BETHLEHEM STEEL CORP /DE/, 10-K, 1996-03-27

BETHLEHEM STEEL CORP /DE/
10-K, 1996-03-27
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

F O R M 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-1941

B E T H L E H E M S T E E L C O R P O R A T I O N
(Exact name of registrant as specified in its charter)

DELAWARE 24-0526133
(State of Incorporation) (I.R.S. Employer Identification No.)

1170 EIGHTH AVENUE
BETHLEHEM, PENNSYLVANIA 18016-7699
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 694-2424

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock--$1 par value per share New York Stock Exchange
Chicago Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Preferred Stock -- $1 par value per share
$5.00 Cumulative Convertible New York Stock Exchange
(stated value $50.00 per share)
$2.50 Cumulative Convertible New York Stock Exchange
(stated value $25.00 per share)
6-7/8% Debentures. Due March 1, 1999 New York Stock Exchange
8-3/8% Debentures. Due March 1, 2001 New York Stock Exchange
8.45% Debentures. Due March 1, 2005 New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/

Aggregate Market Value of Voting Stock held by Non-Affiliates: $1,517,960,689
The amount shown is based on the closing price of Bethlehem Common Stock on
the New York Stock Exchange Composite Tape on March 15, 1996. Voting stock
held by directors and executive officers of Bethlehem is not included in the
computation. However, Bethlehem has made no determination that such
individuals are "affiliates" within the meaning of Rule 405 under the
Securities Act of 1933.

Number of Shares of Common Stock outstanding as of March 15, 1996: 110,867,942

DOCUMENTS INCORPORATED BY REFERENCE:

Selected portions of the 1995 Annual Report to Stockholders of Bethlehem
Steel Corporation are incorporated by reference into Part II of this Report on
Form 10-K.

Selected portions of the 1996 Proxy Statement of Bethlehem Steel
Corporation are incorporated by reference into Part III of this Report on
Form 10-K.

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PART I
ITEM 1. BUSINESS.

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 coke, coal and iron ore, repairs
ships and manufactures and sells forgings and cast rolls.

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 B to the
Consolidated Financial Statements sets forth certain financial information
relating to Bethlehem's industry segments for 1995, 1994 and 1993. 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 1993 through
1995:

1995 1994 1993
---- ---- ----
Basic Steel Operations
Steel mill products:
Sheets and tin mill products. . . . 66.1% 66.1% 63.1%
Plates. . . . . . . . . . . . . . . 15.1 14.0 13.6
Structural shapes and piling. . . . 6.7 6.7 8.5
Rail products . . . . . . . . . . . 3.2 2.8 3.6
Other steel mill products . . . . . 2.7 2.5 2.0
Other products and services
(including raw materials) . . . . . 4.2 5.5 6.8
------ ------ ------
98.0 97.6 97.6
Steel Related Operations . . . . . . . . 2.0 2.4 2.4
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
BASIC STEEL OPERATIONS

Bethlehem's Basic Steel Operations produces a wide variety of steel mill
products, including hot rolled, cold rolled and coated sheets and strip,
plates, structural shapes, piling, tin mill products, specialty blooms, carbon
and alloy bars, rail and large-diameter pipe. Basic Steel Operations
includes the following Business Units: the Burns Harbor Division,
the Sparrows Point Division, Bethlehem Structural Products Corporation ("BSPC")
and Pennsylvania Steel Technologies, Inc. ("PST"). Also included in Basic
Steel Operations are iron ore and coal operations (which provide raw materials
to Bethlehem's steelmaking facilities or sell such materials to trade
customers), railroad and trucking operations (which primarily transport raw
materials and semifinished steel products within various Bethlehem operations)
and lake shipping operations (which primarily transport raw materials to the
Burns Harbor Division). See "ITEM 2. PROPERTIES" of this Report for a
description of the facilities of these business units and operations.

As reported by the American Iron and Steel Institute ("AISI"), the steel
industry's raw steel production capability for 1995 was 112 million tons, and
the preliminary average rate of industry utilization of that capability was 92
percent, compared to 108 million tons and 93 percent for 1994 and 110 million
tons and 89 percent for 1993. Bethlehem's raw steel production capability was
11.5 million tons for 1995, 1994 and 1993. Its average rate of utilization of
that capability was 91 percent for 1995, 85 percent for 1994 and 90 percent for
1993. Bethlehem's raw steel production capability was reduced to 10.5 million
tons for 1996 because of the termination of steelmaking at BSPC and BethForge,
Inc.

- -------------------------
(1) "Bethlehem" when used herein means Bethlehem Steel Corporation, a Delaware
corporation, and where applicable includes its consolidated subsidiaries.
Bethlehem was incorporated in Delaware in 1919.

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The following table shows, for each of the years indicated, the raw steel
production of Bethlehem and of the entire domestic steel industry:

Raw Steel Production
--------------------------------------
Domestic Bethlehem as a
Steel % of Domestic
Bethlehem Industry* Steel Industry
--------- -------- --------------
(millions of net tons)
1995. . . . . . . . . . . . . 10.4 103.1** 10.1**
1994. . . . . . . . . . . . . 9.8 100.6 9.7
1993. . . . . . . . . . . . . 10.3 97.9 10.5

- ---------------
* The figures are as reported by the AISI.
** Based on preliminary AISI figures.

Of Bethlehem's 1995 raw steel production, 93 percent was produced by basic
oxygen furnaces and 7 percent by electric furnaces. Bethlehem's three
continuous slab casters for light flat rolled products and plates produced
approximately 84 percent of the slabs needed for these products in 1995
compared to 78 percent in 1994 and 86 percent in 1993.

Bethlehem's raw steel production and slab production for 1994 decreased
from 1993 primarily due to the reline of one of the two blast furnaces at the
Burns Harbor Division.

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:

1995 1994 1993
---- ---- ----
Service centers, processors and converters
(including semifinished customers). . 41.0% 45.9% 47.3%
Transportation (including automotive) . 24.8 24.2 22.2
Construction. . . . . . . . . . . . . . 14.2 14.7 15.5
Containers. . . . . . . . . . . . . . . 5.2 5.7 5.4
Machinery . . . . . . . . . . . . . . . 5.2 4.9 5.1
Other . . . . . . . . . . . . . . . . . 9.6 4.6 4.5
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======

Steel products are distributed by Bethlehem principally through its own
sales organization, which has sales offices at various locations in the United
States and Mexico, and through foreign sales agents. In addition to selling to
customers who consume steel products directly, Bethlehem sells steel products
to steel service centers, distributors, processors and converters. Export
sales for this segment were 5 percent of total sales in 1995 and 2 percent in
1994 and 1993.

Trade orders on hand for Basic Steel Operations at December 31, 1995, and
December 31, 1994, were approximately $1,281 million and $1,166 million,
respectively. Substantially all of the orders on hand at December 31, 1995,
are expected to be filled in 1996.

Competition within the domestic steel industry is intense. Principal
competitors are domestic mini-mills, foreign and domestic integrated steel
companies and reconstituted mills. Bethlehem experiences strong competition in
all principal markets served by Basic Steel Operations with respect to, among
other things, price, service and quality.

Domestic integrated producers, such as Bethlehem, have lost market share in
recent years to domestic mini-mills. Mini-mills provide significant
competition in certain product lines, including structural shapes and hot
rolled sheets. Mini-mills are relatively efficient, low-cost producers that
produce steel from scrap in electric furnaces, have low employment and
environmental costs and target regional markets. Thin slab

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casting technologies have allowed mini-mills to enter certain sheet markets
which have traditionally been supplied by integrated producers. Certain
companies are constructing, or have indicated that they are currently
considering, additional mini-mill plants for sheet products in
the United States.

Domestic steel producers also face significant competition from foreign
producers and have been adversely affected by unfairly traded imports. Imports
of finished steel products accounted for approximately 18 percent of the
domestic market in 1995, approximately 20 percent in 1994 and approximately 15
percent in 1993. The major restructuring of the domestic steel industry, which
began in the late 1970s and early 1980s, has removed the steelmaking capacity
that once existed to meet market demand during peak periods. 1995 was the
strongest domestic shipment year since 1979. A portion of the demand that
exceeded steelmaking capacity was met by domestic producers who imported
semifinished slabs for rolling into finished products in their own mills.
The remaining demand, which could not be met by domestic rolling mills, was met
by increased imports of finished products, primarily hot and cold rolled
sheets and plates.

Many foreign steel producers are owned, controlled or subsidized by their
governments. Decisions by these foreign producers with respect to production
and sales may be influenced to a greater degree by political and economic
policy considerations than by prevailing market conditions. The following
table, which is based on data reported by the AISI, shows the percentage of the
domestic apparent consumption of steel mill products captured by imports for
various classes of products.

1995* 1994 1993
---- ---- ----
Structural shapes and piling. . . . . . . . 10% 12% 10%
Bars, rods, tool steel and semifinished . . 31 35 29
Plates. . . . . . . . . . . . . . . . . . . 22 23 16
Sheets, strip and tin mill products . . . . 16 19 13
Rail. . . . . . . . . . . . . . . . . . . . 27 28 18
All products**. . . . . . . . . . . . . . . 22 25 19

- ---------------
* Preliminary
** Excludes steel imported in the form of manufactured goods, such as
automobiles, but includes semifinished steel.

Excluding semifinished steel, imports of steel mill products were approximately
19.3 million tons in 1995, 22.1 million tons in 1994 and 14.5 million tons
in 1993.

Antidumping and countervailing duty orders covering imports of
corrosion-resistant sheet from 6 countries, cold rolled sheet from 3 countries
and plates from 11 countries, which resulted from unfair trade cases filed by
Bethlehem and 11 other companies in 1992, remain in place. In late 1995, a
petition to terminate the orders covering cold rolled sheet from Germany and
the Netherlands because of "changed circumstances" was filed with the ITC. The
petition will be opposed by the U.S. producers.

Imports of flat rolled products from countries not covered by antidumping
and countervailing duty orders, particularly imports of plate, continue to
diminish the impact of the successful cases.

The intensely competitive conditions within the domestic steel industry
have been exacerbated by the continued operation, modernization and upgrading
of marginal steel production facilities through bankruptcy reorganization
procedures, thereby perpetuating overcapacity in certain industry product
lines. Overcapacity is also perpetuated by the continued operation of
marginal steel production facilities that have been sold by integrated
steel producers to new owners, which operate such facilities with a
lower cost structure.

In the case of many steel products, there is substantial competition from
manufacturers of products other than steel, including plastics, aluminum,
ceramics, glass, wood and concrete.

STEEL RELATED OPERATIONS

Bethlehem's Steel Related Operations includes BethForge, Inc. and CENTEC
Roll Corporation. BethForge manufactures and fabricates forged products,
including forged rolls for the metalworking industry.

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CENTEC produces centrifugally cast rolls for the metalworking industry.
The operations of BethForge and CENTEC are located in Bethlehem, Pennsylvania.

Steel Related Operations also includes BethShip, Inc., which repairs and
services ships and fabricates industrial products. The facilities of BethShip
consist of a ship repair yard at Sparrows Point, Maryland. A dry dock facility
for the repair and inspection of offshore drill rigs and other vessels at Port
Arthur, Texas, was sold during 1995.

Bethlehem sells this segment's fabricated steel products to the steel,
machinery, transportation, energy, defense and utility industries. These
products are distributed principally through Bethlehem's own sales
organization. The markets for these products overlap to a certain extent with
the principal markets for products included in Basic Steel Operations.
Bethlehem obtains the major portion of the materials and products used in the
manufacture and fabrication of the products of this segment from its own steel
mills.

Competition is strong in all principal markets for the products of this
segment, particularly with respect to price, quality and service. Principal
competitors are foreign and domestic independent steel and marine fabricating
companies. As is the case with Basic Steel Operations, there is substantial
competition with respect to some fabricated steel products from manufacturers
of products other than steel and from imports. The operations of this segment
are generally subject to the cyclical fluctuations characteristic of the
construction and capital goods industries.

Trade orders on hand for Bethlehem's Steel Related Operations at December
31, 1995, and December 31, 1994, were approximately $43 million and $46
million, respectively. Substantially all the orders on hand at December 31,
1995, are expected to be filled in 1996.

GENERAL

Capital Expenditures

Capital expenditures were $267 million in 1995 compared to $445 million in
1994 and $327 million in 1993. Capital expenditures for 1996 are currently
estimated to be approximately $300 million.

Major projects during 1995 included the upgrade of the 44-inch rolling mill
at BSPC and the modernization of the 160-inch plate mill at the Burns Harbor
Division.

Approximately $360 million of additional capital expenditures were
authorized in 1995. At December 31, 1995, the estimated cost of completing
authorized capital expenditures was approximately $400 million compared to $325
million at December 31, 1994. Such authorized capital expenditures are
expected to be completed during the 1996-1998 period.

Environmental Control and Cleanup Expenditures

Bethlehem is subject to various 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, 1995, Bethlehem spent approximately $235 million for environmental
control equipment. Expenditures for new environmental control equipment
totaled approximately $36 million in 1995, $44 million in 1994 and $35 million
in 1993. The costs incurred in 1995 to operate and maintain existing
environmental control equipment were approximately $122 million (excluding
interest costs but including depreciation charges of $21 million) compared to
$115 million in 1994 and $125 million in 1993. 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.
Bethlehem paid approximately $5.9 million in 1995, $3.9 million in 1994 and
$3.7 million in 1993 for such fines and penalties.

Under the Clean Air Act, as amended, coke-making facilities will have to
meet progressively more stringent standards over the next 30 years. Bethlehem
currently operates coke-making facilities at Bethlehem, Pennsylvania; Burns
Harbor, Indiana; and Lackawanna, New York. While Bethlehem continues to
evaluate the impact applicable emission control regulations will have on these
operations, it believes that these operations will be able to comply.

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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 could be
amended, new laws could 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 expenditures for the installation of
new environmental control equipment will average about $30 million per year
over the next two years. However, estimates of future capital expenditures and
operating costs required for environmental compliance are subject to numerous
uncertainties, including the evolving nature of regulations, possible
imposition of more stringent requirements, availability of new technologies and
the timing of expenditures.

Under the Resource Conservation and Recovery Act, as amended ("RCRA"), the
owners of certain facilities that managed hazardous waste after 1980 are
required to investigate and, if appropriate, remediate certain historic
environmental contamination found at the facility. All of Bethlehem's major
facilities may be subject to this "Corrective Action Program", and Bethlehem
has implemented or is currently implementing the program at its facilities
located in Steelton, Pennsylvania; Lackawanna, New York; Burns Harbor, Indiana;
and Sparrows Point, Maryland. At Steelton, Bethlehem has completed a RCRA
Facility Investigation ("RFI"), a Corrective Measures Study ("CMS") and a
remediation program, which program received formal approval of the United
States Environmental Protection Agency (the "EPA") and was completed in 1994 at
a cost of $316,000. At Lackawanna, Bethlehem is conducting an RFI which, due
to the complexity of the site, regulatory delays and agency-initiated
modifications to the original scope of work, will not be completed until mid
1996 at the earliest. Bethlehem has requested and received formal approval
from the EPA for extension of the investigation to incorporate work requested
by the agency. At Burns Harbor, Bethlehem has submitted to the EPA its
proposed scope of work for an RFI which, following EPA approval, will require
several years to complete. At Sparrows Point, Bethlehem, the EPA and the
Maryland Department of the Environment have initiated negotiations to conduct a
Phased RFI as part of a comprehensive multimedia pollution prevention
agreement. The goal is to finalize an agreement during the fourth quarter
1996, or as soon thereafter as possible. The potential costs for possible
remediation activities at Lackawanna, Burns Harbor and Sparrows Point and the
timeframe for implementation of these activities cannot be reasonably estimated
until the RFIs, and possibly the CMSs, have been completed and approved and the
final corrective action rule has been promulgated by the EPA. The EPA is not
expected to propose a final rule until later this year at the earliest.

Under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA", also known as "Superfund"), the EPA has
authority to impose liability for site remediation on waste generators, past
and present site owners, and operators and transporters regardless of fault or
the legality of the original disposal activity. Bethlehem is actively involved
at a total of 22 sites where it has been advised that it may be considered a
potentially responsible party under CERCLA or the corresponding State Superfund
legislation. 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.

Raw Materials

Bethlehem obtains the major portion of the iron ore and a portion of the
coal essential to its steelmaking business from properties that are owned by
it or in which it has substantial interests. The balance of the iron
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ore and coal and all of the limestone and other raw materials essential to its
steelmaking business will be purchased from commercial sources. See "ITEM 2.
PROPERTIES--Properties Relating to the Basic Steel Operations Segment--Raw
Material Properties and Interests" of this Report.

Research and Development

Bethlehem engages in its own research activities for the improvement of
existing products and the development of new products and more efficient
operating processes. During 1995, 1994 and 1993, Bethlehem incurred costs of
approximately $25 million, $24 million and $24 million, respectively, in its
research and development activities. Bethlehem owns a number of United States
and corresponding foreign patents that relate to a wide variety of products and
processes, has pending various patent applications and is licensed under a
number of patents. Bethlehem also licenses its patents to others, producing
royalties. During 1995, four United States patents covering a variety of new
developments were awarded to Bethlehem. However, Bethlehem believes that no
single patent or license, which expires from time to time, or any group of
patents or licenses relating to a particular product or process is of material
importance in its overall business. Bethlehem also owns registered trademarks
for certain of its products and service marks for certain of its services
which, unlike patents and licenses, are renewable so long as they are continued
in use and properly protected.

In 1994, Bethlehem and U. S. Steel Group, a unit of USX Corporation,
entered into a Cooperative Research and Development Agreement. During 1995,
Bethlehem and U. S. Steel Group continued to conduct joint research and
development activities under the Agreement in the field of basic ironmaking and
steelmaking technologies and processes, such as primary iron and steel process
development, finishing process development and process instrumentation
development. Notices in connection with the Cooperative Research and
Development Agreement have been filed in accordance with the National
Cooperative Research and Development Act of 1993.

Employees and Employment Costs

At year end 1995, Bethlehem had about 18,300 employees at work compared to
about 19,900 employees at the end of 1994 and 20,600 employees at the end of
1993. About three-quarters of Bethlehem's employees are covered by its labor
agreements with the United Steelworkers of America ("USWA").

Under the terms of Bethlehem's 1993 labor agreements with the USWA, most
employees at steel operations received a lump-sum bonus of either $500 or 25
shares of Bethlehem Common Stock, at the election of the employee, and a $.50
per hour wage increase in 1995. In early 1996, most employees at steel
operations will receive a bonus of $.50 per hour worked (maximum payment of
$1,000) or the equivalent value of Bethlehem Common Stock, at the option of
Bethlehem, based on Bethlehem having achieved the required level of 1995
adjusted consolidated pre-tax income. Also, profit sharing of 8 percent of
consolidated adjusted annual income before taxes, unusual items and expenses
applicable to the plan, plus 2 percent of adjusted profits of certain
operations, is paid to USWA represented employees in the following year. The
1993 labor agreements provide for Reopener Negotiations in March 1996 for
certain wage and benefit items, but exclude pension and health care benefits.
Issues that Bethlehem is unable to reach agreement upon with the USWA will be
submitted for final offer interest arbitration and any changes will be
effective August 1, 1996.

Under other provisions of the labor agreements, Bethlehem is required to
pay "shortfall amounts" each year up to 10 percent of the first $100 million
and 20 percent in excess of $100 million of consolidated income before taxes,
unusual items and expenses applicable to the shortfall plan. Shortfall amounts
arise when employees terminate employment and ESOP Preference Stock, held in
trust for employees in reimbursement for wage and benefit reductions in prior
years, is converted into Common Stock and sold for amounts less than the stated
value of the Preference Stock ($32 for Series A and $40 for Series B). Profit
sharing is also paid to non-represented employees based on specific Corporate
and Business Unit plans. Bethlehem paid about $37 million in 1995 and expects
to pay about $74 million for income-related bonuses, profit sharing and
shortfall amounts in early 1996.

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Under the terms of the profit sharing plan provided for in the 1989 labor
agreements with the USWA, no material profit sharing payments were required for
the 1993 plan year. Under other provisions of those labor agreements,
Bethlehem issued approximately 40,800 shares of Series B Preference Stock in
1995 and approximately 134,800 shares in 1994 to a trustee for the benefit of
employees for 1994 and 1993, respectively, and expects to issue about 62,000
shares in early 1996 for the 1995 plan year.

For further information with regard to Bethlehem's employment costs, see
"Employment Cost Summary -- All Employees" under "Financial Review and
Operating Analysis" in Bethlehem's 1995 Annual Report to Stockholders. As set
forth on page 14 of this Report, such discussion is incorporated herein by
reference.

Employee Postretirement Obligations

Bethlehem has substantial financial obligations related to its employee
postretirement plans for pensions and health care. 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 health care expense, puts Bethlehem at a competitive
disadvantage with respect to such costs compared to most other domestic steel
producers. As of December 31, 1995, Bethlehem's consolidated balance sheet
reflects liabilities of $1,115 million and $1,565 million for the actuarial
present value of unfunded accumulated benefit obligations for pensions and
postretirement benefits other than pensions, respectively. The calculation of
the actuarial present value of the accumulated benefit obligations for active
employees assumes continued employment with projections for retirements,
deaths, resignations and discharges. If the actual retirement of active
employees is significantly earlier than projected (for plant closings or other
reasons), the accumulated benefit obligations would increase substantially.
The charges for employees terminated as a result of plant shutdowns or
restructurings vary depending upon the demographics of the work force, but
could be approximately $100,000 per employee. The recording of these charges
could result in a material adverse impact on Bethlehem's financial condition
because of the increase in recorded liabilities, decrease in stockholders'
equity and increases in required contributions to the pension fund and retiree
health care payments.

During 1995, long-term interest rates declined substantially. As a result,
Bethlehem decreased the discount rate used to calculate the actuarial present
value of its accumulated benefit obligation for pensions from the 9.0 percent
used at December 31, 1994, to 7.25 percent at December 31, 1995. This decrease
in the discount rate increased Bethlehem's accumulated benefit obligation for
pensions by about $640 million and required a reduction of $67 million to
additional paid-in capital as required by generally accepted accounting
principles. For each 25 basis point change in such future discount rate,
Bethlehem's accumulated benefit obligation for pensions changes by about $90
million. A decrease in interest rates at December 31, 1996, from December 31,
1995, would require Bethlehem to increase the actuarial present value of its
accumulated benefit obligation for pensions and might again require Bethlehem
to reduce additional paid-in capital depending on the then market value of
Bethlehem's pension trust fund assets (which was $4.0 billion at December 31,
1995). For postretirement benefits other than pensions, principally health
care and life insurance, the same increase in the discount rate as of December
31, 1995, and potential future changes also apply to the actuarial present
value of Bethlehem's accumulated benefit obligation. However, because
different accounting principles apply, there is no immediate change in the
recorded liability or potential charge to equity.

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 about two
years, although it presently has no plans to do so. In December 1994 Congress
passed new pension legislation. The new legislation is not expected to
significantly increase Bethlehem's annual required minimum contribution to its
pension plans for the next several years, but it will increase over time the
annual premium due to the Pension Benefit Guaranty Corporation.

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Restructuring Activities

As part of Bethlehem's efforts to make its business and operations more
competitive, Bethlehem has implemented, and will continue to consider, a wide
range of restructuring alternatives.

Asset Sales. Since early 1986, Bethlehem has implemented an extensive
program of asset sales. Approximately 35 businesses have been sold since the
program began. Bethlehem cannot continue indefinitely to raise substantial
cash from asset sales.

Joint Ventures, Partnerships, Facility Sharing Arrangements and Mergers.
Bethlehem has considered, and discussed with others, various opportunities for
joint ventures, partnerships, facility sharing arrangements and mergers of all
or part of Bethlehem. Bethlehem will continue to explore such opportunities.
See "ITEM 2. PROPERTIES." of this Report for a description of joint ventures
in which Bethlehem participates.

Facility Shutdowns and Restructurings. During the last five years,
Bethlehem has shut down or restructured facilities and operations and has
reduced its annual steelmaking capability from 16.0 million tons to 10.5
million tons for 1996. Bethlehem has recorded charges of approximately $1.0
billion in connection with these actions, including a $350 million
restructuring charge ($290 million after-tax) reflected in its results for
1993. See Note C to the Consolidated Financial Statements. Although Bethlehem
has no current plans to do so, if it becomes necessary for Bethlehem to shut
down or restructure additional businesses and operations in the future, it
could incur substantial additional charges in the process. The recording of
these charges could have a material adverse impact on Bethlehem's financial
condition because of the increase in recorded liabilities and decrease in
stockholders' equity.

ITEM 2. PROPERTIES.

PROPERTIES RELATING TO THE BASIC STEEL OPERATIONS SEGMENT

Burns Harbor Division

The principal operations of the Burns Harbor Division are located in
Indiana on Lake Michigan, about 50 miles southeast of Chicago, Illinois. Burns
Harbor produces hot rolled sheet, cold rolled sheet, corrosion-resistant coated
sheet steel and plates. It is a major supplier of sheet and plate products to
the automotive, service center, construction, machinery and appliance markets.
Principal facilities include a sintering plant, two coke oven batteries, two
blast furnaces including new coal injection facilities, three basic oxygen
furnaces with a combined annual raw steel production capability of
approximately 5.6 million tons, a vacuum degassing facility, two continuous
slab casters with a combined annual production capability of approximately four
million tons, a 50 x 90-inch slabbing mill, two sheared plate mills (110-inch
and 160-inch), an 80-inch hot-strip mill, two continuous pickling lines, 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 72-inch hot-dip galvanizing line. The Division
operates a cold reducing mill, a continuous pickling line, a galvanizing line
and two coke oven batteries in Lackawanna, New York. 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 steel plates.

The Burns Harbor Division's utilization of raw steel production capability
was 103 percent during 1995.

Sparrows Point Division

The operations of the Sparrows Point Division are located on the Chesapeake
Bay near Baltimore, Maryland. The Sparrows Point Division produces hot rolled
sheet, cold rolled sheet, galvanized sheet, Galvalume sheet, tin mill products
and steel plate. Its principal markets include construction, containers and
service centers. Principal facilities include a sintering plant, a large blast
furnace, two basic oxygen furnaces with an annual raw steel production
capability of approximately 3.6 million tons, a two-strand continuous slab
caster with an annual production capability of approximately 3.6 million tons,
a 160-inch sheared plate mill, a 68-inch hot-strip mill, three continuous
pickling lines, three cold reducing mills (66-inch, 56-inch and 48-inch),
continuous and batch annealing facilities, two galvanizing lines, a Galvalume
line, a 48-inch hot-

<PAGE>
<PAGE> 10
dip galvanizing/Galvalume line and tin mill facilities that
include tin and chrome plating lines. The Division continuously casts
essentially 100 percent of its total production volume.

The Sparrows Point Division's utilization of raw steel production
capability was 100 percent during 1995.

Bethlehem Structural Products Corporation

Located in Bethlehem, Pennsylvania, BSPC produces structural steel shapes
and piling primarily for the construction market from steel produced at PST.
This business is also the only domestic producer of hot rolled sheet piling
used in retaining walls and piers. Principal facilities include a 40-inch
blooming mill and a 44-inch structural rolling mill. BSPC also operates two
coke oven batteries that supply coke to the Burns Harbor Division, the Sparrows
Point Division and trade customers.

BSPC's utilization of raw steel production capability was 66 percent during
1995. In late 1995, BSPC discontinued iron and steelmaking operations,
production of heavy structural shapes (48-inch structural rolling mill) and
foundry operations. Light and medium structural shapes production has been
consolidated on the recently upgraded 44-inch rolling mill. It is now being
supplied primarily with continuously cast blooms from PST.

Pennsylvania Steel Technologies, Inc.

Located in Steelton, Pennsylvania, south of Harrisburg, Pennsylvania, PST
uses electric furnace steelmaking and a continuous caster in the production of
railroad rails, specialty blooms and flat bars. It is one of only two rail
producers in the United States. PST also produces large- diameter pipe for the
oil and gas industries and supplies steel to BSPC and BethForge, Inc.
Principal facilities include a new DC electric arc furnace with an annual raw
steel production capability of approximately 1.3 million tons and an older AC
electric arc furnace, a vacuum degassing facility, a continuous bloom caster, a
44-inch blooming mill, a 28-inch rail mill, in-line rail head-hardening
facilities, finishing and shipping facilities for long-length (80-foot) rails,
a 20-inch bar mill and an electric fusion welded pipe mill.

PST's utilization of raw steel production capability was 52 percent during
1995.

Joint Ventures

Bethlehem participates in a joint venture, known as Double G Coatings
Company, L.P., which operates a 270,000 ton per year sheet coating line near
Jackson, Mississippi. The new line produces galvanized and Galvalume coated
sheets primarily for the construction market. The Sparrows Point Division
provides cold rolled coils for approximately half of Double G's annual capacity
and is responsible for marketing its share of the finished product.

Bethlehem also 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. The Burns Harbor Division provides cold
rolled coils for 75 percent of Walbridge's annual capacity and is responsible
for marketing its share of the finished product.

Bethlehem also participates in two joint ventures with facilities located
adjacent to the Burns Harbor operations: Indiana Pickling and Processing
Company that operates a pickling line and Chicago Cold Rolling, L.L.C. that
will operate a reversing cold mill complex now under construction.

Bethlehem also has indirect equity interests in various iron ore
properties. See "Raw Material Properties and Interests" below.

Raw Material Properties and Interests

Iron Ore. Bethlehem has indirect equity interests in various iron ore
operating properties, which (excluding tonnages applicable to interests owned
by others) it estimates contained recoverable reserves at December 31, 1995
sufficient to produce at least 11 million tons of direct shipping iron ore from
properties

<PAGE>
<PAGE> 11

located in Brazil and 482 million tons of iron ore concentrates and
pellets, of which 219 million tons are from properties located in Minnesota and
263 million tons are from properties located in Canada. In addition to the
estimated reserves at operating properties, Bethlehem also has indirect equity
interests in undeveloped or nonoperating iron ore properties, which (excluding
tonnages applicable to interests owned by others) it estimates contained
recoverable reserves at December 31, 1995 sufficient to produce at least 28
million tons of direct shipping iron ore from properties located in Brazil and
126 million tons of iron ore pellets from properties located in Minnesota.

The iron ore operating properties in which Bethlehem has interests have
mining and processing facilities which 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 operations 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's share of the annual iron ore production by enterprises in which
it had ownership interests, for Bethlehem's use or sale to trade customers, was
14.7 million tons in 1995 and 13.8 million tons in 1994. In addition to these
sources, Bethlehem purchased 2.0 million tons and 1.6 million tons of iron ore
in 1995 and 1994, respectively, from sources in which it had no ownership
interests.

In 1995, Bethlehem obtained approximately 85 percent of its iron ore
requirements from operations in which it had ownership interests, compared to
87 percent in 1994. Of the iron ore consumed by Bethlehem in 1995,
approximately 67 percent consisted of pellets and 33 percent of sinter.

Through December 31, 1996, Bethlehem is committed to purchase from sources
in which it has ownership interests .2 million tons of iron ore in excess of
such ownership interests.

Bethlehem had trade sales of iron ore in 1995 and 1994 of .6 million tons
and 2.3 million tons, respectively. Additional iron ore trade sales
commitments through December 31, 1996, presently aggregate 1.0 million tons.
No iron ore trade sales commitments exist beyond 1996.

The interests in foreign iron ore properties described above are subject to
the risks associated with investments in foreign countries, including the risk
of nationalization.

Coal and Coke. Bethlehem owns and leases coal operating properties in West
Virginia, which it estimates contained recoverable reserves at December 31,
1995, sufficient to produce at least 81 million tons of coal, of which
approximately 25 percent and 75 percent, respectively, are metallurgical and
steam coal.

In addition to the estimated reserves at operating properties, Bethlehem
also owns and leases undeveloped or nonoperating coal properties in
Pennsylvania and West Virginia, which it estimates contained recoverable
reserves at December 31, 1995, sufficient to produce at least 168 million tons
of coal, of which approximately 89 percent and 11 percent, respectively, are
metallurgical and steam coal.

Bethlehem's coal operations produced 3.3 million tons of coal in 1995 and
3.9 million tons in 1994. Trade shipments of coal were 2.2 million tons in
1995 compared to 2.7 million tons in 1994.

In 1995, Bethlehem obtained approximately 19 percent of its coal
requirements from its own mines, compared to 33 percent in 1994. The balance
of Bethlehem's requirements was purchased from commercial sources. Through
December 31, 2005, Bethlehem is committed to satisfy certain of its coal
requirements from a single supplier.

Bethlehem continues to operate coke-making facilities at Bethlehem,
Pennsylvania; Burns Harbor, Indiana; and Lackawanna, New York.

Other Raw Materials. Bethlehem purchases its other raw material
requirements from commercial sources.

<PAGE>
<PAGE> 12

Transportation

Bethlehem owns five subsidiary shortline railroads which primarily
transport raw materials and semifinished steel products within various
Bethlehem operations. Bethlehem also owns a flat-bed trucking company serving
Bethlehem's steel operations and other facilities.

The Burns Harbor Division operates two 1,000 foot ore vessels (one owned
and one under long-term charter), which are used for the transportation of iron
ore on the Great Lakes.

PROPERTIES RELATING TO THE STEEL RELATED OPERATIONS SEGMENT

BethForge, Inc. has a facility for the production of forgings and castings
located in Bethlehem, Pennsylvania. An ingot teeming facility and vacuum
stream degassing unit were installed for BethForge's use at PST in order to
take advantage of the new DC electric arc furnace, ladle refining station and
vacuum tank degassing unit installed as part of PST's modernization program.
These new facilities, with their lower cost, higher quality ingots, replaced
BethForge's existing steelmaking facility during 1995.

CENTEC Roll Corporation has a facility for the production of centrifugally
cast rolls located in Bethlehem, Pennsylvania.

BethShip, Inc. has a ship repair yard at Sparrows Point, Maryland. A dry
dock facility for the repair and inspection of offshore drill rigs and other
vessels at Port Arthur, Texas, was sold during 1995.

GENERAL

While Bethlehem's principal operations and facilities are adequately
maintained, they are of varying ages, technologies and operating efficiencies.
Bethlehem believes that most of its operations and facilities currently are
competitive with the operations and facilities of its principal competitors.
Bethlehem will continue to make capital expenditures to improve and maintain
the competitiveness of its operations and facilities. See "ITEM 1.
BUSINESS--General--Capital Expenditures" of this Report for a discussion of
Bethlehem's capital expenditures.

All principal operations and facilities are owned in fee by Bethlehem
except for two continuous casters at the Sparrows Point Division and the Burns
Harbor Division and a coal cleaning and processing facility at High Power
Mountain in West Virginia, each of which is being leased. As discussed in Note
E to the Consolidated Financial Statements, Bethlehem capitalized the
expenditures related to the leases for two continuous casters and financed the
construction of two new hot-dip galvanizing lines at its Burns Harbor and
Sparrows Point Divisions. These two facilities are pledged as collateral for
the borrowings.

ITEM 3. LEGAL PROCEEDINGS.

Bethlehem is a party to numerous legal proceedings incurred in the ordinary
course of its business, including the matters specifically discussed below.

On October 4, 1990, the State of Maryland Department of the Environment
(the "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 United
States Environmental Protection Agency (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. Bethlehem, the EPA and the MDE have entered into discussions
concerning potential

<PAGE>
<PAGE> 13
settlement of the remaining count as part of a proposed comprehensive
multimedia pollution prevention agreement to be incorporated in
an additional Consent Decree. The parties are striving to finalize the
agreement in 1996 or as soon as thereafter possible.

On June 9, 1994, the EPA issued an administrative Complaint and Notice of
Opportunity for Hearing alleging several violations of the polychlorinated
biphenyl (PCB) regulations under the Toxic Substance Control Act by Bethlehem
at the Sparrows Point Division. The Complaint sets forth a proposed civil
penalty of $145,500. On June 30, 1994, Bethlehem filed its Answer and Request
for Hearing. Settlement discussions have been initiated between Bethlehem and
the EPA. If such discussions do not succeed, Bethlehem believes it has
meritorious defenses and will vigorously defend the action.

The U. S. Department of Justice informed Bethlehem by letter dated March
12, 1996, that, at the request of the EPA, it would bring a civil action
against Bethlehem in the U. S. District Court for the Northern District of
Indiana by March 29, 1996, for alleged violations of the Clean Water Act and
the Safe Drinking Water Act at the Burns Harbor Division. The Complaint will
allege 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. The letter proposes settlement negotiations and suggests 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.

See "ITEM 1. BUSINESS--General--Environmental Control and Cleanup
Expenditures" of this Report for a discussion of Bethlehem's potential
responsibilities for environmental cleanup at certain sites under RCRA and
CERCLA.

Bethlehem cannot predict with any certainty the outcome of any legal
proceedings to which it is a party. However, in the opinion of Bethlehem's
management, adequate reserves have been recorded for losses which are likely to
result from these proceedings. To the extent that such reserves prove to be
inadequate, Bethlehem would incur a charge to earnings which could be material
to its future results of operations in particular quarterly or annual periods.
The outcome of these proceedings, however, is not currently expected to have a
material adverse effect on Bethlehem's consolidated financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no matters submitted to a vote of security holders during the
fourth quarter of 1995.

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

<PAGE>
<PAGE> 14
EXECUTIVE OFFICERS OF THE REGISTRANT.

The executive officers of Bethlehem as of March 15, 1996, are as follows:

Name Age Position
---- --- --------
<S> <C> <C>
Curtis H. Barnette 61 Chairman (Chief Executive Officer)

Roger P. Penny 59 President (Chief Operating Officer)

Gary L. Millenbruch 58 Executive Vice President (Chief
Financial Officer) and Treasurer

John A. Jordan, Jr. 60 Senior Vice President (Administration)

David P. Post 62 Senior Vice President (Commercial)

Lonnie A. Arnett 50 Vice President and Controller
(Accounting)

Dr. Walter N. Bargeron 53 President, Services Division (Chief
Technology Officer)

Stephen G. Donches 50 Vice President (Public Affairs)

Duane R. Dunham 54 President, Sparrows Point Division

Joseph F. Emig 58 President, Burns Harbor Division

Andrew R. Futchko 53 President, Pennsylvania Steel
Technologies, Inc.

William H. Graham 50 Vice President (Law),
General Counsel and Secretary

John L. Kluttz 53 Vice President (Union Relations)

Timothy Lewis 58 President, Bethlehem Structural
Products Corporation

Dr. Carl F. Meitzner 56 Vice President (Planning)

Dr. Augustine E. Moffitt, Jr. 50 Vice President (Safety, Health and
Environment)

William E. Wickert, Jr. 64 Vice President (Federal Government
Affairs)

</TABLE>

All of the executive officers have held responsible management or
professional positions with Bethlehem or its subsidiaries for more than the
past five years.

The By-laws of Bethlehem provide that the officers shall be chosen annually
by the Board of Directors and that each officer shall hold office until his
successor shall have been elected and shall qualify or until his earlier death
or his earlier resignation or removal in the manner provided in the By-laws.

<PAGE>
<PAGE> 15
PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS.

As of March 15, 1996, there were 110,867,942 shares of Bethlehem Common
Stock outstanding held by approximately 38,295 stockholders of record. The
principal market for Bethlehem Common Stock is the New York Stock Exchange.
Bethlehem Common Stock is also listed on the Chicago Stock Exchange. Dividends
on Bethlehem Common Stock are paid quarterly when declared by Bethlehem's Board
of Directors.

Under the provisions of Bethlehem's 10-3/8% Senior Notes due 2003,
Bethlehem's ability to pay dividends on its Common Stock is restricted. See
Note K to the Consolidated Financial Statements. At December 31, 1995, about
$450 million was available for the payment of Common Stock dividends under
these provisions.

Bethlehem has not paid a dividend on its Common Stock since the fourth
quarter of 1991. In accordance with Bethlehem's policy, future dividends will
be determined by the Board of Directors (subject to any applicable
restrictions) on the basis of attained results and the business outlook.

The following table sets forth, for the periods indicated, the high and low
sales prices of Bethlehem Common Stock as reported in the consolidated
transaction reporting system. The closing sale price of Bethlehem Common Stock
on March 15, 1996, as reported in the consolidated transaction reporting
system, was $13.75.

1995 1994
---- ----
Sales Prices Sales Prices
---------------- ---------------
Period High Low High Low
------ ---- --- ---- ----
First Quarter $19.125 $14.125 $24.250 $19.250
Second Quarter 16.375 13.625 22.125 16.750
Third Quarter 18.250 13.750 24.125 18.500
Fourth Quarter 14.750 12.625 20.875 16.250

ITEM 6. SELECTED FINANCIAL DATA.

The information required by this Item is incorporated by reference from
page 26 of Bethlehem's 1995 Annual Report to Stockholders. With the exception
of the information specifically incorporated by reference, the 1995 Annual
Report to Stockholders is not to be deemed filed as part of this Report for
purposes of this Item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The information required by this Item is incorporated by reference from
pages 1 to 3 and 6 to 10, inclusive, of Bethlehem's 1995 Annual Report to
Stockholders. With the exception of the information specifically incorporated
by reference, the 1995 Annual Report to Stockholders is not to be deemed filed
as part of this Report for purposes of this Item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this Item is incorporated by reference from
pages 11 to 23, inclusive, of Bethlehem's 1995 Annual Report to Stockholders.
With the exception of the information specifically incorporated by reference,
the 1995 Annual Report to Stockholders is not to be deemed filed as part of
this Report for purposes of this Item.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

<PAGE>
<PAGE> 16

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

In addition to the information set forth under the caption "Executive
Officers of the Registrant" in Part I of this Report, the information required
by this Item is incorporated by reference from pages 2 to 6, inclusive, of
Bethlehem's Proxy Statement for the 1996 Annual Meeting of Stockholders. With
the exception of the information specifically incorporated by reference,
Bethlehem's Proxy Statement is not to be deemed filed as part of this Report
for purposes of this Item.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference from
pages 9 to 14, inclusive, of Bethlehem's Proxy Statement for the 1996 Annual
Meeting of Stockholders. With the exception of the information specifically
incorporated by reference, Bethlehem's Proxy Statement is not to be deemed
filed as part of this Report for purposes of this Item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

The information required by this Item is incorporated by reference from
pages 7 and 15 of Bethlehem's Proxy Statement for the 1996 Annual Meeting of
Stockholders. With the exception of the information specifically incorporated
by reference, Bethlehem's Proxy Statement is not to be deemed filed as part of
this Report for purposes of this Item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is incorporated by reference from the
material appearing under the heading "Indemnification Assurance Agreements"
appearing on page 15 of Bethlehem's Proxy Statement for the 1996 Annual Meeting
of Stockholders. With the exception of the information specifically
incorporated by reference, Bethlehem's Proxy Statement is not to be deemed
filed as part of this Report for purposes of this Item.

<PAGE>
<PAGE> 17
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.

(a) Documents filed as part of this Report:

The following is an index of the financial statements, schedules and
exhibits included in this Report or incorporated herein by reference.

(1) Financial Statements.

BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
Page
<S> <C>
Consolidated Statements of Income for the years 1995, 1994 and 1993 . . . . *
Consolidated Balance Sheets, December 31, 1995, and
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Statements of Cash Flows for the years 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Notes to Consolidated Financial Statements
(Including Quarterly Financial Data). . . . . . . . . . . . . . . . . . . *

(2) Consolidated Financial Statement Schedules.

Report of Independent Auditors On Consolidated Financial
Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

Schedules:

II -- Valuation and Qualifying Accounts and Reserves, years
ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . F-3

</TABLE>

* Incorporated in this Report by reference from pages 11 to 23, inclusive,
of Bethlehem's 1995 Annual Report to Stockholders referred to below.

The Consolidated Financial Statements, together with the report thereon of
Price Waterhouse LLP dated January 31, 1996, appearing on pages 11 to 24,
inclusive, of the 1995 Annual Report to Stockholders are incorporated by
reference in this Form 10-K Annual Report. With the exception of those pages,
the 1995 Annual Report to Stockholders is not to be deemed filed as part of
this Report for purposes of this Item. The Schedules listed above should be
read in conjunction with the consolidated financial statements in such 1995
Annual Report to Stockholders.

Schedules not included have been omitted because they are not applicable or
the required information is shown in the consolidated financial statements or
notes thereto.

Separate financial statements of subsidiaries not consolidated and 50
percent or less owned persons accounted for by the equity method have been
omitted because considered in the aggregate as a single subsidiary they do not
constitute a significant subsidiary.

(3) Exhibits.

The following is an index of the exhibits included in this Report or
incorporated herein by reference.

(3)(a) Second Restated Certificate of Incorporation (Incorporated by
reference from Exhibit 3 to Bethlehem's quarterly report on Form 10-Q
for the quarter ended March 31, 1994).

(b) Amendment to Second Restated Certificate of Incorporation
(Incorporated by reference from Exhibit 3(i) to Bethlehem's quarterly
report on Form 10-Q for the quarter ended June 30, 1995).

(c) By-laws of Bethlehem Steel Corporation, as amended October 1, 1988
(Incorporated by reference from Exhibit (3)(b) to Bethlehem's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).

<PAGE>
<PAGE> 18
(4)(a) Rights Agreement, dated as of September 28, 1988, between Bethlehem
Steel Corporation and Morgan Shareholder Services Trust Company
(Incorporated by reference from Exhibit (4)(a) to Bethlehem's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).

(b) Amendment to Rights Agreement, dated as of November 1, 1995, between
Bethlehem Steel Corporation and First Chicago Trust Company of New
York (formerly Morgan Shareholder Services Trust Company).

*(10)(a) Excess Benefit Plan of Bethlehem Steel Corporation and Subsidiary
Companies, as amended July 29, 1992 (Incorporated by reference from
Exhibit 10(a) to Bethlehem's quarterly report on Form 10-Q for the
quarter ended June 30, 1992).

*(b) 1988 Stock Incentive Plan of Bethlehem Steel Corporation (Incorporated
by reference from Exhibit 10(b) to Bethlehem's Annual Report on Form
10-K for the fiscal year ended December 31, 1992).

*(c) 1994 Stock Incentive Plan of Bethlehem Steel Corporation (Incorporated
by reference from Exhibit 1 to Bethlehem's Proxy Statement in
connection with its Annual Meeting of Shareholders held on April 26,
1994).

*(d) 1994 Non-Employee Directors Stock Plan of Bethlehem Steel Corporation
(Incorporated by reference from Exhibit 2 to Bethlehem's Proxy
Statement in connection with its Annual Meeting of Shareholders held
on April 26, 1994).

*(e) Special Incentive Compensation Plan of Bethlehem Steel Corporation,
which is contained in Article Seven of the Second Restated Certificate
of Incorporation referred to in Exhibit 3(a) to this Report.

*(f) Supplemental Benefits Plan of Bethlehem Steel Corporation and
Subsidiary Companies, as amended July 29, 1992 (Incorporated by
reference from Exhibit 10(b) to Bethlehem's quarterly report on Form
10-Q for the quarter ended June 30, 1992).

*(g) Post-Retirement Retainer Plan for Non-Officer Directors (Incorporated
by reference from Exhibit (10)(o) to Bethlehem's Annual Report on Form
10-K for the fiscal year ended December 31, 1992).

(h) Form of Indemnification Assurance Agreement between Bethlehem Steel
Corporation and each of its directors and executive officers listed on
Schedule A thereto.

(11) Statement regarding computation of per share earnings.

(13) Those portions of the 1995 Annual Report to Stockholders of Bethlehem
Steel Corporation which are incorporated by reference into this Form
10-K Annual Report.

(23) Consent of Independent Auditors (included on page F-2 of this Report).

(24) Power of Attorney.

(27) Financial Data Schedule.

- ----------------
* Compensatory plans in which Bethlehem's directors and executive officers
participate.

(b) Reports on Form 8-K.

During the quarter ended December 31, 1995, no reports on Form 8-K
were filed by Bethlehem.

<PAGE>
<PAGE> 19
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Bethlehem Steel Corporation has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 26th day of March, 1996.

BETHLEHEM STEEL CORPORATION,
by /s/ Lonnie A. Arnett
--------------------------
Lonnie A. Arnett
Vice President and Controller

Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of Bethlehem Steel Corporation and in the capacities indicated on the
26th day of March, 1996.
<TABLE>
<CAPTION>

<S> <C>

/s/ Curtis H. Barnette *
------------------------------ ------------------------------
Curtis H. Barnette Thomas L. Holton
Chairman and Director Director
(principal executive officer)

/s/ Gary L. Millenbruch *
------------------------------ ------------------------------
Gary L. Millenbruch Lewis B. Kaden
Executive Vice President, Treasurer Director
and Director
(principal financial officer)

/s/ Lonnie A. Arnett *
------------------------------ ------------------------------
Lonnie A. Arnett Harry P. Kamen
Vice President and Controller Director
(principal accounting officer)

* *
------------------------------ ------------------------------
Benjamin R. Civiletti Winthrop Knowlton
Director Director

* *
------------------------------ ------------------------------
Worley H. Clark Robert McClements, Jr.
Director Director

* *
------------------------------ ------------------------------
John B. Curcio Roger P. Penny
Director Director

* *
------------------------------ ------------------------------
Shirley D. Peterson William A. Pogue
Director Director

* *
------------------------------ ------------------------------
Dean P. Phypers John F. Ruffle
Director Director

*By /s/ Lonnie A. Arnett
----------------------------
Lonnie A. Arnett
(Attorney-in-Fact)
</TABLE>

<PAGE>
<PAGE> 20

REPORT OF INDEPENDENT AUDITORS
ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors
of Bethlehem Steel Corporation

Our audits of the consolidated financial statements referred to in our report
dated January 31, 1996 appearing on page 24 of the 1995 Annual Report to
Stockholders of Bethlehem Steel Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the Financial Statement Schedules listed
in Item 14(a)(2) of this Form 10-K. In our opinion, these Financial Statement
Schedules present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.

/s/ Price Waterhouse LLP

1177 Avenue of the Americas
New York, NY 10036
January 31, 1996

F-1

<PAGE>
<PAGE> 21

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 2-90795, No. 2-71699, No. 2-53880, No. 2-90796,
No. 2-67314, No. 33-23516, No. 33- 23688, No. 33-52267, No. 33-58019, No.
33-58021 and No. 33-60507) of Bethlehem Steel Corporation of our report dated
January 31, 1996 appearing on page 24 of the 1995 Annual Report to Stockholders
which is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page F-1 of this Form 10-K.

/s/ Price Waterhouse LLP

1177 Avenue of the Americas
New York, NY 10036
March 26, 1996

F-2

<PAGE>
<PAGE> 22

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollars in Millions)

Charged
Balance at (Credited) Balance at
12/31/94 to Income Deductions Other 12/31/95
---------- ---------- ---------- ----- ----------
<S> <C> <C> <C> <C> <C>
Classification
- --------------
Allowance for:
-------------
Doubtful receivables & returns $18.6 $1.2 ($0.3)(b) - $19.5
Long-term receivables 4.5 - - - 4.5
Deferred income tax asset 383.2 (37.0) - 14.0 (a) 360.2

Charged
Balance at (Credited) Balance at
12/31/93 to Income Deductions Other 12/31/94
---------- ---------- ---------- ----- ----------
Classification
- --------------
Allowance for:
-------------
Doubtful receivables & returns $16.3 $2.4 ($0.1)(b) - $18.6
Long-term receivables 4.5 - - - 4.5
Deferred income tax asset 406.7 (13.0) - (10.5)(c) 383.2

Balance at Charged Balance at
12/31/92 to Income Deductions Other 12/31/93
---------- ---------- ---------- ----- ----------
Classification
- --------------
Allowance for:
-------------
Doubtful receivables & returns $15.7 $7.5 ($6.9)(b) - $16.3
Long-term receivables 5.3 - (0.8)(b) - 4.5
Deferred income tax asset 309.2 87.0 - 10.5 (d) 406.7

(a) Represents the valuation allowance for an $82 million ($67 million
after-tax) charge to equity required to recognize the minimum pension
liability. See Notes G and K to the Consolidated Financial Statements.

(b) Amounts written-off less collections and reinstatements.

(c) Represents eliminating the valuation allowance recorded for a $60
million ($50 million-after tax) charge to equity at December 31, 1993
required to recognize the minimum pension liability. See Notes G and K
to the Consolidated Financial Statements.

(d) Represents the valuation allowance for a $60 million ($50 million-after
tax) charge to equity required to recognize the minimum pension
liability. See Note K to the Consolidated Financial Statements.

</TABLE>

F-3

<PAGE>
<PAGE> 23
EXHIBIT INDEX

EXHIBIT
NO. DESCRIPTION
- -------- -----------
(3)(a) Second Restated Certificate of Incorporation (Incorporated by
reference from Exhibit 3 to Bethlehem's quarterly report on Form 10-Q
for the quarter ended March 31, 1994).

(b) Amendment to Second Restated Certificate of Incorporation
(Incorporated by reference from Exhibit 3(i) to Bethlehem's quarterly
report on Form 10-Q for the quarter ended June 30, 1995).

(4)(a) Rights Agreement, dated as of September 28, 1988, between Bethlehem
Steel Corporation and Morgan Shareholder Services Trust Company
(Incorporated by reference from Exhibit (4)(a) to Bethlehem's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).

(b) Amendment to Rights Agreement, dated as of November 1, 1995, between
Bethlehem Steel Corporation and First Chicago Trust Company of New
York (formerly Morgan Shareholder Services Trust Company).

- -----------------
* Compensatory plans in which Bethlehem's directors and executive officers
participate.

<PAGE>
<PAGE> 24

*(b) 1988 Stock Incentive Plan of Bethlehem Steel Corporation (Incorporated
by reference from Exhibit 10(b) to Bethlehem's Annual Report on Form
10-K for the fiscal year ended December 31, 1992).

*(g) Post-Retirement Retainer Plan for Non-Officer Directors (Incorporated
by reference from Exhibit (10)(o) to Bethlehem's Annual Report on Form
10-K for the fiscal year ended December 31, 1992).

(h) Form of Indemnification Assurance Agreement between Bethlehem Steel
Corporation and each of its directors and executive officers listed on
Schedule A thereto.

(11) Statement regarding computation of per share earnings.

(13) Those portions of the 1995 Annual Report to Stockholders of Bethlehem
Steel Corporation which are incorporated by reference into this Form
10-K Annual Report.

(23) Consent of Independent Auditors (included on page F-2 of this Report).

(24) Power of Attorney.

(27) Financial Data Schedule.

- ----------------
* Compensatory plans in which Bethlehem's directors and executive officers
participate.

<PAGE>
<PAGE> 25

Exhibit 4(b)

AMENDMENT NO. 1 TO THE RIGHTS AGREEMENT

Amendment No. 1, dated as of November 1, 1995 (the "Amendment"),
between Bethlehem Steel Corporation, a Delaware corporation (the "Company"),
and First Chicago Trust Company of New York, a New York corporation (the
"Rights Agent").

WHEREAS, the Company and the Rights Agent (whose name at the time was
Morgan Shareholder Services Trust Company) entered into a Rights Agreement,
dated as of September 28, 1988 (the "Rights Agreement"), and the Company and
the Rights Agent desire to amend the Rights Agreement in accordance with
Section 26 of the Rights Agreement;

NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth in the Rights Agreement and this Amendment, the parties hereby agree
as follows:

Section 1. Amendment to Definition of "Acquiring Person". Section
1(a) of the Rights Agreement is amended to read in its entirety as follows:

(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan or (v) any such Person
who has reported or is required to report such ownership (but less than 20%) on
Schedule 13G under the Exchange Act (or any comparable or successor report) or
on Schedule 13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Company or engage in any
of the actions specified in Item 4 of such Schedule (other than the acquisition
or disposition of the Common Stock in the ordinary course), but only to the
extent such Person continues to comply with the provisions of this clause (v).

Section 2. Amendment of Section 11(a)(ii) Event. Section
11(a)(ii)(B) of the Rights Agreement is amended to (x) delete the phrase "the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding"
and substitute in its place

<PAGE>
<PAGE> 26
the phrase "an Acquiring Person" and (y) delete the phrase "the 20% threshold
to be crossed" and substitute in its place the phrase "such Person to become an
Acquiring Person."

Section 3. Rights Agreement as Amended. The term "Agreement" as used
in the Rights Agreement shall be deemed to refer to the Rights Agreement as
amended hereby. The foregoing amendments shall be effective as of the date
hereof and, except as set forth herein, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.

Section 4. Execution in Counterparts. This Amendment may be executed
in any number of counterparts, and each of such counterparts shall for all
purposes be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.

BETHLEHEM STEEL CORPORATION

By /s/ G. L. Millenbruch
----------------------------------
G. L. Millenbruch
Executive Vice President,
Chief Financial Officer & Treasurer

FIRST CHICAGO TRUST COMPANY
OF NEW YORK
as Rights Agent

By /s/ Charles D. Keryc
----------------------------------
Charles D. Keryc
Vice President

<PAGE>
<PAGE> 27

Exhibit 10(h)

FORM OF INDEMNIFICATION ASSURANCE AGREEMENT

[Bethlehem Steel Corporation]

[Name and Address of
Director or Officer]

Dear :

This letter will confirm the agreement and understanding between
Bethlehem Steel Corporation (the "Company") and you regarding your service as a
[Director/Officer] of the Company.

It is and has been the policy of the Company to indemnify its officers
and directors against any costs, expenses and other liabilities to which they
may become subject by reason of their service to the Company, and to insure its
directors and officers against such liabilities, as and to the extent permitted
by applicable law and in accordance with the principles of good corporate
governance. In this regard, the Company's By-laws (Article IX) require that
the Company indemnify and advance costs and expenses to (collectively,
"indemnify") its directors and officers as permitted by Delaware law. A copy
of the relevant provisions of the Company's By-laws, as amended, is attached
hereto.

In consideration of your service as a [Director/Officer] of the
Company, the Company shall indemnify you, and hereby confirms its agreement to
indemnify you, to the full extent provided by applicable law and the By-laws of
the Company as currently in effect. In particular, as provided by the By-laws,
the Company shall make any necessary determination as to your entitlement to
indemnification in respect of any liability within 60 days of receiving a
written request from you for indemnification against such liability. You have
agreed to provide the Company with such information or documentation as the
Company may reasonably request to evidence the liabilities against which
indemnification is sought or as may be necessary to permit the Company to
submit a claim in respect thereof under any applicable directors and officers
liability insurance or other liability insurance policy. You have further
agreed to cooperate with the Company in the making of any determination
regarding your entitlement to indemnification. If the Company does not make a
determination within the required 60-day period, a favorable determination
will be deemed to be made, and you shall be entitled to payment, subject only
to your written agreement to refund such payment if a contrary determination is
later made and the delay was by reason of the inability of the Company to make
such determination within the 60-day period. In the event the

<PAGE>
<PAGE> 28
Company shall determine that you are not entitled to indemnification, the
Company shall give you written notice thereof specifying the reason therefor,
including any determinations of fact or conclusions of law relied upon in
reaching such determination. Notwithstanding any determination made by the
Company that you are not entitled to indemnification, you shall be entitled to
seek a de novo judicial determination of your right to indemnification under
the By-laws and this agreement by commencing an appropriate action therefor
within 180 days after the Company shall notify you of its determination. The
Company shall not oppose any such action by reason of any prior determination
made by it as to your right to indemnification or, except in good faith, raise
any objection not specifically relating to the merits of your indemnification
claim or not considered by the Company in making its own determination. In any
such proceeding, the Company shall bear the burden of proof in showing that
your conduct did not meet the applicable standard of conduct required by the
By-laws or applicable law for indemnification. It is understood that, as
provided in Section 4 of Article IX of the By-laws, any expenses incurred by
you in any investigation or proceeding by the Company or before any court
commenced for the purpose of making any such determination shall be reimbursed
by the Company. No future amendment of the By-laws shall diminish your rights
under this agreement, unless you shall have consented to such amendment.

Your right to indemnification as aforesaid shall be in addition to any
right to remuneration to which you may from time to time be entitled as a
[Director/Officer].

It is understood and agreed that your right to indemnification shall
not entitle you to continue in your present position with the Company or any
future position to which you may be appointed or elected and that you shall be
entitled to indemnification under the By-laws only in respect to liabilities
arising out of acts or omissions or alleged acts or omissions by you as a
[Director/Officer] or as otherwise provided by the By-laws, but you shall be
entitled to such indemnification with respect to any such liability, whether
incurred or arising during or after your service as a [Director/Officer] and
whether before or after the date of this letter, in respect of any claim,
cause, action, proceeding or investigation, whether commenced, accruing or
arising during or after your service as a [Director/Officer] and whether before
or after the date of this letter.

In further consideration of your service as a [Director/Officer] of
the Company, the Company in connection with its indemnification policy has
arranged for the issuance of, and you shall be entitled to the benefits of, an
"Irrevocable Straight Standby Letter of Credit" issued by Morgan Guaranty Trust
Company of New York. Said letter of credit has been arranged for the purpose
of assuring payment to you, certain other current and former directors and
officers of the Company and future directors, officers and employees of the
Company and its affiliates designated by the Board of Directors of the Company
("Indemnitees") of any amounts to which you and they may become entitled as

<PAGE>
<PAGE> 29
indemnification pursuant to the By-laws in the event that, for any reason, the
Company shall fail promptly to pay to you, upon written request therefor, any
such indemnification, said assurance for all Indemnitees being limited at any
time to $5,000,000 in aggregate amount. The Company understands that there has
been established an irrevocable trust, the Bethlehem Indemnification Trust, for
which First Valley Bank, Bethlehem, Pennsylvania, acts as trustee, for the
purpose, among other things, of administering the respective interests of the
Indemnitees in said letter of credit, and the Company has consented to the
issuance and delivery of said letter of credit to the Bethlehem Indemnification
Trust. Unless renewed or replaced by a comparable letter of credit in the
amount of $5,000,000, the full undrawn amount of said letter of credit may be
drawn upon prior to the expiration thereof. Drawings on said letter of credit
may be arranged through the Bethlehem Indemnification Trust, as provided by the
trust agreement therefor, by contacting the First Valley Bank, One Bethlehem
Plaza, Bethlehem, Pennsylvania 18018. You have agreed to repay to the
Bethlehem Indemnification Trust any amount paid to you by such trust (i) if it
shall ultimately be determined (by the Company and upon expiration of the
180-day period for commencement of a judicial proceeding for a de novo
determination or by a final judicial determination) that you are not entitled
under this agreement or otherwise to indemnification from Bethlehem in respect
of the liability for which you shall have received payment or (ii) if you shall
subsequently receive payment in respect of such liability from any liability
insurer or from Bethlehem or any successor thereto. It is agreed that, in
addition to the rights of any other person to do so, the Company shall have the
right to compel any repayment to the Bethlehem Indemnification Trust so
required.

This agreement shall terminate upon the later of (i) the tenth
anniversary of the date on which you shall cease to be a director or officer of
the Company or (ii) the final termination or resolution of all actions, suits,
proceedings or investigations commenced within such ten-year period and
relating to the Company or any of its affiliates or your services thereto to
which you may be or become a party and of all claims for indemnification by you
under this agreement or against the Bethlehem Indemnification Trust asserted
within such ten-year period.

This agreement supersedes any and all prior agreements between the
Company and you relating to the subject matter hereof. It is understood and
agreed that this agreement is binding upon the Company and its successors and
shall inure to your benefit and that of your heirs, distributees and legal
representatives. This agreement, and the interpretation and enforcement
hereof, shall be governed by the laws of the State of Delaware. In
confirmation of the provisions of the Company's By-laws, the Company hereby
agrees to pay, and you shall be held harmless from and indemnified against, any
costs and expenses (including attorneys' fees) which you may reasonably incur
in connection with any challenge to the validity of, or the performance and
enforcement of,

<PAGE>
<PAGE> 30
this agreement, in the same manner as provided by the Company's
By-laws.

If the foregoing is in accordance with your understanding of our
agreement, kindly countersign the enclosed copies of this letter, whereupon
this letter shall become a binding agreement in accordance with the laws of the
State of Delaware.

Very truly yours,

BETHLEHEM STEEL CORPORATION

By:
-------------------------------

- ----------------------------------
[Signature of Director/Officer]

<PAGE>
<PAGE> 31

Schedule A

1. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Curtis H. Barnette.

2 . Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Silas S. Cathcart.

3. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and George P. Jenkins.

4. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Reginald H. Jones.

5. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Winthrop Knowlton.

6. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Russell E. Palmer.

7. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Ellmore C. Patterson.

8. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Dean P. Phypers.

9. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and William W. Scranton.

10. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Donald H. Trautlein.

11. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Walter F. Williams.

12. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Lonnie A. Arnett.

13. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and D. Sheldon Arnot.

14. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Robert W. Cooney.

<PAGE>
<PAGE> 32
15. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Frank S. Dickerson, III.

16. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and George T. Fugere.

17. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and John A. Jordan, Jr.

18. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and James F. Kegg.

19. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and David H. Klinges.

20. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Edward H. Kottcamp, Jr.

21. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and James H. Leonard.

22. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Gary L. Millenbruch.

23. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and C. Adams Moore.

24. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Reynold Nebel.

25. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and James C. Van Vliet.

26. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Robert C. Wilkins.

27. Indemnification Assurance Agreement dated December 29, 1986 between
Bethlehem Steel Corporation and Larry L. Adams.

28. Indemnification Assurance Agreement dated December 29, 1986 between
Bethlehem Steel Corporation and Benjamin C. Boylston.

<PAGE>
<PAGE> 33
29. Indemnification Assurance Agreement dated January 28, 1987 between
Bethlehem Steel Corporation and Herman E. Collier.

30. Indemnification Assurance Agreement dated January 28, 1987 between
Bethlehem Steel Corporation and Edwin A. Gee.

31. Indemnification Assurance Agreement dated January 28, 1987 between
Bethlehem Steel Corporation and Thomas L. Holton.

32. Indemnification Assurance Agreement dated March 1, 1987 between Bethlehem
Steel Corporation and Roger P. Penny.

33. Indemnification Assurance Agreement dated May 27, 1987 between Bethlehem
Steel Corporation and Andrew M. Weller.

34. Indemnification Assurance Agreement dated January 27, 1988 between
Bethlehem Steel Corporation and John B. Curcio.

35. Indemnification Assurance Agreement dated January 27, 1988 between
Bethlehem Steel Corporation and William C. Hittinger.

36. Indemnification Assurance Agreement dated January 27, 1988 between
Bethlehem Steel Corporation and William A. Pogue.

37. Indemnification Assurance Agreement dated September 27, 1989 between
Bethlehem Steel Corporation and Robert McClements, Jr.

38. Indemnification Assurance Agreement dated September 27, 1989 between
Bethlehem Steel Corporation and John L. Kluttz.

39. Indemnification Assurance Agreement dated June 27, 1990 between Bethlehem
Steel Corporation and Duane R. Dunham.

40. Indemnification Assurance Agreement dated September 26, 1990 between
Bethlehem Steel Corporation and John F. Ruffle.

41. Indemnification Assurance Agreement dated May 1, 1991 between Bethlehem
Steel Corporation and Carl F. Meitzner.

42. Indemnification Assurance Agreement dated July 1, 1991 between Bethlehem
Steel Corporation and Walter N. Bargeron.

<PAGE>
<PAGE> 34
43. Indemnification Assurance Agreement dated March 1, 1992 between Bethlehem
Steel Corporation and David P. Post.

44. Indemnification Assurance Agreement dated November 1, 1992 between
Bethlehem Steel Corporation and Stephen G. Donches.

45. Indemnification Assurance Agreement dated November 1, 1992 between
Bethlehem Steel Corporation and William H. Graham.

46. Indemnification Assurance Agreement dated November 1, 1992 between
Bethlehem Steel Corporation and G. Penn Holsenbeck.

47. Indemnification Assurance Agreement dated March 1, 1993 between Bethlehem
Steel Corporation and Benjamin R. Civiletti.

48. Indemnification Assurance Agreement dated March 1, 1993 between Bethlehem
Steel Corporation and Worley H. Clark.

49. Indemnification Assurance Agreement dated March 1, 1993 between Bethlehem
Steel Corporation and Harry P. Kamen.

50. Indemnification Assurance Agreement dated April 28, 1993 between Bethlehem
Steel Corporation and Joseph F. Emig.

51. Indemnification Assurance Agreement dated April 28, 1993 between Bethlehem
Steel Corporation and Andrew R. Futchko.

52. Indemnification Assurance Agreement dated April 28, 1993 between Bethlehem
Steel Corporation and Timothy Lewis.

53. Indemnification Assurance Agreement dated April 28, 1993 between Bethlehem
Steel Corporation and William E. Wickert, Jr.

54. Indemnification Assurance Agreement dated March 1, 1994 between Bethlehem
Steel Corporation and Augustine E. Moffitt, Jr.

55. Indemnification Assurance Agreement dated March 16, 1994 between Bethlehem
Steel Corporation and Lewis B. Kaden.

56. Indemnification Assurance Agreement dated January 31, 1996 between
Bethlehem Steel Corporation and Shirley D. Peterson.

<PAGE>
<PAGE> 35

EXHIBIT (11)
BETHLEHEM STEEL CORPORATION

STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(dollars in millions and shares in thousands, except per share data)
<TABLE>
<CAPTION>

Year Ended December 31
-----------------------------
Primary Earnings Per Share 1995 1994 1993
-------------------------------------------------- -------- -------- ---------
<S> <C> <C> <C>
Net Income (Loss) $179.6 $80.5 ($266.3)
Less Dividend Requirements:
$2.50 Preferred Dividend-Cash (10.0) (10.0) (10.0)
$5.00 Preferred Dividend-Cash (12.5) (12.5) (12.5)
$3.50 Preferred Dividend-Cash (17.9) (17.9) (14.8)
5% Preference Dividend-Stock (2.0) (2.7) (2.5)
-------- -------- ---------
Total Preferred and Preference Dividends (42.4) (43.1) (39.8)
-------- -------- ---------
Net Income (Loss) Applicable to Common Stock $137.2 $37.4 ($306.1)
======== ======== =========
Average Shares of Common Stock and
Equivalents Outstanding:
Common Stock 110,311 105,826 90,940
-------- -------- ---------
Stock Options 13 227 *
-------- -------- ---------
Total 110,324 106,053 90,940
======== ======== =========
Primary Earnings Per Share $1.24 $0.35 ($3.37)
======== ======== =========
Fully Diluted Earnings Per Share
--------------------------------
Net Income (Loss) $179.6 $80.5 ($266.3)
Less Dividend Requirements:
$2.50 Preferred Dividend (10.0) (10.0) (10.0)
$5.00 Preferred Dividend (12.5) (12.5) (12.5)
$3.50 Preferred Dividend (17.9) (17.9) (14.8)
5%Preference Dividend - (2.7) (2.5)
-------- -------- ---------
Net Income (Loss) Applicable to Common Stock $139.2 $37.4 ($306.1)
======== ======== =========

Average Shares of Common Stock and Equivalents and
Other Potentially Dilutive Securities Outstanding:
Common Stock 110,311 105,826 90,940
Stock Options 13 227 *
$2.50 Preferred Stock * * *
$5.00 Preferred Stock * * *
$3.50 Preferred Stock * * *
5% Preference Stock 2,588 * *
-------- -------- ---------
Total 112,912 106,053 90,940
======== ======== =========
Fully Diluted Earnings Per Share $1.23 $0.35 ($3.37)
======== ======== =========
</TABLE>

* Antidilutive

<PAGE>
<PAGE> 1
Chairman's Letter
- -----------------

During 1995, we made steady progress in moving toward our Vision of being the
Premier Steel Company. We accomplished this by continuing to implement our
Corporate Strategy of concentrating on steel, rebuilding our financial strength
and improving continuously. Operationally, we continued our focus on improving
productivity and quality while reducing costs. Financially, our net income of
$180 million improved by almost $100 million over last year. Also, our cash
flow improved, which enabled us to continue to make improvements in our capital
structure.

As we look to the years ahead, we know that the intensity of competition
will increase and that we must continuously improve our performance. We remain
committed to achieving our Corporate Objectives of serving our customers,
partnering among our employees, being a good citizen and achieving sustained
profitability and rates of return that will increase value for our
stockholders.

CONCENTRATING ON STEEL
- ----------------------

Our Burns Harbor and Sparrows Point Divisions continued to strengthen their
competitive positions in 1995. Together, these two Divisions shipped about 7.5
million tons of steel products, about 85 percent of Bethlehem's total steel
shipments.

A significant portion of Burns Harbor's 1995 shipments of sheet steel
products went to customers in the automotive industry. More than 90 different
models of 1996 cars, vans and light trucks are manufactured with high-quality
steel from Burns Harbor. In 1995, Burns Harbor earned the coveted QS-9000
quality certification of the Big-Three automakers. QS-9000 defines the
fundamental quality system requirements of General Motors, Ford and Chrysler
and major truck producers.

Burns Harbor is one of the most efficient producers of high-quality steel
anywhere in the world. It is Bethlehem's largest, most productive and
profitable business unit, and we continue to take significant actions to
improve its preeminent position in the face of increasing competition.

In 1994, we completed three major capital projects at Burns Harbor to
enhance its basic ironmaking capabilities - relining a blast furnace,
installing coal injection for the blast furnaces and rebuilding a coke oven
battery. During 1995, we began additional modernization projects at Burns
Harbor to improve the productivity and quality of products produced by both its
hot-strip mill and its 160-inch plate mill and to increase the capacity of its
steelmaking facilities. We also entered into an joint venture in Indiana that
will provide the capability to process hot rolled sheet from Burns Harbor into
additional quantities of higher value cold rolled sheet.

Our Sparrows Point Division produces sheet steel, tin mill products and
steel plate. In 1995, it improved its levels of shipments, revenues and
profitability over 1994. With its tidewater location on the Chesapeake Bay,
Sparrows Point was able to take advantage of strong export demand and had
significant shipments of steel products to international markets.
Operationally, Sparrows Point continues to improve its productivity. For
example, in May the Division's "L" blast furnace produced 305,904 tons of iron,
a monthly record for any blast furnace in North America.

Sparrows Point's four sheet coating lines plus the line at Double G
Coatings, a joint-venture coating line in Mississippi, produce a total of about
a million tons per year, making the Division a major supplier of corrosion-
resistant galvanized and Galvalume(R) sheet to the metal building and
roofing markets. These markets have grown by about 60 percent
since 1992.

<PAGE>
<PAGE> 2
The combined production of steel plate from Sparrows Point and Burns Harbor
makes Bethlehem the nation's largest producer of steel plate, accounting for 15
percent of our steel segment sales in 1995. Strong markets for steel plate in
1995 included construction, construction machinery, industrial machinery, farm
equipment and shipbuilding.

At our Pennsylvania business units, 1995 was a year of major transition.
Steelmaking was discontinued at our Bethlehem Structural Products Corporation
and BethForge, Inc. subsidiaries. New steelmaking facilities, including a DC
electric furnace, were brought into production at our Pennsylvania Steel
Technologies, Inc. subsidiary. With PST now supplying high-quality
semifinished steel to BSPC and BethForge, all three businesses will benefit
from the utilization of these modernized facilities. PST also increased
production of premium head-hardened railroad rail.

REBUILDING OUR FINANCIAL STRENGTH
- ---------------------------------

Over the course of the year, we also made progress in rebuilding Bethlehem's
financial strength. We reduced our long-term debt by about $120 million while
increasing our stockholders' equity by about $80 million. As a result, we were
able to reduce our debt to capitalization to 34 percent in 1995 from 40 percent
in 1994.

Additionally, we maintained our financial flexibility by entering into a
new five-year, nonreducing $500 million credit arrangement with 15 banks and
by maintaining total liquidity of more than $500 million.

CONTINUOUS IMPROVEMENT
- ----------------------

Customers. We measure our success by the success of our customers. Our focus
is on integrating Bethlehem's excellent steel production capabilities with our
superior technical and logistical support to provide our customers with a
"total solution" in terms of quality, delivery, service and value. As part of
this "total solution," we completed a major reorganization of our commercial
function to position our sales staff more closely to our customers and business
units. We also relocated our credit function to the individual steel business
units. These changes help us serve our customers more effectively by being
more responsive to their needs in a rapidly changing marketplace and by
improving the relationship between our business units and their customers.

Suppliers. As an extension of our Supplier Excellence Program, we launched a
Strategic Sourcing initiative in 1995 to further improve the cost, quality and
management of the $3 billion of materials and services that we purchase
annually. Our objective is to achieve breakthrough improvements in total cost
and quality and ensure that Bethlehem achieves full value from all of its
supplier relationships. We are striving to strengthen relationships with
existing suppliers and to identify new suppliers who will work with us to
achieve mutual objectives. Partnership relationships will be based on joint
commitment to continuous improvement, information exchange, planning and
ongoing cost reduction. We seek the same level of mutual trust and commitment
with our suppliers that we seek in our customer and employee partnerships.
Progress has already been achieved, and we expect this activity to accelerate
during 1996.

<PAGE>
<PAGE> 3
Employees. We have also been making good progress in partnering with
employees. It is fundamental to this effort that all employees understand and
carry out their responsibilities in achieving the business plan. Under our
profit-sharing plans, we made payments of more than $25 million in 1995 for
1994 performance to about 18,000 salaried and hourly employees. Employee
training centers to further the development of Bethlehem/USWA partnership
activities were established at Burns Harbor and Sparrows Point, and community
facilities are also available at other locations. A Learning Center for
employees was established in Bethlehem, and we began a corporate initiative to
promote higher education through scholarship grants for employees' children and
matching gifts for contributions to colleges and universities.

Safety and Environment. During 1995, we intensified our efforts to improve our
corporate safety and environmental performance. Sparrows Point improved its
safety performance by more than 30 percent over 1994, and the corporate injury
rate was reduced and the number of lost workday cases also declined. Burns
Harbor maintained its excellent safety performance during 1995, and the PB&NE
Railroad, a Bethlehem subsidiary, once again won an E.H. Harriman Institute
award for outstanding safety performance.

In September, Bethlehem became the first steelmaker to endorse the CERES
Principles, a comprehensive environmental code of conduct promoted by a
coalition of national environmental groups and socially responsible investors.
In December, Bethlehem was among those honored as an "Environmental Champion"
during an awards ceremony sponsored by McGraw- Hill in conjunction with the
U.S. Environmental Protection Agency.

OUTLOOK
- -------

As we look at 1996, the U.S. economy appears to be on a positive course of
moderate and sustainable growth and low inflation. The U.S. manufacturing
base that uses our steel is globally competitive in both technology and costs,
and domestic steel producers, including Bethlehem, are the low-cost,
high-quality suppliers to these manufacturers. These economic factors should
result in good steel demand for the year and relatively high steel industry
operating rates and levels of shipments.

We recognize that capacity additions in the domestic steel industry in the
next few years will increase the intensity of competition in the United States,
while further improving the international competitiveness of the American steel
industry. We will continue to take actions to improve our competitive position
by aggressively reducing costs throughout the corporation, improving our
products and rebuilding our financial strength. Our Vision is to be the
Premier Steel Company. By building on our achievements in 1995, and with the
skills, dedication and teamwork of our employees, we fully intend to achieve
that Vision.

/s/ Hank Barnette

Curtis H. Barnette, Chairman
January 31, 1996

<PAGE>
<PAGE> 4
FINANCIAL REVIEW AND OPERATING ANALYSIS

Bethlehem reported net income of $180 million ($1.24 per share) in 1995
compared to $81 million ($.35 per share) in 1994. Excluding the effect of a
$350 million ($290 million after-tax) restructuring loss, Bethlehem had net
income of $24 million in 1993. 1995's improvement resulted principally from
higher realized steel prices, partially offset by lower shipments and higher
operating costs. 1994's improvement was from higher realized steel prices,
higher shipments and an improved product mix. Sales in 1995 improved to $4.87
billion from $4.82 billion in 1994 and $4.32 billion in 1993.

SEGMENT RESULTS
Basic Steel Operations. Our Basic Steel Operations segment had income from
operations of $311 million in 1995 compared to income from operations of $166
million in 1994 and, excluding the $350 million restructuring loss, $76 million
in 1993.

1995's improvement was from higher realized steel prices, partially offset by
lower shipments and higher operating costs. Shipments fell to 9.0 million tons
from 9.3 million tons in 1994 principally from the softening in automotive
markets and higher customer inventories at the beginning of 1995. Average
realized prices were 5% higher than 1994. Employment costs were higher
principally from higher profit sharing. Scrap and alloy market prices and
depreciation expense were also higher.

1994's improvement, excluding 1993's restructuring charge, was from higher
realized prices, increased shipments and an improved product mix for flat
rolled products driven by the strong demand in the automotive, light
construction and machinery markets. 1994's shipments were about 250,000 tons
higher than 1993's and average realized prices were up 5%.

The effects of changes in average realized steel prices, product mix and
shipments on basic steel segment sales during the last two years were as
follows:

Increase (decrease) from prior year
1995 1994
---- ----

Realized prices 5% 5%
Shipments (4) 3
Product mix 1 4
--- ---
Total sales 2% 12%
=== ===
Raw steel production increased to 10.4 million tons in 1995 from 9.8 million
tons in 1994, when Burns Harbor relined a blast furnace, and 10.3 million tons
in 1993.

Our Burns Harbor Division shipped 4.6 million tons of steel products in 1995
compared to 5.1 million tons in 1994 and 4.8 million tons in 1993. Despite the
decline in shipments in 1995, Burns Harbor's operating results improved,
principally from higher realized prices. The absence in 1995 of the costs
related to rebuilding a blast furnace and coke oven in 1994 was partially offset
by higher employment costs. In 1995, Burns Harbor received the coveted QS-9000
certification, after receiving ISO-9002 certification in 1994. The QS-9000
certification is the combination of the quality standards of domestic auto and
truck manufacturers, which produce a substantial portion of the sheet products
produced at Burns Harbor. In 1995, Burns Harbor launched a relatively low cost
capital project to increase annual steel production by 300,000 tons to reduce
reliance on higher cost purchased steel.

Our Sparrows Point Division shipped 3.0 million tons of steel products in
1995 compared to 2.9 million tons in 1994 and 2.8 million tons in 1993.
Sparrows Point's operating results improved as it also benefitted from higher
realized prices and increased facility utilization and productivity.

<PAGE>
<PAGE> 5
In late 1995, our Bethlehem Structural Products Corporation (BSPC) subsidiary
discontinued iron and steelmaking operations, production of heavy structural
shapes, and foundry operations. Light and medium structural shapes production
has been consolidated on the recently upgraded 44-inch rolling mill. It is now
being supplied primarily with continuously cast blooms from our Pennsylvania
Steel Technologies (PST) subsidiary.

Shipments increased at PST as it increased sales of premium head-hardened
rails. PST's modernization program and head-hardened rail trial qualifications
have positioned it to benefit from the higher value head-hardened rail market.
PST is now supplying cast blooms to BSPC and ingots to BethForge, significantly
increasing steel production and reducing costs per ton at PST.

PERCENTAGE OF BETHLEHEM'S NET SALES
BY SEGMENT AND MAJOR PRODUCT
1995 1994 1993
---- ---- ----
Basic Steel Operations
Steel mill products:
Sheets and tin mill products 66.1% 66.1% 63.1%
Plates 15.1 14.0 13.6
Structural shapes and piling 6.7 6.7 8.5
Rail products 3.2 2.8 3.6
Other steel mill products 2.7 2.5 2.0
Other products and services
(including raw materials) 4.2 5.5 6.8
----- ----- -----
98.0 97.6 97.6
Steel Related Operations 2.0 2.4 2.4
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====

PERCENTAGE OF STEEL MILL PRODUCT SHIPMENTS
BY PRINCIPAL MARKET
(Based on tons shipped) 1995 1994 1993
---- ---- ----
Service Centers, Processors
and Converters (including
semifinished customers) 41.0% 45.9% 47.3%
Transportation (including automotive) 24.8 24.2 22.2
Construction 14.2 14.7 15.5
Containers 5.2 5.7 5.4
Machinery 5.2 4.9 5.1
Other 9.6 4.6 4.5
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====

Includes shipments to Bethlehem's operations.

Steel Related Operations. Our Steel Related segment (BethShip, BethForge and
CENTEC) reported a loss from operations of $42 million in 1995 compared to
losses of $32 million in 1994 and $22 million in 1993. 1995 losses were from
high costs at BethForge and a continued weak ship repair market for BethShip.
In late 1995, BethForge shut down its electric furnace shop, incurring higher
costs in the process, and began receiving ingots from PST. Losses in 1994 were
due to costs related to severe winter weather and higher operating costs,
primarily related to BethForge's modernization program, and a weak ship repair
market. Losses in 1993 were due to weak market conditions and costs incurred
at BethShip in connection with a new labor agreement.

The BethForge modernization program should improve cost and quality
competitiveness because of the lower cost and higher quality ingots being
supplied by PST's modernized steelmaking facilities. During 1995, market
conditions continued to remain weak for ship repair. We will continue to
closely monitor the performance of these business units to determine whether
their plans for improvement are being achieved and whether they are a positive
cash contributor.

<PAGE>
<PAGE> 6
LIQUIDITY AND CAPITAL STRUCTURE
At December 31, 1995, total liquidity, comprising cash, cash equivalents and
funds available under our bank credit arrangement, totaled $512 million
compared to $566 million at December 31, 1994. Cash and cash equivalents were
$180 million at December 31, 1995, compared to $160 million at December 31,
1994, and $332 million was available for use under our credit arrangement.

Cash provided from operating activities in 1995, including $30 million
proceeds from selling accounts receivable under our credit arrangement, was
$586 million compared to $384 million in 1994 and $203 million in 1993.
Principal uses of cash during 1995 included pension funding of $330 million,
capital expenditures of $267 million and debt repayment of $121 million.

During 1995, we entered into a new five-year credit arrangement for $500
million with 15 banks to replace our existing $500 million secured credit
agreement that was scheduled to expire in December 1996. We now have a
separate $300 million receivables sale/purchase agreement through a
wholly-owned special purpose subsidiary and a $200 million secured credit
agreement.

Our capital structure improved during the year from our profits and reduction
in long-term debt. In addition to the scheduled debt payments, we redeemed all
of our outstanding 9% debentures due 2000, which totaled $30 million, by using
funds from our new receivables sale/purchase agreement, which had lower
financing costs.

During 1995, long-term interest rates declined substantially, providing strong
total returns for the financial markets, including our pension fund assets.
Our $330 million contribution to the pension fund and better than market
performance of our pension assets were essentially offset by the current-year
actuarial charges and increase in our pension obligation caused by the decline
in interest rates. The resulting net change in our pension obligation during
the year caused a charge to our stockholders' equity of $67 million under
required accounting rules.

The new pension legislation that Congress passed in 1994 is not expected to
have any significant impact on our annual required minimum contribution to our
pension trust fund for the next several years. It will, however, increase over
time our annual required premiums to the Pension Benefit Guaranty Corporation.
We have contributed amounts to our pension fund substantially in excess of
amounts required under current law and regulations. As a result, we currently
have a funding standard credit balance that would allow us to defer pension
funding for almost two years, although we presently have no plans to do so.

Major uses of funds for 1996 include an estimated $300 million of capital
expenditures, pension funding and repayment of approximately $90 million of
debt and capital lease obligations. We expect to maintain an adequate level of
liquidity throughout 1996 from cash flow from operations, reductions in working
capital and available funds under our new credit arrangement.

COMMON STOCK MARKET AND DIVIDEND INFORMATION
1995 1994
Prices* Prices*
----------------- -----------------
Period High Low High Low
- ------ ---- --- ---- ---
First Quarter $19.125 $14.125 $24.250 $19.250
Second Quarter 16.375 13.625 22.125 16.750
Third Quarter 18.250 13.750 24.125 18.500
Fourth Quarter 14.750 12.625 20.875 16.250

* The principal market for Bethlehem Common Stock is the New York Stock
Exchange. Bethlehem Common Stock is also listed on the Chicago Stock Exchange.
The high and low sales prices of the Common Stock as reported in the
consolidated transaction system are shown. The trading symbol for Bethlehem
Common Stock is BS. Bethlehem has not paid a dividend on its Common Stock
since the fourth quarter of 1991.

CAPITAL EXPENDITURES
Capital expenditures were $267 million in 1995 compared to $445 million in 1994
and $327 million in 1993. Major strategic projects during 1995 included the
upgrade of the 44-inch rolling mill at BSPC, the modernization of the 160-inch
plate mill at Burns Harbor and a project to increase the heat size

<PAGE>
<PAGE> 7

of the basic oxygen furnaces at Burns Harbor. In 1995, work was completed
and start-up began on the coal injection facility at Burns Harbor, which
reduces the use of coke and natural gas at the blast furnaces.

About $360 million of additional capital expenditures were authorized in
1995. Among the expenditures authorized was the participation in a new joint
venture, Chicago Cold Rolling. The joint venture, of which we have a 45%
ownership interest, plans to construct a reversing cold mill near our Burns
Harbor Division. This facility will improve our product mix by increasing
sales of cold rolled product. Also authorized for 1996 are continued
expenditures at the plate mill and improvements to the hot-strip mill at Burns
Harbor. We are installing an accelerated cooling facility and a high-capacity
leveler at the plate mill. The hot-strip mill will receive improved gauge and
shape control. At December 31, 1995, the estimated cost of completing
authorized capital expenditures was about $400 million compared to $325 million
at December 31, 1994. Such authorized capital expenditures are expected to be
completed during the 1996-1998 period.

EMPLOYEES AND EMPLOYMENT COSTS
At year-end 1995, we had about 18,300 employees compared to about 19,900
employees at the end of 1994 and 20,600 employees at the end of 1993. About
three-quarters of our employees are covered by our labor agreements with the
United Steelworkers of America (USWA).

Under the terms of our 1993 labor agreements with the USWA, most employees at
steel operations received a lump-sum bonus of either $500 or 25 shares of
Bethlehem Common Stock, at the election of the employee, and a $.50 per hour
wage increase in 1995. In early 1996, most employees at steel operations will
receive a bonus of $.50 per-hour worked (maximum payment of $1,000) or the
equivalent value of Bethlehem Common Stock, at the option of the Company, based
on our having achieved the required level of 1995 adjusted consolidated pre-tax
income. Also, profit sharing of 8% of adjusted consolidated annual income
before taxes, unusual items and expenses applicable to the plan plus 2% of
adjusted profits of certain operations is paid to USWA-represented employees
in the following year. The 1993 labor agreements provide for Reopener
Negotiations in March 1996 for certain wage and benefit items, but exclude
pension and health care benefits. Issues that we are unable to reach
agreement upon with the USWA will be submitted for final offer interest
arbitration and any changes will be effective August 1, 1996.

Under other provisions of the labor agreements, we are required to pay
"shortfall amounts" each year up to 10% of the first $100 million and 20% in
excess of $100 million of consolidated income before taxes, unusual items and
expenses applicable to the shortfall plan. Shortfall amounts arise when
employees terminate employment and ESOP Preference Stock, held in trust for
employees in reimbursement for wage and benefit reductions in prior years, is
converted into Common Stock and sold for amounts less than the stated value of
the Preference Stock ($32 for Series A and $40 for Series B). Profit sharing
is also paid to nonrepresented employees based on specific Corporate and
Business Unit plans. We paid about $38 million in 1995 and expect to pay about
$75 million for income related bonus, profit sharing and shortfall amounts in
early 1996.

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 1993 plan year. Under other provisions of those labor agreements, we
issued approximately 40,800 shares of Series B Preference Stock in 1995 and
approximately 134,800 shares in 1994 to a trustee for the benefit of employees
for 1994 and 1993, respectively, and expect to issue about 61,000 shares in
early 1996 for the 1995 plan year.

<PAGE>
<PAGE> 8
For additional information concerning our employment costs, see the table
below.

EMPLOYMENT COST SUMMARY--ALL EMPLOYEES

(Dollars in millions) 1995 1994 1993
- --------------------- ---- ---- ----
Salaries and Wages $1,058 $ 999 $ 951
------ ------ ------
Employee Benefits
Pension Plans:
Actives 105 108 85
Retirees 105 95 99
Medical and Insurance:
Actives 151 152 141
Retirees 116 115 110
Payroll Taxes 95 90 89
Workers' Compensation 39 46 44
Supplemental Unemployment,
Savings Plan and Other 15 28 28
------ ------ ------
Total Benefit Costs 626 634 596
------ ------ ------
Total Employment Costs $1,684 $1,633 $1,547
====== ====== ======
Employment Costs as a
Percent of Net Sales 35% 34% 36%
====== ====== ======

ENVIRONMENTAL MATTERS
We are subject to various 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, 1995, we spent approximately $235 million for environmental
control equipment. Expenditures for new environmental control equipment
totaled approximately $36 million in 1995, $44 million in 1994 and $35 million
in 1993. The costs incurred in 1995 to operate and maintain existing
environmental control equipment were approximately $120 million (excluding
interest costs but including depreciation charges of $21 million) compared to
$115 million in 1994 and $125 million in 1993.

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. We believe that there will not be any significant curtailment or
interruptions of any of our important operations as a result of these
proceedings and negotiations. Existing environmental laws could be amended,
new laws could be enacted by Congress and state legislatures and new
environmental regulations could be issued by regulatory agencies. For these
reasons, we cannot predict the specific environmental control requirements that
we will face in the future. Based on existing and anticipated regulations
promulgated under presently enacted legislation, we currently estimate that
capital expenditures for installation of new environmental control equipment
will average about $30 million per year over the next two years. However,
estimates of future capital expenditures and operating costs required for
environmental compliance are subject to numerous uncertainties, including the
evolving nature of regulations, possible imposition of more stringent
requirements, availability of new technologies and the timing of expenditures.

Although it is possible that our future results of operations, in particular
quarterly or annual periods, could be materially affected by the future costs
of environmental compliance, we believe that the future costs of environmental
compliance will not have a material adverse effect on our consolidated
financial position or on our competitive position with respect to other
integrated domestic steelmakers that are subject to the same environmental
requirements.

To demonstrate our commitment to the environment, in September
of 1995, Bethlehem and the Coalition of Environmentally Responsible Economies
(CERES) signed a Statement of Endorsement and Mutual Commitment with respect
to each other's environmental principles. A separate Safety, Health and
Environmental Report will be available at a later date that will provide
more information concerning our relationship with the CERES organization.

10
<PAGE>
<PAGE> 9

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

Year ended December 31
- --------------------------------------------------------------------------------
(Dollars in millions, except per share data) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 4,867.5 $ 4,819.4 $4,323.4
---------- ----------- ---------
Costs and Expenses:
Cost of sales 4,202.8 4,287.3 3,834.2
Depreciation (Note A) 284.0 261.1 277.5
Selling, administration and general expense 111.8 137.4 156.9
Estimated restructuring loss (Note C) -- -- 350.0
---------- ----------- ---------
Total Costs and Expenses 4,598.6 4,685.8 4,618.6
---------- ----------- ---------
Income (Loss) from Operations 268.9 133.6 (295.2)

Financing Income (Expense):
Interest and other financing costs (Note A) (60.0) (46.2) (63.2)
Interest income 7.7 7.1 7.1
---------- ----------- ---------
Income (Loss) Before Income Taxes 216.6 94.5 (351.3)

Benefit (Provision) for Income Taxes (Note D) (37.0) (14.0) 85.0
---------- ----------- ---------
Net Income (Loss) 179.6 80.5 (266.3)

Dividends on Preferred and Preference Stock 42.4 43.1 39.8
---------- ----------- ---------
Net Income (Loss) Applicable to Common Stock-
$1.24, $.35 and ($3.37) per share $ 137.2 $ 37.4 $ (306.1)
========== =========== ==========

</TABLE>

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

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

<PAGE>
<PAGE> 10

Consolidated Balance Sheets

December 31
- -------------------------------------------------------------------------------
(Dollars in millions, except per share data) 1995 1994
- -------------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents (Note A) $ 180.0 $ 159.5
Receivables (Note E) 374.6 519.5
Inventories (Notes A and E)
Raw materials and supplies 335.5 331.9
Finished and semifinished products 604.9 534.9
Contract work in progress less
billings of $10.9 and $2.3 17.8 16.1
---------- ---------
Total Inventories 958.2 882.9
Other current assets 13.0 7.2
---------- ---------
Total Current Assets 1,525.8 1,569.1
Investments and Miscellaneous Assets (Note A) 112.3 124.2
Property, Plant and Equipment less accumulated
depreciation of $4,329.5 and $4,167.9 (Note A) 2,714.2 2,759.3
Deferred Income Tax Asset - net (Note D) 885.0 903.2
Intangible Asset - Pensions (Note G) 463.0 426.6
---------- ---------
Total Assets $ 5,700.3 $5,782.4
========== =========

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 381.4 $ 387.0
Accrued employment costs 208.0 165.8
Postretirement benefits other than pensions (Note H) 150.0 138.0
Accrued taxes (Note D) 72.4 67.6
Debt and capital lease obligations (Note E) 91.5 88.9
Other current liabilities 146.3 163.9
---------- ---------
Total Current Liabilities 1,049.6 1,011.2
Pension Liability (Notes C and G) 1,115.0 1,117.1
Postretirement Benefits Other Than Pensions
(Notes C and H) 1,415.0 1,441.4
Long-term Debt and Capital Lease Obligations (Note E) 546.8 668.4
Other Long-term Liabilities 335.6 388.5
Stockholders' Equity (Notes I, J and K):
Preferred Stock -- at $1 per share par value
(aggregate liquidation preference of $481.2);
Authorized 20,000,000 shares 11.6 11.6
Preference Stock -- at $1 per share par value
(aggregate liquidation preference of $88.2);
Authorized 20,000,000 shares 2.6 2.6
Common Stock -- at $1 per share par value;
Authorized 250,000,000 and 150,000,000 shares
Issued 112,699,869 and 111,882,276 shares 112.7 111.9
Held in treasury, 1,992,189 and 1,996,715
shares at cost (59.4) (59.5)
Additional Paid-in Capital 1,850.6 1,948.6
Accumulated Deficit (679.8) (859.4)
---------- ---------
Total Stockholders' Equity 1,238.3 1,155.8
---------- ---------
Total Liabilities and Stockholders' Equity $ 5,700.3 $5,782.4
========== =========

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

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

<PAGE>
<PAGE> 11

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December
- --------------------------------------------------------------------------------
(Dollars in millions) 1995 1994 1993
- --------------------------------------------------------------------------------

Operating Activities:
Net Income (Loss) $ 179.6 $ 80.5 $(266.3)
Adjustments for items not affecting cash
from operating activities:
Depreciation 284.0 261.1 277.5
Deferred income taxes 35.0 13.0 (87.0)
Other - net 2.1 15.8 19.6
Estimated restructuring loss (Note C) -- -- 350.0
Working capital (excluding investing and
financing activities):
Receivables (Note E) 144.9 (22.7) (99.9)
Inventories (79.0) (28.1) --
Accounts payable (5.6) 20.6 --
Employment costs and other 35.8 45.8 (5.6)
Other - net (10.5) (2.3) 14.9
-------- -------- --------
Cash Provided from Operating Activities 586.3 383.7 203.2
-------- -------- --------
Investing Activities:
Capital expenditures (266.8) (444.6) (327.1)
Cash proceeds from sales of businesses and assets 15.1 32.4 15.2
Other - net 2.5 (1.4) 5.6
-------- -------- --------
Cash Used for Investing Activities (249.2) (413.6) (306.3)
-------- -------- --------
Financing Activities:
Pension financing (funding) (Note G):
Pension expense 210.0 203.1 183.6
Pension funding (330.0) (472.3) (261.1)
Revolving and other credit payments - net -- -- (80.0)
Long-term debt borrowings (Note E) 3.6 31.1 171.2
Long-term debt and capital lease payments (Note E) (120.7) (99.9) (73.8)
Cash dividends paid (Note K) (40.4) (40.4) (36.1)
Preferred Stock issued (Note K) -- -- 248.4
Common Stock issued (Note K) -- 355.3 --
Other payments (39.1) (16.4) (28.4)
-------- -------- --------
Cash Provided from (Used for) Financing Activities (316.6) (39.5) 123.8
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 20.5 (69.4) 20.7
Cash and Cash Equivalents - Beginning of Period 159.5 228.9 208.2
-------- -------- --------
- End of Period $ 180.0 $ 159.5 $ 228.9
======== ======== ========

Supplemental Cash Payment Information:
Interest, net of amount capitalized $ 61.1 $ 41.6 $ 55.7
Income taxes (Note D) $ -- $ 0.2 $ 3.7
- --------------------------------------------------------------------------------

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

13
<PAGE>
<PAGE> 12

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. 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 $49 million and $47 million at December 31, 1995 and 1994.
Associated enterprises are primarily 50% or less interests in steel sheet
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 $5, $31 and $9 million in 1995, 1994 and 1993.

Our property, plant and equipment by major classification is:

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

(Dollars in millions) December 31
- --------------------- -------------------
1995 1994
----- ----
Land (net of depletion) $35.8 $ 38.8
Buildings 689.3 682.9
Machinery and equipment:
Steel manufacturing 5,572.2 5,364.8
Other 610.4 639.2
-------- ---------
6,907.7 6,725.7
Accumulated depreciation (4,329.5) (4,167.9)
-------- ---------
2,578.2 2,557.8
Construction-in-progress 136.0 201.5
-------- ---------
Total $2,714.2 $ 2,759.3
======== =========

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

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 $16
million, $10 million and $4 million more than straight-line in 1995, 1994 and
1993. Through December 31, 1995, $13 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.

Foreign Currency, Interest Rate and Commodity Price Risk Management -
Periodically, we enter into financial contracts to manage risks. We use
foreign currency exchange contracts to manage the cost of firm purchase
commitments for capital equipment or other purchased goods and services
denominated in a foreign currency. We use interest rate swap agreements to fix
the interest rate on certain floating rate debt. We use

<PAGE>
<PAGE> 13
commodity contracts to fix the cost of a portion of our annual requirements
for natural gas, zinc and other metals. Generally, foreign currency and
commodity contracts are for periods of less than a year. The gains or losses
on these contracts are reflected in the cost of goods or services purchased.
Net payments or receipts on interest rate swaps are reflected in interest
expense. Gains or losses on swaps settled or terminated are deferred and
amortized to interest expense over the life of the related debt. Currency and
commodity contracts outstanding during the years and at year end were not
material. Also, see Note E, Long-term Debt and Capital Lease Obligations.

Use of Estimates - In preparing these financial statements, Bethlehem's
management makes estimates and uses assumptions that affect some of the
reported amounts and disclosures. See, for example, Note D, Taxes; Note F,
Commitments and Contingent Liabilities; Note G, Postretirement Pension
Benefits; and Note H, Postretirement Benefits Other Than Pensions. In the
future, actual amounts received or paid could differ from those estimates.

B. INDUSTRY SEGMENT INFORMATION
- -------------------------------------------------------------------------------

(Dollars in millions) 1995 1994 1993
- --------------------- ---- ---- ----
Sales:
Trade:
Basic Steel Operations $4,768.6 $4,702.4 $4,217.5
Steel Related Operations 98.9 117.0 105.9
Intersegment:
Basic Steel Operations 8.2 3.8 1.7
Steel Related Operations 19.4 19.4 13.7
Eliminations (27.6) (23.2) (15.4)
--------- --------- ---------
Total $4,867.5 $4,819.4 $4,323.4
========= ========= =========
Estimated Restructuring Loss:
Basic Steel Operations $ - $ - $ 350.0
========= ========= =========
Income (Loss) from Operations:
Basic Steel Operations $ 310.7 $ 166.0 $ (273.6)
Steel Related Operations (41.8) (32.4) (21.6)
--------- --------- ---------
Total $ 268.9 $ 133.6 $ (295.2)
========= ========= =========
Shipments (tons in thousands):
Basic Steel Operations 8,970 9,251 8,997
========= ========= =========
Identifiable Assets:
Basic Steel Operations $4,048.3 $4,106.0 $3,930.6
Steel Related Operations 115.5 102.7 119.9
Corporate 1,536.5 1,573.7 1,826.2
--------- --------- ---------
Total $5,700.3 $5,782.4 $5,876.7
========= ========= =========
Depreciation:
Basic Steel Operations $ 277.3 $ 252.6 $ 271.9
Steel Related Operations 6.7 8.5 5.6
--------- --------- ---------
Total $ 284.0 $ 261.1 $ 277.5
========= ========= =========
Capital Expenditures:
Basic Steel Operations $ 253.4 $ 432.1 $ 323.8
Steel Related Operations 13.4 12.5 3.3
--------- --------- ---------
Total $ 266.8 $ 444.6 $ 327.1
========= ========= =========
- -------------------------------------------------------------------------------
A general description of our segments and their products and services is
contained under the heading "Bethlehem's Segments" on page 5 of this Report.

Intersegment sales are generally at market prices. Corporate assets consist
primarily of cash and cash equivalents, investments, deferred income tax asset
and intangible asset - pensions.

C. ESTIMATED RESTRUCTURING LOSS

On January 26, 1994, we announced a modernization plan that substantially
reduced the operations of our Bethlehem Structural Products Corporation (BSPC)
subsidiary. Also, based on our review of the current and projected coke
market, we concluded that we could not recover both the remaining book value
and required future investment if we rebuilt and operated the coke plant at our
Sparrows Point Division that was idled in 1991. Accordingly, we recorded a
restructuring loss in 1993 of $350 million ($290 million after-tax or $3.19 per
share). This loss included $215 million for the net book value of certain
equipment, $115 million for employee benefit-related

<PAGE>
<PAGE> 14

costs ($75 million for pensions, $20 million for postretirement benefits other
than pensions and $20 million for severance and other benefits) and $20 million
for future contractual and other costs.

In late 1995, BSPC discontinued iron and steelmaking operations, production
of heavy structural shapes and foundry operations, reducing its workforce by
about 1,300 employees. BSPC expects to reduce employment by an additional 350
employees in 1996. The amounts for severance and other costs charged to the
restructuring liability in 1995 and 1994 were not significant.

D. TAXES

Our benefit (provision) for income taxes consisted of:
- -------------------------------------------------------------------------------

(Dollars in millions) 1995 1994 1993
- --------------------- ---- ---- ----

Federal - deferred $ (35) $ (13) $ 87
Federal, state and foreign - current (2) (1) (2)
------ ------ ------
Total benefit (provision) $ (37) $ (14) $ 85
====== ====== ======
- -------------------------------------------------------------------------------

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) 1995 1994 1993
- --------------------- ---- ---- ----

Pre-tax income (loss):
United States $203 $ 87 $(353)
Foreign 14 8 2
------ ------ ------
Total $ 217 $ 95 $(351)
====== ====== ======
Computed amounts $ (76) $ (33) $ 123
Effect of change in rate
on prior years (a) - - 50
Valuation allowance 37 13 (87)
Percentage depletion 5 8 6
Dividend received deduction 3 3 2
State and foreign taxes - (1) (2)
Other differences - net (6) (4) (7)
------ ------ ------
Total benefit (provision) $ (37) $ (14) $ 85
====== ====== ======

(a) The 1993 Omnibus Budget Reconciliation Act increased the federal corporate
income tax rate to 35% from 34%. This increase in the tax rate resulted
in an increase in our deferred income tax asset of $25 million, net of a
valuation allowance, which we recorded in 1993.

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

The components of our net deferred income tax asset are as follows:

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

(Dollars in millions) December 31
- --------------------- ---------------------
1995 1994
---- ----
Temporary differences:
Employee benefits $ 830 $ 870
Depreciable assets (300) (250)
Other 115 66
-------- -------
Total 645 686
Operating loss carryforward 600 600
-------- -------
Deferred income tax asset 1,245 1,286
Valuation allowance (360) (383)
-------- -------
Deferred income tax asset - net $ 885 $ 903
======== =======

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

Temporary differences represent the cumulative taxable or deductible amounts
recorded in our financial statements in different years than recognized in our
tax returns. Our employee benefits temporary difference includes amounts
expensed in our financial statements for pensions, health care, life insurance
and other postretirement benefits that become deductible in our tax return upon
payment or funding in qualified trusts. The depreciable assets temporary
difference represents principally tax depreciation in excess of financial
statement depreciation. Other temporary differences represent principally
various expenses accrued for financial reporting purposes that are not
deductible for tax reporting purposes until paid. At December 31, 1995, we had
regular tax net operating loss carryforwards of $1.7 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 2010.

FASB Statement No. 109, Accounting for Income Taxes, 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

<PAGE>
<PAGE> 15
income in the future. Bethlehem reported income before income taxes,
restructuring charges and extraordinary gains in 1987 through 1990 and
incurred higher costs in 1991 and 1992 relating to unusual repair costs
at a coke plant that has subsequently been 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. Our income from operations improved significantly in 1995,
1994 and before the restructuring loss in 1993 from the prior year. Also, we
have significant tax planning opportunities to manage taxable income including
selection of depreciation methods and timing of contributions to our pension
trust fund.

We believe that our deferred tax asset will be realized by future operating
results together with tax planning opportunities. However, our losses from
operations before restructuring charges in 1991 and 1992 and our significant
net operating loss carryforwards and future tax deductions from temporary
differences make it appropriate to record a valuation allowance. Accordingly,
we have provided a valuation allowance at December 31, 1995 and 1994 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 approximate 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
appropriate for the deferred tax asset related to our temporary difference
for postretirement benefits other than pensions.

If we are unable to generate sufficient taxable income in the future through
operating results or tax-planning opportunities, we will be required to
increase our valuation allowance through a charge to expense (reducing our
stockholders' equity). On the other hand, if we achieve sufficient
profitability to use all of our deferred income tax asset, we will reduce the
valuation allowance through a decrease to expense (increasing our stockholders'
equity).

In addition to income taxes, we incurred costs for certain other taxes as
follows:

- -------------------------------------------------------------------------------
(Dollars in millions) 1995 1994 1993
- --------------------- ---- ---- ----
Employment taxes $ 95.2 $ 90.1 $ 89.1
Property taxes 24.6 24.7 27.5
State and foreign taxes 11.2 9.1 9.0
Federal excise tax on coal 2.6 3.1 3.3
------- ------- -------
Total other taxes $ 133.6 $ 127.0 $ 128.9
======= ======= =======
- -------------------------------------------------------------------------------

E. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

- -------------------------------------------------------------------------------
(Dollars in millions) December 31
- --------------------- --------------
1995 1994
---- ----
5.69% - 5.99% Galvanizing lines financing $ 187.1 $ 224.6
Notes and loans:
10-3/8 % Senior Notes, Due 2003 105.0 105.0
2% - 9.64%, Due 1996-2009 25.5 31.3
Debentures:
6-1/8% Due 1999 15.7 16.0
9% Due 2000 -- 36.0
8-3/8% Due 2001 41.6 41.6
8.45% Due 2005 90.7 90.7
Pollution control and industrial revenue bonds:
7-1/2%-8%, Due 2015-2024 128.9 128.9
Capital lease obligations 45.2 84.8
Unamortized debt discount (1.4) (1.6)
-------- --------
Total 638.3 757.3
Amounts due within one year (91.5) (88.9)
-------- --------
Long-term $ 546.8 $ 668.4
======== ========
- -------------------------------------------------------------------------------
Maturities and sinking fund requirements for the next five years are $92
million in 1996, $50 million in 1997, $46 million in 1998, $45 million in 1999
and $48 million in 2000.

<PAGE>
<PAGE> 16
The hot-dip galvanizing lines financing is collateralized by the coating
lines at our Sparrows Point and Burns Harbor Divisions and will be repaid in
equal semiannual installments through 2000.

The 10-3/8% Senior Notes 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 K, Stockholders' Equity.

In 1995, we entered into a new five-year credit arrangement with a group of
15 domestic and international banks for $500 million, $150 million of which
can be used for letters of credit. The new arrangement consist of a $300
million receivables sale/purchase agreement through a wholly-owned special
purpose subsidiary and a $200 million secured credit agreement.

As of December 31, 1995, we had sold an ownership interest in trade
receivables to banks of about $136 million in exchange for $30 million in cash,
about $82 million in letters of credit and required reserves of about $24
million. The receivables were sold at a discount, based on defined short-term,
investment grade, interest rates and a fixed fee per annum for the letters of
credit. The banks are required to pay us cash for the face amount of the
letters of credit upon expiration. We pay a .1875% per annum fee on the daily
available commitment.

Receivables from banks are for cash and required reserves that will be
returned to us upon expiration of the letters of credit and liquidation of
receivable ownership. Supplemental information on the receivable balances at
December 31, 1995 and 1994 follows:

- -------------------------------------------------------------------------------
(Dollars in millions) December 31
- --------------------- --------------
1995 1994
---- ----

Trade $ 286.5 $ 536.2
Banks 105.9 --
Other 1.7 1.9
Allowances (19.5) (18.6)
-------- --------
Total receivables - net $ 374.6 $ 519.5
======== ========

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

Under the secured credit agreement, inventories are pledged as collateral for
any borrowings and letters of credit. Borrowings under the agreement are
subject to collateral coverage requirements and incur interest based on defined
short-term interest rates. No borrowings were outstanding under this agreement
at December 31, 1995. We pay a .5% per annum fee on the unused available
credit.

Our secured credit agreement and hot-dip galvanizing lines financing
agreements contain restrictive covenants which require Bethlehem to maintain a
minimum adjusted consolidated tangible net worth. At December 31, 1995, our
adjusted tangible net worth as defined by these agreements exceeded the more
restrictive of these requirements by about $600 million.

At December 31, 1995, outstanding interest rate swap agreements with notional
amounts totaling $105 million effectively fix the interest rate on our floating
rate financings at 5.75% to 8.70%. These swaps are also being used to hedge
the interest rate risk on anticipated financing transactions. These interest
rate swap agreements expire in 2000 and 2001. At December 31, 1995 and 1994,
the estimated fair value of our debt and interest rate swap agreements was not
materially different than the recorded amounts.

We lease certain manufacturing facilities and equipment under capital leases,
the most significant of which covers the two continuous casters at our Sparrows
Point and Burns Harbor Divisions. The casters 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 $263 million
(net of $273 million accumulated amortization) and $291 million (net of $247
million accumulated amortization) at December 31, 1995 and 1994.

Future minimum payments under noncancellable operating leases at December 31,
1995 were $24 million in 1996, $17 million in 1997, $13 million in 1998, $9
million in 1999, $7 million in 2000 and $23 million thereafter. Total rental
expense under operating leases was $42 million, $38 million and $41 million in
1995, 1994 and 1993.

<PAGE>
<PAGE> 17

F. COMMITMENTS AND CONTINGENT LIABILITIES

We own a portion of an iron ore enterprise and are committed to purchase
certain ore produced. We received 2.2 million net tons of such iron ore in
1995, and 2.7 million tons in 1994 and 1993 at a net cost of $58 million, $82
million and $89 million.

At December 31, 1995, we had outstanding approximately $59 million of
purchase orders for additions and improvements to our properties.

We, as well as other steel companies, are subject to various environmental
laws and regulations imposed by federal, state and local governments. Because
of the continuing evolution of the specific regulatory requirements and
available technology to comply with the requirements, we cannot reasonably
estimate the future capital expenditures and operating costs required to comply
with these laws and regulations. Although it is possible that our future
operating results in a particular quarterly or annual period could be
materially affected by the future costs of environmental compliance, we believe
that such costs will not 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 that 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.

G. POSTRETIREMENT PENSION BENEFITS

We have noncontributory defined benefit pension plans which provide benefits
for substantially all our 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) December 31
- ---------------------- ---------------
1995 1994
---- ----
Assumptions:
Discount rate 7.25% 9.00%
Average rate of compensation increase 3.10% 3.10%
Actuarial present value of benefit obligations:
Vested benefit obligation $ 4,895 $ 4,247
Accumulated benefit obligation 5,065 4,393
Projected benefit obligation 5,365 4,579
Plan assets at fair value:
Fixed income securities 1,814 1,759
Equity securities 1,943 1,371
Cash and marketable securities 193 146
-------- --------
Total plan assets $ 3,950 $ 3,276
-------- --------
Projected benefit obligation in excess
of plan assets 1,415 1,303
Unrecognized net loss (382) (82)
Remaining unrecognized net obligation resulting
from adoption of Statement No. 87 (219) (255)
Unrecognized prior service cost from
plan amendments (244) (275)
Adjustment required to recognize minimum liability
- Intangible asset 463 426
- Additional paid-in capital
(pre-tax) (Note K) 82 -
-------- --------
Pension liability $ 1,115 $ 1,117
======== ========

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

<PAGE>
<PAGE> 18
The assumptions used in each year and the components of our annual pension
cost are as follows:

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

(Dollars in millions) 1995 1994 1993
- ---------------------- ---- ---- ----

Assumptions:
Return on plan assets 10.00% 8.75% 9.50%
Discount rate 9.00% 7.50% 8.50%
Pension cost:
Service cost - benefits
earned during the period $ 45 $ 52 $ 39
Interest on projected
benefit obligation 402 375 380
Return on plan assets
- actual (849) 60 (308)
- deferred 532 (365) 4
Amortization of initial
net obligation 36 37 38
Amortization of unrecognized prior
service cost from plan amendments 32 33 20
------- ------ ------
Total 198 192 173
PBGC premiums, administration fees, etc. 12 11 11
------- ------ ------
Total cost $ 210 $ 203 $ 184
======= ====== ======

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

H. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

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

Information regarding our plans' actuarial assumptions, funded status and
liability follows:

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

(Dollars in millions) December 31
- --------------------- --------------
1995 1994
Assumptions: ---- ----
Discount rate 7.25% 9.00%
Trend rate
- beginning next year 8.00% 9.00%
- ending year 2000 4.60% 4.60%
Accumulated postretirement benefit obligation:
Retirees $ 1,605 $ 1,428
Fully eligible active plan participants 170 100
Other active plan participants 230 160
-------- --------
Total 2,005 1,688
Plan assets at fair value:
Fixed income securities 140 136
-------- --------
Accumulated postretirement benefit
obligation in excess of plan assets 1,865 1,552
Unrecognized net gain (loss) (300) 27
-------- --------
Total obligation 1,565 1,579
Current portion (150) (138)
-------- --------
Long-term obligation $ 1,415 $ 1,441
======== ========

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

<PAGE>
<PAGE> 19
The assumptions used in each year and the components of our postretirement
benefit cost follow:

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

(Dollars in millions) 1995 1994 1993
- --------------------- ---- ---- ----
Assumptions:
Return on plan assets 10.00% 8.75% 9.50%
Discount rate 9.00% 7.50% 8.50%
Trend rate
- beginning current year 9.00% 9.00% 9.50%
- ending year 2000 4.60% 4.60% 5.50%
Postretirement benefit cost:
Service cost $ 7 $ 11 $ 9
Interest on accumulated postretirement
benefit obligation 148 139 144
Return on plan assets
- actual (24) 5 (18)
- deferred 12 (18) 4
------ ------ ------
Total cost $ 143 $ 137 $ 139
====== ====== ======
- -------------------------------------------------------------------------------

A one percentage point increase or decrease in the assumed health care trend
rate would increase or decrease the accumulated postretirement benefit
obligation by about $145 million and 1995 expense by about $10 million.

I. 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 one one-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 15% 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.

J. STOCK OPTIONS

At December 31, 1995, we had options outstanding under our Stock Option
Plans. The 1994 Stock Incentive Plan was approved by our stockholders on April
26, 1994 and replaces the 1988 Stock Incentive Plan. New options can be
granted only under the 1994 Plan, which reserved 4,000,000 shares of Common
Stock for such use. At December 31, 1995, options on 2,469,300 shares of
Common Stock were available for granting under the 1994 Plan. The option price
is the fair market value of our Common Stock on the date the option is granted.
Options issued under the 1994 Plan become exercisable either two or four 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. The recently issued FASB Statement No.
123, Accounting for Stock-Based Compensation, will not affect the accounting
for our stock options because of their "surrender" component.

Changes in options outstanding during 1995 and 1994 under the Plans were as
follows:

Number of Option Price
Options or Range

Balance December 31, 1993 2,879,915 8 - 26-1/8
Granted 561,900 20-1/8
Terminated or cancelled (256,264) 14-1/8 - 26-1/8
Surrendered or exercised (685,303) 8 - 21-3/4
----------
Balance December 31, 1994 2,500,248 8 - 21-3/4
Granted 635,100 14-1/2
Terminated or cancelled (111,373) 14 - 21-3/4
Surrendered or exercised (6,900) 14 - 14-1/8
----------
Balance December 31, 1995 3,017,075 8 - 21-3/4
==========

1,848,375 options outstanding were exercisable at December 31, 1995.

<PAGE>
<PAGE> 20

K. STOCKHOLDERS' EQUITY

Preferred Stock Preference Stock Common Stock Common Stock Additional
(Shares in thousands and dollars $1.00 Par Value $1.00 Par Value $1.00 Par Value Held in Treasury Paid-In Accumulated
in millions, except per share data) Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit
- ----------------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 G) (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)
Net income for year 80.5
Minimum pension liability
adjustment (Note G) 50.0
Preferred Stock Dividends (40.4)
Preference Stock:
Stock dividend 135 0.1 (0.1)
Issued 134 0.1 2.6
Converted (461) (0.4) 461 0.4
Common Stock Issued 18,008 18.1 (7) (0.2) 348.1
------ ----- ------ ----- ------- ----- ----- ----- --------- --------
Balance December 31, 1994 11,623 11.6 2,619 2.6 111,882 111.9 1,997 59.5 1,948.6 (859.4)
Net income for year 179.6
Minimum pension liability
adjustment (Note G) (67.0)
Preferred Stock Dividends (40.4)
Preference Stock:
Stock dividend 133 0.1 (0.1)
Issued 41 0.1 0.7
Converted (205) (0.2) 205 0.2
Common Stock Issued 613 0.6 (5) (0.1) 8.8
------ ----- ------ ----- ------- ----- ----- ----- --------- --------
Balance December 31, 1995 11,623 $11.6 2,588 $2.6 112,700 $112.7 1,992 $59.4 $1,850.6 ($679.8)

</TABLE>

<PAGE>
<PAGE> 21
Preferred and Preference Stock issued and outstanding:
(Shares in thousands)
December 31
--------------
1995 1994
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 5,123

Preference Stock -- Authorized 20,000 shares

Series "A" 5% Cumulative Convertible Preference Stock 1,920 1,966
Series "B" 5% Cumulative Convertible Preference Stock 668 653

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 our consolidated net income and minus 100% of our
consolidated net loss since second quarter of 1993, excluding certain
restructuring charges and other adjustments. The amount available at
December 31, 1995 under this covenant was about $450 million.

L. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
(Dollars in millions,
except per share data) 1995 1994

- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
- -------------------------------------------------------------------------------------------------------------
Net sales $ 1,240.7 $ 1,250.2 $1,224.7 $1,151.9 $1,131.2 $1,230.5 $1,233.2 $1,224.5
Cost of sales 1,068.9 1,061.6 1,069.6 1,002.7 1,005.2 1,087.9 1,120.9 1,073.3
Net income 52.5 60.3 34.4 32.4 12.9 26.0 10.3 31.3
Net income per Common Share $ 0.38 $ 0.45 $ 0.22 $ 0.20 $ 0.02 $ 0.14 $ -- $ 0.19
- -------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
<PAGE> 22
REPORT OF INDEPENDENT AUDITORS

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, 1995 and 1994, and the
related consolidated statements of income and of cash flows for each of the
three years in the period ended December 31, 1995. 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, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted
accounting principles.

/s/ Price Waterhouse LLP

1177 Avenue of the Americas
New York, NY 10036
January 31, 1996

<PAGE>
<PAGE> 23
<TABLE>
<CAPTION>
FIVE-YEAR FINANCIAL AND OPERATING SUMMARIES
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share data) 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Statistics
Net sales $ 4,867.5 $ 4,819.4 $ 4,323.4 $ 4,007.9 $ 4,317.9
--------- --------- ---------- ---------- ----------
Costs and Expenses:
Employment costs 1,683.5 1,633.0 1,547.1 1,664.0 1,720.8
Materials and services 2,592.7 2,754.8 2,404.2 2,242.0 2,444.3
Depreciation 284.0 261.1 277.5 261.7 241.4
Taxes (other than employment and income taxes) 38.4 36.9 39.8 43.2 51.3
Estimated restructuring losses - - 350.0 - 635.0
--------- --------- ---------- ---------- ----------
Total Costs and Expenses 4,598.6 4,685.8 4,618.6 4,210.9 5,092.8
--------- --------- ---------- ---------- ----------
Income (loss) from operations 268.9 133.6 (295.2) (203.0) (774.9)
Financing income (expense):
Interest and other financing costs (60.0) (46.2) (63.2) (57.2) (45.5)
Interest income 7.7 7.1 7.1 4.9 9.7
Benefit (provision) for income taxes (37.0) (14.0) 85.0 45.0 (2.0)
Cumulative effect of changes in accounting - - - (340.0) -
--------- --------- ---------- ---------- ----------
Net income (loss) 179.6 80.5 (266.3) (550.3) (812.7)
Dividends on Preferred and Preference Stock 42.4 43.1 39.8 24.3 24.7
--------- --------- --------- ---------- ----------
Net income (loss) applicable to Common Stock $ 137.2 $ 37.4 $ (306.1) $ (574.6) $ (837.4)
========= ========= ========== ========== ==========

Net income (loss) per Common share $ 1.24 $ 0.35 $ (3.37) $ (7.01) $ (11.01)
Dividends per Common share - - - - .40
Dividends paid on Common Stock - - - - 30.4
- --------------------------------------------------------------------------------------------------------------------
Balance Sheet Statistics
Cash and cash equivalent $ 180.0 $ 159.5 $ 228.9 $ 208.2 $ 83.8
Receivables, inventories and other current assets 1,345.8 1,409.6 1,362.2 1,261.3 1,454.0
Current liabilities (1,049.6) (1,011.2) (914.2) (893.2) (931.0)
--------- --------- --------- ---------- ----------
Working capital $ 476.2 $ 557.9 $ 676.9 $ 576.3 $ 606.8
Current ratio 1.5 1.6 1.7 1.6 1.7

Property, plant and equipment - net $ 2,714.2 $ 2,759.3 $ 2,634.3 $ 2,804.5 $ 2,864.8
Total assets 5,700.3 5,782.4 5,876.7 5,493.0 4,708.3
Total debt and capital lease obligations 638.3 757.3 813.8 796.0 871.2
Stockholders' equity 1,238.3 1,155.8 696.6 789.4 1,186.1
Total debt as a percent of invested capital 34% 40% 54% 50% 42%
- --------------------------------------------------------------------------------------------------------------------
Other Statistics
Capital expenditures $ 266.8 $ 444.6 $ 327.1 $ 328.7 $ 563.9
Raw steel production capability (net tons in thousands) 11,500 11,500 11,500 16,000 16,000
Raw steel production (net tons in thousands) 10,449 9,817 10,303 10,544 10,022
Steel products shipped (net tons in thousands) 8,986 9,262 9,016 9,062 8,376

Pensioners receiving benefits at year end 71,000 71,700 70,900 70,500 70,200
Average number of employees receiving pay 19,500 19,900 20,700 24,900 27,500

Common Stock outstanding at year end (shares in thousands) 110,708 109,886 91,409 90,509 76,380
Common stockholders at year end 39,000 41,000 43,000 46,000 50,000
====================================================================================================================

</TABLE>
26

<PAGE>
<PAGE> 24

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors
and officers of Bethlehem Steel Corporation, a Delaware corporation,
constitutes and appoints Curtis H. Barnette, Gary L. Millenbruch, and Lonnie
A. Arnett, and each of them, with full power to act without the others, as his
or her true and lawful attorney-in-fact and agent, with full and several power
of substitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign Bethlehem Steel Corporation's Annual Report on Form
10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, including any amendments thereto, with the Securities and
Exchange Commission under the provisions of the Securities and Exchange Act of
1934, as amended, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he might or could do in person, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals as of the 31st day of January, 1996.

/s/ Curtis H. Barnette /s/ Gary L. Millenbruch
- ------------------------------- -------------------------------
Curtis H. Barnette Gary L. Millenbruch
Chairman, Chief Executive Officer Executive Vice President
(principal executive officer) (principal financial officer)
and Director and Director

<PAGE>
<PAGE> 25
- 2 -

/s/ Lonnie A. Arnett /s/ Winthrop Knowlton
- ------------------------------ ------------------------------
Lonnie A. Arnett Winthrop Knowlton, Director
Vice President and Controller
(principal accounting officer)

/s/ Benjamin R. Civiletti /s/ Robert McClements, Jr.
- ------------------------------ ------------------------------
Benjamin R. Civiletti, Director Robert McClements, Jr., Director

/s/ Worley H. Clark /s/ Roger P. Penny
- ------------------------------ ------------------------------
Worley H. Clark, Director Roger P. Penny, Director

/s/ John B. Curcio /s/ Shirley D. Peterson
- ------------------------------ ------------------------------
John B. Curcio, Director Shirley D. Peterson, Director

/s/ Thomas L. Holton /s/ Dean P. Phypers
- ------------------------------ ------------------------------
Thomas L. Holton, Director Dean P. Phypers, Director

/s/ Lewis B. Kaden /s/ William A. Pogue
- ------------------------------ ------------------------------
Lewis B. Kaden, Director William A. Pogue, Director

/s/ Harry P. Kamen /s/ John F. Ruffle
- ------------------------------ ------------------------------
Harry P. Kamen, Director John F. Ruffle, Director

<ARTICLE> 5
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 180
<SECURITIES> 0
<RECEIVABLES> 394
<ALLOWANCES> 19
<INVENTORY> 958
<CURRENT-ASSETS> 13
<PP&E> 7044
<DEPRECIATION> 4330
<TOTAL-ASSETS> 5700
<CURRENT-LIABILITIES> 1050
<BONDS> 547
0
14
<COMMON> 113
<OTHER-SE> 1111
<TOTAL-LIABILITY-AND-EQUITY> 5700
<SALES> 4868
<TOTAL-REVENUES> 4868
<CGS> 4203
<TOTAL-COSTS> 4599
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60
<INCOME-PRETAX> 217
<INCOME-TAX> 37
<INCOME-CONTINUING> 180
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24

</TABLE>