US Steel Application Record Part II

8/11/2019 US Steel Application Record Part II

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Court File No.

ONTARIOSUPERIOR COURT OF JUSTICE(COMMERCIAL LIST)

IN THE MATTER OF THE COMPANIES CREDITORSARRANGEMEN T ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLAN OF

COMPROMISE OR ARRANGEMENT WITH RESPECT TOU. S. STEEL CANADA INC.

INDEX

TAB NO. DOCUMENT

1. Notice of Application

2. Affidavit of Michael A. McQuade sworn September 16, 2014

Exhibit A - Organization Chart of USSC Group

Exhibit B Summary of USSC Pension and Retirement Plans

Exhibit C - Corporate Services Agreement between USS andUSSC dated November 1, 2007

Exhibit D ERP Cost Sharing Agreement between USS,USSC and USSK, dated November 19, 2009

Exhibit E - Limited Risk Distributor Agreement datedFebruary 1, 2008 between USS and USSC

Exhibit F - Limited Risk Distributor Agreement dated May 1,2008 between USSK and USSC

Exhibit G - Marketing, Distributorship and SupplyAgreement between USS and USSC dated December 1, 2008


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Agreement between UCF and USSC, dated August 5, 2008, andBoard of Directors Resolution

Exhibit K - Business Services Agreement between USSK,USS and USSC, as amended, dated January 1, 2007

Exhibit L Financial Statements, as at December 31, 2013and August 31, 2014

Exhibit M Secured Loan Agreement between USS and

USSC dated as of October 30, 2013Exhibit N - Security Agreement between USS and USSC,dated as of January 28, 2013

Exhibit O Summary of Credit Support provided by USS

Exhibit P - USS Unsecured Loan Agreement, dated as of

October 29, 2007, as amendedExhibit Q - Province of Ontario Loan Agreement, dated as ofMarch 31, 2006, and the amendments relating thereto

Exhibit R - Actuarial Valuation Reports for the USSCPension Plans, as at December 31, 2013

Exhibit S - Agreement Regarding Stelco Inc. Pension Plans,dated August 26, 2007, as amended, and Pension Guarantee

Exhibit T Summary of USSC PPSA Registrations, as ofSeptember 9, 2014

Exhibit U Rothschild Engagement Letter, dated January 22,2014, as amended

Exhibit V CRO Engagement Letter, dated September 16,2014

3. Proposed Initial Order

4. Blackline of Proposed Initial Order to Model Order


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TAB R


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This is E xhibitR eferred to In theaffidavit of A....t.14-G-144(hsworn before m this IAday of 20

A COMMISSIONERFOR TAXING AFFIDAVITS

U. S. Steel Canada Inc.RETIREMENT PLAN FOR USW LOCAL 1005 MEMBERS ATHAMILTON WO RKS

Actuarial Valuation R eport as of Decem ber 31, 2013

Registration #0354878


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Table of Contents

1. Summ ary of Valuation Results T otal Plan

2. Comm ents on Sum mary of Valuation Results as at December 31, 2013

3. Financial Position of the Plan

4. PBGF Assessment 3

5. Funding Requirements 4

6. Actuarial Cost Certificate and Opinion 7

Appendix I: Plan Assets

Appendix II: Plan Membership and Benefit Data

Appendix III: 2014 Con tribution of Requirem ents (Original Benefits) Under G eneralRegulation to the Ontario Pension B enefits Act

Appendix IV: Age S ervice Distribution of Active Mem bers

Appendix V: Actuarial Assum ptions and Methods

Appendix V I: Sum mary of P lan Provisions

Appendix VII: Em ployer Ce rtification

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U. S. STEEL CANADA INC.Retirement Plan for USW Local 1005 Members at Hamilton Works

SUMMARY OF VALUATION RESULTS ( 000s)

VALUATION DATE 12/31/2013 12/31/2012

PLAN MEMBERSHIP DATA

Number of Members:Active members 542 583Retired members and beneficiaries 8,451 8,610Former employees with deferred vested benefits 241 254Transferred members 104 121

Total Members 9,338 9,568

Annual pensions $ 38,216 $ 40,157

Annual bridge pensions $ 4,416 $ 6,240Deferred annual pensions $ 99 $ 11

FUNDING

Market Value of Assets $ ,580,296 $ ,459,950Going Concern Actuarial Liability 1,673,054 1,732,115Going Concern Funding Excess (Deficiency) $ 92,758) $ 272,165)% Funded - Ongoing Basis 94.5% 84.3%

Solvency Assets $ ,579,362 $ ,458,993Solvency Liability 2,152,362 2,436,937Solvency Excess I (Deficiency) $ 573,000) $ 977,944)A) Funded - Solvency Basis 73.4% 59.9%

FUNDING REQUIREMENTS 2014 2013

Prescribed contributions $ 7,817 $ 3,883Normal cost & Special payments for benefit improvements 760 8,129Total annual minimum contribution $ 8,577 $ 2,012

PBGF Assessment (capped at $300 per Ontario member) $ ,712 $ ,780

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Com men ts on Summ ary of Valuation Results as ofDecem ber 31, 2013

This report has been prepared for and at the request of U. S. Steel Canada Inc. (theCom pany or USS C ) and presents the actual results of the actuarial valuation of the

U. S. Steel Canada Inc. Retirement Plan for USW Local 1005 Members at HamiltonWo rks (the Plan ) as of Decem ber 31, 2013. All dollar am ounts referenced in this reportare in Ca nadian dollars.

The purpose of the valuation is to determine:

The funded status of the Plan as at December 31, 2013 on going-concern,solvency and wind-up bases;

The m inimum and m aximum funding requirements for 2014; and

To form part of the go vernme nt fil ings, as required by the Financial ServicesComm ission of Ontario ( FSCO ) and the Canada Re venue Agency ( CRA )for statutory and tax purposes

The terms of our en gagem ent and these tasks were condu cted in accordance w ith theCan adian Institute of Actuaries Standards of Practice for Pen sion Plans (the Stand ardsof Practice ) a nd all relevant regulations in e ffect at December 31, 2013.

The next actuarial valuation of the Plan will be required as of a date not later thanDecem ber 31, 2014 or as at the date of an earlier amend me nt to the Plan, in accordancewith the requirements of the regulations to theOntario Pension Benefits A ct.

Effective October 31, 2007, United States Steel Corporation ( U. S. Steel ) acquiredStelco Inc. As a result of the acquisition, effective O ctober 31, 2007,

Stelco Inc. was rena me d U. S. Steel Canada Inc.

The Plan was renamed as shown in this report from the Bargaining UnitPension Plan for Ham ilton Steel Members of US W Local 1005; and

Hamilton Steel GP Inc. was dissolved and ceased to be a participatingem ployer and transferred its obligations un der the Plan to the Com pany.

In conjunction with a 2006 Plan of Arrangement and Reorganization under theCom panies' Creditors Arrangemen t Act (CCAA) an d upon the acquisit ion o f Stelco Inc.by U. S. Steel, there rema ins in effect a special pension agree me nt amo ngst the partiesStelco Inc., U. S. Steel, the Superintendent of Financial Services and the Minister of

f

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The U. S. Steel Canada Inc. Retirement Plan for Salaried Employees atHam ilton Works, (the Ham ilton Salaried Plan ) Registration #0338509

The U. S . Steel Canada Inc. Retireme nt Plan for Salaried Em ployees a t LakeErie Works, (the Lake Erie Salaried Plan ) Registration #0698753

Key features of the funding arrangeme nt are as follows:

1. The election under S ection 5.1 of the regulations to theOntario Pens ion BenefitsAct which exem pts the plans from funding on a solvency b asis, no longer appliesto the plans.

2. Contributions otherwise required under the general regulations to the OntarioPension Benefits Actare replaced by the following provisions for future years:

a. Level contributions, payable monthly, are allocated between the fourplans:

2008 2010 $65.0 million per annum2011 2015 $70.0 million per annum

b. Additional contributions are required in respect of improvements(amendments) to plan benefits after December 31, 2005. Suchcontributions a re determined u nder the gene ral regulations to theOntarioPension Ben efits Act.

3. The Special Pension Agreement ends on December 31, 2015 or at an earlierdate if all four plans beco me fully funded on a solvency ba sis (with respect to thebenefit provisions in effect at Decem ber 31, 2005).

The minimum contributions for the Plan for 2014 include $47,817,000 for OriginalBenefits and $760,000 for Benefit Improveme nts in effect at Decem ber 31, 2013 for atotal of $48,577,000. The maximum contribution that the Company may make to thePlan in 2014 is $579,394,000, which is the wind-up deficiency plus the normal cost.Contributions in excess of the minimum required are subject to required allocationbetween the four plans under the Special Pension Agreeme nt.

This report reflects the requirements of the Special Pension Agreement, including

presenting separately the financial position and contribution requireme nts for the O riginalBenefits (i.e., provisions of the Plan as at December 31, 2005) and BenefitImprovem ents (i.e. , plan am endm ents ma de after Decem ber 31, 2005 which increasethe normal cost, going-concern liabilities, or solvency liabilities).

This valuation reflects the provisions of the Plan in effect at Decem ber 31, 2013.riorBen efit Im provem ents w ere either (i) retiree CO LA adjustm ents o r (ii) service credit for

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rates of 3.8%. See Appendix V for all other important assumptions relative to thevaluations.

For Plan assets, this valuation report has relied on the audited financial statements of

the Plan as o f Decem ber 31, 2013, audited by KP MG LLP. Assets have been allocatedto Benefit Improvem ents according to requiremen ts of the Special Pension Agreem ent.

Pension fund assets are held in trust by CIBC Mellon and invested in a diversifiedportfolio managed by several managers, including United States Steel & CarnegiePension Fund ( UCF ) in accordance with the investment policy. (With U. S. SteelCorporation's purchase of US SC and ad option of its bene fit plans, the Board of Directorsof USSC delegated authority for certain administrative responsibilities for the plans,including this Plan, to UCF, subject to the ongoing oversight of USSC as sponsoringemployer and administrator.) On May 1, 2009, UCF took over the investmentresponsibilities for most of the P lan's non-Cana dian equity holdings.

The solvency a nd wind u p assum ptions w ere updated to reflect market conditions at thevaluation date. The assumption for wind-up expenses is $100 per participant, whichreflects that the majority of the tasks required to wind-up the plan would be doneinternally at a lower cost than if performed by an outside ven dor.

We are unaware of any subsequent events from the date of the year-end valuationmeasurement to the date of submittal of this report that would influence the resultsherein.

The information contained in this report was prepared for the Company's internal useand for filing with the Financial Services Commission of Ontario and with the CanadaReven ue Agency a nd is not intended to be used for other purposes.

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Financ ial Pos ition - Going C once rn ValuationThe financial position of the Plan on a going concern basis is determined by comparingthe actuarial value of assets to the actuarial accrued liability. The special pensionagreement requires the Plan to use the actual market value of net assets as the actuarialvalue of assets for the Plan.

Goin9 Concern Position at December 31, 2013Benefit

In $000s Total Plan Benefits riginal Benefits mprovem entsAssu mptions for Funded Status Position:Going-Concern Rate 6.25%

Normal Cost to EOY 2,615 2,621 (6)Expected Benefit Payments 161,353 155,382 5,971

Funded S tatus Position:Actuarial Value of Assets $ 1,580,296 1,500,796 79,500

Actuarial Accrue d LiabilitiesActive Members 65,335 62,422 2,913Transferred Members 9,099 9,092 7Pensioners and Survivors 1,593,224 1,533,204 60,020Deferred Vesteds

5,3965,359

37Total Actuarial Accrue d Liabilities $ 1,673,054 1,610,077 62,977

Funding Excess / (Deficiency) $ (92,758) $ (109,281) $ 16,523% Funded Ongoing Basis 94.5%

Going Concern Position at December 31, 2012Benefit

In $000s Total Plan Benefits riginal Benefits mprovementsAssu mptions for Funded Status Position:

Going-Concern Rate 6.25%

Normal Cost to EOY 2,762 2,738 24Expected Benefit Payments 165,252 159,286 5,966

Funded S tatus Position:Actuarial Value of Assets $ 1,459,950 1,393,777 66,173

Actuarial Accrue d LiabilitiesActive Mem bers 66,971 63,910 3,061

Transferred Members 12,276 12,270 6Pensioners and Su rvivors 1,647,411 1,586,700 60,711Deferred Vesteds 5,457 5,436 21Total Actuarial Accru ed Liabilities $ 1,732,115 1,668,316 63,799

Funding Excess / (Deficiency) (272,165) $ (274,539) $ 2,374% Funded Ongoing Basis 84,3%

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Financial Position Solvency Valuation

The Pension Benefits Act (Ontario) requires a measure of solvency based onassumptions, which are prescribed by the Act, to assess the financial status of the Planunder a worst case scenario of Plan termination and wind up. The financial position ofthe Plan on a solvency basis is determined by comparing the market value of assetsreduced by termination expenses to the solvency liability, as prescribed by the Act. Thesolvency liability is the present value of benefits, as determined under the Act, earned forservice prior to the valuation date, calculated as if the pension plan were terminated onthat date. The solvency deficiency is $573,000,000 as of December 31, 2013.

Solvency Position at December 31, 2013Benefit

In $000s Total Plan Benefits riginal Benefits mprovements

Assumptions for Funded Status Position:Annuity Purchase Rate: 3.80%Commuted Value Rates: .00 % first 10 yrs./ 4.60 % thereafter

Funded Status Position:Market Value of Assets 1,580,296 1,500,796 9,500

Termination Expenses (934) (934)

Solvency Assets 1 1,579,362 1,499,862 9,500

Solvency LiabilitiesActive Members 124,205 119,055 ,150Transferred Members 17,196 17,192Pensioners and Survivors 2,003,377 1,928,346 5,031

Deferred Vesteds 7,584 7,517 7Total Solvency Liabilities 2,152,362 2,072,110 0,252

Funding Excess / (Deficiency) (573,000) $ (572,248) $ 752)% Funded Solvency Basis 73.4%

Incremental Solvency Cost (Credit) (5,890)

Solvency Position at December 31, 2012Benefit


Assumptions for Funded Status Position:Annuity Purchase Rate: 3.00%Commuted Value Rates: .40 % first 10 yrs./ 3.60 % thereafter

Funded Status Position:Market Value of Assets $ 1,459,950 1,393,777 6,173

Termination Expenses (957) (957)

Solvency Assets 1 $ 1,458,993 1,392,820 6,173

Solvency LiabilitiesActive Members 146,351 139,905 ,446

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Financial Position Wind-Up

The wind-up liabilities are equal to the solvency liabilities plus liabilities for certainemployees who are not yet eligible, but who on the date of valuation would have growninto eligibility for special early retirement benefits had they been able to work until theyattained age 55 and had at least 10 years of service, absent a termination of theiremployment.

Wind-Up Position at December 31, 2013Benefit


Total Solvency Liabilities $ ,152,362 ,072,110 80,252Consent Benefits Not In SolvencyLiabilities 3,857 ,953 (96)Total Wind-Up Liabilities $ ,156,219 ,076,063 80,156

Solvency Assets 1,579,362 ,499,862 79,500Wind-Up Excess / (Deficiency) $ 576,857) $ 576,201) $ (656)

Transfer Ratio (Market Value ofAssets/Wind-up Liabilities) 73.3%

Wind-Up Position at December 31, 2012Benefit


Total Solvency Liabilities $ ,436,937 ,348,074 88,863Consent Benefits not in SolvencyLiabilities 3,982 ,182 (200)Total Wind-Up Liabilities $ ,440,919 ,352,256 88,663

Solvency Assets 1,458,993 ,392,820 66,173Wind-Up Excess / (Deficiency) $ 981,926) $ 959,436) $ (22,490)

Transfer Ratio (Market Value of

Assets/Wind-up Liabilities) 59.8%

The Plan's transfer ratio is determined by dividing the market value of assets by thewind-up liabilities. As of December 31, 2013, the Plan has a transfer ratio of 73.3%.

Because the transfer ratio of the plan is less than 1.0, the Plan can pay out only 73.3%of the commuted value of a benefit payable on termination or death, unless theCompany makes an additional contribution equal to 26.7% of the commuted value tocover the shortfall. This shortfall is referred to as the transfer deficiency . However,commuted values may be paid in full without the requirement to cover the transferdeficiency if the sum of all transfer deficiencies made since the date of the last actuarialreview is less than 5% of the market value of assets as of December 31, 2013 (or$79,014,800).This is equivalent to the sum of all commuted values being less than

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Discount Rate Sensitivities

It should be noted that the results of this valuation are presented at a single point in time.Both the going concern and solvency funded positions of the Plan can change with timeand the potential for such variations must be borne in mind when using this report as aguide for the funded positions, now or in the future.

This section provides details on the sensitivity of the valuation results to an increase ordecrease of 1% (i.e. 100 basis points) to our current discount rate assumptions.

In $000s

Liabilities


December 31, 2013 December 31, 2012

Actuarial Accrued Liabilities $ 1,673,054 $ ,732,115Normal Cost to EOY 2,615 2,762Solvency Liabilities 2,152,362 2,436,937

- 1% change on ratesActuarial Accrued Liabilities 1,825,091 1,891,506Normal Cost to EOY 3,107 3,291Solvency Liabilities 2,391,254 2,732,029

+ 1% change on ratesActuarial Accrued Liabilities 1,543,334 1,596,381Normal Cost to EOY 2,230 2,348Solvency Liabilities 1,953,371 2,194,019

Effect of -1% changeActuarial Accrued Liabilities 152,037 159,391Normal Cost to EOY 492 529Solvency Liabilities 238,892 295,092

Effect of +1% change

Actuarial Accrued Liabilities(129,720) (135,734)

Normal Cost to EOY (385) (414)Solvency Liabilities (198,991) (242,918)

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Reconciliation of Funded Status - Going Concern Basis

The going concern funding deficiency is $92,758,000 at December 31, 2013. Thedeficiency decreased $179,407,000 from December 31, 2012, due primarily to an

increase in the market value of assets and changes stemming from the naturalmaturation of the plan. Expected return on assets of $87,761,000 compared with anactual return of $233,599,000 decreased the deficiency by $145,838,000. All decrementexperience changes were insignificant to the plan.

Reconciliation of Funded Status on a Going Concern Basis -From December 31, 2012 through December 31, 2013

In $000s Total Plan Benefits riginal BenefitsBenefit

ImprovementsFunding Excess / (Deficiency) Beginning of Year $ (272,165) $ (274,539) $ 2,374

Interest on surplus (unfunded liability) (17,011) (17,159) 148Special Payments 49,333 41,227 8,106Change in actuarial assumptionsInvestment Experience 145,838 138,876 6,962Retirement Experience (478) (638) 160Mortality Experience 949 919 30Withdrawal Experience 297 297Salary ExperienceAll other Sources 479 1,736 (1,257)

Funding Excess / (Deficiency) End of Year $ (92,758) $ (109,281) $ 16,523

Discount Rate 6.25% 6.25% 6.25%

Funded Status Ratio at December 31, 2013 94.5%

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Reconciliation of Funded Status - Going Concern Basis

The going concern funding deficiency is $272,165,000 at December 31, 2012. The

deficiency decreased $48,863,000 from December 31, 2011, due primarily to anincrease in the market value of assets and changes stemming from the naturalmaturation of the plan. The decrease in funding deficiency was partially offset by achange in the going concern discount rate. Expected return on assets of $89,397,000compared with an actual return of $140,691,000 decreased the deficiency by$51,294,000. All decrement experience changes were insignificant to the plan.

Reconciliation of Funded Status on a Going Concern Basis-From December 31, 2011 through December 31, 2012

In $000s Total Plan Benefits riginal BenefitsBenefit

ImprovementsFunding Excess / (Deficiency) Beginning of Year (321,028) $ (307,847) $ (13,181)

Interest on surplus (unfunded liability) (20,867) (20,010) (857)Special Payments 58,088 43,911 14,177Change in actuarial assumptions (35,954) (34,658) (1,296)Investment Experience 51,294 49,203 2,091Retirement Experience (3,161) (3,495) 334Mortality Experience 674 674Withdrawal Experience 104 104

Salary ExperienceNormal Cost w/interest (2,888) (2,891) 3All other Sources 1,573 470 1,103

Funding Excess / (Deficiency) End of Year (272,165) $ (274,539) $ 2,374

Discount Rate 6.25% 6.25% 6.25%

Funded Status Ratio at December 31, 2012 84.3%

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PBGF Assessment for 2014 (In Dollars)

There is an annual assessment payable for Ontario Plan Beneficiaries to the GuaranteeFund pursuant to the Pension Benefits Act (Ontario).

The PBGF Assessment Base shown below is to be used for annual filing purposes untila new actuarial report is filed:

PBGF Assessment Base:

PBGF Liabilities at December 31, 2013 2,137,412,000(Solvency Liabilities in respect of Ontario members)

Ontario Asset Ratio Assumed 9.31%

Solvency Assets at December 31, 2013

(Ontario Portion of the fund) 1 ,569,392,000PBGF Assessment Base $ 68,020,000

Development of PBGF Assessment Fees:

As BGF Liabilities at December 31, 2013Threshold - % of Threshold or Excess

Liabilities over Assess. Base % Charge- On 10% of Total 13,741,200 13,741,200 0.50% $ ,068,706- On 10% of Total 13,741,200 13,741,200 1.00% 2,137,412- On 20% of Total 27,482,400 40,537,600 1.50% 2,108,064

Plus $5 per Ontario Plan Beneficiary 45,200Preliminary PBGF Calculation $ ,359,382

PBGF Cap on Assessment at $300 per Member $ ,712,000

PBGF Assessment Equals Minimum of Preliminary PBGF Calculation or Cap and thisassessment must be at least $250 $ ,712,000Retail Sales Tax at 8% 216,960Total Annual PBGF Assessment Fee $ ,928,960

1 The assets reported for the 1:8GF assessment do not Include the termination expenses.

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Em ployer Con tributions - Original Benefits & To tal Plan

Hamilton ake Erle amiltonIn $000s argaining Plan argaining Plan alaried Plan

Lake ErleSalaried Plan Total

Total Members ,338 ,311 ,276 441 14,366

Allocation of 2014 Prescribed Contributions - Original BenefitsGoing-Concern Basis as ofDecember 31 2013:Market Value of Assets ,500,796 28,008 93,585 $ 155,684 $ ,778,073Actua rial liabilities (Original) ,610,077 48,332 13,976 147,023 2,819,408Unfunded Liability 109,281) 20,324) 9,609 $ 8,661 $ 41,335)

Solvency Basis as ofDecember 31 2013:

Market Value of Assets ,500,796 28,008 93,585 $ 155,684 $ ,778,073Termination Expenses 934) 131) 328) (44 ) (1,437)Solvency Assets ,499,862 27,877 93,257 155,640 2,776,636

Solvenc y Liabilities (Original) ,072,110 45,173 ,009,809 187,295 3 614,387Solvency Deficiency 572,248) 117,296) 116,552) $ 31,655) $ 837,751)

Allocation of Contributions for Year 2014:Initial allocation percentage* 8.31% 4.00% 3.91% 3.78% 100.00%Initial allocation of prescribedcontribution 7,817 ,800 ,737 $ 2,646 $ 0,000

Check for Minimum Limitation:2014 norma l cost to midyear'' ,543 ,853 ,977 $ 1,379 $ ,752

Affected plan o o o No

Total Plans' Funded Status, including Original & Benefit improvement LiabilitiesGoing-Concern Basis as ofDecembe r 31 2013:Market Value of Assets ,580,296 37,477 93,585 $ 155,684 $ ,867,042Actuarial liabilities ,673,054 54,691 13,976 147,023 2,888,744Unfunded Liability 92,758) 17,214) 9,609 $ 8,661 $ 21,702)% Funded Ongoing Basis 4.5% 3.2% 09.8% 105.9% 99.2%

Solvency Basis as ofDecember 31 2013:Market Value of Assets ,580,296 37,477 93,585 $ 155,684 $ ,887,042Termination Expenses 934) 131) 328) (44) (1,437)Solvency Assets ,579,362 37,348 93,257 155,640 2,865,605

Solvency Liabilities ,152,362 54,861 ,009,809 187,295 3,704,327Solvency De ficiency 573,000) 117,515) 116,552) $ 31,655) $ 838,722)% Funded Solvency Basis 3.4% 6.9% 8.5% 83.1% 77.4%

Total 2014 Minimum Contribution - Prescribed and Benefit Improvements

Annual P rescribed Contribution 7,817 ,800 ,737 $ 2,646 $ 0,000Benefit Improvements 60 33 993Total Minimum Required in 2014 8,577 0,033 ,737(payable 1/12 monthly)

$ 2,646 $ 0,993

Termination expense = $0.1 per participant. Allocated in proportion to Solvency Deficiency for each plan

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Em ployer Contributions Be nefit Improvem entsNormal CostThe normal cost (credit) associated with the Benefit Improvements at December 31, 2013 is $ (6,000).

Total Special Payments as of December 31, 2013

In $000sTypeof Liability Bases

Total Ongoing Bases

Present Value ofRemaining Period emaining

Current Special as of December 31, ayments atRate ffective Date ayments 013 2/31/2013

$

0.67 752

752

Solvency*Total Solvency BasesTotal Special Payments

3.79% December31, 2012 766

766

(6)ormal Cost (Credit)2014 Funding Requirement Benefit improveme nts

Note: The solvency special paymen t effective December 31, 2012 is scheduled for 8 mon ths in 2014; the last payment in 2014 w ill bemade by August 31, 2014 and will fully amortize the outstanding base rem aining. This final payme nt ismore than Is required tofully amortize the outstanding base but adheres to the U. S. Steel funding policy of making fuU m onths of contributions into the fund.

760

In $000sType of Deficit

Total Ongoing Bases

Special Payments Determined as of December 31, 2012

Remaining PeriodCurrent Special as of December 31,

Effective Date ayments 012

Solvency ugust 1, 2008 2,253 0.58Solvency ugust 1, 2009 185 1.58Solvency ecember31, 2009 802 2.00Solvency ecember 31, 2010 687 3.00

Solvency ovember 1, 2011 1,106 3.83Solvency ecember31, 2011 1,923 4.00Solvency ecember 31, 2012 1,150 5.00

Total $ 8,106

Total Special Payments $ 8,106Normal Cost (Credit) 232013 Funding Requirement Benefit Improvemen ts 8,129

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Minimum Req uired Em ployer Contributions Total

2014 Funding Requirements-Total Plan

In $000s Total Plan Benefits Original BenefitsBenefit

Improvements

Prescribed contributions 47,817 $ 47,817 $

Normal Cost (6) (6)Special Payments

Going-concernSolvency 766 766

Total 48,577 $ 47,817 $ 760

In respect of the Original Benefits, the Special Pension Agreement prescribes thecontributions required to be made for the four main pension plans in 2014, in lieu ofcontributions otherwise required under the general regulations to the O ntario P ensionBenefits Act. In particular, the Special Pen sion Agreem ent requires a total contribution of$70 million payable in 12 level monthly installments for the period January 1, 2014 toDecember 31, 2014 for the four main plans. The $70 million is allocated pro-rataaccording to the Adjusted Solvency De ficiency of the four main plans at D ecem ber 31,2013, subject to a m inimum allocation to e ach plan which is not less than their adjusted

normal cost. The adjusted normal cost is defined as T U where T equals thenormal cost and U is the lesser of the excess of market value of assets over goingconcern liabilities and the excess o f solvency ass ets over so lvency liabilities, if any. Thetotal contribution to be allocated to the four m ain plans w ill rema in at $70 million pa yablein 12 level monthly installments annually for the period January 1, 2011 throughDecem ber 31, 2015.

The S pecial Pension Ag reeme nt requires additional mon thly contributions for any benefitimprovements m ade to the plan. The a mou nt of the contribution is the am ount required

under the Ontario Pension Be nefits Act and the Gen eral Regulations thereof, determinedas if the benefit improvem ents alone w ere being provided by the pension plan.

Normal Cost represents the present value of benefits allocated to the current year ofservice under the actuarial funding m ethod used for the Plan for all active m em bers ofthe Plan on the basis of a going concern va luation. For all of the Benefit Improvem entsma de to the plan that are Cos t of Living Adjustme nts for retirees, there is no norma l cost.A small normal cost accompanies the October 31, 2011 Benefit Improvement thatrestored lockout service to active me mbe rs.

Max imum Permissible Em ployer Contributions

The m aximum permissible em ployer contribution for 2014 is $579,394,000, the sum of thewind-up unfunded liability determined as of December 31, 2013 plus the expected normal

t f 2014 Th C t t k t ib ti i f th i

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Actuarial Cost Certificate and O pinion

With respect to the Actuarial Valuation as at Decemb er 31, 2013of The U . S. Steel Canada Inc. Retirement Planfor USW Local 1005 Members at Hamilton WorksRegistration #0354 878

In our o pinion, for purpose s of this actuarial valuation report, the da ta is sufficient andreliable, the assu mptions are appropriate and the me thods em ployed in the valuation areappropriate.

The report has been prepared, and our opinion has been given, in accordance withaccepted actuarial practice. The actuarial valuation has been conducted in accordancewith the funding and solvency standards prescribed by the Pension Benefits Act(Ontario) and Regulation, and in conformity with requirements of Income Tax Act(Canada ) and R egulation. This actuarial opinion forms an integral part of the report.

Based on the results of this actuarial valuation report as of December 31, 2013, wecertify that in our opinion:

In respect of the O riginal Bene fits unde r the Plan:

1. The Plan does not have a prior year credit balance or prepaid contributionbalance.

2. In accordance w ith the Special Pension Agree me nt, the em ployer contribution tothe Plan in 2014 is equ al to $47,817,000, payable in twelve mo nthly installmentsfrom January 1, 2014 to Decem ber 31, 2014.

3. The employer's normal cost for 2014 is $2,543,000. No payment to the Plan isrequired in respect of the normal cost beyond the contribution requirementidentified above.

4. The P lan has an u nfunde d liability on a going-conce rn basis of $109,281,000 asof Decem ber 31, 2013.

5. The P lan has a s olvency deficiency of $572,248,000 as of Decem ber 31, 2013.

6. The solvency liabilities do not include the value of consent benefits other thanfunded consent benefits that may be contingent upon wind-up. The value ofthese e xcluded ben efits is $3,953,000.

In respect of the Bene fit Improvem ents under the P lan at Decem ber 31, 2013:

1 The e mploye r's no rmal cos t (credit) for 2014 is $(6 000)

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2. The Benefit Improvements under the plan are fully funded on a going concernbasis, with surplus in nom inal assets of $16,523,000 as of D ecem ber 31, 2013.

3. The Benefit Improvements under the plan would be fully funded on a solvency

basis with an additional $752,000 of plan assets as of December 31, 2013. Inorder to comp ly with the On tario Pension Be nefits Act, the unfunde d liability m ustbe liquidated by ann ual special paymen ts, payable 1/12 monthly.

4. Total 2014 annua l special payments, payable in eight equal m onthly installmen tsfrom Janu ary through August 2014, in respect of Benefit Improvem ents under thePlan a re $766,000.

In respect of the Total Plan :

1. The assessment base determined for the Pension Benefit Guarantee Fund(PBGF) is $568,020,000 and the assessment is $2,712,000 before sales tax.The PBGF liabilities are $2,137,412,000.

2. If the plan had been wo und up on the valuation date, the ma rket value of asse tswould have been $576,857,000 less than wind-up liabilities, with allowance forwind up expense s in the amoun t of $934,000.

3. The transfer ratio, as defined by the Regulation to the Pension Benefits Act(Ontario) is 73.3%.

4. The P lan has a n increme ntal solvency cost (credit) of $(5,890,000) for the periodstarting De cem ber 31, 2013 and ending at the next valuation at Dece mbe r 31,2014.

5. There is no excess surplus pursuant to S ection 147.2(2) of the Income Tax A ct(ITA).

6. The ITA permits the employer to make contributions up to the sum o f the normalcost and the wind-up unfunded liability, less the special payments made inrespect of periods since the valuation date. This ma ximum contribution level isallowed provided that at the time the contribution is ma de, all assum ptions ma dein this valuation rema in reason able an d the wind-up unfunde d liability still exists.As of the valuation date, the maximum permissible employer contributions for2014 are e stimated to be $579,394,000.

7. In accordance w ith the Re gulation to the Pension B enefits Act (Ontario), the nextactuarial valuation report should be prepared with a valuation date no t later thanDecem ber 31, 2014.

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The undersign s available to answer any questions with respect to this valuationreport.

iNormand Fri etteFellow, Socie y of ActuariesFellow, Cana dian Institute of Actuaries

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Reconciliation of Plan Ass ets - From December 31, 2012through December 31, 2013

BenefitTotal Plan Benefits riginal Benefits mprovements

$ ,459,950 $ ,393,777 $ 6,173

52,012 3,883 ,129

Appendix I

Plan Assets

This valuation report has relied on the audited financial statements of the Plan as ofDecember 31, 2013, audited by KPMG LLP. Assets have been allocated to BenefitImprovements according to requirements of the Special Pension Agreement.

Tests performed in review of the plan asset data include the following:

Comparison of the opening market value of assets disclosed in the auditedfinancial statements with the ending values disclosed in the most recent actuarialvaluation report.

Comparison of pension payments, contributions and expenses paid according tothe audited financial statements with expected payments, contributions, andexpenses specified in the most recent actuarial valuation report.

Consideration of all important changes in the composition of the funds invested.

Any anomalies or discrepancies discovered through testing, if any, have been resolved.

The asset data was reviewed for reasonableness and consistency and found to besufficient and reliable for the purposes of the valuation.

$

In $000sActuarial Value of Assets atDecember 31, 2012 (Same as MarketValue of Assets)

Company ContributionsInvestment Income / (Loss), net ofexpensesBenefit PaymentsChange in Actuarial Value of Assets

Actuarial Value of Assets atDecember 31, 2013

233,599 22,435 1,164(165,265) 159,299) 5,966)120,346 07,019 3,327

1,580,296 $ ,500,796 $ 9,500

Average Annualized Rate of Return 6.6%

The market value of assets for Benefit Improvements has been calculated based onactual contributions and expected benefit payments for this provision and proportionateinvestment earnings of the net Total Plan returns for the year. The market value ofassets for the Original Benefits has been determined as the difference in market valuesll d b h T l Pl d B fi I

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Appendix II

Plan Me mbership and B enefit Data

Tests have been a pplied for internal consistency, as well as for consistency with the dataused for the previous valuation. These tests we re applied to m em bership reconciliation,basic information (date o f birth, date of hire, date o f me mbe rship, gender, etc.), creditedservice, and pensions to retirees and other members entitled to a deferred pension.Lump sum payments and pensions to retirees were compared with correspondingam ounts reported in financial statem ents. The results of these tests were satisfactory.

Plan m em bership data is summ arized below for the current and prior year valuations.

VALUATION DATE 12131/2013 12/31/2012


Active MembersNumber 542 583Average years of pensionable service 18.5 17.7

Average age 48.2 47.4Normal Cost With Interest to Mid-Year $ ,537,000 $ ,679,000 With Interest to End of Year $ ,615,000 $ ,761,000

Transferred MembersNumber 104 121Average years of pensionable service 12.6 15.0Average age 47.6 47.7

Former Employees with Deferred Vested BenefitsNumber 241 254Annual pensions $ 99,000 $ 11,000Per capita annual pensions $ ,315 $ ,193Average age 58.8 58.7

Retired Members and BeneficiariesNum ber of retirees an d beneficiaries 8,451 8,610Number receiving bridge pensions 2,370 2,543

Annual pensions $ 38,216,000 $ 40,157,000Annual bridge pensions $ 4,416,000 $ 6,240,000Per capita annual pensions $ 6,355 $ 6,278Per capita annual bridge pensions $ 0,302 $ 0,319Average age 72.2 71.8

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Reconciliation of Membership, 2013 and 2012

The membership data was provided by U. S. Steel Canada Inc. and was reviewed forreasonableness and consistency and found to be sufficient and reliable for the purposesof the valuation. Below is a reconciliation of plan membership for 2013 and 2012.

Reconciliation of Membership 2013

ActiveMembers

TransferredMembers

DeferredPensioners

Pensionersand

Survivors TOTAL

Total at 12-31-2012 583 121 254 8,610 9,568

New Entrants

TerminationsDeferred pensions (13) (1) 14CV Transfers/refunds (6) (9) (15)Non-vested terminations -

Deathswith surviving spouse (2) (113) (115)no surviving spouse (2) (243) (245)new survivor pension 115 115

Retirements (20) (15) (17) 52

Adjustments/Data Corrections

Previously unreported pensioners 1 2 3Prior Year Duplicate (6) (6)E x-spouse spli t benefits 34 34T ransfer not in Plan (1) (1)

Transfers

Total at 12-31-2013 542 104 241 8,451 9,338

Change in counts (41) (17) (13) (159) (230)

Reconciliation of Membership 2012Active

MembersTransferred

MembersDeferred

Pensioners

Pensionersand

Survivors TOTAL

Total at 12-31-2011 661 116 303 8,736 9,816

New Entrants

TerminationsDeferred pensions (10) (1) 11 --CV Transfers/refunds 5 ) (3) (29) (37)Non-vested terminations (2) (2)

Deathsw ith surviving spouse (1) (116) (117)--no surviving spouse (2) (206) (208)new survivor pension 117 117

Retirements (40) (12) (28) 80

Adjustments/Data Corrections

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Appendix III

In $000s

2014 Contribution RequirementsAssuming Use of the General Regulation to the Ontario Pension Benefits Act

Hamilton

BargainingPlan

Lake Erie

BargainingPlan

HamiltonSalaried Plan

Lake ErieSalaried Plan Total

Total Members 9,338 1,311 3,276 441 14,366

Funded Status of Plans:Going-Concern Basis as ofDecember 31, 2013:Market Value of Assets $ ,500,796 $ 28,008 893,585 $ 55,684 $ ,778,073Actuarial liabilities (Original) 1,610,077 248,332 813,976 147,023 2,819,408

Unfunded Liability (109,281) (20,324) 79,609 8,661 (41,335)

Present Value of previously

established GC payments 109,281 20,324 (79,609) (8,661) 41,335New (unfunded liability)

Solvency Basis as of December31 2013:Market Value of Assets $ ,500,796 228,008 $ 93,585 $ 55,684 $ ,778,073Termination Expenses (934) (131) (328) (44) (1,437)

Solvency Assets 1,499,862 227,877 893,257 155,640 2,776,636

Solvency Liabilities (Original) 2,072,110 345,173 1,009,809 187,295 3,614,387

Subtotal - Solvency Deficit (572,248) (117,296) (116,552) (31,655) (837,751)

Present value of special payments over next 5 years

-going-concern3,934 10,937 104,871

-solvency 478,314 106,359 116,552 31,655 732,880

New solvency (deficiency)

2014 contribution requirements under General RegulationNormal Cost to midyear 2,543 $ ,853 $ ,977 $ ,379 $ ,752

Going-concern social payments:Effective December 31, 2008 28,223 28,223

Effective December 31, 2009 957 957Effective December 31, 2011 3,976 1,233 5,209

Effective December 31, 2012 205 205

Solvency speciaLpayments:Effective December 31, 2009 1,382 1,382Effective December 31, 2010 47,823 10,012 57,835

Effective December 31, 2011 79,288 16,389 36,905 7,528 140,110

Effective December 31, 2012 47,278 10,665 17,259 3,953 79,155

Total Minimum on Original Ben. 209,131 42,696 58,141 12,860 322,828

Benefit Improvements 760 233 993

Total Minimum Required $ 09,891 $ 2,929 $ 8,141 $ 2,860 $ 23,821

Notes

1) Estimated contribution requirements determined as if the plans were new plans as of December 31, 2005. The Initial Contribution to the plans as of

March 31, 2006 (as calculated under the Special Pens ion Agreem ent) was reflected in the December 31, 2005 financial position for determining

special payments.2) Unfunded go ing-concern liability special paymen ts are scheduled to be fully amortized within 15 years.

3) The solvency spe cial payment effective December 31, 2009 for the Lake Erie Bargaining Plan is scheduled to be fully amortized by Februa ry 28, 2014

due to actuarial gains in previous valuations.

For Informational purposes only. Actual contribution requirements for the plans are determined under the Special Pension Agreement.

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Appendix IV

Schedule of Active M embership Data

SCHEDULE O F ACTIVE ME MBERS HIP DA TA AS O F 12/31/2013DISTRIBUTED BY AGE A ND SERV ICE

Age

Service

0-4 5-9 10-14 15-19 20-24 25-29 30+ Total

< 20

20-24 2 0 0 0 0 0 0 2

25-29 11 7 0 0 0 0 0 18

30-34 13 32 3 0 0 0 0 48

35-39 8 26 25 0 0 0 0 59

40-44 6 17 26 2 0 0 0 51

45-49 24 18 22 1 5 0 1 71

50-54 8 17 11 0 4 32 65 13755-59 3 7 8 0 1 28 87 134

60-64 0 3 5 0 0 2 12 22

65+ 0 0 0 0 0 0 0 0

Total 75 127 100 3 10 62 165 542

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Appendix V

Actuarial Assum ptions and Methods

Actuarial Assum ptions and Methods Go ing Concern Basis

The assumptions and methods used in the going concern valuation are described below.If actual plan experience differs from the assumptions below, gains and losses will arise.Any changes to assumptions from the previous valuation are noted.

Decrement and other Actuarial Assumptions

Ongoing Discount Rate:

6.25% as of December 31, 2013 (6.25% as of December 31, 2012)

For the plan's asset trust, U. S. Steel Canada's investment strategy provides for adiversified mix of large and mid-cap equities, high quality corporate and government

bonds and selected smaller investments with a target allocation for plan assets of 65percent equities and 35 percent fixed income.

Actual Allocation at: 2/31/2013 12/31/2012Asset Class % of total % of total

Foreign Equities 48% 46%Canadian E quities 18% 19%Bonds 33% 34%All Other 1% 1%Total 100% 100%

UCF oversees the investment management of most non-Canadian equity holdings andplans to absorb other investment responsibilities in future years. Currently, the Planagreement reflecting the terms of the latest CBA with the USW does not allow forinvestment management or administrative expenses to be paid from the Plan's Trust.Therefore, no rate adjustments were made for adverse deviations or for investmentmanagement or administrative expenses.

In determining the discount rate, we have considered our own best estimate range oflikely returns for each asset allocation sector, together with the market outlook from theinvestment manager. Our best-estimate rate of return of 6.25% is within that range.

Mortality: UP 1994 Table with 1 year setback for males, projectedon a generational basis from 2007 using Scale AA

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updated to see if the mortality table used is stillappropriate.

Retirement Age: he following rates of retirement were assumed per100 em ployees for those eligible:

Act.

Age 60 Age 0 30 Years of With ore NormalWith At ith 15 or Service than 0Least 10 & ore Years fLess Than ears f Service15 Years of erviceService

47 16.0 8.548 16.0 8.5

49 16.0 8.550 16.0 8.551 16.0 8.552 16.0 8.553 16.0 8.554 16.0 8.555 17.7 10.656 20.5 11.057 22.5 12.2

58 24.5 14.259 30.0 16.960 2.0 4.6 30.0 20.061 2.0 9.4 30.0 23.562 4.0 37.5 60.8 55.263 4.0 23.1 51.6 34.764 4.0 17.6 44.4 32.265 51.266 33.3

67 33.368 33.369 33.370 100.0

In addition, if under 30 Years of Service but over Age55 with Age + Service at least 85, the retirementassum ption is 2.0 per 100 em ployees.

These rates were chosen off of retirement rates USSuses for its own Steelworker population in the U. S.Given the 30 year benefit structure, makeup andproximity of the plant populations to USS's ownsteelworkers, U. S. Steel believes these rates are m oreappropriate to use until a formal study can be

l t d f l ti t i d

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Withdrawal Rates: he following rates of pre-retirement withdrawal wereassumed per 100 employees (rates do not apply tothose eligible for retirement):

Aqe

Less Than 15 Years 5 or More Years

of Service f Service

5.0530 4.0 1.335 3.5 1.340 3.5 1.245 3.5 0.950 3.5 0.6

55 3.5 0.460 3.5 0.0

These rates were chosen from withdrawal rates USSuses for its own S teelworker population in the U. S.

Disability R ates: he following rates of disability were a ssum ed per 100

employees:Me Disabilities20 .0325 .0330 .0435 .0640 .1045 .1650 .3055 .5560 1.00

Disabled M ortality:

Marital Assumptions:

Future Iron-making Service:

GATT Pre-95 Disability Mortality set forward 1 year.

80 percent of employees eligible for death benefits areassumed to be married. Wives are assumed to bethree years younger than their husbands

The normal cost has been increased by 3% to reflectiron-making service accruals in the year following thevaluation

Economic A ssumptions

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Comm uted Value(Lump S um) Interest Rate: 3.9% per year for the first 10 years following D ecem ber

31, 2013, 5.2% per year thereafter (used for pre-retirement death benefits). These rates were derived

using the methodology described in the actuarialstandards of practice of the Canadian Institute ofActuaries using the 5 year average (from 1/1/2007 to1/1/2012) of the i7 and i L rates. The 5-year average isan es timate of the long-term rates.

Administrative Expen ses: o allowance is made for administrative expenses,since none are charged to the trust

Methods

Actuarial Cost: nit Credit

Actuarial Value of Assets: arket value of assets

Actuarial Assumptions and Methods Solvency Basis

The assum ptions a nd m ethods used in the Solvency valuation are described below andare for the most part prescribed by regulation. Any changes to assumptions from theprevious valuation are no ted.

Assumptions and Method

Comm uted Value(Lump Su m) Interest Rate:

Annuity Purchase Rate:

3.0% per year for the first 10 years following Dece m ber31, 2013, 4.6% per year thereafter (2.4% per year forthe first 10 years following December 31, 2012, 3.6%thereafter for the prior valuation).

3.80% per y ear (3.00% per y ear for the prior valuation).As per the April 26, 2014 Educational Note:Assumptions for Hypothetical Wind-up and Solvency

Valuations with effective dates between December 31,2013 and December 30, 2014, the duration used forthe purpose of determ ining the annuity purchase rate is9.93.

Blended Discount R ate: .79% per year use d to determine special payments on

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Marital Assumptions: am e as for going concern valuation

Termination Expenses: 934,000 ($100 pe r participant)

Actuarial Cost: resent Value of Accrued Benefits (Unit Credit

Method).

Actuarial Value of Assets: arket value of assets

Benefits Included:

Benefits Excluded:

Wind-up Valuation:

Bene fits valued on a wind-up basis as of the valuationdate. Mem bers whose a ge plus service total 55 on thevaluation date are assumed to retire at a retirementage which produced the greatest present value.Members ineligible to retire (under age 55 with lessthan 30 years of service) are entitled to deferredpension payable from age 65 or such earlier age forwhich plan eligibility requirements have been satisfiedas of Decem ber 31, 2013.

Mem bers whose age plus service total 55 or more m ay,with employer consent, grow into a special early

retirement basic retirement benefit and bridgesupplement at age 55 with 10 years of service. Wehave excluded these benefits for members who havenot yet me t these requirements at the valuation date

The assumptions and methods used to determine thewind-up liability are those described above for thesolvency valuation. he benefits excluded fromsolvency were included in the wind-up liabilities whichconsist of unfunded consent benefits. nfundedconsent benefit liabilities are the value for employeesgrowing into special early retireme nt bene fits that ma ybe granted at the option of U. S. Steel Canada to anemployee who has attained age 55 and has a t least 10years o f service.

Solvency Incremental Cost: The calculation adheres to the CIA guidance.Experience benefit payments to time t are developedusing the withdrawa l and retireme nt tables used for thegoing-concern calculations. The mortality table is thestatic mortality table UP 1994 Table with a 1 yearsetback for males that was developed in 2007 basedon ou r actual mo rtality experience for the yea rs 2004

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Appendix VI

Sum mary of Plan P rovisions

Introduction

This valuation is based o n the plan provisions in effect as of Dece mbe r 31, 2013, whichare summ arized below.

Eligibility

The P lan was closed to new entrants effective October 15, 2011. Prior to that date, eachfull-time bargaining unit employee who was a member of the USW union was

autom atically a m em ber of the Plan upon hire. No service is credited for period of lay-offfor lack of work.

Normal R etirement

Norma l retirement takes place on the last day of the mo nth in which the mem ber attainsage 65.

Early Retirement

Early retirement is permitted upon attaining age 60 with 10 years of service, aftercompletion of 30 years of service, or upon attaining age 55 with years of age plusservice totaling 85 or mo re. The mem ber's pension is calculated in the sam e way a s fornorma l retirem ent and reduced by 0.5% per m onth for each m onth, if any, by which theme mbe r's early retiremen t date precedes, age 62. In any event, no reduction will applyif the m em ber has 30 yea rs of service.

Special Early Retirement

A member who has attained age 55 with 10 years of service may be retired from theservice of the Com pany at the option o f the Company or at the request of the em ployeewith the consent of the Compa ny. The pension am ount is calculated in the same w ay asfor norma l retirem ent subject to a reduction of 0.25% per mo nth for each m onth, if any,by which the m em ber's early retirem ent date precedes the earliest of:

Attaining age 60;

Attaining a total of age plus se rvice of 80; or

Com pletion of 30 yea rs of service

Disability Retirement

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A Basic pension of $58.00 per month for each year of credited service, notexceeding 40 years; and

A S upplemental pension of $30.00 per m onth for each year o f credited service

not exceeding 30 years, reduced by the amount of the member's Old AgeSecu rity Pension and Can ada/Quebe c Pension Plan bene fits as determined atretirement.

Additional service credit of 20% is provided for each year, if any, in which a m em ber wasem ployed in the iron-making division.

Contributions

No em ployee contributions are required or perm itted to be m ade to the Plan.

Death Benefits

Before R etirementOn the dea th of a mem ber, prior to norma l retiremen t date, his spouse or ben eficiary isentitled to receive the com mu ted value of that portion o f the mem ber's vested accruedpension for service on or after January 1, 1987. However, on the death of a memberwho dies a fter completion o f 10 years of se rvice there will be paya ble to his spouse o r

bene ficiary a pension equal to 70% of the mem ber's accrued pen sion, without reductionfor early retirement.

After RetirementFor a mem ber without a spouse at the pension comm encemen t date, pension paymentswill be m ade for the lifetime of the mem ber, ceasing with the paym ent ma de in the monthof the mem ber's death.

A member with an eligible spouse at the pension commencement date will receive a

pension which will be equal to 95% of his normal pension. A reduced pension willcontinue to his spouse a fter his death, the reduced pension being 74.5% of the pensionthe mem ber was receiving. This benefit may be waived by the m ember and spou se.

Termination Benefits

On termination of service, the normal pension based on accrued credited service will befully vested and pa yable as a deferred life annu ity from age 65. A terminating m em bermay elect to have his deferred life annuity commence after attainment of age 55 andprior to age 65, in which event it will be reduced by 0.5% for each month betweencomm encement of pension and age 65.

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A member who terminates prior to being eligible for retirement, elects to defer hispension, and who has an eligible spouse at the pension comm enceme nt date will not beeligible for the 95% spousal pension option, but will instead be entitled to a 60% jointand su rvivor pension of actuarial equivalent value to a lifetime pension to the m em ber.

Cost of Living Adjustments

The current CBA provides for no further COLA adjustments to retiree pensions in thefuture.

Income Tax Act Lim itations

Benefits payable under the plan are subject to limitations resulting from regulationsunder the Income T ax Act.

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Appendix VII

Em ployer C ertification

U. S. Steel Canada Inc.Retirement Plan for USW Local 1005 Mem bersRegistration #0354878

I hereby certify that to the best of my know ledge and be lief:

1. The Plan P rovisions sum ma rized in Appen dix VI are com plete, accurate and up-to-date for the purpose of representing member benefit entitlements thatsignificantly affect the financial condition of the Plan;

2. The m embe rship data sum marized in Appendix II is complete and accurate for allpersons who are entitled or will become entitled to benefits under the Plan inrespect of service up to the da te of the valuation;

3. The asset information used in this valuation, as summarized in Appendix I, iscomplete and a ccurate; and

4. There have been no subseque nt events that would ma terially change the plan'sfinancial position since the valuation da te.

United States Steel Corporation

A-0Colleen M. DarraghGeneral Manager Benefits Analysis & AccountingComptroller United States Steel & Carnegie Pension Fund

Date77,JD1L1

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U. S. Steel Canad a Inc.RETIREMENT PLAN FOR SALAR IED EMPLOYEES ATHAMILTON WOR KS

Actuarial Valuation R eport as of Decem ber 31, 2013

Registration #0338509

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Table of Contents

1. Summary of Valuation Results

2. Comments on Summary of Valuation Results as at December 31, 2013

3. Financial Position of the Plan

4. PBGF Assessment 2

5. Funding Requirements 3

6. Actuarial Cost Certificate and Opinion 5

Appendix I: Plan Assets

Appendix II: Plan Membership and Benefit Data

Appendix III: 2014 Contribution of Requirements (Original Benefits) Under GeneralRegulation to the Ontario Pension Benefits Act

Appendix IV: Age Service Distribution of Active Members

Appendix V: Actuarial Assumptions and Methods

Appendix VI: Summary of Plan Provisions

Appendix VII: Employer Certification

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U. S. STEEL CANADA INC.Retirement Plan for Salaried Employees at Hamilton Works

SUMMARY OF VALUATION RESULTS ( 000s)

VALUATION DATE 12/3 1/ 2013 12./31/2012


Number of Members:Active members 192 197

Retired members and beneficiaries 3,021 3,084

Former employees with deferred Nested benefits 58 64

Transferred members 5 5

Total Members 3,2763,350

Annual pensions$ 9,172 $ 0,442

Annual bridge pensions $ ,050 $ ,987

Deferred annual pensions $ 09 $ 98

FUNDING

Market Value of Assets $ 93,585 $ 25,159

Going Concern Actuarial Liability 813,976 835,115

$ 9,609 $ 9,956)Going Concern Funding Excess / (Deficiency)% Funded - Ongoing Basis 109.8% 98.8%

Solvency Assets $ 93,257 $ 24,824Solvency Liability 1,009,809

1,133,711

$ 116,552) $ 308,887)Solvency Excess / (Deficiency)% Funded - Solvency Basis 88.5%

72.8%

FUNDING REQUIREMENTS 20142013

Prescribed contributions $ ,737 $ 4,189

Special payments for benefit improvements -

$ ,737 $ 4,189Total annual minimum contribution

PBGF Assessment (capped at $300 per Ontario member) $ 61 $ 54

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Com men ts on Summ ary of Valuation Results as of

Decem ber 31, 2013This report has been prepared for and at the request of U. S. Steel Canada Inc. (theCom pany or USS C ) and presents the actual results of the actuarial valuation of the

U. S. Steel Canada Inc. Retiremen t Plan for Salaried Em ployees at Ham ilton Wo rks (thePlan ) as of December 31, 2013. All dollar amounts referenced in this report are in

Cana dian dollars.

The purpose of the valuation is to determine:

The funded status of the Plan as at December 31, 2013 on going-concern,solvency and wind-up bases ;

The m inimum and m aximum funding requirements for 2014; and

To form part of the go vernme nt fil ings, as required by the F inancial ServicesComm ission of Ontar io ( FSC O ) and the Canada Revenue Agency ( CRA )for statutory and tax purposes.

The terms of our en gagem ent and these tasks were condu cted in accordance with theCan adian Institute of Actuaries Standards of Practice for Pen sion Plans (the Standa rdsof Practice ) and all relevant regulations in e ffect at Decembe r 31, 2013.

The next actuarial valuation of the Plan will be required as of a date not later thanDecem ber 31, 2014 or as at the date of an earlier ame ndm ent to the Plan, in accordancewith the requirements o f the regulations to theOntario Pension Benefits A ct.

Effective Octobe r 31, 2007, United States S teel ( U. S. S teel ) acqu ired Stelco Inc. As aresult of the acquisition, effective October 31, 2007,

Stelco Inc. was rena me d U. S. Steel Canada Inc.

The Plan was renamed as shown in this report from the Stelco Inc. andParticipating Employers R etirem ent Plan for Salaried Employee s at Ham ilton;and

Hamilton Steel GP Inc. was dissolved and ceased to be a participatingem ployer and transferred its obligations under the Plan to the Co mp any.

In conjunction with a 2006 Plan of Arrangement and Reorganization under theCom panies' Creditors Arrangemen t Act (CCAA) an d upon the acquisit ion of Stelco Inc.

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The U. S. Steel Canada Inc. Retirem ent Plan for USW Lo cal 1005 Mem bersat Ham ilton Works (the Ham ilton Hourly Plan ) Registration #0354878

The U. S. Steel Canada Inc. Retirem ent Plan for USW Lo cal 8782 Mem bersat Lake Erie Works, (the Lake Erie Hourly Plan ) Registration #0698761

The U. S. Steel Canada Inc. Retirement Plan for Salaried Employees atHam ilton Works, (the Ham ilton Salaried Plan ) Registration #0338509

The U. S. Steel Canada Inc. Retirement Plan for Salaried Employees at LakeErie Wo rks, (the Lake Erie Salaried Plan ) Registration #0698753

Key features of the funding arrangeme nt are as follows:

1. The election under S ection 5.1 of the regulations to theOntario Pens ion Benefits

Act which exem pts the plans from fun ding on a solvency ba sis, no longer appliesto the plans.

2. Contributions otherwise required under the general regulations to the Ontario

Pension Benefits Actare replaced by the following provisions for future years:

a. Level contributions, payable monthly, are allocated between the fourplans:

2008 2010 65.0 million per annum

2011 2015 70.0 million per annum

b.Additional contributions are required in respect of improvements(amendments) to plan benefits after December 31, 2005. Suchcontributions a re determined u nder the gene ral regulations to theOntario

Pension Benefits Act.

3. The Special Pension Agreement ends on December 31, 2015 or at an earlierdate if all four plans beco m e fully funded o n a solvency b asis (with respe ct to thebenefit provisions in e ffect at Decem ber 31, 2005).

The minimum contribution for the Plan for 2013 is $9,737,000. The maximumcontribution that the C om pany m ay m ake to the Plan in 2014 is $120,529,000 which isthe wind-up deficiency plus the normal cost. Contributions in excess of the minimumrequired are subject to required allocation between the four plans under the Special

Pension Agreem ent.

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As of Decem ber 31, 2013 there have been no bene fit improvem ents in the Plan.

At December 31, 2013, the going-concern valuation discount rate is 6.25%. Forsolvency calculations a s of Dece mbe r 31, 2013, comm uted value rates of 3.0% for thefirst 10 years and 4.6% for all years thereafter were used as well as annuity purchaserates of 3.8%. See Appendix V for all other important assumptions relative to thevaluations.

For Plan assets, this valuation report has relied on the audited financial statements ofthe Plan as of Decem ber 31, 2013, audited by KPM G LLP.

Pension fund assets are held in trust by CIBC Mellon and invested in a diversifiedportfolio managed by several managers, including United States Steel & CarnegiePension Fund ( UCF ), in accordance with the investment policy. (With U. S. SteelCorporation's purchase of US SC and ad option of its benefit plans, the Board of Directorsof USSC delegated authority for certain administrative responsibilities for the plans,including this Plan, to UCF, subject to the ongoing oversight of USSC as sponsoringem ployer and a dministrator.) UCF took over the investme nt responsibili ties for mos t ofthe Plan's non-Ca nadian equ ity holdings.

The solvency a nd wind u p assum ptions w ere updated to reflect market conditions at thevaluation date. The assumption for wind-up expenses is $100 per participant, whichreflects that the majority of the tasks required to wind-up the plan would be doneinternally at a m uch lower cost than if performed by an outside vendor.

During the fourth quarter of 2013, a decision w as m ade to reduce the n on-representedstaff at U. S. Steel Cana da. As a resu lt, a curtailmen t is included in the going-conce rnliability whereby all affected employe es w ill retire or term inate within the next two years.We are unaw are of any subseque nt events from Decem ber 31, 2013, to the date of thisreport that would influence the valuation results shown here. The information containedin this report was prepared for the Company for its internal use and for filing with theFinancial Services Comm ission of On tario and with the Can ada Re venue Agen cy and isnot intended to be used for other purposes.

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Financial Position Going Con cern Valuation

The financial position of the Plan on a going concern basis is determined by comparingthe actuarial value of assets to the actuarial accrued liability. The Special PensionAgreement requires the Plan to use the actual market value of net assets as theactuarial value of assets for the Plan.

In $000sAssumptions for Funded Status

Going Concern Position


Position:Going-Concern Rate 6.25% 6.25%

Normal Cost (with expenses) to EOY 4,099 3,961

Expected Benefit Payments 75,206 77,174

Funded Status Position:Actuarial Value of Assets 893,585 825,159

(Actual Market Value)

Actuarial Accrued LiabilitiesActive Mem bers $ 77,552 $ 69,838

Transferred Members 975 955

Pensioners and Su rvivors 733,841 762,837

Deferred Vesteds 1,608 1,485Total Actuarial Accrued Liabilities $ 813,976 $ 835,115

Funding Excess / (Deficiency) $ 79,609 $ (9,956)

% Funded Ongoing Basis 109.8% 98.8%


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Financial Position Wind-Up

The wind-up liabilities are equal to the solvency liabilities since the Plan does not haveany consent benefits.

Wind-Up Position

December 31, 2013 December 31, 2012In $000s

Total Sollency Liabilities $ ,009,809 $ ,133,711Consent Benefits Not In SolvencyLiabilitiesTotal Wind-up Liabilities 1,009,809 1,133,711

SoKency Assets 893,257 824,824Wind-up Excess / (Deficiency) $ 116,552) $ 308,887)

Transfer Ratio (Market Value of Assets /Wind-up Liabilities) 88.5% 72.8%

The Plan's transfer ratio is determined by dividing the market value of assets by thewind-up liabilities. As of December 31, 2013, the Plan has a transfer ratio of 0.885.

Because the transfer ratio of the Plan is less than 1.0, the Plan can pay out only 88.5%of the commuted value of a benefit payable on termination or death, unless the

Company makes an additional contribution equal to 11.5% of the commuted value tocover the shortfall. This shortfall is referred to as the transfer deficiency'. However,commuted values may be paid in full without requirement to cover the transfer deficiencyif the sum of all transfer deficiencies made since the date of the last actuarial review isless than 5% of the market value of assets as of December 31, 2013 (or $44,679,000).This is equivalent to the sum of all commuted values being less than $388,515,000).

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It should be noted that the results of this valuation are presented at a single point in time.Both the going concern and solvency funded positions of the Plan can change with timeand the potential for such variations must be borne in mind when using this report as aguide for the funded positions, now or in the future.

This section provides details on the sensitivity of the valuation results to an increase ordecrease of 1% (i.e. 100 basis points) to our current discount rate assumptions.

In $000sLiabilities



Actuarial Accrued Liabilities $ 813,976 $ 835,115Normal Cost (with expenses) to EOY 4,099 3,961Solvency Liabilities 1,009,809 1,133,711

- 1% change on ratesActuarial Accrued Liabilities 887,348 911,808

Normal Cost (with expenses) to EOY 4,425 4,302Solvency Liabilities 1,116,064 1,263,471

+ 1% change on ratesActuarial Accrued Liabilities 751,108 769,577Normal Cost (with expenses) to EOY 3,831 3,684Solvency Liabilities 920,385 1,025,679

Effect of -1% changeActuarial Accrued Liabilities 73,372 76,693

Normal Cost (with expenses) to EOY 326 341Solvency Liabilities 106,255 129,760

Effect of +1% changeActuarial Accrued Liabilities (62,868) (65,538)Normal Cost (with expenses) to EOY (268) (277)

Solvency Liabilities (89,424) (108,032)

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Rec onciliation of Funded Status - Going Co ncern BasisThe go ing concern funding excess is $79,609,000 at Decem ber 31, 2013. The previousvaluation's deficit decreased by $89,565,000 and changed to an excess primarily due tohigher than expected investment returns (actual return of $132,093,000 compared withan expected return of $49,613,000) and favorable change s asso ciated w ith the n aturalmaturation of the Plan. The retirement, termination and mortality decrement experiencegains were not significant.

In $000s

Reconciliation of Funded Status on a Going Concern BasisDecember 31, 2013 December 31, 2012

Funding Excess / (Deficiency) Beginning of Year $ (9,956) (31,385)

Interest on surplus (unfunded liability) (622) (2,040)Special Payments 10,346 10,768Change in actuarial assumptions - (17,339)Investment Expenence 82,480 29,071Retirement Experience 1,161 399Mortality Experience 313 1,323Withdrawal Experience 33 (57)Salary Experience (659) (571)Curtailment (3,894)All other Sources 407 (125)

Funding Excess / (Deficiency) End of Year $ 79,609 $ (9,956)

Discount Rate 6.25% 6.25%Funded Status Ratio at End of Year 109.8% 98.8%

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$ 14,102,000BGF Assessment Base

Development of PBGF Assessment Fees:

As % PBGF Liabilities at December 31, Threshold - % ofThreshold or ExcessLiabilities over Assess. Base % Charge

99,151,30014,950,700

2013- On 10% o f Total- On 10% of Total- On 20% of Total

99,151,300 $99,151,300

198,302,600

0.50% $ 95,7571.00% 49,5071.50%

PBG F A ssessmen t for 2014 (In Dollars)

There is an annual assessment payable for Ontario Plan Beneficiaries to the GuaranteeFund pursuant to the Pension Benefits Act (Ontario).

The PBGF Assessment Base shown below is to be used for annual filing purposes untila new actuarial report is filed:

PBGF Assessment Base:PBGF Liabilities at December 31, 2013 91,513,000

(Solvency Liabilities in respect of Ontario members)

Ontario Asset Ratio Assumed 8.19%

Market Value of Assets at December 31, 2013 77,411,000(Ontario Portion of the fund)I

Plus $5 per Ontario Plan Beneficiary 5,670Preliminary PBGF Calculation 60,934

PBGF Cap on Assessment at $300 per Member 40,200

PBGF Assessment Equals Minimum of Preliminary PBGF Calculation or Cap and thisassessment must be at least $250 60,934Retail Sales Tax at 8% 2,875Total Annual PBGF Assessment Fee 13,808

I The assets reported for the PBGF assessment do not include the termination expenses.

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Em ployer Con tributions - Original Benefits & Total Plan

HamiltonIn $000s argaining Plan

Lake ErieBargaining Plan

HamiltonSalaried Plan

Lake ErieSalaried Plan Total

Total Members ,338 1,311 3,276 441 14,366

Allocation of 2014 Prescribed Contributions - Original BenefitsGoing-Concern Basis as ofDecember 31 2013:Market Value of Assets ,500,796 $ 28,008 $ 93,585 $ 55,684 $ ,778,073Actuarial liabilities (Original) ,610,077 248.332 813,976 147,023 2,819,408Unfunded Liability 109,281) $ 20,324) $ 9,609 $ ,661 $ 41.335)

Solvency Basis as ofDecember 31, 2013:Market Value of Assets ,500,796 $ 28,008 $ 93,585 $ 55,684 $ ,778,073Termination Expenses' 934) (131) (328) (44) (1,437)Solvency Assets ,499,862 227,877 893,257 155,640 2.776,636

Solvency Liabilities (Original) .072.110 345.173 1.009.809 187.295 3.614,387Solvency Deficiency 572,248) $ 117,296) $ 116,552) $ 31,655) $ 837,751)

Allocation of Contributions for Year 2014:Initial allocation pe rcentage 8.31% 14.00% 13.91% 3.78% 100.00%Initial allocation of prescribed

contribution 7,817 9,800 9,737 $ ,646 $ 0,000

Check for Minimum Limitation:2014 normal cost to midyear*** ,543 1,853 3,977 $ ,379 $ ,752

Affected plan o No No No

Total Plans' Funded Status, including Original 8 Benefit Improvement LiabilitiesGoing-Concern Basis as ofDecember 31 2013:Market Value of Assets $ ,580,296 $ 37,477 $ 93,585 $ 55,684 $ ,867,042Actuarial liabilities 1.673,054 254,691 813,976 147.023 2,888,744Unfunded Uability $ 92,758) $ 17,214) $ 9,609 $ ,661 $ 21,702)% Funded Ongoing Ba sis 94.5% 93.2% 109.8% 105.9% 99.2%

Solvency Basis as ofDecember 31 2013:Market Value of Assets $ ,580,296 $ 37,477 $ 93,585 $ 55,684 $ .867.042Termination Expenses' (934) (131) (328) (44) (1,437)Solvency Assets 1.579,362 237,346 893,257 155,640 2,865,605

Solvency L iabilities 2,152,362 354.861 1,009,809 187,295 3.704,327Solvency Deficiency $ 573,000) $ 117,515) $ 116,552) $ 31,655) $ 838,722)

% Funded Solvency Basis 73.4% 66.9% 88.5% 83.1% 77.4%

Total 2014 Minimum Contribution - Prescribed and Benefit Improvements

Annual Prescribed Contribution $ 7,817 $ ,800 9,737 $ ,646 $ 0,000Benefit Improvements 760 233 993Total Minimum Required in 2014(payable 1/12 m onthly)

$ 8,577 10,033 9,737 $ .646 $ 0,993

Termination expense = $0.1 per participant.

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Minimum Required Em ployer Contributions

FundingRequirements

Year 2014

FundingRequirements

Year 2013In $000sPrescribed contributions

Normal Cost 3,977 3,843Other Allocated 5,760 10,346

Total 9,737 14,189

In respect of the Original Benefits, the Special Pension Agreement prescribes thecontributions required to be made for the four main pension plans in 2014, in lieu ofcontributions otherwise required u nder the ge neral regulations to the O ntario P ensionBene fits Act. In particular, the S pecial Pension Agreem ent requires a total contributionof $70 million pa yable in 12 level mon thly installme nts for the period Janu ary 1, 2014 toDecember 31, 2014 for the four main plans. The $70 million is allocated pro-rataaccording to the Adjusted Solvency De ficiency of the four main plans at De cembe r 31,2013, subject to a m inimum allocation to e ach plan which is not less than their adjustednormal cost. The adjusted normal cost is defined as T' U where T equals thenormal cost and U is the lesser of the excess of market value of assets over goingconcern liabilities and the excess of solvency assets o ver solvency liabilities, if any. Thetotal contribution to be allocated to the four m ain plans w ill rema in at $70 million payablein 12 level monthly installments annually for the period January 1, 2015 throughDecember 31, 2015.

The Sp ecial Pension Agreem ent requires additional monthly contributions for any benefitimproveme nts made to the plan. There were no bene fit improvements made to the Plansince Decem ber 31, 2005.

Normal Cost represents the present value of benefits allocated to the current year ofservice un der the actuarial funding method u sed for the Plan for all active m em bers ofthe Plan on the basis of a going concern va luation.

Max imum Permissible Em ployer ContributionsThe m aximum permissible em ployer contribution for 2014 is $120,529,000, the sum of thewind-up unfu nded liability revealed as o f Decem ber 31, 2013 plus the expected n orm alcost for 2014. The Company must not make contributions in excess of the maximumpermissible am ounts, as this may cau se the Plan to be revoked of i ts registered statusunder the Income Tax A ct.

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Actuarial Cost C ertificate and Op inion

With respect to the Actuarial Valuation as at December 31, 2013of The U . S. Steel Canada Inc. Retirement Planfor Salaried Em ployees at Hamilton Work sRegistration #033850 9

In our opinion, for purpose s of this actuarial valuation repo rt, the data is sufficient andreliable, the assu mptions are appropriate and the me thods em ployed in the valuation areappropriate.

The report has been prepared, and our opinion has been given, in accordance withaccepted actuarial practice. The actuarial valuation has been conducted in accordancewith the funding and solvency standards prescribed by the Pension Benefits Act(Ontario) and Regulation and in conformity with requirements of Income Tax Act(Canad a) and R egulation. This actuarial opinion form s an integral part of the report.

Based on the results of this actuarial valuation report as of December 31, 2013, wecertify that in our opinion:

1. The Plan does not have a prior year credit balance or prepaid contributionbalance.

2. In accordance with the Special Pension A greem ent, the employer contribution tothe Plan in 2014 is equal to $9,737,000, paya ble in twelve m onthly installm entsfrom Janua ry 1, 2014 to Decem ber 31, 2014.

3. The employer's normal cost for 2014 is $3,977,000. No payment to the Plan isrequired in respect of the normal cost beyond the contribution requirementidentified above.

4. The Plan has a funded excess on a going-concern basis of $79,609,000 as ofDecem ber 31, 2013.

5. The Plan has an incremental solvency cost of $679,000 between the periodstarting De cemb er 31, 2013 and the next valuation at Decem ber 31, 2014.

6. The P lan has a solvency deficiency and wind-up deficiency of $116,552,000 asof Decem ber 31, 2013.

7. The transfer ratio, as defined by the Regulation to the Pension Benefits Act(Ontario) is 88.5%.

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If the plan had been wound up on the valuation date, the market value of assetswould have been $116,552,000 less than wind-up liabilities, with allowance for

wind up expenses in the amount of $328,000.10. There is no excess surplus pursuant to Section 147.2(2) of the Income Tax Act

(ITA).

11. The ITA permits the employer to make contributions up to the sum of the normalcost and the wind-up unfunded liability, less the special payments made inrespect of periods since the valuation date. The maximum contribution level isallowed provided that the time the contribution is made, all assumptions made in

this valuation remain reasonable and the wind-up unfunded liability still exists.As of the valuation date, the maximum permissible employer contributions for2014 are estimated to be $120,529,000.

12. In accordance with the Regulation to the Pension Benefits Act (Ontario), the nextactuarial valuation report should be prepared with a valuation date not later thanDecember 31, 2014.

13. We are unaware of any subsequent events since the completion of this valuation

that would have a material effect on the results of this report.

The under signed is available to answer any questions with respect to this valuationreport.

Normand FrenetteFellow, Society of ActuariesFellow, Canadian Institute of Actuaries

Date

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Appendix I

Plan Assets

This valuation report has relied on the audited financial statements of the Plan as ofDecember 31, 2013, audited by KPMG LLP.

Tests performed in review of the plan asset data include the following:

Comparison of the opening market value of assets disclosed in the audited

financial statements with the ending values disclosed in the most recent actuarialvaluation report.Comparison of pension payments, contributions and expenses paid according tothe audited financial statements with expected payments, contributions andexpenses specified in the most recent actuarial valuation report.Consideration of all important changes in the composition of the funds invested.

Any anomalies or discrepancies discovered through testing, if any, have been resolved.The asset data was reviewed for reasonableness and consistency and found to be

sufficient and reliable for the purposes of the valuation.

In $000sActuarial Value of Assets atBeginning of Year (Same as Market

Reconciliation of Plan Assets


Value of Assets) 825,159 809,614

Company Contributions 14,189 14,590Year-end transfers 34 1,244Investment Income / (Loss), net of

expenses 132,093 79,645Benefit Payments (76,438) (78,444)Administrative Expenses (1,452) (1,490)Change in Actuarial Value of Assets 68,426 15,545

Actuarial Value of Assets atEnd of Year 893,585 825,159

Average Annualized Rate of Return 16.7% 10.2%

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Appendix II

Plan Membership and Benefit Data

Tests have b een a pplied for internal consistency, as we ll as for consistency with the dataused for the previous valuation. These tests were applied to membership reconciliation,basic information (date of birth, date of hire, date of membership, gender, pensionableearnings, etc.), credited service, and pensions to retirees and other members entitled toa deferred pension. Lump sum payments and pensions to retirees were compared withcorresponding amounts reported in financial statements. The results of these tests were

satisfactory. During the fourth quarter of 2013, a decision was made to reduce the non-represented staff at U. S. Steel Canada. As a result, all affected employees (labeledlayoff in the table) will retire or termina te within the next two years.

Plan membership data is summarized in the tables below for the current and prior yearvaluations

VALUATION DATE 12131 / 2013 12/31/2012


Active MembersNumber 192 197

Layoff 85 -Other 107 -

Total pensionable earnings $ 7,261,000 $ 6,949,000Layoff 7,371,000 -Other 9,890,000 -

Per capita total pensionable earnings $ 9,901 86,036Layoff 86,718 -Other 92,430 -

Average years of pensionable service 27.0 25.9Layoff 28.9 -Other 25.6 -

Average age 55.9 55.0Layoff 57.3 -Other 54.8 -

Normal Cost (both groups) With Interest to Mid-Year $ ,477,000 $ ,343,000 With Interest to End of Year $ ,553,000 $ ,415,000 With Interest to End of Year and Administrative Expenses $ ,099,000 $ ,961,000

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Plan Membership and Benefit Data Continued

VALUATION DATE 12/31/2013 12/31/2012


Transferred MembersNumber 5 5Total pensionable earnings $ 85,000 $ 85,000

Per capita total pensionable earnings $ 6,937 $ 6,937Aierage years of pensionable ser'ace 15.8 15.8AErage age 56.1 55.0

Former Employees with Deferred Vested BenefitsNumber 58 64Annual pensions $ 09,000 $ 98,000Per capita annual pensions $ ,608 $ ,091Average age 57.6 57.3

Retired Members and BeneficiariesNumber of retirees and beneficiaries 3,021 3,084Number receiving bridge pensions 681 778Annual pensions $ 9,172,000 $ 0,442,000Annual bridge pensions 6,050,000 6,987,000Per capita annual pensions $ 2,897 $ 2,841Per capita annual bridge pensions 8,884 $ ,981Ai.erage age 73.6 73.1

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Reconciliation of Membership, 2013 and 2012The membership data was provided by U. S. Steel Canada Inc. and was reviewed for

reasonableness and consistency and found to be sufficient and reliable for the purposesof the valuation. Below is a reconciliation of plan membership for 2013 and 2012.


ActiveMembers

TransferredMembers

DoforrodPensioners

Pensionersand

Survivors TOTAL

Total at 12-31-2012 197 5 64 3,084 3,350

Transfers in:from Lake Erie Sal Plan

TerminationsDeferred pensions (1)CV Transfers/refundsNo n-vested terminations

Deathswith surviving spouse (1) (44) (45)no surviving spouse (83) (83)new survivor pension 45 45

Retirements (5) (6) 11Adjustments/Data Corrections

Ex-spouse split benefits 8 8

Transfersto Lake Erie Sal Plan (1) (1)

Total at 12-31-2013 192 5 58 3,021 3,276Change in counts (5) (6) (63) (74)


ActiveMembers

TransferredMembers

DeferredPensioners

Pensionersand

Survivors TOTAL

Total at 12-31-2011 204 6 67 3,167 3,444

Transfers in:from Lake Erie Sal Plan

Terminations

D eferred pensionsCV Transfers/refunds (1) (1)Non-lasted terminations

Deathswith sumiving spouse (43) (43)no surviving spouse (97) (97)

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Appendix III2014 Contribution Requirements

Assuming Use of tho General Regulation to the Ontario Pension Benefits Act

In $000s

Hamilton ake ErieBargaining argaining

Plan lanHamilton

Salaried PlanLake Erie

Salaried Plan Total

Total Members 9,338 1,311 3,276 441 14,366Funded Status of Plans:Going-Concern Basis as ofDecember 31, 2013:Market Value of Assets $ ,500,796 228,008 893.585 155,684 $ .778.073Actuarial liabilities (Original) 1,610,077 248,332 813,976 147,023 2.819.408Unfunded Liability (109,281) (20.324) 79,609 8,661 (41.335)

Present Value of previouslyestablished GC payments 109,281 20.324 129,605New (un funded liability)

Solvency Basis as of December31 2013:Market Value of Assets $ ,500,796 228,008 893,585 155,684 $ ,778,073Terminat ion Expenses (934) (131) (328) (44) (1.437)Solvency Assets 1,499,862 227,877 893,257 155,640 2,776,636Solvency L iabilities (Onginal) 2,072,110 345,173 1,009,809 187,295 3,614,387Subtotal - Solvency D eficit 572,248) (117,296) (116,552) (31,655) (837,751)

Present value of special payments over next 5 years

-going-concern 93.934 10,937 104,871-solvency 478.314 106,359 116.552 31.655 732,880New solvency (deficiency)

2014 contribution requirements under General RegulationNormal Cost to midyear 2,543 1,853 3.977 1,379 9,752Going-concern special paymentsEffect ive De

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US Steel Application Record Part II

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