361.00 (39.00) (19.00) (287.00) 703.00 18.00 721.00 1,966.00 (229.00) 16.39 1,753.39

12/05
898.00 366.00 53.00 83.00 1,400.00 (723.00) 25.00 (5.00) (703.00) (7.00) (105.96) (60.90) (11.15) (203.00) 494.00 (52.00) 442.00 1,800.00 (475.00) 20.71 1,345.71

12/06
1,372.60 441.00 75.00 0.00 1,888.60 (612.00) 23.00 0.00 (589.00) (607.00) (408.00) (78.00) (62.00) (1,163.00) 136.60 (193.60) (57.00) 2,226.00 (220.00) 25.68 2,031.68

12/07
879.00 506.00 265.00 0.00 1,650.00 (675.00) (3,984.00) 10.00 (4,649.00) 2,090.00 (99.00) (95.00) (5.00) 1,891.00 (1,108.00) 87.00 (1,021.00) 1,719.00 (220.00) 26.57 1,525.57

12/08
2,130.00 605.00 (572.00) 0.00 2,163.00 (896.00) (117.00) 10.00 (1,003.00) (65.00) (222.00) (129.00) 111.00 (305.00) 855.00 (532.00) 323.00 3,701.00 (220.00) 26.57 3,507.57

12/09E
(1,295.28) 645.21 1,348.16 0.00 698.09 (448.00) 0.00 10.00 (438.00) 168.00 667.00 (56.17) 127.00 905.83 1,165.92 (420.00) 745.92 (862.95) (220.00) 26.57 (1,056.38)

% ch
6.6 -67.7 -50.0 -56.3 -56.5 -2.7 0.0 0.0 -

12/10E
(108.22) 663.01 (680.47) 0.00 (125.67) (450.00) 0.00 10.00 (440.00) 0.00 0.00 (28.67) 0.00 (28.67) (594.35) (160.00) (754.35) 711.81 (220.00) 26.57 518.38

% ch
-91.6 2.8 0.4 0.5 -49.0 -66.1 0.0 0.0 -

12/11E
322.17 670.00 (94.44) 0.00 897.73 (550.00) 0.00 10.00 (540.00) 0.00 0.00 (28.67) 0.00 (28.67) 329.06 (210.00) 119.06 1,291.96 (220.00) 26.57 1,098.53

% ch
1.1 -86.1 22.2 22.7 0.0 0.0 31.2 81.5 0.0 0.0 111.9

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Note: For some companies, the data represents an extract of the full company accounts.

UBS 2

Global Equity Research
Americas Steel 12-month rating 12m price target

United States Steel Corp
Sell *
US$34.00
Valuation (x)
P/E (local GAAP) P/E (UBS) P/CEPS Net dividend yield (%) P/BV EV/revenue (core) EV/EBITDA (core) EV/EBIT (core) EV/OpFCF (core) EV/op. invested capital

5Yr Avg
7.0 6.8 4.1 0.9 1.7 0.6 5.0 6.7 6.0 3.0

12/07
13.4 13.0 8.3 0.8 2.1 0.9 8.6 12.2 9.7 2.8

12/08
6.1 6.4 4.9 1.0 2.7 0.8 5.1 6.1 5.4 2.7

12/09E
NM NM NM 1.1 1.2 1.1 -13.8 NM NM 1.9

12/10E
NM NM 10.5 0.5 1.2 0.7 15.3 NM 21.0 1.7

12/11E
18.1 18.1 5.9 0.5 1.0 0.6 8.7 18.1 10.2 1.7

Company profile
US Steel is one of the largest integrated steel producers in North America. Through its subsidiary, USSE in Slovakia and Serbia, it is one of the largest integrated flat-rolled steel producers in Central Europe. Annual production capacity is about 31.5m tons globally, with 18.4m in the US. In 2003, US Steel acquired National Steel out of bankruptcy, and in 2007 it bought pipe maker Lone Star and Canada's Stelco. Its flat-rolled steel is sold primarily to automotive, construction, and appliance industries, and it also produces tin and tubular steel. It owns iron ore mines in the US.

Enterprise value (US$m)
Average market cap + minority interests + average net debt (cash) + pension obligations and other - non-core asset value Core enterprise value

12/07
11,785.29 47.50 1,229.50 1,713.28 0.00 14,775.57

12/08
13,094.98 136.25 1,972.25 3,582.60 0.00 18,786.08

12/09E
6,130.45 259.00 1,972.25 3,582.60 0.00 11,944.30

12/10E
5,463.45 290.00 2,272.25 3,582.60 (697.00) 10,911.30

12/11E
5,463.45 290.00 2,589.89 3,582.60 (697.00) 11,228.94

Value (EV/OpFCF & P/E)
30.0x 25.0x 20.0x 15.0x 10.0x 5.0x 0.0x 12/07 12/08 12/09 EV/OpFCF (LHS) P/E (RHS) 12/10E 40x 20x 0x -20x -40x -60x -80x 12/11E

Growth (%)
Revenue EBITDA (UBS) EBIT (UBS) EPS (UBS) Cash EPS Net DPS BVPS

5Yr Avg
13.6 38.3 83.5 13.1 8.0 41.4 44.8

12/07
7.4 -22.8 -32.0 -34.9 -23.5 33.3 30.1

12/08
41.2 115.3 155.2 125.9 88.2 37.5 -10.8

12/09E
-54.1 -59.1 -18.1

12/10E
41.5 -92.5 -55.6 -3.0

12/11E
12.4 81.5 NM 78.8 0.0 21.0

Margins (%)
EBITDA / revenue EBIT / revenue Net profit (UBS) / revenue Return on capital (%) EBIT ROIC (UBS) ROIC post tax Net ROE Coverage ratios (x) EBIT / net interest Dividend cover (UBS EPS) Div. payout ratio (%, UBS EPS) Net debt / EBITDA Efficiency ratios (x) Revenue / op. invested capital Revenue / fixed assets Revenue / net working capital Investment ratios (x) OpFCF / EBIT Capex / revenue (%) Capex / depreciation Capital structure (%) Net debt / total equity Net debt / (net debt + equity) Net debt (core) / EV

5Yr Avg
11.2 8.2 6.4 5Yr Avg 44.8 29.4 5Yr Avg 13.4 26.7 5.2 0.6 5Yr Avg 5.2 3.5 15.2 5Yr Avg 1.1 4.1 1.4 5Yr Avg 40.8 19.9 8.99

12/07
10.2 7.2 5.4 12/07 23.4 19.4 18.3 12/07 11.6 9.6 10.4 1.7 12/07 3.2 3.0 12.0 12/07 1.3 4.0 1.3 12/07 52.5 34.1 8.3

12/08
15.5 13.0 8.5 12/08 44.8 32.1 39.0 12/08 NM 15.8 6.3 0.7 12/08 3.4 3.6 12.0 12/08 1.1 3.8 1.5 12/08 51.2 33.1 10.5

12/09E
NM -13.8 NM 12/09E NM NM (28.5) 12/09E NM 12/09E 1.7 1.6 6.2 12/09E 0.7 4.1 0.7 12/09E 44.2 29.3 16.5

12/10E
4.6 0.3 NM 12/10E 0.8 0.8 (2.4) 12/10E 0.3 3.7 12/10E 2.4 2.3 10.0 12/10E NM 2.9 0.7 12/10E 63.8 37.4 20.8

12/11E
7.4 3.6 1.9 12/11E 9.2 7.1 7.0 12/11E 3.3 11.2 8.9 2.0 12/11E 2.6 2.7 9.0 12/11E 1.8 3.2 0.8 12/11E 56.9 34.8 23.1

Profitability
15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% 12/07 12/08 12/09(E) 12/10(E) ROIC (RHS) 12/11(E) 38.6% 27.1% 15.7% 4.3% -7.1% -18.6% -30.0%

EBIT margin (LHS)

ROE v Price to book value
40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% 12/07 12/08 ROE (LHS) 12/09(E) 12/10(E) 12/11(E) 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x

Price to book value (RHS)

Growth (UBS EPS)
25000 20000 15000 0% 10000 5000 12/07 12/08 Revenue (LHS) 12/09(E) 12/10(E) UBS EPS Growth (RHS) 12/11(E) -50% -100% 150% 100% 50%

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$40.58 on 26 Oct 2009 19:41 EDT Market cap(E) may include forecast share issues/buybacks.

Timna Tanners
Analyst timna.tanners@ubs.com +1-212-713 2927

PT Luther
Associate Analyst pt.luther@ubs.com +1-212-713 2481

* Exception to core rating bands; See page6

UBS 3

First Read: : United States Steel 26 January 2010

United States Steel Corp US Steel is one of the largest integrated steel producers in North America. Through its subsidiary, USSE in Slovakia and Serbia, it is one of the largest integrated flat-rolled steel producers in Central Europe. Annual production capacity is about 31.5m tons globally, with 18.4m in the US. In 2003, US Steel acquired National Steel out of bankruptcy, and in 2007 it bought pipe maker Lone Star and Canada's Stelco. Its flat-rolled steel is sold primarily to automotive, construction, and appliance industries, and it also produces tin and tubular steel. It owns iron ore mines in the US.

Statement of Risk The potential risks in the metals sector include but are not limited to: the volatile nature of raw materials and finished product prices; trade flows of raw materials and finished products; and operational difficulties, including weather and other uncontrollable logistics troubles. U.S. Steel’s pension and healthcare underfunded liability position approximated $5B as of the latest company-issued information. U.S. Steel in particular is exposed to the automotive industry and onshore energy drilling activity, coal costs, and steel imports.

Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

UBS 4

First Read: : United States Steel 26 January 2010

Required Disclosures
This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request.
UBS Investment Research: Global Equity Rating Allocations
UBS 12-Month Rating Buy Neutral Sell UBS Short-Term Rating Buy Sell Rating Category Buy Hold/Neutral Sell Rating Category Buy Sell Coverage 48% 40% 13% 3 Coverage less than 1% less than 1%
1

IB Services 40% 35% 26% 4 IB Services 17% 67%

2

1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 31 December 2009.

UBS Investment Research: Global Equity Rating Definitions
UBS 12-Month Rating Buy Neutral Sell UBS Short-Term Rating Buy Sell Definition FSR is > 6% above the MRA. FSR is between -6% and 6% of the MRA. FSR is > 6% below the MRA. Definition Buy: Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event. Sell: Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.

UBS 5

First Read: : United States Steel 26 January 2010

KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months. EXCEPTIONS AND SPECIAL CASES UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.

Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities LLC: Timna Tanners; PT Luther.

Company Disclosures
Company Name 2, 4, 13, 16, 20 United States Steel Corp Reuters X.N 12-mo rating Short-term rating Sell (CBE) N/A Price US$56.23 Price date 25 Jan 2010

Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 2. 4. 13. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of its affiliates within the past 12 months. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company`s common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end). UBS Securities LLC makes a market in the securities and/or ADRs of this company. Because UBS believes this security presents significantly higher-than-normal risk, its rating is deemed Buy if the FSR exceeds the MRA by 10% (compared with 6% under the normal rating system).

16. 20.

Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.

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First Read: : United States Steel 26 January 2010

United States Steel Corp (US$)
Price Target (US$) 250 200 150 100 50 0 01-Apr-05 01-Apr-06 01-Apr-07 01-Apr-08 01-Jan-05 01-Jan-06 01-Jan-07 01-Jan-08 01-Jan-09 01-Apr-09 01-Jan-10 01-Jul-05 01-Jul-06 01-Jul-07 01-Jul-08 01-Oct-05 01-Oct-06 01-Oct-07 01-Oct-08 01-Jul-09 01-Oct-09 Stock Price (US$)

Buy 2 Neutral 2 Reduce 2 Buy Neutral Sell No Rating

Source: UBS; as of 25 Jan 2010 Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6% above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 = FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA, lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6% below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities. A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities. From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.

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First Read: : United States Steel 26 January 2010

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