<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, 1996
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 6, 1996: 110,960,415
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BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
Page No.
PART I. Financial Information
Consolidated Statements of Income-
Three Months Ended March 31, 1996
and 1995 (unaudited). . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Balance Sheets-
March 31, 1996 (unaudited), December 31, 1995
and March 31, 1995 (unaudited). . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows-
Three Months Ended March 31, 1996
and 1995 (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
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Bethlehem Steel Corporation
CONSOLIDATED STATEMENTS OF INCOME
(dollars and shares in millions, except per share data)
(unaudited)
Three Months Ended
March 31
---------------------
1996 1995
---- ----
Net Sales $1,118.5 $1,240.7
-------- --------
Costs and Expenses:
Cost of sales 1,009.9 1,068.9
Depreciation 69.9 71.0
Selling, administration and general expense 26.1 26.6
-------- --------
Total Costs and Expenses 1,105.9 1,166.5
Income from Operations 12.6 74.2
Financing Income (Expense):
Interest and other financing costs (14.0) (13.2)
Interest income 1.5 2.5
-------- --------
Income before Income Taxes 0.1 63.5
Provision for Income Taxes - (11.0)
-------- --------
Net Income 0.1 52.5
Dividends on Preferred and Preference Stock 10.5 10.6
-------- --------
Net Income (Loss) Applicable to Common Stock $ (10.4) $ 41.9
======== ========
Net Income (Loss) per Common Share $ (0.09) $ 0.38
Average Primary Shares Outstanding 110.8 110.0
The accompanying Notes are an integral part of the
Consolidated Financial Statements.
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Bethlehem Steel Corporation
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
ASSETS
March 31 December 31 March 31
1996 1995 1995
(unaudited) (unaudited)
----------- ----------- -----------
Current Assets:
Cash and cash equivalents $ 130.5 $ 180.0 $ 125.0
Receivables, less allowances 335.2 374.6 504.3
Inventories:
Raw materials 332.3 335.5 321.2
Finished and semifinished 643.7 604.9 573.6
Contract work-in-progress, less
billings 19.2 17.8 17.4
---------- ---------- ----------
995.2 958.2 912.2
Other current assets 11.2 13.0 11.2
---------- ---------- ----------
Total Current Assets 1,472.1 1,525.8 1,552.7
Investments and Miscellaneous Assets 108.0 112.3 119.7
Property, Plant and Equipment,
less accumulated depreciation of
$4,396.7, $4,329.5 and $4,190.4 2,689.4 2,714.2 2,739.6
Deferred Income Tax Asset - net 885.0 885.0 892.7
Intangible Asset - Pensions 463.0 463.0 412.0
---------- ---------- ----------
Total Assets $ 5,617.5 $ 5,700.3 $ 5,716.7
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 389.8 $ 381.4 $ 418.6
Accrued employment costs 313.5 358.0 296.6
Accrued taxes 63.2 72.4 64.6
Debt and capital lease obligations 82.4 91.5 94.6
Other current liabilities 121.7 146.3 120.3
---------- ---------- ----------
Total Current Liabilities 970.6 1,049.6 994.7
Pension Liability 1,152.6 1,115.0 1,085.0
Postretirement Benefits Other Than
Pensions 1,418.4 1,415.0 1,435.6
Long-term Debt and Capital Lease
Obligations 521.1 546.8 633.8
Other Long-term Liabilities 326.2 335.6 369.2
Stockholders' Equity:
Preferred Stock 11.6 11.6 11.6
Preference Stock 2.5 2.6 2.6
Common Stock 112.9 112.7 112.0
Common Stock held in treasury at cost (59.4) (59.4) (59.4)
Additional paid-in capital 1,840.7 1,850.6 1,938.5
Accumulated deficit (679.7) (679.8) (806.9)
---------- ---------- ----------
Total Stockholders' Equity 1,228.6 1,238.3 1,198.4
---------- ---------- ----------
Total Liabilities and Stockholders' Equity $ 5,617.5 $ 5,700.3 $ 5,716.7
========== ========== ==========
The accompanying Notes are an integral part of the
Consolidated Financial Statements.
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Bethlehem Steel Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
Three Months Ended
March 31
------------------
1996 1995
---- ----
Operating Activities:
Net income $ 0.1 $ 52.5
Adjustments for items not affecting cash
from operating activities:
Depreciation 69.9 71.0
Deferred Income Taxes - 10.5
Other - net 6.2 (4.2)
Working capital (excluding financing and
investing activities):
Receivables - operating (20.6) 15.2
Receivables - sold 60.0 -
Inventories (37.1) (29.3)
Accounts payable 8.2 30.1
Employment costs and other (63.8) (52.3)
Other - net (0.9) (12.7)
--------- ---------
Cash Provided from Operating Activities 22.0 80.8
--------- ---------
Investing Activities:
Capital expenditures (59.9) (60.5)
Cash proceeds from asset sales and other 2.5 5.1
--------- ---------
Cash Used for Investing Activities (57.4) (55.4)
--------- ---------
Financing Activities:
Pension expense 47.6 53.4
Pension funding (10.0) (70.9)
Long-term debt and capital lease borrowings 0.7 1.9
Long-term debt and capital lease payments (34.8) (30.4)
Cash dividends paid (10.1) (10.1)
Other payments (7.5) (3.8)
--------- ---------
Cash Used for Financing Activities (14.1) (59.9)
--------- ---------
Net Decrease in Cash and Cash Equivalents (49.5) (34.5)
Cash and Cash Equivalents - Beginning of Period 180.0 159.5
--------- ---------
- End of Period $ 130.5 $ 125.0
========= =========
Supplemental Cash Payment Information:
Interest, net of amount capitalized $ 23.0 $ 24.3
Income taxes $ 3.2 $ -
The accompanying Notes are an integral part of the
Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Segment Results (dollars in millions):
(unaudited)
1996 1995
------- ---------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
Net Sales:
Basic Steel Operations $ 1,095.4 $ 1,130.4 $ 1,210.6 $ 1,225.4 $ 1,210.4
Steel Related Operations 32.2 28.6 23.8 29.4 36.5
Eliminations (9.1) (7.1) (9.7) (4.6) (6.2)
---------- ---------- ---------- ---------- ----------
Total $ 1,118.5 $ 1,151.9 $ 1,224.7 $ 1,250.2 $ 1,240.7
========== ========== ========== ========== ==========
Operating Income (Loss):
Basic Steel Operations $ 21.4 $ 66.5 $ 67.5 $ 97.6 $ 79.1
Steel Related Operations (8.8) (15.2) (11.4) (10.3) (4.9)
---------- ---------- ---------- ---------- ----------
Total $ 12.6 $ 51.3 $ 56.1 $ 87.3 $ 74.2
========== ========== ========== ========== ==========
Shipments
(thousands of net tons):
Basic Steel Operations 2,103 2,143 2,291 2,263 2,273
========== ========== ========== ========== ==========
Raw Steel Production
(thousands of net tons):
Basic Steel Operations 2,259 2,533 2,565 2,729 2,596
========== ========== ========== ========== ==========
2. The Consolidated Financial Statements as of and for the three month periods
ended March 31, 1996 and 1995 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
1995 audited financial statements set forth in Bethlehem's Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
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MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Review of Results:
First Quarter 1996 - First Quarter 1995
Bethlehem reported break-even results with net income of $.1 million on
sales of $1.12 billion for the first quarter of 1996 compared to net income of
$53 million on sales of $1.24 billion for the first quarter of 1995. After
deducting preferred dividends, this results in a loss of $.09 per common share
for the first quarter of 1996 compared to earnings of $.38 per common share for
the first quarter of 1995.
Segment Results
The Basic Steel Operations segment had income from operations of $21
million on shipments of 2,103,000 tons for the first quarter of 1996 compared
to income from operations of $79 million on shipments of 2,273,000 tons for the
first quarter of 1995. This segment's results declined from a year ago
principally from lower realized prices and, to a lesser extent, from the
effects of the severe winter weather, the consequences of the work stoppage at
General Motors, the start-up of an upgraded structural mill and reduced
shipments.
Results were adversely affected due to lower shipments primarily at
Bethlehem Structural Products Corporation (BSPC) and at the Burns Harbor
Division. BSPC's lower shipments were attributable to the closing of the
48-inch structural mill in the fourth quarter of last year and the transition
to a single structural mill operation. Shipments at Burns Harbor were lower
than last year because of lower steel supply resulting from reduced steelmaking
productivity in the latter part of 1995 and early 1996. Also, General Motors
suspended receipt of deliveries from Burns Harbor for about two weeks due to
GM's labor dispute. Sparrows Point had higher shipments as a result of
relatively strong steel demand.
First quarter 1996 income from operations declined from the fourth quarter
of 1995 due principally to higher costs and lower realized prices. Bethlehem
incurred higher costs during the first quarter from the severe winter weather,
the start-up of BSPC's upgraded structural mill and the increased consumption
of higher cost purchased steel at Burns Harbor.
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The Steel Related Operations segment (BethForge, CENTEC and BethShip)
reported a loss from operations of $9 million for the first quarter of 1996
compared to a loss of $5 million for the first quarter of 1995. BethForge had
lower production due to the severe winter weather which curtailed the ability
of Pennsylvania Steel Technologies, Inc. to ship ingots to BethForge. Also,
results at BethShip were impacted by lower revenues as market conditions for
ship repair remained very competitive. This segment's first quarter loss was
less than the loss from operations of $15 million in the fourth quarter of
1995, primarily because of the absence of costs incurred in the fourth quarter
related to shutting down the electric furnace shop at BethForge.
Liquidity and Capital Structure
At March 31, 1996, total liquidity, comprising cash, cash equivalents and
funds available under Bethlehem's bank credit arrangements, totaled $431
million compared to $512 million at December 31, 1995. Cash and cash
equivalents were $131 million at March 31, 1996, compared to $180 million at
December 31, 1995.
Cash provided from operating activities during the first quarter of 1996,
including selling accounts receivable of $60 million under Bethlehem's credit
arrangement, was $22 million, compared to $81 million in the first quarter of
1995. Principal uses of cash during the first quarter of 1996 included capital
expenditures of $60 million, working capital of $53 million, debt repayments of
$35 million and pension funding of $10 million.
Major uses of cash for 1996 include an estimated $300 million of capital
expenditures, pension funding and repayment of approximately $90 million of
debt and capital lease obligations. Bethlehem expects to maintain an adequate
level of liquidity from cash flow from operations, reductions in working
capital and available borrowings under its 1995 credit arrangement.
Labor Negotiations
Bethlehem's labor agreement with the United Steelworkers of America (USWA)
provides for reopener negotiations in 1996 of wage and certain benefit
provisions (excluding pensions and health care). Discussions with the USWA
began in March. On May 7, 1996, Bethlehem and the USWA submitted unresolved
issues to final offer interest arbitration. Unless otherwise agreed, any
changes will be effective August 1, 1996.
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Dividends
On April 24, 1996, 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, 1996, to holders of record on May 10, 1996. No dividend was
declared on Bethlehem's Common Stock.
Outlook
The U.S. economy continues to be on a course of moderate and sustainable
growth and low inflation. Demand for steel products continues to be strong and
Bethlehem is implementing its previously announced price increases for sheet
and plate products that became effective for second quarter deliveries.
Bethlehem also recently announced additional price increases for sheet and
plate products for third quarter deliveries. Bethlehem expects to continue to
operate at high levels throughout the year, although Bethlehem believes that
recent and planned industry capacity additions will increase the intensity of
domestic competition. Accordingly, Bethlehem is committed to improving its
competitive position by taking actions to improve its product quality and mix,
increase the utilization and efficiency of its production facilities and
improve the management of its working capital. Additionally, Bethlehem is
intensifying its efforts to reduce costs throughout the corporation.
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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, 1996.
The following previously reported proceeding had developments during the
first quarter of 1996:
On March 29, 1996, the U. S. Department of Justice, on behalf of the EPA,
brought a civil action against Bethlehem in the U. S. District Court for the
Northern District of Indiana for alleged violations of the Clean Water Act and
the Safe Drinking Water Act at the Burns Harbor Division. The Complaint
alleges that, from November 1992 to April 1994, the Division discharged
pollutants from its dock wall without a permit as required by the Clean Water
Act and failed to meet certain requirements of an underground injection well
permit. Settlement negotiations were initiated prior to the filing of the
Complaint and the government has suggested settlement for total civil penalties
of $441,300 and appropriate injunctive relief. If settlement negotiations are
unsuccessful, Bethlehem believes it has meritorious defenses and will
vigorously defend the action.
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Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of the Stockholders of Bethlehem was held on April 23,
1996.
The following nominees for director named in the Proxy Statement dated
March 13, 1996 were elected at the Meeting by the votes indicated:
For Withheld
--- --------
Curtis H. Barnette 96,089,569 1,078,932
Benjamin R. Civiletti 96,135,125 1,033,376
Worley H. Clark 96,136,930 1,031,571
John B. Curcio 96,022,888 1,145,613
Thomas L. Holton 96,102,041 1,066,460
Lewis B. Kaden 96,113,572 1,054,929
Harry P. Kamen 96,131,857 1,036,644
Winthrop Knowlton 96,109,603 1,058,898
Robert McClements, Jr. 96,114,962 1,053,539
Gary L. Millenbruch 96,140,370 1,028,131
Roger P. Penny 96,041,675 1,126,826
Shirley D. Peterson 96,092,651 1,075,850
Dean P. Phypers 96,111,718 1,056,783
William A. Pogue 96,110,735 1,057,766
John F. Ruffle 96,135,957 1,032,544
The votes in favor of the election of the nominees represent at least 98.8%
of the shares voted for each of the nominees.
Ratification of the appointment of Independent Auditors was approved by the
following vote:
For Against Abstentions
--- ------- -----------
Number of Shares 96,273,218 491,785 403,498
There were no broker non-votes with respect to any of these matters voted
upon at the Meeting.
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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 Earnings Per Share.
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, 1996.
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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 10, 1996
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EXHIBIT INDEX
The following is an index of the exhibits included in this Report:
Item
No. Exhibit
11 Statement Regarding Computation of Earnings
Per Share
27 Financial Data Schedule
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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 1996 1995
-------------------------- ---- ----
Net Income $0.1 $52.5
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 (0.4) (0.5)
-------- --------
Total Preferred and Preference Dividends (10.5) (10.6)
-------- --------
Net (Loss) Income Applicable to Common Stock ($10.4) $41.9
======== ========
Average Shares of Common Stock and
Equivalents Outstanding:
Common Stock 110,797 109,978
Stock Options 5 36
-------- --------
Total 110,802 110,014
-------- --------
Primary Earnings Per Share ($0.09) $0.38
======== ========
Fully Diluted Earnings Per Share
--------------------------------
Net Income $0.1 $52.5
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 (0.4) -
-------- --------
Net (Loss) Income Applicable to Common Stock ($10.4) $46.9
======== ========
Average Shares of Common Stock and Equivalents and
Other Potentially Dilutive Securities Outstanding:
Common Stock 110,797 109,978
Stock Options 5 36
$2.50 Preferred Stock - *
$5.00 Preferred Stock - *
$3.50 Preferred Stock - 12,255
5% Preference Stock - 2,560
-------- --------
Total 110,802 124,829
======== ========
Fully Diluted Earnings Per Share ($0.09) $0.38
======== ========
*Antidilutive
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<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 131
<SECURITIES> 0
<RECEIVABLES> 355
<ALLOWANCES> 20
<INVENTORY> 995
<CURRENT-ASSETS> 11
<PP&E> 7086
<DEPRECIATION> 4397
<TOTAL-ASSETS> 5618
<CURRENT-LIABILITIES> 971
<BONDS> 521
0
14
<COMMON> 113
<OTHER-SE> 1102
<TOTAL-LIABILITY-AND-EQUITY> 5618
<SALES> 1119
<TOTAL-REVENUES> 1119
<CGS> 1010
<TOTAL-COSTS> 1106
<OTHER-EXPENSES> 0
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