<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1998
Commission file number 1-1941
BETHLEHEM STEEL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 24-0526133
(State of incorporation) (I.R.S. Employer
Identification No.)
1170 Eighth Avenue 18016-7699
BETHLEHEM, PENNSYLVANIA (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (610) 694-2424
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
---- ----
Number of Shares of Common Stock Outstanding as of August 11, 1998:
129,621,955
-----------
<PAGE> 2
BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
Page No.
PART I. Financial Information
Consolidated Statements of Income-
Three Months and Six Months Ended
June 30, 1998 and 1997 (unaudited). . . . . . . . 2
Consolidated Balance Sheets-
June 30, 1998 (unaudited), December 31, 1997
and June 30, 1997 (unaudited) . . . . . . . . . . 3
Consolidated Statements of Cash Flows-
Six Months Ended June 30, 1998
and 1997 (unaudited). . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . 5
Management's Discussion and Analysis of Results of
Operations and Financial Condition. . . . . . . . 7
PART II. Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . 13
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Bethlehem Steel Corporation
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(dollars and shares in millions, except per share data)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
- ------------------------ ----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
$ 1,189.7 $ 1,206.9 Net Sales $ 2,322.2 $ 2,399.4
- ----------- ----------- ---------- ----------
Costs and Expenses:
1,008.8 1,053.4 Cost of sales 1,965.8 2,105.9
63.4 60.4 Depreciation and amortization 123.2 117.3
Selling, administration
28.7 26.1 and general expense 54.0 52.9
Estimated (gain) loss on
35.0 (135.0) exiting businesses 35.0 (135.0)
- ----------- ----------- ---------- ----------
1,135.9 1,004.9 Total Costs and Expenses 2,178.0 2,141.1
- ----------- ----------- ---------- ----------
53.8 202.0 Income from Operations 144.2 258.3
Financing Income (Expense):
(12.1) (12.1) Interest and other financing costs (23.7) (23.9)
3.6 2.1 Interest and other income 6.9 3.5
- ----------- ----------- ---------- ----------
45.3 192.0 Income before Income Taxes 127.4 237.9
(7.7) (32.0) Provision for Income Taxes (21.2) (39.5)
- ----------- ----------- ---------- ----------
37.6 160.0 Net Income 106.2 198.4
Dividends on Preferred and
10.5 10.4 Preference Stock 21.0 20.8
- ----------- ----------- ---------- ----------
Net Income Applicable to
$ 27.1 $ 149.6 Common Stock $ 85.2 $ 177.6
=========== =========== ========== ==========
Net Income per Common Share:
$ 0.23 $ 1.33 Basic $ 0.73 $ 1.58
$ 0.23 $ 1.19 Diluted $ 0.72 $ 1.47
118.8 112.3 Average Basic Shares Outstanding 116.0 112.1
Additional Data
2,357 2,240 Steel products shipped (thousands
of net tons) 4,578 4,467
2,552 2,462 Raw steel produced (thousands of
of net tons) 5,039 4,779
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
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Bethlehem Steel Corporation
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
ASSETS
<TABLE>
<CAPTION>
June 30 June 30
1998 December 31 1997
(unaudited) 1997 (unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 159.8 $ 252.4 $ 187.6
Receivables, less allowances 374.5 306.0 322.6
Inventories:
Raw materials 329.4 324.5 307.8
Finished and semifinished 665.1 569.3 612.8
--------- --------- ---------
994.5 893.8 920.6
Other current assets 11.7 11.8 10.0
--------- --------- ---------
Total Current Assets 1,540.5 1,464.0 1,440.8
Investments and Miscellaneous Assets 99.4 100.9 108.0
Property, Plant and Equipment,
less accumulated depreciation of
$4,099.0, $4,095.5, and $4,018.5 2,595.7 2,357.7 2,400.3
Deferred Income Tax Asset - net 920.0 880.0 897.2
Net Assets of Discontinued Stainless
Operations (Note 3) 310.0 - -
Goodwill (Note 3) 359.0 - -
Intangible Asset - Pensions - - 160.0
--------- --------- ---------
Total Assets $5,824.6 $4,802.6 $5,006.3
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 438.1 $ 371.2 $ 380.0
Accrued employment costs 304.5 323.9 304.1
Accrued taxes 49.0 60.0 53.1
Debt and capital lease obligations 244.4 41.8 47.1
Other current liabilities 213.3 113.9 114.2
--------- --------- ---------
Total Current Liabilities 1,249.3 910.8 898.5
Pension Liability 469.5 440.0 685.0
Postretirement Benefits Other
Than Pensions 1,630.8 1,445.0 1,443.2
Long-term Debt and Capital
Lease Obligations 647.6 451.6 473.0
Other Long-term Liabilities 340.4 340.2 357.9
Stockholders' Equity:
Preferred Stock 11.6 11.6 11.6
Preference Stock 2.4 2.3 2.5
Common Stock 131.4 115.0 114.5
Common Stock held in treasury at cost (60.1) (60.0) (59.9)
Additional paid-in capital 2,003.4 1,854.0 1,870.2
Accumulated deficit (601.7) (707.9) (790.2)
--------- --------- ---------
Total Stockholders' Equity 1,487.0 1,215.0 1,148.7
--------- --------- ---------
Total Liabilities and Stockholders'
Equity $5,824.6 $4,802.6 $5,006.3
========= ========= =========
</TABLE>
The accompanying Notes are an integral part of the Consolidated
Financial Statements.
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<PAGE> 5
Bethlehem Steel Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------
1998 1997
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 106.2 $ 198.4
Adjustments for items not affecting cash
from operating activities:
Depreciation and amortization 123.2 117.3
Estimated (gain) loss on exiting businesses 35.0 (135.0)
Deferred income taxes 20.0 37.8
Other - net 6.8 15.5
Working capital (excluding financing and
investing activities):
Receivables - operating (2.9) (11.0)
Inventories (13.0) 96.7
Accounts payable 7.1 (30.4)
Employment costs and other (22.8) (18.2)
--------- ----------
Cash Provided from Operations Before
Pension Activities 259.6 271.1
Pension Activities:
Pension expense 42.0 80.0
Pension funding (50.0) (265.0)
--------- ----------
Cash Provided from Continuing Operating Activities 251.6 86.1
--------- ----------
Cash Provided from Operating Activities of
Discontinued Stainless Operations (Note 3) 8.3 -
--------- ----------
Investing Activities:
Capital expenditures (114.4) (116.2)
Purchase of Lukens stock, net of cash
acquired (Note 3) (327.8) -
Cash proceeds from asset sales and other 5.4 147.8
--------- ----------
Cash Provided (Used) for Investing Activities (436.8) 31.6
--------- ----------
Financing Activities:
Borrowings (Note 4) 200.0 0.8
Debt and capital lease payments (70.0) (26.7)
Cash dividends paid (20.2) (20.2)
Other payments (25.5) (20.6)
--------- ----------
Cash Provided (Used) for Financing Activities 84.3 (66.7)
--------- ----------
Net Increase (Decrease) in Cash and
Cash Equivalents (92.6) 51.0
Cash and Cash Equivalents - Beginning of Period 252.4 136.6
--------- ----------
- End of Period $ 159.8 $ 187.6
========= ==========
Supplemental Cash Payment Information:
Interest, net of amount capitalized $ 20.3 $ 27.5
Income taxes $ 8.2 $ 7.3
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
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<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Consolidated Financial Statements as of and for the three
month and six month periods ended June 30, 1998 and 1997 have not been audited.
However, the information reflects all adjustments which, in the opinion of
management, are necessary to present fairly the results shown for the periods
indicated. Management believes all adjustments were of a normal and recurring
nature.
2. These Consolidated Financial Statements should be read together
with the 1997 audited financial statements set forth in Bethlehem's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
Presentation of certain amounts in the prior year have been revised to be
consistent with the current year.
3. On May 29, 1998, Bethlehem acquired all of the outstanding capital
stock of Lukens Inc. The aggregate purchase price of $563.6 million comprises
cash of $327.8 million, the issuance of 15.1 million shares of Bethlehem common
stock valued at $184.8 million, and transaction related costs of $51.0 million.
The acquisition was accounted for as a purchase and, accordingly, Lukens'
results are included in the Consolidated Financial Statements from the date of
acquisition.
The preliminary fair value of the assets acquired and liabilities
assumed is as follows:
Current assets $ 153.9
Property, plant & equipment 277.3
Net assets of discontinued stainless operations 320.0
Deferred tax asset, other 70.5
Goodwill 360.0
Current liabilities (109.4)
Pension and other postretirement benefit liabilities (220.0)
Debt (268.5)
Other long-term liabilities (20.2)
--------
Purchase price, net of cash acquired $ 563.6
========
Bethlehem intends to sell Lukens' stainless and distribution
businesses. Accordingly, Bethlehem is accounting for the stainless and
distribution businesses as discontinued operations. Income or losses from
these operations are not included in Bethlehem's operating results. Since the
date of acquisition, these operations have incurred operating losses of about
$5 million. The net assets of these operations are shown separately on the
balance sheet and consist primarily of property, plant & equipment and working
capital.
Bethlehem expects to finalize all purchase accounting adjustments,
e.g., pension and postretirement benefit liabilities, ultimate proceeds on
disposal of the stainless operations, severance costs from planned employee
reductions, etc., within one year of the acquisition. Any difference between
the amounts reflected above and the final amounts could result in an adjustment
to goodwill. Goodwill is being amortized over 30 years or $12 million per
year.
As previously announced, Bethlehem intends to close the Sparrows Point
160" plate mill and increase the output at existing underutilized facilities.
Accordingly, Bethlehem recorded a charge of $35 million ($29 million after-tax)
in connection with the planned closing of the Sparrows Point 160" plate mill.
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<PAGE> 7
The unaudited pro forma combined historical results (excluding
Stainless) as if Lukens had been acquired at the beginning of 1998 and 1997,
respectively, are estimated to be:
Six Months Ended June 30
------------------------
(Dollars in Millions, except per share data) 1998 1997
---- ----
Net Sales $2,561.9 $2,651.8
Income from Operations $154.5 $271.3
Net Income $107.3 $199.2
Net Income per Share:
Basic $0.68 $1.41
Diluted $0.67 $1.34
The pro forma results presented above are not necessarily indicative
of what actually would have occurred if the acquisition had been completed as
of the beginning of each of the periods presented, nor are they necessarily
indicative of future results.
4. On May 29, 1998, Bethlehem borrowed $200 million under a
short-term borrowing arrangement with an interest rate of about 8%. The loan
is payable by February 23, 1999 or upon the sale of certain assets including
the assets of the stainless and distribution businesses acquired in the Lukens
acquisition and the Number 1 Coke Oven Battery at Burns Harbor.
On June 19, 1998, Bethlehem, through its wholly owned, special purpose
subsidiary, amended its existing non-reducing credit facility. The amendment
extends the term of the agreement to July 19, 2003, increases the facilities
receivable purchase agreement from $300 million to $340 million, and increases
the credit facility for inventory from $225 million to $260 million, for a
total of $600 million.
5. In 1997 Bethlehem sold all of the operations that comprised its
Steel Related Operations segment. Presented below are 1997 Segment Results
(dollars in millions):
Second First
Quarter Quarter
-------- ---------
Net Sales:
Basic Steel Operations $1,188.7 $1,174.3
Steel Related Operations 26.8 27.0
Eliminations (8.6) (8.8)
--------- ---------
Total $1,206.9 $1,192.5
========= =========
Estimated Gain on Exiting Businesses:
Basic Steel Operations $ 135.0 $ -
Steel Related Operations - -
--------- ---------
Total $ 135.0 $ -
========= =========
Operating Income (Loss):
Basic Steel Operations $ 212.1 $ 63.8
Steel Related Operations (10.1) (7.5)
--------- ---------
Total $ 202.0 $ 56.3
========= =========
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<PAGE> 8
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Review of Results:
Second Quarter and First Six Months 1998
Second Quarter and First Six Months 1997
Bethlehem reported net income of $38 million, on sales of $1.19
billion, for the second quarter of 1998 compared with net income of $160
million, on sales of $1.21 billion, for the second quarter of 1997. After
deducting preferred dividends, net income per common share was $.23 for the
second quarter of 1998 compared with $1.33 per common share for the second
quarter of 1997.
Results for the second quarter of 1998 include a $35 million ($29
million after tax) restructuring charge related to the previously announced
planned closing of the Sparrows Point plate mill. Results for the second
quarter of 1997 include a $135 million ($113 million after tax) gain related
to the sale of our equity interest in Iron Ore Company of Canada (IOC). If
these items were excluded, net income for the second quarter of 1998 would
have been $67 million compared with $47 million for the second quarter of
1997, an improvement of 42%, and net income per common share would have been
$.47 for the second quarter of 1998 compared with $.32 for the year-earlier
period.
For the first six months of 1998, net income was $106 million, on
sales of $2.32 billion, compared with net income of $198 million, on sales of
$2.40 billion, for the first six months of 1997. Income applicable to common
stock was $.73 per common share, compared with $1.58 per common share in 1997.
If the 1998 restructuring charge and the 1997 IOC gain are excluded, net
income for the first six months of 1998 would have been $135 million compared
with $85 million for the first six months of 1997, an improvement of 58%, and
net income per common share would have been $.98 for the first six months of
1998 compared with $.57 for the year-earlier period.
Operating Results
Income from operations was $54 million for the second quarter of 1998
compared with income from operations of $202 million for the second quarter of
1997. Excluding the effects of the second quarter 1998 restructuring charge
and the second quarter 1997 IOC gain, income from operations was $89 million
for the second quarter of 1998, an improvement of 33% over the $67 million
reported for the second quarter of 1997. Results for the quarter improved
from a year ago principally due to improved costs and increased shipments
which more than offset lower realized prices. Costs were lower compared to
last year due to our exit from underperforming businesses and lower pension
expense. Steel shipments of 2,357,000 net tons for the second quarter of 1998
were higher than the 2,240,000 net tons shipped in the second quarter of 1997
due to increased shipments
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<PAGE> 9
resulting from the Lukens acquisition and increased shipments at
Burns Harbor, Sparrows Point and PST. These increased shipments more than
offset lower shipments from Bethlehem Structural which ceased operations in
March 1997.
Excluding the restructuring charge and the IOC gain, income from
operations for the first six months of 1998 was $179 million compared with
$123 million for the first six months of 1997, an improvement of 45%. We
achieved these improved results despite lower realized prices during the first
six months of 1998.
Excluding the restructuring charge, second quarter 1998 operating
income was about the same as the first quarter of 1998. Higher costs were
incurred during the second quarter primarily due to planned maintenance at
both Burns Harbor and Sparrows Point and a Hot Mill modernization outage at
Burns Harbor. However, these increased costs were essentially offset by
increased shipments resulting from the Lukens acquisition and increased
shipments at Burns Harbor, Sparrows Point and PST. As a result of the work
stoppages at General Motors' plants, our shipments during the second quarter
were curtailed to most GM plants but continued at a normal rate to GM's Saturn
Division.
Liquidity and Capital Structure
At June 30, 1998, total liquidity, comprising cash, cash equivalents
and funds available under our bank credit arrangements, totaled $602 million
compared with $612 million at December 31, 1997, and $551 million at June 30,
1997. In June 1998, we amended our existing non-reducing credit arrangement
with 14 banks, extending the term to June 2003, and increasing the size by $75
million to $600 million. The amended arrangement consists of a $340 million
receivables purchase agreement and a $260 million inventory loan agreement.
Early in the third quarter, we completed the sale of our No. 1 Coke
Oven Battery at Burns Harbor to an affiliate of DTE Energy Services, Inc. We
sold the coke oven battery but will continue to operate the facility for the
new owner and purchase its output. The agreements allow us to strategically
monetize and redeploy assets. The gain on the sale of the battery will be
deferred and recognized over the life of the operating and purchase
agreements.
In May 1998, we borrowed $200 million under a short-term borrowing
arrangement to complete the acquisition of Lukens. We repaid this loan early
in the third quarter with proceeds from the sale of the No. 1 Coke Oven
Battery at Burns Harbor.
Cash provided from operations before pension activities for the first
six months of 1998 was $260 million, compared with $271 million for the first
six months of 1997. Principal uses of cash during the first six months of
1998 included about $330 million for the purchase of Lukens stock related to
the acquisition, capital expenditures, debt repayments and pension funding.
Capital expenditures were $114 million for the first six months of 1998,
compared with $116 million during the year-earlier period. Capital
expenditures
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<PAGE> 10
(excluding the acquisition of Lukens) are currently expected to be
about $325 million in 1998, compared with $228 million in 1997. We repaid $48
million of debt assumed in the Lukens acquisition during the second quarter of
1998 and expect to repay about $220 million of debt during the remainder of the
year. We contributed $45 million to our pension trust during the second
quarter of 1998 for total contributions of $50 million for the first six months
of this year. We plan to make additional contributions to our pension trust
during the second half of 1998 as appropriate.
We expect to maintain adequate liquidity throughout 1998 from cash
flow from operations, reductions in working capital, the sale of various
assets of Lukens, and available funds under our credit arrangements.
Lukens Inc.
The acquisition of Lukens Inc. was completed on May 29, 1998. We
acquired all of the outstanding stock of Lukens for an aggregate purchase
price of about $565 million which included cash and transaction costs of about
$380 million and the issuance of 15.1 million shares of Bethlehem Common Stock
valued at about $185 million.
As previously announced, we intend to sell Lukens' stainless and
distribution businesses. We have entered into agreements with Allegheny
Teledyne Incorporated under which Allegheny will purchase certain of the
assets used in the manufacture of stainless steel products; we will provide
Allegheny with conversion services to produce stainless steel slabs and coiled
plate; and Allegheny will supply stainless hot rolled bands to us for
finishing on the cold roll sheet facilities we acquired from Lukens until
those facilities are sold. We expect Allegheny to complete its due diligence,
transition planning and related details during the third quarter of 1998 and a
closing date will be set soon thereafter. We also expect to enter into an
agreement for the sale of the remaining Lukens' stainless and distribution
businesses during the third quarter and to complete these sales by the end of
the year. We are accounting for the stainless and distribution businesses as
discontinued operations and, therefore, income and losses from those
businesses are not included in our operating results.
Dividends
The Board of Directors declared dividends of $1.25 per share
on Bethlehem's $5.00 Cumulative Convertible Preferred Stock, $0.625 per share
on Bethlehem's $2.50 Cumulative Convertible Preferred Stock and $0.875 per
share on Bethlehem's $3.50 Cumulative Convertible Preferred Stock, each
payable September 10, 1998, to holders of record on August 10, 1998. No
dividend was declared on Bethlehem's Common Stock.
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<PAGE> 11
Recently Issued Accounting Standard
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133 "Accounting for Derivative Instruments and Hedging
Activities." We must adopt the statement by January 1, 2000, but would
be permitted to do so earlier. We have not yet determined when we will
adopt the statement.
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 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. Adoption of
Statement No. 133 would require us to recognize all derivative instruments as
either assets or liabilities on the balance sheet and measure those instruments
at fair value. Gains or losses on these contracts, to the extent they have
been effective as hedges, would continue to be recognized in income as they are
now.
Adoption of Statement No. 133 is not expected to have a material
impact on our operating results or financial position.
Outlook
While we believe the domestic economy will continue to grow but at a
slower rate, we are very concerned about the consequences of the financial and
other developments in Asia. Competition will continue to be intense as new
steel capacity enters the marketplace and unfairly traded imports increase. We
are reviewing the continued high levels of unfairly traded imports, and we have
appropriate remedies under active consideration. We were pleased to hear that
an agreement was reached to end the GM work stoppages. If they had continued,
our operations mainly at our Burns Harbor Division would have been adversely
affected.
We will be concentrating our future efforts in four areas: (1)
further improving the competitiveness of our core businesses, (2) implementing
the new Bethlehem Lukens Plate Division and other actions related to the
Lukens acquisition, (3) taking further actions to profitably grow Bethlehem
and (4) strengthening our overall financial condition.
Forward-looking Statements
This release contains forward-looking statements with respect to
shipments, production levels, asset sales, costs and prices. Our use of the
words "expect", "believe",
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<PAGE> 12
PART II. OTHER INFORMATION
"intend", "plan" and similar words are intended to identify these statements as
forward-looking. These forward-looking statements can be affected by import
levels, domestic production capacity and our ability to successfully complete
certain asset sales. In accordance with the provisions of the Private
Securities Litigation Reform Act of 1995, reference is made to "Item 1 -
Business - Forward-Looking Statements" of Bethlehem's 1997 Annual Report on
Form 10-K and to "Cautionary Statement" of Bethlehem's Registration Statement
on Form S-4 filed with the Securities and Exchange Commission on April 24, 1998
for other important factors that could cause actual results to differ
materially from those projected.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Bethlehem, in the ordinary course of its business, is the subject of
various pending or threatened legal actions involving governmental agencies or
private interests. Bethlehem believes that any ultimate liability arising
from these actions should not have a material adverse effect on its
consolidated financial position at June 30, 1998.
The following proceeding, previously reported by Lukens, Inc.
("Lukens"), had developments during the second quarter of 1998:
On December 23, 1997, a purported stockholder of Lukens, Carrie Anne
Polonetsky, filed a purported class action (the "Polonetsky Action") in the
Court of Chancery of the State of Delaware (the "Court of Chancery") against
Lukens and the Lukens Board alleging, among other things, that the Lukens Board
had breached its fiduciary duties by failing to obtain the highest value
reasonably available in a sale of Lukens. Two other purported stockholders of
Lukens, Wretha Evelyn Walker and Michael Abramsky, filed purported class
actions (collectively with the Polonetsky Action, the "Delaware Actions") in
the Court of Chancery on December 29, 1997 and January 6, 1998, respectively,
making substantially similar allegations. The Delaware Actions have been
consolidated by order of the Court of Chancery dated March 11, 1998. On March
27, 1998, the plaintiffs in the Delaware Actions filed a consolidated complaint
against Lukens and the Lukens Board alleging, among other things, that the
Lukens Board had breached its fiduciary duties by failing to obtain the highest
value reasonably available in a sale of Lukens. On April 13, 1998, Lukens and
the Lukens Board filed a motion to dismiss the complaint. On May 27, 1998, the
plaintiffs in the Delaware Actions filed an amended complaint against Lukens,
the Lukens Board and Bethlehem, adding, among other things, allegations that
Bethlehem had caused the Lukens Board to breach its fiduciary duties. Motions
to dismiss the amended complaint were filed by Lukens and the Lukens Board on
June 8, 1998 and by Bethlehem on June 29, 1998. Bethlehem believes it has
meritorious defenses and will vigorously defend the Delaware Actions.
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<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
The following is an index of the exhibits included in this Report on
Form 10-Q:
4(a). Rights Agreement, dated as of July 29, 1998, between
Bethlehem Steel Corporation and First Chicago Trust
Company of New York, which includes as Exhibit A thereto, the
Form of Rights Certificate (Incorporated by reference from
Bethlehem's Current Report on Form 8-K filed August 5,
1998).
11. Statement Regarding Computation of Earnings Per Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
On June 9, 1998, Bethlehem filed a report on Form 8-K with the
Securities and Exchange Commission ("SEC") regarding the completion
of its acquisition of Lukens Inc. In addition, on August 5, 1998,
Bethlehem filed a report on Form 8-K with the SEC regarding the
approval of its Rights Agreement, dated July 29, 1998.
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<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Bethlehem Steel Corporation has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Bethlehem Steel Corporation
(Registrant)
by:
/s/ L. A. Arnett
-------------------------------
L. A. Arnett
Vice President and Controller
(principal accounting officer)
Date: August 14, 1998
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<PAGE> 15
EXHIBIT INDEX
The following is an index of the exhibits included in this Report:
Item
No. Exhibit
- ---- -------
4(a). Rights Agreement, dated as of July 29, 1998, between
Bethlehem Steel Corporation and First Chicago Trust
Company of New York, which includes as Exhibit A thereto, the
Form of Rights Certificate (Incorporated by reference from
Bethlehem's Current Report on Form 8-K filed August 5,
1998).
11 Statement Regarding Computation of Earnings
Per Share
27 Financial Data Schedule
<PAGE> 16
EXHIBIT (11)
Bethlehem Steel Corporation
Statement Regarding Computation of Earnings Per Share
(dollars in millions and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------- -----------------
1998 1997 Basic Earnings Per Share 1998 1997
---- ---- ------------------------ ---- ----
<S> <C> <C> <C> <C>
$37.6 $160.0 Net Income $106.2 $198.4
Less Dividend Requirements:
(2.5) (2.5) $2.50 Preferred Dividend (5.0) (5.0)
(3.1) (3.1) $5.00 Preferred Dividend (6.3) (6.3)
(4.5) (4.5) $3.50 Preferred Dividend (9.0) (9.0)
(0.4) (0.3) 5% Preference Dividend (0.9) (0.6)
- -------- -------- -------- --------
Total Preferred and Preference
(10.5) (10.4) Dividends (21.1) (20.9)
- -------- -------- -------- --------
$27.1 $149.6 Net Income Applicable to Common Stock $85.1 $177.5
======== ======== ======== ========
118,768 112,237 Average Shares of Common Stock 115,957 112,080
$0.23 $1.33 Basic Earnings Per Share $0.73 $1.58
======== ======== ======== ========
Diluted Earnings Per Share
--------------------------
$37.6 $160.0 Net Income $106.2 $198.4
Less Dividend Requirements:
(2.5) - $2.50 Preferred Dividend (5.0) -
(3.1) - $5.00 Preferred Dividend (6.3) -
(4.5) - $3.50 Preferred Dividend (9.0) -
(0.4) - 5% Preference Dividend - -
- -------- -------- -------- --------
$27.1 $160.0 Net Income Applicable to Common Stock $86.0 $198.4
======== ======== ======== ========
Average Shares of Common Stock and
Other Potentially Dilutive Securities Outstanding:
118,768 112,237 Common Stock 115,957 112,080
1,432 - Stock Options 784 -
* 3,361 $2.50 Preferred Stock * 3,361
* 4,425 $5.00 Preferred Stock * 4,425
* 12,255 $3.50 Preferred Stock * 12,255
* 2,545 5% Preference Stock 2,366 2,545
- -------- -------- -------- --------
120,200 134,823 Total 119,107 134,666
======== ======== ======== ========
$0.23 $1.19 Diluted Earnings Per Share $0.72 $1.47
======== ======== ======== ========
</TABLE>
* Antidilutive
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 160
<SECURITIES> 0
<RECEIVABLES> 396
<ALLOWANCES> 21
<INVENTORY> 995
<CURRENT-ASSETS> 12
<PP&E> 6695
<DEPRECIATION> 4099
<TOTAL-ASSETS> 5825
<CURRENT-LIABILITIES> 1249
<BONDS> 648
0
14
<COMMON> 131
<OTHER-SE> 1342
<TOTAL-LIABILITY-AND-EQUITY> 5825
<SALES> 2322
<TOTAL-REVENUES> 2322
<CGS> 1966
<TOTAL-COSTS> 2178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> 127
<INCOME-TAX> 21
<INCOME-CONTINUING> 106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.72
</TABLE>
