1993
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
F O R M 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Fiscal Year Ended December 31, 1993
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-1941
B E T H L E H E M S T E E L C O R P O R A T I O N
(Exact name of registrant as specified in its charter)
DELAWARE 24-0526133
(State of Incorporation) (I.R.S. Employer
Identification No.)
1170 Eighth Avenue
BETHLEHEM, PENNSYLVANIA 18016-7699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 694-2424
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------
Common Stock--$1 par value per share New York Stock Exchange
Chicago Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Preferred Stock -- $1 par value per share
$5.00 Cumulative Convertible New York Stock Exchange
(stated value $50.00 per share)
$2.50 Cumulative Convertible New York Stock Exchange
(stated value $25.00 per share)
6-7/8% Debentures. Due March 1, 1999 New York Stock Exchange
9% Debentures. Due May 15, 2000 New York Stock Exchange
8-3/8% Debentures. Due March 1, 2001 New York Stock Exchange
8.45% Debentures. Due March 1, 2005 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No
Aggregate Market Value of Voting Stock held by Non-Affiliates:
$2,334,647,633 The amount shown is based on the closing price of
Bethlehem Common Stock on the New York Stock Exchange Composite Tape
on March 15, 1994. Voting stock held by directors and executive
officers of Bethlehem is not included in the computation. However,
Bethlehem has made no determination that such individuals are
"affiliates" within the meaning of Rule 405 under the Securities
Act of 1933.
Number of Shares of Common Stock outstanding as of March 15, 1994:
108,876,296
Documents Incorporated by Reference:
Selected portions of the 1993 Annual Report to Stockholders of
Bethlehem Steel Corporation are incorporated by
reference into Part II of this Report on Form 10-K.
Selected portions of the 1994 Proxy Statement of Bethlehem
Steel Corporation are incorporated by reference into Part
III of this Report on Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS.
Bethlehem (1) is the second largest steel producer in the United
States and is engaged primarily in the manufacture and sale of a
wide variety of steel mill products. Bethlehem also produces and
sells coal and other raw materials, repairs ships and offshore
drill rigs and manufactures and sells forgings and castings.
For financial reporting purposes, Bethlehem has disaggregated
the results of its operations and certain other financial
information into two segments, Basic Steel Operations and Steel
Related Operations. Note C to the Consolidated Financial
Statements sets forth certain financial information relating to
Bethlehem's industry segments for 1993, 1992 and 1991. The table
below shows the percentage contribution to Bethlehem's net sales of
each segment and of major classes of products for each of the years
1991 through 1993:
1993 1992 1991
---- ---- ----
Basic Steel Operations
Steel mill products:
Sheets and tin mill products 63.1% 59.1% 48.4%
Plates 13.6 13.3 13.0
Structural shapes and piling 8.5 9.6 8.9
Rail products 3.6 2.8 2.4
Bars, rods and semifinished 1.2 2.6 10.1
Other steel mill products .8 1.2 4.0
Other products and services
(including raw materials) 6.8 7.5 7.8
---- ---- ----
97.6 96.1 94.6
Steel Related Operations 2.4 3.9 5.4
---- ---- ----
100.0% 100.0% 100.0%
====== ====== ======
Basic Steel Operations
Bethlehem's Basic Steel Operations produces a wide variety
of steel mill products, including hot rolled, cold rolled and
coated sheets and strip, plates, structural shapes, piling, tin
mill products, specialty blooms, carbon and alloy bars, rail and
pipe. Basic Steel Operations includes the following business
units: the Burns Harbor Division, the Sparrows Point Division,
Bethlehem Structural Products Corporation and Pennsylvania Steel
Technologies, Inc. Also included in Basic Steel Operations are
iron ore and coal operations (which provide raw materials to
Bethlehem's steelmaking facilities and sell such materials to trade
customers), railroad operations (which primarily transport raw
materials and semifinished steel products within various Bethlehem
operations) and lake shipping operations (which primarily transport
raw materials to the Burns Harbor Division). See "ITEM 2.
PROPERTIES" of this Report for a description of the facilities of
these business units and operations.
- --------------------------
(1) "Bethlehem" when used herein means Bethlehem Steel Corporation, a
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Delaware Corporation, and where applicable includes its consolidated
subsidiaries. Bethlehem was incorporated in Delaware in 1919.
As reported by the American Iron and Steel Institute
("AISI"), the steel industry's raw steel production capability for
1993 was 110 million tons, and the preliminary average rate of
industry utilization of that capability was 87 percent, compared to
113 million tons and 82 percent for 1992 and 118 million tons and
74 percent for 1991. Effective January 1, 1993, Bethlehem reduced
its reported raw steel production capability to 11.5 million tons
from 16.0 million tons. Bethlehem's average rate of utilization of
its raw steel production capability was 90 percent in 1993.
Bethlehem's raw steel production capability was 16 million tons for
1992 and 1991, and its average rate of utilization of that
capability was 66 percent for 1992 and 63 percent for 1991.
The following table shows, for each of the years indicated,
the raw steel production of Bethlehem and of the entire domestic
steel industry:
Raw Steel Production
--------------------
Domestic Bethlehem as a
Steel % of Domestic
Bethlehem Industry* Steel Industry
--------- --------- --------------
(millions of net tons)
1993 10.3 96.1** 10.7**
1992 10.5 92.9 11.3
1991 10.0 87.3 11.5
* The figures are as reported by the AISI.
** Based on preliminary AISI figures.
Of Bethlehem's 1993 raw steel production, 95 percent was produced
by basic oxygen furnaces and 5 percent by electric furnaces.
Bethlehem's three continuous slab casters for light flat-
rolled products and plates produced approximately 86.4 percent of
the slabs needed for these products in 1993 compared to 86.8
percent in 1992 and 87.3 percent in 1991.
The following table shows, for each of the years indicated,
the percentage of the total net tons of steel mill products shipped
by Bethlehem's Basic Steel Operations to each of its principal
markets, including shipments to its own Steel Related Operations:
1993 1992 1991
---- ---- ----
Service centers, processors and
converters (including semifinished
customers) 47.3% 46.3% 40.0%
Transportation (including
automotive) 22.2 19.9 20.5
Construction 15.5 16.0 15.8
Containers 5.4 4.8 5.3
Machinery 5.1 5.5 6.0
Other 4.5 7.5 12.4
----- ----- -----
100.0% 100.0% 100.0%
====== ====== ======
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Steel products are distributed by Bethlehem principally
through its own sales organizations, which have sales offices at
various locations in the United States, Canada and Mexico, and
through foreign sales agents. In addition to selling to customers
who consume steel products directly, Bethlehem sells steel products
to steel service centers, distributors, processors and converters.
Export sales for this segment were 2.1 percent of total sales in
1993, 5 percent in 1992 and 5.5 percent in 1991.
Trade orders on hand for Basic Steel Operations at December
31, 1993, and December 31, 1992, were approximately $1,133 million
and $865 million, respectively. Substantially all of the orders on
hand at December 31, 1993, are expected to be filled in 1994.
Competition within the domestic steel industry is intense.
Principal competitors are domestic mini-mills, foreign and domestic
integrated steel companies and reconstituted mills. Bethlehem
experiences strong competition in all principal markets served by
Basic Steel Operations with respect to, among other things, price,
service and quality.
Domestic integrated producers, such as Bethlehem, have lost
market share in recent years to domestic mini-mills. Mini-mills
provide significant competition in certain product lines, including
structural shapes and hot rolled sheets. Mini-mills are relatively
efficient, low-cost producers that produce steel from scrap in
electric furnaces, have lower employment and environmental costs
and target regional markets. Thin slab casting technologies have
allowed mini-mills to enter certain sheet markets which have
traditionally been supplied by integrated producers. One mini-mill
has constructed two such plants and announced its intention to
start a third in a joint venture with another steel producer.
Certain companies have announced plans for, or have indicated that
they are currently considering, additional mini-mill plants for
sheet products in the United States.
Domestic steel producers also face significant competition
from foreign producers and have been adversely affected by unfairly
traded imports. Imports of finished steel products have accounted
for approximately 14 percent of the domestic market in 1993 and
approximately 16 percent of the domestic market in 1992 and 1991.
Many foreign steel producers are owned, controlled or subsidized by
their governments. Decisions by these foreign producers with
respect to production and sales may be influenced to a greater
degree by political and economic policy considerations than by
prevailing market conditions. The following table, which is based
on data reported by the AISI, shows the percentage of the domestic
apparent consumption of steel mill products captured by imports for
various classes of products.
1993* 1992 1991
----- ---- ----
Structural shapes and piling 10% 9% 9%
Bars, rods, tool steel and semifinished 29 20 19
Plates 16 18 17
Sheets, strip and tin mill products 13 17 15
Rail 19 27 29
All Products (1) 19 18 18
* Preliminary
(1) Excludes steel imported in the form of manufactured goods,
such as automobiles, but includes semifinished steel.
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Excluding semifinished steel, imports of steel mill products were
approximately 14.3 million tons in 1993, 14.7 million tons in 1992
and 13.6 million tons in 1991.
In 1992, Bethlehem and eleven other domestic steel producers
filed extensive unfair trade cases with the United States
Department of Commerce ("DOC") and the United States International
Trade Commission ("ITC") covering imports of flat-rolled carbon
steel products. In June 1993, the DOC imposed final antidumping
and subsidy margins averaging 37 percent for all products under
review. In July 1993, the ITC made final determinations that
material injury had occurred in cases representing an estimated 51
percent of the dollar value and 42 percent of the volume of all
flat-rolled carbon steel imports under investigation. In the four
product categories, injury was found in cases relating to 97
percent of the volume of plate steel, 92 percent of the volume of
higher value-added corrosion resistant steel, 37 percent of the
volume of cold rolled steel and none of the hot rolled steel.
Imports of products not covered by affirmative ITC injury
determinations may increase as a result of the ITC determinations
which may have an adverse effect on Bethlehem's shipments of these
products and the prices it realizes for such products. Bethlehem
and the other domestic producers who filed these cases have
appealed the negative decisions of the ITC and are vigorously
defending appeals brought by foreign producers involving decisions
favorable to domestic producers. These appeals are proceeding
before the Court of International Trade in New York and decisions
are not expected before the second half of 1994. Future increases
in other steel imports are also possible, particularly if the value
of the dollar should rise in relation to foreign currencies or if
legislation implementing the recently concluded GATT Uruguay Round
agreement is enacted in a form which substantially weakens United
States trade laws.
The intensely competitive conditions within the domestic
steel industry have been exacerbated by the continued operation,
modernization and upgrading of marginal steel production facilities
through bankruptcy reorganization procedures, thereby perpetuating
overcapacity in certain industry product lines. Overcapacity is
also perpetuated by the continued operation of marginal steel
production facilities that have been sold by integrated steel
producers to new owners, which operate such facilities with a lower
cost structure.
In the case of many steel products, there is substantial
competition from manufacturers of products other than steel,
including plastics, aluminum, ceramics, glass, wood and concrete.
Steel Related Operations
Bethlehem's Steel Related Operations includes BethForge,
Inc. and Bethlehem's interest in the CENTEC joint venture.
BethForge, Inc. manufactures and fabricates forgings and castings.
CENTEC, Bethlehem's joint venture with a subsidiary of Usinor-
Sacilor, a French steelmaker, produces centrifugally cast rolls for
the metalworking industry. During 1993, BethForge, Inc. and the
CENTEC joint venture were established as separate business units
responsible for their own marketing, operations and financial
performance. The operations of BethForge, Inc. and the CENTEC
joint venture are located in Bethlehem, Pennsylvania.
- 4 - <PAGE>
Steel Related Operations also includes the BethShip
Division, which repairs and services ships and offshore drill rigs
and fabricates tunnel sections and other industrial products. The
facilities of the BethShip Division consist of a ship repair yard
at Sparrows Point, Maryland, and a dry dock facility for the repair
and inspection of offshore drill rigs and other vessels at Port
Arthur, Texas.
Bethlehem sells this segment's fabricated steel products to
the steel, machinery, transportation, energy, defense and utility
industries. These products are distributed principally
through Bethlehem's own sales organization. The markets for these
products overlap to a certain extent with the principal markets for
products included in Basic Steel Operations. Bethlehem obtains the
major portion of the materials and products used in the manufacture
and fabrication of the products of this segment from its own steel
mills.
Competition is strong in all principal markets for the
products of this segment, particularly with respect to price,
quality and service. Principal competitors are foreign and
domestic independent steel and marine fabricating companies. As is
the case with Basic Steel Operations, there is substantial
competition with respect to some fabricated steel products from
certain of Bethlehem's competitors operating under the protection
of the United States Bankruptcy Code, from manufacturers of
products other than steel and from imports. The operations of this
segment are generally subject to the cyclical fluctuations
characteristic of the construction and capital goods industries.
Trade orders on hand for Bethlehem's Steel Related
Operations at December 31, 1993, and December 31, 1992, were
approximately $82 million and $58 million, respectively.
Substantially all the orders on hand at December 31, 1993, are
expected to be filled in 1994.
General
Capital Expenditures
Capital expenditures were $327 million in 1993 compared to
$329 million in 1992 and $564 million in 1991. Capital
expenditures for 1994 are currently estimated to increase to
approximately $450 million, primarily because of projects under way
at the Burns Harbor Division.
During 1993, a rebuild was commenced of one of the two coke
oven batteries at Burns Harbor, which is expected to be completed
in mid-1995. During this period, Burns Harbor's coke needs are
being supplied by other Bethlehem coke operations and from
commercial sources. Also, expenditures of $55 million were made
during 1993 for construction of a new coal injection facility at
Burns Harbor which will lower this Division's operating costs
through elimination of the consumption of natural gas and reduction
in the use of coke in the blast furnaces. Construction of this
facility is expected to be completed early in 1995 and is being
funded with the net proceeds of approximately $102 million from the
sale in August 1993 of $105 million of 10-3/8% Senior Notes due 2003
and with $30 million in financial assistance from the Department of
Energy. One of Burns Harbor's two blast furnaces is also scheduled
to be relined during the third quarter of 1994. Operating costs per
ton will increase at Burns Harbor while these projects are under way,
due primarily to lower raw steel production and increased costs for
purchased coke and semifinished steel.
- 5 - <PAGE>
During 1993, progress continued on a $70 million
modernization program for Pennsylvania Steel Technologies, Inc.,
which will enable this business to produce premium head hardened
rails. The program includes the installation of state-of-the art
steelmaking facilities, including a new DC electric arc furnace, a
ladle refining furnace and a vacuum degassing unit. The
modernization is expected to be completed during the second half of
1994.
Approximately $385 million of additional capital
expenditures were authorized in 1993. At December 31, 1993, the
estimated cost of completing authorized capital expenditures was
approximately $676 million compared to $620 million at December 31,
1992. Such authorized capital expenditures are expected to be
completed during the 1994-1995 period.
Environmental Control and Cleanup Expenditures
Bethlehem is subject to stringent federal, state and local
environmental laws and regulations concerning, among other things,
air emissions, waste water discharges, and solid and hazardous
waste disposal. During the five years ended December 31, 1993,
Bethlehem spent approximately $257 million for environmental
control equipment. Expenditures for new environmental control
equipment totaled approximately $35 million in 1993, $18 million in
1992 and $102 million in 1991. The costs incurred in 1993 to
operate and maintain existing environmental control equipment were
approximately $125 million (excluding interest costs but including
depreciation charges of $28 million) compared to $130 million in
1992 and $145 million in 1991. In addition, Bethlehem has been
required to pay various fines and penalties relating to violations
or alleged violations of laws and regulations in the environmental
control area. In 1993, Bethlehem paid approximately $3.7 million
of such fines, penalties and related items. Bethlehem paid
approximately $5.8 million of such fines, penalties and related
items in 1992 and $0.8 million in 1991.
Under the Clean Air Act, as amended, coke-making facilities
will have to meet progressively more stringent standards over the
next 30 years. Bethlehem idled coke production at the Sparrows
Point Division in 1991 and continues to assess the most cost-
effective method of supplying coke and completing an emissions
reduction program to meet environmental regulations. Based on a
continuing review of the current and projected coke market,
however, Bethlehem recently concluded that it could not expect to
recover both the remaining book value and, if determined to be
appropriate, any future investment necessary to rebuild and operate
the idled coke plant. Accordingly, Bethlehem recorded a charge in
its 1993 financial statements for the remaining book value of the
idled coke plant at Sparrows Point. Bethlehem continues to operate
coke-making facilities at the Burns Harbor Division, Structural
Products and at Lackawanna, New York. While Bethlehem continues to
evaluate the impact applicable emission control regulations have on
these operations, it believes that these operations will be able to
comply.
Negotiations between Bethlehem and federal and state
regulatory agencies are being conducted to resolve differences in
interpretation of certain environmental control requirements. In
some instances, those negotiations are being held in connection
with the resolution of pending environmental proceedings.
Bethlehem believes that there will not be any significant
- 6 -<PAGE>
curtailment or interruptions of any of its important operations as
a result of these proceedings and negotiations. Existing
environmental laws may be amended and new laws may be enacted by
Congress and state legislatures and new environmental regulations
may be issued by regulatory agencies. For these reasons, Bethlehem
cannot predict the specific environmental control requirements that
it will face in the future. Based on existing and anticipated
regulations promulgated under presently enacted legislation,
Bethlehem currently estimates that capital spending for
installation of new environmental control equipment will range from
$35 million to $50 million in each of the next two years. However,
estimates of the future capital expenditures and operating costs
required for environmental compliance are imprecise due to numerous
uncertainties, including the evolving nature of the regulations,
the possible imposition of more stringent requirements, the
availability of new technologies and the timing of expenditures.
In July 1990, the Environmental Protection Agency ("EPA")
released a proposed rule establishing comprehensive standards for
the implementation of its corrective action program under the
Resource Conservation and Recovery Act, as amended ("RCRA"). The
corrective action program requires the owners of certain facilities
that managed hazardous waste after 1980 to investigate and, if
appropriate, remediate certain historic environmental contamination
found at the facility. All of Bethlehem's major facilities are
subject to these requirements, and Bethlehem is currently
implementing the program at its Steelton, Lackawanna and Burns
Harbor facilities. At Steelton, Bethlehem has completed both a
RCRA Facility Investigation ("RFI") and a Corrective Measures Study
("CMS") and is currently conducting a remediation program which
received formal EPA approval on January 21, 1994. This program is
scheduled to be completed in the first quarter of 1994 at an
estimated cost of $400,000. At Lackawanna, Bethlehem is conducting
a RFI which, due to regulatory delays and agency-initiated
modifications to the original scope of work, will not be completed
until 1995 at the earliest. Bethlehem has requested formal
approval from the EPA for extension of the investigation to reflect
this updated schedule. At Burns Harbor, Bethlehem is negotiating
its proposed scope of work for a RFI which, following EPA approval,
will require several years to complete. Also, the requirements
contained in the EPA's final corrective action rule are not
expected to be promulgated until later this year at the earliest.
Accordingly, the potential costs for possible remediation
activities at Lackawanna and Burns Harbor and the timeframe for
implementation of these activities cannot be reasonably estimated
until the RFI investigations have been completed and the final
corrective action rule has been promulgated.
Under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA", also known as
"Superfund"), the EPA has authority to impose liability for site
remediation on waste generators, past and present site owners and
operators, and transporters regardless of fault or the legality of
the original disposal activity. Liability is strict, joint and several.
Bethlehem has been advised that it may be considered a potentially
responsible party under CERCLA or the corresponding state superfund
legislation at a total of 17 sites. Based on its experience regarding
site remediation and its knowledge of and extent of involvement in such
sites, Bethlehem expects that its share of the costs for remediation of
these sites will not be material.
Although it is possible that Bethlehem's future results of
operations in particular quarterly or annual periods could be
materially affected by the future costs of environmental
- 7 - <PAGE>
compliance, Bethlehem does not believe the future costs of
environmental compliance will have a material adverse effect on its
consolidated financial position or on its competitive position with
respect to other integrated domestic steelmakers that are subject
to the same environmental requirements.
Raw Materials
Bethlehem obtains the major portion of the iron ore and less
than half of the coal essential to its steelmaking business from properties
which are owned by it or in which it has substantial interests. The
balance of Bethlehem's iron ore and coal requirements is purchased from
commercial sources. See "ITEM 2. PROPERTIES--Properties Relating
to the Basic Steel Operations Segment--Raw Material Properties and
Interests" of this Report.
Research and Development
Bethlehem engages in its own research activities for the
improvement of existing products and the development of new
products and more efficient operating processes. During 1993, 1992
and 1991, Bethlehem incurred costs of approximately $24 million,
$27 million and $30 million, respectively, in its research and
development activities. Bethlehem owns a number of patents that
relate to a wide variety of products and processes, has pending
various patent applications and is licensed under a number of
patents. During 1993, patents covering a number of new
developments were awarded to Bethlehem. Bethlehem believes that no
one of its patents or licenses, which expire from time to time, or
any group of patents or licenses relating to a particular product
or process is of material importance in its overall business.
Bethlehem also owns registered trademarks for certain of its
products and services which, unlike patents and licenses, are
renewable so long as they are continued in use and properly
protected.
Employees and Employment Costs
At the end of 1993, Bethlehem had approximately 20,600
employees compared to 22,600 employees at the end of 1992 and
26,400 employees at the end of 1991. Employment costs, including
certain costs for retirees, were 35.8 percent, 41.5 percent and
39.9 percent of sales in 1993, 1992 and 1991, respectively.
Bethlehem expects to continue to reduce the number of its
employees. Approximately two-thirds of Bethlehem's employees are
covered by its labor agreements with the USWA.
On August 1, 1993, Bethlehem and the USWA entered into a new
six year labor agreement for the Burns Harbor and Sparrows Point
Divisions. The agreement provides for a reopening after three
years, subject to binding arbitration, of wage and certain benefit
provisions (excluding pensions). Under the new agreement,
represented employees will receive improved pension benefits.
bonuses to be paid over the term of the agreement, a $.50 per hour
wage increase in August 1995 and profit sharing. A new profit-
sharing plan has been established, effective January 1, 1994, equal
to eight percent of annual corporate income before taxes, unusual
items and expenses applicable to the plan and two percent of
adjusted profits at each covered operation.
- 8 - <PAGE>
The new agreement also provides for opportunities to reduce health
care costs and for flexible work practices and opportunities to
reduce manning levels through attrition in exchange for improved
employment security. Under the terms of this agreement, on March
15, 1994, each eligible USWA-represented employee received a bonus
of either $500 or 25 shares of Bethlehem Common Stock, at the
election of the employee. Approximately 7,000 shares of Common
Stock were issued in connection with the March 1994 bonus. On
March 15, 1995, each eligible USWA-represented employee will
receive a similar bonus.
During 1993, Bethlehem and the USWA also reached agreement
on new, six year labor agreements for its wholly owned
subsidiaries, Bethlehem Structural Products Corporation and
BethForge, Inc., and for the CENTEC joint venture. The agreements
provide for more flexible work rules and lower overall costs by
combining jobs and lessening work rule restrictions. The
agreements at Structural Products and BethForge, however, included
a "snap back" arrangement providing that in the event Bethlehem did
not install a continuous caster at Structural Products, USWA-
represented employees at those business units would then be covered
by the 1993 labor agreement negotiated for the Burns Harbor and
Sparrows Point Divisions. The revised modernization plan announced
for Structural Products (see "ITEM 2. PROPERTIES--Properties
Relating to the Basic Steel Operations Segment--Bethlehem
Structural Products Corporation") does not provide for installation
of a continuous caster at Structural Products, and discussions are
being held with the USWA concerning the implementation and possible
modification of the "snap back" arrangement. Bethlehem does not
expect any material increase in its overall labor costs as a result
of these developments. The announcement of the revised
modernization program for Structural Products will not affect the
labor agreement for the CENTEC joint venture.
A new, three year labor agreement was also reached during
1993 with union employees at BethShip Division's Sparrows Point
ship repair yard, and a six year agreement was reached with USWA-
represented employees at the Hibbing iron ore joint venture.
In 1992, a new and more competitive labor agreement was
negotiated with the USWA covering the employees at Pennsylvania
Steel Technologies. This agreement expires in 1999 with the other
USWA agreements.
Under the terms of the profit-sharing plan provided for in
the 1989 labor agreement with the USWA, no material profit-sharing
payments were required for the 1992 and 1993 plan years. Under
other provisions of the 1989 labor agreement, Bethlehem issued
approximately 211,380 shares of Series B Preference Stock in 1993
to the trustee for the benefit of employees for 1992. Bethlehem
expects to issue approximately 133,500 shares of Series B
Preference Stock in 1994 to the trustee for the benefit of
employees for 1993.
On January 27, 1994, a new five year agreement was reached
with the United Mine Workers of America covering approximately 600
employees at three coal operations of Bethlehem subsidiaries.
For further information with regard to Bethlehem's
employment costs, see "Employment Cost Summary -- All Employees"
under "Financial Review and Operating Analysis" in Bethlehem's 1993
Annual Report to Stockholders. As set forth on pages 24 and 25 of
this Report, such discussion is incorporated herein by reference.
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Employee Postretirement Obligations
Bethlehem has substantial financial obligations related to
its employee postretirement plans for pensions and healthcare. Moreover,
due to the excess of projected benefit obligations over pension fund assets,
Bethlehem's annual pension expense is substantially higher on a per
ton basis than that of most other domestic steel producers. This pension
expense, combined with postretirement healthcare expense, puts
Bethlehem at a competitive disadvantage with respect to such costs
compared to most other domestic steel producers. As of December
31, 1993, Bethlehem's consolidated balance sheet reflects
liabilities of $1.61 billion and $1.58 billion for the
actuarial present value of unfunded accumulated benefit obligations
for pensions and postretirement benefits other than pensions,
respectively. The calculation of the actuarial present
value of the accumulated benefit obligations for active employees
assumes continued employment with projections for retirements,
deaths, resignations and discharges. If the actual retirement of
active employees is significantly earlier than projected (for plant
closings or other reasons), the accumulated benefit obligations would
increase substantially. The charges for employees terminated as
a result of plant shutdowns or restructurings vary depending upon
the demographics of the work force, but could be approximately
$100,000 per employee. The recording of these charges could result
in a material adverse impact on Bethlehem's financial condition
because of the increase in recorded liabilities, decrease in
stockholders' equity and increases in required contributions to the
pension fund and retiree healthcare payments.
During 1993, long-term interest rates in the United States
declined about 100 basis points. As a result, at December 31, 1993
Bethlehem reduced the discount rate used to calculate the actuarial
present value of its accumulated benefit obligation for pensions by
100 basis points from the rate used at December 31, 1992. This decline
in the discount rate increased the pension liability recorded on
Bethlehem's balance sheet by about $360 million, increasing the
related intangible asset by about $300 million with the remaining
$60 million ($50 million after tax) being charged to additional
paid in capital as required by generally accepted accounting
principles. If interest rates change at December 31, 1994 from
December 31, 1993, Bethlehem might again be required to change the
discount rate used to calculate the actuarial present value of the
accumulated benefit obligation for pensions. For each 25 basis
point change in such discount rate, Bethlehem's pension liability
changes by about $100 million. A 25 basis point decline in such
discount rate would result in a charge to additional paid in
capital of about $80 million on an after tax basis. A 25 basis
point increase in such discount rate would reduce the recorded
pension liability by about $100 million and, depending on the then
market value of its pension trust fund assets (which at December
31, 1993 was $3.4 billion), eliminate the current $50 million
charge to additional paid in capital. While the same reduction in
the discount rate as of December 31, 1993 and potential future
reductions also apply to the actuarial present value of Bethlehem's
accumulated benefit obligation for postretirement benefits other
than pensions, principally healthcare and life insurance, they do
not result in any increase in the recorded liability or potential
charge to equity because of different required accounting
principles.
Bethlehem has contributed amounts to its pension fund
substantially in excess of amounts required under current law and
regulations, including net proceeds of approximately $355 million
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from the public offering in March 1994 of 17,250,000 shares of
Bethlehem Common Stock. As a result, Bethlehem currently has a
funding standard credit balance which would allow it under current
law and regulations to defer all pension funding for more than two
years, although it presently has no plans to do so. Legislation
has been introduced into Congress which could potentially increase
Bethlehem's required future annual pension contributions to its
pension plans. The prospects for passage of such legislation are
currently uncertain. Had this legislation, as currently proposed,
been in effect in 1992 and 1993, Bethlehem's required contribution
to its pension fund would have increased by about $125 million and
$25 million, respectively, decreasing Bethlehem's funding standard
credit balance. The specific increase in required pension
contributions which this proposed legislation would require in
future years will depend on the specific actuarial facts and
circumstances in each year.
Bethlehem adopted Financial Accounting Standards Board
Statement No. 106, Accounting for Postretirement Benefits Other
than Pensions, effective with its 1992 financial statements. See
Note B to the Consolidated Financial Statements.
Restructuring Activities
As part of Bethlehem's efforts to make its business and
operations more competitive, Bethlehem has implemented, and will
continue to consider, a wide range of restructuring alternatives.
Asset Sales. Since early 1986, Bethlehem has implemented an
extensive program of asset sales. Approximately 30 businesses have
been sold since the program began. Bethlehem cannot continue
indefinitely to raise substantial cash from asset sales.
Joint Ventures, Partnerships, Facility Sharing Arrangements
and Mergers. Bethlehem has considered, and discussed with others,
various opportunities for joint ventures, partnerships, facility
sharing arrangements and mergers of all or part of Bethlehem.
Bethlehem will continue to explore such opportunities. See "ITEM
2. PROPERTIES." of this Report for a description of joint
ventures in which Bethlehem participates.
Facility Shutdowns and Restructurings. During the last five
years, Bethlehem has shut down or restructured facilities and
operations and has reduced its annual steelmaking capability from
16.0 million tons to 11.5 million tons. Bethlehem has recorded
charges of approximately $1.6 billion in connection with these
actions, including a $350 million restructuring charge ($290
million after tax) reflected in its results for 1993. See Note D
to the Consolidated Financial Statements. Although Bethlehem has no
current plans to do so, if it becomes necessary for Bethlehem to
shut down or restructure additional businesses and operations in
the future, it could incur substantial, additional charges in the
process. The recording of these charges could have a material
adverse impact on Bethlehem's financial condition because of the
increase in recorded liabilities and decrease in stockholders'
equity.
ITEM 2. PROPERTIES.
Properties Relating to the Basic Steel Operations Segment
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Burns Harbor Division
The principal operations of the Burns Harbor Division are
located along the shore of Lake Michigan near Chicago, Illinois.
The principal products of the Burns Harbor Division are hot rolled
and cold rolled sheets and coated sheets for the automotive,
service center, container, office furniture and appliance markets
and plates for the construction, machinery and service center
markets. Principal facilities include a sintering plant, two coke
oven batteries, two blast furnaces, three basic oxygen furnaces
with a combined annual raw steel production capability of
approximately five million tons, a vacuum degassing facility, two
continuous slab casters with a combined annual production
capability of four million tons, a 50 x 96-inch slabbing mill, two
sheared plate mills (110-inch and 160-inch), an 80-inch hot-strip
mill, an 80-inch five stand cold reducing mill, sheet finishing
mills, a continuous heat treating line, batch annealing facilities,
a 48-inch continuous electrogalvanizing line and a new 72-inch hot-
dip galvanizing line. About 80 percent of the steel produced at
Burns Harbor is continuously cast; the remaining 20 percent is
ingot cast. Ingot cast slabs are used primarily to make heavy
steel plates.
The Galvanized Products Division, an operating unit of the
Burns Harbor Division, is located in Lackawanna, New York.
Facilities of the Galvanized Products Division include a continuous
pickling line, a four stand cold reducing mill, a sheet finishing
complex and a 72-inch hot-dip galvanizing line. The Burns Harbor
Division also operates coke-making facilities at Lackawanna, New
York.
The Burns Harbor Division's utilization of raw steel
production capability was 106 percent during 1993.
Sparrows Point Division
The operations of the Sparrows Point Division are located
along the Chesapeake Bay near Baltimore, Maryland. The principal
products of the Sparrows Point Division are hot rolled and cold
rolled sheets, tin mill products, galvanized sheet, Galvalume
sheet, plates and semifinished steel products for service centers
and the container, construction, appliance and other metals
markets. Principal facilities include a sintering plant, three
coke oven batteries (which are cold idled), a large blast furnace,
two basic oxygen furnaces with an annual raw steel production
capability of approximately 3.5 million tons, a two strand
continuous slab caster with a present annual production capability
of approximately 3.5 million tons, a 160-inch sheared plate mill,
a recently modernized 68-inch hot-strip mill, three cold reducing
mills (66-inch, 56-inch and 48-inch), continuous and batch
annealing facilities, a galvanizing line, two Galvalume lines,
recently modernized tin mill facilities and a new 48-inch hot-dip
galvanizing line. Sparrows Point is currently obtaining coke from
Structural Products and from various commercial sources. The
Division continuously casts essentially 100 percent of its total
production volume. The Sparrows Point Division's utilization of
raw steel production capability was 92 percent during 1993.
Bethlehem Structural Products Corporation
The operations of Bethlehem Structural Products Corporation
are located in Bethlehem, Pennsylvania. Its principal products are
structural steel shapes and piling products primarily for the
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building and construction markets and ingot molds for the metals
industry. Principal facilities include three coke oven batteries,
one blast furnace (an additional blast furnace provides backup
capacity), two basic oxygen furnaces with a combined annual raw
steel production capability of 1.5 million tons, two blooming mills
(40-inch and 46-inch), a 48-inch structural rolling mill, a 44-inch
structural rolling mill, an induction furnace and an ingot mold
foundry. The existing iron and steelmaking operations, which
include the blast furnaces, basic oxygen furnaces and related
facilities, will be discontinued by 1996. Structural Products'
utilization of raw steel production capability was 81 percent
during 1993.
On January 26, 1994, Bethlehem announced a revised
modernization plan for Structural Products. Under the plan,
Structural Products will focus on the production and sale of light
and medium wide-flange sections, which comprise about 80 percent of
the wide-flange market in the United States. The revised plan is
the result of a number of market developments, including a
reduction in the demand for heavy wide-flange sections caused by
reduced high-rise building construction activity, continued low
occupancy rates in commercial buildings, trends toward lighter
construction in buildings and delays in the rebuilding of the
nation's infrastructure.
Structural Products will continue to manufacture heavy wide-
flange structurals (which accounted for approximately one-third of
this business' 1993 production) until it phases out its iron and
steelmaking operations by 1996, as previously announced. Its 44-
inch structural rolling mill complex will be upgraded and
modernized and will be sourced with lower cost, continuously cast
steel produced primarily at Pennsylvania Steel Technologies' newly
modernized state-of-the-art operations in Steelton, Pennsylvania.
The revised plan is expected to result in competitive costs with
substantially lower investment requirements (expected to be in the
range of $25-$35 million) than the previously announced
modernization plan and should permit production of wide-flange
sections of up to 27 inches. Other benefits include higher
utilization of the 44-inch structural rolling mill, higher
utilization of the steelmaking facilities at Pennsylvania Steel
Technologies, improved product quality and better utilization of
Bethlehem's overall financial and other resources.
Pennsylvania Steel Technologies, Inc.
The operations of Pennsylvania Steel Technologies, Inc. are
located near Harrisburg, Pennsylvania. Its principal products are
railroad rails, specialty blooms, carbon and alloy bars, and large
diameter pipe for the rail transportation, forging, rerollers and
oil and gas industries. Principal facilities include three
electric arc furnaces with a combined annual raw steel production
capability of 1.3 million tons, a continuous bloom caster, a 44-
inch blooming mill, a 20-inch bar mill, a 28-inch rail mill,
finishing and shipping facilities for long-length (80 foot) rails
and an electric fusion welded pipe mill. Pennsylvania Steel
Technologies' utilization of raw steel production capability was 40
percent during 1993.
Bethlehem also owns another rail mill located in Monessen,
Pennsylvania, which is not operating. Bethlehem has announced it
is seeking buyers for the production equipment of this mill.
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A $70 million modernization program is under way at
Pennsylvania Steel Technologies, which will enable this business to
produce premium head-hardened rails and includes the installation
of state-of-the-art steelmaking facilities, including a new DC
electric arc furnace, a ladle furnace and a vacuum degassing unit.
This program is expected to be completed during the second half of
1994.
Joint Ventures
Bethlehem is participating in a joint venture, known as
Double G Coatings Company, L.P., which is building a 270,000 ton
per year sheet coating line near Jackson, Mississippi. The new
line, which is scheduled to start up in the second quarter of 1994,
will produce galvanized and Galvalume coated sheets primarily for
the construction market. Sparrows Point will provide cold rolled
coils for approximately half of Double G's annual capacity and will
be responsible for marketing its share of the finished product.
Bethlehem participates in a joint venture which owns and
operates a 400,000 ton per year electrogalvanizing line at
Walbridge, Ohio. This facility produces corrosion resistant sheet
steel primarily for the automobile industry and other consumer
durables markets. Burns Harbor provides cold rolled coils for 75
percent of Walbridge's annual capacity and is responsible for
marketing its share of the finished product.
In order to better serve the needs of the Burns Harbor
Division's automotive customers, Bethlehem has announced that it
intends to form a joint venture with a steel service center to
produce tailored welded steel blanks for automotive stampings through
use of a technologically advanced welding process.
Bethlehem also has indirect equity interests in various iron
ore properties. See "Raw Material Properties and Interests" below.
Raw Material Properties and Interests
Iron Ore. Bethlehem has indirect equity interests in
various iron ore operating properties, which (excluding tonnages
applicable to interests owned by others) it estimates contained
recoverable reserves at December 31, 1993, sufficient to produce at
least 13 million tons of direct shipping iron ore located in Brazil
and 445 million tons of iron ore concentrates and pellets, of which
191 million tons are located in Minnesota and 254 million tons in
Canada. In addition to the estimated reserves at operating
properties, Bethlehem also has indirect equity interests in
undeveloped or nonoperating iron ore properties, which (excluding
tonnages applicable to interests owned by others) it estimates
contained recoverable reserves at December 31, 1993, sufficient to
produce at least 31 million tons of direct shipping iron ore
located in Brazil and 126 million tons of iron ore pellets located
in Minnesota.
The iron ore operating properties in which Bethlehem has
interests have mining and processing facilities that are capable of
supplying the major portion of Bethlehem's current annual
iron ore requirements. However, taking into account the location
of Bethlehem's steel plants and the iron ore products best suited
to these facilities, Bethlehem has found it advantageous to engage
in iron ore sales and exchanges with other consumers and to
purchase a portion of its iron ore requirements. These purchases
have been from various sources, including sources in which it has
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ownership interests, under a variety of contractual arrangements
extending over varying periods of time.
Bethlehem's share of the annual iron ore pellet production
by enterprises in which it had ownership interests, for Bethlehem's
use or sale to trade customers, was 12.5 million tons in 1993 and
12.8 million tons in 1992. In addition to these sources, Bethlehem
purchased 1.7 million tons and 2.3 million tons of iron ore in 1993
and 1992, respectively, from sources in which it had no ownership
interests.
In 1993, Bethlehem obtained approximately 70 percent of its
iron ore requirements from operations in which it had ownership
interests, compared to 71 percent in 1992. Of the iron ore
consumed by Bethlehem in 1993, approximately 57 percent consisted
of pellets and 43 percent of sinter.
Through December 31, 1998, Bethlehem is committed to
purchase 0.6 million tons of iron ore from sources in which it has
no ownership interests. Bethlehem is also committed to purchase
from sources in which it has ownership interests 0.2 million tons
of iron ore in excess of such ownership interests.
Bethlehem had trade sales of iron ore in 1993 and 1992 of
2.0 million tons and 2.3 million tons, respectively. Additional
iron ore trade sales commitments through December 31, 1998,
presently aggregate 3.4 million tons.
The interests in foreign iron ore properties described above
are subject to the risks associated with investments in foreign
countries, including the risk of nationalization.
Coal and Coke. Bethlehem owns coal operating properties in
Pennsylvania and West Virginia, which it estimates contained
recoverable reserves at December 31, 1993, sufficient to produce at
least 134 million tons of coal, of which approximately 52 percent
and 48 percent, respectively, are metallurgical and steam coal.
In addition to the estimated reserves at operating
properties, Bethlehem also owns undeveloped or nonoperating coal
properties in Pennsylvania and West Virginia, which it estimates
contained recoverable reserves at December 31, 1993, sufficient to
produce at least 122 million tons of coal, of which
approximately 85 percent and 15 percent, respectively, are
metallurgical and steam coal.
During 1993, Bethlehem's coal operations produced 3.9
million tons of coal compared to 6.1 million tons in 1992. Trade
shipments of coal were 2.5 million tons in 1993 compared to 4.0
million tons in 1992.
In 1993, Bethlehem obtained approximately 31 percent of its
coal requirements from its own mines, compared to 41 percent in
1992. The balance of Bethlehem's requirements is purchased from
commercial sources.
In December 1991, Bethlehem suspended all coke production at
its Sparrows Point Division, and is currently assessing
implementation of the most cost-effective method for supplying coke
and completing an emissions control program to meet environmental
regulations. Sparrows Point is obtaining coke from the coke ovens
at Structural Products and from various commercial sources.
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Bethlehem continues to operate coke-making facilities at
Structural Products, Burns Harbor and at Lackawanna, New York.
During 1993, a rebuild was commenced of one of the two coke oven
batteries at Burns Harbor which is expected to be completed in
mid-1995. During this period, Burns Harbor's coke needs are being
supplied by other Bethlehem coke operations and from commercial
sources.
Other Raw Materials. Bethlehem purchases its other raw
material requirements from commercial sources.
Transportation.
Bethlehem owns five subsidiary shortline railroads which
primarily transport raw materials and semifinished steel products
within various Bethlehem operations. Bethlehem also owns one line-
haul railroad serving a coal mine near Johnstown, Pennsylvania.
The Burns Harbor Division operates two 1,000 foot ore
vessels (one owned and one under long-term charter), which are used
for the transportation of iron ore on the Great Lakes.
Properties Relating to the Steel Related Operations Segment
BethForge, Inc. has a facility for the production of
forgings and castings located in Bethlehem, Pennsylvania. An ingot
teeming facility and vacuum degassing unit are being installed for
BethForge's use at Pennsylvania Steel Technologies, Inc. in order
to take advantage of the new DC electric arc furnace and ladle
refining station being installed as part of Pennsylvania Steel
Technologies' modernization program. This new facility, with its
lower cost, higher quality ingots, will replace BethForge's
existing steelmaking facility during 1995.
CENTEC, Bethlehem's joint venture with a subsidiary of
Usinor-Sacilor, a French Steelmaker, has a facility for the
production of centrifugally cast rolls located in Bethlehem,
Pennsylvania.
Bethlehem's BethShip Division has marine construction
facilities consisting of a ship repair yard at Sparrows Point,
Maryland, and a dry dock facility for the repair and inspection of
offshore drill rigs and other vessels at Port Arthur, Texas. The
dry dock facility at Port Arthur, Texas is for sale.
General
While Bethlehem's principal plants and facilities are
adequately maintained, they are of varying ages, technologies and
operating efficiencies. Bethlehem believes that most of its plants
and facilities currently are competitive with the plants and
facilities of its principal competitors in the domestic steel
industry. Bethlehem continues to invest substantial amounts to
maintain and modernize its plants and facilities. See "ITEM 1.
BUSINESS--General--Capital Expenditures" of this Report for a
discussion of Bethlehem's capital expenditures.
All principal plants and facilities are owned in fee by
Bethlehem except for two continuous casters at Sparrows Point and
Burns Harbor, a coal cleaning and processing facility at High Power
Mountain in West Virginia and the drill rig repair facility at Port
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Arthur, Texas, each of which is being leased. As discussed in Note
G to the Consolidated Financial Statements, Bethlehem has
capitalized the expenditures related to the leases for two
continuous casters. As discussed in Note F to the Consolidated
Financial Statements, Bethlehem has borrowed $270 million to
finance the construction of two new hot-dip galvanizing lines at
its Burns Harbor and Sparrows Point plants and has pledged these
two facilities as collateral for the borrowings.
ITEM 3. LEGAL PROCEEDINGS.
Bethlehem is a party to numerous legal proceedings incurred
in the ordinary course of its business, including the matters
specifically discussed below.
On October 4, 1990, the State of Maryland Department of the
Environment ("MDE") filed a civil action against Bethlehem in the
Circuit Court of Baltimore County, Maryland seeking civil penalties
for alleged violations of the Maryland air pollution regulations
arising out of exceedances of the visible emissions standards
established for various sources at the Sparrows Point Division by
an October 1987 Consent Order, as amended in June 1989. On April
30, 1991, the MDE filed a complaint in intervention in a civil
action filed on April 25, 1991 by the Justice Department on behalf
of the EPA against Bethlehem, alleging violations of the Clean Air
Act resulting from alleged violations of Maryland air pollution
regulations at the Sparrows Point Division. The complaint in
intervention, which was approved by the Court on June 14, 1991,
incorporated all of the violations alleged in the MDE complaint.
On May 1, 1992, a settlement between the parties to the EPA action
was memorialized in a Consent Decree which was entered by the
Court on July 1, 1992. The Consent Decree resolved all of the
issues in both the federal and state actions except for a single
count in the MDE action dealing with alleged violations from the
basic oxygen furnace. The Consent Decree requires Bethlehem to pay
a civil penalty of $3.5 million over a three year period in equal
annual installments beginning in 1992. Bethlehem and the MDE have
entered into discussions concerning potential settlement of the
remaining count in the MDE action.
On October 16, 1990, the Justice Department on behalf of the
EPA filed a civil action against Bethlehem in the United States
District Court for the Northern District of Indiana seeking
injunctive relief and civil penalties for alleged violations of
RCRA and the Safe Drinking Water Act with respect to the Burns
Harbor Division, including failure to manage certain of the plant's
sludges as hazardous wastes, and failure to begin a corrective
action program pursuant to the terms of a previously issued
underground injection permit. On March 19, 1993, the Court issued
a Memorandum Opinion and Order granting Partial Summary Judgment
for the government concerning the liability issues in the case and
ordering Bethlehem to comply with interim status requirements of
RCRA for its terminal polishing lagoons and landfill and to comply
with the corrective action requirements of Bethlehem's underground
injection well permits. A hearing on the civil penalty issue was
concluded on July 21, 1993, and on August 31, 1993 the Court
entered a judgment against Bethlehem for $6 million. This sum
consisted of $4.2 million for alleged permit violations and $1.8
million for the alleged landfill violations. Bethlehem continues
to believe that it has meritorious defenses and that the trial
court's decisions are erroneous. Bethlehem has filed
separate Notices of Appeal with the United States Court of Appeals
for the Seventh Circuit appealing the trial court's grant of
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summary judgment and its penalty determination. On November 8,
1993, the Seventh Circuit issued an Order staying the trial court's
injunction with respect to the terminal polishing lagoons and the
landfill.
On May 28, 1992, the New York State Department of
Environmental Conservation ("DEC") sent Bethlehem a proposed Order
on Consent to resolve various alleged violations of the New York
air pollution control regulations for emissions from the Lackawanna
coke ovens. The Order, which originally covered alleged violations
for the period from May 1, 1990 through October 7, 1991, has been
supplemented to cover all alleged violations of state air pollution
regulations up to the date of execution of the proposed Order. The
updated Order also cites Bethlehem for failure to properly
operate its sulfur recovery system in the coal chemical by-products
plant and failure to properly certify opacity monitors on the under
fire stacks of the coke oven batteries. In addition, the Order
proposes a civil penalty of $1.5 million. Bethlehem has entered
into negotiations with the DEC to attempt to resolve this matter.
If those negotiations are unsuccessful, Bethlehem believes it has
meritorious defenses and will vigorously defend the action.
BethEnergy Mines Inc. (formerly Bethlehem Minerals Company),
a subsidiary of Bethlehem, is a party to an action entitled Church
and Mullins, et al v. Bethlehem Minerals Company, et al. The case
involves a dispute concerning title to coal mined by Bethlehem
under a parcel of land in eastern Kentucky. The trial court
opinion, delivered February 25, 1987, held that the coal in
question was owned by the Church and Mullins interests and awarded
damages in the amount of $16.9 million. On appeal, on January 12,
1990, the Kentucky Court of Appeals reversed the trial court
judgment in part and affirmed it in part, essentially upholding the
trial court's finding on the issue of title but limiting the award
of damages. The Court of Appeals decision was further appealed to
the Supreme Court of Kentucky, and on June 4, 1992, the Supreme
Court of Kentucky, by a vote of four to three, reinstated the
decision of the trial court, making Bethlehem liable for
damages and interest aggregating approximately $34 million. On
June 24, 1992, Bethlehem petitioned the Kentucky Supreme Court to
reconsider its ruling. On August 28, 1992, the Kentucky Supreme
Court granted oral argument on Bethlehem's motion. The motion was
argued on December 15, 1993 and a decision has not yet been
rendered. Bethlehem continues to believe that the trial court made
a number of fundamental errors, including the issue as to title,
and intends to contest the decision vigorously through all
appropriate means. Nevertheless, Bethlehem increased its reserve
for loss contingencies by recording a $25 million charge against
earnings for the second quarter of 1992 and has continued to
increase the reserve for interest accrued thereon. Bethlehem
will revise the reserve in the event the Kentucky Supreme Court
grants the relief Bethlehem has requested and believes is warranted.
An adverse final resolution of the case would not have any other
effect on Bethlehem's results of operations because Bethlehem sold
its Kentucky coal operations in 1988.
The Justice Department, the EPA and the Texas Natural
Resource Conservation Commission (formerly Texas Water Commission)
have instituted a criminal investigation into certain environmental
practices involving the operations of the BethShip Sabine Yard in
Port Arthur, Texas. The basic operations of the Yard comprise the
drydocking of marine vessels to clean and paint exterior surfaces
and internal tanks, as well as performing steel hull plate repairs
and other general repairs. These operations use blasting grit,
paint thinner and other materials. The investigation includes the
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above operations and the usage, treatment, storage and disposal of
those materials. Bethlehem is cooperating with the authorities as
to the conduct of the investigation, which is continuing. No
criminal charges have been brought or fines or penalties proposed,
and it is not possible at this time to reach any conclusions as to
the outcome of the investigation or the future decisions or actions
by the governmental agencies.
On September 10, 1992, the Justice Department on behalf of
the EPA filed a complaint against Bethlehem in the United States
District Court for the Eastern District of Pennsylvania for
penalties for alleged violations of the coke-by-product recovery
plant benzene NESHAP at Bethlehem Structural Products Corporation
and the Sparrows Point Division. The complaint alleges that
Bethlehem failed to meet the regulatory deadlines for operation of
certain sources covered by benzene NESHAP regulations at the two
facilities. The complaint also alleges that Bethlehem failed to
submit certain monthly reports in a timely fashion. Bethlehem has
met with representatives of the Justice Department and the EPA and
a tentative settlement of this action has been reached whereby
Bethlehem would agree to pay a civil penalty of $650,000 and to
continue to comply with all applicable requirements of the benzene
NESHAP regulations at Bethlehem Structural Products Corporation and
at the Sparrows Point Division.
On January 13, 1993, the EPA issued an Administrative
Complaint alleging that Bethlehem had failed to report certain
spills of hazardous substances from various locations at the Burns
Harbor Division as required by Section 103 of CERCLA. The EPA has
proposed a civil penalty of $207,750. Bethlehem and the EPA have
entered into discussions concerning potential settlement of the
action. In the event those settlement negotiations do not succeed,
Bethlehem believes it has meritorious defenses and will vigorously
defend the action.
On December 30, 1993, the EPA sent Bethlehem a letter
alleging that Bethlehem was in violation of the Partial Consent
Decree entered on May 20, 1991, between Bethlehem and the United
States concerning alleged violations of the Clean Air Act at the
Burns Harbor Division. The letter alleges that Bethlehem violated
the door emission limits stated in the Decree for coke oven battery
number 2 located at the facility at various times from October 1991
through September 1993 and demands payment of a stipulated penalty
of $255,750. On January 18, 1994, Bethlehem and the EPA met to
discuss the demand letter and associated issues concerning future
compliance with the Decree. At the meeting, Bethlehem provided the
EPA with additional information which is being evaluated for its
impact, if any, on the penalty demand.
See "ITEM 1. BUSINESS--General--Environmental Control and
Cleanup Expenditures" of this Report for a discussion of
Bethlehem's potential responsibilities for environmental cleanup at
certain sites under RCRA and CERCLA.
Bethlehem cannot predict with any certainty the outcome of
any legal proceedings to which it is a party. However, in the
opinion of Bethlehem's management, adequate reserves have been
recorded for losses which are likely to result from these
proceedings. To the extent that such reserves prove to be
inadequate, Bethlehem would incur a charge to earnings which could
be material to its future results of operations in particular
quarterly or annual periods. The outcome of these proceedings,
however, is not currently expected to have a material adverse
effect on Bethlehem's consolidated financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security
holders during the fourth quarter of 1993.
- -----------------------------------------
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Executive Officers of the Registrant.
The executive officers of Bethlehem as of March 15, 1994,
are as follows:
Name Age Position
Curtis H. Barnette 59 Chairman (Chief Executive
Officer)
Roger P. Penny 57 President (Chief Operating
Officer)
Gary L. Millenbruch 56 Executive Vice President
(Chief Financial Officer)
John A. Jordan, Jr. 58 Senior Vice President
(Administration)
David P. Post 60 Senior Vice President
(Commercial)
Lonnie A. Arnett 48 Vice President and
Controller (Accounting)
Dr. Walter N. Bargeron 51 President, Services
Division (Chief Technology
Officer)
Benjamin C. Boylston 61 Vice President (Human
Resources)
Stephen G. Donches 48 Vice President (Public
Affairs)
Duane R. Dunham 52 President, Sparrows Point
Division
Joseph F. Emig 56 President, Burns Harbor
Division
George T. Fugere 60 Vice President (Materials
Management)*
Andrew R. Futchko 51 President, Pennsylvania
Steel Technologies, Inc.
William H. Graham 48 General Counsel
G. Penn Holsenbeck 47 Secretary and Deputy
General Counsel
John L. Kluttz 51 Vice President (Union
Relations)
Timothy Lewis 56 President, Bethlehem
Structural Products
Corporation
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Dr. Carl F. Meitzner 54 Vice President (Planning)
Dr. Augustine E. Moffitt, Jr. 48 Vice President (Safety,
Health and Environment)
Andrew M. Weller 47 Vice President and
Treasurer (Finance)
William E. Wickert, Jr. 62 Vice President (Federal
Government Affairs)
All of the executive officers have held responsible
management or professional positions with Bethlehem or its
subsidiaries for more than the past five years.
The By-laws of Bethlehem provide that the officers shall be
chosen annually by the Board of Directors and that each officer
shall hold office until his successor shall have been elected and
shall qualify or until his earlier death or his earlier resignation
or removal in the manner provided in the By-laws.
*George T. Fugere will retire as Vice President, effective
March 31, 1994.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS.
As of March 15, 1994, there were 108,876,296 shares of
Bethlehem Common Stock outstanding held by approximately 42,000
stockholders of record. The principal market for Bethlehem Common
Stock is the New York Stock Exchange. Bethlehem Common Stock is
also listed on the Chicago Stock Exchange. Dividends on Bethlehem
Common Stock are paid quarterly when declared by Bethlehem's Board
of Directors.
Under the provisions of Bethlehem's 10-3/8% Senior Notes due
2003, Bethlehem's ability to pay dividends on its Common Stock is restricted.
See Note M to the Consolidated Financial Statements. At March 15, 1994,
$394 million was available for the payment of Common Stock dividends
under these provisions.
Bethlehem has not paid a dividend on its Common Stock since
the fourth quarter of 1991. In accordance with Bethlehem's policy,
future dividends will be determined by the Board of Directors (subject
to any applicable restrictions) on the basis of attained results and
the business outlook.
The following table sets forth, for the periods indicated,
the high and low sales prices of Bethlehem Common Stock as reported
in the consolidated transaction reporting system. The closing sale
price of Bethlehem Common Stock on March 15, 1994, as reported in
the consolidated transaction reporting system, was $21.50.
1993 1992
---- ----
Sales Prices Sales Prices
------------ ------------
Period High Low High Low
---- --- ---- ---
First Quarter $20.000 $14.875 $17.250 $12.750
Second Quarter 21.000 16.375 16.625 12.875
Third Quarter 19.125 12.875 15.375 11.500
Fourth Quarter 20.625 13.750 16.625 10.000
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by
reference from page 31 of Bethlehem's 1993 Annual Report to
Stockholders. With the exception of the information specifically
incorporated by reference, the 1993 Annual Report to Stockholders
is not to be deemed filed as part of this Report for purposes of
this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information required by this Item is incorporated by
reference from pages 2 to 4 and 15 to 19, inclusive, of Bethlehem's
1993 Annual Report to Stockholders. With the exception of the
- 23 - <PAGE>
information specifically incorporated by reference, the 1993 Annual
Report to Stockholders is not to be deemed filed as part of this
Report for purposes of this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is incorporated by
reference from pages 20 to 29, inclusive, of Bethlehem's 1993
Annual Report to Stockholders. With the exception of the
information specifically incorporated by reference, the 1993 Annual
Report to Stockholders is not to be deemed filed as part of this
Report for purposes of this Item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In addition to the information set forth under the caption
"Executive Officers of the Registrant" in Part I of this Report,
the information required by this Item is incorporated by reference
from pages 2 to 6, inclusive, of Bethlehem's Proxy Statement for
the 1994 Annual Meeting of Stockholders. With the exception of the
information specifically incorporated by reference, Bethlehem's
Proxy Statement is not to be deemed filed as part of this Report
for purposes of this Item.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by
reference from pages 16 to 22, inclusive, of Bethlehem's Proxy
Statement for the 1994 Annual Meeting of Stockholders. With the
exception of the information specifically incorporated by
reference, Bethlehem's Proxy Statement is not to be deemed filed as
part of this Report for purposes of this Item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by this Item is incorporated by
reference from pages 7 and 23 to 24, inclusive, of Bethlehem's
Proxy Statement for the 1994 Annual Meeting of Stockholders. With
the exception of the information specifically incorporated by
reference, Bethlehem's Proxy Statement is not to be deemed filed as
part of this Report for purposes of this Item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated by
reference from the material appearing under the headings
"Compensation Committee Interlocks and Insider Participation" and
"Indemnification Assurance Agreements" appearing, respectively, on
pages 8 to 9, inclusive, and page 23 of Bethlehem's Proxy Statement
- 24 - <PAGE>
for the 1994 Annual Meeting of Stockholders. With the exception of
the information specifically incorporated by reference, Bethlehem's
Proxy Statement is not to be deemed filed as part of this Report
for purposes of this Item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Documents filed as part of this Report:
The following is an index of the financial statements,
schedules and exhibits included in this Report or incorporated
herein by reference.
(1) Financial Statements.
BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Page
Consolidated Statements of Income for the years 1993,
1992 and 1991 . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Balance Sheets, December 31, 1993 and
December 31, 1992. . . . . . . . . . . . . . . . . . . *
Consolidated Statements of Cash Flows for the years 1993,
1992 and 1991. . . . . . . . . . . . . . . . . . . . . *
Notes to Consolidated Financial Statements
(Including Quarterly Financial Data) . . . . . . . . . *
(2) Consolidated Financial Statement Schedules.
Report of Independent Accountants On Consolidated Financial
Statement Schedules . . . . . . . . . . . . . . . . . F-1
Schedules:
V -- Property, Plant and Equipment, years ended
December 31, 1993, 1992 and 1991 . . . . . . . . . F-3
VI -- Accumulated Depreciation of Property, Plant and
Equipment, years ended December 31, 1993, 1992
and 1991. . . . . . . . . . . . . . . . . . . . . . F-4
VIII -- Valuation and Qualifying Accounts and Reserves,
years ended December 31, 1993, 1992 and 1991. . . . F-5
X -- Supplementary Income Statement Information, years
ended December 31, 1993, 1992 and 1991 . . . . . . F-6
* Incorporated in this Report by reference from pages 20 to 29,
inclusive, of Bethlehem's 1993 Annual Report to Stockholders
referred to below.
The Consolidated Financial Statements, together with the report
thereon of Price Waterhouse dated January 26, 1994, appearing on
pages 20 to 30, inclusive, of the accompanying 1993 Annual Report
to Stockholders are incorporated by reference in this Form 10-K
Annual Report. With the exception of those pages, the 1993 Annual
Report to Stockholders is not to be deemed filed as part of this
Report for purposes of this Item. The Schedules listed above
should be read in conjunction with the consolidated financial
statements in such 1993 Annual Report to Stockholders.
- 25 - <PAGE>
Schedules not included have been omitted because they are
not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
Separate financial statements of subsidiaries not
consolidated and 50 per cent or less owned persons accounted for by
the equity method have been omitted because considered in the
aggregate as a single subsidiary they do not constitute a
significant subsidiary.
(3) Exhibits.
The following is an index of the exhibits included in this
Report or incorporated herein by reference.
(3)(a) Restated Certificate of Incorporation, as corrected by
the certificate of Correction relating thereto (Incorp
reference from Exhibit 28 to Bethlehem's quarterly report
on Form 10-Q for the quarter ended June 30, 1988).
(b) By-laws of Bethlehem Steel Corporation, as amended
October 1, 1988.
(4)(a) Rights Agreement, dated as of September 28, 1988,
between Bethlehem Steel Corporation and Morgan Shareholder
Services Trust Company.
(b) Certificate of the Voting Powers, Designation, Preferences
and Relative, Participating, Optional or Other Special
Rights, and the Qualifications, Limitations or Restrictions
Thereof, of the Employee Stock Ownership Plan Convertible
Preference Stock, Series B (Par Value $1 Per Share; Stated
Value $40 Per Share) of Bethlehem Steel Corporation, as
amended and supplemented by the Certificate of Decrease
relating thereto (Incorporated by reference from Exhibit 4
to Bethlehem's quarterly report on Form 10-Q for the quarter
ended March 31, 1991).
(c) Certificate of the Voting Powers, Designation Preferences
and Relative, Participating, Optional or Other Special
Rights, and the Qualifications, Limitations or Restrictions
Thereof, of the $3.50 Cumulative Convertible Preferred Stock
(Par Value $1 Per Share) of Bethlehem Steel Corporation, as
amended and supplemented by the Certificate of Increase
relating thereto (Incorporated by reference from Exhibit
4(c) to Bethlehem's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992).
(10)(a) Subsidiary Companies, as amended July 29, 1992
(Incorporated by reference from Exhibit 10(a) to
Bethlehem's quarterly report on form 10-Q for the
quarter ended June 30, 1992).
* (b) 1988 Stock Incentive Plan of Bethlehem Steel Corporation
(Incorporated by reference from Exhibit 10(b) to Bethlehem's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992).
* (c) Special Incentive Compensation Plan of Bethlehem Steel
Corporation, which is contained in Article Seventh of
the Restated Certificate of Incorporation referred to
in Exhibit 3(a) to this Report.
- 26 - <PAGE>
* (d) Supplemental Benefits Plan of Bethlehem Steel Corporation
and Subsidiary Companies, as amended July 29, 1992
(Incorporated by reference from Exhibit 10(b) to Bethlehem's
quarterly report on Form 10-Q for the quarter ended June 30,
1992).
* (e) Post-Retirement Retainer Plan for Non-Officer Directors
(Incorporated by reference from Exhibit (10)(o) to
Bethlehem's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992).
(f) Form of Indemnification Assurance Agreement between
Bethlehem Steel Corporation and each of its directors and
executive officers listed on Schedule A thereto.
(11) Statement regarding computation of per share
earnings.
(13) Those portions of the 1993 Annual Report to
Stockholders of Bethlehem Steel Corporation which are
incorporated by reference into this Form 10-K Annual Report.
(21) Subsidiaries of Bethlehem Steel Corporation.
(23) Consent of Independent Accountants (included on
page F-2 of this Report).
(24) Powers of Attorney.
-------------
* Compensatory plans in which Bethlehem's directors and executive
officers participate.
(b) Reports on Form 8-K.
During the quarter ended December 31, 1993, no reports on
Form 8-K were filed by Bethlehem.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, Bethlehem Steel
Corporation has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 24th day of
March, 1994.
BETHLEHEM STEEL CORPORATION,
by /s/ Lonnie A. Arnett
---------------------
Lonnie A. Arnett
Vice President and Controller
- 27 - <PAGE>
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, this Report has been signed below by the
following persons on behalf of Bethlehem Steel Corporation and in
the capacities indicated on the 24th day of March, 1994.
/s/ Curtis H. Barnette *
---------------------------- ---------------------------
Curtis H. Barnette John B. Curcio
Chairman and Director Director
(principal executive
officer)
/s/ Gary L. Millenbruch *
----------------------------- ---------------------------
Gary L. Millenbruch William C. Hittinger
Executive Vice President Director
and Director
(principal financial officer)
/s/ Lonnie A. Arnett *
----------------------------- ---------------------------
Lonnie A. Arnett Thomas L. Holton
Vice President and Director
Controller
(principal accounting officer)
* *
------------------------ ---------------------------
Benjamin R. Civiletti Harry P. Kamen
Director Director
* *
------------------------ ---------------------------
Worley H. Clark Winthrop Knowlton
Director Director
* *
------------------------ ---------------------------
Herman E. Collier, Jr. Robert McClements, Jr.
Director Director
* *
------------------------ ---------------------------
Roger P. Penny William A. Pogue
Director Director
* *
------------------------ ---------------------------
Dean P. Phypers John F. Ruffle
Director Director
*By /s/ Lonnie A. Arnett
---------------------
Lonnie A. Arnett
(Attorney-in-Fact)
- 28 - <PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders
of Bethlehem Steel Corporation
Our audits of the consolidated financial statements referred
to in our report dated January 26, 1994 appearing on page 30 of the
1993 Annual Report to Stockholders of Bethlehem Steel Corporation
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedules listed in
Item 14(a)(2) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
/s/ PRICE WATERHOUSE
- --------------------
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, NY 10036
January 26, 1994
F-1<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on
Form S-8 (No. 2-90795, No. 2-71699, No. 2-53880, No. 2-90796, No.
2-67314, No. 33-23516, No. 33-23688, and No. 33-52267) of our report dated
January 26, 1994, which appears on page 30 of the 1993 Annual Report to
Stockholders of Bethlehem Steel Corporation, which is incorporated
by reference in Bethlehem Steel Corporation's Annual Report on Form
10-K for the year ended December 31, 1993. We also consent to the
incorporation by reference of our report on the Financial Statement
Schedules, which appears on page F-1 of such Annual Report on Form
10-K.
/s/ PRICE WATERHOUSE
- ---------------------
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, NY 10036
March 24, 1994
F-2<PAGE>
SCHEDULE V
Property, Plant and Equipment
(dollars in millions)
<TABLE>
<CAPTION>
Balance at Additions Retirements Other Balance at
Classification 12/31/92 at Cost or Sales(1) Changes (2) 12/31/93
- -------------- ----------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Construction in Progress $176.2 $327.1 $ - ($182.7) $320.6
Land 53.3 - (2.4) - 50.9
Buildings 694.2 - (29.5) 5.4 670.1
Machinery and Equipment 6,135.9 - (605.0) 168.8 5,699.7
------ ------ -------- -------- -------
Total $7,059.6 $327.1 ($636.9) ($8.5) $6,741.3
======= ====== ======== ======== =======
<CAPTION>
Balance at Additions Retirements Other Balance at
Classification 12/31/91 at Cost or Sales Changes(2) 12/31/92
- -------------- ---------- --------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Construction in Progress $371.1 $328.7 $ - ($523.6) $176.2
Land 90.1 - (36.8) - 53.3
Buildings 694.1 - (27.0) 27.1 694.2
Machinery and Equipment 5,839.2 - (169.7) 466.4 6,135.9
------- ------ ------- ------- -------
Total $6,994.5 $328.7 ($233.5) ($30.1) $7,059.6
======= ====== ======== ======= =======
<CAPTION>
Balance at Additions Retirements Other Balance at
Classification 12/31/90 at Cost or Sales(1) Changes(2) 12/31/91
- -------------- ---------- --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Construction in Progress $510.8 $563.9 $ - ($703.6) $371.1
Land 109.8 - (21.5) 1.8 90.1
Buildings 796.0 - (120.8) 18.9 694.1
Machinery and Equipment 6,365.4 - (1,201.4) 675.2 5,839.2
-------- ------ -------- ------- ------
Total $7,782.0 $563.9 ($1,343.7) ($7.7) $6,994.5
======== ====== ========= ======== =======
</TABLE>
(1) Includes $457.3 million and $1,025.2 million for assets
included in the estimated restructuring losses recorded in 1993
and 1991.
(2) Represents the reclassification of completed construction to
property, plant and equipment and investments in associated
enterprises.
F-3<PAGE>
SCHEDULE VI
Accumulated Depreciation of Property, Plant and Equipment
(dollars in millions)
Balance at Charged Retirements Balance at
Classification 12/31/92 to income or Sales(1) 12/31/93
- -------------- --------- --------- ----------- ---------
Buildings 427.2 $11.2 ($18.9) $419.5
Machinery and Equipment 3,827.9 266.3 (406.7) 3,687.5
------- ------ -------- -------
Total $4,255.1 $277.5 ($425.6) $4,107.0
======= ====== ======== =======
Balance at Charged Retirements Balance at
Classification 12/31/91 to income or Sales 12/31/92
- -------------- ---------- --------- ----------- ---------
Buildings $437.3 $10.9 ($21.0) $427.2
Machinery and Equipment 3,692.4 250.8 (115.3) 3,827.9
------- ------ -------- -------
Total $4,129.7 $261.7 ($136.3) $4,255.1
======= ====== ======== =======
Balance at Charged Retirements Balance at
Classification 12/31/90 to income or Sales(1) 12/31/91
- -------------- ----------- --------- ----------- ----------
Buildings $511.1 $12.5 ($86.3) $437.3
Machinery and Equipment 4,474.5 228.9 (1,011.0) 3,692.4
------- ------ ---------- -------
Total $4,985.6 $241.4 ($1,097.3) $4,129.7
======= ====== ========== =======
(1) Includes $251.5 and $829.6 million for assets included in the
estimated restructuring losses recorded in 1993 and 1991.
F-4<PAGE>
SCHEDULE VIII
Valuation and Qualifying Accounts and Reserves
(dollars in millions)
<TABLE>
<CAPTION>
Balance at Charged Deductions Balance at
Classification 12/31/92 to Income From Reserves Other 12/31/93
- -------------- ---------- ---------- ------------- ----- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful receivables $11.7 $7.5 ($6.9) (a) $ - $12.3
Allowance for sales returns and allowances 4.0 - - - 4.0
Allowance for long-term receivables 5.3 - (0.8) (a) - 4.5
Allowance for deferred income tax asset 309.2 (b) 87.0 - 10.5 (c) 406.7
<CAPTION>
Balance at Charged Deductions Balance at
Classification 12/31/91 to Income From Reserve Other 12/31/92
- -------------- ---------- --------- ------------ ----- --------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful receivables $14.1 $6.0 ($8.4) (a) $ - $11.7
Allowance for sales returns and allowances 4.0 - - - 4.0
Allowance for long-term receivables 4.9 1.2 (0.8) (a) - 5.3
Allowance for deferred income tax asset - 309.2 (b) - - 309.2 (b)
<CAPTION>
Balance at Charged Deductions Balance at
Classification 12/31/90 to Income From Reserves Other 12/31/91
- -------------- ---------- --------- ------------- ------ ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful receivables $15.2 $4.0 ($5.1) (a) $ - $14.1
Allowance for sales returns and allowances 4.0 - - - 4.0
Allowance for long-term receivables 4.3 1.5 (0.9) (a) - 4.9
</TABLE>
(a) Amounts written-off less collections and reinstatements.
(b) During 1993, Bethlehem changed the method of valuing
inventories from the last-in, first-out (LIFO) method to the
to the first-in, first-out (FIFO) method. Prior years'
financial statements have been restated to reflect this
change. See Note B to the Consolidated Financial Statements.
(c) Represents the valuation allowance recorded for a $60.5 million
($50 million after tax) adjustment to equity required to recognize
the minimum pension liability. See Note I to the Consolidated
Financial Statements.
F-5<PAGE>
SCHEDULE X
Supplementary Income Statement Information
(dollars in millions)
Year Ended December 31, 1993 Charged to
Classification Expense
- -------------- ----------
Repairs and maintenance $656.1
Taxes other than payroll and income taxes 39.8
Research and development 23.9
Year Ended December 31, 1992 Charged to
Classification Expense
- -------------- ----------
Repairs and maintenance $706.7
Taxes other than payroll and income taxes 43.2
Research and development 27.0
Year Ended December 31, 1991 Charged to
Classification Expense
- -------------- ----------
Repairs and maintenance $723.2
Taxes other than payroll and income taxes 51.3
Research and development 29.9
F-6<PAGE>
EXHIBIT INDEX
The following is an index of the exhibits included in this Report
or incorporated herin by reference.
Item No. Exhibit Page No.
-------- ------- --------
(3)(a) Restated Certificate of Incorporation, as corrected by
the Certificate of Correction relating thereto
(Incorporated by reference from Exhibit 28 to
Bethlehem's quarterly report on Form 10-Q for the
quarter ended June 30, 1988).
(b) By-laws of Bethlehem Steel Corporation, as
amended October 1, 1988.
(4)(a) Rights Agreement, dated as of September 28, 1988,
between Bethlehem Steel Corporation and Morgan
Shareholder Services Trust Company.
(b) Certificate of the Voting Powers, Designation,
Preferences and Relative, Participating, Optional or
Other Special Rights, and the Qualifications,
Limitations or Restrictions Thereof, of the Employee
Stock Ownership Plan Convertible Preference Stock,
Series B (Par Value $1 Per Share; Stated Value $40
Per Share) of Bethlehem Steel Corporation, as
amended and supplemented by the Certificate of
Decrease relating thereto (Incorporated by reference
from Exhibit 4 to Bethlehem's quarterly report on
Form 10-Q for the quarter ended March 31, 1991).
(c) Certificate of the Voting Powers, Designation
Preferences and Relative, Participating, Optional or
Other Special Rights, and the Qualifications,
Limitations or Restrictions Thereof, of the $3.50
Cumulative Convertible Preferred Stock (Par Value
$1 Per Share) of Bethlehem Steel Corporation, as
amended and supplemented by the Certificate of
Increase relating thereto (Incorporated by reference
from Exhibit 4(c) to Bethlehem's Annual Report on
Form 10-K for the fiscal year ended December 31,
1992).
*(10)(a) Excess Benefit Plan of Bethlehem Steel Corporation
and Subsidiary Companies, as amended July 29,
1992 (Incorporated by reference from Exhibit 10(a)
to Bethlehem's quarterly report on Form 10-Q for
the quarter ended June 10, 1992).
*(b) 1988 Stock Incentive Plan of Bethlehem Steel
Corporation (Incorporated by reference from
Exhibit 10(b) to Bethlehem's Annual Report on
Form 10-K for the fiscal year ended December 31,
1992).
*(c) Special incentive Compensation Plan of Bethlehem
Steel Corporation, which is contained in Article
Seventh of the Restated Certificate of Incorporation
referred to in Exhibit 3(a) to this Report.
*(d) Supplemental Benefits Plan of Bethlehem Steel
Corporation and Subsidiary Companies, as amended
July 29, 1992 (Incorporated by reference from
Exhibit 10(b) to Bethlehem's quarterly report on
Form 10-Q for the quarter ended June 30, 1992).
*(e) Post-Retirement Retainer Plan for Non-Officer
Directors (Incorporated by reference from Exhibit
(10)(o) to Bethlehem's Annual Report on Form 10-
K for the fiscal year ended December 31, 1992).
(f) Form of Indemnification Assurance Agreement
between Bethlehem Steel Corporation and each of
its directors and executive officers listed on
Schedule A thereto.
(11) Statement regarding computation of per share
earnings.
(13) Those portions of the 1993 Annual Report to
Stockholders of Bethlehem Steel Corporation which
are incorporated by reference into this Form 10-K
Annual Report.
(21) Subsidiaries of Bethlehem Steel Corporation.
(23) Consent of Independent Accountants (included on
page F-2 of this Report).
(24) Powers of Attorney.
- -----------------
* Compensatory plans in which Bethlehem's directors and executive
officers participate.
<PAGE>
Exhibit (3)(b)
BY-LAWS
of
BETHLEHEM STEEL CORPORATION
----------------------------
Incorporated under the Laws
of the State of Delaware
---------------------------
As Amended October 1, 1988
<PAGE>
BY-LAWS
OF
BETHLEHEM STEEL CORPORATION
Table of Contents
Page
----
ARTICLE I - Meetings of Stockholders, Etc.
Section 1.01 Annual Meeting . . . . . . . . . . . . . . . . . 1
Section 1.02 Business to be Brought Before an Annual
Meeting of Stockholders. . . . . . . . . . . . . 1
Section 1.03 Special Meeting. . . . . . . . . . . . . . . . . 2
Section 1.04 Place of Meetings. . . . . . . . . . . . . . . . 2
Section 1.05 Notice of Meetings . . . . . . . . . . . . . . . 2
Section 1.06 Quorum . . . . . . . . . . . . . . . . . . . . . 3
Section 1.07 Organization . . . . . . . . . . . . . . . . . . 4
Section 1.08 Order of Business. . . . . . . . . . . . . . . . 4
Section 1.09 Voting . . . . . . . . . . . . . . . . . . . . . 4
Section 1.10 List of Stockholders . . . . . . . . . . . . . . 5
Section 1.11 Inspectors of Votes. . . . . . . . . . . . . . . 6
Section 1.12 Consent of Stockholders in lieu of Meeting . . . 6
ARTICLE II - Board of Directors
Section 2.01 General Powers . . . . . . . . . . . . . . . . . 8
Section 2.02 Number and Term of Office. . . . . . . . . . . . 8
Section 2.03 Nominations for the Election of Directors. . . . 8
Section 2.04 Election of Directors. . . . . . . . . . . . . . 9
Section 2.05 Organization . . . . . . . . . . . . . . . . . . 9
Section 2.06 Resignations . . . . . . . . . . . . . . . . . . 9
Section 2.07 Vacancies, etc.. . . . . . . . . . . . . . . . . 9
Section 2.08 Place of Meeting, etc. . . . . . . . . . . . . . 9
Section 2.09 First Meeting. . . . . . . . . . . . . . . . . . 10
Section 2.10 Regular Meetings . . . . . . . . . . . . . . . . 10
Section 2.11 Special Meetings; Notice . . . . . . . . . . . . 10
Section 2.12 Quorum and Manner of Acting. . . . . . . . . . . 10
Section 2.13 Removal of Directors . . . . . . . . . . . . . . 11
Section 2.14 Compensation . . . . . . . . . . . . . . . . . . 11
ARTICLE III - Committees
Section 3.01 Executive Committee; How Constituted and Powers. 12
Section 3.02 Organization, etc. . . . . . . . . . . . . . . . 12
Section 3.03 Meetings . . . . . . . . . . . . . . . . . . . . 12
Section 3.04 Quorum and Manner of Acting. . . . . . . . . . . 13
Section 3.05 Resignations; Removal; Vacancies . . . . . . . . 13
Section 3.06 Other Committees . . . . . . . . . . . . . . . . 13
Section 3.07 Procedures . . . . . . . . . . . . . . . . . . . 14
Section 3.08 Action by Consent in Writing . . . . . . . . . . 14
ARTICLE IV - Officers
Section 4.01 Number . . . . . . . . . . . . . . . . . . . . . 15
Section 4.02 Election and Term of Office. . . . . . . . . . . 15
Section 4.03 Agents, etc. . . . . . . . . . . . . . . . . . . 15
Section 4.04 Removal. . . . . . . . . . . . . . . . . . . . . 15
Section 4.05 Resignations . . . . . . . . . . . . . . . . . . 15
Section 4.06 Vacancies. . . . . . . . . . . . . . . . . . . . 16
Section 4.07 Chief Executive Officer. . . . . . . . . . . . . 16
Section 4.08 Chairman . . . . . . . . . . . . . . . . . . . . 16
Section 4.09 President. . . . . . . . . . . . . . . . . . . . 16
Section 4.10 Vice Chairmen. . . . . . . . . . . . . . . . . . 16
Section 4.11 Executive Office . . . . . . . . . . . . . . . . 17
Section 4.12 Vice Presidents. . . . . . . . . . . . . . . . . 17
Section 4.13 Assistant Vice Presidents. . . . . . . . . . . . 17
Section 4.14 Controller . . . . . . . . . . . . . . . . . . . 17
Section 4.15 Assistant Controllers. . . . . . . . . . . . . . 18
Section 4.16 General Counsel. . . . . . . . . . . . . . . . . 18
Section 4.17 Treasurer. . . . . . . . . . . . . . . . . . . . 18
Section 4.18 Assistant Treasurers . . . . . . . . . . . . . . 19
Section 4.19 Secretary. . . . . . . . . . . . . . . . . . . . 19
Section 4.20 Assistant Secretaries. . . . . . . . . . . . . . 20
Section 4.21 Salaries . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V - Contracts, Checks, Drafts, Bank Accounts, Etc.
Section 5.01 Contracts with Governmental Authorities. . . . . 20
Section 5.02 Appointment of Agents. . . . . . . . . . . . . . 21
Section 5.03 Execution of Other Contracts, etc. . . . . . . . 21
Section 5.04 Loans. . . . . . . . . . . . . . . . . . . . . . 21
Section 5.05 Checks, Drafts, etc. . . . . . . . . . . . . . . 22
Section 5.06 Deposits . . . . . . . . . . . . . . . . . . . . 22
Section 5.07 General and Special Bank Accounts. . . . . . . . 22
Section 5.08 Proxies in Respect of Stock or Other
Securities of Other Corporations . . . . . . . . 22
ARTICLE VI - Shares and Their Transfer
Section 6.01 Certificates for Stock . . . . . . . . . . . . . 23
Section 6.02 Transfer of Stock. . . . . . . . . . . . . . . . 23
Section 6.03 Regulations. . . . . . . . . . . . . . . . . . . 24
Section 6.04 Lost, Stolen, Destroyed and Mutilated
Certificates.. . . . . . . . . . . . . . . . . . 24
Section 6.05 Fixing Date for Determination of Stockholders
of Record in Certain Case. . . . . . . . . . . . 24
ARTICLE VII - Offices, Etc.
Section 7.01 Registered Office. . . . . . . . . . . . . . . . 25
Section 7.02 Other Offices. . . . . . . . . . . . . . . . . . 25
ARTICLE VIII - Dividends, Surplus, Etc.
Section 8.01 Dividends, Surplus, etc. . . . . . . . . . . . . 25
ARTICLE IX - Indemnification of Directors, Officers, Employees and
Agents
Section 9.01 Third Party Actions. . . . . . . . . . . . . . . 26
Section 9.02 Derivative Actions . . . . . . . . . . . . . . . 27
Section 9.03 Determination of Entitlement to
Indemnification. . . . . . . . . . . . . . . . . 28
Section 9.04 Right to Indemnification Upon Successful
Defense and For Service as a Witness . . . . . . 28
Section 9.05 Advance of Expenses. . . . . . . . . . . . . . . 29
Section 9.06 Indemnification Not Exclusive. . . . . . . . . . 29
Section 9.07 Accrual of Claims; Successors. . . . . . . . . . 30
Section 9.08 Corporate Obligations; Reliance. . . . . . . . . 30
Section 9.09 Insurance. . . . . . . . . . . . . . . . . . . . 30
Section 9.10 Definitions of Certain Terms . . . . . . . . . . 30
Section 9.11 Saving Clause. . . . . . . . . . . . . . . . . . 31
ARTICLE X - Seal
Section 10.01 Seal . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI - Fiscal Year
Section 11.01 Fiscal Year. . . . . . . . . . . . . . . . . . . 31
ARTICLE XII - Waiver of Notices
Section 12.01 Waiver of Notices. . . . . . . . . . . . . . . . 32
ARTICLE XIII - Gender
Section 13.01 Gender . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XIV - Amendments
Section 14.01 Amendments . . . . . . . . . . . . . . . . . . . 32
<PAGE>
BY-LAWS
OF
BETHLEHEM STEEL CORPORATION
---------------------------
ARTICLE I.
Meetings of Stockholders, Etc.
SECTION 1.01. Annual Meeting. The annual meeting of the
stockholders of Bethlehem Steel Corporation (herein called the
"Corporation") shall, unless the Board of Directors (herein called
the "Board") shall designate another time or place, be held on the
Tuesday immediately preceding the last Wednesday in April in each
year (or, if that day shall be a legal holiday, then on the next
preceding business day) at such hour as may be specified in the
notice thereof, in the City of Wilmington, in the State of
Delaware, and at such place within said City as shall be fixed by
the Board, for the purpose of electing directors and for the
transaction of such other business as may properly be brought
before such meeting. If any annual meeting shall not be held on
the day designated herein or the directors shall not have been
elected thereat or at any adjournment thereof, the Board shall
cause a special meeting of the stockholders to be held as soon
thereafter as practicable for the election of directors. At such
special meeting, the stockholders may elect directors and transact
other business with the same force and effect as at an annual
meeting of the stockholders duly called and held.
SECTION 1.02. Business to be Brought Before an Annual
Meeting of Stockholders. Any business properly brought before an
annual meeting of the stockholders of the Corporation may be
transacted at such meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of the
meeting (or any supplement thereto) given by or at the direction of
the Board, (ii) brought before the meeting by or at the direction
of the Board pursuant to a vote of not less than four-fifths of the
whole Board or (iii) otherwise properly brought before the meeting
by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given
such written notice of the proposed business, either by personal
delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation, that the Secretary shall receive such
notice at least 90 days prior to the anniversary date of the
immediately preceding annual meeting or not later than ten days
after notice or public disclosure of the date of the annual meeting
shall be given or made to stockholders, whichever date shall be
earlier. Subject to Section 2.03 hereof, any such notice shall set
forth as to each item of business the stockholder shall propose to
bring before the annual meeting (i) a brief description of such
item of business and the reasons for conducting it at such meeting
and, in the event that such item of business shall include a
proposal to amend or to recommend the amendment of either the
Restated Certificate of Incorporation of the Corporation (which
term as used herein shall include any amendments to the Restated
Certificate) or these By-laws, the text of the proposed amendment,
(ii) the name and address of the stockholder proposing such item of
business, (iii) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting
to propose such item of business and (iv) any material interest of
the stockholder in such item of business. Only business which
shall have been properly brought before an annual meeting of
stockholders in accordance with these By-laws shall be conducted at
such meeting, and the Chairman of such meeting may refuse to permit
any business to be brought before such meeting which shall not have
been properly brought before it in accordance with these By-laws.
SECTION 1.03. Special Meeting. Except as otherwise
required by law, special meetings of the stockholders for any
purpose or purposes may be called only by (i) the Chairman, (ii)
the President, (iii) the Secretary or (iv) the majority of the
whole Board. Only such business as shall be specified in the
notice of any special meeting of the stockholders shall come before
such meeting.
SECTION 1.04. Place of Meetings. Any meeting of the
stockholders for the election of directors shall, unless the Board
shall designate another place, be held in the City of Wilmington,
in the State of Delaware, and at such place within said City as
shall be fixed by the Board. All other meetings of the
stockholders shall be held at such places, within or without the
State of Delaware, as may from time to time be designated by the
Board or in the respective notices or waivers of notice thereof.
SECTION 1.05. Notice of Meetings. Every stockholder shall
furnish the Secretary with an address at which notices of meetings
and all other corporate notices may be served on or mailed to him.
Except as otherwise expressly required by law, notice of each
meeting of the stockholders, whether annual or special, shall, not
less than ten (l0) nor more than sixty (60) days before the date of
the meeting, be given to each stockholder of record entitled to
vote at such meeting by delivering a typewritten or printed notice
thereof to him personally or by depositing such notice in the
United States mail, in a postage prepaid envelope, directed to him
at his post-office address furnished by him to the Secretary for
such purpose, or, if he shall not have furnished to the Secretary
his post-office address for such purpose, but his address shall
otherwise appear on the records of the Corporation, then at his
address as it shall so appear on the records of the Corporation,
or, if he shall not have furnished to the Secretary his post-office
address for such purpose and his address shall not otherwise appear
on the records of the Corporation, then at the registered office of
the Corporation in the State of Delaware. If mailed, notice shall
be deemed given when deposited in the United States mail, postage
prepaid. Except when expressly required by law, no publication of
any notice of a meeting of the stockholders shall be required.
Every notice of a meeting of the stockholders shall state the
place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting shall be
called. Nevertheless, notice of any meeting of the stockholders
shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy except a stockholder who
shall attend such meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business on
the grounds that the meeting shall not have been lawfully called or
convened; and, if any stockholder shall, in person or by attorney
thereunto authorized, in writing or by telegraph, cable, wireless,
telex, telefax or other form of recorded communication, waive
notice of any meeting of the stockholders, notice thereof need not
be given to him. It shall not be necessary to state in any notice
of a meeting of the stockholders as a purpose thereof any matter
relating to the conduct of such meeting. Except when expressly
required by law, notice of any adjourned meeting of the
stockholders need not be given if the time and place thereof shall
be announced at the meeting at which the adjournment shall be
taken, unless such adjournment shall be for more than 30 days or a
new record date shall be fixed for an adjourned meeting.
SECTION 1.06. Quorum. At each meeting of the stockholders,
with the exception of any meeting for the election of directors
summarily ordered as provided by the General Corporation Law of the
State of Delaware, stockholders holding of record a majority of the
shares of stock of the Corporation entitled to be voted thereat
shall be present in person or by proxy to constitute a quorum for
the transaction of business. In the absence of a quorum at any
such meeting or any adjournment or adjournments thereof, a majority
in voting interest of those present in person or by proxy and
entitled to vote thereat, or in the absence therefrom of all the
stockholders, any officer entitled to preside at, or to act as
secretary of, such meeting may adjourn such meeting from time to
time. At any such adjourned meeting at which a quorum may be
present any business may be transacted which might have been
transacted at the meeting as originally called. The absence from
any meeting of stockholders holding the number of shares of stock
of the Corporation required by the laws of the State of Delaware or
by the Restated Certificate of Incorporation of the Corporation or
by these By-laws for action upon any given matter shall not prevent
action at such meeting upon any other matter or matters which may
properly come before the meeting, if there shall be present thereat
in person or by proxy stockholders holding the number of shares of
stock of the Corporation required in respect of such other matter
or matters.
SECTION 1.07. Organization. At each meeting of the
stockholders the Chairman, or, if he shall be absent therefrom, the
President, or if he shall be absent therefrom, a Vice Chairman, or,
if there shall not be any Vice Chairman in office or if all the
Vice Chairmen also shall be absent therefrom, a Vice President or
another officer of the Corporation chosen as chairman of such
meeting by a majority in voting interest of the stockholders
present in person or by proxy and entitled to vote thereat, or, if
all the officers of the Corporation shall be absent therefrom, a
stockholder holding of record shares of stock of the Corporation so
chosen, shall act as chairman of the meeting and preside thereat;
and the Secretary, or, if he shall be absent from such meeting or
shall be required pursuant to the provisions of this Section 1.07
to act as chairman of such meeting, the person (who shall be an
Assistant Secretary, if an Assistant Secretary shall be present
thereat) whom the chairman of such meeting shall appoint shall act
as secretary of such meeting and keep the minutes thereof.
SECTION 1.08. Order of Business. The order of business at
each meeting of the stockholders shall be determined by the
chairman of such meeting, but such order of business may be changed
by the vote of a majority in voting interest of those present in
person or by proxy at such meeting and entitled to vote thereat.
SECTION 1.09. Voting. Except as otherwise provided in the
Restated Certificate of Incorporation of the Corporation, each
stockholder shall be entitled to one vote in person or by proxy for
each share of stock of the Corporation held by him and registered
in his name on the books of the Corporation on the date fixed
pursuant to the provisions of Section 6.05 hereof as the record
date for the determination of stockholders who shall be entitled to
notice of and to vote at the meeting of stockholders, or to express
consent to corporate action in writing without a meeting, as the
case may be. Shares of its own stock belonging to the Corporation
or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation shall
be held by the Corporation, shall not be entitled to vote. Persons
holding in a fiduciary capacity stock of the Corporation shall be
entitled to vote such stock so held, and persons whose stock shall
be pledged shall be entitled to vote such stock, unless in the
transfer by the pledgor on the books of the Corporation he shall
have expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote
thereon. If shares of stock of the Corporation shall stand of
record in the names of two or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants
by the entirety or otherwise, or if two or more persons shall have
the same fiduciary relationship respecting the same shares of stock
of the Corporation, unless the Secretary shall have been given
written notice to the contrary and have been furnished with a copy
of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to
voting shall have the following effect:
(i) if only one shall vote, his act shall bind all;
(ii) if more than one shall vote, the act of the
majority so voting shall bind all; and
(iii) if more than one shall vote, but the vote
shall be evenly split on any particular matter, then, except as otherwise
required by the General Corporation Law of the State of Delaware,
each faction may vote the shares in question proportionally.
If the instrument so filed shall show that any such tenancy shall be held
in unequal interests, the majority or even-split for the purpose of the
next foregoing sentence shall be a majority or even-split in interest.
Any vote on stock of the Corporation at any meeting of the stockholders
by the stockholder entitled thereto, and any expression of consent or
dissent to corporate action without a meeting by the stockholder entitled
to express such consent or dissent, may be given in person or by his proxy
appointed by an instrument in writing subscribed by such stockholder or by
his attorney thereunto authorized and delivered to the Secretary of the
Corporation or in the case of a vote at a meeting to such Secretary or to
the Secretary of the meeting; provided, however, that no proxy shall be
voted or acted upon after three (3) years from its date, unless said proxy
shall provide for a longer period. At all meetings of the stockholders
all matters, except those specified in Section 2.04 of these By-laws, and
except also those the manner of decidin shall be otherwise expressly
regulated by law or by the Restated Certificate of Incorporation of the
Corporation, shall be decided by the vote of a majority in voting interest
of the stockholders present in person or by proxy and entitled to vote
thereat, a quorum being present. Except in the case of votes for the
election of directors, unless demanded by a stockholder of the Corporation
present in person or by proxy at any meeting of the stockholders and
entitled to vote thereat or so directed by the chairman of the meeting,
the vote thereat on any other question need not be by ballot. Upon a
demand of any such stockholder for a vote by ballot on any question or at
the direction of such chairman that a vote by ballot be taken on any
question, such vote shall be taken. On a vote by ballot each ballot
shall be signed by the stockholder voting, or by his proxy, if there be
such proxy, and shall state the number of shares voted.
SECTION 1.10. List of Stockholders. It shall be the duty
of the Secretary or other officer of the Corporation who shall have
charge of its stock ledger, either directly or through another
officer of the Corporation designated by him or through a transfer
agent appointed by the Board, to prepare and make, at least ten
(10) days before every meeting of the stockholders, a complete list
of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours,
for a period of at least ten (10) days prior to said meeting,
either at a place within the city where said meeting is to be held,
which place shall be specified in the notice of said meeting, or,
if not so specified, at the place where said meeting is to be held.
The list shall also be produced and kept at the time and place of
said meeting during the whole time thereof, and may be inspected by
any stockholder who shall be present thereat. Upon the willful
neglect or refusal of the directors to produce such list at any
meeting for the election of directors, they shall be ineligible for
election to any office at such meeting. The stock ledger shall be
the only evidence as to who are the stockholders entitled to
examine the stock ledger, such list or the books of the
Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 1.11. Inspectors of Votes. At each meeting of the
stockholders the chairman of such meeting may appoint two
Inspectors of Votes to act thereat. Each Inspector of Votes so
appointed shall first subscribe an oath or affirmation faithfully
to execute the duties of an Inspector of Votes at such meeting with
strict impartiality and according to the best of his ability. Such
Inspectors of Votes, if any, shall take charge of the ballots at
such meeting and after the balloting thereat on any question shall
count the ballots cast thereon and shall make a report in writing
to the secretary of such meeting of the results thereof. An
Inspector of Votes need not be a stockholder of the Corporation,
and any officer of the Corporation may be an Inspector of Votes on
any question other than a vote for or against his election to any
position with the Corporation or on any other question in which he
may be directly interested.
SECTION 1.12. Consent of Stockholders in lieu of Meeting.
(a) Anything in these By-laws to the contrary notwithstanding, any
action required by the General Corporation Law of the State of
Delaware to be, or which may be, taken at any annual or special
meeting of the stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed in
person or by proxy by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and if the
procedures in this Section 1.12 shall be complied with.
(b) A record date for determining stockholders entitled to
express consent to stockholder action in writing without a meeting
shall be fixed by the Board of Directors of the Corporation (a
"Consent Record Date"), which record date shall not precede the date
upon which the resolution fixing the Consent Record Date shall be
adopted by the Board and which shall not be more than ten days after
the date upon which such resolution shall have been adopted. Any
stockholder seeking to have the stockholders authorize or take action
by written consent without a meeting shall give written notice either
by personal delivery or by United States mail, postage prepaid, to the
Secretary, of the intent of such stockholder to take action by written
consent, which notice shall request the Board of Directors to fix a
Consent Record Date. The Board of Directors shall, within 10 days of
the receipt of such notice, fix as the Consent Record Date a date which
shall not precede the date upon which the resolution fixing the Consent
Record Date shall be adopted by the Board and which shall not be
more than ten days after the date upon which such resolution shall
have been adopted.
(c) Every written consent pursuant to this Section 1.12
shall bear the date of signature of each stockholder who shall sign
such consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days
of the date of earliest dated consent delivered to the Corporation
in the manner required by this Section 1.12, written consents
signed by a sufficient number of stockholders to take action shall
be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business or
to an officer or agent of the Corporation having custody of the
books in which meetings and proceedings of the stockholders shall
be recorded. Delivery made to said registered office of the
Corporation shall be by hand or by certified or registered mail,
return receipt requested.
(d) The date for determining if an action shall have been
validly consented to by the holders of shares of outstanding stock
of the Corporation having the requisite voting power to authorize
or take such action shall be the earliest of (i) the date on which
the required minimum number of votes have been received and the
validity of the actions have been reviewed, (ii) the 60th day after
the Consent Record Date or (iii) the 60th day after the date of the
earliest consent delivered to the Corporation.
(e) Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be
given to those stockholders who shall not have consented in
writing.
ARTICLE II.
Board of Directors.
SECTION 2.01. General Powers. The property, business and
affairs of the Corporation shall be managed by or under the
direction of the Board.
SECTION 2.02. Number and Term of Office. Subject to the
requirements of the laws of the State of Delaware and of the
Restated Certificate of Incorporation of the Corporation, the Board
may from time to time by the vote of the majority of the whole
Board determine the number of directors. Until the Board shall
otherwise so determine or Section 6 of Article FOURTH of such
Restated Certificate of Incorporation shall otherwise so require,
the number of directors shall be fifteen (15). Each of the
directors of the Corporation shall hold office until his successor
shall be elected and shall qualify, or until his death or until he
shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 2.03. Nominations for the Election of Directors.
Subject to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or
upon liquidation and otherwise subject to the rights of
stockholders under the General Corporation Law of the State of
Delaware, nominations for the election of directors shall be made
by the Board. Any stockholder entitled to vote for the election of
directors at a meeting may recommend for nomination by the Board
persons for election as directors. Written notice of the
recommendation of such stockholder shall be given, either by
personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation not later than (i) with respect to an
election to be held at an annual meeting of stockholders, on the
date designated in Section 1.01 hereof, 90 days in advance of such
meeting and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the
close of business on the tenth day following the date on which
notice of such meeting shall first be given to stockholders. Each
such notice shall set forth: (a) the name and address of the
stockholder who shall make such recommendation and of the person or
persons to be nominated; (b) a representation that the stockholder
is a holder of record of stock of the Corporation entitled to vote
at such meeting; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are recommended by the
stockholder; (d) such other information regarding each recommended
person proposed by such stockholder as would have been required to
be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had each such person been
nominated, or intended to be nominated, by the Board of Directors;
and (e) the consent in writing of each such person to serve as a
director of the Corporation if so elected. The chairman of the
meeting may refuse to acknowledge the nomination of any person not
recommended in compliance with the foregoing procedure.
SECTION 2.04. Election of Directors. At each meeting of
the stockholders entitled to vote for the election of directors at
which a quorum shall be present, the persons receiving the greatest
number of votes, up to the number of directors to be elected, shall
be the directors. Such election shall be by ballot in accordance
with the provisions of Section 1.09 hereof.
SECTION 2.05. Organization. At each meeting of the Board
the Chairman, or, if he shall be absent therefrom, the President,
or, if he shall be absent therefrom, a Vice Chairman or, if there
shall not be any Vice Chairman in office or if all the Vice
Chairmen also shall be absent therefrom, a director chosen by a
majority of the directors present thereat, shall act as chairman of
such meeting and preside thereat. The Secretary, or in case of his
absence the person whom the chairman of such meeting shall appoint,
shall act as secretary of such meeting and keep the minutes
thereof.
SECTION 2.06. Resignations. Any director may resign at any
time by giving written notice of his resignation to the
Corporation. Any such resignation shall take effect at the time
specified therein, or, if the time when it shall become effective
shall not be specified therein, then it shall take effect
immediately upon its receipt by the Chairman, the President, any of
the Vice Chairmen, or the Secretary; and, unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 2.07. Vacancies, etc. In case of any increase in
the number of directors, the additional director or directors, and,
in case of any vacancy in the Board due to death, resignation,
disqualification, removal or any other cause, the successor to fill
the vacancy shall be elected by the holders of shares of stock
entitled to vote at an annual or special meeting of said holders or
by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. When one or more
directors shall resign from the Board, effective at a future date,
a majority of the directors then in office, including those who
shall have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective.
SECTION 2.08. Place of Meeting, etc. The Board may hold
its meetings at such place or places within or without the State of
Delaware as the Board may from time to time by resolution determine
or as shall be designated in the respective notices or waivers of
notice thereof.
SECTION 2.09. First Meeting. As soon as practicable after
each annual election of directors, the Board shall meet for the
purpose of organization and the transaction of other business.
SECTION 2.10. Regular Meetings. Regular meetings of the
Board shall be held at such times as the Board shall from time to
time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is
to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business
day. Except as otherwise provided by law, notices of regular
meetings need not be given.
SECTION 2.11. Special Meetings; Notice. Special meetings
of the Board shall be held whenever called by the Chairman, the
President, the Secretary or a majority of the directors at the time
in office. A notice shall be given as hereinafter in this Section
2.11 provided of each such special meeting, in which shall be
stated the time and place of such meeting, but, except as otherwise
expressly provided by law or by these By-laws, the purposes thereof
need not be stated in such notice. Except as otherwise provided by
law, notice of each such meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at
least two (2) days before the day on which such meeting is to be
held, or shall be sent addressed to him at such place by telegraph,
cable, wireless, telex, telefax or other form of recorded
communication or be delivered personally or by telephone not later
than the day before the day on which such meeting is to be held.
Notice of any meeting of the Board need not, however, be given to
any director who shall attend such meeting except a director who
shall attend such meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business on
the grounds that the meeting shall not have been lawfully called or
convened; and, if any director shall, in writing or by telegraph,
cable, wireless, telex, telefax or other form of recorded
communication, waive notice of any meeting of the Board, notice
thereof need not be given to him.
SECTION 2.12. Quorum and Manner of Acting. Subject to the
provisions of Section 2.07 hereof, a majority of the whole Board
shall be present in person at any meeting of the Board
(participation in a meeting by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other to constitute
presence in person at such meeting) in order to constitute a quorum
for the transaction of business at such meeting and, except as
specified in Sections 1.02, 1.03, 2.02, 2.07, 3.01, 3.05, 3.06,
3.07, 3.08, 4.01, 4.04, 4.07, and 4.21 hereof, and except also as
otherwise expressly provided by law, the vote of a majority of the
directors present at any such meeting at which a quorum is present
shall be the act of the Board; provided, however, that any person
who shall both be in the employ of the Corporation or of one or
more of its subsidiary companies and be a director of the
Corporation (herein "Executives of the Corporation") shall not as
a member of the Board have any vote in the determination of the
amount that shall be paid to him as a fixed salary or as any other
form of compensation and provided further that in the case of a
vote in good faith authorizing any contract or transaction between
the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its
directors or officers are directors or officers or have a financial
interest, if the material facts as to the relationship or interest
of the directors or officers of the Corporation as to the contract
or transaction are disclosed or known to the Board, the affirmative
votes of a majority of the disinterested directors of the
Corporation, even though the disinterested directors shall be less
than a quorum, shall be the act of the Board. In the absence of a
quorum from any such meeting, a majority of the directors present
thereat may adjourn such meeting from time to time until a quorum
shall be present thereat. Notice of any adjourned meeting need not
be given. The directors shall act only as a board and the
individual directors shall have no power as such. Anything in
these By-laws to the contrary notwithstanding, any action required
or permitted to be taken at any meeting of the Board may be taken
without a meeting if all members of the Board consent thereto in
writing and the writing or writings are filed with the minutes of
proceedings of the Board.
SECTION 2.13. Removal of Directors. Any director may be
removed, either with or without cause, at any time, by the
affirmative vote of stockholders of record of the Corporation
holding of record a majority of the shares then entitled to vote at
an election of directors; and the vacancy in the Board caused by
any such removal may be filled as provided in Section 2.07 hereof.
In the case of the removal of a director for cause, "Cause" is
hereby defined as the willful and continuous failure substantially
to perform one's duties to the Corporation or the willful engaging
in gross misconduct materially and demonstrably injurious to the
Corporation.
SECTION 2.14. Compensation. Unless otherwise expressly
provided by resolution adopted by the Board, neither any of the
directors nor any of the members of any committee of the
Corporation contemplated by these By-laws or otherwise provided for
by resolution of the Board shall, as such, receive any stated
compensation for his services; but the Board may at any time or
from time to time by resolution provide that a specified sum shall
be paid to any director of the Corporation or to any member of any
such committee who shall not otherwise be in the employ of the
Corporation or of any of its subsidiary companies, either as his
annual compensation as such director or member or as compensation
for his attendance at meetings of the Board or of such committee.
The Board may also likewise provide that the Corporation shall
reimburse each such director or member of such committee for any
expenses paid by him on account of his attendance at any such
meeting. Nothing in this Section 2.14 contained shall be construed
to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE III.
Committees.
SECTION 3.01. Executive Committee; How Constituted and
Powers. The Board, by resolution adopted by a majority of the
whole Board, may designate not less than two (2) of the directors
then in office, who shall include the Chairman and the President,
to constitute an Executive Committee (herein called the "Executive
Committee") which during the intervals between meetings of the
Board of Directors shall have and may exercise all the delegable
powers of the Board to the extent permitted by law and as provided
in said resolution or in another resolution or other resolutions so
adopted by the Board; and it shall have power to authorize the seal
of the Corporation to be affixed to all papers which may require
it.
SECTION 3.02. Organization, etc. The Chairman or, if he
shall be absent therefrom, the President shall act as chairman at
all meetings of the Executive Committee and the Secretary shall act
as secretary thereof. In case of the absence from any meeting of
the Committee of the Chairman, the President, or the Secretary, the
Committee may appoint a chairman or secretary, as the case may be,
of the meeting.
SECTION 3.03. Meetings. Regular meetings of the Executive
Committee, of which notice shall not be necessary, shall be held on
such days and at such places, within or without the State of
Delaware, as shall be fixed by resolution adopted by a majority of
the Committee and communicated to all its members. Special
meetings of the Committee shall be held whenever called by the
Chairman, the President, the Secretary or a majority of the members
of such Committee then in office. Notice of each special meeting
of the Committee shall be given by mail, telegraph, cable,
wireless, telex, telefax or other form of recorded communication or
be delivered personally or by telephone to each member of the
Committee not later than the day before the day on which such
meeting is to be held. Notice of any such meeting need not,
however, be given to any member of the Committee who shall attend
such meeting except a member of the Committee who shall attend such
meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business on the grounds that
the meeting shall not have been lawfully called or convened; and,
if any member of the Committee shall, in writing or by telegraph,
cable, wireless, telex, telefax or other form of recorded
communication, waive notice of any meeting of the Committee, notice
thereof need not be given to him. Subject to provisions of this
Article III, the Committee, by resolution adopted by a majority of
the whole Committee, shall fix its own rules of procedure, and it
shall keep a record of its proceedings and report them to the Board
at the next regular meeting thereof after such proceedings shall
have been taken. All such proceedings shall be subject to revision
or alteration by the Board; provided, however, that third parties
shall not be prejudiced by any such revision or alteration.
SECTION 3.04. Quorum and Manner of Acting. A majority of
the Executive Committee shall be present in person at any meeting
of the Committee (participation in a meeting by means of conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other to
constitute presence in person at such meeting) in order to
constitute a quorum for the transaction of business, and the act of
a majority of those present at a meeting thereof at which a quorum
shall be present shall be the act of the Committee; provided,
however, that in the case of a vote in good faith authorizing any
contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in
which one more of its directors or officers shall be directors or
officers or have a financial interest, if the material facts as to
the relationship or interest of the directors or officers of the
Corporation as to the contract or transaction shall be disclosed or
known to the Executive Committee, the vote of a majority of the
disinterested members of the Committee, even though the
disinterested members shall be less than a quorum, shall be the act
of the Committee. The members of the Committee shall act only as
a committee, and the individual members shall have no power as
such.
SECTION 3.05. Resignations; Removal; Vacancies. Any member
of the Executive Committee may resign therefrom at any time by
giving written notice of his resignation to the Corporation. Any
such resignation shall take effect at the time specified therein,
or, if the time when it shall become effective shall not be
specified therein, then it shall take effect immediately upon its
receipt by the Corporation; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary
to make it effective. The Board by resolution adopted by a
majority of the whole Board may remove any member of the Executive
Committee. Any vacancy in the Executive Committee shall be filled
by the vote of a majority of the whole Board.
SECTION 3.06. Other Committees. The Board, by resolution
adopted by a majority of the whole Board, shall constitute a
Finance Committee, which shall consist of not less than three (3)
members, the majority of whom shall be directors and one of whom
shall be designated by the Board to act as chairman of such
Committee. Subject to any limitations prescribed by the Board, the
Finance Committee shall have authority to advise with the Board,
the Executive Committee and the officers and employees of the
Corporation with respect to all activities, plans and policies
affecting the financial affairs of the Corporation.
The Board, by resolution adopted by a majority of the whole
Board, shall constitute an Audit Committee, an Executive
Compensation Committee, a Nominating Committee and such other
committees as it may determine, which shall in each case consist of
such directors and, at the discretion of the Board, such officers
of the Corporation who shall not be directors and shall have and
may exercise such powers as the Board may by resolution determine
and specify in the respective resolutions appointing them;
provided, however, that (a) unless all the members of any committee
shall be directors, such committee shall not have authority to
exercise any of the powers of the Board in the management of the
business and affairs of the Corporation, and (b) if any committee
shall have the power to determine the amounts of the respective
fixed salaries of the Executives of the Corporation or any of them,
such committee shall consist of not less than three (3) members and
none of its members shall have any vote in the determination of the
amount that shall be paid to him as a fixed salary.
SECTION 3.07. Procedures. A majority of all the members of
the Finance Committee or of any other Committee organized pursuant
to Section 3.06 hereof may fix its rules of procedure, determine
its action and fix the time and place, whether within or without
the State of Delaware, of its meetings (participation in a meeting
by means of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other to constitute presence in person at
such meeting) and specify what notice thereof, if any, shall be
given, unless the Board shall otherwise by resolution provide. The
Board, by resolution adopted by a majority of the whole Board,
shall have power to change the members of any committee referred to
in this Section 3.07 at any time, to fill vacancies therein and to
discharge any such committee, either with or without cause, at any
time.
SECTION 3.08. Action by Consent in Writing. Anything in
these By-laws to the contrary notwithstanding, any action required
or permitted to be taken at any meeting of any committee referred
to in this Article III may be taken without a meeting if all
members of the committee shall consent thereto in writing and the
writing or writings shall be filed with the minutes of proceedings
of the committee.
ARTICLE IV.
Officers.
SECTION 4.01. Number. The Corporation shall have the
following officers as determined by a resolution or resolutions
adopted by a majority of the whole Board: a Chairman (who shall be
a director), a President (who shall be a director), one or more
Vice Chairmen (one or more of whom may be directors), one or more
Vice Presidents (one or more of whom may be directors and may be
designated an Executive Vice President, a Group Executive Vice
President or a Senior Vice President), one or more Assistant Vice
Presidents, a Controller, one or more Assistant Controllers, a
General Counsel, a Treasurer, one or more Assistant Treasurers, a
Secretary and one or more Assistant Secretaries.
SECTION 4.02. Election and Term of Office. The officers
determined as in Section 4.01 hereof provided shall be chosen
annually by the Board. Each such officer shall hold office until
his successor shall have been elected and shall qualify or until
his earlier death or his earlier resignation or removal in the
manner hereinafter provided.
SECTION 4.03. Agents, etc. In addition to the officers
determined as in Section 4.01 hereof provided, the Board may
appoint such agents as the Board may deem necessary or advisable,
each of which agents shall have such authority and perform such
duties as are provided in these By-laws or as the Board may from
time to time determine. The Board may delegate to any officer or
to any committee the power to appoint or remove any such agents.
SECTION 4.04. Removal. Any officer may be removed, either
with or without cause, at any time, by resolution adopted by a
majority of the whole Board. In the case of the removal of an
officer for cause, "Cause" is hereby defined as the willful and
continuous failure substantially to perform one's duties to the
Corporation or the willful engaging in gross misconduct materially
and demonstrably injurious to the Corporation.
SECTION 4.05. Resignations. Any officer may resign at any
time by giving written notice of his resignation to the
Corporation. Any such resignation shall take effect at the time
specified therein, or, if the time when it shall become effective
shall not be specified therein, then it shall take effect
immediately upon its receipt by the Corporation; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 4.06. Vacancies. A vacancy in any office due to
death, resignation, removal, disqualification or any other cause
may be filled for the unexpired portion of the term in the manner
prescribed in these By-laws for regular appointments or elections
to such office.
SECTION 4.07. Chief Executive Officer. The Chief Executive
Officer shall be designated from time to time by a resolution
adopted by a majority of the whole Board and shall, unless
otherwise determined by the Board, be either the Chairman or the
President. He shall have, subject to the direction and control of
the Board, general and active supervision over the business and
affairs of the Corporation and over its several officers. He shall
perform all duties incident to his position and such other duties
as from time to time may be assigned to him by the Board. He shall
see that all orders and resolutions of the Board shall be carried
into effect. He may sign, execute and deliver in the name of the
Corporation all deeds, mortgages, bonds, contracts or other
instruments authorized by the Board, except in cases where the
signing, execution or delivery thereof shall be expressly delegated
by the Board or by a duly authorized committee of the Board or by
these By-laws to some other officer or agent of the Corporation or
where any of them shall be required by law otherwise to be signed,
executed or delivered, and he may cause the seal of the Corporation
to be affixed to any documents the execution of which on behalf of
the Corporation shall have been duly authorized.
SECTION 4.08. Chairman. The Chairman shall perform such
duties as from time to time may be assigned to him by the Board.
He shall, if present, preside at all meetings of the stockholders
and at all meetings of the Board. He shall make a report of the
state of the business of the Corporation at each annual meeting of
the stockholders and from time to time he shall report to the
stockholders and to the Board all matters within his knowledge
which in his judgment the interests of the Corporation may require
to be brought to their notice.
SECTION 4.09. President. The President shall perform such
duties as from time to time may be assigned to him by the Board.
At the request of the Chairman or in the case of his absence or
inability to act, the President shall perform the duties of the
Chairman and, when so acting, shall have the powers of, and shall
be subject to all restrictions upon, the Chairman.
SECTION 4.10. Vice Chairmen. Each of the Vice Chairmen
shall have such powers and perform such duties as the Chief
Executive Officer or the Board may from time to time assign to him
and shall perform such other duties as may be prescribed by these
By-laws. At the request of the Chairman or the President, or in
case of their absence or inability to act, any Vice Chairman shall
perform the duties of the Chairman or the President and, when so
acting, shall have the powers of, and be subject to all the
restrictions upon, the Chairman and the President.
SECTION 4.11. Executive Office. The Chairman, the
President and such other officers as shall from time to time be
designated by the Chief Executive Officer, shall constitute the
Executive Office of the Corporation. Each officer in the Executive
Office shall consult with the Chief Executive Officer as to matters
relating to the business and affairs of the Corporation, and each
shall have such powers and perform such duties as the Chief
Executive Officer or the Board may from time to time assign to him
and each shall perform such other duties as may be prescribed for
him by these By-laws.
SECTION 4.12. Vice Presidents. Each of the Vice Presidents
(including each of the Executive Vice Presidents, Group Executive
Vice Presidents and Senior Vice Presidents) shall have such powers
and perform such duties as the officer in the Executive Office to
whom he shall report, the Chief Executive Officer or the Board may
from time to time assign to him and shall perform such other duties
as may be prescribed by these By-laws. At the request of any
officer in the Executive Office, or, in case of their absence or
inability to act, any Vice President (including any Executive Vice
President, Group Executive Vice President and any Senior Vice
President) who shall report to an officer in the Executive Office
shall perform the duties of that officer and, when so acting, shall
have all the powers of, and be subject to all the restrictions
upon, that officer.
SECTION 4.13. Assistant Vice Presidents. At the request of
any Vice President, or in case of his absence or inability to act,
the Assistant Vice President, if there shall be one, or, if there
shall be more than one, any of the Assistant Vice Presidents shall
perform the duties of the Vice President to whom he shall report,
and, when so acting, shall have all the powers of, and be subject
to all the restrictions upon, that Vice President. Each of the
Assistant Vice Presidents shall perform such other duties as from
time to time may be assigned to him by the Vice President to whom
he shall report, the officer in the Executive Office to whom such
Vice President shall report, the President, the Chairman or the
Board.
SECTION 4.14. Controller. The Controller shall keep or
cause to be kept correct records of the business and transactions
of the Corporation and shall, upon request, at all reasonable times
exhibit or cause to be exhibited such records to any of the
directors of the Corporation at the place where such records shall
be kept. He shall perform such other duties as from time to time
may be assigned to him by the officer to whom he shall report, any
officer in the Executive Office, the Chief Executive Officer or the
Board.
SECTION 4.15. Assistant Controllers. At the request of the
Controller, or in case of his absence or inability to act, the
Assistant Controller, or, if there be more than one, any of the
Assistant Controllers, shall perform the duties of the Controller,
and, when so acting, shall have all the powers of, and be subject
to all the restrictions upon, the Controller. Each of the
Assistant Controllers shall perform such other duties as from time
to time may be assigned to him by the Controller, the officer to
whom the Controller shall report, any officer in the Executive
Office, the Chief Executive Officer or the Board.
SECTION 4.16. General Counsel. The General Counsel shall
be the chief legal officer of the Corporation and shall have,
subject to the control of the Chief Executive Officer, the officer
to whom he shall report, and the Board, general and active
supervision and direction over the legal affairs of the
Corporation. He shall have such other powers and perform such
other duties as the Chief Executive Officer, the officer to whom he
shall report, or the Board may from time to time prescribe and
shall perform such other duties as may be prescribed by these By-
laws.
SECTION 4.17. Treasurer. If required by the Board, the
Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board
shall determine. He shall:
(a) have charge and custody of, and be responsible for,
all funds, securities, notes and valuable effects of the Corporation;
receive and give receipt for moneys due and payable the Corporation
from any sources whatsoever; deposit all such moneys to the credit of
the Corporation or otherwise as any Chairman, the President, the
officer to whom he shall report, or the Board shall direct in such
banks, trust companies or other depositaries as shall be selected
in accordance with the provisions of Section 5.07 hereof; cause such
funds to be disbursed by checks or drafts on the authorized depositaries
of the Corporation signed as provided in Section 5.05 hereof; and be
responsible for the accuracy of the amounts of, and cause to be
preserved proper vouchers for, all moneys so disbursed;
(b) have the right to require from time to time reports or
statements giving such information as he may desire with respect to any
and all financial transactions of the Corporation from the officers or
agents transacting the same;
(c) render to the Chairman, the President, the officer to
whom he shall report, or the Board, whenever they, respectivel shall
request him so to do, an account of the financial condition of the Cor-
poration and of all his transactions as Treasurer;
(d) upon request, exhibit or cause to be exhibited at all
reasonable times, at the place where they shall be kept, his cash books
and other records to the Controller, the Chairman, the President, the
officer to whom he shall report, or the Board; and
(e) in general, perform all duties incident to the office
of Treasurer and such other duties as from time to time may be assigned
to him by the Chairman, the President, the officer to whom he shall
report, or the Board.
SECTION 4.18. Assistant Treasurers. If required by the
Board, each of the Assistant Treasurers shall give a bond for the
faithful discharge of his duties in such sums and with such surety
or sureties as the Board shall determine. At the request of the
Treasurer, or in case of his absence or inability to act, the
Assistant Treasurer, or, if there be more than one, any of the
Assistant Treasurers, shall perform the duties of the Treasurer,
and, when so acting, shall have all the powers of, and be subject
to all the restrictions upon, the Treasurer. Each of the Assistant
Treasurers shall perform such other duties as from time to time may
be assigned to him by the Treasurer, the Chairman, the President or
the Board.
SECTION 4.19. Secretary. The Secretary shall:
(a) record all the proceedings of the meetings of the
stockholders, the Board, the Executive Committee and the Finance
Committee in one or more books kept for that purpose;
(b) see that all notices shall be duly given in accordance
with the provisions of these By-laws or as required by law;
(c) be custodian of the seal of the Corporation, and shall
see that such seal, or, if authorized by the Board, a facsimile thereof,
shall be affixed to any documents the execution of which on behalf of
the Corporation shall be duly authorized and may attest such seal when
so affixed;
(d) have charge, directly or through the transfer agent or
transfer agents and registrar or registrars appointed as in Section
6.03 hereof provided, of the issue, transfer and registration of
certificates for stock of the Corporation and of the records thereof,
such records to be kept in such manner as to show the information
specified in Section 6.01 hereof;
(e) upon request, exhibit or cause to be exhibited at all
reasonable times to the Board, at the place where they shall be kept,
such records of the issue, transfer and registration of the certificates
for stock of the Corporation;
(f) sign with a Vice President, a Vice Chairman, the
Chairman or the President certificates for stock of the Corporation;
(g) see that the books, reports, statements, certificates
and all other documents and records required by law shall be properly
kept and filed;
(h) see that the duties prescribed by Section 1.09 hereof
shall be performed; and
(i) in general, perform all duties incident to the office
of Secretary and such other duties as from time to time may be assigned
to him by the Chairman, the President, the officer to whom he shall report,
or the Board.
SECTION 4.20. Assistant Secretaries. At the request of the
Secretary, or in case of his absence or inability to act, the
Assistant Secretary, or, if there shall be more than one, any of
the Assistant Secretaries, shall perform the duties of the
Secretary and, when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the Secretary. Each of the
Assistant Secretaries shall perform such other duties as from time
to time may be assigned to him by the Secretary, the Chairman, the
President or the Board.
SECTION 4.21. Salaries. The salaries and other forms of
compensation (other than those the fixing of which shall have been
specifically delegated to a committee of the Board) of the officers
of the Corporation shall be fixed from time to time by the Board or
by any one or more committees (none of which shall consist of less
than three (3) members) appointed by a resolution passed by a
majority of the whole Board with power to fix such salaries or such
compensation, and none of such officers shall be prevented from
receiving a salary by reason of the fact that he shall be also a
member of the Board or of any such committee; but none of such
officers who shall also be a member of the Board or of any such
committee shall have any vote in the determination of the amount of
salary that shall be paid to him.
ARTICLE V.
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.01. Contracts with Governmental Authorities. All
bids and proposals for contracts with the Federal or with any
municipal, county, territorial or state government or with any
authority, branch or division thereof, or with any foreign
government or with any authority, branch or division thereof, and
all contracts between the Corporation and any such government or
authority, branch or division thereof, and all bonds and
undertakings for the faithful performance of such contracts, and
all vouchers and receipts in connection therewith, may be executed
and delivered in the name of the Corporation and on its behalf by
the Chairman, the President, a Vice Chairman, a Vice President, the
Treasurer or the Secretary; and no further authority, whether by
resolution of the Board or otherwise, shall be necessary to make
such instrument valid and binding upon the Corporation.
SECTION 5.02. Appointment of Agents. The Board, by
resolution, or the Chairman, the President, a Vice Chairman, a Vice
President, the Treasurer or the Secretary, by an instrument in
writing filed with the Secretary, may from time to time appoint
agents and grant to such agents the power to execute and deliver in
the name of the Corporation and on its behalf (i) any bid or
proposal for any contract with the Federal or with any municipal,
county, territorial or state government or with any authority,
branch or division thereof, or with any foreign government or with
any authority, branch or division thereof, (ii) any contract
between the Corporation and any such government or authority,
branch or division thereof, (iii) any bond or undertaking for the
faithful performance of any such contract and (iv) any voucher or
receipt in connection therewith.
SECTION 5.03. Execution of Other Contracts, etc. Except as
otherwise required by law or by these By-laws, any contract or
other instrument may be executed and delivered in the name of the
Corporation and on its behalf by the Chairman, the President, a
Vice Chairman, a Vice President, the Treasurer or the Secretary;
and the Board, by resolution, or the Chairman, the President, a
Vice Chairman, a Vice President, the Treasurer or the Secretary, by
an instrument in writing filed with the Secretary, may authorize
any other officer or officers or agent or agents to execute and
deliver any contract or other instrument in the name of the
Corporation and on its behalf, and such authority may be general or
confined to specific instances.
SECTION 5.04. Loans. Unless the Board shall otherwise
determine, any two (2) of the following officers, to wit: the
Chairman, the President, a Vice Chairman, a Vice President, the
Treasurer and the Secretary, acting together, or any officer or
officers authorized by a resolution of the Board may effect loans
and advances at any time for the Corporation from any bank, trust
company or other institution or from any firm or individual and for
such loans and advances may make, execute and deliver promissory
notes or other evidences of indebtedness of the Corporation, but no
officer or officers shall mortgage, pledge, hypothecate or
otherwise transfer for security any property whatsoever owned or
held by the Corporation except when authorized by resolution
adopted by the Board.
SECTION 5.05. Checks, Drafts, etc. All checks, drafts,
orders for the payment of money, bills of lading, warehouse
receipts, obligations, bills of exchange and insurance certificates
shall be signed or endorsed (except endorsements for collection for
the account of the Corporation or for deposit to its credit) by
such officer or officers or agent or agents of the Corporation and
in such manner as shall from time to time be determined by
resolution of the Board.
SECTION 5.06. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation or otherwise as the Board, the Chairman,
the President, any Vice Chairman, or the Treasurer shall direct in
such banks, trust companies or other depositaries as the Board may
select or as may be selected by any officer or officers or agent or
agents of the Corporation to whom power in that respect shall have
been delegated by the Board. For the purpose of deposit and for
the purpose of collection for the account of the Corporation,
checks, drafts and other orders for the payment of money which
shall be payable to the order of the Corporation may be endorsed,
assigned and delivered by any officer or agent of the Corporation.
SECTION 5.07. General and Special Bank Accounts. The Board
may from time to time authorize the opening and keeping of general
and special bank accounts with such banks, trust companies or other
depositaries as the Board may select, or as may be selected by any
officer or officers or agent or agents of the Corporation to whom
power in that respect shall have been delegated by the Board. The
Board may make such special rules and regulations with respect to
such bank accounts, not inconsistent with the provisions of these
By-laws, as it may deem expedient.
SECTION 5.08. Proxies in Respect of Stock or Other
Securities of Other Corporations. Unless otherwise provided by
resolution adopted by the Board, the Chairman, the President, a
Vice Chairman, a Vice President or the Secretary may from time to
time appoint an attorney or attorneys or an agent or agents of the
Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as
the holder of stock or other securities in any other corporation to
vote or consent in respect of such stock or other securities, and
the Chairman, the President, a Vice Chairman, a Vice President or
the Secretary may instruct the person or persons so appointed as to
the manner of exercising such powers and rights; and the Chairman,
the President, a Vice Chairman, a Vice President or the Secretary
may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal, or otherwise, all
such written proxies or other instruments as he may deem necessary
or proper in order that the Corporation may exercise its said
powers and rights.
ARTICLE VI.
Shares and Their Transfer.
SECTION 6.01. Certificates for Stock. Every owner of stock
of the Corporation of any class (or, if stock of any class shall be
issuable in series, any series of such class) shall be entitled to
have a certificate registered in his name in such form as the Board
shall prescribe, certifying the number of shares of stock of the
Corporation of such class, or such class and series, owned by him.
The certificates representing shares of stock of each class (or, if
there shall be more than one series of any class, each series of
such class) shall be numbered in the order in which they shall be
issued and shall be signed in the name of the Corporation by the
Chairman or the President or a Vice Chairman or a Vice President
and by the Secretary or an Assistant Secretary. Any of or all the
signatures on any such certificate may be facsimiles. In case any
officer or officers or transfer agent or registrar of the
Corporation who shall have signed, or whose facsimile signature or
signatures shall have been placed upon, any such certificate shall
cease to be such officer or officers or transfer agent or registrar
before such certificate shall have been issued, such certificate
may be issued by the Corporation with the same effect as though the
person or persons who shall have signed such certificate, or whose
facsimile signature or signatures shall have been placed thereupon,
were such officer or officers or transfer agent or registrar at the
date of issue. Records shall be kept of the amount of the stock of
the Corporation issued and outstanding, the manner in which and the
time when such stock was paid for, the respective names,
alphabetically arranged, and the addresses, of the persons, firms
or corporations owning of record the stock represented by
certificates for stock of the Corporation, the number, class and
series of shares represented by such certificates, respectively,
the time when each became an owner of record thereof, and the
respective dates of such certificates, and in case of cancellation,
the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be
canceled and a new certificate or certificates shall not be issued
in exchange for any existing certificate until such existing
certificate shall have been so canceled except in cases provided
for in Section 6.04 hereof.
SECTION 6.02. Transfers of Stock. Transfers of shares of
stock of the Corporation shall be made only on the books of the
Corporation by the registered owner thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed
with the Secretary, or with a transfer agent appointed as in
Section 6.03 hereof provided, and upon surrender of the certificate
or certificates for such shares properly endorsed and payment of
all taxes thereon. The person in whose name shares of stock shall
be registered on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
Whenever any transfer of shares shall be made for collateral
security and not absolutely, such fact shall be so expressed in the
entry of transfer if, when the certificate or certificates shall be
presented to the Corporation for transfer, both the transferor and
the transferee shall in writing request the Corporation to do so.
SECTION 6.03. Regulations. The Board may make such rules
and regulations as it may deem expedient, not inconsistent with
these By-laws, concerning the issue, transfer and registration of
certificates for stock of the Corporation. The Board may appoint,
or authorize any officer or officers to appoint, one or more
transfer agents and one or more registrars, and may require all
certificates for stock to bear the signature or signatures of any
of them.
SECTION 6.04. Lost, Stolen, Destroyed and Mutilated
Certificates. The registered owner of any stock of the Corporation
shall immediately notify the Corporation of any loss, theft,
destruction or mutilation of the certificate therefor, and the
Corporation may issue a new certificate for stock in the place of
any certificate theretofore issued by it and alleged to have been
lost, stolen or destroyed, and the Corporation may, in its
discretion, require the registered owner of the lost, stolen or
destroyed certificate or his legal representatives to give the
Corporation a bond in such sum, limited or unlimited, and in such
form and with such surety or sureties, as the Corporation shall in
its uncontrolled discretion determine, to indemnify the Corporation
against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate, or the
issuance of such new certificate. The Corporation may, however, in
its discretion refuse to issue any such new certificate except
pursuant to legal proceedings under the laws of the State of
Delaware in such case made and provided.
SECTION 6.05. Fixing Date for Determination of Stockholders
of Record in Certain Case. (a) In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, the Board may
fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date shall be adopted
by the Board, and which record date shall not be more than sixty
(60) nor less than ten (l0) days before the date of such meeting.
If no record date shall be fixed by the Board the record date for
determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice shall be given, or, if
notice shall be waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record
date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix a record date, which record date
shall not precede the date upon which the resolution fixing the
record date shall be adopted, and which record date shall be not
more than sixty (60) days prior to such action. If no record date
shall be fixed, the record date for determining stockholders for
any such purpose shall be at the close of business on the day on
which the Board shall adopt the resolution relating thereto.
ARTICLE VII.
Offices, Etc.
SECTION 7.01. Registered Office. The registered office of
the Corporation in the State of Delaware shall be in the City of
Wilmington, County of New Castle, and the registered agent of the
Corporation in said State is The Corporation Trust Company.
SECTION 7.02. Other Offices. The Corporation may also have
one or more offices other than said registered office at such place
or places, either within or without the State of Delaware, as the
Board may from time to time appoint or as the business of the
Corporation may require and may keep the books and records of the
Corporation in such place or places within or without said State as
the Board may from time to time by resolution determine.
ARTICLE VIII.
Dividends, Surplus, Etc.
SECTION 8.01. Dividends, Surplus, Etc. Subject to the
provisions of law, of the Restated Certificate of Incorporation of
the Corporation and of these By-laws, the Board may declare and pay
dividends upon the shares of the stock of the Corporation either
(a) out of its surplus as defined in and computed in accordance
with the provisions of the laws of the State of Delaware or (b), in
case it shall not have any such surplus, out of its net profits for
the fiscal year in which the dividend shall be declared and/or the
preceding fiscal year, whenever and in such amounts as, in the
opinion of the Board, the condition of the affairs of the
Corporation shall render it advisable. The Board in its discretion
may use and apply any of such surplus or such net profits in
purchasing or acquiring any of the shares of the stock of the
Corporation in accordance with law, or any of its bonds,
debentures, notes, scrip or other securities or evidences of
indebtedness, or from time to time may set aside from such surplus
or such net profits such sum or sums as it, in its absolute
discretion, may think proper, as a reserve fund to meet
contingencies, or for equalizing dividends, or for the purpose of
maintaining or increasing the property or business of the
Corporation, or for any other purpose it may think conducive to the
best interests of the Corporation; provided, however, that the
Corporation shall not use its funds or property for the purchase of
shares of its stock when the capital of the Corporation shall be
impaired or when such use would cause any impairment of its
capital. All such surplus or such net profits, until actually
declared in dividends, or used and applied as aforesaid, shall be
deemed to have been so set aside by the Board for one or more of
said purposes.
ARTICLE IX.
Indemnification of Directors, Officers,
Employees and Agents.
SECTION 9.01. Third Party Actions. (a) The Corporation,
to the full extent permitted, and in the manner required, by the
laws of the State of Delaware as in effect at the time of the
adoption of this Article IX or as such laws may be amended from
time to time, shall indemnify any person who shall have been or
shall be made a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding
(including any appeal thereof), whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person
shall have been or shall be a director or officer of the
Corporation, or, if at a time when he shall have been or shall be
a director or officer of the Corporation, shall have been or shall
be serving at the request of the Corporation as a director,
officer, partner, trustee, fiduciary, employee or agent (a
"Subsidiary Officer") of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise (an
"Affiliated Entity"), against expenses (including attorneys' fees),
costs, judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person shall have acted in
good faith and in a manner such person shall have reasonably
believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or
proceeding, shall have had no reasonable cause to believe his or
her conduct was unlawful; provided, however, that the Corporation
shall not be obligated to indemnify against any amount paid in
settlement unless the Corporation shall have consented to such
settlement, which consent shall not be unreasonably withheld. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the
person shall not have acted in good faith and in a manner which
such person shall have reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, that such person shall have had
reasonable cause to believe that his conduct was unlawful.
Notwithstanding anything to the contrary in the foregoing
provisions of this paragraph (a), a person shall not be entitled,
as a matter of right, to indemnification pursuant to this paragraph
(a) against costs or expenses incurred in connection with any
action, suit or proceeding commenced by such person against any
person who shall have been or shall be a director, officer,
fiduciary, employee or agent of the Corporation or a Subsidiary
Officer of an Affiliated Entity, but such indemnification may be
provided by the Corporation in any specific case as permitted by
Section 9.06 hereof.
(b) The Corporation may indemnify any employee or agent of
the Corporation in the manner and to the extent that it shall
indemnify any director or officer under this Section 9.01,
including indemnity in respect of service at the request of the
Corporation as a Subsidiary Officer of an Affiliated Entity.
SECTION 9.02. Derivative Actions. (a) The Corporation, to
the full extent permitted, and in the manner required, by the laws
of the State of Delaware as in effect at the time of the adoption
of this Article IX or as such laws may be amended from time to
time, shall indemnify any person who shall have been or shall be
made a party to or shall be threatened to be made a party to any
threatened, pending or completed action or suit (including any
appeal thereof) brought in the right of the Corporation to procure
a judgment in its favor by reason of the fact that such person
shall have been or shall be a director or officer of the
Corporation, or, if at a time when he shall have been or shall be
a director or officer of the Corporation shall have been or shall
be serving at the request of the Corporation as a Subsidiary
Officer of an Affiliated Entity against expenses (including
attorneys' fees) and costs actually and reasonably incurred by such
person in connection with such action or suit if such person shall
have acted in good faith and in a manner such person shall have
reasonably believed to be in or not opposed to the best interests
of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless, and
except to the extent that, the Court of Chancery of the State of
Delaware or the court in which such judgment shall have been
rendered shall determine upon application that despite the
adjudication of liability but in view of all the circumstances of
the case, such person shall be fairly and reasonably entitled to
indemnity for such expenses and costs as the Court of Chancery of
the State of Delaware or such other court shall deem proper.
Notwithstanding anything to the contrary in the foregoing
provisions of this paragraph (a), a person shall not be entitled,
as a matter of right, to indemnification pursuant to this paragraph
(a) against costs and expenses incurred in connection with any
action or suit in the right of the Corporation commenced by such
person, but such indemnification may be provided by the Corporation
in any specific case as permitted by Section 9.06 hereof.
(b) The Corporation may indemnify any employee or agent of
the Corporation in the manner and to the extent that it shall
indemnify any director or officer under this Section 2, including
indemnity in respect of service at the request of the Corporation
as a Subsidiary Officer of an Affiliated Entity.
SECTION 9.03. Determination of Entitlement to
Indemnification. Any indemnification under Section 9.01 or
Section 9.02 hereof (unless ordered by a court) shall be made by
the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper under the circumstances because such
person has met the applicable standard of conduct set forth in
Section 9.01 or Section 9.02 hereof. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who shall not have been and shall not be
parties to the action, suit or proceeding in respect of which
indemnification shall be sought or by majority vote of the members
of a committee of the Board of Directors composed of at least three
members each of whom shall not have been and shall not be a party
to such action, suit or proceeding, or (ii) if such a quorum shall
not be obtainable and/or such a committee shall not be established
or obtainable, or, even if obtainable, if a quorum of disinterested
directors shall so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders. In the event a
request for indemnification shall be made by any person referred to
in paragraph (a) of Section 9.01 hereof or paragraph (a) of Section
9.02 hereof, the Corporation shall cause such determination to be
made not later than 60 days after such request shall be made.
SECTION 9.04. Right to Indemnification Upon Successful
Defense and For Service as a Witness. (a) Notwithstanding the
other provisions of this Article IX to the extent that a director,
officer, employee or agent of the Corporation shall have been
successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in Section 9.01 or Section 9.02
hereof or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys'
fees) and costs actually and reasonably incurred by such person in
connection therewith. (b) To the extent any person who shall have
been or shall be a director or officer of the Corporation shall
have served or prepared to serve as a witness in any action, suit
or proceeding, whether civil, criminal, administrative or
investigative, or in any investigation by the Corporation or the
Board of Directors thereof or a committee thereof or by any
securities exchange on which securities of the Corporation shall
have been or shall be listed on any national securities
association, by reason of his services as a director or officer of
the Corporation or, if at a time when he shall have been a director
or officer of the Corporation shall have been or shall be serving
at the request of the Corporation as a Subsidiary Officer of an
Affiliated Entity, the Corporation shall indemnify such person
against expenses (including attorneys' fees) and costs actually and
reasonably incurred by such person in connection therewith within
30 days after the receipt by the Corporation from such person of a
statement requesting such indemnification, averring such service
and reasonably evidencing such expenses and costs. The Corporation
may indemnify any employee or agent of the Corporation to the same
extent it is required to indemnify any director or officer of the
Corporation pursuant to the foregoing sentence of this paragraph
(b).
SECTION 9.05. Advance of Expenses. (a) Expenses and costs
incurred by any person referred to in paragraph (a) of Section 9.01
hereof or paragraph (a) of Section 9.02 hereof in defending a
civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if
it shall ultimately be determined that such person shall not be
entitled to be indemnified by the Corporation as authorized by this
Article IX.
(b) Expenses and costs incurred by any person referred to
in paragraph (b) of Section 9.01 hereof or paragraph (b) of Section
9.02 hereof in defending a civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action,
suit or proceeding as authorized by the Board of Directors, a
committee thereof or an officer of the Corporation or a committee
thereof authorized to so act by the Board of Directors upon receipt
of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that such person shall
not be entitled to be indemnified by the Corporation as authorized
by this Article IX.
SECTION 9.06. Indemnification Not Exclusive. The provision
of indemnification to or the advancement of expenses and costs to
any person under this Article IX, or the entitlement of any person
to indemnification or advancement of expenses and costs under this
Article IX, shall not limit or restrict in any way the power of the
Corporation to indemnify or advance expenses and costs to such
person in any other way permitted by law or be deemed exclusive of
any right to which any person seeking indemnification or
advancement of expenses and costs may be entitled under any law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to any action relating to such person in the
capacity of an officer, director, employee or agent of the
Corporation and any action relating to him in any other capacity
while holding any such position.
SECTION 9.07. Accrual of Claims; Successors. The
indemnification provided or permitted under this Article IX shall
apply in respect of any expense, cost, judgment, fine, penalty or
amount paid in settlement, whether or not the claim or cause of
action in respect thereof accrued or arose before or after the
effective date of this Article IX. The right of any person who
shall have been or shall be a director, officer, employee or agent
of the Corporation to indemnification under this Article IX shall
continue after he shall have ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
distributees, executors, administrators and other legal
representatives of such person.
SECTION 9.08. Corporate Obligations; Reliance. This
Article IX shall be deemed to create a binding obligation on the
part of the Corporation to its current and former officers and
directors and their heirs, distributees, executors, administrators
and other legal representatives, and each director or officer in
acting in such capacity shall be entitled to rely on the provisions
of this Article IX, without giving notice thereof to the
Corporation.
SECTION 9.09. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who shall have been or
shall be a director, officer, employee or agent of the Corporation,
or shall have been or shall be serving at the request of the
Corporation as a Subsidiary Officer of any Affiliated Entity,
against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have had the
power to indemnify such person against such liability under the
provisions of this Article IX or applicable law.
SECTION 9.10. Definitions of Certain Terms. (a) For
purposes of this Article IX, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its corporate existence had
continued, would have been permitted under applicable law to
indemnify its directors, officers, employees or agents, so that any
person who shall have been or shall be a director, officer,
employee or agent of such constituent corporation, or shall have
been or shall be serving at the request of such constituent
corporation as a Subsidiary Officer of any Affiliated Entity shall
stand in the same position under the provisions of this Article IX
with respect to the resulting or surviving corporation as such
person would have had with respect to such constituent corporation
if its separate existence had continued.
(b) For purposes of this Article IX, references to "fines"
shall include any excise taxes assessed on a person with respect to
an employee benefit plan; references to "serving at the request of
the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which shall impose duties on,
or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who shall have acted in good faith and
in a manner such person shall have reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed
to the best interest of the Corporation" as referred to in this
Article IX.
SECTION 9.11. Saving Clause. In the event any provision of
this Article IX shall be held invalid by any court of competent
jurisdiction, such holding shall not invalidate any other provision
of this Article IX, and the remaining provisions of this Article IX
shall be construed as if such invalid provision had not been
included in these By-laws.
ARTICLE X.
Seal.
SECTION 10.01. Seal. The Board shall provide a corporate
seal, which shall be in the form of a circle and shall bear the
full name of the Corporation and the words and figures
"Incorporated 1919 Delaware", or words and figures of similar
import.
ARTICLE XI.
Fiscal Year.
SECTION 11.01. Fiscal Year. The fiscal year of the
Corporation shall end on the thirty-first day of December in each
year.
ARTICLE XII.
Waiver of Notices.
SECTION 12.01. Waiver of Notices. Whenever notice shall be
required to be given by these By-laws or by the Restated
Certificate of Incorporation of the Corporation or by the General
Corporation Law of the State of Delaware, a written waiver thereof,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
to notice.
ARTICLE XIII.
Gender.
SECTION 13.01. Gender. Any words in the masculine gender
in these By-laws shall be deemed to include the feminine gender.
ARTICLE XIV.
Amendments.
SECTION 14.01. Amendments. These By-laws as they shall be
at any time, may be amended or repealed by the Board.
<PAGE>
Exhibit (4)(a)
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 28, 1988 (the
"Agreement"), between Bethlehem Steel Corporation, a Delaware
corporation (the "Company"), and Morgan Shareholder Services Trust
Company, a New York corporation, as Rights Agent (the "Rights
Agent").
W I T N E S S E T H
WHEREAS, on September 28, 1988 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for
each share of common stock, par value $1.00 per share, of the
Company (the "Common Stock") outstanding at the close of business
on October 18, 1988 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for each share
of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company's
treasury) and the Distribution Date, each Right initially
representing the right to purchase one one-hundredth of a share of
Series A Junior Participating Preference Stock of the Company
having the rights, powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights attached hereto
as Exhibit A, upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the shares
of Common Stock then outstanding, but shall not include the
Company, any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement (the
"Exchange Act").
(c) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any securi-
ties:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence
of a Triggering Event, or (C) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made with respect
to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not
also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether
or not in writing), for the purpose of acquiring, holding,voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company; provided, however, that nothing in this
paragraph (c) shall cause a person engaged in business as an underwriter
of securities to be the "Beneficial Owner" of, or to "beneficially own,"
any securities Acquired through such person's participation in good
faith in a firm commitment underwriting until the expiration of forty
days after the date of such acquisition.
(d) "Business Day" shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(e) "Close of business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided, howev-
er, that if such date is not a Business Day it shall mean 5:00
P.M., New York City time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock,
par value $1.00 per share, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such
Person.
(g) "Continuing Director" shall mean (i) any
member of the Board of Directors of the Company, while such Person
is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and
was a member of the Board prior to the date of this Agreement, or
(ii) any Person who subsequently becomes a member of the Board,
while such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of
the Continuing Directors.
(h) "Distribution Date" shall have the meaning
set forth in Section 3(a) hereof.
(i) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(j) "Preference Stock" shall mean shares of
Series A Junior Participating Preference Stock, par value $1.00 per
share, of the Company, and, to the extent that there are not a
sufficient number of shares of Series A Junior Participating
Preference Stock authorized to permit the full exercise of the
Rights, any other series of Preference Stock, par value $1.00 per
share, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Partici-
pating Preference Stock.
(k) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) (A), (B) or (C) hereof.
(l) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(m) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this defini-
tion, shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(n) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting securities
sufficient to elect at least a majority of the directors of such
corporation is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.
(o) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of
the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it
may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close of busi-
ness on the tenth day after the Stock Acquisition Date (or, if the
tenth day after the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date) or (ii) the close
of business on the tenth business day (or such later date as may be
determined by the Company's Board of Directors) after the date that
a tender or exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent
or given within the meaning of Rule 14d-2(a) of the General Rules
and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 20% or more
of the shares of Common Stock then outstanding (the earliest of (i)
and (ii) being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y)
the Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a
transfer to the Company). As soon as practicable after the Dis-
tribution Date, the Rights Agent will send by first-class,
insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or
more right certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights
per share of Common Stock has been made pursuant to Section 11(p)
hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As
of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) The Company shall send a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for the Common
Stock and the registered holders of the Common Stock shall also be
the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as such term is
defined in Section 7 hereof), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated
with such shares of Common Stock.
(c) Rights shall be issued in respect of all
shares of Common Stock which are issued (whether originally issued
or from the Company's treasury) after the Record Date but prior to
the earlier of the Distribution Date or the Expiration Date.
Certificates representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Bethlehem Steel Corporation (the "Company") and Morgan
Shareholder Services Trust Company (the "Rights Agent") dated
as of September 28, 1988 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a
copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the re-
verse thereof) shall each be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such
number of one one-hundredth of a share of Preference Stock as shall
be set forth therein at the price set forth therein (such exercise
price per one one-hundredth of a share, the "Purchase Price"), but
the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights benefi-
cially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after such Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman, its President or any Vice
President, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary
of the Company, either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of
business on the Expiration Date, any Rights Certificate or Certif-
icates may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the regis-
tered holder to purchase a like number of one one-hundredth of a
share of Preference Stock (or, following a Triggering Event, Common
Stock, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall
make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall
have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section
7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment
of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and
deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu
of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expira-
tion Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole
or in part at any time after the Distribution Date upon surrender
of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number of one
one-hundredth of a share (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are
then exercisable, at or prior to the earlier of (i) the close of
business on October 18, 1998 (the "Final Expiration Date"), or (ii)
the time at which the Rights are redeemed as provided in Section 23
hereof (the earlier of (i) and (ii) being herein referred to as the
"Expiration Date").
(b) The Purchase Price for each one one-hundredth
of a share of Preference Stock pursuant to the exercise of a Right
shall initially be $80, and shall be subject to adjustment from
time to time as provided in Sections 11 and 13(a) hereof and shall
be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate repre-
senting exercisable Rights, with the form of election to purchase
and the certificate duly executed, accompanied by payment, with
respect to each Right so exercised, of the Purchase Price per one
one-hundredth of a share of Preference Stock (or other shares,
securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i)(A) requisition from any transfer
agent of the shares of Preference Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates
for the total number of one one-hundredth of a share of Preference
Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number
of shares of Preference Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-
hundredth of a share of Preference Stock as are to be purchased (in
which case certificates for the shares of Preference Stock
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of
such Rights Certificate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash or by certified bank check or money order
payable to the order of the Company. In the event that the Company
is obligated to issue other securities (including Common Stock) of
the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary
so that such other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preference Stock
would be issued.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or names as may
be designated by such holder, subject to the provi-sions of Section
14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section
7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure
that the provisions of this Section 7(e) and Section 4(b) hereof
are complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or any
of its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement.
The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any
other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital
Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Preference Stock (and, following the occurrence
of a Triggering Event, out of its authorized and unissued shares of
Common Stock and/or other securities or out of its authorized and
issued shares held in its treasury), the number of shares of
Preference Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in
this Agreement including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preference Stock
(and, following the occurrence of a Triggering Event, Common Stock
and/or other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i)
file, as soon as practicable following the earliest date after the
first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Securities Act of 1933
(the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that
a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been
declared effective. Notwithstanding any provision of this Agreement
to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction
shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement shall
not have been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all one
one-hundredth of a share of Preference Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-hundredth of a share of
Preference Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one
one-hundredth of a share of Preference Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one one-hun-dredth of
a share of Preference Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is
due.
Section 10. Preference Stock Record Date. Each person
in whose name any certificate for a number of one one-hundredth of
a share of Preference Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder
of record of such fractional shares of Preference Stock (or Common
Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preference
Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional
or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preference Stock (or Common
Stock and/or other securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the number
and kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided
in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preference Stock payable in shares of Preference Stock, (B)
subdivide the outstanding Preference Stock, (C) combine the out-
standing Preference Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of
the Preference Stock (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Pur-
chase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of
Preference Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of
any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Preference Stock or capital stock,
as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preference
Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In the event:
(A) any Acquiring Person or any Assoc-
ciate or Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, (1) shall merge
into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such
merger or combination and the Common Stock of the Company shall
remain outstanding and unchanged, (2) shall, in one transaction
or a series of transactions, transfer any assets to the Company or
to any of its Subsidiaries in exchange (in whole or in part) for
shares of Common Stock, for shares of other equity securities of the
Company, or for securities exercisable for or convertible into
shares of equity securities of the Company (Common Stock or
otherwise) or otherwise obtain from the Company, with or without
consideration, any additional shares of such equity securities or
securities exercisable for or convertible into shares of such equity
securities (other than pursuant to a pro rata distribution to all
holders of Common Stock), (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of, in
one transaction or a series of transactions, to, from or with (as
the case may be) the Company or any of its Subsidiaries, assets on
terms and conditions less favorable to the Company than the Company
would be able to obtain in arm's-length negotiation with an unaf-
filiated third party, other than pursuant to a transaction set forth
in Section 13(a) hereof, (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of in one
transaction or a series of transactions, to, from or with (as the
case may be) the Company or any of the Company's Subsidiaries (other
than incidental to the lines of business, if any, engaged in as of
the date hereof between the Company and such Acquiring Person or
Associate or Affiliate) assets having an aggregate fair market value
of more than 3% of the total assets of the Company, other than
pursuant to a transaction set forth in Section 13(a) hereof, (5)
shall receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time employ-
ment as a regular employee at rates in accordance with the Company's
(or its Subsidiaries') past practices, or (6) shall receive the
benefit, directly or indirectly (except proportionately as a stock-
holder and except if resulting from a requirement of law or governmental
regulation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries, or
(B) any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan), alone or together with its Affiliates
and Associates, shall, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding, unless the event
causing the 20% threshold to be crossed is a transaction set forth
in Section 13(a) hereof, or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board
of Directors who are not officers of the Company and who are
not representatives, nominees, Affiliates or Associates of an
Acquiring Person, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair
to stockholders (taking into account all factors which such
members of the Board deem relevant including, without limitation,
prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company
and its stockholders, or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries
or any other transaction or series of transactions involving the
Company or any of its Subsidiaries, other than a transaction or
transactions to which the provisions of Section 13(a) apply (whether
or not with or into or otherwise involving an Acquiring Person)
which has the effect, directly or indirectly, of increasing by
more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its
Subsidiaries which is directly or indirectly beneficially owned
by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person,
then, promptly following the first occurrence of an event described
in Section 11(a)(ii)(A), (B) or (C) hereof, proper provision shall
be made so that each holder of a Right (except as provided below
and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of a number
of one one-hundredth of a share of Preference Stock, such number of
shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the
then number of one one-hundredth of a share of Preference Stock for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d) hereof) per share of Common
Stock on the date of such first occurrence (such number of shares,
the "Adjustment Shares").
(iii) In the event that the number of shares
of Common Stock which are authorized by the Company's certificate
of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect
to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Stock
or other equity securities of the Company (including, without limita-
tion, shares, or units of shares, of preference stock, such as the
Preference Stock, which the Board of Directors of the Company has
deemed to have substantially the same economic right as shares of
Common Stock (such shares of preference stock, "common stock
equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply
uniformly to all out-standing Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announce-
ment at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the current market price (as determined pursuant to Section
11(d) hereof) per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the value of any "common stock equivalent" shall be
deemed to have the same value as the Common Stock on such date.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preference Stock entitling them to subscribe for or purchase (for
a period expiring within forty-five (45) calendar days after such
record date) Preference Stock (or shares having the same rights,
privileges and preferences as the shares of Preference Stock
("equivalent preference stock")) or securities convertible into
Preference Stock or equivalent preference stock at a price per share
of Preference Stock or per share of equivalent preference stock (or
having a conversion price per share, if a security convertible into
Preference Stock or equivalent preference stock) less than the
current market price (as determined pursuant to Section 11(d) hereof)
per share of Preference Stock on such record date, the Purchase Price
to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number
of shares of Preference Stock outstanding on such record date, plus
the number of shares of Preference Stock which the aggregate offering
price of the total number of shares of Preference Stock and/or
equivalent preference stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the
denominator of which shall be the number of shares of Preference
Stock outstanding on such record date, plus the number of additional
shares of Preference Stock and/or equivalent preference stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares
of Preference Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date
for a distribution to all holders of Preference Stock (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preference
Stock, but including any dividend payable in stock other than
Preference Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determine by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the current market price (as determined pursuant to Section
11(d) hereof) per share of Preference Stock on such record date,
less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable
to a share of Preference Stock and the denominator of which shall be
such current market price (as determined pursuant to Section
11(d) hereof) per share of Preference Stock. Such adjustments shall
be made successively whenever such a record date is fixed, and in
the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such
date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date; provided,
however, that in the event that the current market price per share
of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination
or reclassification of such Common Stock, and prior to the expiration
of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
"current market price" shall be properly adjusted to take into account
exdividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock
is not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preference Stock shall be determined in
the same manner as set forth above for the Common Stock in clause (i)
of this Section 11(d) (other than the last sentence thereof). If the
current market price per share of Preference Stock cannot be determined
in the manner provided above or if the Preference Stock is not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per share of Preference Stock
shall be conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current
market price per share of the Common Stock. If neither the Common
Stock nor the Preference Stock is publicly held or so listed or traded,
"current market price" per share of the Preference Stock shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current market
price" of one one-hundredth of a share of Preference Stock shall be
equal to the "current market price" of one share of Preference Stock
divided by 100.
(e) Anything herein to the contrary not-
withstanding, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that
any adjustments which by reason of this Section 11(e) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-millionth of a share of
Preference Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Preference Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preference Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preference Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredth of a share of Preference Stock
purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections
11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one one-hundredth of
a share of Preference Stock (calculated to the nearest one-millionth)
obtained by (i) multiplying (x) the number of one one-hundredth of a
share covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date
of any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one one-hundredth
of a share of Preference Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-
hundredth of a share of Preference Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior
to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior
to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-hundredth of a share of
Preference Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-hundredth of a share and the
number of one one-hundredth of a share which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value,
if any, of the number of one one-hundredth of a share of Preference
Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable such number of one one-hundredth of a share of Preference
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date the number of one one-hundredth of a share of
Preference Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of one
one-hundredth of a share of Preference Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment the Board of Directors of the Company shall determine
to be advisable in order that any (i) consolidation or subdivision of
the Preference Stock, (ii) issuance wholly for cash of any shares of
Preference Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Preference Stock or securities which by
their terms are convertible into or exchangeable for shares of Preference
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders
of its Preference Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or
a series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable
that such action will diminish substantially or other-wise eliminate
the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, (iii) combine the outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue any shares by
reclassification of its shares of Common Stock, the number of Rights
associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the occurrence of
such event.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 and
Section 13 hereof,the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Preference Stock and the Common
Stock, a copy of such certificate, and (c) mail a brief summary thereof to
each holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock)
in accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,(y) any Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with
Section 11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-hundredth of a
share of Preference Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such one one-hundredth of a share
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product
(which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by (2) 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event,
(ii) such Principal Party shall there-after be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement, (iii) the term
Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence
of a Section 13 Event, (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of shares of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon the exercise of
the Rights, and (v) the provisions of Section 11(a)(ii) hereof shall be of
no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a),
the Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or consolidation,
and if no securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock
of such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person, and
(2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall refer to whichever
of such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company shall not consummate any
such consolidation, merger, sale or transfer unless the Principal Party
shall have a sufficient number of authorized shares of its Common Stock
which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the
date of any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date, and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that
a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described
in Section 13(a).
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares
of Common Stock pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock which complies with the provisions
of Section 11(a)(ii)(B) hereof (or a wholly owned subsidiary of any such
Person or Persons), (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose shares were purchased
pursuant to such tender offer or exchange offer and (iii) the form of
consideration being offered to the remaining holders of shares
of Common Stock pursuant to such transaction is the same as the form
of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the Distribution Date
as provided in Section 11(p) hereof, or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
o trading, or if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-
he-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to
issue fractions of shares of Preference Stock (other than fractions
which are integral multiples of one one-hundredth of a share of
Preference Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preference Stock (other
than fractions which are integral multiples of one one-hundredth of a
share of Preference Stock). In lieu of fractional shares of Preference
Stock that are not integral multiples of one one-hundredth of a share of
Preference Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
one one-hundredth of a share of Preference Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a share
of Preference Stock shall be one one-hundredth of the closing price of a
share of Preference Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of
one (1) share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered holders
of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder
of any Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement
and shall be entitled to specific performance of the obligations hereunder
and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the transfer of
Common Stock;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of the
Rights Agent designated for such purposes, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent, subject to the last sentence of Section 7(e) hereof,
shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights Agent
shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the
Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights Certificate
shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of one one-hundredth of a share of
Preference Stock or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice
of meetings or other actions affecting stockholders (except as provided
in Section 24 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability
in the premises.
(b) The Rights Agent shall be protected
and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of
this Agreement in reliance upon any Rights Certificate or certificate
for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change
of Name of Rights Agent.
(a) Any corporation into which the
Rights Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates
either in the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in
ts prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon
the following terms and conditions, by all of which the Company of
Rights Certificates, by their acceptance thereof,shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by
it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman, any Vice
Chairman, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the Rights Certificates or be required to verify
the same (except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preference Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preference Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman, any Vice Chairman, the President,
any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to
such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, default, neglect
or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election
to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30) days' notice in writing
mailed to the Company, and to each transfer agent of the Common Stock
and Preference Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preference Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such appoint-
ment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit
his Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (i) a corporation organized and doing business
under the laws of the United States or of the States of New York or
Pennsylvania (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution
in the States of New York or Pennsylvania), in good standing, having a
principal office in the States of New York or Pennsylvania, which is
authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100,000,000 or (ii)
an affiliate of a corporation described in clause (i) of this sentence.
After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock
and the Preference Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or ofthe
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of the Distribution
Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no
such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the close of business on
the tenth day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date), or (ii) the
Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"); provided, however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the circumstances set
forth in clauses (i) and (ii) below, then there must be Continuing
Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors: (i) such
authorization occurs on or after the time a Person becomes an Acquiring
Person, or (ii) such authorization occurs on or after the date of a
change (resulting from a proxy or consent solicitation) in a majority
of the directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated (or,
if upon the commencement of such solicitation, a majority of the Board
of Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take, or may
consider taking, any action which would result in such Person becoming
an Acquiring Person or which would cause the occurrence of a Triggering
Event unless, concurrent with such solicitation, such Person (or one or
more of its Affiliates or Associates) is making a cash tender offer
pursuant to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding shares of
Common Stock not beneficially owned by such Person (or by its Affiliates
or Associates). Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after the first
occurrence of a Section - 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired. The Company may,
at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the "current market price", as defined in Section
11(d)(i) hereof, of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by the Board of
Directors.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after
the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preference Stock or to make any other
distribution to the holders of Preference Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preference Stock rights
or warrants to subscribe for or to purchase any additional shares of
Preference Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its
Preference Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preference Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related transactions,
of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof),
or (v) to effect the liquidation, dissolution, or winding up of the
Company, then, in each such case, the Company shall give to each holder
of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preference Stock,
if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of
the shares of Preference Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preference Stock whichever
shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding
paragraph to Preference Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the holder
of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
Bethlehem Steel Corporation
1170 Eighth Avenue
Bethlehem, Pennsylvania 18016-7699
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of
any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
Morgan Shareholder Services Trust Company
30 West Broadway
New York, New York 10007-2192
Attention: Tenders and Exchanges
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 26, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing shares
of Common Stock. From and after the Distribution Date and subject to
the penultimate sentence of this Section 26, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder
(which lengthening or shortening, following the first occurrence of an
event set forth in clauses (i) and (ii) of the first proviso to Section
23(a) hereof, shall be effective only if there are Continuing Directors
and shall require the concurrence of a majority of such Continuing
Directors), or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of
Rights Certificates; provided, this Agreement may not be supplemented
or amended to lengthen, pursuant to clause (iii) of this sentence, (A)
a time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration
Date, the Purchase Price or the number of one one-hundredth of a share
of Preference Stock for which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company (with, where specifically provided
for herein, the concurrence of the Continuing Directors) shall have
the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (with,
where specifically provided for herein, the concurrence of the Continuing
Directors) or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary oradvisable for the administration
of this Agreement (including a determination to redeem or not Rights or to
amend the Agreement). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the
Board (with, where specifically provided for herein, the concurrence
of the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board or the
Continuing Directors to any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common
Stock) any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
Section 30. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language
from this Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of
Directors.
Section 31. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such
State, except for Sections 18, 19, 20 and 21 hereof which for all purposes
shall be governed by and construed under the laws of the State of New York.
Section 32. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any
of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By /s/ Walter F. Williams
----------------------
Walter F. Williams
Chairman and Chief Executive
Officer
MORGAN SHAREHOLDER SERVICES
TRUST COMPANY, as Rights
Agent
By /s/ Sal Russo
---------------------
Sal Russo
Assistant Vice President
<PAGE>
Exhibit (10)(f)
FORM OF INDEMNIFICATION ASSURANCE AGREEMENT
[Bethlehem Steel Corporation]
[Name and Address of
Director or Officer]
Dear :
This letter will confirm the agreement and
understanding between Bethlehem Steel Corporation (the "Company")
and you regarding your service as a [Director/Officer] of the
Company.
It is and has been the policy of the Company to
indemnify its officers and directors against any costs, expenses
and other liabilities to which they may become subject by reason of
their service to the Company, and to insure its directors and
officers against such liabilities, as and to the extent permitted
by applicable law and in accordance with the principles of good
corporate governance. In this regard, the Company's By-laws
(Article IX) require that the Company indemnify and advance costs
and expenses to (collectively, "indemnify") its directors and
officers as permitted by Delaware law. A copy of the relevant
provisions of the Company's By-laws, as amended, is attached
hereto.
In consideration of your service as a [Director/Officer]
of the Company, the Company shall indemnify you, and hereby confirms
its agreement to indemnify you, to the full extent provided by applicable
law and the By-laws of the Company as currently in effect. In particular,
as provided by the By-laws, the Company shall make any necessary
determination as to your entitlement to indemnification in respect of
any liability within 60 days of receiving a written request from you
for indemnification against such liability. You have agreed to provide
the Company with such information or documentation as the Company may
reasonably request to evidence the liabilities against which
indemnification is sought or as may be necessary to permit the
Company to submit a claim in respect thereof under any applicable
directors and officers liability insurance or other liability
insurance policy. You have further agreed to cooperate with the
Company in the making of any determination regarding your
entitlement to indemnification. If the Company does not make a
determination within the required 60-day period, a favorable
determination will be deemed to be made, and you shall be entitled
to payment, subject only to your written agreement to refund such
payment if a contrary determination is later made and the
delay was by reason of the inability of the Company to make such
determination within the 60-day period. In the event the Company
shall determine that you are not entitled to indemnification, the
Company shall give you written notice thereof specifying the reason
therefor, including any determinations of fact or conclusions of
law relied upon in reaching such determination. Notwithstanding
any determination made by the Company that you are not entitled to
indemnification, you shall be entitled to seek a de novo judicial
determination of your right to indemnification under the By-laws
and this agreement by commencing an appropriate action therefor
within 180 days after the Company shall notify you of its
determination. The Company shall not oppose any such action by
reason of any prior determination made by it as to your right
to indemnification or, except in good faith, raise any objection
not specifically relating to the merits of your indemnification
claim or not considered by the Company in making its own
determination. In any such proceeding, the Company shall bear the
burden of proof in showing that your conduct did not meet the
applicable standard of conduct required by the By-laws or
applicable law for indemnification. It is understood that, as
provided in Section 4 of Article IX of the By-laws, any expenses
incurred by you in any investigation or proceeding by the Company
or before any court commenced for the purpose of making any such
determination shall be reimbursed by the Company. No future
amendment of the By-laws shall diminish your rights under this
agreement, unless you shall have consented to such amendment.
Your right to indemnification as aforesaid shall be in
addition to any right to remuneration to which you may from time to
time be entitled as a [Director/Officer].
It is understood and agreed that your right to
indemnification shall not entitle you to continue in your
present position with the Company or any future position to which
you may be appointed or elected and that you shall be entitled to
indemnification under the By-laws only in respect to liabilities
arising out of acts or omissions or alleged acts or omissions by
you as a [Director/Officer] or as otherwise provided by the By-
laws, but you shall be entitled to such indemnification with
respect to any such liability, whether incurred or arising during
or after your service as a [Director/Officer] and whether before or
after the date of this letter, in respect of any claim, cause,
action, proceeding or investigation, whether commenced, accruing or
arising during or after your service as a [Director/Officer] and
whether before or after the date of this letter.
In further consideration of your service as a
[Director/Officer] of the Company, the Company in connection
with its indemnification policy has arranged for the issuance of,
and you shall be entitled to the benefits of, an "Irrevocable
Straight Standby Letter of Credit" issued by Morgan Guaranty Trust
Company of New York. Said letter of credit has been arranged for
the purpose of assuring payment to you, certain other current and
former directors and officers of the Company and future directors,
officers and employees of the Company and its affiliates designated
by the Board of Directors of the Company ("Indemnitees") of any
amounts to which you and they may become entitled as indemnification
pursuant to the By-laws in the event that, for any reason, the
Company shall fail promptly to pay to you, upon written request therefor,
any such indemnification, said assurance for all Indemnitees being
limited at any time to $5,000,000 in aggregate amount. The Company
understands that there has been established an irrevocable trust,
the Bethlehem Indemnification Trust, for which First Valley Bank,
Bethlehem, Pennsylvania, acts as trustee, for the purpose, among
other things, of administering the respective interests of the
Indemnitees in said letter of credit, and the Company has consented
to the issuance and delivery of said letter of credit to the Bethlehem
Indemnification Trust. Unless renewed or replaced by a comparable letter
of credit in the amount of $5,000,000, the full undrawn amount of said
letter of credit may be drawn upon prior to the expiration thereof.
Drawings on said letter of credit may be arranged through the
Bethlehem Indemnification Trust, as provided by the trust agreement
therefor, by contacting the First Valley Bank, One Bethlehem Plaza,
Bethlehem, Pennsylvania 18018. You have agreed to repay to the
Bethlehem Indemnification Trust any amount paid to you by such
trust (i) if it shall ultimately be determined (by the Company and
upon expiration of the 180-day period for commencement of a
judicial proceeding for a de novo determination or by a final
judicial determination) that you are not entitled under this
agreement or otherwise to indemnification from Bethlehem in respect
of the liability for which you shall have received payment or (ii)
if you shall subsequently receive payment in respect of such
liability from any liability insurer or from Bethlehem or any
successor thereto. It is agreed that, in addition to the rights of
any other person to do so, the Company shall have the right to
compel any repayment to the Bethlehem Indemnification Trust so
required.
This agreement shall terminate upon the later of (i)
the tenth anniversary of the date on which you shall cease to be a
director or officer of the Company or (ii) the final termination or
resolution of all actions, suits, proceedings or investigations
commenced within such ten-year period and relating to the Company
or any of its affiliates or your services thereto to which you may
be or become a party and of all claims for indemnification by you
under this agreement or against the Bethlehem Indemnification Trust
asserted within such ten-year period.
This agreement supersedes any and all prior agreements
between the Company and you relating to the subject matter hereof.
It is understood and agreed that this agreement is binding upon the
Company and its successors and shall inure to your benefit and that
of your heirs, distributees and legal representatives. This
agreement, and the interpretation and enforcement hereof, shall be
governed by the laws of the State of Delaware. In confirmation of
the provisions of the Company's By-laws, the Company hereby agrees
to pay, and you shall be held harmless from and indemnified
against, any costs and expenses (including attorneys' fees) which
you may reasonably incur in connection with any challenge to the
validity of, or the performance and enforcement of, this
agreement, in the same manner as provided by the Company's By-laws.
If the foregoing is in accordance with your
understanding of our agreement, kindly countersign the enclosed
copies of this letter, whereupon this letter shall become a binding
agreement in accordance with the laws of the State of Delaware.
Very truly yours,
BETHLEHEM STEEL CORPORATION
By:_______________________________
______________________________
[Signature of Director/Officer]
<PAGE>
Schedule A
1. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Curtis H. Barnette.
2. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Silas S. Cathcart.
3. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and George P. Jenkins.
4. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Reginald H. Jones.
5. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Winthrop Knowlton.
6. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Russell E. Palmer.
7. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Ellmore C. Patterson.
8. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Dean P. Phypers.
9. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and William W. Scranton.
10. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Donald H. Trautlein.
11. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Lonnie A. Arnett.
12. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and D. Sheldon Arnot.
13. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Robert W. Cooney.
14. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Frank S. Dickerson,
III.
15. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and George T. Fugere.
16. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and John A. Jordan, Jr.
17. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and James F. Kegg.
18. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and David H. Klinges.
19. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Edward H. Kottcamp,
Jr.
20. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and James H. Leonard.
21. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Gary L. Millenbruch.
22. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and C. Adams Moore.
23. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Reynold Nebel.
24. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and James C. Van Vliet.
25. Indemnification Assurance Agreement dated August 22, 1986
between Bethlehem Steel Corporation and Robert C. Wilkins.
26. Indemnification Assurance Agreement dated December 29, 1986
between Bethlehem Steel Corporation and Larry L. Adams.
27. Indemnification Assurance Agreement dated December 29, 1986
between Bethlehem Steel Corporation and Benjamin C. Boylston.
28. Indemnification Assurance Agreement dated January 28, 1987
between Bethlehem Steel Corporation and Herman E. Collier.
29. Indemnification Assurance Agreement dated January 28, 1987
between Bethlehem Steel Corporation and Edwin A. Gee.
30. Indemnification Assurance Agreement dated January 28, 1987
between Bethlehem Steel Corporation and Thomas L. Holton.
31. Indemnification Assurance Agreement dated March 1, 1987
between Bethlehem Steel Corporation and Roger P. Penny.
32. Indemnification Assurance Agreement dated May 27, 1987 between
Bethlehem Steel Corporation and Andrew M. Weller.
33. Indemnification Assurance Agreement dated January 27, 1988
between Bethlehem Steel Corporation and John B. Curcio.
34. Indemnification Assurance Agreement dated January 27, 1988
between Bethlehem Steel Corporation and William C. Hittinger.
35. Indemnification Assurance Agreement dated January 27, 1988
between Bethlehem Steel Corporation and William A. Pogue.
36. Indemnification Assurance Agreement dated September 27, 1989
between Bethlehem Steel Corporation and Robert McClements, Jr.
37. Indemnification Assurance Agreement dated September 27, 1989
between Bethlehem Steel Corporation and John L. Kluttz.
38. Indemnification Assurance Agreement dated June 27, 1990
between Bethlehem Steel Corporation and Duane R. Dunham.
39. Indemnification Assurance Agreement dated September 26, 1990
between Bethlehem Steel Corporation and John F. Ruffle.
40. Indemnification Assurance Agreement dated May 1, 1991 between
Bethlehem Steel Corporation and Carl F. Meitzner.
41. Indemnification Assurance Agreement dated July 1, 1991 between
Bethlehem Steel Corporation and Walter N. Bargeron.
42. Indemnification Assurance Agreement dated March 1, 1992
between Bethlehem Steel Corporation and David P. Post.
43. Indemnification Assurance Agreement dated November 1, 1992
between Bethlehem Steel Corporation and Stephen G. Donches.
44. Indemnification Assurance Agreement dated November 1, 1992
between Bethlehem Steel Corporation and William H. Graham.
45. Indemnification Assurance Agreement dated November 1, 1992
between Bethlehem Steel Corporation and G. Penn Holsenbeck.
46. Indemnification Assurance Agreement dated March 1, 1993
between Bethlehem Steel Corporation and Benjamin R. Civiletti.
47. Indemnification Assurance Agreement dated March 1, 1993
between Bethlehem Steel Corporation and Worley H. Clark.
48. Indemnification Assurance Agreement dated March 1, 1993
between Bethlehem Steel Corporation and Harry P. Kamen.
49. Indemnification Assurance Agreement dated April 28, 1993
between Bethlehem Steel Corporation and Joseph F. Emig.
50. Indemnification Assurance Agreement dated April 28, 1993
between Bethlehem Steel Corporation and Andrew R. Futchko.
51. Indemnification Assurance Agreement dated April 28, 1993
between Bethlehem Steel Corporation and Timothy Lewis.
52. Indemnification Assurance Agreement dated April 28, 1993
between Bethlehem Steel Corporation and William E. Wickert,
Jr.
53. Indemnification Assurance Agreement dated March 1, 1994
between Bethlehem Steel Corporation and Augustine E. Moffitt, Jr.
54. Indemnification Assurance Agreement dated March 16, 1994
between Bethlehem Steel Corporation and Lewis B. Kaden.<PAGE>
Exhibit (11)
Bethlehem Steel Corporation
Statement Regarding Computation of Earnings Per Share
(dollars in millions and shares in thousands, except per
share data)
Year
Ended December 31
----------------
Primary Earnings Per Share 1993 1992 1991
- -------------------------- ------ ------ ------
Net Income (Loss) ($266.3) ($550.3) ($812.7)
Less Dividend Requirements:
$2.50 Preferred Dividend (10.0) (10.0) (10.0)
$5.00 Preferred Dividend (12.5) (12.5) (12.5)
$3.50 Preferred Dividend (14.8) - -
5% Preference Dividend (2.5) (1.8) (2.2)
-------- -------- --------
Total Preferred and
Preference Dividend (39.8) (24.3) (24.7)
-------- -------- --------
Net Income (Loss) Applicable
to Common Stock ($306.1) ($574.6) ($837.4)
======== ======== ========
Average Shares of Common Stock and
Equivalents Outstanding:
Common Stock 90,940 81,980 76,071
Stock Options * * *
------ ------ ------
Total 90,940 81,980 76,071
====== ====== ======
Primary Earnings Per Share ($3.37) ($7.01) ($11.01)
======= ======= ========
Fully Diluted Earnings Per Share
- --------------------------------
Net Income (Loss) ($266.3) ($550.3) ($812.7)
Less Dividend Requirements:
$2.50 Preferred Dividend (10.0) (10.0) (10.0)
$5.00 Preferred Dividend (12.5) (12.5) (12.5)
$3.50 Preferred Dividend (14.8) - -
5% Preference Dividend (2.5) (1.8) (2.2)
-------- -------- --------
Net Income (Loss) Applicable
to Common Stock ($306.1) ($574.6) ($837.4)
======== ======== ========
Average Shares of Common Stock and Equivalents and Other
Potentially Dilutive Securities Outstanding:
Common Stock 90,940 81,980 76,071
Stock Options * * *
$2.50 Preferred Stock * * *
$5.00 Preferred Stock * * *
$3.50 Preferred Stock * * *
5% Preference Stock * * *
------- ------- --------
Total 90,940 81,980 76,071
======= ======= ========
Fully Diluted Earnings Per Share ($3.37) ($7.01) ($11.01)
======= ======= ========
* Antidilutive<PAGE>
Exhibit 13
1993 Annual Report to Stockholders
of Bethlehem Steel Corporation
Chairman's Letter
1993 was a year of change at Bethlehem. We focused on Customers and
Quality, as indicated on the cover of this Report, on
returning to profitability, and we implemented plans to realign our
operations to make Bethlehem more competitive.
As the result of further restructuring actions,
including a revised modernization program at our Structural
Products Division, Bethlehem recorded a $290 million after-tax
restructuring charge in its results for 1993. Excluding
restructuring charges and the cumulative effect of accounting
changes, Bethlehem had net income of $24 million for 1993, a
significant improvement over the net loss of $210 million for 1992.
We showed steady improvement in 1993, and in the fourth quarter,
without the restructuring charge, made $47 million compared to a
net loss of $56 million in the fourth quarter of 1992.
The progress we made during 1993 toward our goal of
returning Bethlehem to sustained profitability was accomplished by
reducing our costs and upgrading our product mix and, as the demand
for steel strengthened, by increasing shipments and
beginning to restore fair value for our products.
Since becoming chairman in November of 1992, I have
visited all of Bethlehem's business units and most other
facilities and have spoken with many of our employees. We are
dedicated to the same goal--to make the company successful and
profitable for the long term. Change will help bring that about,
but change does not come easily. To serve our customers and be
responsive to an intensely competitive world steel marketplace, we
will make constructive change a way of life.
Our principal objective for 1994 and the years ahead is
to sustain and improve Bethlehem's profitability. While many
changes have taken place, our vision for Bethlehem remains
steadfast--to be recognized by our customers as a premier supplier
of high-quality steel products, based on our contribution to their
success.
Our core business will be primarily our flat-rolled
operations, but we will also have strong positions in rail and
structural products. We will have a decentralized organizational
structure, and our business units will achieve their competitive
advantage from technological leadership, low costs and a strong
market position. They will focus primarily on the North American
construction, automotive, service center, machinery,
transportation and container markets. Overall, we expect to achieve
significant growth in our annual corporate revenues and to
strengthen our financial condition. We will have a corporate
culture characterized by values associated with being a good
corporate citizen--safety, health, environment, code of
conduct--and by employees who are dedicated and empowered to help
make our business successful.
Initiatives Taken During 1993
- - Perhaps the most significant change during 1993 involved our
flat-rolled facilities-the Burns Harbor Division and the Sparrows
Point Division, which account for about 80 percent of our steel
segment sales. They began operating as individual business units,
responsible for their own marketing, production and financial
performance--committed to achieving closer partnerships with
customers and responding faster to their needs. Sparrows Point
returned to profitability in 1993 and Burns Harbor improved its
operating results, shipped a record 4.8 million tons of steel
products, and had the safest year in its history.
- - The Burns Harbor and Sparrows Point business units began
full-scale operation of their new galvanizing lines, which
provide an additional 700,000 tons a year of coated sheet
capacity for the growing automotive and light-construction
markets. We will add more coated sheet capacity this year when our
Double G Coatings joint venture begins production, providing us
with approximately half of its 270,000 ton per year capacity.
- - We began two major capital programs to further improve Burns Harbor's
competitiveness--a new facility to provide coal injection for the
blast furnaces and the rebuilding of one of two coke oven
batteries.
- 2 -<PAGE>
- - Pennsylvania Steel Technologies, Inc. (PST) completed its first
full year of operation as a wholly owned subsidiary--producing
railroad rail, specialty blooms and large-diameter pipe--and
progressed with its modernization program. In 1993, PST shipped a
record tonnage of railroad rails and specialty blooms.
- - We also established our structural products and forging
operations as separate business units and took actions to
increase the competitiveness of these operations in response to
changing market conditions.
- - We negotiated new agreements with the United Steelworkers of
America at all of our principal business units, which should assure
our customers of an uninterrupted supply of steel for the rest of
the decade, improve productivity through work-rule
flexibility and labor-management partnerships, and increase job
security for employees.
- - We began operating under a 10-year partnership agreement with
Electronic Data Systems, under which EDS provides all our
information technology requirements--increasing our access to the
latest technology and providing better service to customers at more
competitive costs.
- - We formed a new Services Division to assure a smooth,
cost-effective transition to separate business units by
consolidating and reengineering the services provided to business
units and corporate operations.
- - We completed two major financings, providing proceeds of more
than $350 million, which were used for pension funding, for the new
coal injection facility at Burns Harbor and for other capital
expenditures.
Actions to Improve Competitiveness
Each of our business units is benchmarking itself against its
most efficient competitor and taking actions to be the low-cost producer
of high-quality steel in its markets.
Our Burns Harbor Division is, we believe, the lowest cost
integrated steel producer in North America. It is cost competitive
with new minimill sheet facilities, and the quality and
sophistication of its products are superior. Burns Harbor has the
advantages of an efficient plant layout, world-class
production equipment, and access to low-cost, high-quality iron
ore. It can ship about five million tons a year of
higher-value-added steel products and has the best productivity of
any integrated steel plant.
Our Sparrows Point Division has undergone extensive
modernization over the last decade and virtually all of its
production is now continuously cast. With its many excellent
facilities and skilled work force, it has achieved significant
improvements in its operating costs and quality.
In 1993, Sparrows Point became the first steel
production facility in the United States to be certified by the
International Organization for Standardization under its ISO 9000
program. This is a major step for Sparrows Point since most of our
customers, and manufacturers throughout the world, will be
specifying products made under ISO quality standards. Other
Bethlehem business units are also well on the way to achieving ISO
certification.
Sparrows Point has several programs under way to
further improve its competitiveness by improving productivity
through more efficient use of employees, renegotiated supply
agreements, improved yields and material flows, and lower energy
consumption. Sparrows Point is also increasing the percentage of
higher-value-added sheet products in its product mix, principally
through its new 260,000 ton per year galvanizing line and
recently modernized hot-strip mill.
Pennsylvania Steel Technologies is one of only two rail
producers in the United States and has a significant share of the
rail market. It is operating under a new, separate competitive
labor agreement. It continuously casts 100 percent of its
production and is proceeding with a steelmaking and rail
production modernization program scheduled for completion in 1994.
This modernization program and competitive labor agreement will
establish Pennsylvania Steel Technologies as the low-cost North
American producer of high-quality rails and specialty blooms. PST
will also benefit from the higher utilization of its steelmaking
facilities when it begins supplying semifinished steel to Bethlehem
Structural Products Corporation in 1996. Our Bethlehem Structural
Products Corporation has many strengths--a strong market position in
the Northeast, an established customer base, high-quality products
and customized technical services. Its revised modernization plans
focus on increasing its competitiveness in the market for medium
and light wide-flange structural sections, which account for about
80 percent of the U.S. wide-flange market.
Concurrent with the establishment of separate business
units, we are also taking actions to reduce corporate overhead
costs by reengineering and slimming down administrative
functions.
- 3 -<PAGE>
At Bethlehem, in addition to focusing on customers and
quality, we believe that environmental compliance and providing a
safe and healthful workplace are integral parts of being a
successful business. We are committed to these objectives, and we
have established new initiatives to help achieve them.
Products for the Future
We are continuing our commitment to developing new, more
sophisticated steel products that will meet our customers' needs
into the 21st Century. We are strengthening our position as the
producer of the widest variety of coated sheet products in the
domestic industry with such products as bake-hardenable sheets,
zinc-nickel electrogalvanized sheets and galvannealed sheets.
Through the Automotive Steel Partnership, made up of major steel
producers and automakers, we are evaluating new automotive
designs using a new approach that considers an automotive body as
a single integrated system rather than an assembly of separate
components. By reducing automobile weight and cost while maintaining
strength and rigidity, this approach should increase steel's advantage
over competitive materials.
To allow automakers to optimize the use of sheet steel in
vehicles, we recently formed a joint venture to produce tailored
welded blanks for automotive stampings. Automakers will be able to
stamp a complex part from a single blank made up of steels of various
thicknesses, strengths or surface finishes--a definite competitive
advantage over other steel producers and materials.
Public Policy Issues
Our competitiveness is also affected by key public policy issues
such as national health care reform and international trade.
Bethlehem shares the concern of the President and the Congress
about the increasing cost burden to both companies and
individuals as the result of rapidly rising and uncontrolled health
care costs. We are committed to working constructively to help
bring about fair and effective national health care reform.
Meanwhile, we continue to seek ways for Bethlehem to provide
quality health care at the most economical cost. Our new agreement
with the USWA provides for improvements in employee health care
management, and in 1993 we opened our first Bethlehem Family Health
Care Center. The Center is completely equipped and staffed to
provide health care for the many employees, retirees and dependents
in the Bethlehem, Pa., area.
It is vitally important that we achieve fairness in
international steel trade. During 1993, we achieved significant but
only partial relief in the countervailing and antidumping cases
filed against foreign steel producers. Bethlehem and other American
steel producers have filed appeals in those countervailing and
antidumping cases in which the International Trade Commission did
not grant warranted relief from unfairly traded steel. We are also
vigorously defending appeals brought by foreign producers involving
decisions favorable to domestic producers.
We commend the Administration for the successful
conclusion of the GATT and NAFTA negotiations. We believe
that--properly implemented and administered--GATT and NAFTA will
produce opportunities both for our customers to export
manufactured products and for us to export steel products.
Outlook
The U.S. economy continues along a path of recovery, and we expect
to see continued improvement in demand in 1994 from major steel
markets, such as automotive, construction and machinery. The trend
is also encouraging for increased demand for higher-value-added products,
such as the coated sheets being produced on our new galvanizing lines at
Burns Harbor and Sparrows Point, and for further restoration of fair value
for our products. Overall, domestic steel industry shipments in 1994
are expected to match or exceed 1993's 88 million tons.
During January 1994, we had increased operating costs and
reduced shipments as a result of severe winter weather
conditions and, as expected, are continuing to incur additional
costs in connection with capital projects under way at Burns
Harbor. Despite these higher costs, we believe that with our
ongoing implementation of cost reductions, efficiencies and quality
improvements -- and a continuation of economic and steel market
recoveries -- Bethlehem will be profitable for the year 1994.
/s/ Curtis H. Barnette, Chairman
- --------------------------------
Curtis H. Barnette, Chairman
January 26, 1994
- 4 -<PAGE>
Financial Review and Operating Analysis
General
Bethlehem reported a net loss of $266 million in 1993 compared to
net losses of $550 million in 1992 and $813 million in 1991. The
net loss for 1993 includes a $350 million restructuring charge
($290 million after tax) for further restructuring actions to
implement its corporate strategy. The restructuring actions include
a revised modernization plan for Bethlehem's structural products
business and a charge for the remaining book value of the idled
coke plant at its Sparrows Point Division. See Note D to the
Consolidated Financial Statements.
Excluding restructuring charges and the cumulative effect
of accounting changes, Bethlehem had net income of $24 million for
1993 compared to net losses of $210 million for 1992 and $178
million for 1991.
Results for 1993 also include a one-time tax benefit of
$25 million (see Note E to the Consolidated Financial Statements)
resulting from new tax legislation and approximately $20 million in
unusual costs incurred in connection with the negotiation of new
labor contracts during 1993. See "Employees and Employment Costs"
on page 18.
During 1993, Bethlehem changed the method of valuing its
inventories from the last-in, first-out (LIFO) method to the first-
in, first-out (FIFO) method. This change had no effect on the 1993
loss per share. Prior years' financial statements have been
restated to reflect the change. See Note B to the Consolidated
Financial Statements.
The net loss for 1992 included a $340 million net charge
for the cumulative effect of changes in accounting, a $25 million
litigation charge and a $31 million gain at the BethShip Division
for recovery of losses reported in prior years on a United States
Navy contract. The net loss for 1991 included an after-tax
restructuring charge of $635 million. See Note D to the
Consolidated Financial Statements.
Segment Results
Basic Steel Operations. The Basic Steel Operations segment had
a loss from operations of $274 million in 1993 compared to losses
from operations of $214 million in 1992 and $754 million in 1991.
This segment's results for 1993 and 1991 include the previously
mentioned restructuring charges. Excluding the effects of these
charges, the Basic Steel Operations segment had income from
operations of $76 million in 1993 compared to losses from
operations of $214 million in 1992 and $119 million in 1991.
The improvement in Basic Steel Operations' 1993
operating results compared to 1992, excluding restructuring
charges, was principally due to increased shipments of sheet and
plate products, reduced operating costs per ton and an improved
product mix. Despite higher natural gas prices and approximately
$20 million in unusual costs incurred in connection with
negotiating new labor contracts, operating costs per ton were
substantially lower at the Sparrows Point and Burns Harbor
Divisions. Increased shipments at these Divisions, primarily of
coated, cold rolled and plate products, and an improved product mix
due to the successful start-up and operation of the two new hot-dip
galvanizing lines also contributed to improved results.
Excluding shipments of discontinued facilities, this segment
shipped 9.0 million net tons of steel products in 1993 compared to
8.4 million net tons in 1992 and 7.6 million net tons in 1991. The
increase in 1993 shipments was primarily due to increased demand
from the automotive, machinery and construction markets.
Raw steel production of the Basic Steel Operations
segment (excluding discontinued facilities) was 10.3 million net
tons in 1993 compared to 10.0 million net tons in 1992 and 9.3
million net tons in 1991.
Operating results for 1993 also benefited from higher
realized steel prices, principally for hot and cold rolled sheet
products. However, Bethlehem's average realized steel prices on a
constant mix basis were only one percent higher in 1993 than in
1992.
The effects of changes in volume, average realized prices
and product mix on total steel mill product revenues during the
last two years were as follows:
Increase (Decrease)
from prior year
------------------
1993 1992
----- -----
Volume 7% 10%
Realized prices 1 (3)
Product mix 3 (2)
----- -----
Total Revenues 11% 5%
===== =====
The Burns Harbor Division operated at record levels during 1993 and
shipped 4.8 million tons of steel products compared to 4.4 million
tons in 1992 and 4.0 million tons in 1991. Operating results at
this Division improved in 1993 over 1992 primarily due to increased
shipments of higher-value-added coated sheet, plate and cold rolled
products, higher realized steel prices for hot rolled and cold
rolled sheet products and reduced operating costs per ton. The
successful operation of the new hot-dip galvanizing line, which
started up in December 1992, also contributed to Burns Harbor's
improved operating performance by increasing the proportion of its
shipments of higher margin coated products.
- 15 -<PAGE>
The Sparrows Point Division had significantly improved
operating results and returned to profitability in 1993. The
principal factors contributing to its improved results were reduced
operating costs, an improved product mix and higher realized prices
for hot rolled, cold rolled and coated sheet products. The improved
operating performance of its recently modernized hot-strip mill and
the successful operation of the new hot-dip galvanizing line that
started up in December 1992 contributed significantly to the
improved results of this Division. The Sparrows Point Division
shipped 2.8 million tons of steel products in 1993 compared to 2.7
million tons in 1992 and 2.2 million tons in 1991.
During 1993, Bethlehem Structural Products Corporation's
results were adversely affected by a number of market developments.
In January 1994, Bethlehem announced a revised modernization plan
for Structural Products under which Structural Products will focus
on the production and sale of light and medium wide-flange sections,
which make up about 80 percent of the wide-flange market in the
United States. The revised plan is the result of a number of market
developments, including a reduction in the demand for heavy wide-
lange sections caused by reduced high-rise building construction
activity, continued low occupancy rates in commercial buildings,
trends toward lighter construction in buildings and delays in the
rebuilding of the nation's infrastructure.
Percentage of Bethlehem's Net Sales
by Segment and Major Product
1993 1992 1991
------ ------ ------
Basic Steel Operations
Steel mill products:
Sheets and tin mill products 63.1% 59.1% 48.4%
Plates 13.6 13.3 13.0
Structural shapes and piling 8.5 9.6 8.9
Rail products 3.6 2.8 2.4
Bars, rods and semifinished 1.2 2.6 10.1
Other steel mill products .8 1.2 4.0
Other products and services
(including raw materials) 6.8 7.5 7.8
------ ------ ------
97.6 96.1 94.6
Steel Related Operations 2.4 3.9 5.4
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
Percentage of Steel Mill Product
Shipments by Principal Market
(Based on net tons shipped)
1993 1992 1991
------ ------ ------
Principal Market
Service Centers, Processors
and Converters (including
semifinished customers) 47.3% 46.3% 40.0%
Transportation (including
automotive) 22.2 19.9 20.5
Construction 15.5 16.0 15.8
Containers 5.4 4.8 5.3
Machinery 5.1 5.5 6.0
Other 4.5 7.5 12.4
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
Includes shipments to Bethlehem's manufacturing and fabricating
operations.
Structural Products will continue to manufacture heavy
wide-flange structurals until it phases out its iron and
steelmaking operations by 1996, as previously announced. Its 44-
inch structural rolling mill complex will be upgraded and
modernized and will be sourced with lower cost, continuously cast
steel produced primarily at Pennsylvania Steel Technologies' newly
modernized state-of-the-art operations in Steelton, Pa. The revised
plan is expected to result in competitive costs with substantially
lower investment requirements (expected to be in the range of $25
million to $35 million) than the previously announced modernization
plan and should permit production of wide-flange sections of up to
27 inches. Other benefits include higher utilization of the 44-inch
structural rolling mill, higher utilization of the steelmaking
facilities at Pennsylvania Steel Technologies, improved product
quality and better utilization of Bethlehem's overall financial and
other resources.
Pennsylvania Steel Technologies' modernization program is
progressing on schedule and is expected to be completed during the
second half of 1994. Despite higher scrap costs for its electric
furnace, operating results at Pennsylvania Steel Technologies were
better in 1993 than in 1992 principally as a result of increased
shipments of rail and semifinished products and higher prices for
rail products. Under the revised modernization plan for Structural
Products, Pennsylvania Steel Technologies expects to begin
supplying Structural Products with continuously cast blooms in
1995.
Steel Related Operations. This segment reported a loss
from operations of $22 million in 1993 compared to income from
operations of $11 million in 1992 and a loss from operations of $21
million in 1991. Results for 1992 included a $31 million gain at
the BethShip Division for reimbursement of a portion of the losses
reported in prior years on a ship construction contract for the
United States Navy. During 1993, the BethShip Division completed
work on a tunnel fabrication contract for the Boston Harbor tunnel;
however, results for 1993 were adversely affected by costs incurred
in connection with a two-week strike after which a new labor
agreement was reached. The Division has received contracts to
renovate five vessels for the United States Ready Reserve fleet in
1994.
BethForge, Inc. and the CENTEC joint venture continued to
experience losses during 1993 due to weak markets for forgings,
castings and cast rolls and to higher operating costs. An ingot
teeming facility and vacuum degassing unit are being installed for
BethForge's use at Pennsylvania Steel Technologies in order to
- 16 -<PAGE>
take advantage of the new DC electric arc furnace and ladle
refining station being installed as part of Pennsylvania Steel
Technologies' modernization program. This new facility, with its
lower cost, higher quality ingots, will replace BethForge's
existing steelmaking facility during 1995.
Liquidity and Financial Resources
Cash and cash equivalents were $229 million at December 31, 1993
compared to $208 million at December 31, 1992. Cash provided by
operating activities in 1993 was $203 million compared to $135
million in 1992 and $119 million in 1991. Principal uses of cash
during 1993 were for capital expenditures, pension funding, debt
repayments and an increase in working capital. Receivables were
$100 million higher at December 31, 1993 than at December 31, 1992
primarily because of a higher level of shipments at the Burns
Harbor and Sparrows Point Divisions.
In March 1993, Bethlehem sold 5.1 million shares of
Cumulative Convertible Preferred Stock in a private offering,
realizing net proceeds of approximately $248 million. Bethlehem
contributed $125 million of the proceeds from the offering to its
pension fund, with the balance of the proceeds being used for
capital expenditures, primarily for modernization.
During 1993, Bethlehem contributed a total of $260
million to its pension fund compared to $40 million in 1992 and
$130 million in 1991. Despite these contributions, Bethlehem's
pension liability increased to $1.6 billion in 1993 from $1.2
billion in 1992 due principally to the decline in long-term
interest rates and additional pension benefits agreed to in
connection with the new labor agreement with the United
Steelworkers of America ("USWA"). The increase in pension
liability arising from the decline in long-term interest rates
resulted in a reduction in stockholders' equity of $50 million at
December 31, 1993.
In August 1993, Bethlehem sold $105 million of 10-3/8%
Senior Notes due 2003 ("Senior Notes"), realizing net proceeds of
approximately $102 million. The proceeds are being used to fund the
construction of a coal injection facility at the Burns Harbor
Division. See "Capital Expenditures" on page 18. The Senior Notes
contain covenants that impose certain limitations on Bethlehem's
ability to incur or repay debt, to pay dividends and make other
distributions on or redeem capital stock, or to sell, merge,
transfer or encumber assets. See Note F to the Consolidated
Financial Statements.
At December 31, 1993, no amounts were outstanding under
Bethlehem's revolving credit agreement and $106 million was used
for letters of credit, leaving $294 million available for
borrowing under such agreement. At December 31, 1992, $80 million
in loans and $104 million in letters of credit were outstanding
under Bethlehem's revolving credit agreement. Bethlehem's
accounts receivable and inventories are pledged as collateral under
the credit agreement. This agreement expires at the end of 1996.
During 1993, Bethlehem borrowed the remaining $49 million
available under a $270 million loan agreement entered into to fund
construction of the two hot-dip galvanizing lines at the Sparrows
Point and Burns Harbor Divisions. Borrowings are collateralized by
the galvanizing lines. Borrowings bear interest based on the London
Interbank Offered Rate with an option to convert to a fixed rate.
During 1993, borrowings of $120 million were fixed at 5.99 percent
per annum, with the balance fixed at 5.69 percent in January 1994.
Repayment of this loan began during the third quarter of 1993 and
is being amortized ratably in equal semiannual installments over a
seven-year period.
Debt and capital lease obligations totaling $154
million were repaid during 1993, including repayments of $80
million outstanding at December 31, 1992 under Bethlehem's
revolving credit agreement.
Major uses of funds during 1994 include an estimated $450
million of capital expenditures, repayment of approximately $96
million of debt and capital lease obligations and contributions
to the pension fund. Bethlehem expects to maintain an adequate
level of liquidity throughout 1994 from cash flow from operations,
reductions in working capital and available borrowings under its
revolving credit agreement. In addition, because Bethlehem has made
contributions to its pension fund substantially in excess of current
requirements under the Employee Retirement Income Security Act of 1974,
it could defer all pension funding for at least two years, although
it presently has no plans to do so. Legislation is currently pending in
Congress that could potentially increase Bethlehem's future
required annual pension contributions and reduce its ability to
defer pension funding. The prospects for passage of such
legislation are currently uncertain.
Common Stock Market and Dividend Information
1993 1992
------- -------
Prices* Prices*
------- -------
Period High Low High Low
------- ------- ------- -------
First Quarter $20.000 $14.875 $17.250 $12.750
Second Quarter 21.000 16.375 16.625 12.875
Third Quarter 19.125 12.875 15.375 11.500
Fourth Quarter 20.625 13.750 16.625 10.000
*The principal market for Bethlehem Common Stock is the New York
Stock Exchange. Bethlehem Common Stock is also listed on the
Chicago Stock Exchange. The high and low sales prices of the Common
Stock as reported in the consolidated transaction reporting system
are shown. The trading symbol for Bethlehem Common Stock is BS.
Bethlehem has not paid a dividend on its Common Stock since the
fourth quarter of 1991.
- 17 -<PAGE>
Capital Expenditures
Capital expenditures were $327 million in 1993 compared to $329
million in 1992 and $564 million in 1991. Capital expenditures for
1994 are currently estimated to increase to approximately $450
million, primarily because of projects under way at the Burns
Harbor Division.
During 1993, a rebuild was commenced of one of the two
coke oven batteries at Burns Harbor, which is expected to be
completed in mid-1995. During this period, Burns Harbor's coke
needs are being supplied by other Bethlehem coke operations and
from commercial sources. Also, expenditures of $55 million were
made during 1993 for construction of a new coal injection
facility at Burns Harbor that will lower this Division's
operating costs through elimination of the consumption of natural
gas and reduction in the use of coke in the blast furnaces.
Construction of this facility is expected to be completed early in
1995 and is being funded with the net proceeds of approximately
$102 million from the sale in August 1993 of Senior Notes and with
$30 million in financial assistance from the Department of Energy.
One of Burns Harbor's two blast furnaces has also been scheduled
to be relined during the third quarter of 1994. Operating costs per
ton will increase at Burns Harbor while these projects are under
way, due primarily to lower raw steel production and increased costs
for purchased coke and semifinished steel.
During 1993, progress continued on a $70 million
modernization program for Pennsylvania Steel Technologies, Inc.,
which will enable this business to produce premium head-hardened
rails. The program includes the installation of state-of-the-art
steelmaking facilities, including a new DC electric arc furnace, a
ladle refining furnace and a vacuum degassing unit. The modernization
is expected to be completed during the second half of
1994.
Approximately $385 million of additional capital
expenditures were authorized in 1993. At December 31, 1993, the
estimated cost of completing authorized capital expenditures was
approximately $676 million compared to $620 million at December 31,
1992. Such authorized capital expenditures are expected to be
completed during the 1994-1995 period.
New Joint Ventures
Bethlehem is participating in a joint venture, known as Double G
Coatings Company, L.P., which is building a 270,000 ton per year
sheet coating line near Jackson, Miss. The new line, which is
scheduled to start up in the second quarter of 1994, will produce
galvanized and Galvalume coated sheets primarily for the
construction market. Sparrows Point will provide cold rolled coils
for approximately half of Double G's annual capacity and will be
responsible for marketing its share of the finished product.
In order to better serve the needs of the Burns Harbor
Division's automotive customers, Bethlehem has announced that it
intends to form a joint venture with a steel service center to
produce tailored welded steel blanks for automotive stampings
through use of a technologically advanced welding process.
Employees and Employment Costs
On August 1, 1993, Bethlehem and the USWA entered into a new six-
year labor agreement for the Burns Harbor and Sparrows Point
Divisions. The agreement provides for a reopening after three
years, subject to binding arbitration, of wage and certain
benefit provisions (excluding pensions). Under the new agreement,
represented employees will receive improved pension benefits,
bonuses to be paid over the term of the agreement, a $.50 per hour
wage increase in August 1995 and profit sharing. A new profit-
sharing plan has been established, effective January 1, 1994, equal
to eight percent of annual corporate income before taxes, unusual
items and expenses applicable to the plan and two percent of
adjusted profits at each covered operation. The new agreement also
provides for opportunities to reduce health care costs and for
flexible work practices and opportunities to reduce manning levels
through attrition in exchange for improved employment security.
Under the terms of this agreement, on March 1, 1994 and March 1,
1995, each eligible USWA-represented employee will receive a bonus
of either $500 or 25 shares of Bethlehem Common Stock, at the
election of the employee. If all eligible employees were to elect
to receive payment of the March 1, 1994 bonus in shares of stock,
approximately 180,000 shares of Common Stock would be issued.
During 1993, Bethlehem and the USWA also reached
agreement on new, six-year labor agreements for its wholly owned
subsidiaries, Bethlehem Structural Products Corporation and
BethForge, Inc., and for the CENTEC joint venture. The agreements
provide for more flexible work rules and lower overall costs by
combining jobs and lessening work-rule restrictions. The
agreements at Structural Products and BethForge, however,
included a "snap back" arrangement providing that in the event
Bethlehem did not install a continuous caster at Structural
Products, USWA-represented employees at those business units would
then be covered by the 1993 labor agreement negotiated for the
Burns Harbor and Sparrows Point Divisions. The revised
modernization plan announced for Structural Products does not
provide for installation of a continuous caster at Structural
Products, and discussions are being held with the USWA concerning
the implementation and possible modification of the "snap back"
arrangement. Bethlehem does not expect any material increase in its
overall labor costs as a result of these developments. The
announcement of a revised modernization program for Structural
Products will not affect the labor agreement for the CENTEC joint
venture.
A new, three-year labor agreement was also reached during
1993 with union employees at BethShip Division's Sparrows Point
ship repair yard, and a six-year agreement was reached with USWA-
represented employees at the Hibbing iron ore joint venture.
In 1992, a new and more competitive labor agreement was
negotiated with the USWA covering the employees at Pennsylvania
Steel Technologies. This agreement expires in 1999 with the other
USWA agreements.
Under the terms of the profit-sharing plan provided for
in the 1989 labor agreement with the USWA, no material
profit-sharing payments were required for the 1992 and 1993 plan
years. Under other provisions of the 1989 labor agreement,
Bethlehem issued approximately 211,380 shares of Series B
Preference Stock in 1993 to the trustee for the benefit of
employees for 1992. Bethlehem expects to issue approximately
133,500 shares of Series B Preference Stock in 1994 to the
trustee for the benefit of employees for 1993.
- 18 -<PAGE>
In January 1994, a new five-year agreement was reached
with the United Mine Workers of America covering approximately 600
employees at three coal operations of Bethlehem subsidiaries.
At the end of 1993, Bethlehem had approximately 20,600
employees compared to 22,600 employees at the end of 1992 and
26,400 employees at the end of 1991. Bethlehem expects to
continue to reduce the number of its employees. Approximately two-
thirds of Bethlehem's employees are covered by its labor agreements
with the USWA.
For additional information concerning Bethlehem's
employment costs, see the table below.
Employment Cost Summary -- All Employees
(Dollars in millions) 1993 1992 1991
--------- -------- --------
Salaries and Wages $ 950.9 $1,058.0 $1,105.7
Employee Benefits (including
retirees):
Pension Plans:
Actives 86.8 88.9 89.1
Retirees 97.7 101.4 97.5
Medical and Insurance:
Actives 122.1 129.2 119.4
Retirees 129.7 125.6 119.9
Payroll Taxes 89.1 88.7 103.5
Workers' Compensation 43.8 48.6 48.6
Supplemental Unemployment,
Savings Plan and Other 27.0 23.4 30.3
Union Employee Investment
and Profit-Sharing Plans - .2 6.8
-------- -------- --------
Total Benefit Costs 596.2 606.0 615.1
-------- -------- --------
Total Employment Costs $1,547.1 $1,664.0 $1,720.8
======== ======== ========
Employment Costs as a Percent
of Net Sales 35.8% 41.5% 39.9%
======== ======== ========
Environmental Matters
Bethlehem is subject to stringent federal, state and local
environmental laws and regulations concerning, among other
things, air emissions, waste water discharges, and solid and
hazardous waste disposal. During the five years ended December 31,
1993, Bethlehem spent approximately $257 million for environmental
control equipment. Expenditures for new environmental control
equipment totaled approximately $35 million in 1993, $18 million in
1992 and $102 million in 1991. The costs incurred in 1993 to
operate and maintain existing environmental control equipment were
approximately $125 million (excluding interest costs but including
depreciation charges of $28 million) compared to $130 million in
1992 and $145 million in 1991. Under the Clean Air Act, as amended,
coke-making facilities will have to meet progressively more
stringent standards over the next 30 years. Bethlehem idled coke
production at the Sparrows Point Division in 1991 and continues to
assess the most cost-effective method of supplying coke and
completing an emissions reduction program to meet environmental
regulations. Based on a continuing review of the current and
projected coke market, however, Bethlehem recently concluded that
it could not expect to recover both the remaining book value and,
if determined to be appropriate, any future investment necessary to
rebuild and operate the idled coke plant. Accordingly, Bethlehem
recorded a charge in its 1993 financial statements for the
remaining book value of the idled coke plant at Sparrows Point. See
Note D to the Consolidated Financial Statements. Bethlehem
continues to operate coke-making facilities at the Burns Harbor
Division, at Structural Products and at Lackawanna, N.Y. While
Bethlehem continues to evaluate the impact applicable emission
control regulations have on these operations, it believes that
these operations will be able to comply.
Negotiations between Bethlehem and federal and state
regulatory agencies are being conducted to resolve differences in
interpretation of certain environmental control requirements. In
some instances, those negotiations are being held in connection
with the resolution of pending environmental proceedings.
Bethlehem believes that there will not be any significant
curtailment or interruptions of any of its important operations as
a result of these proceedings and negotiations. Existing
environmental laws may be amended and new laws may be enacted by
Congress and state legislatures and new environmental regulations
may be issued by regulatory agencies. For these reasons,
Bethlehem cannot predict the specific environmental control
requirements that it will face in the future. Based on existing and
anticipated regulations promulgated under presently enacted
legislation, Bethlehem currently estimates that capital spending
for installation of new environmental control equipment will range
from $35 million to $50 million in each of the next two years.
However, estimates of the future capital expenditures and operating
costs required for environmental compliance are imprecise due to
numerous uncertainties, including the evolving nature of the
regulations, the possible imposition of more stringent requirements,
the availability of new technologies and the timing of expenditures.
Although it is possible that Bethlehem's future results
of operations in particular quarterly or annual periods could be
materially affected by the future costs of environmental compliance,
Bethlehem does not believe the future costs of environmental
compliance will have a material adverse effect on its consolidated
financial position or on its competitive position with respect to
other integrated domestic steelmakers that are subject to the same
environmental requirements.
19<PAGE>
Consolidated Statements of Income
Year Ended December 31
-----------------------
(Dollars in millions, except
per share data) 1993 1992 1991
----- ----- -----
Net Sales $4,323.4 $4,007.9 $4,317.9
-------- -------- --------
Costs and Expenses:
Cost of sales 3,834.2 3,789.9 4,045.4
Depreciation (Note A) 277.5 261.7 241.4
Selling, administration and
general expense 156.9 159.3 171.0
Estimated restructuring
losses (Note D) 350.0 - 635.0
-------- -------- --------
Total Costs and Expenses 4,618.6 4,210.9 5,092.8
-------- -------- --------
Loss from Operations (295.2) (203.0) (774.9)
Financing Income (Expense):
Interest and other income 7.1 4.9 9.7
Interest and other financing costs (63.2) (57.2) (45.5)
---------- -------- --------
Loss Before Income Taxes and
Cumulative Effect of Changes in
Accounting (351.3) (255.3) (810.7)
Benefit (Provision) for Income
Taxes (Note E) 85.0 45.0 (2.0)
---------- -------- -------
Loss Before Cumulative Effect of
Changes in Accounting
[($3.37), ($2.86) and ($11.01)
per share] (266.3) (210.3) (812.7)
Cumulative Effect of Changes in
Accounting [($4.15) per share]
(Note B) - (340.0) -
---------- -------- --------
Net Loss (266.3) (550.3) (812.7)
Dividends on Preferred and
Preference Stock 39.8 24.3 24.7
Net Loss Applicable to Common Stock
[($3.37),($7.01) and ($11.01) per --------- ---------- --------
share] $ (306.1) $ (574.6) $(837.4)
========= ========== ========
The accompanying Notes are an integral part of the Consolidated
Financial Statements.
20<PAGE>
Consolidated Balance Sheets
December 31
--------------------
(Dollars in millions, except per share data) 1993 1992
-------- --------
Assets
Current Assets:
Cash and cash equivalents (Note A) $ 228.9 $ 208.2
Receivables, less allowances of $16.3
and $15.7 (Note F) 503.2 403.3
Inventories (Notes A, B and F)
Raw materials and supplies 341.9 373.7
Finished and semifinished products 494.8 455.0
Contract work in progress less billings
of $10.3 and $5.3 15.8 23.8
------- -------
Total Inventories 852.5 852.5
Other Current assets 6.5 5.5
------- -------
Total Current Assets 1,591.1 1,469.5
Property, Plant and Equipment, less
accumulated depreciation of $4,107.0 and
4,255.1 (Note A) 2,634.3 2,804.5
Investments and Miscellaneous Assets
(Note A) 124.0 150.2
Deferred Income Tax Asset-net (Note E) 926.7 829.2
Intangible Asset-Pensions (Note I) 600.6 239.6
-------- --------
Total Assets $5,876.7 $5,493.0
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 360.9 $ 375.7
Accrued employment costs 130.1 132.8
Postretirement benefits other than
pensions (Note J) 132.3 122.0
Accrued taxes (Note E) 65.4 67.5
Debt and capital lease obligations
(Notes F and G) 95.5 69.2
Other current liabilities 130.0 126.0
-------- --------
Total Current Liabilities 914.2 893.2
Pension Liability (Notes D and I) 1,613.6 1,188.7
Postretirement Benefits Other Than
Pensions (Notes D and J) 1,448.3 1,417.9
Long-term Debt and Capital Lease
Obligations (Notes F and G) 718.3 726.8
Other Long-term Liabilities 485.7 477.0
Stockholders' Equity (Notes K, L and M):
Preferred Stock-at $1 per share par value
(aggregate liquidation preference of $481.2);
Authorized 20,000,000 shares 11.6 6.5
Preference Stock-at $1 per share par value
(aggregate liquidation preference of $95.1);
Authorized 20,000,000 shares 2.8 2.9
Common Stock-at $1 per share par value;
Authorized 150,000,000 shares;
Issued 93,412,852 and 92,511,105 shares 93.4 92.5
Held in Treasury, 2,003,760 and 2,001,677
shares at cost (59.7) (59.7)
Additional Paid-in Capital 1,588.4 1,420.8
Retained Deficit (Note B) (939.9) (673.6)
--------- ---------
Total Stockholders' Equity 696.6 789.4
--------- ---------
Total Liabilities and Stockholders' Equity $5,876.7 $5,493.0
========= =========
The accompanying Notes are an integral part of the Consolidated
Financial Statements.
21<PAGE>
Consolidated Statements of Cash Flows
Year Ended December 31
----------------------
(Dollars in millions) 1993 1992 1991
---- ---- ----
Operating Activities:
Net loss $(266.3) $(550.3) $(812.7)
-------- -------- --------
Adjustments for items not
affecting cash from operating
activities:
Estimated restructuring losses
(Note D) 350.0 - 635.0
Cumulative effect of changes
in accounting (Note B) - 340.0 -
Depreciation 277.5 261.7 241.4
Deferred income taxes (87.0) (45.0) -
Other-net 19.6 26.5 11.4
Working capital*:
Receivables (99.9) 5.2 33.2
Inventories - 172.8 (41.6)
Accounts payable - (59.2) 18.4
Employment costs and other (5.6) (17.6) 13.0
Other-net 14.9 1.0 20.6
------ ------ -------
Cash Provided from Operating
Activities 203.2 135.1 118.7
------- ------- -------
Investing Activities:
Capital expenditures (327.1) (328.7) (563.9)
Cash proceeds from sales of
businesses and assets 15.2 124.9 83.7
Other-net 5.6 7.2 0.4
------- ------- -------
Cash Used for Investing
Activities (306.3) (196.6) (479.8)
------- ------- -------
Financing Activities:
Pension financing (funding)
(Note I):
Pension expense 183.6 188.7 184.6
Pension funding (261.1) (40.2) (130.7)
Revolving and other credit
borrowings (payments)-net (80.0) (74.0) 144.0
Long-term debt borrowings
(Note F) 171.2 104.0 125.8
Long-term debt and capital lease
payments (Notes F and G) (73.8) (105.3) (68.6)
Restructured facilities payments (28.4) (36.1) (30.8)
Cash dividends paid (Note M) (36.1) (22.5) (52.9)
Preferred Stock issued (Note M) 248.4 - -
Common Stock issued (Note M) - 171.3 -
------- ------- --------
Cash Provided from Financing
Activities 123.8 185.9 171.4
------- ------- -------
Net Increase (Decrease) in Cash
and Cash Equivalents 20.7 124.4 (189.7)
Cash and Cash Equivalents
-Beginning of Period 208.2 83.8 273.5
------- ------- -------
-End of Period $ 228.9 $ 208.2 $ 83.8
======= ======= =======
Supplemental Cash Payment
Information:
Interest, net of amount
capitalized $ 55.7 $ 57.1 $ 44.4
Income taxes (Note E) $ 3.7 $ 1.3 $ 1.9
*Excludes Financing Activities and Investing Activities.
The accompanying Notes are an integral part of the Consolidated
Financial Statements.
22<PAGE>
Notes to Consolidated Financial Statements
A. Accounting Policies
Principles of Consolidation - The consolidated financial
statements include the accounts of Bethlehem Steel Corporation and
all majority-owned subsidiaries and joint ventures.
Cash and Cash Equivalents - Cash equivalents consist primarily of
overnight investments, certificates of deposit and other
short-term, highly liquid instruments generally with original
maturities at the time of acquisition of three months or less. Cash
equivalents are stated at cost plus accrued interest, which
approximates market.
Inventories - Inventories are valued at the lower of cost
(principally FIFO) or market. See Note B. Contract work in
progress is valued at cost less billings. Estimated losses are
recognized when first apparent and partial profits are based on
percentage of completion.
Investments - Investments in associated enterprises accounted for
by the equity method were $59.3 million and $63.0 million at
December 31, 1993 and 1992. Associated enterprises are primarily
50% or less interests in coating and mining operations.
Property, Plant and Equipment - Property, plant and equipment is
stated at cost. Maintenance, repairs and renewals which neither
materially add to the value of the property nor appreciably prolong
its life are charged to expense. Gains or losses on dispositions of
property, plant and equipment are recognized in income. Interest is
capitalized on significant construction projects and totaled $8.8,
$17.3 and $26.8 million in 1993, 1992 and 1991.
Our property, plant and equipment by major classification is:
December 31
---------------
(Dollars in millions) 1993 1992
---- ----
Land (net of depletion) $ 50.9 $ 53.3
Buildings 670.1 694.2
Machinery and equipment:
Steel manufacturing 4,960.2 5,381.8
Other 739.5 754.1
--------- ---------
6,420.7 6,883.4
Accumulated depreciation (4,107.0) (4,255.1)
--------- ---------
2,313.7 2,628.3
Construction-in-progress 320.6 176.2
-------- --------
Total $ 2,634.3 $ 2,804.5
========= =========
Depreciation - Depreciation, which includes amortization of assets
under capital leases, is based upon the estimated useful lives of
each asset group. The estimated useful life is 18 years for most
steel producing assets. Steel assets, other than blast furnace
linings, and most raw material producing assets are depreciated on
a straight-line basis adjusted by an activity factor. This factor
is based on the ratio of production and shipments for the current
year to the average production and shipments for the current and
preceding four years at each operating location. Annual
depreciation after adjustment for this activity factor is not less
than 75% nor more than 125% of straight-line depreciation.
Depreciation after adjustment for this activity factor was $4.3
million more than straight-line in 1993 and $6.1 and $21.9 million
less than straight-line in 1992 and 1991. Through December 31,
1993, $37.4 million less accumulated depreciation has been recorded
under this method than would have been recorded under straight-line
depreciation.
The cost of blast furnace linings is depreciated on a
unit-of-production basis. All other assets are depreciated on a
straight-line basis.
B. Accounting Changes
During 1993, we changed the method of valuing inventories from the
last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. We believe the FIFO method of inventory valuation provides
a more meaningful presentation of the financial position of the
Corporation since it reflects more recent cost in the balance
sheet. Also, in the current environment of low inflation, higher
productivity and lower production costs, the use of LIFO has not
had a significant effect on operating results. FIFO will eliminate
the distortions in reported financial results caused by
liquidations of inventories which flow through cost of sales at
lower costs prevailing many years ago. It will also improve the
reporting of interim results by eliminating the requirement to
estimate whether liquidations that occur in interim periods will be
replaced by year end, which tends to cause liquidations and other
LIFO adjustments to be recognized in the fourth quarter.
This change in the method of valuing inventories had no
effect on our loss per share for the year 1993. Prior years'
financial statements have been restated to reflect this change. The
restatement increased the 1992 loss before the cumulative effect of
changes in accounting by about $10 million or $.12 per share and
the 1992 cumulative effect of changes in accounting by $90 million
or $1.10 per share; increased the 1991 net loss by $45 million or
$.59 per share, which includes increasing the estimated loss on
restructuring by $60 million; and increased retained earnings as of
January 1, 1991 by about $560 million.
During 1992, we adopted two new Financial Accounting
Standards Board Statements, No. 106, Accounting for Postretirement
Benefits Other Than Pensions, and No. 109, Accounting for Income
Taxes. The cumulative effect of these changes in accounting
recorded as of January 1, 1992 was a $340 million net charge to
income. Prior years' financial statements were not restated for
these changes.
23<PAGE>
Statement No. 106 requires postretirement benefits other
than pensions, principally health care and life insurance, to be
accrued as an expense over the period active employees become
eligible for the benefits. Previously, such retiree benefits were
generally expensed as claims were incurred. The cumulative effect
of adopting Statement No. 106 was a $745 million charge, net of a
$380 million deferred income tax benefit.
Statement No. 109 requires financial statements to
reflect deferred taxes for the future tax consequences of events
recognized in different years for financial reporting and tax
reporting purposes. The cumulative effect of adopting Statement No.
109 was a $405 million credit for the net deferred income tax
asset.
C. Industry Segment Information
(Dollars in millions) 1993 1992 1991
---- ---- ----
Sales:
Trade:
Basic Steel Operations $4,217.5 $3,849.7 $4,085.7
Steel Related Operations 105.9 158.2 232.2
Intersegment:
Basic Steel Operations 1.7 8.1 21.0
Steel Related Operations 13.7 21.6 18.7
Eliminations (15.4) (29.7) (39.7)
--------- --------- ---------
Total $4,323.4 $4,007.9 $4,317.9
========= ========= =========
Estimated Restructuring
Losses:
Basic Steel Operations $ 350.0 $ - $ 635.0
========= ========= =========
Income (Loss) from
Operations:
Basic Steel Operations $ (273.6) $ (214.3) $ (753.6)
Steel Related Operations (21.6) 11.3 (21.3)
--------- --------- ---------
Total $ (295.2) $ (203.0) $ (774.9)
========= ========= =========
Shipments (tons in
thousands):
Basic Steel Operations 8,997 8,431 8,303
========= ========= =========
Identifiable Assets:
Basic Steel Operations $3,930.6 $3,896.3 $4,253.6
Steel Related Operations 119.9 139.0 139.5
Corporate 1,826.2 1,457.7 315.2
--------- --------- ---------
Total $5,876.7 $5,493.0 $4,708.3
========= ========= =========
Depreciation:
Basic Steel Operations $ 271.9 $ 256.0 $ 235.1
Steel Related Operations 5.6 5.7 6.3
--------- --------- ---------
Total $ 277.5 $ 261.7 $ 241.4
========= ========= =========
Capital Expenditures:
Basic Steel Operations $ 323.8 $ 325.8 $ 554.3
Steel Related Operations 3.3 2.9 9.6
--------- --------- ---------
Total $ 327.1 $ 328.7 $ 563.9
========= ========= =========
A general description of our segments and their
products and services is contained under the heading "Bethlehem's
Segments" on page 14 of this Report.
Intersegment sales are generally at market prices.
Corporate assets consist primarily of cash and cash equivalents,
investments, deferred income tax asset and an intangible
asset-pensions.
D. Estimated Restructuring Losses
On January 26, 1994, we announced a revised modernization plan for
our Bethlehem Structural Products subsidiary which will result in
a substantial reduction in the work force and an elimination of
certain products currently produced. Also, based on our continuing
review of the current and projected coke market, we have concluded
that we cannot expect to recover both the remaining book value and
required future investment if we rebuild and operate the idled coke
plant at our Sparrows Point Division. Principally as a result of
these actions, we recorded a restructuring loss in 1993 of $350
million ($290 million after tax or $3.19 per share). This loss
includes certain employee benefit costs for pensions of about $75
million and postretirement benefits other than pensions cost of
about $20 million for the reduction of employees related to these
decisions.
On January 29, 1992, we announced our plans to exit the
business of our Bar, Rod and Wire Division and to reduce forces
throughout the Corporation during 1992. We also announced that it
was not feasible to make the necessary repairs to meet the ever
more stringent environmental requirements at our Sparrows Point
Division coke plant and, therefore, the coke plant had been idled
and a significant portion of its book value had been written off.
Principally as a result of these actions, we recorded a
restructuring loss of $635 million ($8.35 per share with no tax
effect). This loss includes certain employee benefit costs for
pensions of about $190 million and postretirement benefits other
than pensions of about $140 million for the reduction of
employees related to the decisions.
E. Taxes
Our benefit (provision) for income taxes consisted of:
(Dollars in millions) 1993 1992 1991
---- ---- ----
Federal-current $ - $ - $ -
State and foreign-current (2.0) - (2.0)
------ ------ ------
Total current (2.0) - (2.0)
Federal-deferred 87.0 45.0 -
------ ------ ------
Total benefit (provision) $85.0 $45.0 $(2.0)
====== ====== ======
24<PAGE>
The benefit (provision) for income taxes differs from the
amount computed by applying the federal statutory rate to pre-tax
income (loss). The computed amounts and the items comprising the
total differences follow:
(Dollars in millions) 1993 1992 1991
--------- --------- ---------
Pre-tax income (loss):
United States $ (353.3) $ (260.4) $ (818.7)
Foreign 2.0 5.1 8.0
--------- --------- ---------
Total $ (351.3) $ (255.3) $ (810.7)
========= ========= =========
Computed benefit $ 123.0 $ 86.8 $ 275.6
Effect of change in rate
on prior years (a) 50.0 - -
Percentage depletion 5.6 6.8 -
Dividend received deduction 2.4 2.7 -
Valuation allowance (87.0) (50.4) -
Loss in excess of allowable
carrybacks - - (275.6)
State and foreign taxes (2.0) - (2.0)
Other differences-net (7.0) (.9) -
---------- --------- ---------
Total benefit (provision) $ 85.0 $ 45.0 $ (2.0)
========== ========= =========
(a) The 1993 Omnibus Budget Reconciliation Act increased the
federal corporate income tax rate to 35% from 34%. This increase in
the tax rate resulted in an increase in our deferred income tax
asset of $25 million, net of a valuation allowance, which we
recorded in 1993.
The components of our net deferred income tax asset are as
follows:
December 31
-----------
(Dollars in millions) 1993 1992
---- ----
Temporary differences:
Employee benefits $ 980 $ 950
Depreciable assets (240) (310)
Other 44 (12)
------ --------
Total 784 628
Operating loss carryforward 550 510
------ --------
Deferred income tax asset 1,334 1,138
Valuation allowance (407) (309)
------- --------
Deferred income tax asset-net $ 927 $ 829
======= ========
Temporary differences represent the cumulative taxable or
deductible amounts recorded in our financial statements in
different years than recognized in our tax returns. Our employee
benefits temporary difference includes amounts expensed in our
financial statements for pensions, health care, life insurance and
other postretirement benefits which become deductible in our tax
return upon payment or funding in qualified trusts. The depreciable
assets temporary difference represents generally tax depreciation
in excess of financial statement depreciation. Other temporary
differences represent principally various expenses accrued for
financial reporting purposes which are not deductible for tax
reporting purposes until paid. At December 31, 1993, we had regular
tax net operating loss carryforwards of $1.6 billion and
alternative minimum tax loss carryforwards of $800 million. Regular
federal tax net operating loss carryforwards of $420 million expire
in 1998 with the balance expiring in varying amounts from 1999
through 2008.
Statement No. 109 requires that we record a valuation
allowance when it is "more likely than not that some portion or all
of the deferred tax assets will not be realized." It further
states, "forming a conclusion that a valuation allowance is not
needed is difficult when there is negative evidence such as
cumulative losses in recent years." The ultimate realization of
this deferred tax asset depends on our ability to generate
sufficient taxable income in the future. Bethlehem reported income
before income taxes, restructuring charges and extraordinary gains
in 1987 through 1990 and incurred higher costs in 1991 and 1992
relating to unusual repair costs at a coke plant that has
subsequently been temporarily idled and start-up costs of certain
modernized facilities. Bethlehem has undergone substantial
restructuring and made substantial strategic capital expenditures
during the last several years. As a result, Bethlehem has a
significantly lower and more competitive cost structure and our
operating results before income taxes improved by about $250
million in 1993 over 1992 excluding the 1993 restructuring charge.
Also, we have significant tax planning opportunities to manage
taxable income including selection of depreciation methods and
timing of contributions to our pension trust.
While we believe that our total deferred tax asset will
be fully realized by future operating results together with tax
planning opportunities, our losses in recent years make it
appropriate to record a valuation allowance. Accordingly, we have
provided a valuation allowance at December 31, 1993 and 1992 equal
to 50% of the total deferred tax asset related to our operating
loss carryforward and our temporary differences exclusive of
postretirement benefits other than pensions. We expect our annual
financial statement expense for postretirement benefits other than
pensions to exceed the annual amount deductible in our tax returns
for several years. Furthermore, if we have a tax loss in any year
in which our tax deduction exceeds our financial statement expense,
the tax law currently provides for a 15-year carryforward of that
loss against future taxable income. Under current law, we have a
very long time to realize these future tax benefits. We believe,
therefore, a valuation allowance is not necessary for the deferred
tax asset related to our temporary difference for postretirement
benefits other than pensions.
If we are unable to generate sufficient taxable income in
the future through operating results or tax planning
opportunities, we will be required to increase our valuation
allowance through a charge to expense (reducing our stockholders'
equity). On the other hand, if we achieve sufficient
profitability to use all of our deferred income tax asset, we will
reduce the valuation allowance through a decrease to expense
(increasing our stockholders' equity).
In addition to income taxes, we incurred costs for
certain other taxes as follows:
(Dollars in millions) 1993 1992 1991
---- ---- ----
Employment taxes $ 89.1 $ 88.7 $ 103.5
Property taxes 27.5 26.7 27.4
State and foreign taxes 9.0 11.2 16.8
Federal excise tax on coal 3.3 5.3 7.1
------- ------- -------
Total other taxes $ 128.9 $ 131.9 $ 154.8
======= ======= =======
25<PAGE>
F. Long-term Debt
December 31
-----------
(Dollars in millions) 1993 1992
---- ----
Hot-dip galvanizing lines financing $262.0 $220.5
Revolving and other credit agreements - 80.0
Debentures:
6-7/8% Due 1999 18.8 18.8
9% Due 2000 39.9 41.3
8-3/8% Due 2001 41.6 41.6
8.45% Due 2005 90.7 90.7
Pollution control and industrial revenue
bonds:
5-1/4%-8%, Due 1994-2002 78.1 90.7
Variable interest at 50%-70% of prime
rate, Due 1994-1996 27.0 35.0
Notes and loans:
10-3/8% Senior Notes, Due 2003 105.0 -
9-5/8-12.75%, Due 1994-1997 34.8 35.0
Unamortized debt discount (2.0) (2.1)
Amounts due within one year (57.4) (33.2)
------- -------
Total long-term debt $638.5 $618.3
======= =======
Maturities and sinking fund requirements at December 31,
1993 for the next five years were $57.4 million in 1994, $61.8
million in 1995, $88.9 million in 1996, $71.9 million in 1997 and
$75.6 million in 1998.
During 1993, we sold $105 million of Senior Notes to
finance the construction of a coal injection facility at our Burns
Harbor Division. The Notes are unsecured senior obligations and are
senior in right of payment to all existing and future subordinated
indebtedness of Bethlehem. As unsecured senior obligations of
Bethlehem, the Notes will effectively be subordinate to secured
senior indebtedness of Bethlehem. These Notes contain covenants
which impose certain limitations on Bethlehem's ability to incur or
repay debt, to pay dividends and make other distributions on or
redeem capital stock, or to sell, merge, transfer or encumber
assets. See Note M, Stockholders' Equity.
A major portion of the costs to construct hot-dip
galvanizing lines at our Sparrows Point and Burns Harbor
Divisions are financed through a $270 million loan agreement.
Borrowings are collateralized by the coating lines and originally
incurred interest based on the London Interbank Offered Rate
(LIBOR). At December 31, 1993, $112 million of this debt incurs a
fixed rate of 5.99% with the balance converted to a fixed rate of
5.69% in January 1994. This loan will be repaid in equal
semiannual installments over a seven-year period. Repayment on $120
million of the loan began in 1993 with repayment on the balance
beginning in 1994.
Our revolving credit agreement expires on December 31,
1996, and is nonreducing with initial bank commitments of $400
million. The agreement permits additional banks to be added and the
total commitment amount to be increased to $500 million. Borrowings
under the revolver are subject to collateral coverage requirements
and incur interest based on the prime rate, Federal Funds rate,
certificate of deposit rates or LIBOR. Our accounts receivable and
inventories are pledged as collateral for borrowings and letters of
credit under the credit agreement and certain other obligations to
participating banks. No borrowings were outstanding at December 31,
1993. We pay five eighths of 1% per annum commitment fee on the
unused available credit.
Our revolving credit and hot-dip galvanizing lines
financing agreements contain restrictive covenants which require
Bethlehem to maintain a minimum adjusted tangible net worth. At
December 31, 1993, our adjusted tangible net worth exceeded the
more restrictive of these requirements by about $1 billion.
At December 31, 1993, interest rate swap agreements with
notional amounts totaling $225 million effectively fix the interest
rate on a like amount of our floating rate debt at 7.99% to 11.95%.
These agreements expire from 1995 through 2001. Net payments or
receipts under these agreements are included in interest expense.
We estimate the aggregate fair value of our debt and
related obligations exceeds the total debt recorded at December 31,
1993 by approximately $30 million and approximately equals the
total debt recorded at December 31, 1992. We based our estimates on
quoted market prices or current rates offered for debt with similar
terms and maturities.
G. Leases
We lease certain manufacturing facilities and equipment under
capital leases, the most significant of which covers the two
continuous casters at our Sparrows Point and Burns Harbor plants.
The lease requires quarterly rental payments of $9 million plus
interest at 1-1/4% above LIBOR. The amounts included in property,
plant and equipment for capital leases were $319.5 million (net of
$222.1 million accumulated amortization) and $337.9 million (net of
$184.4 million accumulated amortization) at December 31, 1993 and
1992.
Future minimum payments under noncancellable operating
leases at December 31, 1993 were $18.1 million in 1994, $15.9
million in 1995, $14.9 million in 1996, $7.7 million in 1997, $5.9
million in 1998 and $32.6 million thereafter. Total rental expense
under operating leases was $40.5, $49.8 and $46.6 million in 1993,
1992 and 1991.
H. Commitments and Contingent Liabilities
Based generally on our proportionate ownership in an iron ore
associated enterprise, we are entitled to receive our share of the
ore produced and are committed to pay our share of their costs. We
received 2.7 million net tons of such iron ore in each of the years
1993, 1992 and 1991 at a net cost of $88.8 million, $89.1 million
and $84.4 million.
At December 31, 1993, we had outstanding approximately
$192 million of purchase orders for additions and improvements to
our properties.
We, as well as other steel companies, are subject to
various environmental laws and regulations imposed by federal,
state and local governments. Because of the continuing evolution of
the specific regulatory requirements and available technology to
comply with the requirements, we cannot reasonably estimate the
future capital expenditures and operating costs required to comply
with these laws and regulations. Although it is possible that our
future operating results in a particular quarterly or annual period
could be materially affected by the future costs of environmental
compliance, we do not believe the future costs of environmental
compliance will have a material adverse effect on our consolidated
financial position or on our competitive position with respect to
other integrated domestic steelmakers subject to the same environmental
requirements.
26<PAGE>
In the ordinary course of our business, we are involved
in various pending or threatened legal actions. In our opinion,
adequate reserves have been recorded for losses which are likely to
result from these proceedings. If such reserves prove to be
inadequate, however, we would incur a charge to earnings which
could be material to the results of operations in a particular
future quarterly or annual period. We believe that any ultimate
liability arising from these actions will not have a material
adverse effect on our consolidated financial position.
I. Postretirement Pension Benefits
We have noncontributory defined benefit pension plans which provide
benefits for substantially all employees. Defined benefits are
based on years of service and the five highest consecutive years of
pensionable earnings during the last ten years prior to retirement
or a minimum amount based on years of service. We fund annually
the amount required under ERISA minimum funding standards plus
additional amounts as appropriate.
The following sets forth the plans' actuarial
assumptions used and funded status at year end together with
amounts recognized in our consolidated balance sheets:
December 31
-----------
(Dollars in millions) 1993 1992
---- ----
Assumptions:
Discount rate 7.5% 8.5%
Average rate of compensation increase 3.3% 4.4%
Actuarial present value of benefit
obligations:
Vested benefit obligation $4,816.4 $4,357.9
Accumulated benefit obligation 4,979.4 4,490.1
Projected benefit obligation 5,208.6 4,822.7
Plan assets at fair value:
Fixed income securities 1,955.0 1,979.8
Equity securities 1,232.2 1,006.0
Cash and marketable securities 178.6 315.6
-------- -------
Total plan assets $3,365.8 3,301.4
-------- -------
Projected benefit obligations in
excess of plan assets 1,842.8 1,521.3
Unrecognized net loss (289.7) (58.3)
Remaining unrecognized net
obligation resulting from adoption
of Statement No. 87 (293.5) (339.0)
Unrecognized prior service cost from
plan amendments (307.1) (174.9)
Adjustment required to recognize
minimum liability
-Intangible asset 600.6 239.6
-Additional paid-in
capital (pre-tax)
(Note M) 60.5 -
-------- --------
Pension liability $1,613.6 $1,188.7
======== ========
The assumptions used in each year and the components of
our annual pension cost are as follows:
(Dollars in millions) 1993 1992 1991
---- ---- ----
Assumptions:
Return on plan assets 9.50% 9.50% 10.25%
Discount rate 8.50% 8.50% 9.25%
Pension cost:
Service cost-benefits earned
during the period $ 39.3 $ 45.0 $ 45.6
Interest on projected benefit
obligation 380.4 394.2 386.6
Return on plan assets
-actual (308.8) (250.0) (582.7)
-deferred 4.3 (62.2) 265.5
Amortization of initial net
obligation 37.7 37.8 43.9
Amortization of unrecognized
prior service cost from plan
amendments 19.8 18.8 21.0
------- ------- -------
Total defined benefit plans 172.7 183.6 179.9
PBGC premiums, administration
fees, etc. 10.9 5.1 4.7
------- ------- -------
Total cost $ 183.6 $ 188.7 $ 184.6
======= ======= =======
J. Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, we currently provide
health care and life insurance benefits for most retirees, and
their dependents.
Information regarding our plans' actuarial assumptions,
funded status and liability follows:
December 31
-------------
(Dollars in millions) 1993 1992
---- ----
Assumptions:
Discount rate 7.5% 8.5%
Trend rate -beginning 9.0% 9.5%
-ending (year 2000) 4.6% 5.5%
Accumulated postretirement
benefit obligation:
Retirees $1,506.7 $1,413.7
Fully eligible active plan
participants 126.8 105.1
Other active plan participants 236.1 176.2
-------- -------
Total 1,869.6 1,695.0
Plan assets at fair value:
Fixed income securities 158.5 159.6
------- -------
Accumulated postretirement benefit
obligation in excess of plan assets 1,711.1 1,535.4
Unrecognized net (loss) gain (130.5) 4.5
-------- -------
Balance sheet liability $1,580.6 $1,539.9
========= ========
27<PAGE>
The assumptions used in each year and the components of
our postretirement benefit cost follow:
(Dollars in millions) 1993 1992
---- ----
Return on plan assets 9.5% 9.5%
Discount rate 8.5% 8.5%
Trend rate-beginning 9.5% 9.5%
-ending (2000) 5.5% 5.5%
Service cost $ 9.0 $ 9.0
Interest on accumulated postretirement
benefit obligation 144.1 139.0
Return on plan assets-actual (17.9) (18.4)
-deferred 3.8 4.5
Multi-employer plans 5.9 7.1
------ ------
Total cost $144.9 $141.2
====== ======
A 1% increase or decrease in the assumed health care
trend rate would increase or decrease the accumulated
postretirement benefit obligation by about $135 million and 1993
expense by about $13 million.
In 1991, these postretirement benefits were expensed
generally as claims were incurred except the estimated cost of
postretirement life insurance was accrued over the working lives of
those employees expected to qualify for such benefits. The 1991
expense was $112.9 million including multi-employer plans of $7
million.
During 1992, legislation was enacted to replace the
health care plan for certain former mine workers and their
dependents with a new multi-employer plan. We estimate that this
legislation will increase our annual future cost between $3 and $5
million. Based on the number of participants that have been
assigned to us, our estimate of the net present value of the future
payments to this fund at December 31, 1993 is $75 million.
K. Stockholder Rights Plan
We have a Stockholder Rights Plan under which holders of Common
Stock have rights to purchase a new series of Preference Stock.
When exercisable, each right entitles the holder to purchase a
hundredth of a share of Series A Junior Participating Preference
Stock at an exercise price of $80 per unit. The rights will become
exercisable only if a person or group acquires 20% or more of
Common Stock or begins a tender offer or exchange offer which would
result in that person or group beneficially owning 20% or more of
Common Stock. Subsequently, upon the occurrence of certain events,
holders of rights will be entitled to purchase Common Stock of
Bethlehem or a third-party acquiror worth twice the right's
exercise price. Until the rights become exercisable, we will
be able to redeem them at one cent per right. The rights expire
on October 18, 1998.
L. Stock Options
At December 31, 1993, we had options outstanding under our Stock
Option Plans. The 1988 Stock Incentive Plan was approved by our
stockholders on April 26, 1988. New options can be granted only
under the 1988 Plan, which reserved 3,000,000 shares of Common
Stock for such use. At December 31, 1993, options on 60,870 shares
of Common Stock were available for granting under the 1988 Plan.
The option price is the fair market value of our Common Stock on
the date the option is granted. Options issued under the 1988 Plan
become exercisable either one or two years after the date granted
and expire ten years from the date granted. Exercisable options
may be surrendered for the difference between the option price and
the fair market value of the Common Stock on the date of surrender.
Depending on the circumstances, option holders receive either
Common Stock, cash or a combination of Common Stock and cash.
Changes in options outstanding during 1993 and 1992 under
the Plans were as follows:
Number of Option Price
Options or Range
---------- ----------
Balance December 31, 1991 2,542,223 7-3/4 to 27-l/8
Granted 492,200 14-l/8
Terminated or cancelled (123,104) 14 to 27-1/8
----------
Balance December 31, 1992 2,911,319 7-3/4 to 27-l/8
Granted 532,600 19
Terminated or cancelled (348,102) 8 to 27-1/8
Surrendered or Exercised (215,902) 7-3/4 to 17-5/8
----------
Balance December 31, 1993 2,879,915 8 to 26-1/8
==========
2,104,465 options outstanding were exercisable at December 31,
1993.
28<PAGE>
M. Stockholders' Equity
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock Preference Stock Common Stock Common Stock Additional Retained
(Shares in thousands $1.00 Par Value $1.00 Par Value $1.00 Par Value Held in Treasury Paid-in Earnings
and dollars in millions, Shares Amount Shares Amount Shares Amount Shares Amount Capital (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1990 6,500 $ 6.5 2,606 $ 2.6 77,864 $77.9 1,997 $59.6 $1,287.7 $ 173.9
Effect of change in
accounting (Note B) 557.0
Net loss for year (812.7)
Preferred Stock dividends (5.6) (16.9)
Preference Stock:
Stock dividend 129 0.1 1.7 (1.8)
Issued 323 0.3 4.4
Converted (345) (0.3) 345 0.3
Common Stock:
Dividends ($.40 per share) (7.6) (22.8)
Issued 168 0.2 0.8
- ---------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1991 6,500 6.5 2,713 2.7 78,377 78.4 1,997 59.6 1,281.4 (123.3)
Net loss for year (550.3)
Preferred Stock dividends (22.5)
Preference Stock:
Stock dividend 133 0.1 (0.1)
Issued 256 0.3 3.3
Converted (233) (0.2) 233 0.2
Common Stock:
Stock acquired 5 0.1
Issued 13,901 13.9 158.7
- --------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1992 6,500 6.5 2,869 2.9 92,511 92.5 2,002 59.7 1,420.8 (673.6)
Net loss for year (266.3)
Minimum pension
liability adjustment
(Note I) (50.0)
Preferred Stock:
Dividends (36.2)
Issued 5,123 5.1 243.2
Preference Stock:
Stock dividend 138 0.1 (0.1)
Issued 211 0.2 3.2
Converted (407) (0.4) 407 0.4
Common Stock:
Stock acquired 2
Issued 495 0.5 7.5
- --------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1993 11,623 $11.6 2,811 $ 2.8 93,413 $93.4 2,004 $59.7 $1,588.4 $(939.9)
==========================================================================================================================
Preferred and Preference Stock issued and outstanding:
- --------------------------------------------------------------------------------------------------------------------------
December 31
- --------------------------------------------------------------------------------------------------------------------------
(Shares in thousands) 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock-Authorized 20,000 shares
$5.00 Cumulative Convertible Preferred Stock 2,500 2,500
$2.50 Cumulative Convertible Preferred Stock 4,000 4,000
$3.50 Cumulative Convertible Preferred Stock 5,123 -
Preference Stock-Authorized 20,000 shares
Series "A" 5% Cumulative Convertible
Preference Stock 2,171 2,339
Series "B" 5% Cumulative Convertible
Preference Stock 640 529
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
During 1993, we issued 5.1 million shares of $3.50 Cumulative
Convertible Preferred Stock for $248 million. Each share is
convertible into 2.39 shares of Common Stock, subject to certain
events.
Each share of the $5.00 Cumulative Convertible
Preferred Stock and the $2.50 Cumulative Convertible Preferred
Stock issued in 1983 is convertible into 1.77 and .84 shares of
Common Stock, respectively, subject to certain events.
In accordance with our labor agreements, we issue
Preference Stock to a trustee under the Employee Investment
Program. Series "A" and Series" B" of Preference Stock have a
cumulative dividend of 5% per annum payable at our option in cash,
Common Stock or additional shares of Preference Stock. Each share
of Preference Stock is entitled to vote with Common Stock on all
matters and is convertible into one share of Common Stock.
Under the covenants of our 10-3/8% Senior Notes, we can
pay future dividends on our common stock, among certain other
restrictions, only if such cumulative dividends do not exceed the
aggregate net cash proceeds from the sale of capital stock plus 50%
of a consolidated net income and minus 100% of a consolidated net
loss since the second quarter of 1993, excluding certain
restructuring charges. The amount available at December 31, 1993
under this covenant was $39 million.
<PAGE>
N. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share data)
- --------------------------------------------------------------------------------------------------------------------------
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $1,020.4 $1,117.4 $1,055.3 $1,130.3 $995.4 $1,014.3 $1,007.8 $ 990.4
Cost of sales 946.4 1,010.6 924.4 952.8 926.2 965.1 959.4 939.2
Estimated
restructuring
losses - - - 350.0 - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss)
as reported (41.3) (5.3) 31.2 (251.0) (286.3) (51.7) (58.2) (53.1)
Inventory method
restatement net
of income taxes
(Note B) 0.5 (8.3) (0.5) 8.4 (97.2)(a) (2.2) 1.5 (3.1)
Net income (loss)
as restated (40.8) (13.6) 30.7 (242.6) (383.5) (53.9) (56.7)(56.2)
- ---------------------------------------------------------------------------------------------------------------------------
Per common share
as reported (0.54) (0.18) 0.23 (2.87) (3.82) (0.76) (0.76) (0.65)
Per common share
restatement
(Note B) 0.01 (0.09) (0.01) 0.09 (1.28)(a) (0.03) 0.02 (0.04)
Per common share
as restated $ (0.53) $ (0.27) $ 0.22 $ (2.78)$ (5.10) $ (0.79) $(0.74) $0.69)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes $90 million ($1.18 per share) for the cumulative effect of
changes in accounting.
29<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders of Bethlehem Steel
Corporation
We have audited the accompanying consolidated balance sheets of
Bethlehem Steel Corporation and its subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of income
and of cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
audited by us present fairly, in all material respects, the
financial position of Bethlehem Steel Corporation and its
subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in Note B to the financial statements, the
Company changed its methods of accounting for the cost of
inventories in 1993 and for income taxes and postretirement
benefits other than pensions in 1992.
/s/ Price Waterhouse
-----------------
Price Waterhouse
1177 Avenue of the Americas
New York, NY 10036
January 26, 1994
Management Statement on Responsibility for Financial Information
The accompanying consolidated financial statements of Bethlehem
Steel Corporation have been prepared in accordance with generally
accepted accounting principles. Management has the primary
responsibility for the information contained in the financial
statements and in other sections of the Annual Report to
Stockholders. In preparing the financial statements, management
must make estimates and judgments based upon available
information. To facilitate this financial reporting, management has
communicated to all appropriate employees the requirements for
accurate records and accounting.
Bethlehem maintains a system of internal accounting
controls designed to provide reasonable assurance for the
safeguarding of assets and the reliability of financial records.
The system is subject to continuous review through a
corporate-wide internal audit program with appropriate management
follow-up action. Management recognizes the limits that are
inherent in all systems of internal accounting control.
Management believes, however, that through the careful selection of
employees, the division of responsibilities and the
application of formal policies and procedures, Bethlehem has an
effective and responsive system of internal accounting controls.
Bethlehem's independent accountants, Price Waterhouse,
examine Bethlehem's financial statements in accordance with
generally accepted auditing standards. They express their
professional opinion which is shown above. This examination
includes evaluating our internal accounting control systems to
establish the audit scope, testing our accounting records and
transactions and performing such other audit procedures as they
deem appropriate.
The Audit Committee of the Board of Directors is
composed of Bethlehem's non-employee directors, who meet at
appropriate times and met three times during 1993. The Audit
Committee is responsible for recommending to the Board of
Directors, subject to approval by the Board and ratification by
stockholders, the independent accountants to perform audit and
related work for Bethlehem; for reviewing with the independent
accountants the scope of their examination of Bethlehem's
financial statements; for reviewing with Bethlehem's internal
auditors the scope of the plan of audit; for meeting with the
independent accountants and Bethlehem's internal auditors to review
the results of their audits and Bethlehem's internal accounting
controls; and for reviewing other professional services performed
for Bethlehem by the independent accountants. From time to time,
the Audit Committee meets with the independent accountants and
with Bethlehem's internal auditors without members of Bethlehem's
management being present. The meetings permit the Audit Committee
to have private communications with the independent accountants and
the internal auditors about the results of their examinations, their
evaluation of Bethlehem's internal accounting controls, the overall
quality of Bethlehem's financial reporting and any other appropriate
topics.
Management believes that the system of internal
accounting controls, including Bethlehem's Code of Business
Conduct, provides reasonable assurances that (1) business
activities are conducted in a manner consistent with Bethlehem's
commitment to a high standard of business conduct and (2)
Bethlehem's financial accounting system contains the integrity and
objectivity necessary to maintain accountability for assets and to
prepare Bethlehem's financial statements in accordance with
generally accepted accounting principles.
/s/ Curtis H. Barnette /s/ Gary L. Millenbruch
- ---------------------- ------------------------
Curtis H. Barnette Gary L. Millenbruch
Chairman Chief Financial Officer
30<PAGE>
Five-Year Financial and Operating Summaries
(Dollars in millions, except per share and average employment cost data)
1993 1992 1991 1990 1989
-------- -------- -------- -------- -------
Earnings Statistics
Net sales $4,323.4 $4,007.9 $4,317.9 $4,899.2 $5,250.9
-------- -------- -------- -------- --------
Operating charges:
Employment costs 1,547.1 1,664.0 1,720.8 1,752.0 1,731.6
Materials and services 2,403.9 2,242.0 2,444.3 2,679.3 2,760.1
Depreciation 277.5 261.7 241.4 305.7 325.3
Taxes (other than
employment and income
taxes) 40.1 43.2 51.3 51.3 52.7
Estimated restructuring
losses 350.0 - 635.0 550.0 105.0
-------- -------- -------- -------- --------
4,618.6 4,210.9 5,092.8 5,338.3 4,974.7
-------- -------- -------- -------- --------
Income (loss) from
operations (295.2) (203.0) (774.9) (439.1) 276.2
Financing income (expense):
Interest and other
financing costs (63.2) (57.2) (45.5) (44.1) (64.7)
Interest and other income 7.1 4.9 9.7 29.9 55.0
Benefit (provision) for
income taxes 85.0 45.0 (2.0) (6.0) (12.0)
Cumulative effect of changes
in accounting - (340.0) - - -
Net income (loss) (266.3) (550.3) (812.7) (459.3) 254.5
Dividends on Preferred and
Preference Stock 39.8 24.3 24.7 24.2 26.0
--------- --------- -------- --------- -------
Net income (loss) applicable
to Common Stock $ (306.1) $ (574.6) $(837.4) $ (483.5) $ 228.5
========= ========= ======== ========= ========
Net income (loss) per
Common share $ (3.37) $ (7.01) $ (11.01) $(6.39) $ 3.05
Dividends per Common share - - .40 .40 .20
Dividends paid on Common
Stock - - 30.4 30.3 15.0
--------- --------- --------- ------- ---------
Balance Sheet Statistics
Cash and cash equivalents $ 228.9 $ 208.2 $ 83.8 $273.5 $ 530.5
Receivables, inventories
and other current assets 1,362.2 1,261.3 1,454.0 1,494.7 1,465.7
Current liabilities (914.2) (893.2) (931.0) (831.4) (838.0)
--------- -------- --------- ---------- --------
Working capital $ 676.9 $ 576.3 $ 606.8 $ 936.8 $1,158.2
Current ratio 1.7 1.6 1.7 2.1 2.4
Property, plant and
equipment-net $2,634.3 $2,804.5 $2,864.8 $2,796.4 $2,916.7
Total assets 5,876.7 5,493.0 4,708.3 4,947.1 5,354.3
Total debt and capital
lease obligations 813.8 796.0 871.2 663.8 724.1
Stockholders' equity 696.6 789.4 1,186.1 2,046.0 2,555.7
Total debt as a percent of
invested capital 54% 50% 42% 24% 22%
-------- -------- --------- --------- -------
Other Statistics
Capital expenditures $ 327.1 $ 328.7 $ 563.9 $ 488.0 $421.3
Raw steel production
capability (net tons in
thousands) 11,500 16,000 16,000 16,000 16,000
Raw steel production
(net tons in thousands) 10,303 10,544 10,022 10,924 12,181
Steel products shipped
(net tons in thousands) 9,016 9,062 8,376 8,865 9,779
Pensioners receiving
benefits at year end 70,900 70,500 70,200 70,500 70,000
Average number of
employees receiving pay 20,700 24,900 27,500 29,600 30,500
Common Stock outstanding
at year end (shares in
thousands) 91,409 90,509 76,380 75,867 75,218
Common stockholders at
year end 43,000 46,000 50,000 52,000 55,000
31 <PAGE>
Exhibit (21)
Subsidiaries of Bethlehem Steel Corporation
Unless otherwise stated, the following subsidiaries
were 100% owned and were consolidated by the Corporation at
December 31, 1993.
State or Other Jurisdiction
Name of Subsidiary In Which Incorporated
----------------------- ---------------------------
BethEnergy Mines Inc.* West Virginia
Bethlehem Steel International
Corporation Delaware
Bethlehem Hibbing Corporation Minnesota
* BethEnergy Mines Inc. does business in the Commonwealth of
Pennsylvania and the State of West Virginia under the name
"Bethlehem Mines Corporation".
The names of other subsidiaries, both consolidated and
unconsolidated, have been omitted as these unnamed subsidiaries,
considered in the aggregate as a single subsidiary, do not
constitute a significant subsidiary.<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned
directors and officers of Bethlehem Steel Corporation, a Delaware
corporation, constitutes and appoints Curtis H. Barnette, Gary L.
Millenbruch, and Lonnie A. Arnett, and each of them, with full power
to act without the others, as his true and lawful attorney-in-fact and agent,
with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign Bethlehem Steel
Corporation's Annual Report on Form 10-K, and to file the same, with
all exhibits thereto, and other documents in connection therewit
including any amendments thereto, with the Securities and Exchange
Commission under the provisions of the Securities and Exchange Act of 1934,
as amended, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as they or he might or could do in
person, hereby ratifying and confirming all the said attorneys-in-fact
and agents, or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands and seals as of the 24th day of March, 1994.
/s/ Curtis H. Barnette /s/ Gary L. Millenbruch
- ------------------------ -------------------------
Curtis H. Barnette Gary L. Millenbruch
Chairman, Chief Executive Officer Executive Vice President
(principal executive officer) (principal financial officer)
and Director and Director<PAGE>
/s/ Lonnie A. Arnett /s/ Harry P. Kamen
- ---------------------------------- --------------------------------
Lonnie A. Arnett Harry P. Kamen, Director
Vice President and Controller
(principal accounting officer)
/s/ Benjamin R. Civiletti /s/ Winthrop Knowlton
- ---------------------------------- --------------------------------
Benjamin R. Civiletti, Director Winthrop Knowlton, Director
/s/ Worley H. Clark /s/ Robert McClements, Jr.
- ---------------------------------- -------------------------------
Worley H. Clark, Director Robert McClements, Jr., Director
/s/ Herman E. Collier, Jr. /s/ Roger P. Penny
- ---------------------------------- -------------------------------
Herman E. Collier, Jr., Director Roger P. Penny, Director
/s/ John B. Curcio /s/ Dean P. Phypers
- ---------------------------------- -------------------------------
John B. Curcio, Director Dean P. Phypers, Director
/s/ William C. Hittinger /s/ William A. Pogue
- ---------------------------------- --------------------------------
William C. Hittinger, Director William A. Pogue, Director
/s/ Thomas L. Holton
- ----------------------------------
Thomas L. Holton, Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director
of Bethlehem Steel Corporation, a Delaware corporation, hereby constitutes
and appoints Curtis H. Barnette, Gary L. Millenbruch and Lonnie A. Arnett,
and each of them, with full power to act without the others, as his true
and lawful attorney-in-fact and agent, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign Bethlehem Steel Corporation's Annual Report on Form
10-K, and to file the same with all exhibits thereto, and other documents
in connection therewith, including any amendments thereto, with the
Securities and Exchange Commission under the provisions of the Securities
and Exchange Act of 1934, as amended, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes
or substitutes, may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
and seal as of the 24th day of March, 1994.
/s/ John F. Ruffle
-------------------------
John F. Ruffle, Director<PAGE>
