BETHLEHEM STEEL CORP /DE/, S-3, 1994-02-09

BETHLEHEM STEEL CORP /DE/
S-3, 1994-02-09
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 1994

REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

BETHLEHEM STEEL CORPORATION
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 24-0526133
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>

1170 EIGHTH AVENUE
BETHLEHEM, PENNSYLVANIA 18016-7699
(610) 694-2424
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

G. PENN HOLSENBECK, ESQ.
BETHLEHEM STEEL CORPORATION
MARTIN TOWER 1960
1170 EIGHTH AVENUE
BETHLEHEM, PENNSYLVANIA 18016-7699
(610) 694-7430
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE TO EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock........................... 13,800,000 shares(2) $23.125 $319,125,000 $110,044
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Preference Stock Purchase Rights(3).... 13,800,000 rights N/A N/A N/A
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</TABLE>

(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933 on the basis of the high and
low prices ($23.125 per share) of the Registrant's Common Stock on the New
York Stock Exchange Composite Tape on February 4, 1994.

(2) Includes 1,800,000 shares which the Underwriters have options to purchase to
cover over-allotments, if any.

(3) Rights are evidenced by certificates for shares of the Common Stock and
automatically trade with such Common Stock. The value attributable to such
Rights, if any, is reflected in the market price of the Common Stock.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains a Prospectus relating to a public
offering in the United States and Canada of an aggregate of up to 11,730,000
shares of Common Stock of Bethlehem Steel Corporation (the "U.S. Offering"),
together with alternate Prospectus pages relating to a concurrent international
offering outside the United States and Canada of an aggregate of up to 2,070,000
shares of Common Stock of Bethlehem Steel Corporation (the "International
Offering"). The complete Prospectus for the U.S. Offering follows immediately
after this Explanatory Note. Following such Prospectus are the alternate pages
to be included in the Prospectus for the International Offering, which consist
of the front and back cover pages for such Prospectus and sections captioned
"Underwriting," "Legal Matters" and "Experts," which replace the corresponding
sections of the Prospectus for the U.S. Offering. All other pages and sections
of the Prospectus apply for both the U.S. Offering and the International
Offering.
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION
FEBRUARY 9, 1994

PROSPECTUS

12,000,000 SHARES

BETHLEHEM STEEL CORPORATION
COMMON STOCK
($1.00 PAR VALUE)

Of the 12,000,000 shares of Common Stock of Bethlehem Steel Corporation
("Bethlehem" or the "Company") offered, 10,200,000 shares are being offered
hereby in the United States and Canada (the "U.S. Offering") and 1,800,000
shares are being offered in a concurrent international offering outside the
United States and Canada (the "International Offering" and, collectively with
the U.S. Offering, the "Offerings"), subject to transfers between the U.S.
Underwriters and the International Underwriters. The Price to Public and the
Underwriting Discount per share will be identical for the Offerings. The closing
of each of the U.S. Offering and the International Offering is conditioned upon
the closing of the other such Offering. See "Underwriting."

The Common Stock of Bethlehem is listed under the symbol "BS" on the New York
Stock Exchange ("NYSE") and the Chicago Stock Exchange ("CSE"). On February 8,
1994, the last sale price of Bethlehem's Common Stock as reported on the New
York Stock Exchange Composite Tape was $24.125 per share.

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE
CAPTION "INVESTMENT CONSIDERATIONS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT BETHLEHEM(1)
Per Share....................................... $ $ $
Total(2)........................................ $ $ $
</TABLE>

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(1) Before deduction of expenses payable by Bethlehem estimated to be $430,000.
(2) Bethlehem has granted to the U.S. Underwriters and the International
Underwriters 30-day options to purchase up to 1,530,000 additional shares
and 270,000 additional shares, respectively, of Common Stock at the Price to
Public less the Underwriting Discount solely to cover over-allotments, if
any. If all such additional shares are purchased by the Underwriters, the
total Price to Public, Underwriting Discount and Proceeds to Bethlehem will
be $ , $ , and $ , respectively. See "Underwriting."

The shares of Common Stock are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the shares will be made at the office of Salomon
Brothers Inc, Seven World Trade Center, New York, New York, or through the
facilities of The Depository Trust Company, on or about , 1994.

SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
The date of this Prospectus is , 1994.
<PAGE> 4

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE OUTSTANDING
$5.00 CUMULATIVE CONVERTIBLE PREFERRED STOCK, THE OUTSTANDING $2.50 CUMULATIVE
CONVERTIBLE PREFERRED STOCK, THE OUTSTANDING $3.50 CUMULATIVE CONVERTIBLE
PREFERRED STOCK AND THE OUTSTANDING COMMON STOCK OF BETHLEHEM AT LEVELS ABOVE
THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK OR CHICAGO STOCK EXCHANGES, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.

AVAILABLE INFORMATION

Bethlehem is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices in New York (Seven World Trade Center (Thirteenth Floor), New York, New
York 10048) and in Chicago (Northwestern Atrium Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661). Copies of such materials can be
obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such materials also can be inspected at the offices of
The New York Stock Exchange (20 Broad Street, New York, New York 10005) and the
Chicago Stock Exchange (440 South LaSalle Street, Chicago, Illinois 60605).

Bethlehem has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed with the Commission by Bethlehem
(File No. 1-1941) are incorporated by reference in this Prospectus:

1. Bethlehem's Annual Report on Form 10-K for the year ended December
31, 1992.

2. Bethlehem's Amendment No. 2 on Form 10-K/A to Bethlehem's Annual
Report on Form 10-K for the year ended December 31, 1992.

3. Bethlehem's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1993.

4. Bethlehem's Current Report on Form 8-K dated March 5, 1993.

5. The description of Bethlehem's Common Stock set forth in Article
Fourth of Bethlehem's Restated Certificate of Incorporation.

6. Bethlehem's Registration Statement on Form 8-A dated October 4,
1988, relating to Bethlehem's Preference Stock Purchase Rights.

All documents filed by Bethlehem pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offerings shall be deemed to be incorporated by reference in
this Prospectus and to be a part of this Prospectus from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this Prospectus modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

Bethlehem hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein or in any
incorporated document. Requests should be directed to Bethlehem Steel
Corporation, Secretary, 1170 Eighth Avenue, Bethlehem, Pennsylvania 18016-7699
(Telephone Number: 610-694-7430).

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<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information in
this Prospectus assumes that the Underwriters' over-allotment options will not
be exercised. See "UNDERWRITING."

BETHLEHEM STEEL CORPORATION

Bethlehem Steel Corporation ("Bethlehem" or the "Company", which terms as
used herein include, where applicable, the consolidated subsidiaries of
Bethlehem Steel Corporation) is the second largest steel producer in the United
States. Bethlehem is engaged primarily in the manufacture and sale of a wide
variety of steel mill products. Flat-rolled products currently account for
approximately 80 percent of Bethlehem's steel segment sales, and structural and
rail products account for most of its remaining steel segment sales. Bethlehem's
products are sold principally to the construction, automotive, machinery,
service center, transportation and container markets.

INVESTMENT CONSIDERATIONS

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN FACTORS RELATING TO
BETHLEHEM. SEE "INVESTMENT CONSIDERATIONS."

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock Offered
U.S. Offering.................... 10,200,000 shares
International Offering........... 1,800,000 shares
Total.................... 12,000,000 shares
Common Stock Outstanding
Before the Offerings(1).......... 91,457,880 shares
After the Offerings.............. 103,457,880 shares
Use of Proceeds.................... All or substantially all of the net proceeds from the
Offerings will be contributed to Bethlehem's pension
fund. Any net proceeds not used for pension funding will
be used for general corporate purposes, including
capital expenditures for modernization. See "USE OF
PROCEEDS."
NYSE and CSE Symbol................ BS
</TABLE>

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(1) As of February 8, 1994.

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SUMMARY CONSOLIDATED FINANCIAL DATA
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,(1)
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1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS STATISTICS:
Net sales.................................................... $4,323.4 $4,007.9 $4,317.9 $4,899.2 $5,250.9
Estimated restructuring losses(2)............................ (350.0) -- (635.0) (550.0) (105.0)
Income (loss) from operations................................ (295.2) (203.0) (774.9) (439.1) 276.2
Cumulative effect of changes in accounting(3)................ -- (340.0) -- -- --
Net income (loss)(4)......................................... (266.3) (550.3) (812.7) (459.3) 254.5
Per Common Share:
Income (loss) before cumulative effect of changes in
accounting............................................... $ (3.37) $ (2.86) $ (11.01) $ (6.39) $ 3.05
Net income (loss)(4)....................................... $ (3.37) $ (7.01) $ (11.01) $ (6.39) $ 3.05
Dividends.................................................. -- -- $ 0.40 $ 0.40 $ 0.20
Weighted average Common Shares outstanding................... 90.9 82.0 76.1 75.7 74.9
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,(1)
--------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET STATISTICS:
Cash and cash equivalents.................................... $ 228.9 $ 208.2 $ 83.8 $ 273.5 $ 530.5
Current ratio................................................ 1.7X 1.6X 1.7X 2.1X 2.4X
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 and capital lease obligations as a percent of
invested capital........................................... 54% 50% 42% 24% 22%
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1993 1992 1991 1990 1989
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OTHER STATISTICS:
Capital expenditures........................................ $ 327.1 $ 328.7 $ 563.9 $ 488.0 $ 421.3
Raw steel to finished product yield......................... 84% 83% 82% 81% 81%
Percent cast--flat-rolled products.......................... 86% 86% 86% 83% 71%
Steel products shipped (net tons in thousands)(5)........... 9,016 9,062 8,376 8,865 9,779
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)(6)............. 10,303 10,544 10,022 10,924 12,181
Average number of employees receiving pay................... 20,700 24,900 27,500 29,600 30,500
</TABLE>

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(1) During 1993, Bethlehem changed the method of valuing inventories from the
last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method.
This change in the method of valuing inventories had no effect on the 1993
loss per share. Prior years' financial statements have been restated to
reflect this change. See Note B to the Consolidated Financial Statements.

(2) In 1993, Bethlehem recorded a $350 million restructuring charge ($290
million after tax) principally for a revised modernization plan for its
Bethlehem Structural Products subsidiary and for the book value of the idled
coke plant at its Sparrows Point Division. See Note D to the Consolidated
Financial Statements.

(3) In 1992, Bethlehem recorded a $340 million net charge for the adoption of
two new Financial Accounting Standards Board Statements, No. 106, Accounting
for Postretirement Benefits Other Than Pensions, and No. 109, Accounting for
Income Taxes. See Note B to the Consolidated Financial Statements.

(4) Net income (loss) excluding restructuring charges and the cumulative effect
of accounting changes and related per Common Share amounts were $23.7
million and ($.18) for 1993, ($210.3) million and ($2.86) for 1992, ($177.7)
million and ($2.66) for 1991, $90.7 million and $.88 for 1990 and $359.5
million and $4.45 for 1989.

(5) Shipments of the Basic Steel Operations segment excluding discontinued
facilities were 9.0 million net tons for 1993, 8.4 million net tons for
1992, 7.6 million net tons for 1991, 8.0 million net tons for 1990, and 8.8
million net tons for 1989.

(6) Raw steel production excluding discontinued facilities was 10.3 million net
tons in 1993, 10.0 million net tons in 1992, 9.3 million net tons in 1991,
10.0 million net tons in 1990 and 11.3 million net tons in 1989.

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INVESTMENT CONSIDERATIONS

Prospective investors should carefully consider the following investment
considerations, which could have a material adverse affect on the value of the
shares of Common Stock offered hereby.

CERTAIN FACTORS RELATING TO BETHLEHEM

Net Losses for 1993, 1992 and 1991

Bethlehem reported net losses of $266 million in 1993, $550 million in 1992
and $813 million in 1991. The net loss for 1993 includes a $290 million after
tax restructuring charge principally for a revised modernization plan for
Bethlehem's Structural Products subsidiary and for the book value of the idled
coke plant at the Sparrows Point Division. See Note D to the Consolidated
Financial Statements. The net loss for 1992 includes a $340 million net charge
representing the cumulative effect of adopting two new Financial Accounting
Standards Board Statements, Accounting for Postretirement Benefits Other Than
Pensions (Statement No. 106) and Accounting for Income Taxes (Statement No.
109). The net loss for 1991 includes an after tax restructuring charge of $635
million. Excluding restructuring charges and the cumulative effect of accounting
changes, Bethlehem had net income of $24 million in 1993 compared to net losses
of $210 million for 1992 and $178 million for 1991.

Steel Price Sensitivity

Bethlehem's results of operations are significantly affected by relatively
small (on a percentage basis) variations in the realized prices for its
products. Bethlehem's Basic Steel Operations segment shipped 9.0 million net
tons of steel products and recorded sales of $4,217 million during 1993,
implying an average realized price per ton of approximately $470. A one percent
increase or decrease in this implied average realized price during 1993 would,
on a pro forma basis, have resulted in an increase or decrease in net sales and
pre-tax income of approximately $42 million. Bethlehem's average realized steel
prices declined by a total of five percent from 1990 through 1993. Bethlehem
benefited from higher realized steel prices during 1993, 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.
Competitive pressures in the steel industry are severe. These pressures could
limit Bethlehem's ability to obtain further price increases, or could lead to a
further decline in prices, which would have a material adverse effect upon
Bethlehem.

Substantial 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 workforce, 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,

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<PAGE> 8

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. 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 at least 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.

Restructuring Charges

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.

Restrictions on Common Stock Dividends

Under the provisions of its 10 3/8% Senior Notes, Bethlehem's ability to
pay dividends on its Common Stock is restricted. See Note M to the Consolidated
Financial Statements. At December 31, 1993, $39 million was available for the
payment of Common Stock dividends under these provisions. This amount will be
increased by the amount of the net proceeds of the Offerings. In accordance with
Bethlehem's policy, future dividends on Bethlehem's Common Stock will be

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<PAGE> 9

determined by the Board of Directors (subject to any applicable restrictions) on
the basis of attained results and the business outlook.

Environmental Regulation

Bethlehem incurs substantial costs in complying with Federal, state and
local environmental laws and regulations. Bethlehem's total expense for
environmental compliance (excluding interest costs but including depreciation)
was approximately $125 million in 1993, $130 million in 1992 and $145 million in
1991, while environmental compliance-related capital expenditures were $35
million in 1993, $18 million in 1992 and $102 million in 1991. Bethlehem
currently estimates that capital expenditures for environmental compliance will
range from $35 million to $50 million in each of the next two years. Bethlehem
expects to be able to continue to address environmental concerns in the ordinary
course of business on terms satisfactory to it. However, in view of the scope of
the applicable laws, and the possibility of unanticipated factual or regulatory
developments, the amount and timing of future environmental expenditures could
vary substantially from those currently anticipated. See
"BUSINESS -- General -- Environmental Control and Cleanup Expenditures."

FACTORS RELATING TO THE STEEL INDUSTRY

Cyclicality

The domestic steel industry is highly cyclical in nature. Domestic
integrated producers suffered substantial losses in the first half of the 1980s
as a result of a number of factors, including recessionary conditions, a high
level of steel imports, the strength of the United States dollar against other
currencies, worldwide production overcapacity, increased domestic and
international competition, high labor costs and inefficient plants. During the
second half of the 1980s, domestic steel producers benefited from improved
industry conditions as steel demand increased substantially, the value of the
dollar declined against other currencies, the level of steel imports receded,
excess capacity was reduced through restructurings, and facilities were
modernized. These favorable conditions reached their peak in 1988 when domestic
industry earnings reached record levels. Steel demand and pricing began to
decline in the latter half of 1989 and the domestic industry has reported
substantial losses, including restructuring and other charges, during recent
years. A recovery in steel markets is currently underway and domestic steel
producers reported improved results in 1993 compared to 1992. Although the
recovery in steel markets is expected to continue in 1994, there can be no
assurance as to the extent of any future improvement in domestic industry
earnings.

Overcapacity

Annual United States raw steel production capability has been reduced from
155 million tons in 1982 to 110 million tons in 1993. This reduction has
resulted in higher utilization rates. Average utilization of domestic industry
capability improved from 60 percent in the 1982-1986 period to 83 percent in the
1987-1991 period and was 82 percent in 1992 and approximately 87 percent in
1993. Despite these improvements, steel consumption in the United States has not
grown with the overall economy in recent years and excess production capacity
continues to exist in certain product lines in domestic markets and, to a
greater extent, worldwide. Industry overcapacity has resulted in an intensely
competitive environment.

Competition

Mini-mills. 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

7
<PAGE> 10

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.

Imports; Adverse ITC Rulings. Domestic steel producers face significant
competition from foreign producers and have been adversely affected by unfairly
traded imports. Imports of finished steel products 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.

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.

Reorganized/Reconstituted Mills. 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.

Steel Substitutes. 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.

Environmental Regulation; Strict, Joint and Several CERCLA Liability

Domestic steel producers, including Bethlehem, are 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. Under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA", also known as "Superfund"), the
United States Environmental Protection Agency (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. Domestic
producers have expended, and can be expected to expend in

8
<PAGE> 11

the future, substantial amounts for compliance with these environmental laws and
regulations. The costs of environmental compliance may place domestic steel
producers at a competitive disadvantage with respect to foreign steel producers,
which are not subject to environmental requirements as stringent as those in the
United States, and producers of materials that compete with steel, which may not
be required to undertake equivalent costs in their operations.

RECENT DEVELOPMENTS

RECENT FINANCIAL RESULTS

Bethlehem reported net losses of $243 million and $266 million for the
fourth quarter and year 1993, compared to net losses of $56 million and $550
million for the comparable periods of 1992. Excluding restructuring charges and
the cumulative effect of accounting changes, Bethlehem had net income of $24
million for 1993 and $47 million for the fourth quarter of 1993 compared to net
losses of $210 million and $56 million for the comparable periods in 1992. These
improvements resulted principally from higher shipments, lower operating costs
per ton and an improved product mix. See "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION."

BUSINESS OUTLOOK

Bethlehem expects 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 Bethlehem's new galvanizing lines at Burns
Harbor and Sparrows Point, and for further restoration of fair value for its
products. A continued economic and steel market recovery coupled with only a
modest rise in steel imports should result in 1994 domestic industry shipments
which match or exceed 1993's estimated 87 million tons.

During January 1994, Bethlehem had increased operating costs and reduced
shipments as a result of severe winter weather conditions and, as expected, is
continuing to incur additional costs in connection with capital projects
underway at its Burns Harbor Division. Despite these higher costs, Bethlehem
believes that with its ongoing implementation of cost reductions, efficiencies
and quality improvements throughout its businesses and operations and a
continuation of the economic and steel market recoveries it will be profitable
for the year 1994.

9
<PAGE> 12

BETHLEHEM

Bethlehem 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. Bethlehem's principal executive offices are located at 1170 Eighth
Avenue, Bethlehem, Pennsylvania 18016-7699, and its telephone number is (610)
694-2424.

BETHLEHEM'S STRATEGY

Bethlehem's strategic objective is to be recognized by its customers as a
premier supplier of high quality, cost effective steel products based on its
contribution to their success. To achieve its objective, Bethlehem has
concentrated and is continuing to concentrate essentially all its resources on
improving and realigning its steel operations and rebuilding its financial
strength. During the past ten years, Bethlehem has substantially upgraded and
improved its two large flat-rolled steel plants at Burns Harbor, Indiana, and
Sparrows Point, Maryland, with capital expenditures totaling more than $2.7
billion. These two Divisions account for approximately 80 percent of Bethlehem's
steel segment sales, with sales principally to the automotive, construction,
machinery, service center, transportation and container markets. Most of
Bethlehem's remaining steel segment sales come from two other business units,
Bethlehem Structural Products Corporation in Bethlehem, Pennsylvania and
Pennsylvania Steel Technologies, Inc., in Steelton, Pennsylvania. Bethlehem will
continue to drive for significant cost reductions, efficiencies and quality
improvements throughout its businesses and operations. Bethlehem believes that
with these efforts and a continuation of the economic and steel market
recoveries it will be profitable for the year 1994. See "RECENT
DEVELOPMENTS -- Business Outlook."

Despite intensely competitive steel industry conditions (see "INVESTMENT
CONSIDERATIONS"), Bethlehem has made significant progress during the last decade
in improving the competitiveness of its steel operations.

- The Burns Harbor Division is recognized, based on its low operating
costs, high product quality and superior customer service, as one of the
world's premier steel producing facilities, serving primarily the
automotive and capital goods markets.

- The Sparrows Point Division has undergone extensive modernization and is
now an efficient producer of high quality flat-rolled products with an
increasing position in the growing light construction market.

- Pennsylvania Steel Technologies is the largest domestic rail producer and
is currently implementing a modernization program to establish it as the
low cost North American producer of high quality railroad rails and
specialty blooms.

- Bethlehem Structural Products Corporation has a strong position in the
Northeastern construction market and has announced a modernization plan
under which this business will focus on the production of light and medium
wide-flange sections, which comprise about 80 percent of the wide-flange
market in the United States.

Bethlehem continues to take actions to further strengthen its competitive
position. During 1993, Bethlehem:

- Established each of its principal operating facilities as a separate
business unit with its own marketing, sales and customer service functions
and responsibility for its own financial performance;

- Negotiated new, separate six year labor agreements at its principal
business units which are expected to improve productivity through work
rule flexibility;

10
<PAGE> 13

- Entered into an information technology partnership agreement with
Electronic Data Systems which will provide Bethlehem with increased access
to diverse and rapidly changing information technologies at reduced cost;

- Took additional steps to control health care costs, including
establishing a family health care center for employees, retirees and
dependents in the Bethlehem, Pennsylvania area;

- Received ISO 9000 quality certification at Sparrows Point, making this
Division the first domestic integrated steel facility to receive this
internationally recognized measure of quality management systems;

- Commenced a rebuild of a coke oven battery and construction of a coal
injection facility at Burns Harbor, which will lower this Division's
operating costs;

- Progressed with Pennsylvania Steel Technologies' $70 million
modernization program, with completion planned for the second half of
1994; and

- Achieved numerous production and performance records at its operating
facilities.

Concentrating on Value-Added Flat-Rolled Steel Products

Bethlehem has been concentrating most of its resources on improving its two
flat-rolled product business units, the Burns Harbor Division and the Sparrows
Point Division. During the past ten years, it has made capital expenditures at
these two business units totaling more than $2.7 billion, primarily to reduce
costs, enhance product mix and improve product quality. Bethlehem has been
recognized by many of its major customers for superior product quality and
service. The Burns Harbor Division has received major automotive quality awards
from each of Ford, GM, Auto Alliance (formerly Mazda) and Nissan. In 1993, the
Sparrows Point Division became the first integrated steel facility in the United
States to be certified to the ISO 9000 Standard, the internationally recognized
measure of quality management systems. Bethlehem's marketing efforts have been
directed toward increasing its sales of products contributing higher profit
margins, principally in the automotive, construction, machinery and container
industries. These products include new, more sophisticated coated sheet steels
that are stronger, lighter, more formable and more corrosion resistant, such as
hot-dip galvanized, electrogalvanized, Galvalume(R), galvannealed, zinc nickel,
and zinc nickel with organic and universal coatings, high strength low alloy and
baked hardenable steels. Principally as a result of the addition of the three
new hot-dip galvanizing lines described below, Bethlehem anticipates that by
1995 approximately 45 percent of its product mix will be in higher valued coated
sheet and plate products compared to approximately 30 percent in 1992 and 35
percent in 1993.

Burns Harbor Division. The Burns Harbor Division, located near Chicago,
produces high quality sheet and plate products for the automotive, construction,
machinery, and service center markets. Burns Harbor is the newest integrated
steel plant in North America, with an annual raw steel production capability of
approximately five million tons. With its modern equipment, efficient plant
layout and material flow, low cost and high quality raw material supply and high
productivity, Bethlehem believes that Burns Harbor has the lowest operating
costs of any integrated steel plant in North America and has among the lowest
costs of any integrated steel plant in the world. At less than three manhours
per ton of steel shipments, Burns Harbor's productivity is significantly better
than that of the average of the integrated steel producers. Bethlehem believes
that Burns Harbor is cost competitive with thin slab casting technology and its
product quality, level of product sophistication and customer service is
superior to that of the mini-mills and reconstituted mills. A new hot-dip
galvanizing line, which completed its first full year of operation in 1993, is
providing high quality, value-added galvanized and galvannealed sheet products
to meet the automotive industry's corrosion-free vehicle body objectives. A new
coal injection facility is also being constructed 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. See
"BUSINESS --

11
<PAGE> 14

Operations -- Burns Harbor Division" for a more detailed description of the
operations of the Burns Harbor Division.

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.

Sparrows Point Division. The Sparrows Point Division, located near
Baltimore, produces sheets, plates and tin mill products for the construction,
container and service center markets. As a result of capital expenditures
totaling approximately $1.5 billion during the past ten years, the Division has
significantly modernized its facilities. These modernization expenditures have
been a contributing factor in helping the Division improve its productivity to
less than four manhours per ton of shipments. With its ocean access, Sparrows
Point has favorable transportation costs for its raw materials and is one of the
few flat-rolled product facilities geographically positioned to serve steel
markets in the eastern and southern United States as well as export markets.

A substantial modernization of Sparrows Point's hot-strip mill was recently
completed. Benefits of the modernized mill include improved yields, improvements
in product quality, increased productivity at both the hot mill and the caster
and an increased customer base. The new mill utilizes thicker slabs, enabling
Sparrows Point to expand its cast slab production by about 20 percent to
approximately 3.5 million tons per year without any increase in the workforce.
Essentially 100 percent of the Division's steel production is now continuously
cast. In addition, the modernized mill produces coils about twice the size of
its previous capability, significantly improving productivity and providing the
ability to supply additional customers.

A new hot-dip galvanizing line, which completed its first full year of
operation in 1993, is providing high quality, value-added coated sheets for the
growing metal building and roofing markets. This line has increased the
percentage of value-added products produced by Sparrows Point. See
"BUSINESS -- Operations -- Sparrows Point Division" for a more detailed
description of the operations of the Sparrows Point Division.

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(R) 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.

Structural Products

Bethlehem Structural Products Corporation. Structural Products produces
structural steel shapes and piling products primarily for the building and
construction markets, and accounted for approximately 10 percent of Bethlehem's
1993 steel segment sales. In early 1993, Bethlehem announced a modernization
program for Structural Products, the first phase of which would have cost more
than $100 million, and Structural Products entered into a separate, new labor
contract with the United Steelworkers of America ("USWA"). See
"BUSINESS -- General -- Employees and Employment Costs."

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

12
<PAGE> 15

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.

While Structural Products faces intense competition from lower cost
mini-mill producers, it has a number of competitive strengths. They include
product niches in sheet piling and custom special sections, established
relationships and reputation with the fabricating industry, a strong position in
the Northeastern construction market and marketing and distribution strategies
that differentiate it from the mini-mills, such as providing preliminary design
analysis, field sales support, cutting to length, cambering and other
processing, and distributing directly to end-users. Bethlehem also anticipates
that Structural Products will benefit from an increasing use of steel in lieu of
concrete in certain construction applications as a result of steel's increased
cost competitiveness compared to concrete.

Rail Products and Pipe

Pennsylvania Steel Technologies, Inc. Pennsylvania Steel Technologies,
located near Harrisburg, Pennsylvania, produces railroad rails, specialty
blooms, carbon and alloy bars and large diameter pipe for the rail
transportation, forging, rerollers and oil and gas industries, and accounted for
approximately six percent of Bethlehem's 1993 steel segment sales. It is one of
two domestic rail producers, and has the largest share of the United States rail
market. In 1993, rail imports represented about 19 percent of United States rail
consumption, about two-thirds of which is premium head hardened rail that is not
currently available in sufficient quantities from domestic sources.

A $70 million modernization program is underway at Pennsylvania Steel
Technologies to establish it as the low cost North American producer of high
quality railroad rails and specialty blooms. The program, which is expected to
be completed during the second half of 1994, 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 capable of producing 1.3
million tons of steel per year through its continuous caster. These actions
should enable Pennsylvania Steel Technologies to further increase its share of
the domestic rail market, to benefit from an anticipated increase in the level
of rail demand, and to provide low cost continuously cast blooms to Structural
Products. See "BUSINESS -- Operations -- Pennsylvania Steel Technologies, Inc."

USE OF PROCEEDS

The net proceeds from the Offerings are estimated to be $
($ if the over-allotment options granted to the U.S. Underwriters and
the International Underwriters are exercised in full). Bethlehem intends to
contribute all or substantially all of the net proceeds to its pension fund,
which will reduce Bethlehem's recorded liabilities for its defined benefit
pension plans. This will improve Bethlehem's capital structure and overall
financial condition, reduce its annual pension expense by improving pension fund
earnings and provide additional flexibility regarding future

13
<PAGE> 16

funding requirements. Any net proceeds not used for pension funding will be used
for general corporate purposes, including capital expenditures for
modernization.

PRICE RANGE OF COMMON STOCK

Bethlehem's Common Stock is listed on the New York and Chicago Stock
Exchanges. The table below sets forth, for the periods indicated, the high and
low sales prices of Bethlehem's Common Stock, as reported on the New York Stock
Exchange Composite Tape.

<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1992:
First Quarter.......................................... $ 17.250 $ 12.750
Second Quarter......................................... 16.625 12.875
Third Quarter.......................................... 15.375 11.500
Fourth Quarter......................................... 16.625 10.000
1993:
First Quarter.......................................... 20.000 14.875
Second Quarter......................................... 21.000 16.375
Third Quarter.......................................... 19.125 12.875
Fourth Quarter......................................... 20.625 13.750
1994:
First Quarter (through February 8, 1994)............... 24.125 19.250
</TABLE>

See the cover page of this Prospectus for a recent reported sales price of
Bethlehem's Common Stock on the New York Stock Exchange Composite Tape.

Bethlehem has not paid a dividend on its Common Stock since the fourth
quarter of 1991. In addition, Bethlehem's ability to pay dividends on its Common
Stock is limited by the provisions of its 10 3/8% Senior Notes. See "INVESTMENT
CONSIDERATIONS -- Certain Factors Relating to Bethlehem -- Restrictions on
Common Stock Dividends." In accordance with Bethlehem's policy, future dividends
on its Common Stock will be determined by the Board of Directors (subject to any
applicable restrictions) on the basis of attained results and the business
outlook.

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<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of Bethlehem at December
31, 1993, and as adjusted to give effect to the Offerings, assuming the
Underwriters' over-allotment options are not exercised.

<TABLE>
<CAPTION>
DECEMBER 31, 1993
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-Term Debt:
Current portion of long-term debt and capital lease obligations... $ 95.5 $ 95.5
Long-Term Debt:
Long-term debt and capital lease obligations due after one year... 718.3 718.3
-------- -----------
Stockholders' Equity:
Preferred and Preference Stock, at $1 per share par value......... 14.4 14.4
Common Stock, at $1 per share par value(1)........................ 93.4
Held in treasury at cost.......................................... (59.7) (59.7)
Additional paid-in capital........................................ 1,588.4
Retained deficit.................................................. (939.9) (939.9)
-------- -----------
Total Stockholders' Equity................................ 696.6
-------- -----------
Total Invested Capital.............................................. $1,510.4 $
-------- -----------
-------- -----------
</TABLE>

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

(1) Does not include shares of Common Stock issuable upon conversion of shares
of outstanding Preferred Stock or outstanding Preference Stock or the
exercise of outstanding stock options. See "DESCRIPTION OF CAPITAL STOCK --
Preferred Stock", "DESCRIPTION OF CAPITAL STOCK -- Preference Stock" and
Notes K, L and M to the Consolidated Financial Statements.

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<PAGE> 18

SELECTED CONSOLIDATED INCOME STATEMENT DATA

The following selected consolidated income statement data for each of the
years in the five-year period ended December 31, 1993, has been derived from
Bethlehem's consolidated financial statements. This information should be read
in conjunction with the information under "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and the Consolidated Financial
Statements and the notes thereto included in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, (1)
--------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales.................................................... $4,323.4 $4,007.9 $4,317.9 $4,899.2 $5,250.9
Operating costs and expenses:
Cost of sales.............................................. 3,834.2 3,789.9 4,045.4 4,323.0 4,390.3
Depreciation............................................... 277.5 261.7 241.4 305.7 325.3
Selling, administration and general expense................ 156.9 159.3 171.0 159.6 154.1
Estimated restructuring losses(2).......................... 350.0 -- 635.0 550.0 105.0
-------- -------- -------- -------- --------
Income (loss) from operations................................ (295.2) (203.0) (774.9) (439.1) 276.2
Other income (expense):
Interest and other income.................................. 7.1 4.9 9.7 29.9 55.0
Interest and other financing costs......................... (63.2) (57.2) (45.5) (44.1) (64.7)
-------- -------- -------- -------- --------
Income (loss) before income taxes and cumulative effect of
changes in accounting...................................... (351.3) (255.3) (810.7) (453.3) 266.5
Benefit (provision) for income taxes......................... 85.0 45.0 (2.0) (6.0) (12.0)
Cumulative effect of changes in accounting(3)................ -- (340.0) -- -- --
-------- -------- -------- -------- --------
Net income (loss)(4)......................................... (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
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per Common Share:
Income (loss) before cumulative effect of changes in
accounting............................................... $ (3.37) $ (2.86) $ (11.01) $ (6.39) $ 3.05
Net income (loss)(4)....................................... $ (3.37) $ (7.01) $ (11.01) $ (6.39) $ 3.05
Dividends.................................................. -- -- $ 0.40 $ 0.40 $ 0.20
Weighted average Common Shares outstanding................... 90.9 82.0 76.1 75.7 74.9
</TABLE>

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

(1) 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 in the method of valuing inventories had no effect on
1993 loss per share. Prior years' financial statements have been restated to
reflect this change. See Note B to the Consolidated Financial Statements.

(3) In 1992, Bethlehem recorded a $340 million net charge for the adoption of
two new Financial Accounting Standards Board Statements, No. 106, Accounting
for Postretirement Benefits Other Than Pensions and No. 109, Accounting for
Income Taxes. See Note B to the Consolidated Financial Statements.

16
<PAGE> 19

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

THREE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

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 Structural
Products 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.

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
"BUSINESS -- General -- Employees and Employment Costs."

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 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 Navy contract. The net loss for 1991 included an after tax
restructuring charge of $635 million. 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.

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 (see "BUSINESS -- General -- Employees and Employment Costs"),
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 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 tons of steel products in 1993 compared to 8.4 million tons in 1992 and
7.6 million tons in 1991. The increase in 1993 shipments was primarily due to
increased demand from the automotive, machinery and construction markets.

17
<PAGE> 20

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:

<TABLE>
<CAPTION>
INCREASE
(DECREASE)
FROM PRIOR YEAR
---------------
1993 1992
---- ----
<S> <C> <C>
Volume....................................................... 7% 10 %
Realized prices.............................................. 1 (3 )
Product mix.................................................. 3 (2 )
---- ----
Total Revenues............................................... 11% 5 %
---- ----
---- ----
</TABLE>

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.

The Sparrows Point Division had significantly improved operating results
and returned to operating 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
which 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, Structural Products' results were adversely affected by a
number of market developments. On January 26, 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 comprise about 80 percent of the wide-flange market in the
United States. The revised modernization plan is described under
"BETHLEHEM -- Bethlehem's Strategy -- Structural Products."

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

18
<PAGE> 21

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 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 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 "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Capital Expenditures." The
Senior Notes contain covenants which impose certain limitations on Bethlehem's
ability to incur or prepay debt, to pay dividends and make other distributions
on or redeem capital stock, or to sell, merge, transfer or encumber assets.

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.
The agreement contains a restrictive covenant that requires Bethlehem to
maintain a minimum adjusted tangible net worth. Bethlehem's adjusted tangible
net worth exceeded this requirement by approximately $1 billion at December 31,
1993. 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

19
<PAGE> 22

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 which could
potentially increase Bethlehem's future required annual pension contributions
and reduce its ability to defer pension funding. See "INVESTMENT
CONSIDERATIONS -- Certain Factors Relating to Bethlehem -- Substantial Employee
Postretirement Obligations." The prospects for passage of such legislation are
currently uncertain.

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 underway 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 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
underway, 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.

20
<PAGE> 23

BUSINESS

OPERATIONS

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:

<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
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%
----- ----- -----
----- ----- -----
</TABLE>

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, Structural
Products 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).

21
<PAGE> 24

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:

<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
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%
----- ----- -----
----- ----- -----
</TABLE>

Burns Harbor Division

The principal operations of the Burns Harbor Division are located near
Chicago along the shore of Lake Michigan. 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.

Utilization of the Burns Harbor Division's raw steel production capability
was 106 percent during 1993.

Bethlehem is participating 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 separately.

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 tailor welded steel blanks for
automotive stampings through use of a technologically advanced welding process.

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.

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

22
<PAGE> 25

rolled sheets, tin mill products, galvanized sheet, Galvalume(R) sheet, plates
and semifinished steel products for service centers and the container,
construction and 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(R)
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. Utilization of Sparrows
Point Division's raw steel production capability was 92 percent during 1993.

Bethlehem Structural Products Corporation

The operations of Structural Products are located in Bethlehem,
Pennsylvania. Its principal products are structural steel shapes and piling
products primarily for the building and construction markets and ingot molds for
the metals industry. 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. Utilization of Structural Products' raw steel production capability was 81
percent during 1993.

On January 26, 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 comprise about 80
percent of the wide-flange market in the United States. The revised
modernization plan is described under "BETHLEHEM -- Bethlehem's
Strategy -- Structural Products."

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. Utilization of Pennsylvania Steel Technologies' raw steel production
capability was 40 percent during 1993.

A $70 million modernization program is underway 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.

23
<PAGE> 26

Iron Ore and Coal

Bethlehem has equity interests in various iron ore operating properties in
the United States, Canada and Brazil, which 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 ownership interests, under a variety of contractual arrangements
extending over varying periods of time.

Bethlehem owns coal operating properties in Pennsylvania and West Virginia.
It obtains less than half of the coal for its coke operations from its own
mines. The balance of Bethlehem's requirements are purchased from commercial
sources.

Steel Related Operations

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. The operations of BethForge, Inc. and the CENTEC joint
venture are located in Bethlehem, Pennsylvania.

During 1993, BethForge, Inc. and the CENTEC joint venture were established
as separate business units responsible for their own marketing, operations and
financial performance. New labor contracts for BethForge, Inc. and the CENTEC
joint venture were reached with the USWA during 1993. See
"-- General -- Employees and Employment Costs" below.

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. During 1993, a new three year labor contract was reached with the USWA
covering the Sparrows Point ship repair yard. The dry dock facility at Port
Arthur, Texas is for sale.

Bethlehem sells this segment's fabricated steel products to the steel,
machinery, transportation, energy, defense and utility industries.

GENERAL

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. The new agreement also

24
<PAGE> 27

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 contracts for its wholly owned subsidiaries, Bethlehem Structural Products
Corporation and BethForge, Inc., and for the CENTEC joint venture. The contracts
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
"BETHLEHEM -- Bethlehem's Strategy -- 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 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.

Information Technology Partnership Agreement

In December 1992, Bethlehem entered into an information technology
partnership agreement with Electronic Data Systems Corporation ("EDS"), under
which EDS is providing all of Bethlehem's information technology services. Over
the ten year term of the agreement, EDS will provide Bethlehem with all the
necessary resources for data center management, applications development and
support, personal computers and telecommunications, and will provide additional
resources for Bethlehem's existing process control activities. The new agreement
will provide Bethlehem with increased access to diverse information technologies
and a broad base of critical technical skills, increase its ability to stay
current with rapidly changing technologies and result in reduced operating costs
and capital requirements.

25
<PAGE> 28

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
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 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

26
<PAGE> 29

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 CERCLA, 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 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.

LEGAL PROCEEDINGS

Bethlehem is a party to numerous legal proceedings arising 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

27
<PAGE> 30

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 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 (the "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 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 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.

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<PAGE> 31

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 the 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 "-- General -- Environmental Control and Cleanup Expenditures" 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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<PAGE> 32

DESCRIPTION OF CAPITAL STOCK

The following statements with respect to the capital stock of Bethlehem are
subject to the detailed provisions of Bethlehem's Restated Certificate of
Incorporation (the "Restated Certificate"), its By-laws (the "By-Laws"), the
Rights Agreement dated as of September 28, 1988, between Bethlehem and First
Chicago Trust Company of New York (the "Rights Agreement"), the 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 (the "Certificate of Designation -- Series B Preference"), and the
Certificate of the Voting Powers, Designation, Preferences and Relative,
Participating, Optional or Other Special Rights, and the Qualifications,
Limitations or Restrictions Thereof, of Bethlehem's $3.50 Cumulative Convertible
Preferred Stock (Par Value $1 Per Share) (the "Certificate of
Designation -- $3.50 Preferred"). These statements do not purport to be complete
and are subject to, and qualified in their entirety by reference to, the terms
of the Restated Certificate, the By-laws, the Rights Agreement, the Certificate
of Designation -- Series B Preference and the Certificate of
Designation -- $3.50 Preferred.

COMMON STOCK

The rights and privileges of the holders of the Common Stock of Bethlehem
are subject to the preferential rights and privileges of the holders of any of
the currently authorized preferred stock of Bethlehem ("Preferred Stock")
described below, including the Outstanding Preferred Stock, and any of the
currently authorized preference stock of Bethlehem (the "Preference Stock")
described below, including the Outstanding Preference Stock.

Dividend Rights

Subject to the preferential rights and privileges of the Outstanding
Preferred Stock and Outstanding Preference Stock, and any additional Preferred
Stock or Preference Stock that may be issued, the holders of Common Stock are
entitled to receive dividends, when and as declared by the Board of Directors,
from funds legally available therefor. Bethlehem paid quarterly dividends of ten
cents per share on its Common Stock during each of the four quarters of 1990 and
1991. Bethlehem has omitted the quarterly dividends on its Common Stock for each
of the four quarters of 1992 and 1993. In accordance with Bethlehem's policy,
the payment of future dividends on the Common Stock will be determined by the
Board of Directors (subject to any applicable restrictions) on the basis of
attained results and the business outlook.

Voting Rights

Voting power is vested exclusively in the Common Stock, except for (a) the
power of the Outstanding Preferred Stock and of any additional Preferred Stock
that may be issued to vote separately as a class or series on certain matters
and in certain cases as required by the Restated Certificate or By-Laws or by
law and (b) such voting powers as are described below with respect to the
Outstanding Preference Stock and as may be granted by the Board of Directors of
Bethlehem to the holders of any additional Preferred Stock or Preference Stock
that may be issued. Each share of the Outstanding Preference Stock issued in
connection with the Employee Investment Program has one vote with respect to the
election of Directors and all matters required to be submitted to holders of
Common Stock. Each share of stock of any class entitled to vote is entitled to
one vote.

Liquidation Rights

In the event of liquidation, dissolution or winding up of Bethlehem,
subject to the preferential rights and privileges of any Preferred Stock,
including the Outstanding Preferred Stock, and any Preference Stock, including
the Outstanding Preference Stock, the holders of Common Stock are

30
<PAGE> 33

entitled to share ratably in the assets of Bethlehem legally available for
distribution to stockholders of Bethlehem.

Preemptive Rights

Unless and except to the extent that the Board of Directors may otherwise
determine, the holders of Common Stock are not entitled to preemptive rights.

Stockholder Rights Plan

Pursuant to Bethlehem's Stockholder Rights Plan, on September 28, 1988, the
Board of Directors declared a dividend of one Right for each share of Common
Stock from time to time outstanding. 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 percent or more of Common
Stock or begins a tender offer or exchange offer which would result in that
person or group owning 20 percent 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 acquired worth twice the Right's
exercise price. Until the Rights become exercisable, Bethlehem may redeem them
at one cent per Right. The Rights expire on October 18, 1998.

New Stock Incentive Plan

At its Annual Meeting of Stockholders on April 26, 1994, stockholders will
be asked to approve a new stock incentive plan under which key employees of
Bethlehem may receive stock option awards for up to an aggregate of 4,000,000
shares of Bethlehem Common Stock. It is anticipated that these awards will be
made over a six year period. Of the 4,000,000 shares which would be reserved for
issuance under the plan, up to 1,000,000 shares may be used for restricted stock
grants.

Transfer Agent and Registrar

First Chicago Trust Company of New York serves as transfer agent and
registrar for the Common Stock.

PREFERRED STOCK

Bethlehem is authorized to issue up to 20,000,000 shares of Preferred
Stock, par value $1.00 per share, in one or more series, with such designations,
voting powers, preferences, rights, qualifications, limitations and restrictions
as shall be fixed by the Board of Directors and that are consistent with the
provisions regarding the Preferred Stock set forth in Bethlehem's Restated
Certificate. In March 1983, Bethlehem issued 2,500,000 shares of $5.00
Cumulative Convertible Preferred Stock, par value $1.00 per share (the "$5.00
Cumulative Convertible Preferred Stock"), in September 1983, Bethlehem issued
4,000,000 shares of $2.50 Cumulative Convertible Preferred Stock, par value
$1.00 per share (the "$2.50 Cumulative Convertible Preferred Stock"), and in
February 1993, Bethlehem issued 5,123,200 shares of $3.50 Cumulative Convertible
Preferred Stock, par value $1.00 (the "$3.50 Cumulative Convertible Preferred
Stock") (the $5.00 Cumulative Convertible Preferred Stock, the $2.50 Cumulative
Convertible Preferred Stock and the $3.50 Cumulative Convertible Preferred Stock
are collectively called the "Outstanding Preferred Stock"), which are the only
series of Preferred Stock issued to date by Bethlehem. Each series of Preferred
Stock will rank pari passu with any other series with respect to the payment of
dividends and the distribution of assets upon any liquidation, dissolution or
winding up of Bethlehem.

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<PAGE> 34

Dividends

Each share of the $5.00 Cumulative Convertible Preferred Stock is entitled
to cumulative quarterly dividends at an annual rate of $5.00, each share of the
$2.50 Cumulative Convertible Preferred Stock is entitled to cumulative quarterly
dividends at an annual rate of $2.50 and each share of the $3.50 Cumulative
Convertible Preferred Stock is entitled to cumulative quarterly dividends at an
annual rate of $3.50. Bethlehem paid quarterly dividends on the Outstanding
Preferred Stock during each of the four quarters of 1991, 1992 and 1993.

Conversion Rights

Each share of the Outstanding Preferred Stock is convertible, at the option
of the holder, into Common Stock at a conversion price equal to, with respect to
the $5.00 Cumulative Convertible Preferred Stock, $28.25 per share of Common
Stock (each share of $5.00 Cumulative Convertible Preferred Stock being taken at
its stated value of $50 for such purpose), with respect to the $2.50 Cumulative
Convertible Preferred Stock, $29.75 per share of Common Stock (each share of
$2.50 Cumulative Convertible Preferred Stock being taken at its stated value of
$25 for such purpose), and with respect to the $3.50 Cumulative Convertible
Preferred Stock, $20.90 per share of Common Stock (each share of $3.50
Cumulative Convertible Preferred Stock being taken at its stated value of $50
for such purpose) subject, in each case, to adjustment in certain events.

Redemption

The $5.00 Cumulative Convertible Preferred Stock and the $2.50 Cumulative
Convertible Preferred Stock may be redeemed at any time at the option of
Bethlehem, in whole or in part, at a redemption price equal to $50 per share
with respect to the $5.00 Cumulative Convertible Preferred Stock and $25 per
share with respect to the $2.50 Cumulative Convertible Preferred Stock, plus, in
each case, dividends accrued and unpaid to the redemption date. The $3.50
Cumulative Convertible Preferred Stock may be redeemed at any time on or after
March 10, 1996, at the option of Bethlehem, in whole or in part, at a redemption
price of $52.45 per share declining annually to $50 per share on or after March
10, 2003, plus, in each case, dividends accrued and unpaid to the redemption
date.

Liquidation Rights

In the event of any liquidation, dissolution or winding up of Bethlehem,
the holders of the Outstanding Preferred Stock will be entitled to receive,
before any distribution is made to holders of Preference Stock or Common Stock,
liquidating distributions in the amount of, with respect to the $5.00 Cumulative
Convertible Preferred Stock and the $3.50 Cumulative Convertible Preferred
Stock, $50 per share and, with respect to the $2.50 Cumulative Convertible
Preferred Stock, $25 per share, plus, in each case, accrued and unpaid
dividends.

Voting Rights

If dividends on any series of Preferred Stock, including the Outstanding
Preferred Stock, are in arrears in an amount equal to six quarterly dividends at
the time of any annual meeting of stockholders of Bethlehem for the election of
directors, the holders of shares of Preferred Stock of all series, including the
Outstanding Preferred Stock, voting as a class, will be entitled to elect two
members of the Board of Directors until all dividends in arrears on Preferred
Stock of each series at the time outstanding have been paid in full.

Bethlehem may not (i) without the consent of the holders of two-thirds of
the shares of $5.00 Cumulative Convertible Preferred Stock, $2.50 Cumulative
Convertible Preferred Stock or $3.50 Cumulative Convertible Preferred Stock, as
the case may be, alter or change the rights given to such series of Preferred
Stock by the Restated Certificate so as to adversely affect such series or

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<PAGE> 35

(ii) without the consent of the holders of two-thirds of the aggregate number of
shares of Preferred Stock of all series, including the Outstanding Preferred
Stock, voting as a class, alter or change the rights given to the Preferred
Stock by the Restated Certificate so as to adversely affect the Preferred Stock
or authorize or increase the number of authorized shares of any class of stock
ranking prior to the Preferred Stock. In addition, Bethlehem may not, without
the consent of the holders of a majority of the aggregate number of outstanding
shares of Preferred Stock of all series, including the Outstanding Preferred
Stock, voting as a class, increase the number of authorized shares of Preferred
Stock or authorize or create any class of stock ranking on a parity with the
Preferred Stock.

PREFERENCE STOCK

Bethlehem is authorized to issue up to 20,000,000 shares of Preference
Stock, par value $1.00 per share, in one or more series. The Preference Stock is
junior to the Preferred Stock as to payment of dividends and distribution of
assets on liquidation, dissolution or winding up of Bethlehem. To the maximum
extent permitted by Delaware law, the Board of Directors has the authority to
fix the powers, preferences and rights, and the qualifications, limitations or
restrictions, of the shares of each series of Preference Stock, including,
without limitation, any dividend rate (including any dividends which may be
determined from time to time at the discretion of the Board of Directors), any
preferences over the Common Stock or other series of Preference Stock as to
dividends and/or assets in the event of any liquidation, dissolution or winding
up of Bethlehem, any redemption terms and prices, any sinking fund or purchase
fund provisions, any conversion rights and terms, and any voting rights.
Bethlehem's Restated Certificate expressly provides that the terms of any series
of Preference Stock can be related to any aspect of the results of operations of
Bethlehem or any of its divisions, subsidiaries or other affiliates or to any
other independently ascertainable fact.

Pursuant to its 1986 and 1989 labor agreements with the USWA, Bethlehem has
authorized up to 6,000,000 shares of Series A, par value $1.00 per share (the
"Series A Preference Stock"), and 5,000,000 shares of Employee Stock Ownership
Plan Convertible Preference Stock, Series B, par value $1.00 per share (the
"Series B Preference Stock") (the Series A Preference Stock and the Series B
Preference Stock are collectively called the "Outstanding Preference Stock") to
be issued to the trustee for an Employee Stock Ownership Plan ("ESOP") for the
benefit of its USWA-represented employees. At February 1, 1994, a total of
2,161,342 shares of Series A Preference Stock and 634,108 shares of Series B
Preference Stock were outstanding and held by the ESOP trustee. All outstanding
shares of Series A and Series B Preference Stock issued are held for the benefit
of employees by the ESOP trustee under a qualified trust. Each outstanding share
of Series A and Series B Preference Stock is convertible, at the option of the
holder thereof and, in certain circumstances, at the option of Bethlehem, into
one share of Common Stock (subject to adjustment) and is entitled to vote with
the Common Stock on all matters, including the election of directors. The
outstanding shares of Series A and Series B Preference Stock may be redeemed at
any time at the option of Bethlehem, in whole or in part, at a redemption price
equal to the stated value per share of each series of outstanding shares of
Series A and Series B Preference Stock. In the event of any liquidation,
dissolution or winding up of Bethlehem, the holders of the outstanding shares of
Series A and Series B Preference Stock will be entitled to receive liquidating
distributions in the amount of such stated value per share, plus accrued and
unpaid dividends, before any distribution is made to holders of Preference
Stock, if any, junior to the outstanding shares of Series A and Series B
Preference Stock, or Common Stock, and after distributions required to be made
on the Preferred Stock, including the Outstanding Preferred Stock.

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<PAGE> 36

UNDERWRITING

Subject to the terms and conditions set forth in the U.S. Underwriting
Agreement, Bethlehem has agreed to sell to each of the Underwriters named below
(the "U.S. Underwriters") for whom Salomon Brothers Inc, J. P. Morgan Securities
Inc. and Morgan Stanley & Co. Incorporated are acting as representatives (the
"U.S. Representatives"), and each of the U.S. Underwriters has severally agreed
to purchase from Bethlehem, the number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
U.S. UNDERWRITERS TO BE PURCHASED
------------------------------------------------------------ ----------------
<S> <C>
Salomon Brothers Inc........................................
J.P. Morgan Securities Inc..................................
Morgan Stanley & Co. Incorporated...........................
----------------
Total............................................. 10,200,000
----------------
----------------
</TABLE>

In the U.S. Underwriting Agreement, the several U.S. Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the shares of Common Stock set forth in the table above, if any such shares
are purchased. In the event of a default by any U.S. Underwriter, the U.S.
Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.

Bethlehem has been advised by the U.S. Representatives that the several
U.S. Underwriters propose initially to offer such shares to the public at the
public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $ per
share. The U.S. Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to other dealers. After this
public offering, the public offering price and such concessions may be changed.

Bethlehem has granted to the U.S. Underwriters an option, exercisable
during the 30-day period after the date of this Prospectus, to purchase up to
1,530,000 additional shares of Common Stock at the same price per share as the
initial 10,200,000 shares of Common Stock to be purchased by the U.S.
Underwriters. The U.S. Underwriters may exercise such option only to cover
over-allotments in the sale of the shares of Common Stock that the U.S.
Underwriters have agreed to purchase. To the extent that the U.S. Underwriters
exercise such option, each U.S. Underwriter will have a firm commitment, subject
to certain conditions, to purchase the same proportion of the option shares as
the number of shares of Common Stock to be purchased and offered by such U.S.
Underwriter in the above table bears to the total number of shares of Common
Stock initially purchased by the U.S. Underwriters.

Bethlehem has also entered into an International Underwriting Agreement
with the International Underwriters named therein, for whom Salomon Brothers
International Limited, J.P. Morgan Securities Ltd. and Morgan Stanley & Co.
International Limited are acting as representatives (the "International
Representatives"), providing for the concurrent offer and sale of 1,800,000
shares of Common Stock outside of the United States and Canada and providing the
International Underwriters an option, exercisable during the 30-day period after
the date of this Prospectus, to purchase up to 270,000 additional shares at the
same price per share as the initial 1,800,000 shares of Common Stock to be
purchased by the International Underwriters.

The offering price and underwriting discounts for the U.S. Offering and the
International Offering will be identical. The closing of the U.S. Offering is
conditioned upon the closing of the International Offering, and the closing of
the International Offering is conditioned upon the closing of the U.S. Offering.

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<PAGE> 37

Each U.S. Underwriter has severally agreed that, as part of the U.S.
Offering, (a) it is not purchasing any shares of Common Stock for the account of
anyone other than a United States or Canadian Person and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any shares of
Common Stock or distribute this Prospectus to any person outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Each International Underwriter has severally agreed that, as part of the
International Offering, (a) it is not purchasing any shares of Common Stock for
the account of any United States or Canadian Person and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any shares of
Common Stock or distribute any Prospectus relating to the International Offering
to any person within the United States or Canada or to any United States or
Canadian Person. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the agreement between
the U.S. Underwriters and the International Underwriters. "United States or
Canadian Person" means any person who is a national or resident of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada, or any political
subdivision thereof, any estate or trust the income of which is subject to
United States or Canadian federal income taxation, regardless of the source of
its income (other than a foreign branch of any United States or Canadian
Person), and includes any United States or Canadian branch of a person other
than a United States or Canadian Person.

Each U.S. Underwriter that will offer or sell shares of Common Stock in
Canada as part of the distribution has severally agreed that such offers and
sales will be made only pursuant to an exemption from the prospectus
requirements in each jurisdiction in Canada in which such offers and sales are
made.

Pursuant to the agreement between the U.S. Underwriters and the
International Underwriters, sales may be made between the U.S. Underwriters and
the International Underwriters of such number of shares of Common Stock as may
be mutually agreed. The price of any shares of Common Stock so sold shall be the
initial public offering price, less an amount not greater than the concession to
securities dealers. To the extent that there are sales between the U.S.
Underwriters and the International Underwriters pursuant to the agreement
between the U.S. Underwriters and the International Underwriters, the number of
shares initially available for sale by the U.S. Underwriters or by the
International Underwriters may be more or less than the amount appearing on the
cover page of this Prospectus.

Bethlehem has agreed not to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any shares of Common Stock, or any
securities convertible into, or exchangeable for, shares of Common Stock, except
those offered in the Offerings or in connection with certain employee benefit
plans or labor agreements, for a period of 90 days from the date hereof without
the prior written consent of the U.S. Representatives and the International
Representatives.

The U.S. Underwriting Agreement and International Underwriting Agreement
each provide that Bethlehem will indemnify the U.S. Underwriters and the
International Underwriters, respectively, against certain liabilities, including
liabilities under the Securities Act, or contribute to payments the U.S.
Underwriters and the International Underwriters, as the case may be, may be
required to make in respect thereof.

In the ordinary course of business, Salomon Brothers Inc provides financial
advisory services to Bethlehem and expects to do so in the future. In addition,
affiliates of Salomon Brothers Inc have entered into interest rate swap
transactions with Bethlehem and may do so in the future.

In the ordinary course of their respective businesses, affiliates of J.P.
Morgan Securities Inc. engage in commercial banking and investment banking
transactions with Bethlehem and expect to do so in the future. Morgan Guaranty
is agent bank for Bethlehem's revolving credit agreement.

35
<PAGE> 38

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for Bethlehem by G. P. Holsenbeck, Esq., Deputy General Counsel of
Bethlehem. Certain legal matters will be passed upon for the Underwriters by
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022. Skadden, Arps, Slate, Meagher & Flom has from time to time provided legal
services to Bethlehem.

EXPERTS

The financial statements included in this Prospectus have been so included
in reliance on the report of Price Waterhouse, independent accountants, given on
the authority of said firm as experts in auditing and accounting.

36
<PAGE> 39

BETHLEHEM STEEL CORPORATION AND
CONSOLIDATED SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Year-End Financial Information:
Consolidated Statements of Income -- Years Ended 1993, 1992 and 1991............... F-2
Consolidated Balance Sheets -- At December 31, 1993 and December 31, 1992.......... F-3
Consolidated Statements of Cash Flows -- Years Ended 1993, 1992 and 1991........... F-4
Notes to Consolidated Financial Statements......................................... F-5
Report of Independent Accountants.................................................. F-17
</TABLE>

Note: In the Notes to Consolidated Financial Statements references to "we", "us"
and "our" refer to Bethlehem and its consolidated subsidiaries.

F-1
<PAGE> 40

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
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)
-------- -------- --------
-------- -------- --------
</TABLE>

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-2
<PAGE> 41

CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)

<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1993 1992
-------- --------
<S> <C> <C>
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
-------- --------
-------- --------
</TABLE>

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-3
<PAGE> 42

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
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
</TABLE>

- ---------------
* Excludes Financing Activities and Investing Activities.

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-4
<PAGE> 43

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:
(Dollars in millions)

<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
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
--------- ---------
--------- ---------
</TABLE>

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.

F-5
<PAGE> 44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

Statement No. 106 requires postretirement benefits other than pensions,
principally healthcare 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.

F-6
<PAGE> 45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

C. INDUSTRY SEGMENT INFORMATION
(Dollars in millions)

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
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
Steel Related Operations........................... -- -- --
-------- -------- --------
Total...................................... $ 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
-------- -------- --------
-------- -------- --------
</TABLE>

A general description of our segments and their products and services is
contained under the heading "BUSINESS -- Operations".

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.

F-7
<PAGE> 46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 workforce 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 can not 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)

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
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)
------- ------- -------
------- ------- -------
</TABLE>

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)

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
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)
------- ------- -------
------- ------- -------
</TABLE>

- ---------------
(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.

F-8
<PAGE> 47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The components of our net deferred income tax asset are as follows:
(Dollars in millions)

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1993 1992
------ ------
<S> <C> <C>
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
------ ------
------ ------
</TABLE>

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, healthcare, 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, 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.

F-9
<PAGE> 48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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)

<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
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
------ ------ ------
------ ------ ------
</TABLE>

F. LONG-TERM DEBT
(Dollars in millions)

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1993 1992
------ ------
<S> <C> <C>
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 1993-2002......................................... 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 1993-1997...................................... 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
------ ------
------ ------
</TABLE>

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

F-10
<PAGE> 49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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
non-reducing 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 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

F-11
<PAGE> 50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

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:

(Dollars in millions)

<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1993 1992
-------- --------
<S> <C> <C>
Assumptions:
Discount rate......................................................... 7.50% 8.50%
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
-------- --------
-------- --------
</TABLE>

F-12
<PAGE> 51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The assumptions used in each year and the components of our annual
pension cost are as follows:
(Dollars in millions)

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
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
------- ------- -------
------- ------- -------
</TABLE>

J. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

In addition to providing pension benefits, we currently provide healthcare
and life insurance benefits for most retirees, and their dependents.

Information regarding our plans' actuarial assumptions, funded status
and liability follows:
(Dollars in millions)

<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1993 1992
-------- --------
<S> <C> <C>
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
-------- --------
-------- --------
</TABLE>

F-13
<PAGE> 52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The assumptions used in each year and the components of our
postretirement benefit cost follow:
(Dollars in millions)

<TABLE>
<CAPTION>
1993 1992
------ ------
<S> <C> <C>
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
------ ------
------ ------
</TABLE>

A 1% increase or decrease in the assumed healthcare 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 post retirement 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 healthcare 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.

F-14
<PAGE> 53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Changes in options outstanding during 1993 and 1992 under the Plans were as
follows:

<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
OPTIONS OR RANGE
--------- ------------
<S> <C> <C>
Balance December 31, 1991.................................... 2,542,223 7 3/4-27 1/8
Granted.................................................... 492,200 14 1/8
Terminated or cancelled.................................... (123,104) 14-27 1/8
---------
Balance December 31, 1992.................................... 2,911,319 7 3/4-27 1/8
Granted.................................................... 532,600 19
Terminated or cancelled.................................... (348,102) 8-27 1/8
Surrendered or exercised................................... (215,902) 7 3/4-17 5/8
---------
Balance December 31, 1993.................................... 2,879,915 8-26 1/8
---------
---------
2,104,465 options outstanding were exercisable at December
31, 1993.
</TABLE>

M. STOCKHOLDERS' EQUITY
(Shares in thousands and dollars in millions, except per share data)

<TABLE>
<CAPTION>
PREFERRED PREFERENCE
STOCK STOCK COMMON STOCK COMMON STOCK
$1.00 PAR $1.00 PAR $1.00 PAR HELD IN
VALUE VALUE VALUE TREASURY ADDITIONAL RETAINED
-------------- -------------- -------------- -------------- PAID-IN EARNINGS
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)
------ ------ ------ ------ ------ ------ ------ ------ ---------- ---------
------ ------ ------ ------ ------ ------ ------ ------ ---------- ---------
</TABLE>

F-15
<PAGE> 54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Preferred and Preference Stock issued and outstanding:
(Shares in thousands)

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1992
------ ------
<S> <C> <C>
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.

N. QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in millions, except per share data)

<TABLE>
<CAPTION>
1993 1992
----------------------------------------- ----------------------------------------
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.

F-16
<PAGE> 55

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.

Price Waterhouse

1177 Avenue of the Americas
New York, NY 10036

January 26, 1994

F-17
<PAGE> 56

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY BETHLEHEM OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF BETHLEHEM SINCE THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION.
---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Prospectus Summary................... 3
Investment Considerations............ 5
Recent Developments.................. 9
Bethlehem............................ 10
Use of Proceeds...................... 13
Price Range of Common Stock.......... 14
Capitalization....................... 15
Selected Consolidated Income
Statement Data..................... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 17
Business............................. 21
Description of Capital Stock......... 30
Underwriting......................... 34
Legal Matters........................ 36
Experts.............................. 36
Index to Financial Statements........ F-1
</TABLE>

12,000,000 SHARES

BETHLEHEM STEEL
CORPORATION

COMMON STOCK
($1.00 PAR VALUE)

SALOMON BROTHERS INC

J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
PROSPECTUS

DATED , 1994
<PAGE> 57

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR OTHER
JURISDICTION.

[ALTERNATE]

SUBJECT TO COMPLETION
FEBRUARY 9, 1994
PROSPECTUS

12,000,000 SHARES

BETHLEHEM STEEL CORPORATION
COMMON STOCK
($1.00 PAR VALUE)

Of the 12,000,000 shares of Common Stock of Bethlehem Steel Corporation
("Bethlehem" or the "Company") offered, 1,800,000 shares are being offered
hereby outside the United States and Canada (the "International Offering") and
10,200,000 shares are being offered in a concurrent offering in the United
States and Canada (the "U.S. Offering" and, collectively with the International
Offering, the "Offerings"), subject to transfers between the International
Underwriters and the U.S. Underwriters. The Price to Public and the Underwriting
Discount per share will be identical for the Offerings. The closing of each of
the International Offering and the U.S. Offering is conditioned upon the closing
of the other such Offering. See "Underwriting."

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE
CAPTION "INVESTMENT CONSIDERATIONS."

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

(1) Before deduction of expenses payable by Bethlehem estimated to be $430,000.

(2) Bethlehem has granted to the International Underwriters and the U.S.
Underwriters 30-day options to purchase up to 270,000 additional shares and
1,530,000 additional shares, respectively, of Common Stock at the Price to
Public less the Underwriting Discount solely to cover over-allotments, if
any. If all such additional shares are purchased by the Underwriters, the
total Price to Public, Underwriting Discount and Proceeds to Bethlehem will
be $ , $ , and $ , respectively. See "Underwriting."

SALOMON BROTHERS INTERNATIONAL LIMITED
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY & CO. INTERNATIONAL
The date of this Prospectus is , 1994.
<PAGE> 58

[ALTERNATE]

The shares of Common Stock offered in the International Offering (the
"International Shares") may not be offered or sold, directly or indirectly, in
the United States or Canada or to any person who is a United States or Canadian
person, as part of the distribution of the International Shares. The
distribution of this Prospectus and the offering of shares of Common Stock in
certain jurisdictions may be restricted by law. Persons into whose possession
the Prospectus comes are required by Bethlehem and the International
Underwriters to inform themselves about and to observe any such restrictions,
including, without limitation, compliance with the restrictions on distribution
of this document applicable under the Companies Act 1985 and the Financial
Services Act 1986 of the United Kingdom. See "UNDERWRITING."

AVAILABLE INFORMATION

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed with the Commission by Bethlehem
(File No. 1-1941) are incorporated by reference in this Prospectus:

1. Bethlehem's Annual Report on Form 10-K for the year ended December
31, 1992.

2. Bethlehem's Amendment No. 2 on Form 10-K/A to Bethlehem's Annual
Report on Form 10-K for the year ended December 31, 1992.

2
<PAGE> 59

[ALTERNATE]

3. Bethlehem's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1993.

4. Bethlehem's Current Report on Form 8-K dated March 5, 1993.

5. The description of Bethlehem's Common Stock set forth in Article
Fourth of Bethlehem's Restated Certificate of Incorporation.

6. Bethlehem's Registration Statement on Form 8-A dated October 4,
1988, relating to Bethlehem's Preference Stock Purchase Rights.

All documents filed by Bethlehem pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the shares of Common Stock offered hereby shall
be deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference in this Prospectus modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

3
<PAGE> 60

[ALTERNATE]

UNDERWRITING

Subject to the terms and conditions set forth in the International
Underwriting Agreement, Bethlehem has agreed to sell to each of the Underwriters
named below (the "International Underwriters"), for whom Salomon Brothers
International Limited, J. P. Morgan Securities Ltd. and Morgan Stanley & Co.
International Limited are acting as representatives (the "International
Representatives"), and each of the International Underwriters has severally
agreed to purchase from Bethlehem, the number of shares of Common Stock set
forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
INTERNATIONAL UNDERWRITERS TO BE PURCHASED
------------------------------------------------------------ ----------------
<S> <C>
Salomon Brothers International Limited......................
J.P. Morgan Securities Ltd. ................................
Morgan Stanley & Co. International Limited..................
----------------
Total............................................. 1,800,000
----------------
----------------
</TABLE>

In the International Underwriting Agreement, the several International
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all of the shares of Common Stock set forth in the table above, if
any such shares are purchased. In the event of a default by any International
Underwriter, the International Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting International
Underwriters may be increased or the International Underwriting Agreement may be
terminated.

Bethlehem has been advised by the International Representatives that the
several International Underwriters propose initially to offer such shares to the
public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share. The International Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to other dealers.
After this public offering, the public offering price and such concessions may
be changed.

Bethlehem has granted to the International Underwriters an option,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to 270,000 additional shares of Common Stock at the same price per
share as the initial 1,800,000 shares of Common Stock to be purchased by the
International Underwriters. The International Underwriters may exercise such
option only to cover over-allotments in the sale of the shares of Common Stock
that the International Underwriters have agreed to purchase. To the extent that
the International Underwriters exercise such option, each International
Underwriter will have a firm commitment, subject to certain conditions, to
purchase the same proportion of the option shares as the number of shares of
Common Stock to be purchased and offered by such International Underwriter in
the above table bears to the total number of shares of Common Stock initially
purchased by the International Underwriters.

Bethlehem has also entered into a U.S. Underwriting Agreement with the U.S.
Underwriters named therein, for whom Salomon Brothers Inc., J.P. Morgan
Securities Inc. and Morgan Stanley & Co. Incorporated are acting as
representatives (the "U.S. Representatives"), providing for the concurrent offer
and sale of 10,200,000 shares of Common Stock in the United States and Canada
and providing the U.S. Underwriters an option, exercisable during the 30-day
period after the date of this Prospectus, to purchase up to 1,530,000 additional
shares at the same price per share as the initial 10,200,000shares of Common
Stock to be purchased by the U.S. Underwriters.

The offering price and underwriting discounts for the International
Offering and the U.S. Offering will be identical. The closing of the
International Offering is conditioned upon the closing of the

4
<PAGE> 61

[ALTERNATE]

U.S. Offering, and the closing of the U.S. Offering is conditioned upon the
closing of the International Offering.

Each International Underwriter has severally agreed that, as part of the
International Offering, (a) it is not purchasing any shares of Common Stock for
the account of any United States or Canadian Person and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any shares of
Common Stock or distribute this Prospectus to any person within the United
States or Canada or to any United States or Canadian Person. Each U.S.
Underwriter has severally agreed that, as part of the U.S. Offering, (a) it is
not purchasing any shares of Common Stock for the account of anyone other than a
United States or Canadian Person and (b) it has not offered or sold, and will
not offer or sell, directly or indirectly, any shares of Common Stock or
distribute any Prospectus relating to the U.S. Offering to any person outside
the United States or Canada or to anyone other than a United States or Canadian
Person. The foregoing limitations do not apply to stabilization transactions or
to certain other transactions specified in the agreement between the
International Underwriters and the U.S. Underwriters. "United States or Canadian
Person" means any person who is a national or resident of the United States or
Canada, any corporation, partnership or other entity created or organized in or
under the laws of the United States or Canada, or any political subdivision
thereof, any estate or trust the income of which is subject to United States or
Canadian federal income taxation, regardless of the source of its income (other
than a foreign branch of any United States or Canadian Person), and includes any
United States or Canadian branch of a person other than a United States or
Canadian Person.

Each International Underwriter has severally represented and agreed that:
(a) it has not offered or sold and will not offer or sell in the United Kingdom,
by means of any document, any shares of Common Stock other than to persons whose
ordinary business it is to buy or sell shares or debentures, whether as
principal or agent, or in circumstances which do not constitute an offer to the
public within the meaning of the Companies Act 1985; (b) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the shares of Common Stock
in, from or otherwise involving the United Kingdom; and (c) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the shares of Common Stock to a
person who is of a kind described in Article 9(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1988 or is a person to whom
the document may otherwise lawfully be issued or passed on. Each International
Underwriter has also severally agreed, among other things, that it will not
offer or sell any shares of Common Stock, or distribute the Prospectus or any
offering materials relating to the Common Stock in any jurisdiction except in
compliance with law.

Pursuant to the agreement between the International Underwriters and the
U.S. Underwriters, sales may be made between the International Underwriters and
the U.S. Underwriters of such number of shares of Common Stock as may be
mutually agreed. The price of any shares of Common Stock so sold shall be the
initial public offering price, less an amount not greater than the concession to
securities dealers. To the extent that there are sales between the International
Underwriters and the U.S. Underwriters pursuant to the agreement between the
International Underwriters and the U.S. Underwriters, the number of shares
initially available for sale by the International Underwriters or by the U.S.
Underwriters may be more or less than the amount appearing on the cover page of
this Prospectus.

5
<PAGE> 62

[ALTERNATE]

employee benefit plans or labor agreements, for a period of 90 days from the
date hereof without the prior written consent of the International
Representatives and the U.S. Representatives.

The International Underwriting Agreement and the U.S. Underwriting
Agreement each provide that Bethlehem will indemnify the International
Underwriters and the U.S. Underwriters, respectively, against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the International Underwriters and the U.S. Underwriters, as the case
may be, may be required to make in respect thereof.

LEGAL MATTERS

EXPERTS

6
<PAGE> 63

[ALTERNATE]

12,000,000 SHARES

BETHLEHEM STEEL
CORPORATION

COMMON STOCK
($1.00 PAR VALUE)

SALOMON BROTHERS
INTERNATIONAL LIMITED

J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY & CO.
INTERNATIONAL

PROSPECTUS

DATED FEBRUARY , 1994
<PAGE> 64

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $110,044
NASD filing fee.................................................. 32,413
Listing fee...................................................... 48,300
Blue sky fees and expenses....................................... 12,000
Legal services................................................... 75,000
Accounting services.............................................. 75,000
Transfer Agent and Registrar fees................................ 1,500
Printing expenses................................................ 75,000
Miscellaneous.................................................... 743
--------
Total.................................................. $430,000
--------
--------
</TABLE>

All of the above items except the Securities and Exchange Commission
registration fee, the NASD filing fee and the listing fees are estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware gives
Delaware corporations broad powers to indemnify their present and former
directors and officers and those of affiliated corporations against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with threatened, pending or
completed actions, suits or proceedings to which they are parties or are
threatened to be made parties by reason of being or having been such directors
or officers, subject to specified conditions and exclusions; gives a director or
officer who successfully defends an action the right to be so indemnified; and
permits a corporation to buy directors' and officers' liability insurance. Such
indemnification is not exclusive of any other rights to which those indemnified
may be entitled under any by-law, agreement, vote of stockholders or otherwise.

Article IX of Bethlehem's By-laws requires Bethlehem to indemnify its
directors and officers to the maximum extent permitted by the General
Corporation Law of the State of Delaware. Article Eighth of Bethlehem's Restated
Certificate also provides that Bethlehem may indemnify and advance expenses to
its directors, officers, employees or agents to the fullest extent permitted by
applicable law.

Bethlehem has entered into individual Indemnification Assurance Agreements
with each of its directors and executive officers pursuant to which Bethlehem
has agreed to indemnify each of its directors and executive officers to the full
extent provided by applicable law and the By-laws of Bethlehem as currently in
effect. In addition, Bethlehem has established in connection with its
indemnification policy an irrevocable letter of credit in an aggregate amount of
$5 million to assure payment to each director and executive officer of any
amounts to which they may become entitled as indemnification pursuant to the
Bylaws in the event that, for any reason, Bethlehem shall not pay to them any
such indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling Bethlehem
pursuant to the foregoing provisions, Bethlehem has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and therefore unenforceable.

Bethlehem maintains insurance policies insuring its directors and officers
against certain losses incurred by them as a result of claims based upon their
actions or statements (including omissions

II-1
<PAGE> 65

to act or to make statements) as directors and officers. The aggregate amount
payable for individual directors and officers under such policies in any policy
year is limited to $75 million. After certain deductibles, Bethlehem is entitled
to reimbursement of up to $50 million under such policies in connection with its
indemnification of directors and officers.

Bethlehem also maintains an insurance policy insuring those individuals who
are fiduciaries, as defined by the Employee Retirement Income Security Act of
1974, under certain employee benefit plans of Bethlehem and its subsidiaries
against certain losses incurred by them as a result of claims based on their
responsibilities, obligations and duties under such Act. This fiduciary policy
is subject to certain deductibles and has an annual aggregate limit of $30
million.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware Corporation to include in its certificate of incorporation a
provision eliminating the potential monetary liability of a director to the
corporation or its stockholders for breach of fiduciary duty as a director,
provided that such provision shall not eliminate the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for improper payment
of dividends, or (iv) for any transaction from which the director receives an
improper personal benefit. Bethlehem's Restated Certificate includes such a
provision in Article Ninth thereof.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------------
<S> <C>
1(a) Form of U.S. Underwriting Agreement.
1(b) Form of International Underwriting Agreement.
4(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 3, 1988).
4(b) By-laws of Bethlehem Steel Corporation, as amended October 1, 1988
(Incorporated by reference from Exhibit 3 to Bethlehem's quarterly
report on Form 10-Q for the quarter ended September 30, 1988).
4(c) Rights Agreement, dated as of September 28, 1988, between Bethlehem
Steel Corporation and Morgan Shareholder Services Trust Company
(Incorporated by reference from Exhibit 1,2 to Bethlehem's Application
for Registration of Certain Classes of Securities on Form 8-A).
4(d) Certificate of Voting Powers, Designation, Preferences and Relative,
Participating, Optional or Other Special Rights, and the Qualifications,
Limitations and Restrictions Thereof, of the Employee Stock Ownership
Plan Convertible Preference Stock, Series B, of Bethlehem Steel
Corporation (Incorporated by reference from Exhibit 4 to Bethlehem's
quarterly report on Form 10-Q for the quarter ended March 31, 1991).
4(e) Certificate of Voting Powers, Designation, Preferences and Relative,
Participating, Optional or Other Special Rights, and the Qualifications,
Limitations and 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).
</TABLE>

II-2
<PAGE> 66

<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------------
<S> <C>
4(f) Form of Common Stock Certificate (Incorporated by reference from Exhibit
4(e) to Bethlehem's Registration Statement on Form S-3 (No. 33-48697)).
5 Opinion of G. P. Holsenbeck, Esq.
18 Price Waterhouse Letter regarding Change in Accounting.
23(a) Consent of G. P. Holsenbeck, Esq. (included in Exhibit 5).
23(b) Consent of Price Waterhouse.
24 Powers of Attorney.
</TABLE>

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described
under Item 15 above, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(4) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-3
<PAGE> 67

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bethlehem and Commonwealth of Pennsylvania, on this
9th day of February, 1994.

BETHLEHEM STEEL CORPORATION,
Registrant

By /s/ CURTIS H. BARNETTE
Curtis H. Barnette
Chairman and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ CURTIS H. BARNETTE Director, Chairman and Chief February 9, 1994
Curtis H. Barnette Executive Officer
(principal executive
officer)
/s/ GARY L. MILLENBRUCH Director, Executive Vice February 9, 1994
Gary L. Millenbruch President (principal
financial officer)
/s/ LONNIE A. ARNETT Vice President and February 9, 1994
Lonnie A. Arnett Controller (principal
accounting officer)
* Director February 9, 1994
Benjamin R. Civiletti
* Director February 9, 1994
Worley H. Clark
* Director February 9, 1994
Herman E. Collier, Jr.
* Director February 9, 1994
John B. Curcio
* Director February 9, 1994
William C. Hittinger
* Director February 9, 1994
Thomas L. Holton
* Director February 9, 1994
Harry P. Kamen
</TABLE>

II-4
<PAGE> 68

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
* Director February 9, 1994
Winthrop Knowlton
* Director February 9, 1994
Robert McClements, Jr.
* Director February 9, 1994
Roger P. Penny
* Director February 9, 1994
Dean P. Phypers
* Director February 9, 1994
William A. Pogue
* Director February 9, 1994
John F. Ruffle
*By /s/ LONNIE A. ARNETT
Lonnie A. Arnett
(Attorney-in-Fact)
</TABLE>

II-5
<PAGE> 69

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- --------------------------------------------------------------------------------- -----------
<S> <C> <C>
1(a) Form of U.S. Underwriting Agreement...................................
1(b) Form of International Underwriting Agreement..........................
4(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)........................................................
4(b) By-laws of Bethlehem Steel Corporation, as amended October 1, 1988
(Incorporated by reference from Exhibit 3 to Bethlehem's quarterly
report on Form 10-Q for the quarter ended September 30, 1988).........
4(c) Rights Agreement, dated as of September 28, 1988, between Bethlehem
Steel Corporation and Morgan Shareholder Services Trust Company
(Incorporated by reference from Exhibit 1,2 to Bethlehem's Application
for Registration of Certain Classes of Securities on Form 8-A)........
4(d) Certificate of Voting Powers, Designation, Preferences and Relative,
Participating, Optional or Other Special Rights, and the
Qualifications, Limitations and Restrictions Thereof, of the Employee
Stock Ownership Plan Convertible Preference Stock, Series B, of
Bethlehem Steel Corporation (Incorporated by reference from Exhibit 4
to Bethlehem's quarterly report on Form 10-Q for the quarter ended
March 31, 1991).......................................................
4(e) Certificate of Voting Powers, Designation, Preferences and Relative,
Participating, Optional or Other Special Rights, and the
Qualifications, Limitations and 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)..................................
4(f) Form of Common Stock Certificate (Incorporated by reference from
Exhibit 4(e) to Bethlehem's Registration Statement on Form S-3 (No.
33-48697)). ..........................................................
5 Opinion of G. P. Holsenbeck, Esq......................................
18 Price Waterhouse Letter regarding Change in Accounting................
23(a) Consent of G. P. Holsenbeck, Esq. (included in Exhibit 5).............
23(b) Consent of Price Waterhouse...........................................
24 Powers of Attorney....................................................
</TABLE>

<PAGE> 1

Bethlehem Steel Corporation

10,200,000 Shares*
Common Stock
($1.00 par value)

U.S. Underwriting Agreement

New York, New York
--------- --, 1994

Salomon Brothers Inc
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
As Representatives of the
several Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048

Dear Sirs:

Bethlehem Steel Corporation, a Delaware corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), 10,200,000 shares of Common Stock, $1.00 par value (the
"Common Stock") of the Company (said shares to be issued and sold by the
Company being hereinafter called the "U.S. Underwritten Shares"). The Company
also proposes to grant to the Underwriters an option to purchase up to
1,530,000 additional shares of Common Stock to cover over-allotments (the "U.S.
Option Shares"). The U.S. Option Shares, together with the U.S. Underwritten
Shares, are hereinafter called the "U.S. Shares". Each share of Common Stock
has attached to it a Preference Stock Purchase Right (a "Right"). Unless the

- ----------------------------------
* Plus an option to purchase from Bethelehem Steel Corporation up to
1,530,000 additional shares to cover over-allotments.
<PAGE> 2
context otherwise requires, all references in this Agreement to Common Stock
include the attached Rights.

It is understood that the Company is concurrently entering
into an International Underwriting Agreement dated the date hereof (the
"International Underwriting Agreement") providing for the sale by the Company
of 1,800,000 shares of Common Stock (the "International Underwritten Shares")
outside the United States and Canada, through arrangements with certain
managers outside the United States and Canada (the "Managers"), for whom
Salomon Brothers International Limited, J.P. Morgan Securities Ltd. and Morgan
Stanley & Co. International Limited are acting as representatives (the
"International Representatives"), and providing for the grant to the Managers
of an option to purchase up to 270,000 additional shares of Common Stock (the
"International Option Shares") to cover over-allotments. The International
Underwritten Shares together with the International Option Shares, are
hereinafter called the "International Shares".

The U.S. Shares together with the International Shares are
hereinafter called the "Shares".

It is further understood and agreed that the Underwriters and
the Managers are entering into an Agreement Between Syndicates, dated the date
hereof (the "Agreement Between Syndicates"), pursuant to which, among other
things, the Managers may purchase from the Underwriters a portion of the U.S.
Shares to be sold pursuant to this Agreement and the Underwriters may purchase
from the Managers a portion of the International Shares to be sold pursuant to
the International Underwriting Agreement.

1. Representations and Warranties. The Company
represents and warrants to, and agrees with, each Underwriter as set forth
below in this Section 1. Certain terms used in this Section 1 are defined in
paragraph (c) hereof.

(a) The Company meets the requirements for use of
Form S-3 under the Securities Act of 1933 (the "Act") and the Company
has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (file number 33------) on

2
<PAGE> 3
such form, including related preliminary prospectuses, for the
registration under the Act of the offering and sale of the Shares.
The Company may have filed one or more amendments thereto, including
the related preliminary prospectuses, each of which has previously
been furnished to you. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such registration
statement, a further amendment to such registration statement,
including the forms of final prospectuses or (ii) after effectiveness
of such registration statement, final prospectuses in accordance with
Rules 430A and 424(b)(1) or (4). In the case of clause (ii), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than the Rule 430A Information)
required by the Act and the rules and regulations thereunder to be
included in the Prospectuses with respect to the Shares and the
offering thereof. As filed, such amendment and forms of final
prospectuses, or such final prospectuses, shall contain all Rule 430A
Information together with all other such required information, with
respect to the Shares and the offerings thereof and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest
Preliminary Prospectuses) as the Company has advised you, prior to the
Execution Time, will be included or made therein.

(b) On the Effective Date, the Registration
Statement did or will, and when each of the Prospectuses is first
filed (if required) in accordance with Rule 424(b), on the Closing
Date and on the Settlement Date, if any, each of the Prospectuses (and
any supplements thereto) will, comply in all material respects with
the applicable requirements of the Act and the Securities Exchange Act
of 1934 (the "Exchange Act"), and the respective rules thereunder; on
the Effective Date, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any

3
<PAGE> 4
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Effective
Date, each of the Prospectuses, if not filed pursuant to Rule 424(b),
did not or will not, and on the date of any filing pursuant to Rule
424(b), on the Closing Date and on the Settlement Date, if any, each
of the Prospectuses (together with any supplement thereto) will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectuses (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives or by or on behalf of any
Manager through the International Representatives specifically for
inclusion in the Registration Statement or the Prospectuses (or any
supplement thereto).

(c) The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term "the Effective
Date" shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. The "U.S.
Preliminary Prospectus" and the "International Preliminary
Prospectus", respectively, shall mean any preliminary prospectus with
respect to the offering of the U.S. Shares and the International
Shares, as the case may be, referred to in paragraph (a) above and any
preliminary prospectus with respect to the offering of the U.S. Shares
and the International Shares, as the case may be, included in the
Registration Statement at the Effective Date that omits Rule 430A
Information; and the U.S. Preliminary Prospectus and the International
Preliminary Prospectus and hereinafter collectively called the
"Preliminary Prospectuses". "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including
incorporated

4
<PAGE> 5
documents, exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution Time, in the
form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined) or the Settlement Date (as
hereinafter defined), if any, shall also mean such registration
statement as so amended. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 424," "Rule 430A" and "Regulation S-K"
refer to such rules or regulation under the Act. "Rule 430A
Information" means information with respect to the Shares and the
offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A. Any
reference herein to the Registration Statement, a Preliminary
Prospectus or a Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of such
Preliminary Prospectus or Prospectus, as the case may be; and any
reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, any Preliminary Prospectus
or Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary
Prospectus or Prospectus, as the case may be, deemed to be
incorporated therein by reference.

It is understood that two forms of prospectus are to
be used in connection with the offering and sale of the Shares: one
form of prospectus relating to the U.S. Shares, which are to be
offered and sold to United States and Canadian Persons (as defined in
Section 5 below), and one form of prospectus relating to the
International Shares, which are to be offered and sold to persons
other than United States and Canadian Persons. The two forms of
prospectus are identical except for the outside front cover page, the
inside front cover page, the discussion under the heading
"Underwriting", and the

5
<PAGE> 6
outside back cover page. Such form of prospectus relating to the U.S.
Shares as first filed pursuant to Rule 424(b) or, if no filing
pursuant to Rule 424(b) is required, such form of prospectus included
in the Registration Statement at the Effective Date, is hereinafter
called the U.S. Prospectus; such form of prospectus relating to the
International Shares as first filed pursuant to Rule 424(b) or, if no
filing pursuant to Rule 424(b) is required, such form of prospectus
included in the Registration Statement at the Effective Date, is
hereinafter called the "International Prospectus"; and the U.S.
Prospectus and the International Prospectus are hereinafter
collectively called the "Prospectuses".

(d) The Shares have been duly authorized by
the Company and, when issued and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable, free of any preemptive rights and not subject to any
lien, charge, encumbrance or any other claim by any third party
arising out of any act of the Company.

(e) This Agreement has been duly authorized,
executed and delivered by the Company.

2. Purchase and Sale.

(a) Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth,
the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a
purchase price of $---- per share, the number of U.S. Underwritten
Shares set forth opposite such Underwriter's name in Schedule I
hereto.

(b) Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth,
the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to 1,530,000 shares of U.S.
Option Shares at the same purchase price per share as the Underwriters
shall pay for the U.S. Underwritten Shares. Said option may be

6
<PAGE> 7
exercised only to cover over-allotments in the sale of the U.S.
Underwritten Shares by the Underwriters. Said option may be exercised
in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the U.S. Prospectus upon written or
telegraphic notice by the Representatives to the Company setting forth
the number of shares of the U.S. Option Shares as to which the several
Underwriters are exercising the option and the Settlement Date.
Subject to the terms and conditions of this Agreement, the Company
agrees to sell to the Underwriters the number of U.S. Option Shares
specified in such notice and the Underwriters, severally and not
jointly, agree to purchase such U.S. Option Shares. Delivery of
certificates for the shares of U.S. Option Shares, and payment
therefor, shall be made as provided in Section 3 hereof. The number
of shares of the U.S. Option Shares to be purchased by each
Underwriter shall be the same percentage of the total number of shares
of the U.S. Option Shares to be purchased by the several Underwriters
as such Underwriter is purchasing of the U.S. Underwritten Shares,
subject to such adjustments as you in your absolute discretion shall
make to eliminate any fractional shares.

3. Delivery and Payment. Delivery of and payment for the
U.S. Underwritten Shares and the U.S. Option Shares (if the option provided for
in Section 2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date) shall be made at 10:00 A.M., New York
City time, on ------ --, 1994, or such later date (not later than ------ --,
1994) as the Representatives shall designate, which date and time may be
postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for
the U.S. Shares being herein called the "Closing Date"; and such date and time
of delivery and payment for the U.S. Option Shares (if the option provided for
in Section 2(b) hereof shall have been exercised after the third business day
prior to the Closing Date) being herein called the "Settlement Date").
Delivery of the U.S. Shares shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to the
Company [by wire transfer to the Company

7
<PAGE> 8
in immediately available funds, provided that the Company reimburses you for
your costs for obtaining such immediately available funds on the day following
the Closing Date by wire transfer to the Representatives in immediately
available funds] [or by certified or official bank check or checks drawn on or
by a New York Clearing House bank and payable in next day funds]. Delivery of
the U.S. Underwritten Shares and the U.S. Option Shares shall be made at such
location as the Representatives shall reasonably designate at least one
business day in advance of the Closing Date and payment for the U.S. Shares
shall be made at the office of Skadden, Arps, Slate, Meagher & Flom, New York,
New York. Certificates for the U.S. Shares shall be registered in such names
and in such denominations as the Representatives may request not less than
three full business days in advance of the Closing Date.

The Company agrees to have the U.S. Shares available for
inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 P.M. on the business day prior to the Closing Date.

If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representatives, at Seven World
Trade Center, New York, New York, on the date specified by the Representatives
(which shall be within three business days after exercise of said option),
certificates for the U.S. Option Shares in such names and denominations as the
Representatives shall have requested against payment of the purchase price
thereof to the Company by wire transfer to the Company in immediately available
funds, provided that the Company reimburses you for your costs for obtaining
such immediately available funds on the day following the Closing Date for the
U.S. Option Shares by wire transfer to the Representatives in immediately
available funds. If settlement for the U.S. Option Shares occurs after the
Closing Date, the Company will deliver to the Representatives on the Settlement
Date for the U.S. Option Shares, and the obligation of the Underwriters to
purchase the U.S. Option Shares shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.

8
<PAGE> 9
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the U.S. Shares for sale to the public as
set forth in the U.S. Prospectus.

5. Agreements.

(a) The Company agrees with the several Underwriters
that:

(i) The Company will use its best efforts to cause
the Registration Statement, and any amendment thereof, if not
effective at the Execution Time, to become effective. Prior
to the termination of the offering of the Shares, the Company
will not file any amendment of the Registration Statement or
any supplement to the Prospectuses unless the Company has
furnished you a copy for your review prior to filing and will
not file any such proposed amendment or supplement to which
you reasonably object. Subject to the foregoing sentence, if
the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectuses is
otherwise required under Rule 424(b), the Company will cause
the Prospectuses, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will
promptly advise the Representatives (i) when the Registration
Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the
Prospectuses, and any supplement thereto, shall have been
filed (if required) with the Commission pursuant to Rule
424(b), (iii) when, prior to termination of the offering of
the Shares, any amendment to the Registration Statement shall
have been filed or become effective, (iv) of any request by
the Commission for any amendment or supplement of the
Registration Statement or the Prospectuses or for any
additional information, (v) of the issuance by the Commission
of any stop order suspending

9
<PAGE> 10
the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose
and (vi) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.

(ii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Act, any
event occurs as a result of which the Prospectuses as then
amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary
to make the statements therein in the light of the
circumstances under which they were made not misleading, or if
it shall be necessary to amend the Registration Statement or
supplement either of the Prospectuses to comply with the Act
or the Exchange Act or the respective rules thereunder, the
Company promptly will prepare and file with the Commission,
subject to paragraph (i) of this subsection 5(a), an amendment
or supplement that will correct such statement or omission or
will effect such compliance.

(iii) As soon as practicable, the Company will make
generally available to its security holders and to the
Representatives an earnings statement or statements of the
Company and its subsidiaries that will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the Act.

(iv) The Company will furnish to the Representatives
and counsel for the Underwriters, without charge, conformed
copies of the Registration Statement (including exhibits
thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long
as delivery of a prospectus by an Underwriter or dealer may be
required

10
<PAGE> 11
by the Act, as many copies of each U.S. Preliminary Prospectus
and the U.S. Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay
the expenses of printing or other production of all documents
relating to the offering.

(v) The Company will arrange for the qualification
of the Shares for sale under the laws of such jurisdictions as
the Representatives may designate, will maintain such
qualifications in effect so long as required for the
distribution of the Shares and will pay the fee of the
National Association of Securities Dealers, Inc., in
connection with its review of the offering; provided, however,
that the Company shall not be required to qualify to do
business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to general or
unlimited service of process in any jurisdiction where it is
not now so subject.

(vi) The Company confirms as of the date hereof that
it is in compliance with all provisions of Section 1 of Laws
of Florida, Chapter 92-198, An Act Relating to Disclosure of
Doing Business with Cuba, and the Company further agrees that
if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become
effective with the Commission or with the Florida Department
of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectuses, if
any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material
way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to
the Department.

(vii) The Company will not, for a period of 90 days
following the Execution Time, without the prior written
consent of the Representatives, offer, sell or contract to
sell, or

11
<PAGE> 12
otherwise dispose of, directly or indirectly, announce the
offering of or register, any shares of Common Stock, or
securities convertible into, or exchangeable for shares of
Common Stock (other than pursuant to this Agreement and the
International Underwriting Agreement and other than in the
ordinary course of the Company's employee benefit and
incentive plans and collective bargaining agreements).

(b) Each Underwriter agrees that (i) it is not
purchasing any of the U.S. Shares for the account of anyone other than
a United States or Canadian Person, (ii) it has not offered or sold,
and will not offer or sell, directly or indirectly, any of the U.S.
Shares or distribute the U.S. Preliminary Prospectus or the U.S.
Prospectus to any person outside the United States or Canada, or to
anyone other than a United States or Canadian Person, and (iii) any
dealer to whom it may sell any of the U.S. Shares will represent that
it is not purchasing for the account of anyone other than a United
States or Canadian Person and will agree that it will not offer or
resell, directly or indirectly, any of the U.S. Shares outside the
United States or Canada, or to anyone other than a United States or
Canadian Person or to any other dealer who does not so represent and
agree; provided, however, that the foregoing shall not restrict (A)
purchases and sales between the Underwriters on the one hand and the
Managers on the other hand pursuant to Section 1(b) of the Agreement
Between Syndicates, (B) stabilization transactions contemplated under
Section 2 of the Agreement Between Syndicates, conducted through
Salomon Brothers Inc as part of the distribution of the Shares, and
(C) sales to or through (or distributions of U.S. Prospectuses or U.S.
Preliminary Prospectuses to) United States or Canadian Persons who are
investment advisors, or who otherwise exercise investment discretion,
and who are purchasing for the account of anyone other than a United
States or Canadian Person. "United States or Canadian Person" shall
mean any person who is a national or resident of the United States or
Canada, a corporation, partnership, or other entity created or
organized in or under the laws of the United States or Canada or of
any political subdivision thereof, or

12
<PAGE> 13
any estate or trust the income of which is subject to United States or
Canadian federal income taxation, regardless of its source (other than
any non-United States or non-Canadian branch of any United States or
Canadian Person), and shall include any United States or Canadian
branch of a person other than a United States or Canadian Person.
"U.S." or "United States" shall mean the United States of America
(including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction.

(c) The agreements of the Underwriters set forth in
subsection (b) of this Section 5 shall terminate upon the earlier of
the following events:

(i) a mutual agreement of the Representatives and
the International Representatives to terminate the selling
restrictions set forth in subsection (b) of this Section 5 and
in subsection (b) of Section 5 of the International
Underwriting Agreement; or

(ii) the expiration of a period of 30 days after the
Closing Date, unless (A) the Representatives shall have given
notice to the Company and the International Representatives
that the distribution of the U.S. Shares by the Underwriters
has not yet been completed, or (B) the International
Representatives shall have given notice to the Company and the
Underwriters that the distribution of the International Shares
by the Managers has not yet been completed. If such notice by
the Representatives or the International Representatives is
given, the agreement set forth in such paragraph (b) shall
survive until the earlier of (1) the event referred to in
clause (i) above or (2) the expiration of any additional
period of 30 days from the date of any such notice.

6. Conditions to the Obligations of the Underwriters. The
obligation of the Underwriters to purchase the U.S. Underwritten Shares and
the U.S. Option Shares, as the case may be, shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time, the

13
<PAGE> 14
Closing Date, and in the case of any U.S. Option Shares sold after the Closing
Date, the Settlement Date, to the accuracy of the statements of the Company
made in any certificates pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:

(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives
agree in writing to a later time, the Registration Statement shall
have become effective not later than (i) 6:00 P.M., New York City
time, on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 P.M., New York City
time, on such date or (ii) 12:00 Noon on the business day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 P.M., New York City time, on such
date; if filing of the Prospectuses, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectuses and any such
supplements shall have been filed in the manner and within the time
period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for the purpose shall have been instituted or
threatened.

(b) The Company shall have furnished to the
Representatives the opinion of G. Penn Holsenbeck, Esq., Deputy
General Counsel of the Company, dated the Closing Date, to the effect
that:

(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power and
authority to execute, deliver and perform its obligations
under this Agreement, and full corporate power and authority
to own its properties and conduct its business as described in
the Prospectuses; the Company is duly qualified to do business
as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification
where failure so to qualify would have a material adverse
effect on its operations or business;

14
<PAGE> 15
and the Company does not have any subsidiaries whose assets,
operations or earnings are material to the assets, operations
or earnings of the Company and its subsidiaries, taken as a
whole;

(ii) the Company's authorized equity capitalization
is as set forth in the Prospectuses; the capital stock of the
Company conforms to the description thereof contained in the
Prospectuses; the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Shares have been duly and validly
authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement and the Managers
pursuant to the International Underwriting Agreement will be
fully paid and nonassessable; the Shares have been duly
authorized for listing, subject to official notice of
issuance, on the New York Stock Exchange and the Chicago Stock
Exchange and the certificates therefor are in valid and
sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Shares;

(iii) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the Registration
Statement or Prospectuses which is not adequately disclosed in
the Registration Statement and Prospectuses; to the best
knowledge of such counsel, there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectuses, or to be filed as an
exhibit, which is not described or filed or incorporated by
reference as required and the statements in each of the
Prospectuses under the heading "Business--Legal Proceedings"
fairly summarize the matters therein described;

15
<PAGE> 16
(iv) the Registration Statement has become effective
under the Act; any required filing of the Prospectuses and any
supplement thereto pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been
instituted or threatened, and the Registration Statement and
each of the Prospectuses (other than the financial statements
and other financial and statistical information contained
therein as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the Exchange Act and the
respective rules thereunder; and such counsel has no reason to
believe that at the Effective Date the Registration Statement
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or
that either of the Prospectuses contains any untrue statement
of a material fact or omits to state a material fact necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

(v) this Agreement has been duly authorized,
executed and delivered by the Company;

(vi) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated
herein, except such as have been obtained under the Act and
such as may be required under the securities or blue sky laws
of any jurisdiction in connection with the purchase and
distribution of the Shares and such other approvals (specified
in such opinion) as have been obtained;

(vii) neither the issue and sale of the Shares, nor
the consummation of any other of the transactions herein
contemplated nor the

16
<PAGE> 17
fulfillment of the terms hereof will conflict with, result in
a breach or violation of, or constitute a default under any
law or the Restated Certificate of Incorporation, or By-laws
of the Company, or the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company or any of its subsidiaries is a party or bound, or any
judgment, order or regulation known to such counsel to be
applicable to the Company or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company or any
of its subsidiaries; and

(viii) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement.

In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of Delaware and Pennsylvania or the United States, to the extent he
deems proper and specified in such opinion, upon the opinion of other counsel
of good standing whom he believes to be reliable and who are satisfactory to
counsel for the Representatives and (B) as to matters of fact, to the extent he
deems proper, on certificates of responsible officers of the Company and public
officials. References to the Prospectuses in this paragraph (b) include any
amendments and supplements thereto.

(c) The Representatives shall have received from
Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriters,
such opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Shares, the Registration Statement, the
Prospectuses and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.

(d) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chairman
and Chief Executive Officer

17
<PAGE> 18
or the President and by the Executive Vice President and Chief
Financial Officer, the Vice President and Treasurer or the Vice
President and Controller of the Company, dated the Closing Date, to
the effect that:

(i) the representations and warranties of
the Company in this Agreement are true and correct in all
material respects on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;

(ii) no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to the Company's knowledge, threatened; and

(iii) since the date of the most recent
financial statements included in the Prospectuses (exclusive
of any supplement thereto), there has been no material adverse
change in the condition (financial or other), earnings,
business or properties of the Company and its subsidiaries,
whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in
the Prospectuses (exclusive of any supplement thereto).

(e) At the Execution Time and at the Closing Date, the Company
shall have furnished to the Representatives a letter or letters from
Price Waterhouse, dated respectively as of the Execution Time and the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the Exchange
Act and the respective applicable published rules and regulations
thereunder and stating in effect that:

(i) in their opinion the audited financial
statements and financial statement

18
<PAGE> 19
schedules included in the Registration Statement and the
Prospectuses and reported on by them comply in form in all
material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related published
rules and regulations; and

(ii) they have performed certain other specified
procedures requested by the Representatives and which Price
Waterhouse is willing to perform and report on as a result of
which they determined that certain information of an
accounting, financial or statistical nature (that is expressed
in dollars, or percentages derived from such dollar amounts,
and has been obtained from the general accounting records that
are subject to internal controls of the Company's accounting
system or that has been derived directly from such accounting
records by analysis or computation) set forth in the
Registration Statement and each of the Prospectuses including
the information set forth under the captions "Prospectus
Summary", "Investment Considerations", "Recent Developments",
"Bethlehem", "Use of Proceeds", "Price Range of Common Stock",
"Capitalization," "Selected Consolidated Income Statement
Data", "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Business" and
"Description of Capital Stock" in the Registration Statement
and each of the Prospectuses, the information included or
incorporated in the Registration Statement and the
Prospectuses from the Company's Annual Report on Form 10-K for
the year ended December 31, 1992, Amendment No. 2 on Form
10-K/A to the Annual Report on Form 10-K for the year ended
December 31, 1992, the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1993, June 30, 1993 and September 30,
1993 and the Current Report on Form 8-K dated March 5, 1993
agrees with the accounting records of the Company and its
subsidiaries, subject to its system of internal controls.

19
<PAGE> 20
References to the Registration Statement and the Prospectuses
in this paragraph (e) include any amendments or supplements thereto at the date
of the letter.

(f) Subsequent to the Execution Time or, if earlier,
the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectuses
(exclusive of any supplement thereto), there shall not have been (i)
any change or decrease specified in the letter or letters referred to
in paragraph (e) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the
business or properties of the Company and its subsidiaries the effect
of which, in any case referred to in clause (i) or (ii) above, is, in
the judgment of the Representatives, so material and adverse as to
make it impractical or inadvisable to proceed with the public offering
or the delivery of the Shares as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectuses
(exclusive of any supplement thereto).

(g) The closing of the purchase of the International
Underwritten Shares (and of the International Option Shares, if the
option provided for in Section 2(b) of the International Underwriting
Agreement shall have been exercised on or before the third business
day prior to the Closing Date) pursuant to the International
Underwriting Agreement shall occur concurrently with the closing
described in the first paragraph of Section 3 above.

(h) At the Execution Time, the Representatives shall
have received from the Company a letter substantially in the form of
Exhibit A hereto.

(i) The Shares shall have been approved for listing
on the New York Stock Exchange and the Chicago Stock Exchange.

(j) Prior to the Closing Date, the Company shall
have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably
request.

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<PAGE> 21
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.

7. Reimbursement of Underwriters' Expenses. If the sale of
the U.S. Shares provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the U.S.
Shares, but the Company shall then be under no further liability to the
Underwriters except as provided in Section 5(d) and (e) for the payment of
expenses by the Company and Section 8 hereof.

8. Indemnification and Contribution.

(a) The Company agrees to indemnify and hold
harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the
Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
for the registration of the Shares

21
<PAGE> 22
as originally filed or in any amendment thereof, or in any Preliminary
Prospectus or either of the Prospectuses, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action;provided, however, that (i) the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion
therein, and (ii) such indemnity with respect to any U.S. Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any
person controlling any Underwriter) from whom the person asserting any
such loss, claim, damage or liability purchased the Shares which are
the subject thereof if such person did not receive a copy of the U.S.
Prospectus (or the U.S. Prospectus as amended or supplemented) at or
prior to the confirmation of the sale of such Shares to such person in
any case where such delivery is required by the Act and the untrue
statement or omission of a material fact contained in such U.S.
Preliminary Prospectus was corrected in the U.S. Prospectus (or the
U.S. Prospectus as amended or supplemented). This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.

(b) Each Underwriter severally agrees to indemnify
and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who
controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company by
or

22
<PAGE> 23
on behalf of such Underwriter through the Representatives specifically
for inclusion in the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the
statements set forth in the last paragraph of the cover page and under
the heading "Underwriting" in any U.S. Preliminary Prospectus and the
U.S. Prospectus constitute the only information furnished in writing
by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the
Representatives, confirm that such statements are correct.

(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except
as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses
of such separate

23
<PAGE> 24
counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An
indemnifying party shall not be liable for any settlement or
compromise effected, or any judgment entered pursuant to settlement or
compromise, without its prior written consent, with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder,
provided that such consent may not be withheld unless such settlement
or compromise is unreasonable in light of such claims or actions
against, and defenses available to, the indemnified party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (provided that the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding.

24
<PAGE> 25
cluding legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received
by the Company and by the Underwriters from the offering of the
Shares; provided, howeve, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters
relating to the offering of the Shares) be responsible for any amount
in excess of the underwriting discount or commission applicable to the
Shares purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and of the
Underwriters in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to
be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Underwriters shall be deemed
to be equal to the total underwriting discounts and commissions, in
each case as set forth on the cover page of the Prospectus. Relative
fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company
or the Underwriters. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person who controls an Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who con-

25
<PAGE> 26
trols the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to
the applicable terms and conditions of this paragraph (d).

9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the U.S. Shares agreed
to be purchased by such Underwriter or Underwriters hereunder and such failure
to purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of U.S. Shares set forth opposite their names in Schedule I hereto bears
to the aggregate amount of U.S. Shares set forth opposite the names of all the
remaining Underwriters) the U.S. Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of U.S. Shares which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of U.S. Shares set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the U.S. Shares, and if such nondefaulting
Underwriters do not purchase all the U.S. Shares, this Agreement will terminate
without liability to any nondefaulting Underwriter or the Company. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company and
any nondefaulting Underwriter for damages occasioned by its default hereunder.

26
<PAGE> 27
have been suspended by the Commission or the New York Stock Exchange or trading
in securities generally on the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or (iii) there shall have occurred any outbreak
or escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Representatives,
impracticable to proceed with the offering or delivery of the Shares as
contemplated by the Prospectus (exclusive of any supplement thereto).

11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Shares. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.

12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, care of Salomon
Brothers Inc, at Seven World Trade Center, New York, New York, 10048; or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at Bethlehem Steel Corporation, Martin Tower, Bethlehem, Pennsylvania 18016,
attention of the Secretary.

13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.

27
<PAGE> 28
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.

28
<PAGE> 29
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.

Very truly yours,

BETHLEHEM STEEL CORPORATION

By: ------------------------
Name:
Title:

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED

By SALOMON BROTHERS INC

By:-------------------------
Name:
Title:

For themselves and the other
several Underwriters named in
Schedule 1 to the foregoing
Agreement.

29
<PAGE> 30
SCHEDULE I

<TABLE>
<CAPTION>
Number of
U.S. Shares
Underwriters to be Purchased
- ------------ ---------------
<S> <C> <C>
Salomon Brothers Inc. . . . . . . . . . . . . . . . . . . .
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . .
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . .
-------------

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . [ ]
============
</TABLE>

30
<PAGE> 31
EXHIBIT A

[FORM OF LOCK UP LETTER]

---------------, 1994

Salomon Brothers Inc
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
As Representatives of the
several Underwriters
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048

Dear Sirs:

This letter is being delivered to you in connection with the
U.S. Underwriting Agreement (the "U.S. Underwriting Agreement") between
Bethlehem Steel Corporation, a Delaware corporation (the "Company"), and each
of you, as representatives (the "Representatives") of a group of Underwriters
named therein (the "Underwriters"), relating to an underwritten public offering
of shares of common stock, par value $1.00 per share (the "Common Stock"), of
the Company.

In order to induce you and the other Underwriters to enter
into the U.S Underwriting Agreement, the undersigned agrees not to, for a
period of 90 days following the Execution Time (as defined in the U.S.
Underwriting Agreement), without the prior written consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, announce the offering of or register, any shares of
Common Stock, or securities convertible into, or exchangeable for shares of
Common Stock (other than pursuant to the U.S. Underwriting Agreement and the
International Underwriting Agreement (as defined in the U.S. Underwriting
Agreement) and other than in the ordinary course of the Company's employee
benefit and incentive plans and collective bargaining agreements).

<PAGE> 32
If for any reason the U.S. Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the U.S. Underwriting
Agreement), the agreement set forth above shall likewise be terminated.

Very truly yours,

<PAGE> 1

Bethlehem Steel Corporation

1,800,000 Shares*
Common Stock
($1.00 par value)

International Underwriting Agreement

New York, New York
--------- --, 1994

Salomon Brothers International Limited
J.P. Morgan Securities Ltd.
Morgan Stanley & Co. International Limited
As Representatives of the
several Managers,
c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W OSB

Dear Sirs:

Bethlehem Steel Corporation, a Delaware corporation (the
"Company"), proposes to sell to the managers named in Schedule I hereto (the
"Managers"), for whom you are acting as representatives (the
"Representatives"), 1,800,000 shares of Common Stock, $1.00 par value (the
"Common Stock"), of the Company (said shares to be issued and sold by the
Company being hereinafter called the "International Underwritten Shares"). The
Company also proposes to grant to the Managers an option to purchase up to
270,000 additional shares of Common Stock to cover over-allotments (the
"International Option Shares"). The International Option Shares, together with
the International Underwritten Shares, are hereinafter called the

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

* Plus an option to purchase from Bethlehem Steel Corporation up to
270,000 additional shares to cover over-allotments.
<PAGE> 2
"International Shares". Each share of Common Stock has attached to it a
Preference Stock Purchase Right (a "Right"). Unless the context otherwise
requires, all references in this Agreement to Common Stock include the attached
Rights.

It is understood that the Company is concurrently entering
into a U.S. Underwriting Agreement dated the date hereof (the "U.S.
Underwriting Agreement") providing for the sale by the Company of 10,200,000
shares of Common Stock (the "U.S. Underwritten Shares") in the United States
and Canada, through arrangements with certain underwriters in the United States
and Canada (the "Underwriters"), for whom Salomon Brothers Inc, J.P. Morgan
Securities Inc. and Morgan Stanley & Co. Incorporated are acting as
representatives (the "U.S. Representatives"), and providing for the grant to
the Underwriters of an option to purchase up to 1,530,000 additional shares of
Common Stock (the "U.S. Option Shares") to cover over-allotments. The U.S.
Underwritten Shares together with the U.S. Option Shares, are hereinafter
called the "U.S. Shares".

The International Shares together with the U.S. Shares are
hereinafter called the "Shares".

It is further understood and agreed that the Underwriters and
the Managers are entering into an Agreement Between Syndicates, dated the date
hereof (the "Agreement Between Syndicates"), pursuant to which, among other
things, the Managers may purchase from the Underwriters a portion of the U.S.
Shares to be sold pursuant to the U.S. Underwriting Agreement and the
Underwriters may purchase from the Managers a portion of the International
Shares to be sold pursuant to this Agreement.

1. Representations and Warranties. The Company represents
and warrants to, and agrees with, each Manager as set forth below in this
Section 1. Certain terms used in this Section 1 are defined in paragraph (c)
hereof.

(a) The Company meets the requirements for
use of Form S-3 under the Securities Act of 1933 (the "Act")
and the Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (file
number 33-------) on

2
<PAGE> 3
such form, including related preliminary prospectuses, for the
registration under the Act of the offering and sale of the
Shares. The Company may have filed one or more amendments
thereto, including the related preliminary prospectuses, each
of which has previously been furnished to you. The Company
will next file with the Commission one of the following: (i)
prior to effectiveness of such registration statement, a
further amendment to such registration statement, including
the forms of final prospectuses or (ii) after effectiveness of
such registration statement, final prospectuses in accordance
with Rules 430A and 424(b)(1) or (4). In the case of clause
(ii), the Company has included in such registration statement,
as amended at the Effective Date, all information (other than
the Rule 430A Information) required by the Act and the rules
and regulations thereunder to be included in the Prospectuses
with respect to the Shares and the offering thereof. As
filed, such amendment and forms of final prospectuses, or such
final prospectuses, shall contain all Rule 430A Information
together with all other such required information, with
respect to the Shares and the offerings thereof and, except to
the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectuses) as the
Company has advised you, prior to the Execution Time, will be
included or made therein.

(b) On the Effective Date, the
Registration Statement did or will, and when each of the
Prospectuses is first filed (if required) in accordance with
Rule 424(b), on the Closing Date and on the Settlement Date,
if any, each of the Prospectuses (and any supplements thereto)
will, comply in all material respects with the applicable
requirements of the Act and the Securities Exchange Act of
1934 (the "Exchange Act"), and the respective rules
thereunder; on the Effective Date, the Registration Statement
did not or will not contain any untrue statement of a material
fact or omit to state any

3
<PAGE> 4
material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on
the Effective Date, each of the Prospectuses, if not filed
pursuant to Rule 424(b), did not or will not, and on the date
of any filing pursuant to Rule 424(b), on the Closing Date and
on the Settlement Date, if any, each of the Prospectuses
(together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company
makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the
Prospectuses (or any supplement thereto) in reliance upon and
in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the U.S.
Representatives or by or on behalf of any Manager through the
Representatives specifically for inclusion in the Registration
Statement or the Prospectuses (or any supplement thereto).

(c) The terms which follow, when used in
this Agreement, shall have the meanings indicated. The term
"the Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution
Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. The "U.S.
Preliminary Prospectus" and the "International Preliminary
Prospectus", respectively, shall mean any preliminary
prospectus with respect to the offering of the U.S. Shares and
the International Shares, as the case may be, referred to in
paragraph (a) above and any preliminary prospectus with
respect to the offering of the U.S. Shares and the
International Shares, as the case may be, included in the
Registration Statement at the Effective Date that omits Rule
430A Information; and the U.S. Preliminary Prospectus and the
International Preliminary Prospectus and hereinafter
collectively called the "Preliminary Prospectuses".
"Registration Statement" shall mean the registration statement
referred to in paragraph (a) above, including incorporated

4
<PAGE> 5
documents, exhibits and financial statements, as amended at
the Execution Time (or, if not effective at the Execution
Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined)
or the Settlement Date (as hereinafter defined), if any, shall
also mean such registration statement as so amended. Such
term shall include any Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule
430A. "Rule 424," "Rule 430A" and "Regulation S-K" refer to
such rules or regulation under the Act. "Rule 430A
Information" means information with respect to the Shares and
the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to
Rule 430A. Any reference herein to the Registration Statement,
a Preliminary Prospectus or a Prospectus shall be deemed to
refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under
the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of such Preliminary
Prospectus or Prospectus, as the case may be; and any
reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, any
Preliminary Prospectus or Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange
Act after the Effective Date of the Registration Statement, or
the issue date of any Preliminary Prospectus or Prospectus, as
the case may be, deemed to be incorporated therein by
reference.

It is understood that two forms of prospectus
are to be used in connection with the offering and sale of the
Shares: one form of prospectus relating to the U.S. Shares,
which are to be offered and sold to United States and Canadian
Persons (as defined in Section 5 below), and one form of
prospectus relating to the International Shares, which are to
be offered and sold to persons other than United States and
Canadian Persons. The two forms of prospectus are identical
except for the outside front cover page, the inside front
cover page, the discussion under the heading "Underwriting",
and the

5
<PAGE> 6
outside back cover page. Such form of prospectus relating to the U.S.
Shares as first filed pursuant to Rule 424(b) or, if no filing
pursuant to Rule 424(b) is required, such form of prospectus included
in the Registration Statement at the Effective Date, is hereinafter
called the U.S. Prospectus. Such form of prospectus relating to the
International Shares as first filed pursuant to Rule 424(b) or, if no
filing pursuant to Rule 424(b) is required, such form of prospectus
included in the Registration Statement at the Effective Date, is
hereinafter called the "International Prospectus". The U.S.
Prospectus and the International Prospectus are hereinafter
collectively called the "Prospectuses".

(d) The Shares have been duly authorized by the
Company and, when issued and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable, free of any preemptive rights and not subject to any
lien, charge, encumbrance or any other claim by any third party
arising out of any act of the Company.

(e) This Agreement has been duly authorized,
executed and delivered by the Company.

2. Purchase and Sale.

(a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Manager, and each Manager agrees,
severally and not jointly, to purchase from the Company, at a purchase
price of $---- per share, the number of International Underwritten
Shares set forth opposite such Manager's name in Schedule I hereto.

(b) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the
Company hereby grants an option to the several Managers to purchase,
severally and not jointly, up to 270,000 shares of International
Option Shares at the same purchase price per share as the Managers
shall pay for the International Underwritten Shares. Said option may
be exercised only to cover over-allotments in the sale

6
<PAGE> 7
of the International Underwritten Shares by the Managers. Said option
may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the International
Prospectus upon written or telegraphic notice by the Representatives
to the Company setting forth the number of shares of the International
Option Shares as to which the several Managers are exercising the
option and the Settlement Date. Subject to the terms and conditions
of this Agreement, the Company agrees to sell to the Managers the
number of International Option Shares specified in such notice and the
Managers, severally and not jointly, agree to purchase such
International Option Shares. Delivery of certificates for the shares
of International Option Shares, and payment therefor, shall be made as
provided in Section 3 hereof. The number of shares of the
International Option Shares to be purchased by each Manager shall be
the same percentage of the total number of shares of the International
Option Shares to be purchased by the several Managers as such Manager
is purchasing of the International Underwritten Shares, subject to
such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.

3. Delivery and Payment. Delivery of and payment for the
International Underwritten Shares and the International Option Shares (if the
option provided for in Section 2(b) hereof shall have been exercised on or
before the third business day prior to the Closing Date) shall be made at 10:00
A.M., New York City time, on ------ --, 1994, or such later date (not later
than ------ --, 1994) as the Representatives shall designate, which date and
time may be postponed by agreement between the Representatives and the Company
or as provided in Section 9 hereof (such date and time of delivery and payment
for the International Shares being herein called the "Closing Date"; and such
date and time of delivery and payment for the International Option Shares (if
the option provided for in Section 2(b) hereof shall have been exercised after
the third business day prior to the Closing Date) being herein called the
"Settlement Date"). Delivery of the International Shares shall be made to the
Representatives for the respective accounts of the several Managers against
payment by the several Managers through the Representatives of the purchase
price thereof to the Com-

7
<PAGE> 8
pany by wire transfer to the Company in immediately available funds, provided
that the Company reimburses you for your costs for obtaining such immediately
available funds on the day following the Closing Date by wire transfer to the
Representatives in immediately available funds. Delivery of the International
Underwritten Shares and the International Option Shares shall be made at such
location as the Representatives shall reasonably designate at least one
business day in advance of the Closing Date and payment for the International
Shares shall be made at the office of Skadden, Arps, Slate, Meagher & Flom, New
York, New York. Certificates for the International Shares shall be registered
in such names and in such denominations as the Representatives may request not
less than three full business days in advance of the Closing Date.

The Company agrees to have the International Shares available
for inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 P.M. on the business day prior to the Closing Date.

If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representatives, at Seven World
Trade Center, New York, New York, on the date specified by the Representatives
(which shall be within three business days after exercise of said option),
certificates for the International Option Shares in such names and
denominations as the Representatives shall have requested against payment of
the purchase price thereof to the Company by wire transfer to the Company in
immediately available funds, provided that the Company reimburses you for your
costs for obtaining such immediately available funds on the day following the
Closing Date for the International Option Shares by wire transfer to the
Representatives in immediately available funds. If settlement for the
International Option Shares occurs after the Closing Date, the Company will
deliver to the Representatives on the Settlement Date for the International
Option Shares, and the obligation of the Managers to purchase the International
Option Shares shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the

8
<PAGE> 9
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.

4. Offering by Managers. It is understood that the several
Managers propose to offer the International Shares for sale to the public as
set forth in the International Prospectus.

5. Agreements.

(a) The Company agrees with the several
Underwriters that:

9
<PAGE> 10
tration Statement or the Prospectuses or for any additional
information, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding
for that purpose and (vi) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.

(ii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Act, any
event occurs as a result of which the Prospectuses as then
amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary
to make the statements therein in the light of the
circumstances under which they were made not misleading, or if
it shall be necessary to amend the Registration Statement or
supplement either of the Prospectuses to comply with the Act
or the Exchange Act or the respective rules thereunder, the
Company promptly will prepare and file with the Commission,
subject paragraph (i) of this subsection 5(a), an amendment or
supplement that will correct such statement or omission or
will effect such compliance.

(iii) As soon as practicable, the Company will
make generally available to its security holders and to the
Representatives an earnings statement or statements of the
Company and its subsidiaries that will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the Act.

(iv) The Company will furnish to the
Representatives and counsel for the Managers, without charge,
conformed copies of the Registration Statement (including
exhibits thereto) and to each other Manager a copy of the
Regis-

10
<PAGE> 11
tration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by a Manager or dealer may be
required by the Act, as many copies of each International
Preliminary Prospectus and the International Prospectus and
any supplement thereto as the Representatives may reasonably
request. The Company will pay the expenses of printing or
other production of all documents relating to the offering.

(vi) The Company confirms as of the date hereof
that it is in compliance with all provisions of Section 1 of
Laws of Florida, Chapter 92-198, An Act Relating to Disclosure
of Doing Business with Cuba, and the Company further agrees
that if it commences engaging in business with the government
of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become
effective with the Commission or with the Florida Department
of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectuses, if
any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material
way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to
the Department.

11
<PAGE> 12
(vii) The Company will not, for a period of 90
days following the Execution Time, without the prior written
consent of the Representatives, offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly,
announce the offering of or register, any shares of Common
Stock, or securities convertible into, or exchangeable for
shares of Common Stock (other than pursuant to this Agreement
and the U.S. Underwriting Agreement and other than in the
ordinary course of the Company's employee benefit and
incentive plans and collective bargaining agreements).

(b) Each Underwriter agrees that (i) it is not
purchasing any of the International Shares for the account of any
United States or Canadian Person, (ii) it has not offered or sold, and
will not offer or sell, directly or indirectly, any of the
International Shares or distribute the International Preliminary
Prospectus or the International Prospectus to any person within the
United States or Canada, or to any United States or Canadian Person,
and (iii) any dealer to whom it may sell any of the International
Shares will represent that it is not purchasing for the account of any
United States or Canadian Person and will agree that it will not offer
or resell, directly or indirectly, any of the International Shares
within the United States or Canada, or to any United States or
Canadian Person or to any other dealer who does not so represent and
agree; provided, however, that the foregoing shall not restrict (A)
purchases and sales between the Underwriters on the one hand and the
Managers on the other hand pursuant to Section 1(b) of the Agreement
Between Syndicates, (B) stabilization transactions contemplated under
Section 2 of the Agreement Between Syndicates, conducted through
Salomon Brothers Inc as part of the distribution of the Shares, and
(C) sales to or through (or distributions of International
Prospectuses or International Preliminary Prospectuses to) persons who
are not United States or Canadian Persons who are investment advisors,
or who otherwise exercise investment discretion, and who are
purchasing for the account of a United States or Canadian Person.
"United States or Canadian Person" shall mean any person who is a
national

12
<PAGE> 13
or resident of the United States or Canada, a corporation,
partnership, or other entity created or organized in or under the laws
of the United States or Canada or of any political subdivision
thereof, or any estate or trust the income of which is subject to
United States or Canadian federal income taxation, regardless of its
source (other than any non-United States or non-Canadian branch of any
United States or Canadian Person), and shall include any United States
or Canadian branch of a person other than a United States or Canadian
Person. "U.S." or "United States" shall mean the United States of
America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its
jurisdiction.

(c) The agreements of the Managers set forth in
subsection (b) of this Section 5 shall terminate upon the earlier of
the following events:

(i) a mutual agreement of the Representatives and
the U.S. Representatives to terminate the selling restrictions
set forth in subsection (b) of this Section 5 and in
subsection (b) of Section 5 of the U.S. Underwriting
Agreement; or

(ii) the expiration of a period of 30 days after
the Closing Date, unless (A) the Representatives shall have
given notice to the Company and the U.S. Representatives that
the distribution of the International Shares by the Managers
has not yet been completed, or (B) the U.S. Representatives
shall have given notice to the Company and the Representatives
that the distribution of the U.S. Shares by the Underwriters
has not yet been completed. If such notice by the
Representatives or the U.S. Representatives is given, the
agreement set forth in such paragraph (b) shall survive until
the earlier of (1) the event referred to in clause (i) above
or (2) the expiration of any additional period of 30 days from
the date of any such notice.

13
<PAGE> 14
(d) Each Manager represents and agrees that:

(i) it has not offered or sold and will not offer
or sell in the United Kingdom, by means of any document, any
International Shares other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as
principal or agent or in circumstances which do not constitute
an offer to the public within the meaning of the Companies Act
of 1985;

(ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the
International Shares in, from or otherwise involving the
United Kingdom; and

(iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the
International Shares to a person who is of a kind described in
Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements)(Exemptions) Order 1988 or is a person to whom
the document may otherwise lawfully be issued or passed on.

6. Conditions to the Obligations of the Managers. The
obligation of the Managers to purchase the International Underwritten Shares
and the International Option Shares, as the case may be, shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date, and in the case of
any International Option Shares sold after the Closing Date, the Settlement
Date, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:

(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives
agree in writing to a later

14
<PAGE> 15
time, the Registration Statement shall have become effective not later
than (i) 6:00 P.M., New York City time, on the date of determination
of the public offering price, if such determination occurred at or
prior to 3:00 P.M., New York City time, on such date or (ii) 12:00
Noon on the business day following the day on which the public
offering price was determined, if such determination occurred after
3:00 P.M., New York City time, on such date; if filing of the
Prospectuses, or any supplement thereto, is required pursuant to Rule
424(b), the Prospectuses and any such supplements shall have been
filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
the purpose shall have been instituted or threatened.

(b) The Company shall have furnished to the
Representatives the opinion of G. Penn Holsenbeck, Esq., Deputy
General Counsel of the Company, dated the Closing Date, to the effect
that:

(ii) the Company's authorized equity
capitalization is as set forth in the Prospectuses; the
capital stock of the Company conforms to the description
thereof contained in

15
<PAGE> 16
the Prospectuses; the outstanding shares of Common Stock have
been duly and validly authorized and issued and are fully paid
and nonassessable; the Shares have been duly and validly
authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to the U.S. Underwriting Agreement
and the Managers pursuant to the International Underwriting
Agreement will be fully paid and nonassessable; the Shares
have been duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange and the
Chicago Stock Exchange and the certificates therefor are in
valid and sufficient form; and the holders of outstanding
shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Shares;

(iii) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the Registration
Statement and Prospectuses which is not adequately disclosed
in the Registration Statement and Prospectuses; to the best
knowledge of such counsel, there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectuses, or to be filed as an
exhibit, which is not described or filed or incoporated by
reference as required and the statements in the Prospectuses
under the heading "Business--Legal Proceedings" fairly
summarize the matters therein described;

(iv) the Registration Statement has become
effective under the Act; any required filing of the
Prospectuses and any supplement thereto pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened, and the

16
<PAGE> 17
Registration Statement and each of the Prospectuses (other
than the financial statements and other financial and
statistical information contained therein as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the Exchange Act and the respective rules thereunder; and
such counsel has no reason to believe that at the Effective
Date the Registration Statement contained any untrue statement
of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading or that either of the
Prospectuses contains any untrue statement of a material fact
or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;

(v) this Agreement has been duly authorized,
executed and delivered by the Company;

(vi) no consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation by the Company of the transactions
contemplated herein, except such as have been obtained under
the Act and such as may be required under the securities or
blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Shares and such other
approvals (specified in such opinion) as have been obtained;

(vii) neither the issue and sale of the Shares,
nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under any law or the Restated Certificate
of Incorporation, or By-laws of the Company, or the terms of
any indenture or other agreement or instrument known to such
counsel and to which the Company or any of its subsidiaries is
a party or bound, or any judgment, order or regulation known
to such counsel to be applicable to the Company or any of its

17
<PAGE> 18
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Company or any of its subsidiaries; and

(viii) no holders of securities of the Company
have rights to the registration of such securities under the
Registration Statement.

(c) The Representatives shall have received from
Skadden, Arps, Slate, Meagher & Flom, counsel for the Managers, such
opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Shares, the Registration Statement, the
Prospectuses and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.

(d) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chairman
and Chief Executive Officer or the President and by the Executive Vice
President and Chief Financial Officer, the Vice President and
Treasurer or the Vice President and Controller of the Company, dated
the Closing Date, to the effect that:

18
<PAGE> 19
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;

(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and

(iii) since the date of the most recent financial
statements included in the Prospectuses (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).

(e) At the Execution Time and at the Closing Date,
the Company shall have furnished to the Representatives a letter or
letters from Price Waterhouse, dated respectively as of the Execution
Time and the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the Exchange
Act and the respective applicable published rules and regulations
thereunder and stating in effect that:

(i) in their opinion the audited financial
statements and financial statement schedules included in the
Registration Statement and the Prospectuses and reported on by
them comply in form in all material respects with the
applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations; and

(ii) they have performed certain other specified
procedures requested by the Representatives and which Price
Waterhouse is willing to perform and report on as a result of
which

19
<PAGE> 20
they determined that certain information of an accounting,
financial or statistical nature (that is expressed in dollars,
or percentages derived from such dollar amounts, and has been
obtained from the general accounting records that are subject
to internal controls of the Company's accounting system or
that has been derived directly from such accounting records by
analysis or computation) set forth in the Registration
Statement and each of the Prospectuses including the
information set forth under the captions "Prospectus Summary",
"Investment Considerations", Recent Developments", Bethlehem",
"Use of Proceeds", "Price Range of Common Stock",
"Capitalization", "Selected Consolidated Income Statement
Data", "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Business" and
"Description of Capital Stock" in the Registration Statement
and each of the Prospectuses, the information included or
incorporated in the Registration Statement and the
Prospectuses from the Company's Annual Report on Form 10-K for
the year ended December 31, 1992, Amendment No. 2 on Form
10-K/A to the Annual Report on Form 10-K for the year ended
December 31, 1992, the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1993, June 30, 1993 and September 30,
1993 and the Current Report on Form 8-K dated March 5, 1993
agrees with the accounting records of the Company and its
subsidiaries, subject to its system of internal controls.

References to the Registration Statement and the Prospectuses
in this paragraph (e) include any amendments or supplements thereto at the date
of the letter.

20
<PAGE> 21
ing the business or properties of the Company and its subsidiaries the
effect of which, in any case referred to in clause (i) or (ii) above,
is, in the judgment of the Representatives, so material and adverse as
to make it impractical or inadvisable to proceed with the public
offering or the delivery of the Shares as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectuses (exclusive of any supplement thereto).

(g) The closing of the purchase of the U.S.
Underwritten Shares (and of the U.S. Option Shares, if the option
provided for in Section 2(b) of the U.S. Underwriting Agreement shall
have been exercised on or before the third business day prior to the
Closing Date) pursuant to the U.S. Underwriting Agreement shall occur
concurrently with the closing described in the first paragraph of
Section 3 above.

(h) At the Execution Time, the Representatives
shall have received from the Company a letter substantially in the
form of Exhibit A hereto.

(i) The Shares shall have been approved for
listing on the New York Stock Exchange and the Chicago Stock Exchange.

(j) Prior to the Closing Date, the Company shall
have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably
request.

If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Managers, this Agreement and all obligations of the Managers hereunder may be
cancelled at, or at any time prior to, the Closing Date by the Representatives.
Notice of such cancellation shall be given to the Company in writing or by
telephone or telegraph confirmed in writing.

21
<PAGE> 22
7. Reimbursement of Managers' Expenses. If the sale of the
International Shares provided for herein is not consummated because any
condition to the obligations of the Managers set forth in Section 6 hereof is
not satisfied because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Managers, the Company will
reimburse the Managers upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the International
Shares, but the Company shall then be under no further liability to the
Managers except as provided in Section 5(d) and (e) for the payment of expenses
by the Company and Section 8 hereof.

8. Indemnification and Contribution.

(a) The Company agrees to indemnify and hold
harmless each Manager, the directors, officers, employees and agents
of each Manager and each person who controls any Manager within the
meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the
Shares as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or either of the Prospectuses, or in any
amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
(i) the Company will not be liable in any

22
<PAGE> 23
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Manager through the Representatives
specifically for inclusion therein, and (ii) such indemnity with
respect to any International Preliminary Prospectus shall not inure to
the benefit of any Manager (or any person controlling any Manager)
from whom the person asserting any such loss, claim, damage or
liability purchased the Shares which are the subject thereof if such
person did not receive a copy of the International Prospectus (or the
International Prospectus as amended or supplemented) at or prior to
the confirmation of the sale of such Shares to such person in any case
where such delivery is required by the Act and the untrue statement or
omission of a material fact contained in such International
Preliminary Prospectus was corrected in the International Prospectuses
(or the International Prospectuses as amended or supplemented). This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.

(b) Each Manager severally agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each
Manager, but only with reference to written information relating to
such Underwriter furnished to the Company by or on behalf of such
Manager through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any Manager may
otherwise have. The Company acknowledges that the statements set
forth in the last paragraph of the cover page and under the heading
"Underwriting" in any International Preliminary Prospectus and the
International Prospectus constitute the only information furnished in
writing by or on behalf of the several Managers for inclusion in any
International Preliminary Prospectus or the Interna-

23
<PAGE> 24
tional Prospectus, and you, as the Representatives, confirm that such
statements are correct.

24
<PAGE> 25
nified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An
indemnifying party shall not be liable for any settlement or
compromise effected, or any judgment entered pursuant to settlement or
compromise, without its prior written consent, with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder,
provided that such consent may not be withheld unless such settlement
or compromise is unreasonable in light of such claims or actions
against, and defenses available to, the indemnified party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (provided that the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding.

(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party for any reason, the
Company and the Managers agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which the Company and one or more of
the Managers may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and by the
Managers from the offering of the Shares; provided, however, that in
no case shall any Manager (except as may be provided in any agreement
among managers relating to the offering of the Shares) be responsible
for any amount in excess of the underwriting discount or commission
applicable to the Shares purchased by

25
<PAGE> 26
such Manager hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Managers shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of
the Company and of the Managers in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before
deducting expenses), and benefits received by the Managers shall be
deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the
Prospectuses. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to
information provided by the Company or the Managers. The Company and
the Managers agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who
controls a Manager within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of a
Manager shall have the same rights to contribution as such Manager,
and each person who controls the Company within the meaning of either
the Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this
paragraph (d).

9. Default by a Manager. If any one or more Managers shall
fail to purchase and pay for any of the International Shares agreed to be
purchased by such Manager or Managers hereunder and such failure to purchase
shall constitute a default in the performance of its or their obligations under
this Agreement, the re-

26
<PAGE> 27
maining Managers shall be obligated severally to take up and pay for (in the
respective proportions which the amount of International Shares set forth
opposite their names in Schedule I hereto bears to the aggregate amount of
International Shares set forth opposite the names of all the remaining
Managers) the International Shares which the defaulting Manager or Managers
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of International Shares which the defaulting Manager or
Managers agreed but failed to purchase shall exceed 10% of the aggregate amount
of International Shares set forth in Schedule I hereto, the remaining Managers
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the International Shares, and if such nondefaulting Managers
do not purchase all the International Shares, this Agreement will terminate
without liability to any nondefaulting Manager or the Company. In the event of
a default by any Manager as set forth in this Section 9, the Closing Date shall
be postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Registration
Statement and the Prospectuses or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Manager of its liability, if any, to the Company and any nondefaulting Manager
for damages occasioned by its default hereunder.

10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives by notice given
to the Company prior to delivery of any payment for the International Shares,
if prior to such time but after the Execution Time (i) trading in the Company's
Common Stock shall have been suspended by the Commission or the New York Stock
Exchange or trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the judgment of
the Representatives, impracticable to proceed with the offering or delivery of
the Internation-

27
<PAGE> 28
al Shares as contemplated by the International Prospectus (exclusive of any
supplement thereto).

11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Managers set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Manager or the
Company or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Shares. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.

12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Representatives,
will be mailed, delivered or telegraphed and confirmed to them, care of Salomon
Brothers International, at Victoria Plaza, 111 Buckingham Palace Road, London
SW1W OSB; or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at Bethlehem Steel Corporation, Martin Tower, Bethlehem,
Pennsylvania 18016, attention of the Secretary.

13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.

14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.

<TABLE>
<S> <C>
Very truly yours,

BETHLEHEM STEEL CORPORATION

By:
------------------------
Name:
Title:

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

SALOMON BROTHERS INTERNATIONAL LIMITED
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY & CO. INTERNATIONAL LIMITED

By SALOMON BROTHERS INTERNATIONAL LIMITED

By:
-------------------------
Name:
Title:

For themselves and the other
several Managers named in
Schedule 1 to the foregoing
Agreement.
</TABLE>

29
<PAGE> 30
SCHEDULE I

<TABLE>
<CAPTION>
Number of Inter-
national Shares
Managers to be Purchased
- -------- ---------------
<S> <C>
Salomon Brothers International
Limited . . . . . . . . . . . . . . . . . . . . . . . . .
J.P. Morgan Securities Ltd. . . . . . . . . . . . . . . . .
Morgan Stanley & Co. International
Limited . . . . . . . . . . . . . . . . . . . . . . . . .
---------

Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
=========
</TABLE>

30
<PAGE> 31
EXHIBIT A

[FORM OF LOCK UP LETTER]

---------------, 1994

Salomon Brothers International Limited
J.P. Morgan Securities Ltd.
Morgan Stanley & Co. International Limited
As Representatives of the
several Managers
c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W OSB

Dear Sirs:

This letter is being delivered to you in connection with the
International Underwriting Agreement (the "International Underwriting
Agreement") between Bethlehem Steel Corporation, a Delaware corporation (the
"Company"), and each of you, as representatives (the "International
Representatives") of a group of Managers named therein (the "Managers"),
relating to an underwritten public offering of shares of common stock, par
value $1.00 per share (the "Common Stock"), of the Company.

In order to induce you and the other Managers to enter into
the International Underwriting Agreement, the undersigned agrees not to, for a
period of 90 days following the Execution Time (as defined in the International
Underwriting Agreement), without the prior written consent of the International
Representatives, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of or register, any shares of
Common Stock, or securities convertible into, or exchangeable for shares of
Common Stock (other than pursuant to the International Underwriting Agreement
and the U.S. Underwriting Agreement (as defined in the International
Underwriting Agreement) and other than in the ordinary course of the Company's
employee benefit and incentive plans and collective bargaining agreements).

<PAGE> 32
If for any reason the International Underwriting Agreement
shall be terminated prior to the Closing Date (as defined in the International
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.

Very truly yours,

<PAGE> 1

EXHIBIT 5

BETHLEHEM STEEL CORPORATION

FEBRUARY 9, 1994

BOARD OF DIRECTORS
BETHLEHEM STEEL CORPORATION
BETHLEHEM, PA 18016-7699

I am Deputy General Counsel of Bethlehem Steel Corporation, a Delaware
corporation (the "Corporation"). I have acted as counsel for the Corporation in
connection with the proposed offer and sale by the Corporation of up to an
aggregate of 13,800,000 shares of its Common Stock, par value $1 per share (the
"Common Stock"), pursuant to (i) the U.S. Underwriting Agreement to be entered
into among the Corporation and Salomon Brothers Inc, J.P. Morgan Securities Inc.
and Morgan Stanley & Co. Incorporated, as representatives of the several U.S.
underwriters named therein (the "U.S. Underwriting Agreement"), and (ii) the
International Underwriting Agreement to be entered into among the Corporation
and Salomon Brothers International Limited, J.P. Morgan Securities Ltd. and
Morgan Stanley & Co. International Limited, as representatives of the several
international underwriters named therein (the "International Underwriting
Agreement," and together with the U.S. Underwriting Agreement, the "Underwriting
Agreements"). In that capacity, I am familiar with the Registration Statement on
Form S-3 (the "Registration Statement") which has been prepared in connection
with the proposed offering.

As Deputy General Counsel of the Corporation, I am familiar with the
Corporation's Restated Certificate of Incorporation and its By-laws, as amended.
I am also familiar with the actions taken by the Corporation's Board of
Directors on January 26, 1994.

Based upon the foregoing, I am of the opinion that, when certificates for
such additional shares of Common Stock have been duly executed, countersigned by
the Transfer Agent and registered by a Registrar of the Corporation, and
delivered in accordance with the terms of the Underwriting Agreements, such
shares of Common Stock will be duly authorized, validly issued, fully paid and
nonassessable.

I know that I am referred to under the heading "Legal Matters" in the
Prospectus forming a part of the Registration Statement and to the filing of
this opinion as an exhibit to the Registration Statement.

Very truly yours,

G.P. Holsenbeck
Deputy General Counsel

<PAGE> 1

EXHIBIT 18

January 26, 1994

To the Board of Directors
of Bethlehem Steel Corporation

Dear Directors:

We have audited the consolidated financial statements included in the
Corporation's Registration Statement on Form S-3 (No. 33- ) and issued
our report thereon dated January 26, 1994. Note B to the consolidated financial
statements describes a change in the Corporation's method of determining the
cost of inventories from the last-in, first-out to the first-in, first-out
method. It should be understood that the preferability of one acceptable method
of inventory accounting over another has not been addressed in any authoritative
accounting literature and in arriving at our opinion expressed below, we have
relied on management's business planning and judgment. Based on our discussions
with management and the stated reasons for the change, we believe that such
change represents, in your circumstances, the adoption of a preferable
alternative accounting principle for inventories in conformity with Accounting
Principles Board Opinion No. 20.

Yours very truly,

Price Waterhouse

1177 Avenue of the Americas
New York, NY 10036

<PAGE> 1

EXHIBIT 23(B)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (Registration
Statement) of our report dated January 27, 1993, which appears on page 29 of the
1992 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, 1992, as amended. Such report relates to
financial statements which have not been restated for the retroactive effect of
the 1993 change in the method of accounting for the cost of inventories. 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. We also consent to the use in the Prospectus constituting part of this
Registration Statement of our report dated January 26, 1994 relating to the
financial statements of Bethlehem Steel Corporation, which appears in such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.

Price Waterhouse

1177 Avenue of the Americas
New York, NY 10036
February 9, 1994

<PAGE> 1

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 ("Bethlehem"),
which proposes to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3 for the registration under said Act of shares
of Common Stock of Bethlehem, par value one dollar ($1) per share, 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, 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
said Registration Statement and any and all amendments thereto, with power where
appropriate to affix the corporate seal of Bethlehem thereto and to attest said
seal, and to file, or cause to be filed, said Registration Statement and each
such amendment with all exhibits thereto, and any and all other documents in
connection therewith, with the Securities and Exchange Commission, hereby
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform any and all acts and things requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each of 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 substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
this 9th day of February, 1994

SIGNATURES TITLE
- ------------------------------- -------------------------------------------
/s/ CURTIS H. BARNETTE Chairman, Chief Executive Officer (principal
Curtis H. Barnette executive officer) and Director
/s/ GARY L. MILLENBRUCH Executive Vice President (principal financial
Gary L. Millenbruch officer) and Director
/s/ LONNIE A. ARNETT Vice President and Controller (principal
Lonnie A. Arnett accounting officer)
/s/ BENJAMIN R. CIVILETTI Director
Benjamin R. Civiletti
/s/ WORLEY H. CLARK Director
Worley H. Clark
/s/ HERMAN E. COLLIER, JR. Director
Herman E. Collier, Jr.
/s/ JOHN B. CURCIO Director
John B. Curcio
/s/ WILLIAM C. HITTINGER Director
William C. Hittinger
/s/ THOMAS L. HOLTON Director
Thomas L. Holton
<PAGE> 2

SIGNATURES TITLE
- ------------------------------ ---------------------------------------
/s/ HARRY P. KAMEN Director
Harry P. Kamen
/s/ WINTHROP KNOWLTON Director
Winthrop Knowlton
/s/ ROBERT MCCLEMENTS, JR. Director
Robert McClements, Jr.
/s/ ROGER P. PENNY Director
Roger P. Penny
/s/ DEAN P. PHYPERS Director
Dean P. Phypers
/s/ WILLIAM A. POGUE Director
William A. Pogue
/s/ JOHN F. RUFFLE Director
John F. Ruffle