Dan Lesnak John P. Surma - Chairman, Chief Executive Officer and Member of Proxy Committee Gretchen Robinson Haggerty - Chief Financial Officer and Executive Vice President

Luke Folta - Jefferies & Company, Inc., Research Division Brett Levy - Jefferies & Company, Inc., Research Division Michelle Applebaum - Steel Market Intelligence Inc David Lipschitz - Credit Agricole Securities (USA) Inc., Research Division Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division Kevin J. Cohen - Imperial Capital, LLC, Research Division David Katz - JP Morgan Chase & Co, Research Division David S. Martin - Deutsche Bank AG, Research Division David Gagliano - Barclays Capital, Research Division Michael F. Gambardella - JP Morgan Chase & Co, Research Division Richard Garchitorena - Crédit Suisse AG, Research Division Shneur Z. Gershuni - UBS Investment Bank, Research Division Sandeep S.M. - Goldman Sachs Group Inc., Research Division Philip Gibbs - KeyBanc Capital Markets Inc., Research Division Sam Dubinsky - Wells Fargo Securities, LLC, Research Division

Ladies and gentlemen, thank you very much for standing by and welcome to the United States Steel Second Quarter 2012 Earnings Conference Call. [Operator Instructions] And also, as a reminder, this conference is being recorded. I would now like turn the call over to your host, Mr. Dan Lesnak. Please go ahead.

Thank you, Perky. Good afternoon and thank you, all, for participating in our second quarter conference call today. For those of you participating by phone, the slides are included on the webcast are also available on the Investors section of our website at www.ussteel.com. We will start the call with introductory remarks from U.S. Steel Chairman and CEO, John Surma, covering our second quarter results. Next, I will provide some additional details for the second quarter; and then Gretchen Haggerty, U.S. Steel Executive Vice President and CFO, will comment on a few financial matters and our outlook for the third quarter. Following our prepared remarks, we'll be happy to take your questions. Before we begin, I must caution you that today's conference call contains forward-looking statements, and that future results may differ materially from statements or projections made on today's call. For your convenience, the forward-looking statements and risk factors that could affect those statements are referenced at the end of our release and are included in our most recent annual report on Form 10-K and updated in our quarterly reports on Form 10-Q in accordance with the Safe Harbor provisions. Now to begin the call, here is U.S. Steel Chairman and CEO, John Surma. John P. Surma: Thanks, Dan. Good afternoon, everyone. We appreciate you taking the time to join us today. Earlier today, we reported second quarter net income of $101 million or $0.62 per diluted share. Net sales of $5 billion and shipments of 5.4 million tons. Excluding the early redemption premium on the repayment of senior notes in April, our adjusted net income was $112 million or $0.69 per diluted share as compared to adjusted net income of $0.67 per share last quarter. Consistent performance from our Flat-rolled and Tubular segments, and a return to profitability for our European operations resulted in a second consecutive solid quarter. Our segment operating income was $330 million, our second highest quarter since the onset of the global economic downturn in late 2008. Lower average transaction prices for North American Flat-rolled products was the primary reason for the decrease from second quarter 2011 operating income levels. Results in both our Tubular and European operations improved as compared to the year-ago period. Now, before I go into more detail on our operating results, I would like to comment on safety, our primary core value. I want to recognize the outstanding accomplishments of our employees in this critical area. Two very important measures of safety performance are OSHA recordable injury rate and our days away from work rate, have both improved over 2011 with the most significant improvement being in our days away from work rate, which has improved by over 15%. 12 of our operating locations have worked without a days- away-from-work case so far in 2012, and several of our facilities have recently attained significant milestones in their safety performance. For example, our Fairfield, Alabama Flat-rolled operations have now worked over 5 million hours without a days away from work injury. Our Keetac, Minnesota iron ore facility has now worked over 1 million hours without a recordable injury, and just this past month our U.S. Steel Košice coal rolling operations passed the million-hour milestone injury-free. We're proud of the collective efforts of our employees as we continue to pursue our shared goal of 0 injuries. While the global economic recovery continues to be slow and unsteady and we have focused on finding ways to make money in the economy we have today. Thanks to the excellent and safe work of our operating and commercial teams, our operating results were significantly better than the last 12 months than the prior 12-month period. We have realized higher average prices in both our Flat-rolled and Tubular segments. Our Tubular shipments have increased with the continued development of shale resources. And overall, operating margins for all of our operations in North America have improved year-over-year. Our Flat-rolled segment had income from operations for the second quarter of $177 million, which was comparable to the first quarter but lower than our results from the particularly strong second quarter of 2011, when spot steel prices were considerably higher. Our Flat-rolled operations had another quarter of strong operating performance, and we managed our planned major maintenance outages quite well. For the first half of 2012, we had Flat-rolled income from operations of $360 million, which represents our best first-half performance since 2008, as first-half results have improved each year since the low point in the first half of 2009. The automotive industry has been a key component to industry-wide flat-rolled steel shipments thus far in 2012 and, specifically, to our performance as well. The automotive segment continues to operate at levels well above last year with light vehicle production of 7.9 million units in first half of this year, 21.5% higher than the first half of last year. Traditionally, vehicle sales have increased by 15% year-over-year and days supply of vehicle inventory remains lower than historical averages at 59 days at the end of June. While the second half vehicle built schedules are projected lower by approximately 800,000 units versus the first half, which is a typical seasonal pattern, full year production estimates remain in the mid to upper 14 million unit range. Many other contractual industries are projecting steady demand, which suggests that spot market activity is going to be the key to future shipment levels for the North American market. Spot industry segments like the service center, pipe and tube, and construction-related industries have recently increased their order activity as they kept purchases during the second quarter to a relatively low level and continue to closely manage their inventories. As end-user demand remains firm, they have begun to increase the inventory to levels which support the volume of end- user shipments. So at present, the spot market volumes we thought we would see are materializing. Results improved for our European segment in the second quarter, reflecting better performance by U.S. Steel Košice and the sale of U.S. Steel Serbia in the first quarter. Focusing on USSK, operating results improved by $51 million as compared to the first quarter, primarily reflecting lower raw materials, energy and maintenance costs. Results at USSK improved as compared to the second quarter of 2011 as lower raw materials cost and efficiencies related to higher operating levels were only partially offset by lower selling prices. The European steel consuming markets continue to struggle. Consumer confidence is weak as the region deals with the complex issues surrounding the sovereign debt crisis and Member State governments attempt to implement austerity measures. The regional markets for our Slovak operations have tended to outperform those in Western Europe, where in many cases manufacturers, especially automotive, were idling or permanently closing less efficient operations and reallocating some of their production to central Europe. The weaker euro continue to discourage imports in the near-term. Steel purchases continue to use caution in their buying patterns. Inventories remain at reasonably low levels, and we would expect any incremental recovery in demand to be promptly reflected in order rates for the quality products that we provide to our customers. Our Tubular segment boasts another solid performance in the second quarter with operating income of $103 million. Shipments of 493,000 tons were below last quarter's record levels but remained at a historically high level. Average realized prices were lower compared to the first quarter, as selling prices, particularly for welded pipe, were pressured by declining spot hot-roll prices. A portion of this impact was offset by lower substrate transfer pricing from our Flat-rolled operations, which is down at market prices. The $72 million improvement over the second quarter of 2011 primarily reflects significant improvements in both shipments and prices as lower substrate costs were essentially offset by higher maintenance and outage costs. Although there was a slight decrease in total rig count in the second quarter, the increase in new oil-directed rigs was slightly less than the decrease in gas-directed rigs, drilling activity in the United States continued at a high level. While the recent volatility in commodity prices has resulted in a slight moderation in customer drilling programs, overall demand remains firm, and Gulf of Mexico activity is gradually increasing as a recent licensing round by the federal government grew record high bids. Now before I turn it back to Dan, I would like to provide updates on several strategic projects we have been pursuing. With carbon costs being one of our larger market exposures, we have been focused on reducing our coke requirements and on becoming self-sufficient in our coke production capabilities in North America. We have a targeted reduction of 100 pounds of coke per ton of liquid metal produced in our blast furnaces as compared to our 2010 coke rates. We have already achieved more than 1/2 of our targeted reduction and we have a series of projects scheduled for completion in the second half of this year that should get us very close to our objective by year-end. At Gary Works, the first of the 2 Carbonyx modules is in the commissioning phase and the initial production batches are in the furnace today. We expect to have both modules running by early 2013 and reaching full production later in the year. The C-Battery at Clairton is expected to start production by year-end and reach full production early in 2013. In order to serve the growing demand for value-added premium Tubular Products, we constructed a new heat treating and finishing facility at our Lorain Tubular operations. This facility started production in the third quarter of 2011, and production levels have continued to increase each quarter as the high levels of unconventional drilling drives demand for these premium products. Also, we are in the early stages of a project to increase the size range for our No. 4 Seamless Mill at Lorain up to 6-inch outer diameter, which will increase our capability to supply the sizes that are at high demand from our customers for the continuing development of share resources. Once the engineering for this project is completed, we will seek final project authorization. At our PRO-TEC automotive joint venture in Ohio, we are constructing a new continuous annealing line and we remain on schedule for start up in early 2013. The new line will extend our existing coated advanced high-strength steel capability to include cold-rolled advanced high-strength grades that our customers require for their next generation of vehicles. It is also designed to process new and higher-strength grades currently under development to meet the future material demands and vehicle designs of our automotive customers. Production of many competing materials is typically much more energy-intensive than steel, which results in higher costs and increased CO2 emissions. And as a result, these materials generally cannot provide the lowest carbon emissions when measured on a life cycle basis. Grades of steel we will be capable of producing at this new facility will position steel to remain the material of choice for automotive customers. It's a cost-effective and environmentally-sound solution to meet their need for lighter weight, greater fuel efficiency while also meeting the improved safety standards that we all want for our families. Another project we have been discussing is the potential expansion of our Keetac iron ore operations. We have completed the necessary engineering and have the required permits, and we're positioned to move forward with this project when we believe the market outlook and economic conditions are appropriate. So now I'll turn the call back to Dan for some additional details on the second quarter. Dan?

Thank you, John. Capital expenditures totaled $116 million in the second quarter and we currently estimate that full year capital expenditures will be approximately $800 million, down from our previous guidance of $900 million, primarily due to lower plant spending this year related to the Keetac project. Appreciation, depletion and amortization totaled $164 million in the second quarter and we currently expect to be approximately $660 million for the year. Pension and other benefits cost for the quarter totaled $133 million. We made cash payments for pension and other benefits of $112 million. We expect pension on the benefits cost to be approximately $530 million in 2012, a decrease of $70 million from 2011. And we expect cash payments for pension and other benefits to be approximately $500 million excluding any voluntary pension contributions and any contributions to our trust for retiree health care and life insurance. Net interest and other financial costs were $82 million for the quarter and include $18 million of early redemption premium on the senior notes we retired in April. Now Gretchen will review some additional financial information and our outlook for the third quarter of 2012.

Thank you, Dan. Our cash flow from operations was $435 million for the second quarter, bringing our cash flow from operations over the last 12 months to almost $1 billion, even after $280 million of voluntary contribution to our main defined benefit pension plan. We've generated free cash flow, after cash used in investing activities and dividends, of almost $600 million in the first half of 2012. This is a substantial improvement as compared to the last half of 2011. We ended the second quarter with cash of $565 million and $2.4 billion of total liquidity. Given recent pension risk management developments, I thought that it would be helpful to highlight some of our actions to manage the liability and funding risk associated with our pension plans. We've limited the growth of our pension obligation by closing our defined benefit pension plans to new entrants. We've taken a long-term approach to funding our main U.S. plan even when not required to do so. Our practice of annual voluntary contribution to our main U.S. plan has served us well, and we have voluntarily contributed approximately $1.5 billion over the last decade in order to mitigate the risk of potentially larger mandatory contributions in later years. The recently enacted pension stabilization legislation is helpful to us. It also validates the prudence of our long-term approach to funding. In an effort to stabilize pension funding over the next several years or so, the new law, in essence, changed the interest rate formula used to measure defined benefit obligations for calculating minimum annual contributions. In general, the new law defers required contributions and reduces the medium term likelihood of increased pension funding to our main plan that we may have faced in the years 2014 and '15, under the old law. This is certainly helpful to us in light of the 2014 maturity of our $863 million convertible note. Now turning to our outlook for the third quarter, we expect total reportable segment and other business operating results to be positive in the third quarter but below our second quarter results reflecting the continued weakness in the North American, European and emerging market economies. Average realized prices are expected to be lower for all 3 operating segments with total reportable segment shipments slightly lower than the second quarter. Our Tubular segment is expected to continue its trend of solid operating profit. We expect near breakeven results for our Flat-rolled segment in the third quarter due to lower average realized prices. Proceeds are expected to be lower compared to the second quarter as spot and index-based contract prices decrease. While average realized spot prices are projected to be lower for the third quarter, spot transaction prices are expected to increase as the quarter progresses. Shipments for our Flat-rolled segment are expected to be comparable to the second quarter as end-user demand appears stable and supply chain inventories remain balanced. Our operating costs are expected to be comparable to the second quarter. For our European segment, we expect results to remain positive but lower than the second quarter, reflecting the continued economic challenges in Europe. Average realized prices are expected to decrease compared to the second quarter as lower spot market prices carryover into the third quarter. Shipments are expected to be lower as service centers and distributors maintain a conservative buying pattern to minimize inventory and Europe enters its summer holiday period. Our operating costs should be comparable to the second quarter. For our Tubular segment, we expect third quarter 2012 results to be in line with the second quarter results. Shipments are expected to be lower as end-users continue to adjust their drilling plans due to economic uncertainty and concern over energy prices. Similarly, average realized prices are projected to decline as supply has outpaced demand mainly due to a substantial increase in imported products. Operating costs are expected to decrease compared to the second quarter due to lower substrate and facility maintenance costs. And then finally, we are currently negotiating with the United Steelworkers for a new labor agreement covering most of our domestic operations. The current agreement expires on September 1, 2012. We anticipate reaching a competitive agreement without a work stoppage. That concludes our outlook. Dan?

Thank you, Gretchen. Perky, can you please queue the line for questions.

[Operator Instructions] And our first question comes from the line of Luke Folta with Jefferies. Luke Folta - Jefferies & Company, Inc., Research Division: I have 3 quick ones, if I could. The first one I had was, if I look at your North American Flat-rolled segment, the other revenue category where you have total customers sales and you've got the tons times price, there is about $100 million-plus step up sequentially in kind of other revenues, in that category ,and I assume it's higher coke and iron ore sales and all that. Just want to get a sense of what that piece is and how that impacts the profitability in the quarter.

Yes, no, Luke, that's really the -- our businesses, it's kind of everything other than Flat-rolled, Tubular and Europe, right? But it's -- that would include our remaining transportation assets, some of our railroads, our Transtar operation and real estate and things like that. So I think the revenues really relate to that, probably more on the Transtar side. And they were just improvements in those businesses, nothing really, I think, was highlighted. John P. Surma: Nothing, Luke, of a structural or unusual nature that we think we would need to draw to your attention. Luke Folta - Jefferies & Company, Inc., Research Division: I guess I was referring to within the Flat-rolled segment. If you look at -- if you take reported shipments and reported sales prices and do the math there, what's left when you look at total segment revenues? That piece that's left -- that piece is much bigger this quarter than it has been in a long time, and I was just looking for some color around that.

Luke, let me look into that. I'll get back to you with off-line on that one, but I'm not aware of anything unusual. But I'll find out for you what's going on there. Luke Folta - Jefferies & Company, Inc., Research Division: And then secondly, just on the outages, you -- I think we have talked about potentially a bigger outage at Gary Works this quarter, and we've gotten some indications that maybe you might be limiting that outage or maybe pushing it forward in some way. Can you maybe give us some thoughts on, maybe not only in your North American steel segment, but just overall what outages are planned in the third quarter and second half? John P. Surma: There's always a normal diet of things, Luke, as you know, but we did -- we do have planned -- I'll acknowledge, we do have planned a relatively significant project, repair project, at our #14 furnace at Gary that is scheduled to be underway later in August or -- that's our current schedule at least. It could be earlier or it could later. And that would continue probably into sometime into the fourth quarter and early October. The duration is probably about that length. Whether when and whether we start, it depends on a lot of things, but it's pretty close that pretty likely we're going to need to do that and is likely it is going to be done this year, and likely on the schedule I gave you. So that will be the single biggest element that I would mention. We already did a smaller outage in one of our Mon Valley blast furnace, which is already behind us. So those would be the highlights through the rest of the company. Tubular or Europe, there's a variety of things. Nothing that I would draw to your attention that would be of consequence. And you'll notice, we did say that our operating cost are expected to be comparable quarter-over-quarter. Luke Folta - Jefferies & Company, Inc., Research Division: Okay. And just lastly, regarding the labor negotiations, Gretchen, you've touched on it. Obviously, your -- one of your competitors in North America is going for some pretty steep reductions in wages and benefits and things. And my sense was that, kind of before that was announced, that maybe you guys weren't asking for big cuts anywhere, I'm just curious to know whether or not that development has really changed the way you're seeing your negotiations or what your expectations are just to remain competitive. John P. Surma: Luke, I'll handle that one for Gretchen. Our expectations are, as they were set forth in our earnings release and as Gretchen mentioned, we expect reaching a competitive agreement and we expect to do so on the schedule that we outlined. We don't really like to comment on the substance of our own discussions with our major unit or anybody else's. So we'll leave that party alone. But I think from our standpoint, we are working hard towards a competitive agreement. We've done it before, we expect to do it again.

And our next question comes from the line of Brett Levy with Jefferies & Company. Brett Levy - Jefferies & Company, Inc., Research Division: You've got considerable liquidity here. Can you talk about whether or not you're looking at any of the R&D assets? ThyssenKrupp is apparently looking for a buyer of their Alabama assets. That has some strategic importance to you guys in the long run, probably, as well. Talk a little bit about sort of anything you're thinking about in the M&A front and whether it's more North America or maybe another geography? John P. Surma: I would say in the latter point, our primary footprint is in North America we think because of -- as a region, North America's long ferrous, long met coal, long gas, long scrap -- it's a pretty good region to be in our line of work. Once the market catches up with our capabilities, it will be even better. And I just say on the general point you mentioned, right, we look at everything that's available to see if there's a way that it would add value to our company. That's our determinant, does it add value? That's the first question. Second question would be, how might we accomplish such a thing? And with respect to the company you mentioned, I'm reluctant to comment on this specifically because it's fairly early in the process. But we likely look at everything that's available and to the extent there's something we think can add value, we'll take a pretty good run at it. Brett Levy - Jefferies & Company, Inc., Research Division: All right. And then in terms of spot prices from 2Q to 3Q, obviously, because you guys are indexed monthly and indexed quarterly and that kind of thing, there is a certain stickiness. Can you guys talk a little bit -- I mean there's been 2 rounds of price increases. Have you implemented it kind of across the board or announced across the board? And then talk a little bit about rough magnitude, because it looks like spot prices actually fell like close to $100 a ton from peak to trough, sort of $700 to $600 in round numbers. Just wanted to get a sense of just sort of when that's going to come through and how fast that's going to reverse itself in your numbers? John P. Surma: Sure, let me just try to work it through, that's a good question. You can take a look at the indices from the outside folks and see what the highs were, but I think the order of magnitude, if you just look at what happened in this quarter, that's probably not a bad assessment -- on the way down, that is. The indices would indicate, some are weekly, that there seems to have been a turn upward. There have been a number of press reports about different pricing actions, that's certainly what we're experiencing. We see the market moving up in front of us and we want to make sure we're getting what the market has to offer. It's still early in the process and we like to discuss those things with our customer before we talk about it too much here. So the direction is pretty clear. It's up and it's a direction that we intend to pursue and make sure we get what the market has to bear. Your assessment about us, I think, is accurate. We're already booking in the September probably at this point and because some of our outages, we don't have much spot business available as might be the case in other quarters -- some, but maybe not as much. So because of the timing and the amount of the spot business we have, we probably won't get as much of that effect in this quarter. But we take a longer view of this and we think the movement is in the right direction. It will begin to work its way into the indices. The indices will not work for us this quarter. I think you all understand how that works. And we had quite a nice adjustment in the last quarter. This one goes the other way. That's the nature of the beast. So for us, it's a little longer horizon, there'll be some in the third quarter but if the trend continues, it would be more of a later item.

And our next question comes from the line of Michelle Applebaum with Steel Market Intel. Michelle Applebaum - Steel Market Intelligence Inc: Very nice quarter. I don't mind admitting when I'm wrong, but I really like admitting I'm wrong when I can say U.S. Steel [indiscernible] beat, so really nice job in a tough environment. My question was -- so the Wall Street Journal made this very large deal about this Ford truck turning into aluminum, and it's interesting because you just had this automotive thing. And I was checking my records and on the subject of aluminum substitution in automotive: In 1981, the target for 5 years was 500 pounds per car. In 1990, the target was 500 pounds per car in 5 years. In 2000, the target was 500 pounds per car in 5 years. And in 2012, the amount of aluminum used per car is 330 pounds, currently. So it's interesting to look at that and to see that this has been out there for a lot of our lifetimes almost. And why has aluminum not taken much share? And is there anything going on that changing that, because we've had this fuel economy move before, but is this time different? John P. Surma: Michelle, I'll let folks from the companies that are involved with those materials comment about why they do or they don't. That's their concern and not ours. I just say that one of the reasons steel has remained a very competitive material in that marketplace is because we've been able -- we, as a company and I think as an industry-consortium, we've been able to keep our material aligned with what our major automotive customers need. And right now, they need mass reduction and strength and formability and coat-ability. All those things are important to them but it's, fundamentally, mass reduction and strength for safety requirements. And we think if we do things like our continuous anneal line, which I described in my prepared remarks at some length, that we can go a long way towards making a very compelling case that when one adds the value proposition steel has, the performance characteristics in terms of strength, the weight reduction we can provide through our future steel vehicle program, which was a global industry consortium, together with the environmental benefits, the much lower production phase emissions and a much higher recycling rate at the end, we've got, I think, have had a fairly compelling value proposition for automotive markets, which maybe the answer to your question. And we always have competition. We're going to be working as hard as we can to make sure we win that competition, doing all the things I just described to you, and everyone in our company is dedicated to making that the end result.

Our next question comes from the line of David Lipschitz with CLSA. David Lipschitz - Credit Agricole Securities (USA) Inc., Research Division: My question for you guys is about the pricing in the second quarter. Obviously, spot pricing came off pretty hard at the last part of the quarter, yet your pricing was up. And now in the third quarter, it's dropping pretty precipitously. Is that just a timing issue? Or -- what happened there, because usually it doesn't follow as much on a quarter-over-quarter basis and up in a spot-price type of environment like that? John P. Surma: David, I think if you look back in the appendix in the slides, there's a couple of pie charts there which are pretty helpful. They show our overall contract spot mix; it's spot about 30, contract about 70. But in the things that are market related, we have monthly-based contracts that are about 20%, and they respond fairly quickly so it may take a month but eventually, we're going to catch up with the spot. The market base quarterlies, those don't respond until the subsequent quarters. So we do tend to -- on the way up, we move into better territory a little slower. We tend to hold it, including the second quarter, which is precisely what you're seeing. We had a very nice adjustment second -- first to second quarter. And then when we get to the third quarter, the downdraft you mentioned begins to catch up with us. And eventually, it evens out and we end up heading in whatever the direction the spot market is. But I think our movements tend to be less abrupt and more measured in over longer periods of time because of our particular commercial strategy that you see on those charts. David Lipschitz - Credit Agricole Securities (USA) Inc., Research Division: No, I understand, I mean, but it's not that much different than last year's chart or maybe a tad here, a tad there. And just prices fell precipitously last year, second to third quarter, and you were only down $30, I think, a quarter. So I'm just -- I was just -- That's what I was just trying to figure out. It seems like it's happening more than it normally does. John P. Surma: Yes. That would just be the way the numbers work through the indices. There wouldn't be nothing structurally any different than -- the indices come out once a month. You can work the math and see what they do. But it's basically, the indices and then, for us, it might be affected by how much spot business we're actually doing because for other reasons, we may or may not have as much available. You may recall last year, we had a difficulty in one of our facilities and we had very little spot business available and the spot price was high. So it just depends on the amount we have available and in which direction they're moving, but nothing different now than it would've been last quarter or last year at this time.

Your next question comes from the line of Jeff Kramer [ph] with Morgan Stanley.

Just on the Tubular side, you mentioned building plans being revisited, the excess inventories and there's, obviously, competitor mills starting up this fall. I guess the ability to balance supply and demand seems pretty challenged in the near-term, how do you see that playing out? John P. Surma: What I think it's going to play out better if drilling remains active and the rig rate stays strong and if imports are guided by fair trade and not dumping for reasons we can't fully understand. And if any of those things go the other way, then I think it's going to be a longer, more difficult process. Our guidance incorporates the fact that, that process is going on right now and there's a few things in there that Gretchen mentioned. But we see the rig activity in the 1,900s. It's still pretty healthy and still a lot of business that's going on. We see our place in the market with a very strong supply capability on the alloy and heat treat -- the key things that the really important drillers, the big drillers, really want to have, particularly for the more challenging shale plays that they're after now. And pretty healthy line pipe market too, I think we've done pretty well on that side as well in the last quarter or 2, and we have a decent outlook there. So it's going to be a competitive market but the underlying demand remains strong and for all the reasons for our country for energy activity, we think we've got a pretty good shot of doing okay.

And then just on the slab caster in Fairfield, when the decision is made next year on whether to lease or purchase, what are we looking at in terms of dollars, either the purchase price or the increase in the annual lease amount?

Well, with that price, that's going to play out over a period of time. But I think the original contract had a buyout option on the order of $50-ish million, okay? Something like that. So that's what the buyout is. And if you went back to the original, what the facility cost and all that stuff, that would make sense in the context of the lease that we did. But we still have to sort through that. There's a process that we have to work through, which we're in the midst of doing and we have notices and things we have to meet.

And then just a quick housekeeping question, if I could. Was there a LIFO credit for the quarter, Gretchen?

I honestly don't think so. John P. Surma: We don't normally comment on that. That's like giving you earnings results without payroll or something. We think that it really doesn't tell the whole story. In our particularly case, we've been on LIFO since 1941, so it doesn't have the same charm as some others and we think that what you get with us is essentially a current cost of sales, and so that's the number that counts.

And our next question comes from the line of Tony Rizzuto with Dahlman Rose. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: Just a couple of questions here. John, do you think the domestic market can accommodate further price hikes beyond the July announcements? John P. Surma: Well, I don't know, Tony. I think that depends a lot on how the general economy does and if there happen to be a little bit of good news on the construction and housing side. I saw some reports of one of our really good major customer saying that they were hoping that was going to happen. That would be great. If the energy markets stay strong and if the automotive build stays strong, there certainly could be that possibility. That depends on the supply-demand balance. And we have -- utilization rates have been what they've been, in the high 70s or whatever, most recently. But I think one has to look a bit deeper and see what the utilization rates is for those things that are actually operating. And it may be that, that supply-demand balance right now is in a pretty good place. And if that's the case, there could very well be. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: Obviously, imports are trending downward right now, but would you be concerned that they might begin to pick up again if prices were to move up too much here? John P. Surma: It's certainly a possibility, Tony. We've had that experience in the last couple of years. And a combination of maybe North American prices being a little fuller and some other regions being less so, and currency moving in the direction that wasn't helpful -- that sort of all conspired to be a concern for us. And we're quite concerned about imports and remain so, particularly when we see some news out of China that isn't particularly inspiring. So it seems to me that if things stay in the general zone we're in with some reasonable price stability and there's availability of supply, there's really no reason for imports to come this way anymore than they already do. But I guess that remains to be seen and how far the market would go. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: And just one further question, if I may. Just in regards to the maintenance expenses for the third quarter, your commentary sounded as if you're going to see a continued high level of those expenses. I know the second quarter was $40 million above Q1, should we expect the similar level in 3Q versus 2Q? John P. Surma: Well, I think the actual amount of that spending might be a little bit higher than it was in the second quarter. But I think Gretchen's comment was that overall costs are expected to be comparable. So that encompasses our expectation for those major maintenance cost, Tony. Maybe we were too subtle on that. But when we put it in with other things that are up and down: the amount of cost we had in the second quarter, natural gas movements, scrap movements and other odd and ends and whatever's happening on productivity, et cetera, we expect total cost to be about the same. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: All right, just sometimes you got to hit me on the head a little bit, that's all. I think... John P. Surma: No, I just really --

That's kind of subtle, actually, Tony. John P. Surma: No, no, I'm just reading it now. I could see how maybe that question could be there. So we were perhaps too subtle. We're not good at that.

Our next question comes from the line of Kevin Cohen with Imperial Capital. Kevin J. Cohen - Imperial Capital, LLC, Research Division: I guess, John, just to elaborate a little bit further on the import front, how much of a risk do you think there is to the import equation in terms of it going up in the North America just given the move in the U.S. dollar? John P. Surma: Well, just -- I think, Kevin, if your question is on Flat-rolled, I think there's some risk, I guess where euro-dollar was 1.22, 1.23 range last day or so. We sure liked it more at 1.50 or 1.40 or 1.30, but I still think still the relative position of the dollar euro and one looks at transportation and taxes and import fees, et cetera. It's not so extreme that it's a sure thing for imports to make economic sense. And again, if there's reasonable domestic availability, it takes away that reason for maybe some customers to want to go and look to imports. There's probably also some good concern to have about just the difficulty in other regions where the markets are in more difficult shape and imports -- where exports would be an attractive alternative to keep their plants running. We haven't seen a whole lot of that, but it's always a risk and we may see some of it in the future. So I wouldn't say the currency situation is, in and of itself, a reason for [indiscernible] to head this way, but it would be much better if the currency went back the other way.

And our next question comes from the line of Dave Katz with JPMorgan. David Katz - JP Morgan Chase & Co, Research Division: Just as a clarification, when you guys say operating cost should be comparable, are you talking on a pure-per ton basis or on an absolute basis?

Absolute, Dave. David Katz - JP Morgan Chase & Co, Research Division: Then coming back to CapEx, with the understanding earlier when you're talking about Keetac -- obviously, you're waiting on the market before you decide to go ahead. But looking out at 2013, with the items that are now already decided, what would CapEx be?

Dave, it's probably a little early for us in our process to be talking about that. I think we thought -- if we have the Keetac project underway, you're going to be looking at spending more in the order of $900 million to $1 billion level that we had started at the beginning of the year talking about, okay? So I don't know that I would change that. You could push this $100 million or so out into the next year, but I don't know that we could really... John P. Surma: Now, the other thing that is probably worth mentioning, if I understand the nature of your question, would be that -- as I mentioned in my comments, we're finishing up the Carbonyx project, we're finishing the C-Battery project, we've had an ongoing ERP installation that's taking some capital and we're in the position where we might be able to see the finish line there. And when those larger strategic projects or there are any projects behind us, when there -- the strategic larger projects are behind us, it does open up some flexibility on capital expenditures that if we wanted to try to minimize them for whatever reason because there was another dip or whatever there might be, or maybe an opportunity if we wanted to think about a larger strategic project. So we'll do some thinking on that, but we're not in a position to say exactly how much. But it would be -- it would be in a position where some of the bigger projects are rolling off, and that's not a bad place.

And our next question comes from the line of Dave Martin with Deutsche Bank. David S. Martin - Deutsche Bank AG, Research Division: John, I wanted to ask you briefly about the Tubular business where your profits and margins were quite strong despite volatile and declining steel prices. I'm just curious as to what impact program sales and other sales embedded in this segment may be having to the stickiness of the profitability of Tubular? And then secondly, I'm just curious if you can comment on the order books you currently have in that business? John P. Surma: Sure. On the stickiness, if that's the term [indiscernible]. I think programs have been helpful for us and I think on the one slide, we showed program business was 44% or whatever. But that bounces back and forth but that's not a bad place. I think that's a situation where we and an important end user customer agreed that we're going to commit a certain amount of capacity and they get what they get, we make what we want to make. And we match up and we usually have an understanding about how prices will be arrived at, mostly it’s just a normal negotiation on a monthly or quarterly basis. And I think the program business has been more important in terms of allowing us to keep our manufacturing running at the levels we want and to have us align our products with what the market is going to need with the knowledge that we can to do that. The pricing is still, I think, determined by the broader market. And while it's been helpful to that regard, I think it's more helpful to us from an overall volume standpoint. I'd also point out that we continue to make pretty good progress on our own premium connection strategy. We've got a number that are already in the market, we have a new one, CDC HTQ, which is a high torque casing drilling connection, which is just now getting in the market. It's already being accepted by a couple of very important customers. And that brings with it a nice margin improvement as well, and some of that begins to work its way into the figures that you see. David S. Martin - Deutsche Bank AG, Research Division: And then secondly, John, if I may. Earlier, you had mentioned that your lead times were into September, I believe, in your North American business. Were you referring to hot-rolled or... John P. Surma: We were just -- we're booking into September on a variety of projects -- or products. Some are contract and some are more spot based. But our lead times, the absolutes, I don't think are all that meaningful because it's reflective of our particular product mix and what facilities are running. But we're -- spot hot-rolled are probably 3 to 4 weeks out, which is what that would indicate. And I just say, recently, our lead times have probably lengthened a bit, and I think what's more important is direction and I think the direction is a somewhat longer lead time at this point. And I didn't answer your question on the Tubular bookings, but that's largely a spot monthly booking program and we're booked pretty far out into September -- on some of the mills, probably into October. So we're booking reasonably well on the Tubular business also.

And our next question comes from the line of David Gagliano with Barclays. David Gagliano - Barclays Capital, Research Division: I was wondering what the average natural gas price was that flowed through your cost in the second quarter. And also, how much of your third quarter natural gas is hedged at this point, and if so, what price? John P. Surma: I'll let Gretchen or Dan look up the figure. It's 3 something, I think, if I remember, right, for the second quarter. Gretchen?

$2.89 for the second quarter. John P. Surma: So a little less than $3, and I think that's a delivered cost, so it's got transport up to the plant, et cetera, on it. That was reflective of some gas we had purchased before and we do some advanced buying, some with some financial mechanisms, largely to allow us to make sure we cover gas we've already sold when we do fixed or firm contracts a little further out. And the market -- I think the prop [ph] months then the strip has turned up pretty substantially since then on a percentage basis. The numbers are still pretty low. And so we'll probably have higher gas cost in the third quarter but that's all part of our prediction that the cost that will be about the same. David Gagliano - Barclays Capital, Research Division: Okay, and then just one more time, come back to the Tubular, I apologize for beating a dead horse here, but I'm going to give it a try. Obviously, you've got a view on rising input prices and given the commentary on the supply-demand imbalance. What scenario -- is there a scenario where your margins in Tubular do not compress in the fourth quarter versus the third quarter as you see it right now? John P. Surma: In the fourth versus the third, I don't know that I thought it out that far, quite honestly. I think the fourth quarter is pretty far away, it seems, for us right now. But I think there's a few things you have to look at. Certainly, a flat-rolled, a strengthening flat-rolled, hot-rolled market probably is a good thing from that standpoint. My 2 bigger colleagues here won't necessarily like it, because we'll charge you more, but I think in the end, that probably is a supportive activity. Import levels have to be carefully monitored. Tubular imports for the first 6 months were over 1 million tons, more than half of the market, and a lot of them low-priced, a lot of them from Korea. Prices that we can't comprehend based on what we know it would cost to make something and to ship something. So I think we have to monitor that and see what damage to our market that might be doing. And then we have to watch the rigs, and if the rigs are busy and active and they are running the kinds of heat-treat alloy small diameter product we make, we think we can probably still do okay. Now, we may have a little bit of compression as the hot-rolled price moves up. That happens for us very quickly, as you know. We just do it on monthly market basis so you can all see how it works. But I think those are usually shorter-term things that work themselves out. I'd be more concerned with the volume, with the rig count and with the absolute prices. The ultimate cost, we end up equalizing those over time.

And our next question comes from the line of Michael Gambardella with JPMorgan. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: I wanted to get back to the labor contract because your contract and Middles [ph] contract expires at the end of August. And last time you negotiated a contract, I guess in the first half of 2008, market was a lot better under those negotiations than it is today. Are you seeing any type of customer buying patterns changing in anticipation of the end of the labor contract? John P. Surma: Not in any significant way, Mike. I would tell you that some of our customers were interested in our views on that subject, on our situation, and we comment to them precisely as we comment to all of you. I think that's what our view is. It would be hard to see that probably, but we haven't seen anything that would suggest that's the case. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: Just hypothetically, if your competitor were to go on strike and you did not, how much availability do you have on the volume side to fill the void? John P. Surma: Well, we're running essentially everything we have right now with the exception of Hamilton, and that would be one large incremental piece that would be a couple million tons as a weighted capacity. But from a current operation standpoint, I think today or last week, in the U.S. business, just the U.S. business, I would compare it to the mid-70s or whatever the ASI number was, we were probably pushing 90% or close to it, maybe not quite. So, some, but not a whole lot, particularly, as we go through these maintenance projects. But, again, it's a hypothetical. So what we might do or not do it's impossible to say now. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: In all likelihood, though, if there were a strike by one of your competitors, I mean, to make the move to restart Hamilton, that would be a pretty big decision, right? John P. Surma: It's an important decision regardless of what the reason might be, and I'm not suggesting that would be a natural reaction. I'm just suggesting -- you asked me what the capacity was and that's a factual answer, which you probably already know anyway, of course. But it seems to me that we would look at this like we have described it before. We need to look at what the cost of that is, and what the longevity of the conditions are, market or otherwise, that might provide a margin that looks positive and measure that against a working capital and capital which is required to make a rational decision.

And our next question comes from the line of Richard Garchitorena with Credit Suisse. Richard Garchitorena - Crédit Suisse AG, Research Division: I just wanted to touch a little bit on Europe, and pretty strong results there this quarter. Can you remind us about the value-added capabilities there? It seems like the demands for your firm -- and I know you mentioned how you're positioned on a regional basis better than others. So maybe just some color around that would be great. John P. Surma: Sure. In Europe, we're, we think, positioned a little more favorably than some for a number of reasons. One would be that we have really good plants with really good equipment and excellent and productive employees. And so we have a -- I think, a reasonably strong operating cost position. We've got access to materials that while market based are competitively market priced, we think in most cases. So we've got pretty good cost position. On the market side, we have steadily invested capital over the decade or more that we've been in Slovakia. Initially, the new tin mill -- we operate several now and they're running reasonably well. We have electrical motor laminate. Dynamo would be the term of art in Europe. We have 2 of those lines, one of which is fairly new that we invested in 4 or 5 years ago. We have a -- I still think of it as new but it’s a few years old now -- a continuous galvanizing line that is automotive capable and we have won quality awards from the very top European automakers for our material and it's in quite good demand and fully loaded. So we've got reasonably good and very high-quality bid -- from a volume standpoint, reasonably good exposure to higher value-added markets. But we still have a pretty heavy spot hot-rolled -- that's probably 1/2 of our book, plus or minus -- pretty heavy spot hot-rolled position that we'll continue to look at ways to upgrade over time. But it's a very competitive hot-rolled coil, and we usually manage to sell this for a pretty good place when the market is functioning better than it is today. Richard Garchitorena - Crédit Suisse AG, Research Division: Great, so do you think the second quarter is indicative of what a normal type of run rate might be going forward? Obviously, Q3 has seasonality, but try and to look beyond Q3 and if the European economy doesn't deteriorate further, is that a good base to think about, I guess is my question. John P. Surma: It looks really small to me. Actually, we've had -- most quarters we're way better than that over the 10 to 12 years we've been around in Slovakia. So we have expectations or at least aspirations that would be much better than that. But in the market that we're in, in the location that we're in, the pricing in the second quarter was not great, but it was good enough given our cost position, we could make a reasonable amount of profit. The cost and the prices will move to some degree in unison, but not always perfectly. So I'm reluctant to say that's the new normal. We think we can do better than that, but I think given what's happening in the spot market in the third quarter, as our outlook indicates, it's going to be difficult to maintain that. So we're going to have to run hard. So I think the second quarter was reasonably good given we had to work with, but there have been other quarters that we've done way, way better than that. And that's the kind of quarter we're shooting for.

Our next question comes from the line of Shneur Gershuni with UBS. Shneur Z. Gershuni - UBS Investment Bank, Research Division: Just a question here about the maintenance with respect to #14. Once it's completed -- if my recollection is correct, it wasn't actually operating at kind of design capacity beforehand. With this maintenance in place, do we expect to see a productivity improvement in 14? Is there a way that you can quantify the improvements if there's expected to be one? John P. Surma: I think there will be some higher productivity levels. We have been not running it extremely hard just because the refractories and some of the hardest walls were in a little bit tenuous condition. We were emphasizing safety. But I think it's an -- there's an expectation. At least on my part, there should be some better ability to run day in and day out at higher levels. See how much that is. We have to wait and see and see how it behaves when the project's done. And we don't know everything about the furnace until we get inside and have a look at it. One thing I would comment on though is that this will be a very big step in getting to our natural gas substitution goal of 100 pounds that I mentioned before. This furnace has not been accommodated to a lot of gas usage because of its condition. When we're done, it will be. And that will be a big step forward. Hopefully we'll have that stabilized and, as I said, by the end of the year be chasing or be right on top of our 100 pound goal. So that will be a very important step for us.

The economics on that are very, very good for us. Shneur Z. Gershuni - UBS Investment Bank, Research Division: And a follow-up question. We've seen a decline in the import markets, specifically, in met coal the last couple of weeks and so forth. Does this prompt you to sort of bring forward the discussions you normally have with the producers to sort of discuss contracting for next year? Or do kind of plan to stick onto the normal schedule? John P. Surma: We're thinking about that. We stay in pretty close touch with our coal suppliers anyway, and whether it might be in their interest and ours to have an earlier discussion, trying to time that to a particular move in the market has never been a particular skill of ours, and so I think we go through a lot of that data gathering. So today, we look at our needs, they look at what their availability is. And that will happen at some point, whether it's any earlier or not -- I guess I don't expect but it's possible.

And our next question comes from the line of Sandeep S.M. with Goldman Sachs. Sandeep S.M. - Goldman Sachs Group Inc., Research Division: In the outlook for Tubular segment, you had mentioned that operating costs will be lower than second quarter because of lower substrate and facility maintenance cost. Can you just quantify how much was the maintenance costs in second quarter and how much do you expect it to be in the third quarter? John P. Surma: I don't know that we can give you the total maintenance costs. We might be able to comment if Dan looks -- We might be able to comment on what the sort of maintenance project cost was that was not normal to have in every quarter, that I'm going to guess was single-digits millions or something like. Dan?

Yes, it was. John P. Surma: So it's probably $10 million to $20 million in that range that would be different one quarter versus another. Sandeep S.M. - Goldman Sachs Group Inc., Research Division: Okay. The working capital first half of the year for U.S. Steel is usually a drain on cash [indiscernible]. This time, it was a source on cash. Do you have any comments on the performance? And second thing, any comments on how the second half could shape up to be? John P. Surma: I'm sorry, can you give us the question one more time? Sandeep S.M. - Goldman Sachs Group Inc., Research Division: Sure, working capital, first half, you have -- it was a source rather than a drain on cash. So what was the reason for that? And second, how do you think the second half is going to play out?

Actually I think the first half working capital was positive. John P. Surma: Right, and it was a good source of cash.

And mostly in the first quarter, for the most part. John P. Surma: And we had some from the second quarter as well. But I think what's happening there is that we managed our inventories well. We've balanced our inventories to lower positions. We have our coke and coal and iron ore inventories in better position and more well aligned with what our requirements are. And on the steel side, we have been selling a little more than we've been making and so our inventories are getting imbalanced as well. And I think that is something we have asked our operating and commercial folks to emphasize and they've done a good job on it. And the cash flow number, as Gretchen mentioned earlier, that are on the slide, where it shows cash from operations nearly $1 billion in the last 12 months, that was an area of emphasis for us and our folks did a very good job on it.

Yes. And I think a lot of the inventory effort for this year has occurred and we should be able to manage our working capital reasonably over the balance of the year, but I don't know that I'm expecting a lot of big swings in there. John P. Surma: No, but absent any major change in the market, we don't expect to have to put a lot in either, I think. We're in a reasonably good position at this stage.

And our next question comes from the line of Phil Gibbs with KeyBanc Capital Markets. Philip Gibbs - KeyBanc Capital Markets Inc., Research Division: A lot of good questions so a lot of mine have been answered. I just have a quick one here on the coal -- to kind of just go off a little bit about what Shneur was asking. But assuming current market pricing for coal at the levels persist, any way for you to handicap potential cost reduction opportunities in '12, John? John P. Surma: No, I'd be reluctant to do that. That would be a bit unfair to our good suppliers. I think it's going to be a good discussion and negotiation. Our costs have generally been in line with what the market has to offer. We usually do a bit better because we're, we think, a good customer with some of the best logistics and someone they know is going to be there. Our coke plants are in the same place they always are. So I'm confident we'll get a good competitive coal supply. We continue to work on using different coals and different coal combinations to try to get the best overall cost and value. Not always the cheapest because that could lead to battery damage and things that have short-term benefit but aren't good for us in the long-term. So we have a group of people whose job that is and we're still working on that and we test new coals all the time. And we're going to try to get the right combination that gives us the best coke at the right value for the overall production process, and that's saved us a lot of money. I think that -- I'm going to just estimate that, that's probably a $10 difference in the average cost of our coal in a year or so. And when you're buying 10 million tons, that's a lot of money. So we expect to continue to do that. Philip Gibbs - KeyBanc Capital Markets Inc., Research Division: How many of those tons, John, are on longer-term agreements, like 2 or 3 years, or is this all annual? John P. Surma: Most of the pricing would be annual, there might be some that's a little bit longer than that. We have sort of understandings with some of our suppliers for quantity nominations for a longer period yet to be priced. So I'm confident we're going to have supply but most of it would be annual pricing. Not very much it would be any different than that.

And our next question comes from the line of Sam Dubinsky with Wells Fargo. Sam Dubinsky - Wells Fargo Securities, LLC, Research Division: Just a quick housekeeping one. You had $44 million in income from investees this quarter, which is almost double of what it was in 1Q. Can you explain the reason, again? What's the reason for the increase this quarter and how should we model that for the rest of the year?

That may be something that Dan can work with you later. It just reflects our existing joint ventures. We didn't have anything particularly new or different from that. So to the extent that it reflects PRO-TEC, UPI, our equity ventures on the iron ore side, that's really what it is. So, I mean, it's kind of fundamental to whatever's happening in the rest of our business. Sam Dubinsky - Wells Fargo Securities, LLC, Research Division: So how should be benchmark just the profitability or the contribution in the coming quarter? Should it be down, I assume? John P. Surma: Well, to the extent that if you just look back over a period of time and look at quarters and values, generally speaking, I think that's sort of how it's gone. So I think, directionally, it probably should be the same. Some of the items in there might be a little bit kind of cyclical. But generally speaking, I would say, they're all in the steel game whether it's one way or the other. So that would be a fair assessment. Dan will see if there's something we might not be thinking of that we should have brought to your attention but I think it's probably a good assumption.

I'd like to thank everybody for participating and we'll see you next quarter.

Ladies and gentlemen, this conference call will be available for replay starting today at 5:30 p.m. and run until August 7 at midnight. You may access the replay service by dialing (320) 365-3844 and entering the access code of 253506. That does conclude your conference for today. Thank you very much for your participation and for using AT&T executive teleconference. You may now disconnect.