<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1995
Commission file number 1-1941
BETHLEHEM STEEL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 24-0526133
(State of incorporation) (I.R.S. Employer Identification No.)
1170 Eighth Avenue
BETHLEHEM, PENNSYLVANIA 18016-7699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 694-2424
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of Shares of Common Stock Outstanding as of May 5, 1995:
110,156,711
<PAGE>
<PAGE> 2
BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
Page No.
PART I. Financial Information
Consolidated Statements of Income-
Three Months Ended March 31, 1995
and 1994 (unaudited). . . . . . . . . . . . . . . 2
Consolidated Balance Sheets-
March 31, 1995 (unaudited), December 31, 1994
and March 31, 1994 (unaudited). . . . . . . . . . 3
Consolidated Statements of Cash Flows-
Three Months Ended March 31, 1995
and 1994 (unaudited). . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . 5
Management's Discussion and Analysis of Results of
Operations and Financial Condition. . . . . . . . 6
PART II. Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
<PAGE> 3
Bethlehem Steel Corporation
CONSOLIDATED STATEMENTS OF INCOME
(dollars and shares in millions, except per share data)
(unaudited)
Three Months Ended
March 31
1995 1994
Net Sales $1,240.7 $1,131.2
Costs and Expenses:
Cost of sales 1,068.9 1,005.2
Depreciation 71.0 65.5
Selling, administration and general expense 26.6 34.4
Total Costs and Expenses 1,166.5 1,105.1
Income from Operations 74.2 26.1
Financing Income (Expense):
Interest and other financing costs (13.2) (13.6)
Interest income 2.5 1.9
Income before Income Taxes 63.5 14.4
Provision for Income Taxes (11.0) (1.5)
Net Income 52.5 12.9
Dividends on Preferred and Preference Stock 10.6 10.8
Net Income Applicable to Common Stock $ 41.9 $ 2.1
Net Income per Common Share $ 0.38 $ 0.02
Average Primary Shares Outstanding 110.0 95.1
The accompanying Notes are an integral part of the
Consolidated Financial Statements.
- 2 -
<PAGE>
<PAGE> 4
Bethlehem Steel Corporation
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
ASSETS
March 31 December 31 March 31
1995 1994 1994
(unaudited) (unaudited)
Current Assets:
Cash and cash equivalents $ 125.0 $ 159.5 $ 206.3
Receivables, less allowances 504.3 519.5 471.0
Inventories:
Raw materials 321.2 331.9 309.9
Finished and semifinished 573.6 534.9 542.1
Contract work-in-progress, less
billings 17.4 16.1 22.2
912.2 882.9 874.2
Other current assets 11.2 7.2 6.9
Total Current Assets 1,552.7 1,569.1 1,558.4
Investments and Miscellaneous Assets 119.7 124.2 118.3
Property, Plant and Equipment,
less accumulated depreciation of
$4,190.4, $4,167.9 and $4,087.2 2,739.6 2,759.3 2,631.0
Deferred Income Tax Asset - net 892.7 903.2 926.2
Intangible Asset - Pensions 412.0 426.6 583.9
Total Assets $ 5,716.7 $ 5,782.4 $ 5,817.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 418.6 $ 387.0 $ 405.1
Accrued employment costs 296.6 303.8 267.3
Accrued taxes 64.6 67.6 62.4
Debt and capital lease obligations 94.6 88.9 95.0
Other current liabilities 120.3 163.9 112.7
Total Current Liabilities 994.7 1,011.2 942.5
Pension Liability 1,085.0 1,117.1 1,253.9
Postretirement Benefits Other Than
Pensions 1,435.6 1,441.4 1,451.5
Long-term Debt and Capital Lease
Obligations 633.8 668.4 696.3
Other Long-term Liabilities 369.2 388.5 419.9
Stockholders' Equity:
Preferred Stock 11.6 11.6 11.6
Preference Stock 2.6 2.6 2.7
Common Stock 112.0 111.9 110.9
Common Stock held in treasury at cost (59.4) (59.5) (59.5)
Additional paid-in capital 1,938.5 1,948.6 1,915.1
Accumulated deficit (806.9) (859.4) (927.1)
Total Stockholders' Equity 1,198.4 1,155.8 1,053.7
Total Liabilities and Stockholders' Equity $ 5,716.7 $ 5,782.4 $ 5,817.8
The accompanying Notes are an integral part of the
Consolidated Financial Statements.
- 3 -
<PAGE>
<PAGE> 5
Bethlehem Steel Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
Three Months Ended
March 31
1995 1994
Operating Activities:
Net income $ 52.5 $ 12.9
Adjustments for items not affecting cash
from operating activities:
Depreciation 71.0 65.5
Deferred Income Taxes 10.5 0.5
Other - net (4.2) 2.9
Working capital (excluding financing and
investing activities):
Receivables 15.2 32.2
Inventories (29.3) (21.7)
Accounts payable 30.1 44.8
Employment costs and other (52.3) (16.0)
Other - net (12.1) 4.5
Cash Provided from Operating Activities 81.4 125.6
Investing Activities:
Capital expenditures (60.5) (118.8)
Cash proceeds from asset sales and other 4.5 5.6
Cash Used for Investing Activities (56.0) (113.2)
Financing Activities:
Pension expense 53.4 55.9
Pension funding (70.9) (406.0)
Long-term debt and capital lease borrowings 1.9 6.5
Long-term debt and capital lease payments (30.4) (29.0)
Common stock issued - 355.3
Cash dividends paid (10.1) (10.1)
Other payments (3.8) (7.6)
Cash Used for Financing Activities (59.9) (35.0)
Net Decrease in Cash and Cash Equivalents (34.5) (22.6)
Cash and Cash Equivalent- Beginning of Period 159.5 228.9
- End of Period $ 125.0 $ 206.3
Supplemental Cash Payment Information:
Interest, net of amount capitalized $ 24.3 $ 18.7
Income taxes $ - $ 0.1
The accompanying Notes are an integral part of the
Consolidated Financial Statements.
- 4 -
<PAGE>
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Segment Results (dollars in millions):
(unaudited)
1995 1994
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
Net Sales:
Basic Steel Operations $ 1,210.4 $ 1,203.0 $ 1,187.6 $ 1,189.9 $ 1,125.7
Steel Related Operations 36.5 29.7 51.3 45.3 10.1
Eliminations (6.2) (8.2) (5.7) (4.7) (4.6)
Total $ 1,240.7 $ 1,224.5 $ 1,233.2 $ 1,230.5 $ 1,131.2
Operating Income (Loss):
Basic Steel Operations $ 79.1 $ 51.5 $ 29.4 $ 49.3 $ 35.8
Steel Related Operations (4.9) (6.2) (8.8) (7.7) (9.7)
Total $ 74.2 $ 45.3 $ 20.6 $ 41.6 $ 26.1
Shipments
(thousands of net tons):
Basic Steel Operations 2,273 2,294 2,321 2,346 2,290
Raw Steel Production
(thousands of net tons):
Basic Steel Operations 2,596 2,479 2,187 2,648 2,474
2. The Consolidated Financial Statements as of and for the three month
periods ended March 31, 1995 and 1994 have not been audited. However, the
information reflects all adjustments which, in the opinion of management, are
necessary to present fairly the results shown for the periods indicated.
Management believes all adjustments were of a normal recurring nature.
3. These Consolidated Financial Statements should be read together with
the 1994 audited financial statements set forth in Bethlehem's Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
- 5 -
<PAGE>
<PAGE> 7
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Review of Results:
First Quarter 1995 - First Quarter 1994
Bethlehem reported net income of $53 million, or $.38 per
common share, for the first quarter of 1995, a $40 million
improvement from net income of $13 million, or $.02 per common
share, for the first quarter of 1994. Net sales for the first
quarter of 1995 increased 10% to $1.24 billion from $1.13 billion
for the year earlier period.
Segment Results
The Basic Steel Operations segment reported income from
operations in the first quarter of 1995 of $79 million, an
improvement of $43 million from the prior year. Operating income
was $35 per ton, compared to $16 last year. In the first quarter
of 1995, demand continued to be strong and Bethlehem's shipments
of 2.3 million tons were about the same as last year. Bethlehem
realized improved prices for its flat-rolled products and its
product mix improved, reflecting an increased percent of higher
valued coated products.
Bethlehem's operating costs per ton of shipment increased,
reflecting the higher costs for raw materials, principally purchased
slabs and alloys, profit sharing expenses and depreciation. Bethlehem
has a number of actions under way that will reduce its future costs.
For example, costs will decrease as Burns Harbor's coal injection
facilities become fully operational. Burns Harbor is also proceeding
with a relatively low cost investment in equipment that will
significantly increase its steelmaking capability. This will bring
production and shipment capability into better balance, and thereby
reduce this Division's reliance on higher cost purchased slabs.
There are a number of initiatives under way at Bethlehem's
other operations that will significantly reduce future costs and
improve competitiveness. Pennsylvania Steel Technologies, Inc.'s
("PST") newly modernized steelmaking facilities and in-line rail
head-hardening equipment are moving up their start-up curve to
higher levels of utilization. Additionally, later this year,
Bethlehem Structural Products Corporation ("BSPC") will
discontinue steelmaking and consolidate all of its production of
light to medium wide-flange beams, sheet piling and special
sections on the 44-inch mill, which is currently being modernized.
This Division will then be supplied with continuously cast steel
produced primarily from PST, which will further increase the
utilization of assets at both these divisions and improve their
overall efficiency.
- 6 -<PAGE>
<PAGE> 8
The Steel Related Operations segment reported a first quarter
1995 loss from operations of $5 million compared to a loss from
operations of $10 million in the first quarter of 1994. The
favorable change from the previous period reflects a modest
improvement in the ship repair market. The BethForge Division is
nearing the completion of its modernization program to improve its
cost and quality competitiveness. Later this year, BethForge will
discontinue operating its electric furnace steelmaking and ingot
production facilities in Bethlehem. Lower cost, higher quality
ingots will then be supplied from the newly modernized steelmaking
and ingot production facilities at PST.
Liquidity
At March 31, 1995, total liquidity, comprising cash, cash
equivalents and available borrowings under bank commitments, was
$541 million compared to $566 million at December 31, 1994, and
$500 million at March 31, 1994. Cash and cash equivalents were
$125 million at March 31, 1995, compared to $160 million at
December 31, 1994, and $206 million at March 31, 1994, and $416
million was available for borrowings under Bethlehem's revolving
credit agreement. Bethlehem's accounts receivable and inventories
are pledged as collateral under this credit agreement.
Cash provided from operating activities in the first quarter
of 1995 was $81 million compared to $126 million for the first
quarter of 1994. Significant uses of cash during the first
quarter of 1995 included pension funding of $71 million, capital
expenditures and working capital, including a payment in
connection with a legal settlement, which Bethlehem now has under
appeal, involving previously owned coal assets.
Major uses of funds in 1995 include an estimated $350 million
of capital expenditures, repayment of approximately $90 million of
debt and capital lease obligations and contributions to the
pension fund. Bethlehem expects to maintain an adequate level of
liquidity throughout 1995 from cash flow from operations,
reductions in working capital and available borrowings under its
revolving credit agreement.
Labor
The labor agreements at BSPC and BethForge include a
"snapback" arrangement providing that if Bethlehem does not
install a continuous caster at BSPC, employees represented by the
United Steelworkers of America ("USWA") 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 BSPC does not provide for
installation of a continuous caster and BSPC and BethForge have
returned to coverage under the 1993 labor agreement. On March 31
of this year, Bethlehem and the USWA resolved a dispute relative
to the participation by BSPC and BethForge employees represented
by the USWA in the 1994 profit sharing amounts under the
- 7 -<PAGE>
<PAGE> 9
"snapback" arrangement. Bethlehem agreed to move the $.50 per
hour wage increase originally scheduled for July 30, 1995 to April
2, 1995 for Burns Harbor employees and to May 7, 1995 for Sparrows
Point employees. Beginning in 1995, BSPC and BethForge will not
be included in the 1993 labor agreement profit sharing plan but
will both have their own profit sharing plan. BSPC and BethForge,
however, will be eligible for the March 1, 1996 special payment
that is conditioned upon 1995 profitability. Bethlehem does not
expect any material increase in its overall labor costs as a
result of these developments.
Dividends
On April 26, 1995, the Board of Directors declared dividends
of $1.25 per share on Bethlehem's $5.00 Cumulative Convertible
Preferred Stock, $0.625 per share on Bethlehem's $2.50 Cumulative
Convertible Preferred Stock and $0.875 per share on Bethlehem's
$3.50 Cumulative Convertible Preferred Stock, each payable June
10, 1995 to holders of record on May 10, 1995. No dividend was
declared on Bethlehem's Common Stock.
On April 1, 1995, Bethlehem paid the annual dividend on its
Series A and Series B Employee Stock Ownership Plan Convertible
Preference Stock in additional shares of Series A and Series B
Preference Stock having an aggregate stated value of approximately
$4.4 million.
Outlook
Bethlehem continues to make steady progress toward achieving
its objectives. It expects to operate at high levels with
continued improvement in its performance during the balance of the
year.
Market conditions continue to be strong and Bethlehem is
receiving higher value for its products. During the first quarter
of this year, Bethlehem's customers reduced steel inventories and
they advise Bethlehem that import offerings have declined.
Customers in each of Bethlehem's major consuming industries
are reporting good business conditions. Order entry during the
first quarter was strong, export opportunities are increasing and
Bethlehem continues to have a very good backlog of orders.
Bethlehem's 1995 shipments should be slightly higher than last
year and it expects another year of strong industry shipments.
Bethlehem expects further reductions in customers' inventories
during the second quarter as well as reduced levels of imports
during the balance of the year. Bethlehem's prices should
continue to improve and costs will decrease as its recently
modernized facilities become fully operational.
- 8 -
<PAGE>
<PAGE> 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Bethlehem, in the ordinary course of its business, is the
subject of various pending or threatened legal actions involving
governmental agencies or private interests. Bethlehem believes
that any ultimate liability arising from these actions should not
have a material adverse effect on its consolidated financial
position at March 31, 1995.
The following previously reported proceeding had developments
during the first quarter of 1995:
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. On June 24, 1992,
Bethlehem petitioned the Kentucky Supreme Court to reconsider its
ruling.
On December 23, 1994, the Court denied the Motion, upholding
the original verdict, plus interest. Bethlehem has paid $37.6
million, representing the full amount of the judgment, including
interest, into the trial court and has filed a petition for review
by the U. S. Supreme Court. An adverse final resolution of the
case will not have any other effect on Bethlehem's results of
operations because Bethlehem sold its Kentucky coal operations in
1988.
- 9 -
<PAGE>
<PAGE> 11
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of the Stockholders of Bethlehem was held on April 25,
1995.
The following nominees for director named in the Proxy Statement dated
March 15, 1995 were elected at the Meeting by the votes indicated:
For Withheld
Curtis H. Barnette 89,880,619 2,608,278
Benjamin R. Civiletti 89,924,103 2,564,794
Worley H. Clark 89,950,971 2,537,926
John B. Curcio 89,810,936 2,677,961
Thomas L. Holton 89,927,856 2,561,041
Lewis B. Kaden 89,946,143 2,542,754
Harry P. Kamen 89,930,645 2,558,252
Winthrop Knowlton 89,945,532 2,543,365
Robert McClements, Jr. 89,941,385 2,547,512
Gary L. Millenbruch 89,939,106 2,549,791
Roger P. Penny 89,786,676 2,702,221
Dean P. Phypers 89,931,359 2,557,538
William A. Pogue 89,938,707 2,550,190
John F. Ruffle 89,952,724 2,536,173
The votes in favor of the election of the nominees represent at least 97.1% of
the shares voted for each of the nominees.
Stockholders approved the proposed amendment of Article Fourth of the
Second Restated Certificate of Incorporation of Bethlehem to increase the
number of authorized shares of Common Stock from 150,000,000 to 250,000,000 by
the following vote:
For Against Abstentions
Number of Shares
of Common Stock
and ESOP Preference
Stock Voting Together
as a Class 81,216,801 6,910,168 4,361,928
Number of Shares of
Common Stock Voting
Separately as a Class 79,327,121 6,291,906 4,281,893
Ratification of the appointment of Independent Auditors was
approved by the following vote:
For Against Abstentions
Number of Shares 91,554,002 411,471 523,424
There were no broker non-votes with respect to any of these matters voted
upon at the Meeting.
- 10 -<PAGE>
<PAGE> 12
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
The following is an index of the exhibits included in
this Report on Form 10-Q:
11. Statement regarding computation of per share earnings.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by Bethlehem during
the quarter ended March 31, 1995.
- 11 -
<PAGE>
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, Bethlehem Steel Corporation has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
Bethlehem Steel Corporation
(Registrant)
by
/s/ L. A. Arnett
============================
L. A. Arnett
Vice President and
Controller (principal
accounting officer)
Date: May 11, 1995
- 12 -
<PAGE>
<PAGE> 15
EXHIBIT INDEX
The following is an index of the exhibits included in
this Report:
Item
No. Exhibit
==== =======
11 Statement Regarding Computation of
Per Share Earnings
27 Financial Data Schedule
<PAGE>
<PAGE> 16
EXHIBIT (11)
Bethlehem Steel Corporation
Statement Regarding Computation of Earnings Per Share
(dollars in millions and shares in thousands, except per share data)
Three Months Ended
March 31
Primary Earnings Per Share 1995 1994
Net Income $52.5 $12.9
Less Dividend Requirements:
$2.50 Preferred Dividend (2.5) (2.5)
$5.00 Preferred Dividend (3.1) (3.1)
$3.50 Preferred Dividend (4.5) (4.5)
5% Preference Dividend (0.5) (0.7)
Total Preferred and Preference Dividends (10.6) (10.8)
Net Income Applicable to Common Stock $41.9 $2.1
Average Shares of Common Stock and
Equivalents Outstanding:
Common Stock 109,978 94,760
Stock Options 36 346
Total 110,014 95,106
Primary Earnings Per Share $0.38 $0.02
Fully Diluted Earnings Per Share
Net Income $52.5 $12.9
Less Dividend Requirements:
$2.50 Preferred Dividend (2.5) (2.5)
$5.00 Preferred Dividend (3.1) (3.1)
$3.50 Preferred Dividend - (4.5)
5% Preference Dividend - (0.7)
Net Income Applicable to Common Stock $46.9 $2.1
Average Shares of Common Stock and Equivalents and
Other Potentially Dilutive Securities Outstanding:
Common Stock 109,978 94,760
Stock Options 36 346
$2.50 Preferred Stock * *
$5.00 Preferred Stock * *
$3.50 Preferred Stock 12,255 *
5% Preference Stock 2,560 *
Total 124,829 95,106
Fully Diluted Earnings Per Share $0.38 $0.02
* Antidilutive
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 125
<SECURITIES> 0
<RECEIVABLES> 524
<ALLOWANCES> 20
<INVENTORY> 912
<CURRENT-ASSETS> 1553
<PP&E> 6930
<DEPRECIATION> 4190
<TOTAL-ASSETS> 5717
<CURRENT-LIABILITIES> 995
<BONDS> 634
<COMMON> 112
0
14
<OTHER-SE> 1072
<TOTAL-LIABILITY-AND-EQUITY> 5717
<SALES> 1241
<TOTAL-REVENUES> 1241
<CGS> 1069
<TOTAL-COSTS> 1167
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 64
<INCOME-TAX> 11
<INCOME-CONTINUING> 53
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
