Marathon Oil Corporation - SEC Filing



<PAGE> 1

                                    FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

(Mark One)

      [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
                                        
                For the Quarterly Period Ended September 30, 2000
                                        
                                       or
                                        
      [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

           For the transition period from ------------ to ------------
                                        
                                        
                                 USX CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                  1-5153                 25-0996816
       ---------------            ------------         -------------------
       (State or other            (Commission             (IRS Employer
       jurisdiction of            File Number)         Identification No.)
        incorporation)

600 Grant Street, Pittsburgh, PA                            15219-4776
---------------------------------------                     ----------
(Address of principal executive offices)                    (Zip Code)

                                 (412) 433-1121
                         ------------------------------
                         (Registrant's telephone number,
                              including area code)


--------------------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes..X..No.....

Common stock outstanding at October 31, 2000 follows:

               USX-Marathon Group       - 310,455,772 shares
               USX-U. S. Steel Group    -  88,767,023 shares


<PAGE> 2

                                 USX CORPORATION
                                  SEC FORM 10-Q
                        QUARTER ENDED September 30, 2000
                        --------------------------------

                                     INDEX                        Page
                                     -----                        ----

PART I - FINANCIAL INFORMATION

   A.  Consolidated Corporation


       Item 1. Financial Statements:

               Consolidated Statement of Operations                  4

               Consolidated Balance Sheet                            6

               Consolidated Statement of Cash Flows                  8

               Selected Notes to Consolidated
                 Financial Statements                                9

               Ratio of Earnings to Combined Fixed Charges
                 and Preferred Stock Dividends and Ratio of
                 Earnings to Fixed Charges                          22


       Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of
                 Operations                                         23


       Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                        32

               Financial Statistics                                 35

   B.  Marathon Group


       Item 1. Financial Statements:

               Marathon Group Statement of Operations               36

               Marathon Group Balance Sheet                         37

               Marathon Group Statement of Cash Flows               38

               Selected Notes to Financial Statements               39


       Item 2. Marathon Group Management's Discussion and
                 Analysis of Financial Condition and
                 Results of Operations                              49


       Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                        60

               Supplemental Statistics                              63

<PAGE> 3

                                 USX CORPORATION
                                  SEC FORM 10-Q
                        QUARTER ENDED September 30, 2000
                        --------------------------------

                                     INDEX                        Page
                                     -----                        ----

PART I - FINANCIAL INFORMATION (Continued)

   C.  U. S. Steel Group


       Item 1. Financial Statements:

               U. S. Steel Group Statement of Operations            64

               U. S. Steel Group Balance Sheet                      65

               U. S. Steel Group Statement of Cash Flows            66

               Selected Notes to Financial Statements               67


       Item 2. U. S. Steel Group Management's Discussion
                 and Analysis of Financial Condition
                 and Results of Operations                          76


       Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                        85

               Supplemental Statistics                              88


PART II - OTHER INFORMATION



Item 1.        Legal Proceedings                                    89


Item 5.        Other Information                                    92


Item 6.        Exhibits and Reports on Form 8-K                     93

<PAGE> 4


Part I - Financial Information

   A.  Consolidated Corporation

<TABLE>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                ------------------------------------------------
<CAPTION>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                            <C>      <C>    <C>      <C>
REVENUES:
 Sales                                         $10,621  $7,827 $30,425  $20,636
 Dividend and affiliate income (loss)               46     (39)     81      (28)
 Net gains (losses) on disposal of assets            7       5     129       (8)
 Gain on ownership change in Marathon Ashland
  Petroleum LLC                                      1      11       9       11
 Other income                                       18       9      31       22
                                                ------  ------  ------   ------
   Total revenues                               10,693   7,813  30,675   20,633
                                                ------  ------  ------   ------
COSTS AND EXPENSES:
 Cost of sales (excludes items shown below)      8,198   5,896  23,324   15,260
 Selling, general and administrative expenses       95      60     233      149
 Depreciation, depletion and amortization          310     297     949      906
 Taxes other than income taxes                   1,250   1,121   3,650    3,269
 Exploration expenses                               51      40     142      162
 Inventory market valuation credits                  -    (136)      -     (551)
                                                ------  ------  ------   ------
   Total costs and expenses                      9,904   7,278  28,298   19,195
                                                ------  ------  ------   ------
INCOME FROM OPERATIONS                             789     535   2,377    1,438
Net interest and other financial costs              80      92     267      266
Minority interest in income of Marathon Ashland
 Petroleum LLC                                     115     148     373      405
                                                ------  ------  ------   ------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY
 LOSSES                                            594     295   1,737      767
Provision for estimated income taxes               454      94     877      267
                                                ------  ------  ------   ------
INCOME BEFORE EXTRAORDINARY LOSSES                 140     201     860      500
Extraordinary losses on extinguishment of debt,
 net of income tax                                   -       2       -        7
                                                ------  ------  ------   ------
NET INCOME                                         140     199     860      493
Dividends on preferred stock                         2       2       6        7
                                                ------  ------  ------   ------
NET INCOME APPLICABLE TO COMMON STOCKS            $138    $197    $854     $486
                                                ======  ======  ======   ======





<FN>
Selected notes to financial statements appear on pages 9-21.
</TABLE>


<PAGE> 5

<TABLE>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
          CONSOLIDATED STATEMENT OF OPERATIONS (Continued) (Unaudited)
                             INCOME PER COMMON SHARE
          ------------------------------------------------------------
<CAPTION>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions, except per share amounts)  2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                              <C>     <C>     <C>      <C>
APPLICABLE TO MARATHON STOCK:

 Net income                                       $121    $230    $742     $483
   - Per share - basic                             .38     .74    2.38     1.56
            - diluted                              .38     .74    2.37     1.56

 Dividends paid per share                          .23     .21     .65      .63

 Weighted average shares, in thousands
   - Basic                                     311,847 309,392 312,068  309,160
   - Diluted                                   312,094 309,810 312,272  309,491

APPLICABLE TO STEEL STOCK:

 Income (loss) before extraordinary losses         $17    $(31)   $112      $10
   - Per share - basic and diluted                 .19    (.35)   1.27      .12

 Extraordinary losses, net of income tax             -       2       -        7
   - Per share - basic and diluted                   -     .02       -      .08

 Net income (loss)                                 $17    $(33)   $112       $3
   - Per share - basic and diluted                 .19    (.37)   1.27      .04

 Dividends paid per share                          .25     .25     .75      .75

 Weighted average shares, in thousands
   - Basic                                      88,738  88,394  88,554   88,383
   - Diluted                                    88,738  88,394  88,556   88,385


















<FN>
Selected notes to financial statements appear on pages 9-21.
</TABLE>


<PAGE> 6

<TABLE>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     CONSOLIDATED BALANCE SHEET (Unaudited)
                    ----------------------------------------
<CAPTION>                                        
                                     ASSETS
                                                   September 30 December 31
(Dollars in millions)                                  2000         1999
--------------------------------------------------------------------------------
<S>                                                <C>          <C>
ASSETS

Current assets:
  Cash and cash equivalents                             $171          $133
  Receivables, less allowance for doubtful
   accounts of $16 and $12                             3,035         2,706
  Inventories                                          2,886         2,627
  Deferred income tax benefits                           316           303
  Other current assets                                   269           218
                                                      ------        ------
     Total current assets                              6,677         5,987

Investments and long-term receivables,
 less reserves of $3 and $3                            1,355         1,237
Property, plant and equipment, less accumulated
 depreciation, depletion and amortization of
 $17,242 and $16,799                                  12,718        12,809
Prepaid pensions                                       2,850         2,629
Other noncurrent assets                                  270           300
                                                      ------        ------
     Total assets                                    $23,870       $22,962
                                                      ======        ======


























<FN>
Selected notes to financial statements appear on pages 9-21.
</TABLE>


<PAGE> 7

<TABLE>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
               CONSOLIDATED BALANCE SHEET (Continued) (Unaudited)
               --------------------------------------------------
<CAPTION>                                        
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                   September 30 December 31
(Dollars in millions)                                  2000         1999
--------------------------------------------------------------------------------
<S>                                                <C>          <C>
LIABILITIES

Current liabilities:
  Notes payable                                          $65            $-
  Accounts payable                                     3,515         3,440
  Payroll and benefits payable                           501           468
  Accrued taxes                                          305           283
  Accrued interest                                        64           107
  Long-term debt due within one year                     709            61
                                                      ------        ------
     Total current liabilities                         5,159         4,359

Long-term debt, less unamortized discount              3,128         4,222
Deferred income taxes                                  2,366         1,839
Employee benefits                                      2,818         2,809
Deferred credits and other liabilities                   652           691
Preferred stock of subsidiary                            250           250
USX obligated mandatorily redeemable convertible preferred
 securities of a subsidiary trust holding solely junior
 subordinated convertible debentures of USX              183           183

Minority interest in Marathon Ashland Petroleum LLC    1,922         1,753

STOCKHOLDERS' EQUITY

Preferred stock -
  6.50% Cumulative Convertible issued - 2,421,987 shares
    and 2,715,287 shares ($121 and $136 liquidation
    preference, respectively)                              2             3
Common stocks:
  Marathon Stock issued - 312,165,978 shares and
   311,767,181 shares                                    312           312
  Steel Stock issued - 88,767,395 shares and
   88,397,714 shares                                      89            88
  Securities exchangeable solely into Marathon Stock
   issued - 281,539 shares and 288,621 shares              -             -
Treasury common stock, at cost -
  Marathon Stock 1,397,400 shares and -0- shares         (37)            -
Additional paid-in capital                             4,675         4,673
Deferred compensation                                     (8)            -
Retained earnings                                      2,392         1,807
Accumulated other comprehensive income (loss)            (33)          (27)
                                                      ------        ------
     Total stockholders' equity                        7,392         6,856
                                                      ------        ------
     Total liabilities and stockholders' equity      $23,870       $22,962
                                                      ======        ======

<FN>
Selected notes to financial statements appear on pages 9-21.
</TABLE>


<PAGE> 8

<TABLE>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                ------------------------------------------------
<CAPTION>
                                                       Nine Months Ended
                                                          September 30
(Dollars in millions)                                  2000         1999
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                              $860          $493
Adjustments to reconcile to net cash provided
 from operating activities:
  Extraordinary losses                                     -             7
  Minority interest in income of Marathon Ashland
   Petroleum LLC                                         373           405
  Depreciation, depletion and amortization               949           906
  Exploratory dry well costs                              52            74
  Inventory market valuation credits                       -          (551)
  Pensions and other postretirement benefits            (217)         (156)
  Deferred income taxes                                  522           161
  Gain on ownership change in Marathon Ashland
   Petroleum LLC                                          (9)          (11)
  Net (gains) losses on disposal of assets              (129)            8
  Changes in:
     Current receivables - sold                            -            30
                         - operating turnover           (334)         (816)
  Inventories                                           (259)         (116)
     Current accounts payable and accrued expenses       (20)          742
  All other - net                                        (32)          126
                                                      ------        ------
     Net cash provided from operating activities       1,756         1,302
                                                      ------        ------
INVESTING ACTIVITIES:
Capital expenditures                                  (1,011)       (1,048)
Disposal of assets                                       269           261
Restricted cash - withdrawals                            219            54
                - deposits                              (207)          (39)
Affiliates - investments                                 (80)          (17)
         - loans and advances                            (13)         (104)
         - returns and repayments                          9             1
All other - net                                           20            (4)
                                                      ------        ------
     Net cash used in investing activities              (794)         (896)
                                                      ------        ------
FINANCING ACTIVITIES:
Commercial paper and revolving credit 
                        arrangements - net              (329)         (126)
Other debt - borrowings                                  273           460
           - repayments                                 (328)         (240)
Common stock - issued                                      -            46
             - repurchased                               (37)            -
Preferred stock repurchased                              (12)            -
Dividends paid                                          (275)         (266)
Distributions to minority shareholder of
 Marathon Ashland Petroleum LLC                         (212)         (333)
                                                      ------        ------
     Net cash used in financing activities              (920)         (459)
                                                      ------        ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                   (4)            -
                                                      ------        ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      38           (53)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR           133           146
                                                      ------        ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD              $171           $93
                                                      ======        ======
Cash used in operating activities included:
  Interest and other financial costs paid (net of
   amount capitalized)                                 $(301)        $(313)
  Income taxes paid                                     (381)          (36)
<FN>
Selected notes to financial statements appear on pages 9-21.
</TABLE>


<PAGE> 9

                    USX CORPORATION AND SUBSIDIARY COMPANIES
               SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                   (Unaudited)


1.   The information furnished in these financial statements is unaudited
     but, in the opinion of management, reflects all adjustments necessary for a
     fair presentation of the results for the periods covered.  All such
     adjustments are of a normal recurring nature unless disclosed otherwise.
     These financial statements, including selected notes, have been prepared in
     accordance with the applicable rules of the Securities and Exchange
     Commission and do not include all of the information and disclosures
     required by generally accepted accounting principles for complete financial
     statements.  Certain reclassifications of prior year data have been made to
     conform to 2000 classifications.  Additional information is contained in
     the USX Annual Report on Form 10-K for the year ended December 31, 1999.

     In March 2000, the Emerging Issues Task Force of the Financial
     Accounting Standards Board (EITF) issued EITF Topic No. D-88, which
     requires companies to disclose their accounting policy for costs incurred
     in connection with planned major maintenance activities.  For USX, such
     costs primarily are associated with refinery turnarounds in the Marathon
     Group and blast furnace relines in the  U. S. Steel Group.  Costs
     associated with refinery turnarounds are expensed in the same annual period
     as incurred; however, estimated annual turnaround costs are recognized in
     income throughout the year on a pro rata basis.  Costs associated with
     blast furnace relines are separately capitalized in property, plant and
     equipment.  Such costs are amortized over their estimated useful life,
     which is generally the period until the next scheduled reline.

2.   In August 1999, USX and Kobe Steel, Ltd. (Kobe Steel) completed a
     transaction that combined the steelmaking and bar producing assets of
     USS/Kobe Steel Company (USS/Kobe) with companies controlled by Blackstone
     Capital Partners II.  The combined entity was named Republic Technologies
     International, LLC (Republic).  In addition, USX made a $15 million equity
     investment in Republic.  USX owned 50% of USS/Kobe and now owns 16% of
     Republic.  USX accounts for its investment in Republic under the equity
     method of accounting. The seamless pipe business of USS/Kobe was excluded
     from this transaction.  That business, now known as Lorain Tubular Company
     LLC, is a wholly owned subsidiary of USX.

     Third quarter 2000 dividend and affiliate income (loss) includes $10
     million in charges related to USX's share of impairment and restructuring
     charges of Republic.  In addition, third quarter 1999 dividend and
     affiliate income (loss) includes $50 million in charges related to the
     impairment of the carrying value of USX's investment in USS/Kobe and costs
     related to the formation of Republic.

     In the third quarter of 2000, Republic underwent a financial
     restructuring to improve its liquidity position and to assist in making the
     semi-annual interest payment on its senior secured notes.  As part of this
     restructuring, Republic received approximately $30 million in loans from
     certain of its direct and indirect equity partners in exchange for notes of
     Republic and warrants to purchase Class D common stock of Republic
     Technologies International, Inc., Republic's majority owner.  USX loaned
     approximately $6 million to Republic as part of this transaction.  USX also
     agreed to certain deferred payment terms into 2002 on up to a maximum of
     $30 million of obligations relating to an iron ore pellets supply
     agreement.

<PAGE> 10

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


3.   The Marathon Group's operations consist of three reportable operating
     segments: 1) Exploration and Production (E&P) - explores for and produces
     crude oil and natural gas on a worldwide basis; 2) Refining, Marketing and
     Transportation (RM&T) - refines, markets and transports crude oil and
     petroleum products, primarily in the Midwest and southeastern United States
     through Marathon Ashland Petroleum LLC (MAP); and 3) Other Energy Related
     Businesses (OERB).  OERB is an aggregation of two segments which fall below
     the quantitative reporting thresholds: 1) Natural Gas and Crude Oil
     Marketing and Transportation - markets and transports its own and third-
     party natural gas and crude oil in the United States; and 2) Power
     Generation - develops, constructs and operates independent electric power
     projects worldwide.  The U. S. Steel Group consists of one operating
     segment, U. S. Steel (USS).  USS is engaged in the production and sale of
     steel mill products, coke and taconite pellets.  USS also engages in the
     following related business activities:  the management of mineral
     resources, domestic coal mining, engineering and consulting services, and
     real estate development and management.  The results of segment operations
     are as follows:

<TABLE>
                                                  Total
                                                Marathon
(In millions)            E&P     RM&T      OERB Segments  USS  Total
------------------------------------------------------------------------------
<S>                      <C>     <C>       <C>  <C>     <C>     <C>
THIRD QUARTER 2000
------------------
Revenues:
 Customer                $1,124  $7,595    $490 $9,209  $1,412 $10,621
 Intersegment (a)            74      10      20    104       -     104
 Intergroup (a)               9       -      10     19       5      24
 Equity in earnings of
   unconsolidated affiliates 28       5       4     37       6      43
 Other                        5      13       3     21       7      28
                          -----   -----   -----  -----   -----   -----
 Total revenues          $1,240  $7,623    $527 $9,390  $1,430 $10,820
                          =====   =====   =====  =====   =====   =====
 Segment income            $465    $299     $12   $776     $23    $799
                          =====   =====   =====  =====   =====   =====
THIRD QUARTER 1999
------------------
Revenues:
 Customer                  $820  $5,413    $219 $6,452  $1,376  $7,828
 Intersegment (a)            61      16       9     86       -      86
 Intergroup (a)               5       -       7     12       2      14
 Equity in earnings (losses) of
   unconsolidated affiliates (2)      6       5      9      (3)      6
 Other                        1      12       3     16      12      28
                          -----   -----   -----  -----   -----   -----
 Total revenues            $885  $5,447    $243 $6,575  $1,387  $7,962
                          =====   =====   =====  =====   =====   =====
 Segment income            $201    $236     $13   $450      $3    $453
                          =====   =====   =====  =====   =====   =====
<FN>
(a) Intersegment and intergroup sales and transfers were conducted under terms
    comparable to those with unrelated parties.
</TABLE>


<PAGE> 11

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


3.   (Continued)

<TABLE>
                                                 Total
                                                Marathon
(In millions)            E&P    RM&T     OERB   Segments   USS    Total
--------------------------------------------------------------------------------
<S>                      <C>    <C>      <C>    <C>    <C>      <C>
NINE MONTHS ENDED SEPTEMBER 30, 2000
------------------------------------
Revenues:
 Customer                $3,175 $21,576  $1,145 $25,896 $4,529  $30,425
 Intersegment (a)           262      79      52     393      -      393
 Intergroup (a)              20       -      21      41     13       54
 Equity in earnings of
   unconsolidated affiliates 24      15      12      51     13       64
 Other                       15      33       9      57     33       90
                          -----   -----   -----   -----  -----    -----
 Total revenues          $3,496 $21,703  $1,239 $26,438 $4,588  $31,026
                          =====   =====   =====   =====  =====    =====
 Segment income          $1,130    $968     $25  $2,123   $145   $2,268
                          =====   =====   =====   =====  =====    =====

NINE MONTHS ENDED SEPTEMBER 30, 1999
------------------------------------
Revenues:
 Customer                $2,081 $14,229    $414 $16,724 $3,913  $20,637
 Intersegment (a)           129      25      24     178      -      178
 Intergroup (a)              12       -      15      27     14       41
 Equity in earnings (losses) of
   unconsolidated affiliates  2      13      18      33    (36)      (3)
 Other                       20      28      12      60     33       93
                          -----   -----   -----   -----  -----    -----
 Total revenues          $2,244 $14,295    $483 $17,022 $3,924  $20,946
                          =====   =====   =====   =====  =====    =====
 Segment income            $361    $509     $47    $917    $43     $960
                          =====   =====   =====   =====  =====    =====

<FN>
(a) Intersegment and intergroup sales and transfers were conducted under terms
    comparable to those with unrelated parties.
</TABLE>


<PAGE> 12

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)
                                        

3.   (Continued)

    The following schedules reconcile segment revenues and income to amounts
    reported in the Marathon and U. S. Steel Groups' financial statements:

<TABLE>
                                               Marathon Group  U. S. Steel Group
                                                Third Quarter   Third Quarter
                                                    Ended           Ended
                                                 September 30    September 30
(In millions)                                    2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
Revenues:
 Revenues of reportable segments                $9,390  $6,575  $1,430   $1,387
 Items not allocated to segments:
  Gain on ownership change in MAP                    1      11       -        -
  Other (a)                                          -     (10)      -      (50)
 Elimination of intersegment revenues             (104)    (86)      -        -
                                                ------  ------   -----    -----
   Total Group revenues                         $9,287  $6,490  $1,430   $1,337
                                                ======  ======  ======   ======

Income:
 Income for reportable segments                   $776    $450     $23       $3
 Items not allocated to segments:
  Gain on ownership change in MAP                    1      11       -        -
  Administrative expenses                          (48)    (26)     (7)      (4)
  Net pension credits                                -       -      67       46
  Costs related to former business activities        -       -     (23)     (21)
  Inventory market valuation adjustments             -     136       -        -
  Other (a)                                          -     (10)      -      (50)
                                                ------  ------  ------   ------
   Total Group income (loss) from operations      $729    $561     $60     $(26)
                                                ======  ======  ======   ======
<FN>
(a)  Represents in 1999 for the Marathon Group, mainly the loss on sale of
     certain domestic production properties and for the U. S. Steel Group,
     impairment of investment in USS/Kobe and costs related to the formation of
     Republic.
</TABLE>


     Effective January 1, 2000, USX changed its methodology for allocating
     the pension credit or cost associated with its principal U. S. Steel
     pension plans for internal business performance reporting purposes.  Since
     future contributions to these plans are expected to be minimal due to their
     overfunded position, no pension credit or cost is allocated to the U. S.
     Steel operating segment.  Prior years' segment income or loss has been
     restated to conform with the current allocation methodology.


<PAGE> 13

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)
                                        

3.   (Continued)



<TABLE>
                                               Marathon Group  U. S. Steel Group
                                                 Nine Months     Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(In millions)                                    2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Revenues:
 Revenues of reportable segments               $26,438 $17,022  $4,588   $3,924
 Items not allocated to segments:
  Gain on ownership change in MAP                    9      11       -        -
  Other (a)                                         87     (33)      -      (72)
 Elimination of intersegment revenues             (393)   (178)      -        -
                                                ------  ------   -----    -----
   Total Group revenues                        $26,141 $16,822  $4,588   $3,852
                                                ======  ======  ======   ======

Income:
 Income for reportable segments                 $2,123    $917    $145      $43
 Items not allocated to segments:
  Gain on ownership change in MAP                    9      11       -        -
  Administrative expenses                         (105)    (83)    (18)     (17)
  Net pension credits                                -       -     199      186
  Costs related to former business activities        -       -     (63)     (65)
  Inventory market valuation adjustments             -     551       -        -
  Other (a)                                         87     (33)      -      (72)
                                                ------  ------  ------   ------
   Total Group income from operations           $2,114  $1,363    $263      $75
                                                ======  ======  ======   ======
<FN>
(a)  Represents for the Marathon Group in 2000, gain on disposition of
     Angus/Stellaria and in 1999, mainly the loss on sale of Scurlock Permian
     LLC, Carnegie Natural Gas Company and subsidiaries, and certain domestic
     production properties.  For the U. S. Steel Group in 1999, represents
     impairment of investment in USS/Kobe and costs related to the formation of
     Republic and loss on investment in RTI International Metals, Inc. stock
     used to satisfy indexed debt obligations.
</TABLE>

4.   In 1998, Marathon Oil Company (Marathon) and Ashland Inc. (Ashland)
     combined the major elements of their refining, marketing and transportation
     (RM&T) operations.  Marathon transferred certain RM&T assets to Marathon
     Ashland Petroleum LLC (MAP), a new consolidated subsidiary.  Also, Marathon
     acquired certain RM&T net assets from Ashland in exchange for a 38%
     interest in MAP.  In accordance with MAP closing agreements, Marathon and
     Ashland made capital contributions to MAP for environmental improvements.
     The closing agreements stipulate that ownership interests in MAP will not
     be adjusted as a result of such contributions.  Accordingly, Marathon
     recognized a gain on ownership change of $1 million in the third quarter of
     2000 and $9 million in the nine months of 2000 and $11 million in the third
     quarter and nine months of 1999.


<PAGE> 14

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


5.   Inventories are carried at lower of cost or market.  Cost of
     inventories is determined primarily under the last-in, first-out (LIFO)
     method.

<TABLE>
                                                         (In millions)
                                                   -------------------------
                                                   September 30 December 31
                                                       2000         1999
                                                   ------------ -----------
    <S>                                            <C>          <C>
    Raw materials                                       $976         $830
    Semi-finished products                               391          392
    Finished products                                  1,354        1,239
    Supplies and sundry items                            165          166
                                                      ------       ------
      Total (at cost)                                  2,886        2,627
    Less inventory market valuation reserve                -            -
                                                      ------       ------
      Net inventory carrying value                    $2,886       $2,627
                                                      ======       ======
</TABLE>

     The inventory market valuation reserve reflects the extent that the
     recorded LIFO cost basis of crude oil and refined products inventories
     exceeds net realizable value.  The reserve is decreased to reflect
     increases in market prices and inventory turnover and increased to reflect
     decreases in market prices.  Changes in the inventory market valuation
     reserve result in noncash charges or credits to costs and expenses.  For
     additional information, see discussion of results of operations in the
     Marathon Group Management's Discussion and Analysis of Financial Condition
     and Results of Operations.

6.   Total comprehensive income was $138 million for the third quarter of
     2000, $208 million for the third quarter of 1999, $854 million for the nine
     months of 2000 and $496 million for the nine months of 1999.

7.   The method of calculating net income (loss) per share for the Marathon
     Stock and Steel Stock reflects the USX Board of Directors' intent that the
     separately reported earnings and surplus of the Marathon Group and the
     U. S. Steel Group, as determined consistent with the USX Restated
     Certificate of Incorporation, are available for payment of dividends on the
     respective classes of stock, although legally available funds and
     liquidation preferences of these classes of stock do not necessarily
     correspond with these amounts.  The financial statements of the Marathon
     Group and the U. S. Steel Group, taken together, include all accounts which
     comprise the corresponding consolidated financial statements of USX.

     Basic net income (loss) per share is calculated by adjusting net
     income for dividend requirements of preferred stock and is based on the
     weighted average number of common shares outstanding.

     Diluted net income (loss) per share assumes exercise of stock options,
     provided the effect is not antidilutive.

<PAGE> 15

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


7.   (Continued)

<TABLE>
          COMPUTATION OF INCOME PER SHARE
                                                      Third Quarter Ended
                                                          September 30
                                                     2000            1999
                                                Basic  Diluted  Basic   Diluted
--------------------------------------------------------------------------------
<S>                                            <C>     <C>     <C>      <C>
Marathon Group
---------------
Net income (millions)                             $121    $121    $230     $230
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding   311,847 311,847 309,392  309,392
 Effect of dilutive securities - stock options       -     247       -      418
                                                ------  ------  ------   ------
   Average common shares and dilutive effect   311,847 312,094 309,392  309,810
                                                ======  ======  ======   ======
Net income per share                              $.38    $.38    $.74     $.74
                                                ======  ======  ======   ======

U. S. Steel Group
-----------------
Net income (loss) (millions):
 Income (loss) before extraordinary loss           $19      $19   $(29)    $(29)
 Dividends on preferred stock                        2       2       2        2
 Extraordinary loss                                  -       -       2        2
                                                ------  ------  ------   ------
 Net income (loss) applicable to Steel Stock       $17     $17    $(33)    $(33)
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands) -
 Average number of common shares outstanding    88,738  88,738  88,394   88,394
                                                ======  ======  ======   ======
Per share:
 Income (loss) before extraordinary loss          $.19    $.19   $(.35)   $(.35)
 Extraordinary loss                                  -       -     .02      .02
                                                ------  ------  ------   ------
 Net income (loss)                                $.19    $.19   $(.37)   $(.37)
                                                ======  ======  ======   ======
</TABLE>


<PAGE> 16

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


7.   (Continued)

<TABLE>
          COMPUTATION OF INCOME PER SHARE
                                                      Nine Months Ended
                                                         September 30
                                                     2000            1999
                                                Basic  Diluted  Basic   Diluted
--------------------------------------------------------------------------------
<S>                                            <C>     <C>     <C>      <C>
Marathon Group
--------------
Net income (millions)                             $742    $742    $483     $483
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding   312,068 312,068 309,160  309,160
 Effect of dilutive securities - stock options       -     204       -      331
                                                ------  ------  ------   ------
   Average common shares and dilutive effect   312,068 312,272 309,160  309,491
                                                ======  ======  ======   ======
Net income per share                             $2.38   $2.37   $1.56    $1.56
                                                ======  ======  ======   ======
U. S. Steel Group
-----------------
Net income (millions):
 Income before extraordinary loss                 $118    $118     $17      $17
 Dividends on preferred stock                        6       6       7        7
 Extraordinary loss                                  -       -       7        7
                                                ------  ------  ------   ------
 Net income applicable to Steel Stock             $112    $112      $3       $3
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding    88,554  88,554  88,383   88,383
 Effect of dilutive securities - stock options       -       2       -        2
                                                ------  ------  ------   ------
   Average common shares and dilutive effect    88,554  88,556  88,383   88,385
                                                ======  ======  ======   ======
Per share:
 Income before extraordinary loss                $1.27   $1.27    $.12     $.12
 Extraordinary loss                                  -       -     .08      .08
                                                ------  ------  ------   ------
 Net income                                      $1.27   $1.27    $.04     $.04
                                                ======  ======  ======   ======
</TABLE>


<PAGE> 17

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)

8.   In 1999, USX irrevocably deposited with a trustee the entire 5.5
     million common shares it owned in RTI International Metals, Inc. (RTI).
     The deposit of the shares resulted in the satisfaction of USX's obligation
     under its 6-3/4% Exchangeable Notes (indexed debt) due February 1, 2000.  
     Under the terms of the indenture, the trustee exchanged one RTI share for
     each note at maturity; therefore, none reverted back to USX.

     As a result of the above transaction, USX recorded in the first
     quarter of 1999 an extraordinary loss of $5 million, net of a $3 million
     income tax benefit, representing prepaid interest expense and the write-off
     of unamortized debt issue costs, and a pretax charge of $22 million,
     representing the difference between the carrying value of the investment in
     RTI and the carrying value of the indexed debt, which is included in net
     gains (losses) on disposal of assets.

     Additionally, a $13 million credit to adjust the indexed debt to
     settlement value at March 31, 1999, is included in net interest and other
     financial costs.

     In December 1996, USX had issued the $117 million of notes indexed to
     the common share price of RTI.  At maturity, USX would have been required
     to exchange the notes for shares of RTI common stock, or redeem the notes
     for the equivalent amount of cash.  Since USX's investment in RTI was
     attributed to the U. S. Steel Group, the indexed debt was also attributed
     to the U. S. Steel Group.  USX had a 26% investment in RTI and accounted
     for its investment using the equity method of accounting.

     Republic Technologies International, LLC, an equity method affiliate
     of USX, recorded in the third quarter of 1999 an extraordinary loss related
     to the early extinguishment of debt.  As a result, USX recorded an
     extraordinary loss of $2 million, net of a $1 million income tax benefit,
     representing its share of the extraordinary loss.

9.   The items below are included in both revenues and costs and expenses,
     resulting in no effect on income.

<TABLE>
                                                         (In millions)
                                                -------------------------------
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
                                                 2000    1999    2000     1999
                                                 ----    ----    ----     ----
    <S>                                         <C>      <C>    <C>      <C>
    Matching crude oil and refined product
      buy/sell transactions settled in cash     $1,192    $901  $3,662   $2,471
    Consumer excise taxes on petroleum
      products and merchandise                   1,121   1,007   3,268    2,923
</TABLE>


10.  The provision for estimated income taxes for the periods reported is
     based on tax rates and amounts which recognize management's best estimate
     of current and deferred tax assets and liabilities.

     The third quarter and nine month 2000 income tax provisions include a
     one-time, noncash adjustment to deferred tax expense of $235 million, which
     is discussed further in Note 17.

<PAGE> 18

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)

11.  In the second quarter of 1999, USX recognized a one-time pretax
     settlement gain of $35 million, related mainly to pension costs of
     employees who retired under the U. S. Steel Group 1998 voluntary early
     retirement program.  This noncash settlement gain is included in selling,
     general and administrative expenses.

12.  At September 30, 2000, USX had no borrowings against its
     $2,350 million revolving credit facility.

     At September 30, 2000, MAP had no borrowings against its $500 million
     revolving credit agreements with banks and had no amounts outstanding
     against its $190 million revolving credit agreement with Ashland.

     USX has a short-term credit agreement totaling $125 million at
     September 30, 2000.  Interest is based on the bank's prime rate or London
     Interbank Offered Rate (LIBOR), and carries a facility fee of .15%.
     Certain other banks provide short-term lines of credit totaling $150
     million which require a .125% fee or maintenance of compensating balances
     of 3%.  At September 30, 2000, there were no borrowings against these
     facilities.  USX had other outstanding short-term borrowings of $65
     million.

     In December 1999, USX entered into a secured borrowing agreement for
     $350 million, under which the U. S. Steel Group participated in a program
     to sell an undivided interest in certain accounts receivable.  At December
     31, 1999, the receivables facility was considered long-term, since it could
     be refinanced by USX's long-term revolving credit facility.  In August
     2000, the revolving credit facility became due within one year, resulting
     in the receivables facility being reclassified to short-term debt.

     In the event of a change in control of USX, debt obligations totaling
     $3,077 million at September 30, 2000, may be declared immediately due and
     payable.

13.  In July 2000, the Board of Directors of USX Corporation authorized the
     spending of up to $450 million to repurchase shares of USX-Marathon Group
     Common Stock (Marathon Stock), such purchases to be made from time to time
     as the Corporation's financial condition and market conditions warrant.
     During the third quarter of 2000, 1.4 million shares of Marathon Stock were
     repurchased for $37 million.

14.  In 1997, USX sold its stock in Delhi Gas Pipeline Corporation and
     other subsidiaries of USX that comprised all of the Delhi Group.  The net
     proceeds of the sale of $195 million were used to redeem all shares of USX-
     Delhi Group Common Stock (Delhi Stock) and were distributed to the holders
     thereof on January 26, 1998.  After the redemption, 50,000,000 shares of
     Delhi Stock remain authorized but unissued.

15.  USX is the subject of, or a party to, a number of pending or
     threatened legal actions, contingencies and commitments involving a variety
     of matters, including laws and regulations relating to the environment.
     Certain of these matters are discussed below.  The ultimate resolution of
     these contingencies could, individually or in the aggregate, be material to
     the consolidated

<PAGE> 19

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


15.  (Continued)

     financial statements.  However, management believes that USX will
     remain a viable and competitive enterprise even though it is possible that
     these contingencies could be resolved unfavorably.  See discussion of
     Liquidity in USX Consolidated Management's Discussion and Analysis of
     Financial Condition and Results of Operations.

     USX is subject to federal, state, local and foreign laws and
     regulations relating to the environment.  These laws generally provide for
     control of pollutants released into the environment and require responsible
     parties to undertake remediation of hazardous waste disposal sites.
     Penalties may be imposed for noncompliance.  At September 30, 2000, and 
     December 31, 1999, accrued liabilities for remediation totaled $187 million
     and $170 million, respectively.  It is not presently possible to estimate
     the ultimate amount of all remediation costs that might be incurred or the
     penalties that may be imposed.  Receivables for recoverable costs from
     certain states, under programs to assist companies in cleanup efforts
     related to underground storage tanks at retail marketing outlets, were $57
     million at September 30, 2000, and $52 million at December 31, 1999.

     For a number of years, USX has made substantial capital expenditures
     to bring existing facilities into compliance with various laws relating to
     the environment.  In the nine months of 2000 and for the years 1999 and
     1998, such capital expenditures totaled $38 million, $78 million and $132
     million, respectively.  USX anticipates making additional such expenditures
     in the future; however, the exact amounts and timing of such expenditures
     are uncertain because of the continuing evolution of specific regulatory
     requirements.

     At September 30, 2000, and December 31, 1999, accrued liabilities for
     platform abandonment and dismantlement totaled $161 million and $152
     million, respectively.

     Guarantees by USX of the liabilities of affiliated entities totaled
     $219 million at September 30, 2000.  In the event that any defaults of
     guaranteed liabilities occur, USX has access to its interest in the assets
     of most of the affiliates to reduce losses resulting from these guarantees.
     As of September 30, 2000, the largest guarantee for a single affiliate was
     $131 million.

     At September 30, 2000, USX's pro rata share of obligations of LOOP LLC
     and various pipeline affiliates secured by throughput and deficiency
     agreements totaled $120 million.  Under the agreements, USX is required to
     advance funds if the affiliates are unable to service debt.  Any such
     advances are prepayments of future transportation charges.

     Contract commitments to acquire property, plant and equipment and long-
     term investments at September 30, 2000, totaled $719 million compared with
     $568 million at December 31, 1999.



<PAGE> 20

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


16.  In the fourth quarter 2000, USX must adopt several recently issued
     accounting pronouncements primarily related to the classification of items
     in the statement of operations.  In December 1999, the Securities and
     Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101 (SAB
     101) "Revenue Recognition in Financial Statements," which summarizes the
     SEC staff's interpretations of generally accepted accounting principles
     related to revenue recognition and classification.  During the third
     quarter 2000, the EITF issued EITF Consensus No. 99-19 "Reporting Revenue
     Gross as a Principal versus Net as an Agent", which addresses whether
     certain cost items should be reported as a reduction of revenue or as a
     component of cost of sales, and EITF Consensus No. 00-10 "Accounting for
     Shipping and Handling Fees and Costs," which addresses the classification
     of costs incurred for shipping goods to customers.  The adoption of these
     new pronouncements will have no net effect on the financial position or
     results of operations of USX, although they will require reclassifications
     of certain amounts in the statement of operations.

17.  On October 19, 2000, the Marathon Group of USX signed a definitive
     agreement with Shell to transfer its 37.5 percent interest in Sakhalin
     Energy Investment Company Ltd.(Sakhalin Energy).  In exchange, the Marathon
     Group will receive certain Shell interests in the UK Atlantic Margin area
     and the U.S. Gulf of Mexico as well as reimbursement for all Sakhalin
     project capital expenditures made by the Marathon Group in 2000.  The
     closing and transfer of operations are expected to take place in early
     December 2000.

     The increased likelihood of closing this transaction resulted in a one-
     time, noncash deferred tax charge of $235 million in the third quarter of
     2000.  Balance sheet net deferred tax liabilities include deferred U.S. tax
     benefits related to certain foreign subsidiaries.  Until now, management
     concluded it was likely that income from foreign sources, such as Sakhalin
     Energy, would allow these benefits to be realized in the future.  The
     definitive agreement to transfer the Marathon Group's interest in Sakhalin
     Energy affects the timing, amount and nature of expected future foreign
     source income, decreasing the likelihood that these tax benefits will be
     realized.

18.  Definitive agreements have been executed regarding the following
     transactions, which will be accounted for as business combinations.  The
     transactions are expected to close shortly after the receipt of any
     required approvals and the clearance of all preclosing conditions.

     On September 29, 2000, final documents were signed for the acquisition
     by USX of the steel operations and related assets of VSZ a.s. (VSZ).  The
     transaction was approved by VSZ shareholders on October 12, 2000.  The
     transaction must be approved by the Slovak government's anti-monopoly
     office.  These operations are located in Kosice, Slovak Republic and will
     be known as U. S. Steel Kosice s.r.o. (USSK). An initial cash payment to
     VSZ of $60 million will be made at closing.  An additional payment to VSZ
     of not less than $25 million and up to $75 million is contingent upon the
     future performance of USSK.  Additionally, $325 million of debt will be
     issued by USSK to VSZ's lenders prior to closing.  The acquisition will be
     accounted for under the purchase method of accounting.


<PAGE> 21

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)
                                        
                                        
18.  (Continued)

     Prior to this transaction, USX and VSZ were joint partners in VSZ U. S.
     Steel s. r.o. (VSZUSS), a tin mill products manufacturer.  The assets of
     USSK will include VSZ's interest in VSZUSS.  The acquisition of the
     remaining interest in VSZUSS will be accounted for under the purchase
     method of accounting.  Previously, USX had accounted for its investment in
     VSZUSS under the equity method of accounting.

     In October 2000, Transtar, Inc. (Transtar) announced that it had
     entered into a Reorganization and Exchange Agreement with its two voting
     shareholders, USX and Transtar Holdings, L.P. (Holdings), an affiliate of
     Blackstone Capital Partners L.P.  As a result of this transaction, USX will
     become sole owner of Transtar and certain of its subsidiaries.  Holdings
     will become owner of the other subsidiaries of Transtar.  USX will account
     for the change in its ownership interest in Transtar under the purchase
     method of accounting.  Previously, USX had accounted for its investment in
     Transtar under the equity method of accounting.

     Also in October 2000, USX agreed to purchase the tin mill products
     business of LTV Corporation (LTV).  Terms of this noncash transaction call
     for USX to assume certain employee-related obligations of LTV.  The
     acquisition will be accounted for under the purchase method of accounting.

     Both the Transtar and the LTV transactions are subject to certain
     government approvals and clearances.  The LTV transaction is also subject
     to certain third party consents and customary closing conditions.



<PAGE> 22

<TABLE>
<CAPTION>
                                 USX CORPORATION
           COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
                          AND PREFERRED STOCK DIVIDENDS
                      TOTAL ENTERPRISE BASIS - (Unaudited)
                              CONTINUING OPERATIONS
           ----------------------------------------------------------
                                        

  Nine Months Ended
     September 30                        Year Ended December 31
---------------------   -------------------------------------------------------
   <C>         <C>          <C>         <C>          <C>         <C>       <C>
   2000        1999         1999        1998         1997        1996      1995
   ----        ----         ----        ----         ----        ----      ----

   6.60        4.30         4.20        3.45         3.63        3.41      1.46
   ====        ====         ====        ====         ====        ====      ====
</TABLE>



<TABLE>
<CAPTION>

                                 USX CORPORATION
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                      TOTAL ENTERPRISE BASIS - (Unaudited)
                              CONTINUING OPERATIONS
                -------------------------------------------------


  Nine Months Ended
     September 30                        Year Ended December 31
---------------------   -------------------------------------------------------
   <C>         <C>          <C>         <C>          <C>         <C>       <C>
   2000        1999         1999        1998         1997        1996      1995
   ----        ----         ----        ----         ----        ----      ----

   6.77        4.43         4.32        3.56         3.79        3.65      1.58
   ====        ====         ====        ====         ====        ====      ====
</TABLE>


<PAGE> 23

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     USX Corporation ("USX") is a diversified company that is principally
engaged in the energy business through its Marathon Group and in the steel
business through its U. S. Steel Group. The following discussion should be read
in conjunction with the third quarter 2000 USX Consolidated Financial Statements
and Selected Notes to Financial Statements. For income per common share amounts
applicable to USX's two classes of common stock, USX-Marathon Group Common Stock
("Marathon Stock") and USX-U. S. Steel Group Common Stock ("Steel Stock"), see
Consolidated Statement of Operations - Income per Common Share. For individual
Group results, see Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Marathon Group and the U. S. Steel Group. For
operating statistics, see Supplemental Statistics following Management's
Discussion and Analysis of Financial Condition and Results of Operations for
each of the respective Groups.

     Certain sections of Management's Discussion and Analysis include forward-
looking statements concerning trends or events potentially affecting USX. These
statements typically contain words such as "anticipates", "believes",
"estimates", "expects" or similar words indicating that future outcomes are
uncertain. In accordance with "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, these statements are accompanied by cautionary
language identifying important factors, though not necessarily all such factors,
that could cause future outcomes to differ materially from those set forth in
the forward-looking statements. For additional risk factors affecting the
businesses of USX, see Supplementary Data - Disclosures About Forward-Looking
Statements in the USX 1999 Form 10-K.

<PAGE> 24

                    USX CORPORATION AND SUBSIDIARY COMPANIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Results of Operations
---------------------

     Revenues for the third quarter and the first nine months of 2000 and 1999
are set forth in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
                                               ------  ------  ------   ------
<S>                                           <C>      <C>    <C>      <C>
Revenues
 Marathon Group                                $9,287  $6,490 $26,141  $16,822
 U. S. Steel Group                              1,430   1,337   4,588    3,852
 Eliminations                                     (24)    (14)    (54)     (41)
                                               ------  ------  -------  -------
   Total USX Corporation revenues             $10,693  $7,813  $30,675  $20,633
Less:
 Excise taxes (a)(b)                            1,121   1,007    3,268    2,923
 Matching buy/sell transactions (a)(c)          1,192     901    3,662    2,471
                                               ------  ------   ------   ------
   Revenues excluding above items              $8,380  $5,905  $23,745  $15,239
                                               ======  ======   ======   ======
------
<FN>
(a)  Included in both revenues and costs and expenses for the Marathon Group and
     USX consolidated.
(b)  Consumer excise taxes on petroleum products and merchandise.
(c)  Matching crude oil and refined products buy/sell transactions settled in
     cash.
</TABLE>

     Revenues (excluding excise taxes and matching buy/sell transactions)
increased by $2,475 million in the third quarter of 2000 as compared with the
third quarter of 1999, reflecting increases of $2,392 million for the Marathon
Group and $93 million for the U. S. Steel Group, before intergroup eliminations.
For the first nine months of 2000, revenues increased $8,506 million as compared
with the same period of 1999, reflecting increases of $7,783 million for the
Marathon Group and $736 million for the U. S. Steel Group, before intergroup
eliminations.

     For discussion of revenues by Group, see Management's Discussion and
Analysis of Financial Condition and Results of Operations for the Marathon Group
and the U. S. Steel Group.


<PAGE> 25

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Income from operations for the third quarter and the first nine months of
2000 and 1999 are set forth in the following table:

<TABLE>
                                                 Third Quarter    Nine Months
                                                     Ended           Ended
                                                  September 30    September 30
(Dollars in millions)                             2000    1999    2000     1999
                                                ------  ------  ------   ------
<S>                                             <C>     <C>     <C>      <C> 
Reportable segments
 Marathon Group
  Exploration & production                        $465    $201  $1,130     $361
 Refining, marketing & transportation              299     236     968      509
 Other energy related businesses                    12      13      25       47
                                                ------  ------  ------   ------
   Income for reportable segments-Marathon Group  $776    $450  $2,123     $917
 U. S. Steel Group
   Income for reportable segment                    23       3     145       43
                                                 -----   -----   -----    -----
   Income for reportable segments-USX Corporation  799     453   2,268      960
Items not allocated to segments:
 Marathon Group                                    (47)    111      (9)     446
 U. S. Steel Group                                  37     (29)    118       32
                                                 -----   -----   -----    -----
   Total income from operations-USX Corporation   $789    $535  $2,377   $1,438
</TABLE>


     Income for reportable segments increased by $346 million in the third
quarter of 2000 as compared with the third quarter of 1999, reflecting increases
of $326 million for the Marathon Group reportable segments and $20 million for
the U. S. Steel Group reportable segment. Income for reportable segments in the
first nine months of 2000 increased by $1,308 million compared with the first
nine months of 1999, reflecting increases of $1,206 million for the Marathon
Group reportable segments and $102 million for the U. S. Steel Group reportable
segment.

     For discussion of income from operations, see Management's Discussion and
Analysis of Financial Condition and Results of Operations for the Marathon Group
and the U. S. Steel Group.

<PAGE> 26

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Net interest and other financial costs for the third quarter and first nine
months of 2000 and 1999 are set forth in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                             2000    1999    2000     1999
                                                ------  ------  ------   ------
<S>                                             <C>     <C>     <C>      <C>
Net interest and other financial costs             $80     $92    $267     $266
Less:
 Favorable adjustment to carrying value
    of indexed debt(a)                               -       -       -      (13)
                                                ------  ------  ------   ------
   Net interest and other financial costs
     adjusted to exclude above item                $80     $92    $267     $279
                                                 =====  ======  ======   ======
------
<FN>
(a)  For further discussion, see the Exchangeable Notes discussion in Note 8 to
     the USX Consolidated Financial Statements.
</TABLE>

     Provisions for estimated income taxes of $454 million and $877 million for
the third quarter and the first nine months of 2000, respectively, were based on
tax rates and amounts that recognize management's best estimate of current and
deferred tax assets and liabilities and included a $235 million one-time,
noncash deferred tax charge related to the exchange involving Marathon's
interest in Sakhalin Energy Investment Company Ltd. (see Note 17 to the USX
Consolidated Financial Statements).

     Extraordinary loss on extinguishment of debt of $2 million (net of $1
million income tax benefit) in the third quarter of 1999 was USX's share of
Republic's extraordinary loss related to the early extinguishment of debt.  The
$7 million for the first nine months of 1999 included this charge and a $5
million loss (net of a $3 million income tax benefit) resulting from the
satisfaction of the indexed debt. For further discussion, see Note 8 to the USX
Consolidated Financial Statements.

     Net income was $140 million for the third quarter of 2000, a decrease of
$59 million compared to the third quarter of 1999 reflecting a decrease of $109
million for the Marathon Group and an increase of $50 million for the U. S.
Steel Group.  Net income was $860 million for the first nine months of 2000, an
increase of $367 million compared with the first nine months of 1999, reflecting
increases of $259 million for the Marathon Group and $108 million for the U. S.
Steel Group.

<PAGE> 27

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Dividends to Stockholders
-------------------------
     On October 31, 2000, the USX Board of Directors (the "Board") declared
dividends of 23 cents per share on Marathon Stock and 25 cents per share on
Steel Stock, payable December 9, 2000, to stockholders of record at the close of
business on November 16, 2000. The Board also declared a dividend of $0.8125 per
share on USX's 6.50% Cumulative Convertible Preferred Stock, payable December
29, 2000, to stockholders of record at the close of business on December 1,
2000.

     On October 31, 2000, Marathon Oil Canada Limited, an indirect subsidiary of
Marathon Oil Company, declared a dividend of CDN $0.3512 per share on its non-
voting Exchangeable Shares, payable December 9, 2000, to stockholders of record
at the close of business on November 16, 2000.

Cash Flows
----------
     Cash and cash equivalents totaled $171 million at September 30, 2000,
compared with $133 million at December 31, 1999, an increase of $38 million
reflecting a $54 million increase for the Marathon Group and a $16 million
decrease for the U. S. Steel Group.

     Net cash provided from operating activities totaled $1,756 million in the
first nine months of 2000, a $454 million increase from the first nine months of
1999, reflecting a $607 million increase for the Marathon Group and a $153
million decrease for the U. S. Steel Group.  The increase primarily reflects
higher net income partially offset by income tax payments.  For details, see
Management's Discussion and Analysis of Financial Condition and Results of
Operation for each Group.

     Capital expenditures for property, plant and equipment in the first nine
months of 2000 were $1,011 million compared with $1,048 million for the first
nine months of 1999.  For details by Group, see USX Corporation - Financial
Statistics, following Management's Discussion and Analysis of Financial
Condition and Results of Operations.

     Contract commitments to acquire property, plant and equipment and long-term
investments at September 30, 2000, totaled $719 million compared with $568
million at December 31, 1999.

     Cash from disposal of assets was $269 million in the first nine months of
2000, compared with $261 million in the first nine months of 1999.  Proceeds in
2000 were mainly from the disposition of Marathon's 33.34 percent interest in
the Angus/Stellaria development in the Gulf of Mexico.  Proceeds in 1999 were
mainly from the sale of Scurlock Permian LLC and domestic production properties.


<PAGE> 28

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The net change in restricted cash was a net withdrawal of $12 million in
the first nine months of 2000, compared with a net withdrawal of $15 million in
the first nine months of 1999.  Restricted cash in both periods primarily
reflected the net effects of cash deposited and withdrawn from domestic
production property dispositions and acquisitions.

     Financial obligations (the net of commercial paper and revolving credit
agreements, debt borrowings and repayments on the Consolidated Statement of Cash
Flows) decreased $384 million in the first nine months of 2000 compared with an
increase of $94 million in the first nine months of 1999.  The decrease in 2000
reflects net cash provided from operating activities and asset sales in excess
of cash used for capital expenditures, dividend payments, and distributions.

     Common stock repurchased was $37 million in the first nine months of 2000.
Based on USX Board of Directors' authorization, in the third quarter of 2000,
1.4 million shares of Marathon Stock were repurchased.  For further details, see
Liquidity discussion for USX Corporation and Subsidiary Companies.

     Distributions to minority shareholder of MAP were $212 million in the first
nine months of 2000, compared with $333 million in the first nine months of
1999.  For further details, see Management's Discussion and Analysis of
Financial Condition and Results of Operations for the Marathon Group.

Liquidity
---------
     At September 30, 2000, USX had no borrowings against its $2,350 million
revolving credit agreement which is scheduled to terminate in August 2001. At
September 30, 2000, MAP had no borrowings against its bank revolving credit
agreements.  MAP's $100 million revolving credit facility is scheduled to
terminate in July 2001.  MAP's $400 million revolving credit facility terminates
in July 2003.

     On July 25, 2000, the USX Board of Directors authorized the spending of up
to $450 million to repurchase shares of its Marathon Stock, such purchases to be
made from time to time as the Corporation's financial condition and market
conditions warrant.    During the third quarter of 2000, 1.4 million shares ($37
million) of Marathon Stock were repurchased.  The repurchase program does not
include specific price targets or timetables, and is subject to termination
prior to completion.  During the repurchase program, offerings of Marathon Stock
under the Marathon Group Dividend Reinvestment and Direct Stock Purchase Plan
have been suspended for first-time, non-employee purchasers.  In addition,
offerings of Steel Stock under the U. S. Steel Group Dividend Reinvestment and
Direct Stock Purchase Plan have also been suspended for first-time, non-employee
purchasers.

     USX management believes that its short-term and long-term liquidity is
adequate to satisfy its obligations as of September 30, 2000, and to complete
currently authorized capital spending programs. Future requirements for USX's
business needs, including the funding of capital expenditures, debt maturities
for the balance of 2000 and years 2001 and 2002, and any amounts that may
ultimately be

<PAGE> 29

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

paid in connection with contingencies (which are discussed in Note 15 to the USX
Consolidated Financial Statements), are expected to be financed by a combination
of internally generated funds, proceeds from the sale of stock, borrowings and
other external financing sources.

     USX management's opinion concerning liquidity and USX's ability to avail
itself in the future of the financing options mentioned in the above forward-
looking statements are based on currently available information.  To the extent
that this information proves to be inaccurate, future availability of financing
may be adversely affected.  Factors that could affect the availability of
financing include the performance of each Group (as measured by various factors
including cash provided from operating activities), the state of worldwide debt
and equity markets, investor perceptions and expectations of past and future
performance, the overall U.S. financial climate, and, in particular, with
respect to borrowings, by levels of USX's outstanding debt and credit ratings by
rating agencies.

Environmental Matters, Contingencies and Commitments
----------------------------------------------------
     USX has incurred and will continue to incur substantial capital, operating
and maintenance, and remediation expenditures as a result of environmental laws
and regulations. To the extent these expenditures, as with all costs, are not
ultimately reflected in the prices of USX's products and services, operating
results will be adversely affected. USX believes that domestic competitors of
the U. S. Steel Group and substantially all the competitors of the Marathon
Group are subject to similar environmental laws and regulations. However, the
specific impact on each competitor may vary depending on a number of factors,
including the age and location of its operating facilities, marketing areas,
production processes and the specific products and services it provides.

     USX has been notified that it is a potentially responsible party ("PRP") at
40 waste sites under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") as of September 30, 2000. In addition, there are 19
sites where USX has received information requests or other indications that USX
may be a PRP under CERCLA but where sufficient information is not presently
available to confirm the existence of liability. There are also 145 additional
sites, excluding retail gasoline stations, where remediation is being sought
under other environmental statutes, both federal and state, or where private
parties are seeking remediation through discussions or litigation. Of these
sites, 15 were associated with properties conveyed to MAP by Ashland for which
Ashland has retained liability for all costs associated with remediation. At
many of these sites, USX is one of a number of parties involved and the total
cost of remediation, as well as USX's share thereof, is frequently dependent
upon the outcome of investigations and remedial studies. USX accrues for
environmental remediation activities when the responsibility to remediate is
probable and the amount of associated costs is reasonably determinable. As
environmental remediation matters proceed toward ultimate resolution or as
additional remediation obligations arise, charges in excess of those previously
accrued may be required.


<PAGE> 30

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     New Tier II Fuels regulations were proposed in late 1999 and the U.S.
Environmental Protection Agency ("EPA") has since finalized the rules for
gasoline; however, the rules for diesel fuel are not yet final.  The gasoline
rules, which are finalized and the diesel fuel rules, which are not yet final
are expected to require reduced sulfur levels.  It is anticipated that if final
diesel regulations are adopted, consistent with the published proposed
regulations, then the combined compliance cost for the gasoline and diesel
regulations could amount to $600 to $700 million between 2003 and 2005.  This is
a forward-looking statement and can only be a broad-based estimate due to the
ongoing evolution of regulatory requirements.  Some factors (among others) that
could potentially affect gasoline and diesel fuel compliance costs include
adoption of final diesel fuel regulations, obtaining the necessary construction
and environmental permits, operating considerations, and unforeseen hazards such
as weather conditions.
     
     MAP has responded to information requests from the EPA regarding New Source
Review ("NSR") compliance at its Garyville and Texas City refineries.  In
addition, the scope of the EPA's 1998 multi-media inspections of the Detroit and
Robinson refineries included NSR compliance.  NSR requires new major stationary
sources and major modifications at existing major stationary sources to obtain
permits, perform air quality analysis and install stringent air pollution
control equipment at affected facilities. The current EPA initiative appears to
target many items that the industry has historically considered routine repair,
replacement and maintenance or other activity exempted from the NSR
requirements.  MAP is engaged in ongoing discussions with the EPA on these
issues concerning all of MAP's refineries.

     While MAP has not been notified of any formal findings or violations
resulting from either the information requests or inspections regarding NSR
compliance; MAP has been informed during discussions with the EPA of potential
non-compliance concerns of the EPA based on these inspections and other
information identified by the EPA.  Currently, discussions with the EPA have
been of a general and technical nature without any commitment to specific
control technologies, implementation schedules or possible penalties.  It is
possible that a framework for resolution of these issues could be reached as
early as the fourth quarter of this year and that any resolution may include
other pending matters such as those arising from the EPA's 1998 multi-media
inspections.

     In October 1998, the National Enforcement Investigations Center and Region
V of the EPA conducted a multi-media inspection of MAP's Detroit refinery.
Subsequently, in November 1998, Region V conducted a multi-media inspection of
MAP's Robinson refinery.  These inspections covered compliance with the Clean
Air Act (New Source Performance Standards, Prevention of Significant
Deterioration, and the National Emission Standards for Hazardous Air Pollutants
for Benzene), the Clean Water Act (permit exceedances for the Waste Water
Treatment Plant), reporting obligations under the Emergency Planning and
Community Right to Know Act and the handling of process waste.  Although MAP has
been advised as to certain compliance issues regarding MAP's Detroit refinery,
complete findings on the results of the inspections have not been issued.  Thus
far, MAP has been served with two Notices of Violation ("NOV")and three Findings
of Violation in connection with the multi-media inspections at its Detroit
refinery.  The Detroit notices allege violations of the

<PAGE> 31

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Michigan State Air Pollution Regulation, the EPA New Source Performance
Standards and National Emission Standards for Hazardous Air Pollutant for
benzene.  On March 6, 2000, MAP received its first NOV arising out of the multi-
media inspection of the Robinson Refinery conducted in November 1998.  The NOV
is for alleged Resource Conservation and Recovery Act (hazardous waste)
violations.  MAP can contest the factual and legal basis for the allegations
prior to the EPA taking enforcement action.  At this time, it is not known when
complete findings on the results of these multi-media inspections will be
issued.

     In 1996, USX was notified by the Indiana Department of Environmental
Management  ("IDEM") acting as lead trustee, that IDEM and the U.S. Department
of the Interior had concluded a preliminary investigation of potential injuries
to natural resources related to releases of hazardous substances and oil into
the Grand Calumet River, Indiana Harbor Canal and Indiana Harbor near Gary
Works. USX was identified as a PRP along with 15 other companies owning property
along the river, harbor canal and harbor.  The public trustees have completed a
preassessment screen pursuant to federal regulations and are performing a
Natural Resource Damage Assessment.  USX is cooperating with eight other PRPs in
a joint defense group which is currently engaged in settlement discussions with
the public trustees and EPA.

     In February 1999, the United States Department of Justice and the EPA
issued a letter demanding a cash payment of approximately $4 million to resolve
a Finding of Violation issued in 1997 alleging improper sampling of benzene
waste streams at Gary Works.  On September 18, 2000, a Consent Decree was
entered with the United States District Court which settled the alleged
violation of the benzene National Emissions Standards for Hazardous Air
Pollutants.  U. S. Steel agreed to pay a civil penalty of $587,000 and to
complete a Supplemental Environmental Project removing transformers containing
polychlorinated biphenyl at a cost of approximately $2.2 million.
Payment of the civil penalty was made on October 13, 2000.

     USX is the subject of, or a party to, a number of pending or threatened
legal actions, contingencies and commitments involving a variety of matters,
including laws and regulations relating to the environment (see Note 15 to the
USX Consolidated Financial Statements for a discussion of certain of these
matters). The ultimate resolution of these contingencies could, individually or
in the aggregate, be material to the USX Consolidated Financial Statements.
However, management believes that USX will remain a viable and competitive
enterprise even though it is possible that these contingencies could be resolved
unfavorably. See discussion of Liquidity herein.

Outlook
-------
     See Outlook in Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Marathon Group and the U. S. Steel Group.

<PAGE> 32


                    USX CORPORATION AND SUBSIDIARY COMPANIES
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Commodity Price Risk and Related Risks
--------------------------------------
     Sensitivity analysis of the incremental effects on income before income 
taxes of hypothetical 10% and 25% changes in commodity prices for open 
derivative commodity instruments are provided in the following table(a):

<TABLE>
                                        Incremental Decrease in
                                       Income Before Income Taxes
                                        Assuming a Hypothetical
                                            Price Change of:

(Dollars in millions)                          10%      25%
-------------------------------------------------------------------------------
<S>                                            <C>      <C>    <C>
Derivative Commodity Instruments
Marathon Group (b) (c)
  Crude oil
   Other than trading (f)(g)                   $19.8    $54.6  (d)
  Natural gas
   Other than trading (f)(g)                     4.3     10.6  (d)
  Refined products
   Other than trading (f)(g)                    11.1     29.6  (d)

U. S. Steel Group
  Zinc
   Other than trading                            .2       .4   (e)
  Tin
   Other than trading                            .1       .2   (e)
<FN>
 (a)  Gains and losses on derivative commodity instruments used for other
      than trading activities are generally offset by price changes in the
      underlying commodity.  Effects of these offsets are not reflected in the
      sensitivity analyses.  Amounts reflect the estimated incremental decrease
      in income before income taxes of hypothetical 10% and 25% changes in
      closing commodity prices for each open contract position at September 30,
      2000. Management evaluates the portfolios of derivative commodity
      instruments on an ongoing basis and adjusts  strategies to reflect
      anticipated market conditions, changes in risk profiles and overall
      business objectives.  Changes to the portfolios subsequent to September
      30, 2000, will cause future income before income tax effects to differ
      from those presented in the table.
 (b)  The number of net open contracts varied throughout third quarter
      2000, from a low of 12,252 contracts at July 5, to a high of 34,126
      contracts at September 27, and averaged 21,063 for the quarter.  The
      derivative commodity instruments used and hedging positions taken also
      varied throughout third quarter 2000, and will continue to vary in the
      future.  Because of these variations in the composition of the portfolio
      over time, the number of open contracts, by itself, cannot be used to
      predict future income effects.
 (c)  The calculation of sensitivity amounts for basis swaps assumes that
      the physical and paper indices are perfectly correlated.  Gains and
      losses on options are based on changes in intrinsic value only.
 (d)  Price increase.
 (e)  Price decrease.
 (f)  The direction of the price change used in calculating the sensitivity
      amount for each commodity reflects that which would result in the largest
      incremental decrease in income before income taxes when applied to the
      derivative commodity instruments used to hedge that commodity.
 (g)  Adjusted to reflect Marathon's 62 percent ownership of MAP.
</TABLE>


<PAGE> 33
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Interest Rate Risk
------------------
     USX is subject to the effects of interest rate fluctuations on certain of
its non-derivative financial instruments.  A sensitivity analysis of the
projected incremental effect of a hypothetical 10% decrease in September 30,
2000 interest rates on the fair value of USX's non-derivative financial
instruments is provided in the following table:

<TABLE>
(Dollars in millions)
------------------------------------------------------------------------------

As of September 30, 2000
                                                                 Incremental
                                                                 Increase in
Non-Derivative                                Carrying   Fair        Fair
Financial Instruments(a)                        Value   Value      Value(b)
------------------------------------------------------------------------------
<S>                                           <C>       <C>       <C>
Financial assets:
  Investments and
    long-term receivables                        $188      $241          $ -
------------------------------------------------------------------------------
Financial liabilities:
  Long-term debt (c)(d)                        $3,734    $3,885         $154
  Preferred stock of
    subsidiary                                    250       241           21
  USX obligated mandatorily redeemable convertible
    preferred securities of a subsidiary trust    183       129           11
                                                -----     -----        -----
        Total liabilities                      $4,167    $4,255         $186
------------------------------------------------------------------------------
<FN>
(a) Fair values of cash and cash equivalents, receivables, notes payable,
    accounts payable and accrued interest, approximate carrying value and are
    relatively insensitive to changes in interest rates due to the short-term
    maturity of the instruments. Accordingly, these instruments are excluded
    from the table.
(b) Reflects, by class of financial instrument, the estimated incremental effect
    of a hypothetical 10% decrease in interest rates at September 30, 2000 on
    the fair value of USX's non-derivative financial instruments. For financial
    liabilities, this assumes a 10% decrease in the weighted average yield to
    maturity of USX's long-term debt at September 30, 2000.
(c) Includes amounts due within one year.
(d) Fair value was based on market prices where available, or current borrowing
    rates for financings with similar terms and maturities.
</TABLE>


<PAGE> 34
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Foreign Currency Exchange Rate Risk
-----------------------------------
     USX is subject to the risk of price fluctuations related to anticipated
revenues and operating costs, firm commitments for capital expenditures and
existing assets or liabilities denominated in currencies other than U.S.
dollars.  USX has not generally used derivative instruments to manage this risk.
However, USX has made limited use of forward currency contracts to manage
exposure to certain currency price fluctuations.  At September 30, 2000, USX had
open Canadian dollar forward purchase contracts with a total carrying value of
approximately $9 million.  A 10% increase in the Canadian dollar to U.S. dollar
forward rate would result in a charge to income of approximately $1 million.

Equity Price Risk
-----------------
     As of September 30, 2000, USX had no material exposure to equity price
risk.

Safe Harbor
-----------
     USX's Quantitative and Qualitative Disclosures About Market Risk include
forward-looking statements with respect to management's opinion about risks
associated with USX's use of derivative instruments. These statements are based
on certain assumptions with respect to market prices and industry supply and
demand for crude oil, natural gas, refined products, steel products and certain
raw materials. To the extent that these assumptions prove to be inaccurate,
future outcomes with respect to USX's derivative usage may differ materially
from those discussed in the forward-looking statements.

<PAGE> 35

                                 USX CORPORATION

<TABLE>                                        

                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
                                                --------------  --------------
(Dollars in millions)                            2000    1999    2000     1999
------------------------------------------------------------------------------
<S>                                           <C>       <C>    <C>      <C>
REVENUES

 Marathon Group                                 $9,287  $6,490 $26,141  $16,822
 U. S. Steel Group                               1,430   1,337   4,588    3,852
 Eliminations                                      (24)    (14)    (54)     (41)
                                                ------  ------  ------   ------
   Total                                       $10,693  $7,813 $30,675  $20,633


INCOME FROM OPERATIONS

 Marathon Group                                   $729    $561  $2,114   $1,363
 U. S. Steel Group                                  60    (26)     263       75
                                                ------  ------  ------   ------
   Total                                          $789    $535  $2,377   $1,438




CASH FLOW DATA
--------------

CAPITAL EXPENDITURES

 Marathon Group                                   $302    $295    $878     $827
 U. S. Steel Group                                  36      68     133      221
                                                ------  ------  ------   ------
   Total                                          $338    $363  $1,011   $1,048


INVESTMENTS (RETURNS) & OTHER AFFILIATE ACTIVITY - NET

 Marathon Group                                     $4     $49     $58     $105
 U. S. Steel Group                                  15      15      26       15
                                                ------  ------  ------   ------
   Total                                           $19     $64     $84     $120
</TABLE>


<PAGE> 36

Part I - Financial Information (Continued):

   B.  Marathon Group

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                       STATEMENT OF OPERATIONS (Unaudited)
                       -----------------------------------
                                       
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions, except per share amounts)  2000    1999    2000     1999
-------------------------------------------------------------------------------
<S>                                             <C>     <C>    <C>      <C>
REVENUES:
 Sales                                          $9,228  $6,464 $25,937  $16,751
 Dividend and affiliate income                      40      14      68       58
 Net gains (losses) on disposal of assets            1      (6)     95      (17)
 Gain on ownership change in Marathon Ashland
  Petroleum LLC                                      1      11       9       11
 Other income                                       17       7      32       19
                                                ------  ------  ------   ------
   Total revenues                                9,287   6,490  26,141   16,822
                                                ------  ------  ------   ------
COSTS AND EXPENSES:
 Cost of sales (excludes items shown below)      6,923   4,621  19,275   11,695
 Selling, general and administrative expenses      151     121     409      375
 Depreciation, depletion and amortization          241     219     727      678
 Taxes other than income taxes                   1,192   1,064   3,474    3,100
 Exploration expenses                               51      40     142      162
 Inventory market valuation credits                  -    (136)      -     (551)
                                                ------  ------  ------   ------
   Total costs and expenses                      8,558   5,929  24,027   15,459
                                                ------  ------  ------   ------
INCOME FROM OPERATIONS                             729     561   2,114    1,363
Net interest and other financial costs              53      72     192      218
Minority interest in income of Marathon Ashland
 Petroleum LLC                                     115     148     373      405
                                                ------  ------  ------   ------
INCOME BEFORE INCOME TAXES                         561     341   1,549      740
Provision for estimated income taxes               440     111     807      257
                                                ------  ------  ------   ------
NET INCOME                                        $121    $230    $742     $483
                                                ======  ======  ======   ======
MARATHON STOCK DATA:
 Net income per share - basic                     $.38    $.74   $2.38    $1.56
                      - diluted                    .38     .74    2.37     1.56

 Dividends paid per share                          .23     .21     .65      .63

 Weighted average shares, in thousands
   - Basic                                     311,847 309,392 312,068  309,160
   - Diluted                                   312,094 309,810 312,272  309,491




<FN>
Selected notes to financial statements appear on pages 39-48.
</TABLE>


<PAGE> 37

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                            BALANCE SHEET (Unaudited)
                        ---------------------------------
                                        
                                                   September 30 December 31
(Dollars in millions)                                  2000         1999
------------------------------------------------------------------------------
<S>                                                <C>          <C>
ASSETS

Current assets:
  Cash and cash equivalents                             $165          $111
  Receivables, less allowance for doubtful
   accounts of $2 and $2                               2,212         1,876
  Inventories                                          2,030         1,884
  Deferred income tax benefits                            32            23
  Other current assets                                   259           218
                                                      ------        ------
     Total current assets                              4,698         4,112

Investments and long-term receivables                    857           762
Property, plant and equipment, less accumulated
 depreciation, depletion and amortization of
 $10,837 and $10,567                                  10,305        10,293
Prepaid pensions                                         234           225
Other noncurrent assets                                  282           313
                                                      ------        ------
     Total assets                                    $16,376       $15,705
                                                      ======        ======
LIABILITIES

Current liabilities:
  Notes payable                                          $52            $-
  Accounts payable                                     2,888         2,685
  Payroll and benefits payable                           185           146
  Income taxes payable                                   129            97
  Accrued taxes                                          130           107
  Accrued interest                                        50            92
  Long-term debt due within one year                     287            48
                                                      ------        ------
     Total current liabilities                         3,721         3,175

Long-term debt, less unamortized discount              2,445         3,320
Deferred income taxes                                  1,814         1,495
Employee benefits                                        603           564
Deferred credits and other liabilities                   387           414
Preferred stock of subsidiary                            184           184

Minority interest in Marathon Ashland Petroleum LLC    1,922         1,753

COMMON STOCKHOLDERS' EQUITY                            5,300         4,800
                                                      ------        ------
   Total liabilities and common stockholders' equity $16,376       $15,705
                                                      ======        ======



<FN>
Selected notes to financial statements appear on pages 39-48.
</TABLE>


<PAGE> 38

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                       STATEMENT OF CASH FLOWS (Unaudited)
                       -----------------------------------
                                                       Nine Months Ended
                                                          September 30
(Dollars in millions)                                  2000         1999
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                              $742          $483
Adjustments to reconcile to net cash provided from
 operating activities:
  Minority interest in income of Marathon Ashland
   Petroleum LLC                                         373           405
  Depreciation, depletion and amortization               727           678
  Exploratory dry well costs                              52            74
  Inventory market valuation credits                       -          (551)
  Pensions and other postretirement benefits              17            41
  Deferred income taxes                                  314            89
  Gain on ownership change in Marathon 
                     Ashland Petroleum LLC                (9)          (11)
  Net (gains) losses on disposal of assets               (95)           17
  Changes in:
     Current receivables                                (334)         (667)
     Inventories                                        (146)          (95)
     Current accounts payable and accrued expenses       149           630
     All other - net                                     (39)           51
                                                      ------        ------
     Net cash provided from operating activities       1,751         1,144
                                                      ------        ------
INVESTING ACTIVITIES:
Capital expenditures                                    (878)         (827)
Disposal of assets                                       252           255
Restricted cash - withdrawals                            216            39
                - deposits                              (205)          (25)
Affiliates - investments                                 (62)           (2)
           - loans and advances                           (5)         (104)
           - returns and repayments                        9             1
All other - net                                           16           (10)
                                                      ------        ------
     Net cash used in investing activities              (657)         (673)
                                                      ------        ------
FINANCING ACTIVITIES:
Decrease in Marathon Group's portion of USX
 consolidated debt                                      (586)          (41)
Specifically attributed debt - borrowings                273           141
                             - repayments               (271)         (141)
Marathon Stock - issued                                    -            46
               - repurchased                             (37)            -
Dividends paid                                          (203)         (193)
Distributions to minority shareholder of
 Marathon Ashland Petroleum LLC                         (212)         (333)
                                                      ------        ------
     Net cash used in financing activities            (1,036)         (521)
                                                      ------        ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                   (4)            -
                                                      ------        ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      54           (50)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR           111           137
                                                      ------        ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD              $165           $87
                                                      ======        ======
Cash used in operating activities included:
  Interest and other financial costs paid (net of
   amount capitalized)                                 $(233)        $(250)
  Income taxes paid, including settlements with the
   U. S. Steel Group                                    (466)          (31)

<FN>
Selected notes to financial statements appear on pages 39-48.
</TABLE>


<PAGE> 39
                        MARATHON GROUP OF USX CORPORATION
                     SELECTED NOTES TO FINANCIAL STATEMENTS
                     --------------------------------------
                                   (Unaudited)

1.   The information furnished in these financial statements is unaudited
     but, in the opinion of management, reflects all adjustments necessary for a
     fair presentation of the results for the periods covered.  All such
     adjustments are of a normal recurring nature unless disclosed otherwise.
     These financial statements, including selected notes, have been prepared in
     accordance with the applicable rules of the Securities and Exchange
     Commission and do not include all of the information and disclosures
     required by generally accepted accounting principles for complete financial
     statements.  Certain reclassifications of prior year data have been made to
     conform to 2000 classifications.  Additional information is contained in
     the USX Annual Report on Form 10-K for the year ended December 31, 1999.

     In March 2000, the Emerging Issues Task Force of the Financial
     Accounting Standards Board (EITF) issued EITF Topic No. D-88, which
     requires companies to disclose their accounting policy for costs incurred
     in connection with planned major maintenance activities.  For the Marathon
     Group, such costs primarily are associated with refinery turnarounds, which
     are expensed in the same annual period as incurred; however, estimated
     annual turnaround costs are recognized in income throughout the year on a
     pro rata basis.

2.   The financial statements of the Marathon Group include the financial
     position, results of operations and cash flows for the businesses of
     Marathon Oil Company (Marathon) and certain other subsidiaries of USX, and
     a portion of the corporate assets and liabilities and related transactions
     which are not separately identified with ongoing operating units of USX.
     These financial statements are prepared using the amounts included in the
     USX consolidated financial statements.  Corporate amounts reflected in
     these financial statements are determined based upon methods which
     management believes to be reasonable.  The accounting policies applicable
     to the preparation of the financial statements of the Marathon Group may be
     modified or rescinded in the sole discretion of the Board of Directors of
     USX (Board), although the Board has no present intention to do so.  The
     Board may also adopt additional policies depending on the circumstances.

     Although the financial statements of the Marathon Group and the U. S.
     Steel Group separately report the assets, liabilities (including contingent
     liabilities) and stockholders' equity of USX attributed to each such Group,
     such attribution of assets, liabilities (including contingent liabilities)
     and stockholders' equity between the Marathon Group and the U. S. Steel
     Group for the purpose of preparing their respective financial statements
     does not affect legal title to such assets and responsibility for such
     liabilities.  Holders of USX-Marathon Group Common Stock (Marathon Stock)
     and USX-U. S. Steel Group Common Stock (Steel Stock) are holders of common
     stock of USX and continue to be subject to all the risks associated with an
     investment in USX and all of its businesses and liabilities.  Financial
     impacts arising from one Group that affect the overall cost of USX's
     capital could affect the results of operations and financial condition of
     the other Group.  In addition, net losses of either Group, as well as
     dividends or distributions on any class of USX Common Stock or series of
     Preferred Stock and repurchases of any class of USX Common Stock or series
     of Preferred Stock at prices in excess of par or stated value, will reduce
     the funds of USX legally available for payment of dividends on both classes
     of Common Stock.  Accordingly, the USX consolidated financial information
     should be read in connection with the Marathon Group financial information.

<PAGE> 40

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


2.   (Continued)

     The financial statement provision for estimated income taxes and
     related tax payments or refunds have been reflected in the Marathon Group
     and the U. S. Steel Group financial statements in accordance with USX's tax
     allocation policy for such groups.  In general, such policy provides that
     the consolidated tax provision and related tax payments or refunds are
     allocated between the Marathon Group and the U. S. Steel Group for group
     financial statement purposes, based principally upon the financial income,
     taxable income, credits, preferences and other amounts directly related to
     the respective groups.

     The provision for estimated income taxes for the Marathon Group is
     based on tax rates and amounts which recognize management's best estimate
     of current and deferred tax assets and liabilities.  Differences between
     the combined interim tax provisions of the Marathon and U. S. Steel Groups
     and USX consolidated are allocated to each group based on the relationship
     of the individual group provisions to the combined interim provisions.

3.   The method of calculating net income (loss) per common share for the
     Marathon Stock and Steel Stock reflects the Board's intent that the
     separately reported earnings and surplus of the Marathon Group and the
     U. S. Steel Group, as determined consistent with the USX Restated
     Certificate of Incorporation, are available for payment of dividends on the
     respective classes of stock, although legally available funds and
     liquidation preferences of these classes of stock do not necessarily
     correspond with these amounts.

     Basic net income per share is based on the weighted average number of
     common shares outstanding.

     Diluted net income per share assumes exercise of stock options,
     provided the effect is not antidilutive.

     See Note 7 of the Notes to USX Consolidated Financial Statements for
     the computation of income per share.

4.   In 1998, Marathon and Ashland Inc. (Ashland) combined the major
     elements of their refining, marketing and transportation (RM&T) operations.
     Marathon transferred certain RM&T assets to Marathon Ashland Petroleum LLC
     (MAP), a new consolidated subsidiary.  Also, Marathon acquired certain RM&T
     net assets from Ashland in exchange for a 38% interest in MAP.  In
     accordance with MAP closing agreements, Marathon and Ashland made capital
     contributions to MAP for environmental improvements.  The closing
     agreements stipulate that ownership interests in MAP will not be adjusted
     as a result of such contributions.  Accordingly, Marathon recognized a gain
     on ownership change of $1 million in the third quarter of 2000 and $9
     million in the nine months of 2000 and $11 million in the third quarter and
     nine months of 1999.




<PAGE> 41

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)
                                        

5.   The items below are included in both revenues and costs and expenses,
     resulting in no effect on income.

<TABLE>
                                                         (In millions)
                                                -------------------------------
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
                                                 2000    1999    2000     1999
                                                 ----    ----    ----     ----
    <S>                                         <C>      <C>    <C>      <C>
    Matching crude oil and refined product
      buy/sell transactions settled in cash     $1,192    $901  $3,662   $2,471
    Consumer excise taxes on petroleum
      products and merchandise                   1,121   1,007   3,268    2,923
</TABLE>


6.   The Marathon Group's total comprehensive income was $121 million for
     the third quarter of 2000, $233 million for the third quarter of 1999, $739
     million for the nine months of 2000 and $488 million for the nine months of
     1999.

7.   The Marathon Group's operations consist of three reportable operating
     segments: 1) Exploration and Production (E&P) - explores for and produces
     crude oil and natural gas on a worldwide basis; 2) Refining, Marketing and
     Transportation (RM&T) - refines, markets and transports crude oil and
     petroleum products, primarily in the Midwest and southeastern United States
     through MAP; and 3) Other Energy Related Businesses (OERB).  OERB is an
     aggregation of two segments which fall below the quantitative reporting
     thresholds: 1) Natural Gas and Crude Oil Marketing and Transportation -
     markets and transports its own and third-party natural gas and crude oil in
     the United States; and 2) Power Generation - develops, constructs and
     operates independent electric power projects worldwide.  The results of
     segment operations are as follows:


<PAGE> 42

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


7.   (Continued)

<TABLE>                                                                  Total
(In millions)                                    E&P     RM&T    OERB   Segments
--------------------------------------------------------------------------------
<S>                                            <C>      <C>      <C>    <C>
THIRD QUARTER 2000
------------------
Revenues:
 Customer                                       $1,124  $7,595    $490   $9,209
 Intersegment (a)                                   74      10      20      104
 Intergroup (a)                                      9       -      10       19
 Equity in earnings of unconsolidated affiliates    28       5       4       37
 Other                                               5      13       3       21
                                                ------  ------  ------   ------
   Total revenues                               $1,240  $7,623    $527   $9,390
                                                ======  ======  ======   ======
Segment income                                    $465    $299     $12     $776
                                                ======  ======  ======   ======

THIRD QUARTER 1999
------------------
Revenues:
 Customer                                         $820  $5,413    $219   $6,452
 Intersegment (a)                                   61      16       9       86
 Intergroup (a)                                      5       -       7       12
 Equity in earnings (losses) of
  unconsolidated affiliates                         (2)      6       5        9
 Other                                               1      12       3       16
                                                ------  ------  ------   ------
   Total revenues                                 $885  $5,447    $243   $6,575
                                                ======  ======  ======   ======
Segment income                                    $201    $236     $13     $450
                                                ======  ======  ======   ======
<FN>
(a) Intersegment and intergroup sales and transfers were conducted under terms
    comparable to those with unrelated parties.
</TABLE>


<PAGE> 43

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


7.   (Continued)

<TABLE>
                                                                         Total
(In millions)                                    E&P     RM&T    OERB   Segments
--------------------------------------------------------------------------------
<S>                                             <C>    <C>      <C>     <C>
NINE MONTHS ENDED SEPTEMBER 30, 2000
------------------------------------
Revenues:
 Customer                                       $3,175 $21,576  $1,145  $25,896
 Intersegment (a)                                  262      79      52      393
 Intergroup (a)                                     20       -      21       41
 Equity in earnings of unconsolidated affiliates    24      15      12       51
 Other                                              15      33       9       57
                                                ------  ------  ------   ------
   Total revenues                               $3,496 $21,703  $1,239  $26,438
                                                ======  ======  ======   ======
Segment income                                  $1,130    $968     $25   $2,123
                                                ======  ======  ======   ======

NINE MONTHS ENDED SEPTEMBER 30, 1999
------------------------------------
Revenues:
 Customer                                       $2,081 $14,229    $414  $16,724
 Intersegment (a)                                  129      25      24      178
 Intergroup (a)                                     12       -      15       27
 Equity in earnings of
  unconsolidated affiliates                          2      13      18       33
 Other                                              20      28      12       60
                                                ------  ------  ------   ------
   Total revenues                               $2,244 $14,295    $483  $17,022
                                                ======  ======  ======   ======
Segment income                                    $361    $509     $47     $917
                                                ======  ======  ======   ======
<FN>
(a) Intersegment and intergroup sales and transfers were conducted under terms
    comparable to those with unrelated parties.
</TABLE>


<PAGE> 44

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)
                                        

7.   (Continued)

    The following schedules reconcile segment revenues and income to amounts
    reported in the Marathon Group financial statements:

<TABLE>
                                                      Third Quarter Ended
                                                          September 30
(In millions)                                          2000         1999
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues:
  Revenues of reportable segments                     $9,390        $6,575
  Items not allocated to segments:
   Gain on ownership change in MAP                         1            11
   Other (a)                                               -           (10)
  Elimination of intersegment revenues                  (104)          (86)
                                                      ------        ------
     Total Group revenues                             $9,287        $6,490
                                                      ======        ======

Income:
  Income for reportable segments                        $776          $450
  Items not allocated to segments:
   Gain on ownership change in MAP                         1            11
   Administrative expenses                               (48)          (26)
   Inventory market valuation adjustments                  -           136
   Other (a)                                               -           (10)
                                                      ------        ------
     Total Group income from operations                 $729          $561
                                                      ======        ======


<FN>
(a) Represents mainly in 1999, loss on sale of certain domestic production
    properties.
</TABLE>


<PAGE> 45

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)
                                        

7.   (Continued)

<TABLE>
                                                       Nine Months Ended
                                                          September 30
(In millions)                                          2000         1999
--------------------------------------------------------------------------------
<S>                                                  <C>           <C> 
Revenues:
  Revenues of reportable segments                    $26,438       $17,022
  Items not allocated to segments:
   Gain on ownership change in MAP                         9            11
   Other (a)                                              87           (33)
  Elimination of intersegment revenues                  (393)         (178)
                                                      ------        ------
     Total Group revenues                            $26,141       $16,822
                                                      ======        ======

Income:
  Income for reportable segments                      $2,123          $917
  Items not allocated to segments:
   Gain on ownership change in MAP                         9            11
   Administrative expenses                              (105)          (83)
   Inventory market valuation adjustments                  -           551
   Other (a)                                              87           (33)
                                                      ------        ------
     Total Group income from operations               $2,114        $1,363
                                                      ======        ======
<FN>
(a) Represents in 2000, gain on disposition of Angus/Stellaria.  Represents in
    1999, mainly the loss on sale of Scurlock Permian LLC, Carnegie Natural Gas
    Company and subsidiaries, and certain domestic production properties.
</TABLE>


<PAGE> 46

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)

8.   Inventories are carried at the lower of cost or market.  Cost of
     inventories of crude oil and refined products is determined under the last-
     in, first-out (LIFO) method.

<TABLE>
                                                         (In millions)
                                                    ------------------------
                                                   September 30 December 31
                                                       2000         1999
                                                   ------------ -----------
    <S>                                            <C>          <C>
    Crude oil and natural gas liquids                   $789         $729
    Refined products and merchandise                   1,136        1,046
    Supplies and sundry items                            105          109
                                                      ------        ------
      Total (at cost)                                  2,030        1,884
    Less inventory market valuation reserve                -            -
                                                      ------        ------
      Net inventory carrying value                    $2,030       $1,884
                                                      ======        ======
</TABLE>

     The inventory market valuation reserve reflects the extent that the
     recorded LIFO cost basis of crude oil and refined products inventories
     exceeds net realizable value.  The reserve is decreased to reflect
     increases in market prices and inventory turnover and increased to reflect
     decreases in market prices.  Changes in the inventory market valuation
     reserve result in noncash charges or credits to costs and expenses.  For
     additional information, see discussion of results of operations in the
     Marathon Group Management's Discussion and Analysis of Financial Condition
     and Results of Operations.

9.   At September 30, 2000, and December 31, 1999, income taxes payable
     represents an estimated income tax payable to the U. S. Steel Group. In
     addition, included in deferred credits and other liabilities at September
     30, 2000, and December 31, 1999, is $97 million income taxes payable to the
     U. S. Steel Group.  These amounts have been determined in accordance with
     the tax allocation policy discussed in Note 2.

10.  USX is the subject of, or a party to, a number of pending or
     threatened legal actions, contingencies and commitments relating to the
     Marathon Group involving a variety of matters, including laws and
     regulations relating to the environment.  Certain of these matters are
     discussed below.  The ultimate resolution of these contingencies could,
     individually or in the aggregate, be material to the Marathon Group
     financial statements.  However, management believes that USX will remain a
     viable and competitive enterprise even though it is possible that these
     contingencies could be resolved unfavorably to the Marathon Group.  See
     discussion of Liquidity in USX Consolidated Management's Discussion and
     Analysis of Financial Condition and Results of Operations.

     The Marathon Group is subject to federal, state, local and foreign
     laws and regulations relating to the environment.  These laws generally
     provide for control of pollutants released into the environment and require
     responsible parties to undertake remediation of hazardous waste disposal
     sites.  Penalties may be imposed for noncompliance.  At September 30, 2000,
     and December 31, 1999, accrued liabilities for remediation totaled $72
     million and $69 million, respectively.  It is not presently possible to
     estimate the ultimate amount of

<PAGE> 47

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


10.  (Continued)

     all remediation costs that might be incurred or the penalties that may
     be imposed.  Receivables for recoverable costs from certain states, under
     programs to assist companies in cleanup efforts related to underground
     storage tanks at retail marketing outlets, were $57 million at September
     30, 2000, and $52 million at December 31, 1999.

     For a number of years, the Marathon Group has made substantial capital
     expenditures to bring existing facilities into compliance with various laws
     relating to the environment.  In the first nine months of 2000 and for the
     years 1999 and 1998, such capital expenditures totaled $22 million,
     $46 million and $83 million, respectively.  The Marathon Group anticipates
     making additional such expenditures in the future; however, the exact
     amounts and timing of such expenditures are uncertain because of the
     continuing evolution of specific regulatory requirements.

     At September 30, 2000, and December 31, 1999, accrued liabilities for
     platform abandonment and dismantlement totaled $161 million and $152
     million, respectively.

     Guarantees by USX and its consolidated subsidiaries of the liabilities
     of an affiliated entity of the Marathon Group totaled $131 million at
     September 30, 2000.

     At September 30, 2000, the Marathon Group's pro rata share of
     obligations of LOOP LLC and various pipeline affiliates secured by
     throughput and deficiency agreements totaled $120 million.  Under the
     agreements, the Marathon Group is required to advance funds if the
     affiliates are unable to service debt.  Any such advances are prepayments
     of future transportation charges.

     The Marathon Group's contract commitments to acquire property, plant
     and equipment and long-term investments at September 30, 2000, totaled
     $635 million compared with $485 million at December 31, 1999.

11.  In the fourth quarter 2000, the Marathon Group must adopt several
     recently issued accounting pronouncements primarily related to the
     classification of items in the statement of operations.  In December 1999,
     the Securities and Exchange Commission (SEC) issued Staff Accounting
     Bulletin No. 101 (SAB 101) "Revenue Recognition in Financial Statements,"
     which summarizes the SEC staff's interpretations of generally accepted
     accounting principles related to revenue recognition and classification.
     During the third quarter 2000, the EITF issued EITF Consensus No. 99-19
     "Reporting Revenue Gross as a Principal versus Net as an Agent", which
     addresses whether certain cost items should be reported as a reduction of
     revenue or as a component of cost of sales, and EITF Consensus No. 00-10
     "Accounting for Shipping and Handling Fees and Costs," which addresses the
     classification of costs incurred for shipping goods to customers.  The
     adoption of these new pronouncements will have no net effect on the
     financial position or results of operations of the Marathon Group, although
     they will require reclassifications of certain amounts in the statement of
     operations.



<PAGE> 48

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


12.  On October 19, 2000, the Marathon Group signed a definitive agreement
     with Shell to transfer its 37.5 percent interest in Sakhalin Energy
     Investment Company Ltd.(Sakhalin Energy).  In exchange, the Marathon Group
     will receive certain Shell interests in the UK Atlantic Margin area and the
     U.S. Gulf of Mexico as well as reimbursement for all Sakhalin project
     capital expenditures made by the Marathon Group in 2000.  The closing and
     transfer of operations are expected to take place in early December 2000.

     The increased likelihood of closing this transaction resulted in a one-
     time, noncash deferred tax charge of $235 million in the third quarter of
     2000.  Balance sheet net deferred tax liabilities include deferred U.S. tax
     benefits related to certain foreign subsidiaries.  Until now, management
     concluded it was likely that income from foreign sources, such as Sakhalin
     Energy, would allow these benefits to be realized in the future.  The
     definitive agreement to transfer the Marathon Group's interest in Sakhalin
     Energy affects the timing, amount and nature of expected future foreign
     source income, decreasing the likelihood that these tax benefits will be
     realized.


<PAGE> 49

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The Marathon Group includes Marathon Oil Company ("Marathon") and certain
other subsidiaries of USX Corporation ("USX"), which are engaged in worldwide
exploration and production of crude oil and natural gas; domestic refining,
marketing and transportation of petroleum products primarily through Marathon
Ashland Petroleum ("MAP"), owned 62 percent by Marathon; and other energy
related businesses.  The Management's Discussion and Analysis should be read in
conjunction with the Marathon Group's Financial Statements and Selected Notes to
Financial Statements.  The discussion of Results of Operations should be read in
conjunction with the Supplemental Statistics provided on page 63.

     Certain sections of Management's Discussion and Analysis include forward-
looking statements concerning trends or events potentially affecting the
businesses of the Marathon Group.  These statements typically contain words such
as "anticipates", "believes", "estimates", "expects", "targets", "scheduled" or
similar words indicating that future outcomes are uncertain.  In accordance with
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, these statements are accompanied by cautionary language identifying
important factors, though not necessarily all such factors, that could cause
future outcomes to differ materially from those set forth in forward-looking
statements.  For additional risk factors affecting the businesses of the
Marathon Group, see Supplementary Data - Disclosures About Forward-Looking
Statements in the USX Annual Report on Form 10-K for the year ended December 31,
1999.

<PAGE> 50
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Results of Operations
---------------------
     Revenues for the third quarter and first nine months of 2000 and 1999 are
summarized in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
                                                -----   -----   -----    -----
<S>                                             <C>     <C>     <C>      <C>
Exploration & production ("E&P")                $1,240    $885  $3,496   $2,244
Refining, marketing & transportation ("RM&T")    7,623   5,447  21,703   14,295
Other energy related businesses (a)                527     243   1,239      483
                                                ------  ------  ------   ------
     Revenues of reportable segments            $9,390  $6,575 $26,438  $17,022

Revenues not allocated to segments:
 Gain on ownership change in MAP                     1      11       9       11
 Other (b)                                           -     (10)     87      (33)
Elimination of intersegment revenues              (104)    (86)   (393)    (178)
                                                ------  ------  ------   ------
     Total Group revenues                       $9,287  $6,490 $26,141  $16,822
                                                ======  ======  ======   ======

Items included in both revenues and costs and expenses, resulting in no effect
on income:

Consumer excise taxes on petroleum
  products and merchandise                      $1,121  $1,007  $3,268   $2,923
Matching crude oil and refined product
  buy/sell transactions settled in cash:
 E&P                                              $119    $176    $496     $451
 RM&T                                            1,073     725   3,166    2,020
                                                 -----   -----   -----    -----
 Total buy/sell transactions                    $1,192    $901  $3,662   $2,471

---------
<FN>
(a) Includes domestic natural gas and crude oil marketing and transportation,
    and power generation.
(b) Represents in 2000, a gain on the disposition of Angus/Stellaria and in
    1999, a loss on the sale of certain domestic production properties and a
    loss on sale of Scurlock Permian LLC ("Scurlock") and Carnegie Natural Gas
    Company and affiliated subsidiaries ("Carnegie"), partially offset by a gain
    on the sale of certain Egyptian properties.
</TABLE>

     E&P segment revenues increased by $355 million in the third quarter of 2000
from the comparable prior-year period.  For the first nine months of 2000,
revenues increased by $1,252 million from the prior-year period.  The increase
in both periods primarily reflected higher worldwide liquid hydrocarbon and
natural gas prices, partially offset by lower domestic liquid hydrocarbon
volumes.

     RM&T segment revenues increased by $2,176 million in the third quarter of
2000 from the comparable prior-year period.  For the first nine months of 2000,
revenues increased by $7,408 million from the prior-year period.  The increase
in both periods primarily reflected higher refined product prices and increased
refined product sales volumes.

<PAGE> 51
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Other energy related businesses segment revenues increased by $284 million
in the third quarter of 2000 from the comparable prior-year period.  For the
first nine months of 2000, revenues increased by $756 million from the prior-
year period.  The increase in both periods primarily reflected higher natural
gas and crude oil purchase and resale activity accompanied by higher crude oil
and natural gas prices.

     Income from operations for the third quarter and first nine months of 2000
and 1999 is summarized in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
                                                -----   -----   -----    -----
<S>                                             <C>     <C>     <C>      <C>
E&P
 Domestic                                         $305    $168    $783     $299
 International                                     160      33     347       62
                                                ------  ------  ------   ------
   Income for E&P reportable segment               465     201   1,130      361
RM&T                                               299     236     968      509
Other energy related businesses                     12      13      25       47
                                                ------  ------  ------   ------
     Income for reportable segments               $776    $450  $2,123     $917

Items not allocated to segments:
 Administrative expenses (a)                      $(48)   $(26)  $(105)    $(83)
 IMV reserve adjustment (b)                          -     136       -      551
 Loss on disposal of assets (c)                      -     (10)      -      (33)
 Gain on disposition of Angus/Stellaria (d)          -       -      87        -
 Gain on ownership change in MAP (e)                 1      11       9       11
                                                ------  ------  ------   ------
     Total Group income from operations           $729    $561  $2,114   $1,363
                                                ======  ======  ======   ======
--------
<FN>
(a) Includes the portion of the Marathon Group's administrative costs not
    charged to the operating segments and the portion of USX corporate general
    and administrative costs allocated to the Marathon Group.
(b) The inventory market valuation ("IMV") reserve reflects the extent to which
    the recorded LIFO cost basis of crude oil and refined products inventories
    exceeds net realizable value.  For additional discussion of the IMV, see
    Note 8 to the Marathon Group Financial Statements.
(c) For the third quarter of 1999, this represented a loss on the sale of
    certain domestic production properties, partially offset by a gain on the 
    sale of certain Egyptian properties.  For the first nine months of 1999, 
    this also included a loss from the sale of Scurlock and Carnegie.
(d) Resulted from the disposition of Marathon's 33.34 percent interest in the
    Angus/Stellaria development located in the Gulf of Mexico.
(e) For additional discussion of the gain on ownership change in MAP, see Note 4
    to the Marathon Group Financial Statements.
</TABLE>


<PAGE> 52
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Income for reportable segments in the third quarter of 2000 increased by
$326 million from last year's third quarter, due primarily to higher worldwide
liquid hydrocarbon and natural gas prices, higher refined product margins, and
increased liquid hydrocarbon volumes.  Income for reportable segments in the
first nine months of 2000 increased by $1,206 million from the first nine months
of 1999, due primarily to higher worldwide liquid hydrocarbon and natural gas
prices and higher refined product margins.

     Worldwide E&P segment income in the third quarter of 2000 increased by
$264 million from last year's third quarter.  Results in the first nine months
of 2000 increased by $769 million from the same period in 1999.

     Domestic E&P income in the third quarter of 2000 increased by $137 million
from last year's third quarter.  Results in the first nine months of 2000
increased by $484 million from the same period in 1999.  These increases were
mainly due to higher liquid hydrocarbon and natural gas prices, partially offset
by lower liquid hydrocarbon and natural gas volumes due to natural field
declines and asset sales and derivative losses from other than trading
activities.

     International E&P income in the third quarter of 2000 increased by
$127 million from last year's third quarter.  This increase was mainly due to
higher liquid hydrocarbon and natural gas prices and higher liquid hydrocarbon
liftings, primarily in Russia and Gabon.  Results in the first nine months of
2000 increased by $285 million from the same period in 1999.  In addition to the
factors discussed previously, the increase was also due to lower dry well
expense, offset by lower natural gas volumes.

     RM&T segment income in the third quarter of 2000 increased by $63 million
from last year's third quarter.  Results in the first nine months of 2000
increased by $459 million from the same period in 1999.  These increases were
mainly due to higher refined product margins and increased refined product sales
volumes.

     Other energy related businesses segment income in the first nine months of
2000 decreased by $22 million from the same period in 1999.  This decrease was
primarily a result of derivative losses from other than trading activities and
lower equity earnings as a result of decreased pipeline throughput.  Also, the
1999 results included a second quarter reversal of abandonment accruals of $10
million.

Items not allocated to reportable segments:
     
     Administrative expenses in the third quarter and first nine months of 2000
increased by $22 million from the same periods in 1999.  The increase was
primarily due to higher accruals for employee benefit plans, and Voluntary Early
Retirement Program ("VERP") and reorganization costs recorded in the third
quarter of 2000.
     
     IMV reserve adjustment - When United States Steel Corporation acquired
Marathon Oil Company in March 1982, crude oil and refined product prices were at
historically high levels.  In applying the purchase method of accounting, the
Marathon Group's crude oil and refined product inventories were revalued by
reference to current prices at the time of acquisition, and this became the new
LIFO cost basis of the inventories.  Generally accepted accounting principles
require that inventories be carried at lower of cost or market.  Accordingly,
the Marathon Group has established an IMV reserve to reduce the cost basis of
its inventories to net realizable value.  Quarterly adjustments to the IMV
reserve, if necessary, result in noncash charges or credits to income from
operations.


<PAGE> 53
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     These adjustments affect the comparability of financial results from period
to period as well as comparisons with other energy companies, many of which do
not have such adjustments.  Therefore, the Marathon Group reports separately the
effects of the IMV reserve adjustments on financial results.  In management's
opinion, the effects of such adjustments should be considered separately when
evaluating operating performance.
     
     Net interest and other financial costs in the first nine months of 2000
decreased by $26 million from the comparable 1999 period, mainly due to
decreased costs resulting from lower average debt levels and higher interest
income, partially offset by lower capitalized interest on E&P projects.

     The minority interest in income of MAP, which represents Ashland's 38
percent ownership interest, decreased by $32 million in the first nine months of
2000 from the comparable 1999 period.  The 1999 results included a favorable IMV
reserve adjustment as discussed previously.

     The provision for estimated income taxes in the first nine months of 2000
increased by $550 million from the comparable 1999 period due to an increase in
income before taxes and a $235 million one-time, noncash deferred tax charge.
For additional information, see Note 12 to the Marathon Group Financial
Statements.

     Net income for the third quarter and first nine months decreased by
$109 million and increased by $259 million, respectively, in 2000 from 1999,
primarily reflecting the factors discussed above.

Cash Flows
----------
     Net cash provided from operating activities was $1,751 million in the first
nine months of 2000, compared with $1,144 million in the first nine months of
1999.  The $607 million increase mainly reflected the favorable effects of
improved net income (excluding noncash items), partially offset by increased
allocation for income tax payments and an income tax settlement with the Steel
Group in accordance with the group tax allocation policy.

     Capital expenditures in the first nine months of 2000 totaled $878 million,
compared with $827 million in the comparable 1999 period.  For additional
information regarding capital expenditures, refer to the Supplemental Statistics
on page 63.

     Contract commitments for property, plant and equipment acquisitions and
long-term investments at September 30, 2000, totaled $635 million compared with
$485 million at December 31, 1999.
     
     Cash from disposal of assets was $252 million in the first nine months of
2000, compared with $255 million in the comparable 1999 period.  Proceeds in
2000 were mainly from the disposition of Marathon's 33.34 percent interest in
the Angus/Stellaria development in the Gulf of Mexico and other domestic
production properties.  Proceeds in 1999 were mainly from the sale of Scurlock
Permian LLC and domestic and international production properties.

<PAGE> 54

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The net change in restricted cash was a net withdrawal of $11 million in
the first nine months of 2000, compared to a net withdrawal of $14 million in
the comparable 1999 period.  Restricted cash in both periods primarily reflected
the net effects of cash deposited and withdrawn from domestic production
property dispositions and acquisitions.

     Net investments in affiliates were $58 million in the first nine months of
2000, compared with $105 million in the comparable 1999 period.  Cash outflows
in both periods mainly reflected funding provided to equity affiliates for
capital projects, primarily the Sakhalin II project in Russia.

     Financial obligations, which consist of the Marathon Group's portion of USX
debt and preferred stock of a subsidiary attributed to both groups, as well as
debt specifically attributed to the Marathon Group, decreased by $584 million in
the first nine months of 2000.  Financial obligations decreased primarily
because cash from operating activities and asset sales exceeded capital
expenditures and distribution and dividend payments.  For further details, see
Management's Discussion and Analysis of USX Consolidated Financial Condition,
Cash Flows and Liquidity.

     Common stock repurchased was $37 million in the first nine months of 2000.
As announced on July 25, 2000, the USX Board of Directors authorized the
spending of up to $450 million to repurchase shares of USX-Marathon Group Common
Stock ("Marathon Stock").  In the third quarter, 1.4 million shares of Marathon
Stock were repurchased.  Share repurchases will continue to be made from time to
time as the Corporation's financial condition and market conditions warrant.

     Dividends paid in the first nine months of 2000 increased by $10 million
from the comparable 1999 period, reflecting the two-cents-per-share increase in
the quarterly Marathon Stock dividend rate, declared in July 2000.

     Distributions to minority shareholder of MAP were $212 million in the first
nine months of 2000, compared with $333 million in the comparable 1999 period.
The 1999 amount included a distribution of $103 million in the first quarter
1999, which related to fourth quarter 1998 MAP activity.

Derivative Instruments
----------------------
     See Quantitative and Qualitative Disclosure About Market Risk for
discussion of derivative instruments and associated market risk for the Marathon
Group.

Liquidity
---------
     For discussion of USX's liquidity and capital resources, see Management's
Discussion and Analysis of USX Consolidated Financial Condition, Cash Flows and
Liquidity.

<PAGE> 55

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Environmental Matters, Contingencies and Commitments
----------------------------------------------------
     The Marathon Group has incurred and will continue to incur substantial
capital, operating and maintenance, and remediation expenditures as a result of
environmental laws and regulations.  To the extent these expenditures, as with
all costs, are not ultimately reflected in the prices of the Marathon Group's
products and services, operating results will be adversely affected.  The
Marathon Group believes that substantially all of its competitors are subject to
similar environmental laws and regulations.  However, the specific impact on
each competitor may vary depending on a number of factors, including the age and
location of its operating facilities, marketing areas, production processes and
whether or not it is engaged in the petrochemical business, power business or
the marine transportation of crude oil and refined products.

     USX has been notified that it is a potentially responsible party ("PRP") at
13 waste sites related to the Marathon Group under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") as of
September 30, 2000.  In addition, there are 6 sites related to the Marathon
Group where USX has received information requests or other indications that USX
may be a PRP under CERCLA but where sufficient information is not presently
available to confirm the existence of liability.
     
     There are also 115 additional sites, excluding retail marketing outlets,
related to the Marathon Group where remediation is being sought under other
environmental statutes, both federal and state, or where private parties are
seeking remediation through discussions or litigation.  Of these sites, 15 were
associated with properties conveyed to MAP by Ashland for which Ashland has
retained liability for all costs associated with remediation.
     
     At many of these sites, USX is one of a number of parties involved and the
total cost of remediation, as well as USX's share thereof, is frequently
dependent upon the outcome of investigations and remedial studies.  The Marathon
Group accrues for environmental remediation activities when the responsibility
to remediate is probable and the amount of associated costs is reasonably
determinable.  As environmental remediation matters proceed toward ultimate
resolution or as additional remediation obligations arise, charges in excess of
those previously accrued may be required.

<PAGE> 56
                                        
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     New Tier II Fuels regulations were proposed in late 1999 and the U.S.
Environmental Protection Agency ("EPA") has since finalized the rules for
gasoline; however, the rules for diesel fuel are not yet final.  The gasoline
rules, which are finalized and the diesel fuel rules, which are not yet final
are expected to require reduced sulfur levels.  It is anticipated that if final
diesel regulations are adopted, consistent with the published proposed
regulations, then the combined compliance cost for the gasoline and diesel
regulations could amount to approximately $700 million between 2003 and 2005.
This is a forward-looking statement and can only be a broad-based estimate due
to the ongoing evolution of regulatory requirements.  Some factors (among
others) that could potentially affect gasoline and diesel fuel compliance costs
include adoption of final diesel fuel regulations, obtaining the necessary
construction and environmental permits, operating considerations, and unforeseen
hazards such as weather conditions.
     
     MAP has responded to information requests from the EPA regarding New Source
Review ("NSR") compliance at its Garyville and Texas City refineries.  In
addition, the scope of the EPA's 1998 multi-media inspections of the Detroit and
Robinson refineries included NSR compliance.  NSR requires new major stationary
sources and major modifications at existing major stationary sources to obtain
permits, perform air quality analysis and install stringent air pollution
control equipment at affected facilities.  The current EPA initiative appears to
target many items that the industry has historically considered routine repair,
replacement and maintenance or other activity exempted from the NSR
requirements.  MAP is engaged in ongoing discussions with the EPA on these
issues concerning all of MAP's refineries.

     While MAP has not been notified of any formal findings or violations
resulting from either the information requests or inspections regarding NSR
compliance; MAP has been informed during discussions with the EPA of potential
non-compliance concerns of the EPA based on these inspections and other
information identified by the EPA.  Currently, discussions with the EPA have
been of a general and technical nature without any commitment to specific
control technologies, implementation schedules or possible penalties.  It is
possible that a framework for resolution of these issues could be reached as
early as the fourth quarter of this year and that any resolution may include
other pending matters such as those arising from the EPA's 1998 multi-media
inspections.

     In October 1998, the National Enforcement Investigations Center and Region
V of the EPA conducted a multi-media inspection of MAP's Detroit refinery.
Subsequently, in November 1998, Region V conducted a multi-media inspection of
MAP's Robinson refinery.  These inspections covered compliance with the Clean
Air Act (New Source Performance Standards, Prevention of Significant
Deterioration, and the National Emission Standards for Hazardous Air Pollutants
for Benzene), the Clean Water Act (permit exceedances for the Waste Water
Treatment Plant), reporting obligations under the Emergency Planning and
Community Right to Know Act and the handling of process waste.  Although MAP has
been advised as to certain compliance issues regarding MAP's Detroit refinery,
complete findings on the results of the inspections have not been issued.  Thus
far, MAP has been served with two Notices of Violation ("NOV") and three
Findings of Violation in connection with the multi-media inspections at its
Detroit refinery.  The Detroit notices allege violations of the

<PAGE> 57

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------
                                        
Michigan State Air Pollution Regulations, the EPA New Source Performance
Standards and National Emission Standards for Hazardous Air Pollutants for
Benzene.  On March 6, 2000, MAP received its first NOV arising out of the multi-
media inspection of the Robinson Refinery conducted in November 1998.  The NOV
is for alleged Resource Conservation and Recovery Act (hazardous waste)
violations.  MAP can contest the factual and legal basis for the allegations
prior to the EPA taking enforcement action.  At this time, it is not known when
complete findings on the results of these multi-media inspections will be
issued.

     USX is the subject of, or a party to, a number of pending or threatened
legal actions, contingencies and commitments relating to the Marathon Group
involving a variety of matters, including laws and regulations relating to the
environment.  See Note 10 to the Marathon Group Financial Statements for a
discussion of certain of these matters.  The ultimate resolution of these
contingencies could, individually or in the aggregate, be material to the
Marathon Group Financial Statements.  However, management believes that USX will
remain a viable and competitive enterprise even though it is possible that these
contingencies could be resolved unfavorably to the Marathon Group.  See
Management's Discussion and Analysis of USX Consolidated Financial Condition,
Cash Flows and Liquidity.

Outlook
-------
     The outlook regarding the Marathon Group's upstream revenues and income is
largely dependent upon future prices and volumes of liquid hydrocarbons and
natural gas.  Prices have historically been volatile and have frequently been
affected by unpredictable changes in supply and demand resulting from
fluctuations in worldwide economic activity and political developments in the
world's major oil and gas producing and consuming areas.  Any significant
decline in prices could have a material adverse effect on the Marathon Group's
results of operations.  A prolonged decline in such prices could also adversely
affect the quantity of crude oil and natural gas reserves that can be
economically produced and the amount of capital available for exploration and
development.

     Marathon's fourth quarter 2000 worldwide liquid hydrocarbon production is
expected to be approximately 215,000 barrels per day ("bpd") and worldwide
natural gas production is projected at approximately 1.3 billion cubic feet per
day ("bcfpd").  Based on these fourth quarter projections, average production
for the full year 2000 is expected to be approximately 208,000 bpd and 1.25
bcfpd.

     Because of potential transactions involving the possible disposition or
exchange of producing properties, it is difficult to project 2001 production at
this time.  A revised 2001 production forecast is expected to be available by
early first quarter 2001.
     
     On October 19, 2000, Marathon signed a definitive agreement with Shell
Sakhalin Holdings  B.V. ("Shell") to transfer its 37.5 percent interest in
Sakhalin Energy Investment Company Ltd. ("Sakhalin Energy").  In exchange,
Marathon will receive certain Shell interests in the UK Atlantic Margin area and
the U.S. Gulf of Mexico as well as reimbursement for all Sakhalin project
capital expenditures made by Marathon in 2000.  The closing and transfer of
operations are expected to take place in early December.

<PAGE> 58
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     On August 17, 2000, Marathon announced a VERP for approximately 970
eligible employees, of which 460 employees elected to retire.  Upon completion
of the VERP, it is anticipated that some involuntary terminations may be
necessary as the company reorganizes to improve its overall competitiveness.
Administrative activities at region production offices in Cody, Wyoming and
Tyler, Texas along with a research facility in Littleton, Colorado will be
combined with functions currently being carried out in Catlettsburg, Kentucky,
Oklahoma City, Oklahoma, and Midland and Houston, Texas.  Through the third
quarter, Marathon accrued $8 million in VERP charges.  This is consistent with
Marathon's goals to significantly improve its E&P business performance,
including a $75 million reduction in above field costs, a $25 million savings in
global procurement expenses and a $50 million reduction in exploration expense.
These goals are expected to be achieved fully in 2001.

     In July 2000, first production was achieved from Marathon's 50 percent
owned Viosca Knoll Block 786 ("Petronius") development in the Gulf of Mexico.
Drilling and well completion activities will continue through next year with
gross peak production of 50,000 barrels of oil per day and 70 million cubic feet
of gas per day expected by mid-2001.

     The above discussion includes forward-looking statements with respect to
the timing and levels of Marathon's worldwide liquid hydrocarbon and natural gas
production, including production rates from the Petronius field, timing and
completion of the Sakhalin transaction, and amount and timing of cost
reductions.  Some factors that could potentially affect timing and levels of
production include pricing, supply and demand for petroleum products, regulatory
constraints, and geological and operating considerations.  Some factors that
could potentially affect the timing and completion of the Sakhalin transaction
include third party consents.  Some factors that could potentially affect
reaching efficiency goals include the closing of certain acquisitions,
dispositions and exchanges, drilling rig availability, weather conditions, and
other geological, operating and economic considerations.  In accordance with the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, USX has included in Form 10-K for the year ended December 31, 1999,
cautionary statements identifying important factors, but not necessarily all
factors, that could cause actual results to differ materially from those set
forth in the forward-looking statements.

<PAGE> 59
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Downstream income of the Marathon Group is largely dependent upon refined
product margins, which reflect the difference between the selling prices of
refined products and the cost of raw materials refined and manufacturing costs.
Refined product margins have been historically volatile and vary due to numerous
factors such as supply and demand balance in the various marketing areas, the
regulatory climate, crude oil costs, manufacturing costs and the available
supply of crude oil and refined products.

     MAP is pursuing the disposition of approximately 270 non-strategic Speedway
SuperAmerica retail locations in the Midwest and Southeast.  These locations
comprise less than 12 percent of MAP's owned and operated Speedway SuperAmerica
retail network.  Through the end of the third quarter, 25 stations had been
sold.  Most of the remaining stations are expected to be disposed of in the
fourth quarter of 2000.
     
     On March 9, 2000, Marathon Ashland Petroleum LLC ("MAP") announced it
joined CMS Energy Corporation and TEPPCO Partners, L.P., in an agreement to form
a limited liability company with equal ownership to operate an interstate
refined petroleum products pipeline extending from the U.S. Gulf of Mexico to
the Midwest.  The new company plans to build a 70-mile, 24-inch diameter
pipeline connecting TEPPCO's facility in Beaumont, Texas, with an existing 720-
mile, 26-inch diameter pipeline extending from Longville, Louisiana to Bourbon,
Illinois.  The system will be called Centennial Pipeline and will pass through
seven states.  It is expected to be completed in the fourth quarter of 2001.

     MAP's subsidiary, Ohio River Pipe Line LLC ("ORPL"), plans to build a
pipeline from Kenova, West Virginia to Columbus, Ohio.  ORPL is a common carrier
pipeline company and the pipeline will be an interstate common carrier pipeline.
The pipeline is expected to initially move about 50,000 bpd of refined petroleum
into the central Ohio region.  Construction is currently expected to begin in
the second half of 2001.  However, the construction schedule is largely
dependent on obtaining the necessary rights-of-way, of which approximately 92
percent have been obtained to date, and final regulatory approvals.  ORPL is
still negotiating with various landowners to obtain the remaining rights-of-way.
In addition, where appropriate, ORPL has brought condemnation actions to acquire
rights-of-way.  These actions are at various stages of litigation and appeal.
     
     The above discussion includes forward-looking statements with respect to
the disposition of MAP retail stations and completion of MAP infrastructure
projects.  Some factors that could potentially affect the MAP dispositions
include receipt of government approvals, regulatory constraints, consent of
third parties, and satisfaction of customary closing conditions.  Some factors
that could potentially affect the completion of the MAP infrastructure projects
include securing acceptable financing, obtaining the necessary construction and
environmental permits, unforeseen hazards such as weather conditions,
acquisitions of rights-of-way, outcome of pending litigation, and regulatory
approval constraints.  In accordance with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, USX has included in Form 10-K
for the year ended December 31, 1999, cautionary statements identifying
important factors, but not necessarily all factors, that could cause actual
results to differ materially from those set forth in the forward-looking
statements.

<PAGE> 60

                        MARATHON GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Commodity Price Risk and Related Risks
--------------------------------------
     Sensitivity analysis of the incremental effects on income before income
taxes of hypothetical 10% and 25% changes in commodity prices for open
derivative commodity instruments as of September 30, 2000, are provided in the
following table(a):

<TABLE>

                                        Incremental Decrease in
                                       Income Before Income Taxes
                                        Assuming a Hypothetical
                                            Price Change of:

(Dollars in millions)                         10%       25%
-------------------------------------------------------------------------------
<S>                                          <C>      <C>           <C>
Derivative Commodity Instruments
Marathon Group (b) (c)
  Crude oil
   Other than trading (e)(f)                 $19.8     $54.6        (d)
  Natural gas
   Other than trading (e)(f)                   4.3      10.6        (d)
  Refined products
   Other than trading (e)(f)                  11.1      29.6        (d)
<FN>
 (a)  Gains and losses on derivative commodity instruments used for other
      than trading activities are generally offset by price changes in the
      underlying commodity.  Effects of these offsets are not reflected in the
      sensitivity analyses.  Amounts reflect the estimated incremental decrease
      in income before income taxes of hypothetical 10% and 25% changes in
      closing commodity prices for each open contract position at September 30,
      2000. Management evaluates the portfolios of derivative commodity
      instruments on an ongoing basis and adjusts strategies to reflect
      anticipated market conditions, changes in risk profiles and overall
      business objectives.  Changes to the portfolios subsequent to September
      30, 2000, will cause future income before income tax effects to differ
      from those presented in the table.
 (b)  The number of net open contracts varied throughout third quarter
      2000, from a low of 12,252 contracts at July 5, to a high of 34,126
      contracts at September 27, and averaged 21,063 for the quarter.  The
      derivative commodity instruments used and hedging positions taken also
      varied throughout third quarter 2000, and will continue to vary in the
      future.  Because of these variations in the composition of the portfolio
      over time, the number of open contracts, by itself, cannot be used to
      predict future income effects.
 (c)  The calculation of sensitivity amounts for basis swaps assumes that
      the physical and paper indices are perfectly correlated.  Gains and
      losses on options are based on changes in intrinsic value only.
 (d)  Price increase.
 (e)  The direction of the price change used in calculating the
      sensitivity amount for each commodity reflects that which would result in
      the largest incremental decrease in income before income taxes when
      applied to the derivative commodity instruments used to hedge that
      commodity.
 (f)  Adjusted to reflect Marathon's 62 percent ownership of MAP.
</TABLE>


<PAGE> 61
                                        
                        MARATHON GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Interest Rate Risk
------------------
     USX is subject to the effects of interest rate fluctuations on certain of
its non-derivative financial instruments.  A sensitivity analysis of the
projected incremental effect of a hypothetical 10% decrease in September 30,
2000, interest rates on the fair value of the Marathon Group's specifically
attributed non-derivative financial instruments and the Marathon Group's
portion of USX's non-derivative financial instruments attributed to both groups,
is provided in the following table:

<TABLE>
(Dollars in millions)
------------------------------------------------------------------------------

As of September 30, 2000
                                                              Incremental
                                                              Increase in
Non-Derivative                             Carrying     Fair     Fair
Financial Instruments(a)                     Value     Value     Value(b)
-------------------------------------------------------------------------------
<S>                                        <C>         <C>     <C> 
Financial assets:
  Investments and
    long-term receivables                      $129     $182       $ -
------------------------------------------------------------------------------
Financial liabilities:
  Long-term debt (c)(d)                      $2,717   $2,838      $124
  Preferred stock of
    subsidiary                                  184      177        15
                                              -----    -----     -----
        Total liabilities                    $2,901   $3,015      $139
------------------------------------------------------------------------------
<FN>
(a) Fair values of cash and cash equivalents, receivables, notes payable,
    accounts payable and accrued interest, approximate carrying value and are
    relatively insensitive to changes in interest rates due to the short-term
    maturity of the instruments. Accordingly, these instruments are excluded
    from the table.
(b) Reflects, by class of financial instrument, the estimated incremental effect
    of a hypothetical 10% decrease in interest rates at September 30, 2000, on
    the fair value of USX's non-derivative financial instruments. For financial
    liabilities, this assumes a 10% decrease in the weighted average yield to
    maturity of USX's long-term debt at September 30, 2000.
(c) Includes amounts due within one year.
(d) Fair value was based on market prices where available, or current borrowing
    rates for financings with similar terms and maturities.
</TABLE>


<PAGE> 62

                        MARATHON GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------
                    
Foreign Currency Exchange Rate Risk
-----------------------------------
     USX is subject to the risk of price fluctuations related to anticipated
revenues and operating costs, firm commitments for capital expenditures and
existing assets or liabilities denominated in currencies other than U.S.
dollars.  USX has not generally used derivative instruments to manage this risk.
However, USX has made limited use of forward currency contracts to manage
exposure to certain currency price fluctuations.  At September 30, 2000, USX had
open Canadian dollar forward purchase contracts with a total carrying value of
approximately $9 million.  A 10% increase in the Canadian dollar to U.S. dollar
forward rate would result in a charge to income of approximately $1 million.
The entire amount of these contracts is attributed to the Marathon Group.

Equity Price Risk
-----------------
     As of September 30, 2000, the Marathon Group had no material exposure to
equity price risk.

Safe Harbor
-----------
     The Marathon Group's Quantitative and Qualitative Disclosures About Market
Risk include forward-looking statements with respect to management's opinion
about risks associated with the Marathon Group's use of derivative instruments.
These statements are based on certain assumptions with respect to market prices
and industry supply and demand for crude oil, natural gas and refined products.
To the extent that these assumptions prove to be inaccurate, future outcomes
with respect to the Marathon Group's derivative usage may differ materially from
those discussed in the forward-looking statements.



<PAGE> 63

<TABLE>
                        MARATHON GROUP OF USX CORPORATION
                       SUPPLEMENTAL STATISTICS (Unaudited)
                ------------------------------------------------
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                             2000   1999      2000   1999
-------------------------------------------------------------------------------
<S>                                              <C>     <C>     <C>      <C>
INCOME (LOSS) FROM OPERATIONS
 Exploration & Production ("E&P")
   Domestic                                       $305    $168    $783     $299
   International                                   160      33     347       62
                                                 -----   -----   -----    -----
     Income For E&P Reportable Segment             465     201   1,130      361
 Refining, Marketing & Transportation              299     236     968      509
 Other Energy Related Businesses (a)                12      13      25       47
                                                 -----   -----   -----    -----
       Income For Reportable Segments             $776    $450  $2,123     $917

Items Not Allocated To Segments:
 Administrative Expenses                          $(48)   $(26)  $(105)    $(83)
 Inventory Market Valuation Reserve Adjustment       -     136       -      551
 Estimated Loss on Sale of Assets                    -     (10)      -      (33)
 Gain on Disposition of Angus/Stellaria              -       -      87        -
 Gain on Ownership Change In MAP                     1      11       9       11
                                                ------  ------  ------   ------
     Marathon Group Income From Operations        $729    $561  $2,114   $1,363

CAPITAL EXPENDITURES
 Exploration & Production                         $153    $184    $553     $594
 Refining, Marketing & Transportation              149     107     315      226
 Other (b)                                           -       4      10        7
                                                 -----   -----   -----    -----
     Total                                        $302    $295    $878     $827

EXPLORATION EXPENSE
 Domestic                                          $33     $26     $84      $92
 International                                      18      14      58       70
                                                 -----   -----   -----    -----
     Total                                         $51     $40    $142     $162

INVESTMENTS IN EQUITY AFFILIATES - NET              $4     $49     $58     $105
OPERATING STATISTICS

Net Liquid Hydrocarbon Production (c):
     United States                               129.4   138.6   131.7    143.4
     Europe                                       26.3    28.7    28.2     32.3
     Other International                          42.8    24.4    37.3     28.4
                                                ------  ------  ------   ------
       Total Consolidated                        198.5   191.7   197.2    204.1
  Equity Affiliates (CLAM & Sakhalin Energy)      24.4     2.4     9.1      0.9
                                                ------  ------  ------   ------
       Worldwide                                 222.9   194.1   206.3    205.0


Net Natural Gas Production (d):
     United States                               715.5   730.9   726.1    747.2
     Europe (e)                                  306.2   291.1   333.1    345.5
     Other International                         144.8   149.1   144.8    169.7
                                                ------  ------ -------  -------
       Total Consolidated                       1166.5  1171.1  1204.0   1262.4
     Equity Affiliate (CLAM)                      21.4    25.1    28.0     32.0
                                               ------- ------- -------  -------
       Worldwide                                1187.9  1196.2  1232.0   1294.4

Average Equity Sales Prices (f) (g):
 Liquid Hydrocarbons (per Bbl)
   Domestic                                     $26.58 $17.78   $24.85   $13.48
   International                                 28.84  19.56    26.87    14.80
 Natural Gas (per Mcf)
   Domestic                                      $3.61  $2.22    $2.90    $1.83
   International                                  2.59   1.80     2.47     1.81

Crude Oil Refined (c)                            928.4  940.4    915.0    909.5
Refined Products Sold (c)                       1350.0 1301.4   1304.6   1227.9
Matching buy/sell volumes included in refined
       products sold (c)                          43.5   55.8     55.3     50.0
MAP Merchandise Sales                             $638   $561   $1,786   $1,545
--------------
<FN>
 (a)  Includes domestic natural gas and crude oil marketing and
      transportation, and power generation.
 (b)  Includes other energy related businesses and corporate capital
      expenditures.
 (c)  Thousands of barrels per day
 (d)  Millions of cubic feet per day
 (e)  Includes gas acquired for injection and subsequent resale of 9.3,
      16.0, 11.7 and 20.8 mmcfd in the third quarter and nine month year-to-
      date 2000 and 1999, respectively.
 (f)  Prices exclude gains and losses from hedging activities.
 (g)  Prices exclude equity affiliates and purchase/resale gas.
</TABLE>


<PAGE> 64

Part I - Financial Information (Continued):

   C.  U. S. Steel Group

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                       STATEMENT OF OPERATIONS (Unaudited)
                      ------------------------------------
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions, except per share amounts)  2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
REVENUES:
 Sales                                          $1,417  $1,377  $4,542   $3,926
 Income (loss) from affiliates                       6     (53)     13      (86)
 Net gains on disposal of assets                     6      11      34        9
 Other income (loss)                                 1       2      (1)       3
                                                ------  ------  ------   ------
   Total revenues                                1,430   1,337   4,588    3,852
                                                ------  ------  ------   ------
COSTS AND EXPENSES:
 Cost of sales (excludes items shown below)      1,299   1,289   4,103    3,606
 Selling, general and administrative
  expenses (credits)                               (56)    (61)   (176)    (226)
 Depreciation, depletion and amortization           69      78     222      228
 Taxes other than income taxes                      58      57     176      169
                                                ------  ------  ------   ------
   Total costs and expenses                      1,370   1,363   4,325    3,777
                                                ------  ------  ------   ------
INCOME (LOSS) FROM OPERATIONS                       60     (26)    263       75
Net interest and other financial costs              27      20      75       48
                                                ------  ------  ------   ------
INCOME (LOSS) BEFORE INCOME TAXES AND
 EXTRAORDINARY LOSSES                               33     (46)    188       27
Provision (credit) for estimated income taxes       14     (17)     70       10
                                                ------  ------  ------   ------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSSES           19     (29)    118       17
Extraordinary losses on extinguishment of debt,
 net of income tax                                   -       2       -        7
                                                ------  ------  ------   ------
NET INCOME (LOSS)                                   19     (31)    118       10
Dividends on preferred stock                         2       2       6        7
                                                ------  ------  ------   ------
NET INCOME (LOSS) APPLICABLE TO STEEL STOCK        $17    $(33)   $112       $3
                                                ======  ======  ======   ======
STEEL STOCK DATA:
 Income (loss) before extraordinary losses         $17    $(31)   $112      $10
   - Per share - basic and diluted                 .19    (.35)   1.27      .12
 Extraordinary losses, net of income tax             -       2       -        7
   - Per share - basic and diluted                   -     .02       -      .08
 Net income (loss)                                 $17    $(33)   $112       $3
   - Per share - basic and diluted                 .19    (.37)   1.27      .04

 Dividends paid per share                          .25     .25     .75      .75

 Weighted average shares, in thousands
   - Basic                                      88,738  88,394  88,554   88,383
   - Diluted                                    88,738  88,394  88,556   88,385

<FN>
Selected notes to financial statements appear on pages 67-75.
</TABLE>


<PAGE> 65

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                            BALANCE SHEET (Unaudited)
                      ------------------------------------
                                        
                                                   September 30 December 31
(Dollars in millions)                                  2000         1999
--------------------------------------------------------------------------------
<S>                                                <C>          <C>
ASSETS

Current assets:
  Cash and cash equivalents                               $6           $22
  Receivables, less allowance for doubtful
   accounts of $14 and $10                               832           838
  Income taxes receivable                                129            97
  Inventories                                            856           743
  Deferred income tax benefits                           284           281
  Other current assets                                    10             -
                                                      ------        ------
     Total current assets                              2,117         1,981

Investments and long-term receivables,
 less reserves of $3 and $3                              595           572
Property, plant and equipment, less accumulated
 depreciation, depletion and amortization of
 $6,405 and $6,232                                     2,413         2,516
Prepaid pensions                                       2,616         2,404
Other noncurrent assets                                   52            52
                                                      ------        ------
     Total assets                                     $7,793        $7,525
                                                      ======        ======
LIABILITIES

Current liabilities:
  Notes payable                                          $13            $-
  Accounts payable                                       627           757
  Payroll and benefits payable                           316           322
  Accrued taxes                                          175           177
  Accrued interest                                        14            15
  Long-term debt due within one year                     422            13
                                                      ------        ------
     Total current liabilities                         1,567         1,284

Long-term debt, less unamortized discount                683           902
Deferred income taxes                                    552           348
Employee benefits                                      2,215         2,245
Deferred credits and other liabilities                   435           441
Preferred stock of subsidiary                             66            66
USX obligated mandatorily redeemable convertible preferred
 securities of a subsidiary trust holding solely junior
 subordinated convertible debentures of USX              183           183

STOCKHOLDERS' EQUITY
Preferred stock                                            2             3
Common stockholders' equity                            2,090         2,053
                                                      ------        ------
     Total stockholders' equity                        2,092         2,056
                                                      ------        ------
     Total liabilities and stockholders' equity       $7,793        $7,525
                                                      ======        ======

<FN>
Selected notes to financial statements appear on pages 67-75.
</TABLE>


<PAGE> 66

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                       STATEMENT OF CASH FLOWS (Unaudited)
                      ------------------------------------
                                                       Nine Months Ended
                                                          September 30
(Dollars in millions)                                  2000         1999
--------------------------------------------------------------------------------
<S>                                                    <C>          <C> 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                              $118           $10
Adjustments to reconcile to net cash provided
 from operating activities:
  Extraordinary losses                                     -             7
  Depreciation, depletion and amortization               222           228
  Pensions and other postretirement benefits            (234)         (197)
  Deferred income taxes                                  208            72
  Net gains on disposal of assets                        (34)           (9)
  Changes in:
     Current receivables - sold                            -            30
                         - operating turnover            (33)         (208)
     Inventories                                        (113)          (21)
     Current accounts payable and accrued expenses      (138)          170
  All other - net                                          9            76
                                                      ------        ------
     Net cash provided from operating activities           5           158
                                                      ------        ------
INVESTING ACTIVITIES:
Capital expenditures                                    (133)         (221)
Disposal of assets                                        17             6
Restricted cash - withdrawals                              3            15
                - deposits                                (2)          (14)
Affiliates - investments                                 (18)          (15)
           - loans and advances                           (8)            -
All other- net                                             4             6
                                                      ------        ------
     Net cash used in investing activities              (137)         (223)
                                                      ------        ------
FINANCING ACTIVITIES:
Increase in U. S. Steel Group's portion of USX
 consolidated debt                                       206           146
Specifically attributed debt repayments                   (6)          (11)
Preferred stock repurchased                              (12)            -
Dividends paid                                           (72)          (73)
                                                      ------        ------
     Net cash provided from financing activities         116            62
                                                      ------        ------
NET DECREASE IN CASH AND CASH EQUIVALENTS                (16)           (3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR            22             9
                                                      ------        ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $6            $6
                                                      ======        ======
Cash provided from (used in) operating activities included:
  Interest and other financial costs paid (net of
   amount capitalized)                                  $(68)         $(63)
  Income taxes (paid) refunded, including settlements
   with the Marathon Group                                85            (5)
<FN>
Selected notes to financial statements appear on pages 67-75.
</TABLE>


<PAGE> 67
                      U. S. STEEL GROUP OF USX CORPORATION
                     SELECTED NOTES TO FINANCIAL STATEMENTS
                     --------------------------------------
                                   (Unaudited)
                                        
1.   The information furnished in these financial statements is unaudited
     but, in the opinion of management, reflects all adjustments necessary for a
     fair presentation of the results for the periods covered.  All such
     adjustments are of a normal recurring nature unless disclosed otherwise.
     These financial statements, including selected notes, have been prepared in
     accordance with the applicable rules of the Securities and Exchange
     Commission and do not include all of the information and disclosures
     required by generally accepted accounting principles for complete financial
     statements.  Certain reclassifications of prior year data have been made to
     conform to 2000 classifications.  Additional information is contained in
     the USX Annual Report on Form 10-K for the year ended December 31, 1999.

     In March 2000, the Emerging Issues Task Force of the Financial
     Accounting Standards Board (EITF) issued EITF Topic No. D-88, which
     requires companies to disclose their accounting policy for costs incurred
     in connection with planned major maintenance activities.  For the U. S.
     Steel Group, such costs primarily are associated with blast furnace
     relines, which are separately capitalized in property, plant and equipment.
     Such costs are amortized over their estimated useful life, which is
     generally the period until the next scheduled reline.

2.   The financial statements of the U. S. Steel Group include the
     financial position, results of operations and cash flows for all businesses
     of USX other than the businesses, assets and liabilities included in the
     Marathon Group and a portion of the corporate assets and liabilities and
     related transactions which are not separately identified with ongoing
     operating units of USX.  These financial statements are prepared using the
     amounts included in the USX consolidated financial statements.  Corporate
     amounts reflected in these financial statements are determined based upon
     methods which management believes to be reasonable.  The accounting
     policies applicable to the preparation of the financial statements of the
     U. S. Steel Group may be modified or rescinded in the sole discretion of
     the Board of Directors of USX (Board), although the Board has no present
     intention to do so.  The Board may also adopt additional policies depending
     on the circumstances.

     Although the financial statements of the U. S. Steel Group and the
     Marathon Group separately report the assets, liabilities (including
     contingent liabilities) and stockholders' equity of USX attributed to each
     such Group, such attribution of assets, liabilities (including contingent
     liabilities) and stockholders' equity between the U. S. Steel Group and the
     Marathon Group for purposes of preparing their respective financial
     statements does not affect legal title to such assets and responsibility
     for such liabilities.  Holders of USX-U. S. Steel Group Common Stock (Steel
     Stock) and USX-Marathon Group Common Stock (Marathon Stock) are holders of
     common stock of USX and continue to be subject to all the risks associated
     with an investment in USX and all of its businesses and liabilities.
     Financial impacts arising from one Group that affect the overall cost of
     USX's capital could affect the results of operations and financial
     condition of the other Group.  In addition, net losses of either Group, as
     well as dividends or distributions on any class of USX Common Stock or
     series of Preferred Stock and repurchases of any class of USX Common Stock
     or series of Preferred Stock at prices in excess of par or stated value,
     will reduce the funds of USX legally available for payment of dividends on
     both classes of Common Stock.  Accordingly, the USX consolidated financial
     information should be read in connection with the U. S. Steel Group
     financial information.

<PAGE> 68

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


2.   (Continued)
 
     The financial statement provision for estimated income taxes and
     related tax payments or refunds have been reflected in the U. S. Steel
     Group and the Marathon Group financial statements in accordance with USX's
     tax allocation policy for such groups.  In general, such policy provides
     that the consolidated tax provision and related tax payments or refunds are
     allocated between the U. S. Steel Group and the Marathon Group for group
     financial statement purposes, based principally upon the financial income,
     taxable income, credits, preferences and other amounts directly related to
     the respective groups.

     The provision for estimated income taxes for the U. S. Steel Group is
     based on tax rates and amounts which recognize management's best estimate
     of current and deferred tax assets and liabilities.  Differences between
     the combined interim tax provisions of the U. S. Steel and Marathon Groups
     and USX consolidated are allocated to each group based on the relationship
     of the individual group provisions to the combined interim provisions.

3.   The U. S. Steel Group's total comprehensive income (loss) was $17 million
     for the third quarter of 2000, $(25) million for the third quarter of 1999,
     $115 million for the nine months of 2000 and $8 million for the nine months
     of 1999.

4.   In 1999, USX irrevocably deposited with a trustee the entire 5.5
     million common shares it owned in RTI International Metals, Inc. (RTI).
     The deposit of the shares resulted in the satisfaction of USX's obligation
     under its 6-3/4% Exchangeable Notes (indexed debt) due February 1, 2000.  
     Under the terms of the indenture, the trustee exchanged one RTI share for 
     each note at maturity; therefore, none reverted back to USX.

     As a result of the above transaction, USX recorded in the first
     quarter of 1999 an extraordinary loss of $5 million, net of a $3 million
     income tax benefit, representing prepaid interest expense and the write-off
     of unamortized debt issue costs, and a pretax charge of $22 million,
     representing the difference between the carrying value of the investment in
     RTI and the carrying value of the indexed debt, which is included in net
     gains (losses) on disposal of assets.

     Additionally, a $13 million credit to adjust the indexed debt to
     settlement value at March 31, 1999, is included in net interest and other
     financial costs.

     In December 1996, USX had issued the $117 million of notes indexed to
     the common share price of RTI.  At maturity, USX would have been required
     to exchange the notes for shares of RTI common stock, or redeem the notes
     for the equivalent amount of cash.  Since USX's investment in RTI was
     attributed to the U. S. Steel Group, the indexed debt was also attributed
     to the U. S. Steel Group.  USX had a 26% investment in RTI and accounted
     for its investment using the equity method of accounting.


<PAGE> 69

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


4.   (Continued)

     Republic Technologies International, LLC, an equity method affiliate
     of USX, recorded in the third quarter of 1999 an extraordinary loss related
     to the early extinguishment of debt.  As a result, the U. S. Steel Group
     recorded an extraordinary loss of $2 million, net of a $1 million income
     tax benefit, representing its share of the extraordinary loss.

5.   The U. S. Steel Group consists of one operating segment, U. S. Steel.
     U. S. Steel is engaged in the production and sale of steel mill products,
     coke and taconite pellets.  U. S. Steel also engages in the following
     related business activities:  the management of mineral resources, domestic
     coal mining, engineering and consulting services, and real estate
     development and management.  The results of segment operations are as
     follows:

<TABLE>
                                                      Third Quarter Ended
                                                          September 30
(In millions)                                          2000         1999
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues:
  Customer                                            $1,412        $1,376
  Intergroup (a)                                           5             2
  Equity in earnings (losses) of unconsolidated affiliates 6            (3)
  Other                                                    7            12
                                                      ------        ------
     Total revenues                                   $1,430        $1,387
                                                      ======        ======
Segment income                                           $23            $3
                                                      ======        ======
<FN>
(a)  Intergroup sales and transfers were conducted under terms comparable
     to those with unrelated parties.
</TABLE>

     Effective January 1, 2000, USX changed its methodology for allocating
     the pension credit or cost associated with its principal pension plans for
     internal business performance reporting purposes.  Since future
     contributions to these plans are expected to be minimal due to their
     overfunded position, no pension credit or cost is allocated to the U. S.
     Steel operating segment.  Prior years' segment income or loss has been
     restated to conform with the current allocation methodology.

<PAGE> 70

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


5.   (Continued)

<TABLE>
                                                       Nine Months Ended
                                                          September 30
(In millions)                                          2000         1999
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Revenues:
  Customer                                             $4,529        $3,913
  Intergroup (a)                                           13            14
  Equity in earnings (losses) of unconsolidated affiliates 13           (36)
  Other                                                    33            33
                                                       ------        ------
     Total revenues                                    $4,588        $3,924
                                                       ======        ======
Segment income                                           $145           $43
                                                       ======        ======
<FN>
(a)  Intergroup sales and transfers were conducted under terms comparable
     to those with unrelated parties.
</TABLE>


          The following schedules reconcile segment revenue and income to
     amounts reported in the U. S. Steel Group's financial statements:

<TABLE>
                                                      Third Quarter Ended
                                                          September 30
(In millions)                                          2000         1999
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues of reportable segment                        $1,430        $1,387
Items not allocated to segment - impairment of USS/Kobe
  investment and costs related to formation of Republic    -           (50)
                                                      ------        ------
     Total Group revenues                             $1,430        $1,337
                                                      ======        ======

Income for reportable segment                            $23            $3
Items not allocated to segment:
  Administrative expenses                                 (7)           (4)
  Net pension credits                                     67            46
  Costs related to former business activities            (23)          (21)
  Impairment of USS/Kobe investment and costs related
    to formation of Republic                                -          (50)
                                                       ------        ------
     Total Group income (loss) from operations            $60          $(26)
                                                       ======        ======
</TABLE>



<PAGE> 71

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


5.   (Continued)

<TABLE>
                                                       Nine Months Ended
                                                          September 30
(In millions)                                          2000         1999
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues of reportable segment                        $4,588        $3,924
Items not allocated to segment:
  Impairment of USS/Kobe investment and costs related
    to formation of Republic                               -           (50)
  Loss on investment in RTI stock used to satisfy
    indexed debt obligations                               -           (22)
                                                      ------        ------
     Total Group revenues                             $4,588        $3,852
                                                      ======        ======

Income for reportable segment                           $145           $43
Items not allocated to segment:
  Administrative expenses                                (18)          (17)
  Net pension credits                                    199           186
  Costs related to former business activities            (63)          (65)
  Impairment of USS/Kobe investment and costs related
    to formation of Republic                               -           (50)
  Loss on investment in RTI stock used to satisfy
    indexed debt obligations                               -           (22)
                                                      ------        ------
     Total Group income from operations                 $263           $75
                                                      ======        ======
</TABLE>

6.   In the second quarter of 1999, the U. S. Steel Group recognized a one-
     time pretax settlement gain of $35 million, related mainly to pension costs
     of employees who retired under the U. S. Steel Group 1998 voluntary early
     retirement program.  This noncash settlement gain is included in selling,
     general and administrative expenses.

7.   Inventories are carried at the lower of cost or market.  Cost of
     inventories is determined primarily under the last-in, first-out (LIFO)
     method.

<TABLE>
                                                         (In millions)
                                                   -------------------------
                                                   September 30 December 31
                                                       2000         1999
                                                   ------------ -----------
    <S>                                            <C>          <C>
    Raw materials                                       $187         $101
    Semi-finished products                               391          392
    Finished products                                    218          193
    Supplies and sundry items                             60           57
                                                        ----         ----
      Total                                             $856         $743
                                                        ====         ====
</TABLE>



<PAGE> 72

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


8.   The method of calculating net income (loss) per common share for the
     Steel Stock and Marathon Stock reflects the Board's intent that the
     separately reported earnings and surplus of the U. S. Steel Group and the
     Marathon Group, as determined consistent with the USX Restated Certificate
     of Incorporation, are available for payment of dividends on the respective
     classes of stock, although legally available funds and liquidation
     preferences of these classes of stock do not necessarily correspond with
     these amounts.

     Basic net income (loss) per share is calculated by adjusting net
     income for dividend requirements of preferred stock and is based on the
     weighted average number of common shares outstanding.

     Diluted net income (loss) per share assumes exercise of stock options,
     provided the effect is not antidilutive.

     See Note 7, of the Notes to USX Consolidated Financial Statements for
     the computation of income per share.

9.   At September 30, 2000, and December 31, 1999, income taxes receivable
     represents an estimated income tax receivable from the Marathon Group.  In
     addition, included in investments and long-term receivables at September
     30, 2000, and December 31, 1999, is $97 million income taxes receivable
     from the Marathon Group.  These amounts have been determined in accordance
     with the tax allocation policy discussed in Note 2.

10.  In August 1999, USX and Kobe Steel, Ltd. (Kobe Steel) completed a
     transaction that combined the steelmaking and bar producing assets of
     USS/Kobe Steel Company (USS/Kobe) with companies controlled by Blackstone
     Capital Partners II.  The combined entity was named Republic Technologies
     International, LLC (Republic).  In addition, USX made a $15 million equity
     investment in Republic.  USX owned 50% of USS/Kobe and now owns 16% of
     Republic.  USX accounts for its investment in Republic under the equity
     method of accounting. The seamless pipe business of USS/Kobe was excluded
     from this transaction.  That business, now known as Lorain Tubular Company
     LLC, is a wholly owned subsidiary of USX.

     Third quarter 2000 income (loss) from affiliates includes $10 million
     in charges related to USX's share of impairment and restructuring charges
     of Republic.  In addition, third quarter 1999 income (loss) from affiliates
     includes $50 million in charges related to the impairment of the carrying
     value of USX's investment in USS/Kobe and costs related to the formation of
     Republic.

     In the third quarter of 2000, Republic underwent a financial
     restructuring to improve its liquidity position and to assist in making the
     semi-annual interest payment on its senior secured notes.  As part of this
     restructuring, Republic received approximately $30 million in loans from
     certain of its direct and indirect equity partners in exchange for notes of
     Republic and warrants to purchase Class D common stock of Republic
     Technologies International, Inc., Republic's majority owner.  USX loaned
     approximately $6 million to Republic as part of this transaction.  USX also
     agreed to certain deferred payment terms into 2002 on up to a maximum of
     $30 million of obligations relating to an iron ore pellets supply
     agreement.

<PAGE> 73

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


11.  USX is the subject of, or a party to, a number of pending or
     threatened legal actions, contingencies and commitments relating to the 
     U. S. Steel Group involving a variety of matters including laws and
     regulations relating to the environment.  Certain of these matters are
     discussed below.  The ultimate resolution of these contingencies could,
     individually or in the aggregate, be material to the U. S. Steel Group
     financial statements.  However, management believes that USX will remain a
     viable and competitive enterprise even though it is possible that these
     contingencies could be resolved unfavorably to the U. S. Steel Group.  See
     discussion of Liquidity in USX Consolidated Management's Discussion and
     Analysis of Financial Condition and Results of Operations.

     The U. S. Steel Group is subject to federal, state and local laws and
     regulations relating to the environment.  These laws generally provide for
     control of pollutants released into the environment and require responsible
     parties to undertake remediation of hazardous waste disposal sites.
     Penalties may be imposed for noncompliance.  At September 30, 2000, and
     December 31, 1999, accrued liabilities for remediation totaled $115 million
     and $101 million, respectively.  It is not presently possible to estimate
     the ultimate amount of all remediation costs that might be incurred or the
     penalties that may be imposed.

     For a number of years, the U. S. Steel Group has made substantial
     capital expenditures to bring existing facilities into compliance with
     various laws relating to the environment.  In the nine months of 2000 and
     for the years 1999 and 1998, such capital expenditures totaled $16 million,
     $32 million and $49 million, respectively.  The U. S. Steel Group
     anticipates making additional such expenditures in the future; however, the
     exact amounts and timing of such expenditures are uncertain because of the
     continuing evolution of specific regulatory requirements.

     Guarantees by USX of the liabilities of affiliated entities of the U. S.
     Steel Group totaled $88 million at September 30, 2000.  In the event
     that any defaults of guaranteed liabilities occur, USX has access to its
     interest in the assets of the affiliates to reduce U. S. Steel Group losses
     resulting from these guarantees.  As of September 30, 2000, the largest
     guarantee for a single affiliate was $60 million.

     The U. S. Steel Group's contract commitments to acquire property,
     plant and equipment at September 30, 2000, totaled $84 million compared
     with $83 million at December 31, 1999.

<PAGE> 74

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


12.  In the fourth quarter 2000, the U. S. Steel Group must adopt several
     recently issued accounting pronouncements primarily related to the
     classification of items in the statement of operations.  In December 1999,
     the Securities and Exchange Commission (SEC) issued Staff Accounting
     Bulletin No. 101 (SAB 101) "Revenue Recognition in Financial Statements,"
     which summarizes the SEC staff's interpretations of generally accepted
     accounting principles related to revenue recognition and classification.
     During the third quarter 2000, the EITF issued EITF Consensus No. 99-19
     "Reporting Revenue Gross as a Principal versus Net as an Agent", which
     addresses whether certain cost items should be reported as a reduction of
     revenue or as a component of cost of sales, and EITF Consensus No. 00-10
     "Accounting for Shipping and Handling Fees and Costs," which addresses the
     classification of costs incurred for shipping goods to customers.  The
     adoption of these new pronouncements will have no net effect on the
     financial position or results of operations of the U. S. Steel Group,
     although they will require reclassifications of certain amounts in the
     statement of operations.

13.  Definitive agreements have been executed regarding the following
     transactions, which will be accounted for as business combinations.  The
     transactions are expected to close shortly after the receipt of any
     required approvals and the clearance of all preclosing conditions.

     On September 29, 2000, final documents were signed for the acquisition
     by USX of the steel operations and related assets of VSZ a.s. (VSZ).  The
     transaction was approved by VSZ shareholders on October 12, 2000.  The
     transaction must be approved by the Slovak government's anti-monopoly
     office.  These operations are located in Kosice, Slovak Republic and will
     be known as U. S. Steel Kosice s.r.o. (USSK). An initial cash payment to
     VSZ of $60 million will be made at closing.  An additional payment to VSZ
     of not less than $25 million and up to $75 million is contingent upon the
     future performance of USSK.  Additionally, $325 million of debt will be
     issued by USSK to VSZ's lenders prior to closing.  The acquisition will be
     accounted for under the purchase method of accounting.

     Prior to this transaction, USX and VSZ were joint partners in VSZ U.S.
     Steel s. r.o. (VSZUSS), a tin mill products manufacturer.  The assets of
     USSK will include VSZ's interest in VSZUSS.  The acquisition of the
     remaining interest in VSZUSS will be accounted for under the purchase
     method of accounting.  Previously, USX had accounted for its investment in
     VSZUSS under the equity method of accounting.

     In October 2000, Transtar, Inc. (Transtar) announced that it had
     entered into a Reorganization and Exchange Agreement with its two voting
     shareholders, USX and Transtar Holdings, L.P. (Holdings), an affiliate of
     Blackstone Capital Partners L.P.  As a result of this transaction, USX will
     become sole owner of Transtar and certain of its subsidiaries.  Holdings
     will become owner of the other subsidiaries of Transtar.  USX will account
     for the change in its ownership interest in Transtar under the purchase
     method of accounting.  Previously, USX had accounted for its investment in
     Transtar under the equity method of accounting.

<PAGE> 75

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


13.  (Continued)

     Also in October 2000, USX agreed to purchase the tin mill products
     business of LTV Corporation (LTV).  Terms of this noncash transaction call
     for USX to assume certain employee-related obligations of LTV.  The
     acquisition will be accounted for under the purchase method of accounting.

     Both the Transtar and the LTV transactions are subject to certain
     government approvals and clearances.  The LTV transaction is also subject
     to certain third party consents and customary closing conditions.



<PAGE> 76
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The U. S. Steel Group includes U. S. Steel, which is engaged in the
production, transportation and sale of steel mill products, coke, and taconite
pellets; the management of mineral resources; domestic coal mining; real estate
development and management; and engineering and consulting services.  Certain
business activities are conducted through joint ventures and partially owned
companies, such as USS-POSCO Industries ("USS-POSCO"), PRO-TEC Coating Company
("PRO-TEC"), Transtar, Inc. ("Transtar"), Clairton 1314B Partnership, VSZ U. S.
Steel, s. r.o., and Republic Technologies International, LLC ("Republic").
Management's Discussion and Analysis should be read in conjunction with the
U. S. Steel Group's Financial Statements and Selected Notes to Financial
Statements.  The discussion of Results of Operations should be read in
conjunction with the Supplemental Statistics provided on page 88.

     Certain sections of Management's Discussion and Analysis include forward-
looking statements concerning trends or events potentially affecting the
businesses of the U. S. Steel Group.  These statements typically contain words
such as "anticipates," "believes," "estimates," "expects" or similar words
indicating that future outcomes are not known with certainty and subject to risk
factors that could cause these outcomes to differ significantly from those
projected.  In accordance with "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, these statements are accompanied by
cautionary language identifying important factors, though not necessarily all
such factors, that could cause future outcomes to differ materially from those
set forth in forward-looking statements.  For additional risk factors affecting
the businesses of the U. S. Steel Group, see Supplementary Data -- Disclosures
About Forward-Looking Information in USX 1999 Form 10-K.

Results of Operations
---------------------
     Revenues for the third quarter and first nine months of 2000 and 1999 are
set forth in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
Revenues of reportable segment                  $1,430  $1,387  $4,588   $3,924
Revenues not allocated to reportable segment         -     (50)      -      (72)
                                                 -----   -----   -----    -----
 Total Revenues                                 $1,430  $1,337  $4,588   $3,852
</TABLE>

     Total reportable segment revenues increased by $43 million and $664 million
in the third quarter and first nine months of 2000, respectively, compared with
the same periods in 1999.  The increase in the third quarter reflected higher
steel transaction prices and better results from equity affiliates, partially
offset by lower steel shipment volumes.  For the first nine months, improvement
came primarily from higher tubular shipment volumes which had higher average
transaction prices.

<PAGE> 77

                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
     Income from operations for the U. S. Steel Group for the third quarter and
first nine months of 2000 and 1999 is set forth in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
-------------------------------------------------------------------------------
<S>                                              <C>     <C>     <C>      <C> 
Segment income for U. S. Steel operations (a)      $23      $3    $145      $43
Items not allocated to segment:
 Net pension credits                                67      46     199      186
 Administrative expenses                            (7)     (4)    (18)     (17)
 Costs related to former business activities (b)   (23)    (21)    (63)     (65)
 Impairment of USX's investment in USS/Kobe and
  costs related to formation of Republic (c)         -     (50)      -      (50)
 Loss on investment in RTI stock used to satisfy
  indexed debt obligations (d)                       -       -       -      (22)
                                                 -----   -----   -----    -----
  Total Group income from operations               $60    $(26)   $263      $75
                                                 =====   =====   =====    =====
-----
<FN>
  (a) Includes income from the production and sale of steel products, coke
      and taconite pellets; domestic coal mining; the management of mineral
      resources; engineering and consulting services; and equity income from
      joint ventures and partially owned companies, such as USS-POSCO
      Industries, PRO-TEC Coating Company, Transtar, Inc., Republic
      Technologies International, LLC and VSZ U. S. Steel, s. r.o.  Also
      includes results of real estate development and management, and financing
      activities.
  (b) Includes other postretirement benefit costs and certain other
      expenses principally attributable to former business units of the
      U. S. Steel Group.
  (c) For further details, see Note 10 to the U. S. Steel Group Financial
      Statements.
  (d) For further details, see Note 4 to the U. S. Steel Group Financial
      Statements.
</TABLE>

Segment income for U. S. Steel operations

     Segment income for U. S. Steel operations increased $20 million and
$102 million in the third quarter and first nine months of 2000, respectively,
compared with the same periods in 1999.  The increases in segment income were
primarily due to those factors previously mentioned in the revenue discussion.
In addition, the third quarter and first nine months of 2000 were negatively
impacted by higher natural gas prices.  Segment income in the third quarter and
first nine months of 2000 included a $10 million charge for USX's share of
restructuring and impairment charges at Republic.  The first nine months of 2000
included charges totaling $15 million for certain environmental and legal
contingencies.  The third quarter and first nine months of 2000 were unfavorably
impacted by a planned blast furnace outage at Gary Works and the first nine
months of 2000 were also negatively impacted by an unplanned blast furnace
outage at Fairfield Works.  Segment income for the third quarter and first nine
months of 1999 included charges of $7 million and $17 million, respectively, for
certain environmental and legal accruals.  Segment income for 1999 was restated
to conform with the current pension allocation methodology; therefore, no
pension credit or cost is allocated to the U. S. Steel operations segment.

<PAGE> 78

                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
I
tem not allocated to segment

     Net pension credits associated with all of U. S. Steel's pension plans are
not included in segment income for U. S. Steel operations. These net pension
credits, which are primarily noncash, totaled $67 million and $199 million in
the third quarter and first nine months of 2000, respectively, compared to $46
million and $186 million in the same periods in 1999.  Net pension credits in
the first nine months of 1999 included $35 million for a one-time favorable
settlement primarily related to the 1998 voluntary early retirement program for
salaried employees completed during the second quarter 1999.

     Net interest and other financial costs for the third quarter and first nine
months of 2000 and 1999 are set forth in the following table:

<TABLE>
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
-------------------------------------------------------------------------------
<S>                                              <C>     <C>     <C>      <C> 
Net interest and other financial costs             $27     $20     $75      $48
Less:
  Favorable adjustment to carrying value
     of indexed debt(a)                              -       -       -      (13)
                                                 -----   -----   -----    -----
Net interest and other financial costs
 adjusted to exclude above item                    $27     $20     $75      $61
                                                 =====   =====   =====    =====
-----
<FN>
(a)  For further discussion, see the Exchangeable Notes discussion in Note 4 to
     the U. S. Steel Group Financial Statements.
</TABLE>
      
     Adjusted net interest and other financial costs increased by $7 million and
$14 million in the third quarter and first nine months of 2000, respectively, as
compared with the same periods in 1999.  These increases were primarily due to
higher debt levels.

     The provision for estimated income taxes in the third quarter and first
nine months of 2000 increased compared to the same periods in 1999 due to an
increase in income before income taxes.

     The extraordinary loss on extinguishment of debt of $2 million (net of
$1 million income tax benefit) in the third quarter of 1999 was USX's share of
Republic's extraordinary loss related to the early extinguishment of debt.  The
$7 million for the first nine months included this charge and a $5 million loss
(net of $3 million income tax benefit) resulting from the satisfaction of the
indexed debt. For further discussion, see Note 4 to the U. S. Steel Group
Financial Statements.

     Net income increased $50 million and $108 million in the third quarter and
first nine months of 2000, respectively, compared to the same periods in 1999,
primarily reflecting the factors discussed above.

<PAGE> 79
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
Operating Statistics
--------------------
     Third quarter 2000 steel shipments of 2.6 million tons decreased 10% from
the same period in 1999 and steel shipments of 8.4 million tons in the first
nine months of 2000 increased 9% from the same period in 1999.  Raw steel
production in the third quarter of 2000 of 2.8 million tons was down 10%
compared to the same period in 1999.  Raw steel production in the first nine
months of 2000 of 8.9 million tons was comparable to the same period in 1999.
Raw steel capability utilization in the third quarter of 2000 averaged 85.5%,
compared to 94.9% in the same period in 1999.  Raw steel capability utilization
in the first nine months of 2000 averaged 93.3%, compared to 93.0% in the same
period in 1999.  Steel shipments, raw steel production and raw steel capability
utilization in the third quarter and first nine months of 2000 were negatively
impacted by a planned blast furnace outage at Gary Works, with this blast
furnace expected to be idled for the remainder of the year because of business
conditions, and, for the first nine months, by the blast furnace outage at
Fairfield Works in the second quarter.

Cash Flows
----------
     Net cash provided from operating activities in the first nine months of
2000 was $5 million, compared with $158 million in the same period in 1999.  The
decrease of $153 million reflected unfavorable working capital changes,
partially offset by improved net income and an income tax settlement with the
Marathon Group in accordance with the group tax allocation policy.

     Capital expenditures in the first nine months of 2000 were $133 million,
compared with $221 million in the same period in 1999.  Capital expenditures are
expected to approximate $200 million for the year 2000.

     Contract commitments for capital expenditures at September 30, 2000,
totaled $84 million, compared with $83 million at December 31, 1999.  The
September 30, 2000 commitment includes approximately half of the $90 million
purchase price for the Gary No. 2 Slab Caster which is expected to be purchased
upon lease expirations in the second and third quarters of 2001.  The commitment
for the remaining purchase price was made in October 2000.

     The above discussion includes a forward-looking statement concerning
capital expenditures for the year 2000.  This statement is based on assumptions
as to completion of capital projects and estimated spending levels.  In the
event any of these assumptions prove to be inaccurate, actual results may differ
significantly from those presently anticipated.

     Financial obligations increased $200 million in the first nine months of
2000. The increase in financial obligations resulted from capital expenditures
and dividend payments exceeding cash from operating activities.  Financial
obligations consist of the U. S. Steel Group's portion of USX debt and preferred
stock of a subsidiary attributed to both groups, as well as debt and financing
agreements specifically attributed to the U. S. Steel Group.

Derivative Instruments
----------------------
     See Quantitative and Qualitative Disclosures About Market Risk for
discussion of derivative instruments and associated market risk for U. S. Steel
Group.

<PAGE> 80
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
Liquidity
---------
     For discussion of USX's liquidity and capital resources, see Management's
Discussion and Analysis of USX Consolidated Financial Condition, Cash Flows and
Liquidity.

Environmental Matters, Litigation and Contingencies
---------------------------------------------------
     The U. S. Steel Group has incurred and will continue to incur substantial
capital, operating and maintenance, and remediation expenditures as a result of
environmental laws and regulations. In recent years, these expenditures have
been mainly for process changes in order to meet Clean Air Act obligations,
although ongoing compliance costs have also been significant. To the extent
these expenditures, as with all costs, are not ultimately reflected in the
prices of the U. S. Steel Group's products and services, operating results will
be adversely affected. The U. S. Steel Group believes that all of its domestic
competitors are subject to similar environmental laws and regulations. However,
the specific impact on each competitor may vary depending on a number of
factors, including the age and location of its operating facilities, marketing
areas, production processes and the specific products and services it provides.
To the extent that competitors are not required to undertake equivalent costs in
their operations, the competitive position of the U. S. Steel Group could be
adversely affected.

     USX has been notified that it is a potential responsible party ("PRP") at
27 waste sites related to the U. S. Steel Group under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") as of
September 30, 2000.  In addition, there are 13 sites related to the U. S. Steel
Group where USX has received information requests or other indications that USX
may be a PRP under CERCLA but where sufficient information is not presently
available to confirm the existence of liability or make any judgment as to the
amount thereof. There are also 30 additional sites related to the U. S. Steel
Group where remediation is being sought under other environmental statutes, both
federal and state, or where private parties are seeking remediation through
discussions or litigation. At many of these sites, USX is one of a number of
parties involved and the total cost of remediation, as well as USX's share
thereof, is frequently dependent upon the outcome of investigations and remedial
studies. The U. S. Steel Group accrues for environmental remediation activities
when the responsibility to remediate is probable and the amount of associated
costs is reasonably determinable. As environmental remediation matters proceed
toward ultimate resolution or as additional remediation obligations arise,
charges in excess of those previously accrued may be required.

     In 1997, USS/Kobe Steel Company ("USS/Kobe"), a joint venture between USX
and Kobe Steel, Ltd. ("Kobe"), was the subject of a multi-media audit by the
U.S. Environmental Protection Agency ("EPA") that included an air, water and
hazardous waste compliance review.  USS/Kobe and the EPA entered into a tolling
agreement pending issuance of the final audit and commenced settlement
negotiations in July 1999.  In August 1999, the steelmaking and bar producing
operations of USS/Kobe were combined with companies controlled by Blackstone
Capital Partners II to form Republic.  The tubular operations of USS/Kobe were
transferred to a newly formed entity, Lorain Tubular Company, LLC ("Lorain
Tubular"), which operated as a joint venture between USX and Kobe until December
31, 1999 when USX purchased all of Kobe's interest in Lorain Tubular.  Republic
and Lorain Tubular are continuing

<PAGE> 81
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
negotiations with the EPA.  Most of the matters raised by the EPA relate to
Republic's facilities; however, air discharges from Lorain Tubular's #3 seamless
pipe mill have also been cited.  Lorain Tubular will be responsible for matters
relating to its facilities.  The final report and citations from the EPA have
not been issued.

     In 1996, USX was notified by the Indiana Department of Environmental
Management ("IDEM"), acting as lead trustee, that IDEM and the U.S. Department
of the Interior had concluded a preliminary investigation of potential injuries
to natural resources related to releases of hazardous substances and oil into
the Grand Calumet River, Indiana Harbor Canal and Indiana Harbor near Gary
Works.  USX was identified as a PRP along with 15 other companies owning
property along the river, harbor canal and harbor.  The public trustees have
completed a preassessment screen pursuant to federal regulations and are
performing a Natural Resource Damage Assessment.  USX is cooperating with eight
other PRP's in a joint defense group which is currently engaged in settlement
discussions with the public trustees and EPA.

     In February 1999, the United States Department of Justice and EPA issued a
letter demanding a cash payment of approximately $4 million to resolve a Finding
of Violation issued in 1997 alleging improper sampling of benzene waste streams
at Gary Works.  On September 18, 2000, a Consent Decree was entered with the
United States District Court which settled the alleged violation of the benzene
National Emissions Standards for Hazardous Air Pollutants.  U. S. Steel agreed
to pay a civil penalty of $587,000 and to complete a Supplemental Environmental
Project removing polychlorinated biphenyl transformers at a cost of
approximately $2.2 million.  Payment of the civil penalty was made on
October 13, 2000.

     USX is the subject of, or a party to, a number of pending or threatened
legal actions, contingencies and commitments relating to the U. S. Steel Group
involving a variety of matters, including laws and regulations relating to the
environment, certain of which are discussed in Note 11 to the U. S. Steel Group
Financial Statements. The ultimate resolution of these contingencies could,
individually or in the aggregate, be material to the U. S. Steel Group Financial
Statements. However, management believes that USX will remain a viable and
competitive enterprise even though it is possible that these contingencies could
be resolved unfavorably to the U. S. Steel Group.

Outlook
-------
     U. S. Steel's order book and prices have softened due to continued high
import volumes, which, through the first eight months of 2000, exceeded record-
year 1998 levels for the same period, a draw down of inventories by spot
purchasers and increasing evidence that the growth in the domestic economy is
slowing.  These factors are expected to continue to dampen our business through
the fourth quarter with shipments for the fourth quarter of 2000 projected to be
somewhat below third quarter levels.  High natural gas prices, which unfavorably
affected the first nine months of 2000, are expected to persist for some time.
Due to our reduced order book, the blast furnace idled at Gary Works in July for
a planned 10-day outage is now expected to remain down through year end.  In 
addition, one of five agglomerator lines at Minntac taconite mining operations 
in Minnesota will be idled on November 3, 2000, and is expected to remain down 
through year end.


<PAGE> 82
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
     U. S. Steel's income from operations includes net pension credits, which
are primarily noncash, associated with all of U. S. Steel's pension plans.  Net
pension credits are expected to be approximately $265 million in 2000.  At the
end of 2000, U. S. Steel's main pension plans' transition asset will be fully
amortized, decreasing the pension credit by $69 million annually in future years
for this component.  In addition, for the year 2001, changes in plan assets
based on market performance, if unfavorable, and pending business combinations
are expected to further reduce net pension credits which are currently projected
to be in the range of $140 million to $165 million.  The above includes forward-
looking statements concerning net pension credits which can vary depending upon
the market performance of plan assets, changes in actuarial assumptions
regarding such factors as the selection of a discount rate and rate of return on
plan assets, changes in the amortization levels of transition amounts or prior
period service costs, plan amendments affecting benefit payout levels and
profile changes in the beneficiary populations being valued.  Changes in any of
these factors could cause net pension credits to change.  To the extent net
pension credits decline in the future, income from operations would be adversely
affected.

     USX owns a 16 percent equity method investment in Republic (through USX's
ownership in Republic Technologies International Holdings, LLC ("Republic
Holdings"), which is the sole owner of Republic).  In the third quarter of 2000,
Republic announced that it had completed a financial restructuring to improve
its liquidity position.  Republic raised approximately $30 million in loans from
certain of its direct and indirect equity partners in exchange for notes of
Republic and warrants to purchase Class D common stock of Republic Technologies
International, Inc., Republic's majority owner.  USX's portion was approximately
$6 million.  USX also agreed to certain deferred payment terms into the year
2002, up to a maximum of $30 million, with regard to Republic's obligations
relating to iron ore pellets supplied to Republic.  In its Form 10-Q for the
period ended September 30, 2000, which was filed with the SEC on October 31,
2000, Republic Holdings stated that "Notwithstanding these efforts, [Republic] 
may need to obtain additional financing to meet its cash flow requirements, 
including financing from the sale of additional debt or equity securities."  
Republic Holdings also stated, "As a result of the factors mentioned above, 
[Republic] is highly leveraged and could be considered a risky investment."

     At September 30, 2000, USX's financial exposure to Republic totaled
approximately $107 million, consisting of its equity investment in Republic,
unsecured notes receivable, unsecured trade accounts receivable and contingent
liabilities on USX obligations assumed by Republic.

     In March 2000, U. S. Steel announced it had reached a tentative agreement
to acquire ownership of the steel operations and related assets of VSZ a.s.
("VSZ").  These operations are located in Kosice, Slovak Republic and will be
known as U. S. Steel Kosice s.r.o. ("USSK").  VSZ has an annual capacity of 4
million tons of raw steel production.  An initial cash payment to VSZ of $60
million will be made at closing.  Additional payments to VSZ of not less that
$25 million and up to $75 million are contingent upon the future performance of
USSK.  Additionally, USSK will issue $325 million of debt to VSZ lenders and
will reimburse VSZ for paying $15 million in past taxes.  Also, USSK has agreed
to spend $700 million in capital improvements over the next ten years.  Final
transaction documents were signed on September 29 and shareholders gave their
final approval at a meeting held on October 12.  The transaction is expected to
close in November 2000.  USX owns approximately 25% of the shares of VSZ.


<PAGE> 83
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
     In early October 2000, U. S. Steel announced an agreement with LTV
Corporation ("LTV") to purchase LTV's tin mill products business, including its
Indiana Harbor, Indiana tin operations.  Terms of this noncash transaction call
for U. S. Steel to assume certain employee-related obligations of LTV.  U. S.
Steel intends to operate these facilities as an ongoing business and tin mill
employees at Indiana Harbor will become U. S. Steel employees.  U. S. Steel and
LTV also entered into 5-year agreements for LTV to supply U. S. Steel with
pickled hot bands and for U. S. Steel to provide LTV with processing of cold
rolled steel.  The purchase is expected to become effective around year end.

     Transtar recently announced it has entered into a Reorganization and
Exchange Agreement with its two voting shareholders, Transtar Holdings, L.P.
(Holdings), an affiliate of Blackstone Capital Partners L.P., and USX
Corporation.  As a result of this transaction, USX would become the sole owner
of Transtar and certain of its subsidiaries, namely, the Birmingham Southern
Railroad Company; the Elgin, Joliet and Eastern Railway Company; the Lake
Terminal Railroad Company; the McKeesport Connecting Railroad Company; the
Mobile River Terminal Company, Inc.; the Union Railroad Company; the Warrior &
Gulf Navigation Company; and Tracks Traffic and Management Services, Inc. and
their subsidiaries.  Holdings would become the owner of the other subsidiaries.

     The above discussion includes forward-looking statements concerning
shipments and prices and the completion of the VSZ, LTV and Transtar
transactions.  Projected shipments and prices are based on assumptions as to
import levels, purchaser inventory levels and U.S. economic performance.  One
factor among others that could affect the VSZ acquisition is final approval by
the anti-monopoly office of the Slovak Republic.  The completion of the LTV
acquisition may be affected by factors such as receipt of government approvals,
consent of third parties, and satisfaction of customary closing conditions.  The
completion of the Transtar reorganization and exchange could be affected by a
number of factors, such as approval by the Surface and Transportation Board,
antitrust clearances and satisfaction of customary closing conditions.  In the
event any of these assumptions prove to be inaccurate, actual results may differ
significantly from those presently anticipated.

     Steel imports to the United States accounted for an estimated 28%, 26% and
30% of the domestic steel market in the first eight months of 2000, and for the
years 1999 and 1998, respectively.  Steel imports of hot-rolled sheet and pipe
increased 58% and 45%, respectively, in the first eight months of 2000, compared
to the same period in 1999.

     On June 30, 1999, U. S. Steel joined with four other producers and the USWA
to file trade cases against five countries (the Czech Republic, Japan, Mexico,
Romania, and South Africa) concerning imports of large and small diameter
seamless carbon and alloy standard, line, and pressure pipe.  In each of these
cases the Department of Commerce ("Commerce") found that dumping had occurred,
and on June 9, 2000 and July 13, 2000, the International Trade Commission
("ITC") determined that the domestic industry is being materially injured or
threatened with material injury by the dumping in question.  Commerce issued
antidumping ("AD") orders in all of the cases.


<PAGE> 84
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
     USX intends to file additional antidumping and countervailing duty
petitions if unfairly traded imports adversely impact, or threaten to adversely
impact, the results of the U. S. Steel Group.

     On September 1, 1999, Commerce and the ITC published public notices
announcing the initiation of the mandatory five-year "sunset" reviews of AD and
countervailing duty ("CVD") orders issued as a result of the cold-rolled,
corrosion-resistant, and cut-to-length plate cases filed by the domestic
industry in 1992 and earlier. Under the "sunset" review procedure, an order must
be discontinued after five years unless Commerce and the ITC determine that 
dumping or a countervailable subsidy is likely to continue or recur and that 
material injury to the domestic industry is likely to continue or recur.  In all
34 of the cases, Commerce issued determinations that, if the CVD or AD orders 
were to be revoked, further dumping or subsidization would occur.  On 
November 2, 2000, the ITC determined that the orders should be continued in 
place in all of the cases concerning corrosion-resistant steel and all of the 
cases concerning cut-to-length plate, except cut-to-length plate from Canada.  
It decided that all of the orders on cold-rolled product should be discontinued.

     On July 3, 2000, Commerce and the ITC published public notices announcing
the initiation of the mandatory five-year "sunset" reviews of AD orders issued
in 1995 against seamless pipe from Argentina, Brazil, Germany and Italy and oil
country tubular goods ("OCTG") from Argentina, Italy, Japan, Mexico and South
Korea.  The reviews also encompass the 1995 CVD orders against the same two
products from Italy.  Of the 11 orders, 8 are the subject of expedited review at
Commerce because there was no response, inadequate response, or waiver of
participation by the respondent parties.  Therefore, at Commerce, only three of
the orders (AD: OCTG from Mexico; and CVD: OCTG and seamless pipe from Italy)
are the subject of a full review.  The ITC is conducting full reviews of all the
cases, despite the fact that responses by some of the respondent countries were
inadequate.

     On October 28, 1999, Weirton Steel, along with the USWA and the Independent
Steelworkers Union ("ISU"), filed a trade case against tin- and chromium-coated
steel sheet imports from Japan.  On June 20, 2000 Commerce announced final AD
margins and on August 2, 2000, the ITC determined that the domestic industry is
being materially injured or threatened with material injury by the dumping in
question.  Commerce issued an AD order against Japan effective August 28, 2000.



<PAGE> 85

                      U. S. STEEL GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Commodity Price Risk and Related Risks
--------------------------------------
     Sensitivity analysis of the incremental effects on income before income
taxes of hypothetical 10% and 25% decreases in commodity prices for open
derivative commodity instruments as of September 30, 2000, are provided in the
following table(a):

<TABLE>
                                        Incremental Decrease in
                                       Income Before Income Taxes
                                        Assuming a Hypothetical
                                            Price Change of:

(Dollars in millions)                         10%       25%
-------------------------------------------------------------------------------
<S>                                           <C>       <C>           <C>
Derivative Commodity Instruments
U. S. Steel Group
  Zinc
   Other than trading                         $.2       $.4           (b)
  Tin
   Other than trading                          .1        .2           (b)
<FN>
 (a)  Gains and losses on derivative commodity instruments used for other
      than trading activities are generally offset by price changes in the
      underlying commodity.  Effects of these offsets are not reflected in the
      sensitivity analyses.  Amounts reflect the estimated incremental decrease
      in income before income taxes of hypothetical 10% and 25% changes in
      closing commodity prices for each open contract position at September 30,
      2000. Management evaluates the portfolios of derivative commodity
      instruments on an ongoing basis and adjusts strategies to reflect
      anticipated market conditions, changes in risk profiles and overall
      business objectives.  Changes to the portfolios subsequent to 
      September 30, 2000, will cause future income before income tax effects to
      differ from those presented in the table.
 (b)  Price decrease.
</TABLE>


<PAGE> 86

                      U. S. STEEL GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Interest Rate Risk
------------------
     USX is subject to the effects of interest rate fluctuations on certain of
its non-derivative financial instruments.  A sensitivity analysis of the
projected incremental effect of a hypothetical 10% decrease in September 30,
2000, interest rates on the fair value of the U.S. Steel Group's specifically
attributed non-derivative financial instruments and the U. S. Steel Group's
portion of USX's non-derivative financial instruments attributed to both groups,
is provided in the following table:

<TABLE>
(Dollars in millions)
--------------------------------------------------------------------------------
As of September 30, 2000

                                                              Incremental
                                                              Increase in
Non-Derivative                             Carrying     Fair    Fair
Financial Instruments(a)                     Value      Value   Value(b)
-------------------------------------------------------------------------------
<S>                                        <C>        <C>      <C>
Financial assets:
  Investments and
    long-term receivables                       $59       $59        $-
------------------------------------------------------------------------------
Financial liabilities:
  Long-term debt (c)(d)                      $1,017    $1,047       $30
  Preferred stock of
    subsidiary                                   66        64         6
  USX obligated mandatorily redeemable convertible
    preferred securities of a subsidiary trust  183       129        11
                                              -----     -----     -----
        Total liabilities                    $1,266    $1,240       $47
------------------------------------------------------------------------------
<FN>
(a) Fair values of cash and cash equivalents, receivables, notes payable,
    accounts payable and accrued interest, approximate carrying value and are
    relatively insensitive to changes in interest rates due to the short-term
    maturity of the instruments. Accordingly, these instruments are excluded
    from the table.
(b) Reflects, by class of financial instrument, the estimated incremental effect
    of a hypothetical 10% decrease in interest rates at September 30, 2000, on
    the fair value of USX's non-derivative financial instruments. For financial
    liabilities, this assumes a 10% decrease in the weighted average yield to
    maturity of USX's long-term debt at September 30, 2000.
(c) Includes amounts due within one year.
(d) Fair value was based on market prices where available, or current borrowing
    rates for financings with similar terms and maturities.
</TABLE>

Foreign Currency Exchange Rate Risk
-----------------------------------
     As of September 30, 2000, the U. S. Steel Group had no material exposure to
foreign currency exchange rate risk.

Equity Price Risk
-----------------
     As of September 30, 2000, the U. S. Steel Group had no material exposure to
equity price risk.

<PAGE> 87

                      U. S. STEEL GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Safe Harbor
-----------
     The U. S. Steel Group's Quantitative and Qualitative Disclosures About
Market Risk include forward-looking statements with respect to management's
opinion about risks associated with the U. S. Steel Group's use of derivative
instruments. These statements are based on certain assumptions with respect to
market prices and industry supply and demand for steel products and certain raw
materials. To the extent that these assumptions prove to be inaccurate, future
outcomes with respect to the U. S. Steel Group's hedging programs may differ
materially from those discussed in the forward-looking statements.




<PAGE> 88

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                       SUPPLEMENTAL STATISTICS (Unaudited)
                       -----------------------------------

                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
(Dollars in millions)                            2000    1999    2000     1999
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
REVENUES                                        $1,430  $1,337  $4,588   $3,852

INCOME (LOSS) FROM OPERATIONS

 U. S. Steel operations (a) (b) (c)                $23      $3    $145      $43
 Items not allocated to segment:
   Net Pension Credits (c)                          67      46     199      186
   Administrative Expenses                          (7)     (4)    (18)     (17)
   Cost related to former business activities (d)  (23)    (21)    (63)     (65)
   Impairment of USX's investment in USS/Kobe
     and costs related to the formation of
     Republic (e)                                    -     (50)      -      (50)
   Loss on settlement of indexed debt with
     RTI International Metals, Inc. Stock            -       -       -      (22)
                                                  ----    ----    ----     ----
Total U. S. Steel Group                             60     (26)    263       75

CAPITAL EXPENDITURES                               $36     $68    $133     $221

OPERATING STATISTICS

 Average steel price per ton                      $454    $405    $448     $421
 Steel Shipments (f)                             2,557   2,835   8,441    7,764
 Raw Steel-Production (f)                        2,752   3,061   8,938    8,901
 Raw Steel-Capability Utilization (g)            85.5%   94.9%   93.3%    93.0%
 Iron ore shipments (f)                          4,770   4,706  11,455   10,892

----------
<FN>
 (a)  Results in the third quarter and first nine months of 2000 included
      $10 million for USX's share of Republic's special charges.  Results in
      the first nine months of 2000 included charges totaling $15 million for
      certain environmental and legal accruals.  Results in the third quarter
      and first nine months of 1999 included charges of $7 million and $17
      million, respectively, for certain legal and environmental accruals.
 (b)  Includes the production and sale of steel products, coke and taconite
      pellets; domestic coal mining; the management of mineral resources; 
      engineering and consulting services; and equity income from joint ventures
      and partially owned companies, such as USS-POSCO Industries, PRO-TEC 
      Coating Company, Transtar, Inc., Republic Technologies International, LLC
      and VSZ U. S. Steel, s. r.o.  Also includes results of real estate 
      development and management, and financing activities.
 (c)  Effective January 1, 2000, USX changed its methodology for
      allocating the pension credit or cost associated with its principal
      pension plans for internal business performance reporting purposes.
      Since future contributions to these plans are expected to be minimal due
      to their overfunded position, no pension credit or cost is allocated to
      current business activities.  Accordingly, no pension credit or cost has
      been allocated to the U. S. Steel operations segment.  Prior years'
      segment profit or loss has been restated to conform with the current
      allocation methodology. Net pension credits for 1999 periods include $35
      million for a pension settlement gain primarily related to the early
      retirement program completed during the second quarter 1999.
 (d)  Includes other postretirement benefit costs and certain other
      expenses principally attributable to former business units of the U. S.
      Steel Group.
 (e)  For additional information on the impairment, see Note 10 to the U. S.
      Steel Group Financial Statements.
 (f)  Thousands of net tons.
 (g)  Based on annual raw steel production capability of 12.8 million
      tons.
</TABLE>


<PAGE> 89


Part II - Other Information
----------------------------


Item 1. LEGAL PROCEEDINGS

Marathon Group

Environmental Proceedings

     MAP has responded to information requests from the EPA regarding New Source
Review ("NSR") compliance at its Garyville and Texas City refineries.  In
addition, the scope of the EPA's 1998 multi-media inspections of the Detroit and
Robinson refineries included NSR compliance.  NSR requires new major stationary
sources and major modifications at existing major stationary sources to obtain
permits, perform air quality analysis and install stringent air pollution
control equipment at affected facilities.  The current EPA initiative appears to
target many items that the industry has historically considered routine repair,
replacement and maintenance or other activity exempted from the NSR
requirements.  MAP is engaged in ongoing discussions with the EPA on these
issues.

     While MAP has not been notified of any formal findings or violations
resulting from either the information requests or inspections regarding NSR
compliance; MAP has been informed during discussions with the EPA of potential
non-compliance concerns of the EPA based on these inspections and other
information identified by the EPA.  Currently, discussions with the EPA have
been of a general and technical nature without any commitment to specific
control technologies, implementation schedules or possible penalties.  It is
possible that a framework for resolution of these issues could be reached as
early as the fourth quarter of this year and that any resolution may include
other pending matters such as those arising from the EPA's 1998 multi-media
inspections.
     
     In October 1998, the National Enforcement Investigations Center and Region
V of the EPA conducted a multi-media inspection of MAP's Detroit refinery.
Subsequently, in November 1998, Region V conducted a multi-media inspection of
MAP's Robinson refinery.  These inspections covered compliance with the Clean
Air Act (New Source Performance Standards, Prevention of Significant
Deterioration, and the National Emission Standards for Hazardous Air Pollutants
for Benzene), the Clean Water Act (permit exceedances for the Waste Water
Treatment Plant), reporting obligations under the Emergency Planning and
Community Right to Know Act and the handling of process waste.  Although MAP has
been advised as to certain compliance issues regarding MAP's Detroit refinery,
complete findings on the results of the inspections have not been issued.  Thus
far, MAP has been served with two Notices of Violation ("NOV") and three
Findings of Violation in connection with the multi-media inspections at its
Detroit refinery.  The Detroit notices allege violations of the Michigan State
Air Pollution Regulations, the EPA New Source Performance Standards and National
Emission Standards for Hazardous Air Pollutants for benzene.

<PAGE> 90

Part II - Other Information
----------------------------

Item 1. LEGAL PROCEEDINGS (continued)

Marathon Group (continued)

Environmental Proceedings (continued)

     On March 6, 2000, MAP received its first NOV arising out of the multi-media
inspection of the Robinson Refinery conducted in November 1998.  The NOV is for
alleged Resource Conservation and Recovery Act (hazardous waste) violations.
MAP can contest the factual and legal basis for the allegations prior to the EPA
taking enforcement action.  At this time, it is not known when complete findings
on the results of these multi-media inspections will be issued.

FTC Investigation

     On June 27, 2000, the Federal Trade Commission ("FTC") issued a subpoena to
MAP as part of an investigation to determine whether firms engaged in the
production, transportation, distribution, marketing or sale of petroleum
products have engaged in any unfair methods of competition in the Midwest in
violation of Section 5 of the Federal Trade Commission Act. MAP has responded to
the subpoena and is cooperating with the investigation. On June 29, 2000, MAP
received a demand for information from the Wisconsin Attorney General which is
substantially similar to the FTC subpoena. MAP has responded to the request and
certain other informal requests for information.

     The investigation was in response to a recent increase in gasoline prices,
particularly those in the Midwest. MAP believes that much of the increase
nationwide was related to the price of crude oil, which nearly tripled since
January 1999, and to the implementation of regulations which force refiners to
produce an ever-widening array of motor fuels for different markets. In addition
to these factors, the Midwest has been experiencing an imbalance of gasoline
supply and demand. The primary causes of this imbalance are new fuels required
June 1 for the Chicago, Milwaukee and St. Louis markets and a series of pipeline
and refinery disruptions. MAP believes that it properly responded to market
forces in its gasoline pricing practices.


Manteo

      On  July 18, 1997, the United States Court of Federal Claims, Case No. 92-
331C,  entered a judgment in the amount of $78 million in favor of Marathon  Oil
Company  and  against the United States of America.  The U.  S.  government  was
effectively  ordered  to return lease bonuses that Marathon  paid  in  1981  for
interest in five oil and gas leases offshore North Carolina.  The lawsuit  filed
in May 1992 alleged, inter alia, that the federal government breached the leases
through  passage  of  legislation  which imposed  additional  conditions  and  a
moratorium on the company's rights to explore, develop, and produce hydrocarbons
from  the leases.  The Department of Justice appealed the trial court's decision
to  the U. S. Court of Appeals for the Federal Circuit which reversed the  trial
court.   During  the  fourth quarter of 1999, Marathon's  request  for  Writ  of
Certiorari to the U.S. Supreme Court was granted.  On June 26, 2000, the  United
States  Supreme  Court reversed and remanded the case to  the  U.  S.  Court  of
Appeals for the Federal Circuit for further action.


<PAGE> 91

Part II - Other Information (continued)
----------------------------

Item 1. LEGAL PROCEEDINGS (continued)

U. S. Steel Group

Environnmental Proceedings

Gary Works

     In 1996, USX was notified by the Indiana Department of Environmental 
Management ("IDEM") acting as lead trustee, that IDEM and the U.S. Department of
the Interior had concluded a preliminary investigation of potential injuries to
natural resources related to releases of hazardous substances and oil into the
Grand Calumet River, Indiana Harbor Canal and Indiana Harbor near Gary Works.
USX was identified as a PRP along with 15 other companies owning property along
the river, harbor canal and harbor.  The public trustees have completed a
preassessment screen pursuant to federal regulations and are performing a
Natural Resource Damage Assessment.  USX is cooperating with eight (8) other
PRPs in a joint defense group which is currently engaged in settlement
discussions with the public trustees and EPA.

     In February 1999, the United States Department Of Justice and EPA issued a
letter demanding a cash payment of approximately $4 million to resolve a Finding
of Violation issued in 1997 alleging improper sampling of benzene waste streams
at Gary Works.  On September 18, 2000, a Consent Decree was entered with the
United States District Court which settled the alleged violation of the benzene
National Emissions Standards for Hazardous Air Pollutants.  U. S. Steel agreed
to pay a civil penalty of $587,000 and to complete a Supplemental Environmental
Project removing transformers containing polychlorinated biphenyl at a cost of
approximately $2.2 million.  Payment of the civil penalty was made on
October 13, 2000.
     

<PAGE> 92

Part II - Other Information (Continued):
---------------------------


Item 5.  OTHER INFORMATION (Continued)

     
     Marathon Group
     
      SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF MARATHON OIL COMPANY
                               Supplementary Data
      ---------------------------------------------------------------------
                                   (Unaudited)


The following summarized consolidated financial information of Marathon Oil
Company, a wholly owned subsidiary of USX, is included in this Form 10-Q in
satisfaction of the reporting obligation of Marathon which has debt securities
registered under the Securities Exchange Act.  All such securities are
guaranteed by USX.

<TABLE>
                                                        (In millions)
                                                -------------------------------
                                                Third Quarter    Nine Months
                                                    Ended           Ended
                                                 September 30    September 30
                                                 2000    1999    2000     1999
                                                 ----    ----    ----     ----
<S>                                             <C>     <C>    <C>      <C>
INCOME DATA:
Revenues                                        $9,288  $6,483 $26,142  $16,805
Income from operations                             741     566   2,140    1,389
Net income                                         107     221     724      475


                                                         (In millions)
                                                    -----------------------
                                                   September 30 December 31
                                                       2000         1999
                                                     --------   -----------
BALANCE SHEET DATA:
Assets:
Current assets                                        $7,031        $6,077
Noncurrent assets                                     11,568        11,489
                                                      ------        ------
Total assets                                         $18,599       $17,566
                                                      ======        ======

Liabilities and Stockholder's Equity:
Current liabilities                                   $3,912        $3,320
Noncurrent liabilities                                 8,799         9,250
Preferred stock of subsidiary                             10            10
Minority interest in consolidated subsidiary           1,922         1,753
Stockholder's equity                                   3,956         3,233
                                                     -------       -------
Total liabilities and stockholder's equity           $18,599       $17,566
                                                     =======       =======
</TABLE>


<PAGE> 93

Part II - Other Information (Continued):
----------------------------------------


   Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS

          12.1 Computation of Ratio of Earnings to
               Combined Fixed Charges and Preferred
               Stock Dividends

          12.2 Computation of Ratio of Earnings to Fixed Charges

          27.  Financial Data Schedule


   (b)    REPORTS ON FORM 8-K

          Form 8-K dated July 25, 2000, reporting under Item 5. Other Events,
that the Board of Directors declared a dividend of 25 cents per share on USX-US
Steel Group Common Stock.

          Form 8-K dated July 25, 2000, reporting under Item 5. Other Events,
that the Board of Directors declared a dividend of 23 cents per share on USX-
Marathon Group Common Stock, an increase of 2 cents per share.  USX also
announced the Board of Directors authorized the spending of up to $450 million
to repurchase shares of its USX-Marathon Group Common Stock.

          Form 8-K dated October 19, 2000, reporting under Item 5. Other Events
and Regulation FD Disclosure, that the Marathon Group Earnings Release reported
that Marathon has signed a definitive agreement with Shell to transfer its 37.5
percent interest in Sakhalin Energy Investment Company Ltd.  The increased
likelihood of closing this transaction triggered a one-time, noncash deferred
tax charge of $235 million in the third quarter.


<PAGE> 94

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned chief accounting officer thereunto duly authorized.

      USX CORPORATION


      By /s/ Larry G. Schultz
         --------------------
          Larry G. Schultz
          Vice President -
             Accounting

November 2, 2000







                                                                    Exhibit 12.1

<TABLE>
<CAPTION>                                        
                                 USX CORPORATION
           COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
                          AND PREFERRED STOCK DIVIDENDS
                      TOTAL ENTERPRISE BASIS - (Unaudited)
                              CONTINUING OPERATIONS
           ----------------------------------------------------------
                              (Dollars in Millions)
                                        
                               Nine Months
                                  Ended           Year Ended December 31
                               September 30  --------------------------------
                                2000   1999   1999   1998    1997   1996   1995
                                ----   ----   ----   ----    ----   ----   ----
<S>                            <C>     <C>    <C>    <C>     <C>    <C>    <C>
Portion of rentals
  representing interest          $74    $75    $95   $105     $82    $78    $76
Capitalized interest              12     24     26     46      31     11     13
Other interest and fixed
  charges                        281    269    365    318     352    428    486
Pretax earnings which would
  be required to cover
  preferred stock dividend
  requirements of parent           9     11     14     15      20     37     46
                                ----   ----   ----   ----    ----   ----   ----
Combined fixed charges
  and preferred stock
  dividends (A)                 $376   $379   $500   $484    $485   $554   $621
                                ====   ====   ====   ====    ====   ====   ====
Earnings-pretax income
  with applicable
  adjustments (B)              $2483  $1631  $2098  $1671   $1761  $1887   $909
                                ====   ====   ====   ====    ====   ====   ====

Ratio of (B) to (A)             6.60   4.30   4.20   3.45    3.63   3.41   1.46
                                ====   ====   ====   ====    ====   ====   ====
</TABLE>







                                                                    Exhibit 12.2

<TABLE>                                                                 
<CAPTION>
                                                                                
                                 USX CORPORATION
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                      TOTAL ENTERPRISE BASIS - (Unaudited)
                              CONTINUING OPERATIONS
                -------------------------------------------------
                              (Dollars in Millions)
                                        
                               Nine Months
                                  Ended           Year Ended December 31
                               September 30  --------------------------------
                                2000   1999   1999   1998    1997   1996   1995
                                ----   ----   ----   ----   -----   ----   ----
<S>                            <C>     <C>    <C>    <C>    <C>     <C>    <C>
Portion of rentals
  representing interest          $74    $75    $95   $105     $82    $78    $76
Capitalized interest              12     24     26     46      31     11     13
Other interest and fixed
  charges                        281    269    365    318     352    428    486
                                ----   ----   ----   ----    ----   ----  -----
Total fixed charges (A)         $367   $368   $486   $469    $465   $517   $575
                                ====   ====   ====   ====    ====   ====   ====
Earnings-pretax income
  with applicable
  adjustments (B)              $2483  $1631  $2098  $1671   $1761  $1887   $909
                                ====   ====   ====   ====    ====   ====   ====
Ratio of (B) to (A)             6.77   4.43   4.32   3.56    3.79   3.65   1.58
                                ====   ====   ====   ====    ====   ====   ====
</TABLE>









<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               SEP-30-2000
<CASH>                                             171
<SECURITIES>                                         0
<RECEIVABLES>                                     3051
<ALLOWANCES>                                        16
<INVENTORY>                                       2886
<CURRENT-ASSETS>                                  6677
<PP&E>                                           29960
<DEPRECIATION>                                   17242
<TOTAL-ASSETS>                                   23870
<CURRENT-LIABILITIES>                             5159
<BONDS>                                           3128
<PREFERRED-MANDATORY>                              183
<PREFERRED>                                          2
<COMMON>                                           401<F1>
<OTHER-SE>                                        6989
<TOTAL-LIABILITY-AND-EQUITY>                     23870
<SALES>                                          30425
<TOTAL-REVENUES>                                 30675
<CGS>                                            23324
<TOTAL-COSTS>                                    28298
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 267
<INCOME-PRETAX>                                   1737<F2>
<INCOME-TAX>                                       877
<INCOME-CONTINUING>                                860
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       860
<EPS-BASIC>                                          0<F3>
<EPS-DILUTED>                                        0<F4>
<FN>
<F1>Consists of Marathon Stock issued, $312 million; Steel Stock issued, $89
million.
<F2>Net of minority interest of $373 million.
<F3>Basic Earnings Per Share applicable to Marathon Stock, $2.38; Steel Stock,
$1.27
<F4>Diluted Earnings Per Share applicable to Marathon Stock, $2.37; Steel Stock,
$1.27
</FN>
        

</TABLE>