-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WDzsK6i58SK+eRodGgUHVpNG54dj1oHhwdQ6E8GoBPClfq9P0KjR8Iu0epYQMe9H Qi+XCzsDyXGqd5lKozdxpQ== /in/edgar/work/0000011860-00-000038/0000011860-00-000038.txt : 20001026 0000011860-00-000038.hdr.sgml : 20001026 ACCESSION NUMBER: 0000011860-00-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BETHLEHEM STEEL CORP /DE/ CENTRAL INDEX KEY: 0000011860 STANDARD INDUSTRIAL CLASSIFICATION: [3312 ] IRS NUMBER: 240526133 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01941 FILM NUMBER: 745516 BUSINESS ADDRESS: STREET 1: 1170 EIGHTH AVE CITY: BETHLEHEM STATE: PA ZIP: 18016-7699 BUSINESS PHONE: 6106942424 MAIL ADDRESS: STREET 1: 1170 EIGHTH AVE CITY: BETHLEHEM STATE: PA ZIP: 18016-7699 10-Q 1 0001.txt THIRD QUARTER 2000 10-Q 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 September 30, 2000 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 October 20, 2000: 132,470,653 ----------- 2 BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX Page No. -------- PART I. Financial Information Consolidated Statements of Income- Three Months and Nine Months Ended September 30, 2000 and 1999 (unaudited) . . . . . . . . . . . . . . . . . . . 2 Consolidated Balance Sheets- September 30, 2000 (unaudited), December 31, 1999 and September 30, 1999 (unaudited). . . . . . . . . . . . . 3 Consolidated Statements of Cash Flows- Nine Months Ended September 30, 2000 and 1999 (unaudited). . . . . . . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements (unaudited) . . . . 5 Management's Discussion and Analysis of Results of Operations and Financial Condition. . . . . . . . . . . . . 6 PART II. Other Information Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 9 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 1 - 3 Bethlehem Steel Corporation CONSOLIDATED STATEMENTS OF INCOME (dollars and shares in millions, except per share data) (unaudited)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------ ----------------------- 2000 1999 2000 1999 ---- ---- ---- ---- $ 960.6 $ 958.3 Net Sales $ 3,126.7 $ 2,902.6 ---------- ---------- ---------- ---------- Costs and Expenses: 895.6 963.5 Cost of sales 2,821.1 2,769.2 61.4 62.9 Depreciation 199.9 187.6 27.5 30.5 Selling, administration and general expense 85.5 89.9 - - Unusual gains (Note 4) (26.9) - ---------- ---------- ---------- ---------- 984.5 1,056.9 Total Costs and Expenses 3,079.6 3,046.7 ---------- ---------- ---------- ---------- (23.9) (98.6) Income (Loss) from Operations 47.1 (144.1) Financing Income (Expense): (19.5) (12.0) Interest and other financing costs (51.9) (38.0) 1.3 1.8 Interest and other income 4.6 6.0 ---------- ---------- ---------- ---------- (42.1) (108.8) Loss before Income Taxes (0.2) (176.1) 7.3 19.0 Benefit from Income Taxes - 31.0 ---------- ---------- ---------- ---------- (34.8) (89.8) Net Loss (0.2) (145.1) 10.2 10.3 Dividends on Preferred and Preference Stock 30.6 30.9 ---------- ---------- ---------- ---------- $ (45.0) $ (100.1) Loss Applicable to Common Stock $ (30.8) $ (176.0) ========== ========== ========== ========== Net Loss per Common Share: $ (0.34) $ (0.77) Basic and Diluted $ (0.23) $ (1.35) Average Shares Outstanding: 132.1 130.4 Basic and Diluted 131.6 130.0 Additional Data 2,046 2,100 Steel products shipped (thousands of net tons) 6,669 6,220 2,470 1,951 Raw steel produced (thousands of net tons) 7,702 6,752
The accompanying Notes are an integral part of the Consolidated Financial Statements. - 2 - 4 Bethlehem Steel Corporation CONSOLIDATED BALANCE SHEETS (dollars in millions)
ASSETS September 30 December 31 September 30 2000 1999 1999 (unaudited) (unaudited) ============ =========== ============ Current Assets: Cash and cash equivalents $ 111.8 $ 99.4 $ 103.0 Receivables, less allowances 198.3 235.0 304.8 Inventories: Raw materials 290.4 292.3 303.9 Finished and semifinished 581.2 572.5 581.7 ---------- ---------- ---------- 871.6 864.8 885.6 Other current assets 8.1 10.2 7.3 ---------- ---------- ---------- Total Current Assets 1,189.8 1,209.4 1,300.7 Investments and Miscellaneous Assets 132.8 123.1 117.8 Property, Plant and Equipment, less accumulated depreciation of $4,408.2, $4,263.6, and $4,260.2 2,850.1 2,899.7 2,884.7 Deferred Income Tax Asset - net 961.0 960.0 951.0 Net Assets of Discontinued Stainless Operations (Note 3) - 3.0 20.0 Goodwill, less accumulated amortization of $28.0, $19.0, and $16.0 332.0 341.0 344.0 ---------- ---------- ---------- Total Assets $ 5,465.7 $ 5,536.2 $ 5,618.2 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 396.6 $ 427.6 $ 430.4 Accrued employment costs 294.7 292.2 277.0 Accrued taxes 60.4 56.4 56.4 Debt and capital lease obligations 59.8 110.0 144.7 Other current liabilities 138.7 147.2 147.9 ---------- ---------- ---------- Total Current Liabilities 950.2 1,033.4 1,056.4 Pension Liability 426.7 410.0 409.0 Postretirement Benefits Other Than Pensions 1,710.6 1,645.0 1,658.6 Long-term Debt and Capital Lease Obligations 734.1 754.1 724.4 Deferred Gain on Sales 103.5 117.4 122.0 Other Long-term Liabilities 288.2 299.2 325.1 Stockholders' Equity: Preferred Stock 11.6 11.6 11.6 Preference Stock 2.1 2.0 2.2 Common Stock 134.6 133.6 133.2 Common Stock held in treasury at cost (60.8) (60.6) (60.6) Additional paid-in capital 1,936.1 1,961.5 1,969.2 Accumulated deficit (771.2) (771.0) (732.9) ---------- ---------- ---------- Total Stockholders' Equity 1,252.4 1,277.1 1,322.7 ---------- ---------- ---------- Total Liabilities and Stockholders' Equity $ 5,465.7 $ 5,536.2 $ 5,618.2 ========== ========== ==========
The accompanying Notes are an integral part of the Consolidated Financial Statements. - 3 - 5 Bethlehem Steel Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions) (unaudited)
Nine Months Ended September 30 --------------------- 2000 1999 ---- ---- Operating Activities: Net loss $ (0.2) $ (145.1) Adjustments for items not affecting cash from operating activities: Depreciation and amortization 199.9 187.6 Unusual gains (Note 4) (26.9) - Deferred income taxes (1.0) (31.0) Other - net (6.0) 1.1 Working capital (excluding financing and investing activities): Receivables - operating 35.0 (65.3) Receivables - sold - 70.0 Inventories (6.8) 154.9 Accounts payable (31.0) 13.5 Employment costs and other 7.7 (24.5) --------- --------- Cash Provided from Operations Before Funding Postretirement Benefits 170.7 161.2 Funding Postretirement Benefits: Pension funding less (more) than expense 16.7 (6.0) Retiree healthcare and life insurance benefit payments less than expense 65.6 18.6 --------- --------- Cash Provided from Continuing Operating Activities 253.0 173.8 --------- --------- Cash Provided from Operating Activities of Discontinued Stainless Operations (Note 3) - 10.3 --------- --------- Investing Activities: Capital expenditures (158.2) (446.9) Payments related to the purchase of Lukens (Note 3) - (6.6) Cash proceeds from sales of businesses and assets 94.7 93.8 --------- --------- Cash Used for Investing Activities (63.5) (359.7) --------- --------- Financing Activities: Borrowings 92.3 237.4 Debt and capital lease payments (217.9) (44.4) Cash dividends paid (30.3) (30.3) Other payments (21.2) (21.9) --------- --------- Cash Provided From (Used for) Financing Activities (177.1) 140.8 --------- --------- Net Increase (Decrease) in Cash and Cash Equivalents 12.4 (34.8) Cash and Cash Equivalents - Beginning of Period 99.4 137.8 --------- --------- - End of Period $ 111.8 $ 103.0 ========= ========= Supplemental Cash Payment Information: Interest, net of amount capitalized $ 40.1 $ 41.9 Income taxes paid (received) $ 1.5 $ (0.2) Capital lease obligations incurred $ 55.3 $ 4.7
The accompanying Notes are an integral part of the Consolidated Financial Statements. - 4 - 6 Bethlehem Steel Corporation NOTES TO FINANCIAL STATEMENTS (unaudited) 1. The Consolidated Financial Statements as of and for the three month and nine month periods ended September 30, 2000 and 1999 were not audited. However, in Management's opinion, the information reflects all adjustments necessary for a fair statement of the results for the periods presented. Management believes all adjustments were of a normal and recurring nature. 2. These Consolidated Financial Statements should be read together with the 1999 audited financial statements 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. Transaction related costs of $6.6 million were paid during the first half of 1999. The stainless and distribution businesses acquired in the Lukens purchase were accounted for as discontinued operations. Income or losses from these businesses were not included in Bethlehem's operating results. In the first quarter of 2000, Bethlehem completed the divestiture of these businesses. The net assets of these operations are shown separately on the balance sheet and consist primarily of property, plant and equipment and working capital. 4. During the second quarter of 2000, Bethlehem recognized unusual gains of $26.9 million ($22.2 million after-tax or $.17 per diluted share). Metropolitan Life Insurance Company converted from a mutual company owned by its policyowners to a stock company. As a policyholder, Bethlehem received $17.9 million in cash in relation to this conversion. We sold our equity interest in Presque Isle Corporation for $10.0 million and recognized a gain of $9.0 million. Presque Isle operates a limestone quarry in Michigan. Bethlehem will continue to purchase limestone from Presque Isle at market prices. 5. On September 29, 2000, Bethlehem secured a $50 million term loan to refinance the construction loan for equipment at the new cold mill facility at Sparrows Point. The loan requires quarterly principal payments beginning December 31, 2000, with a final principal payment on April 30, 2003. It has a variable interest rate and is secured by the equipment. Also on September 29, 2000, Bethlehem executed a $50 million sale-leaseback transaction for the new wide continuous slab casting equipment at Sparrows Point and entered into a seven year capital lease. 6. Third quarter of 2000 operations include a $10 million pre-tax charge, ($8.3 million after-tax) for estimated losses resulting from a fire that occurred on September 30, 2000 at the Coatesville, Pennsylvania operation. - 5 - 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION REVIEW OF RESULTS: Third Quarter and First Nine Months 2000 Third Quarter and First Nine Months 1999 We reported a net loss for the third quarter of 2000 of $35 million ($.34 per diluted common share) on sales of $961 million. Included in the third quarter results was a pre-tax charge of $10 million, or $8 million after tax ($.06 per diluted common share), for fire expense that was incurred in connection with a fire that destroyed a building and certain equipment at our Coatesville operation located in Pennsylvania. Excluding this charge, our net loss for the quarter was $27 million, which is a loss of $.28 per diluted common share. This compares with a net loss of $90 million ($.77 per diluted common share) on sales of $958 million for the third quarter of 1999. For the first nine months of 2000, our net loss was $0.2 million ($.23 per diluted common share) compared with a net loss of $145 million ($1.35 per diluted common share) in 1999. Included in this year's results were unusual gains of $27 million, or $22 million after tax. Excluding these unusual gains, the net loss for the first nine months was $22 million ($.40 per diluted common share). The unusual gains resulted from Metropolitan Life Insurance Company's conversion from a mutual company owned by its policyholders to a publicly held company and from the sale of our equity interest in Presque Isle, a producer of limestone. Sales for the first nine months of 2000 were $3.1 billion compared with $2.9 billion for the first nine months of 1999. Operating Results Our loss from operations was $24 million for the third quarter of 2000. Excluding the fire expense discussed above, our loss from operations was $14 million compared with a loss of $99 million for the third quarter of 1999. The improvement in operating results is principally from lower costs. Third quarter 1999 results included about $50 million in costs in connection with a reline of the "L" Blast Furnace and certain other planned modernization and maintenance outages at Sparrows Point. Income from operations for the first nine months of 2000 was $47 million. Excluding the unusual gains discussed above, income from operations was $20 million compared with a loss of $144 million for the first nine months of 1999. This improvement resulted primarily from lower costs and higher shipments. Costs were lower, despite the estimated loss in connection with the fire at our Coatesville facility, because of cost reduction initiatives that have been underway throughout the company and the absence of $70 million in costs incurred in 1999 related to the "L" Blast Furnace reline and modernization at Sparrows Point. - 6 - 8 The $24 million loss from operations for the third quarter of 2000 compares with income from operations, excluding unusual gains, of $25 million for the second quarter of 2000. The decrease was mainly attributable to lower shipments and the $10 million charge for fire expense recorded in the third quarter. Liquidity and Capital Structure At September 30, 2000, our total liquidity, comprising cash, cash equivalents, and funds available under our bank credit arrangements, totaled $387 million compared with $334 million at December 31, 1999. For the first nine months of 2000, cash provided from operating activities was $253 million compared with $174 million in 1999. In the third quarter of 2000, we completed a $50 million term loan and executed a $50 million sale-leaseback transaction. The proceeds from these transactions were used to repay existing short-term borrowings. In addition to these and other financings, major sources of funds for the year include cash provided from operating activities and asset sales. Major uses of funds for the year include capital expenditures of about $250 million, debt repayments, and preferred dividends. We expect to maintain an adequate level of liquidity during the balance of the year primarily from cash provided by operating activities and available funds under our bank and other financing arrangements. International Steel Trade Market conditions continue to be very competitive due to an oversupply situation caused to a large extent by high levels of steel imports. Unfairly traded steel imports into the domestic marketplace are back once again to nearly the record levels experienced during the import crisis of 1998. We, along with many other domestic steel producers and the United Steelworkers, are continuing our efforts to combat this very serious problem. Strategic Initiatives Given the difficult steel market conditions, we are pursuing additional cost reductions and improvements in our product mix. Our recently completed continuous cold mill complex at Sparrows Point is progressing toward full production. This new cold mill complex will make our Sparrows Point Division a key player in the most demanding markets for cold rolled and coated products at significantly lower cost. In addition, our company-wide force reductions, and many other cost competitiveness initiatives that are underway, should help us achieve a significant net cost reduction this year compared to last year, despite much higher energy costs and health care expenses. With respect to improvements in our product mix, construction of the coating line joint venture involving our Burns Harbor Division and LTV has been completed and the line is now in the start-up phase. We also broke ground for the BethNova Tube joint venture with - 7 - 9 Novamerican Steel that will provide automakers and their suppliers with a premium source of tubing for hydroforming applications. Dividends On October 25, 2000, 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 December 10, 2000, to holders of record on November 10, 2000. No dividend was declared on Bethlehem's Common Stock. Outlook Steel consumption in the second half of 2000 is expected to decline from first half levels. Higher interest rates are beginning to slow demand somewhat in key markets for steel. Steel imports into the domestic marketplace remain a serious concern and customer inventory levels, especially service center inventories, continue to be at relatively high levels. Competition remains intense due to this excess supply, which is continuing to place downward pressure on steel prices, and we expect our losses for the fourth quarter to widen from the third. We are continuing to implement our strategy of concentrating on steel and rebuilding our financial strength, and we are taking all necessary actions to reduce costs and improve our overall competitiveness. Forward-looking Statements This release contains forward-looking statements. Our use of the words "expect", "believe", "intent", "should", "plan", and similar words are intended to identify these statements as forward-looking. 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 1999 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 important factors that could cause actual results to differ materially from those projected. - 8 - 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings. Bethlehem, in the ordinary course of its business, is the subject of various pending or threatened legal actions involving governmental agencies or private interests. Bethlehem believes that any ultimate liability arising from these actions should not have a material adverse effect on its consolidated financial position at September 30, 2000. The following matters consist of a previously reported proceeding that had developments during the third quarter, and a new proceeding that was initiated during the third quarter of 2000: On December 3, 1997, the Indiana Department of Environmental Management ("IDEM") issued a notice alleging violations of Indiana Air Pollution Control Regulations and operating permit conditions by Bethlehem at the Burns Harbor Division. The alleged violations involve visible emissions from the basic oxygen furnace ("BOF") roof monitor and iron beaching pits and failure to install baghouses at various emission points. Bethlehem and IDEM have entered into an Agreed Order effective October 1, 2000, under which Bethlehem will pay a civil penalty of $379,500 in four equal installments of $94,875 each within 30, 120, 210 and 300 days of that effective date. Pursuant to the Agreed Order, Bethlehem also will conduct a self-monitoring program of visible emissions from the BOF roof monitor. The Agreed Order is scheduled to terminate on October 1, 2002. The Agreed Order and compliance with its terms constitute full resolution of this matter. On August 10, 2000, the New York State Department of Environmental Conservation ("NYDEC") issued a notice alleging violations of a consent order and New York State Air Pollution Control Regulations by Bethlehem at the Lackawanna Coke Division. The alleged violations involve emissions from Coke Oven Battery No. 7 exceeding opacity requirements and failing to install and continuously operate a certified emissions monitor on the waste heat stack for Coke Oven Battery No. 8. Settlement discussions intended to lead to an agreed order resolving the matter are being held between Bethlehem and NYDEC. If settlement discussions are unsuccessful, Bethlehem believes it has meritorious defenses and will vigorously defend the action. - 9 - 11 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. The following is an index of the exhibits included in this Report on Form 10-Q: 11. Statement Regarding Computation of Earnings Per Share. 27. Financial Data Schedule. (b) Reports on Form 8-K. Bethlehem did not file any reports on Form 8-K with the Securities and Exchange Commission during the third quarter of 2000. - 10 - 12 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: October 25, 2000 - 11 - 13 EXHIBIT INDEX The following is an index of the exhibits included in this Report: Item No. Exhibit - ---- ------- 11 Statement Regarding Computation of Earnings Per Share 27 Financial Data Schedule 14 EXHIBIT (11) Bethlehem Steel Corporation Statement Regarding Computation of Earnings Per Share (dollars in millions and shares in thousands, except per share data)
Three Months Nine Months Ended September 30 Ended September 30 - ------------------- ------------------ 2000 1999 Basic Loss Per Share 2000 1999 ---- ---- -------------------- ---- ---- ($34.8) ($89.8) Net Loss ($0.2) ($145.1) Less Dividend Requirements: (2.5) (2.5) $2.50 Preferred Dividend (7.5) (7.5) (3.1) (3.1) $5.00 Preferred Dividend (9.4) (9.4) (4.5) (4.5) $3.50 Preferred Dividend (13.4) (13.4) (0.1) (0.2) 5% Preference Dividend (0.3) (0.6) - -------- -------- -------- -------- (10.2) (10.3) Total Preferred and Preference Dividends (30.6) (30.9) - -------- -------- -------- -------- ($45.0) ($100.1) Net Loss Applicable to Common Stock ($30.8) ($176.0) ======== ======== ======== ======== 132,055 130,404 Average Shares of Common Stock 131,637 130,009 ($0.34) ($0.77) Basic Loss Per Share ($0.23) ($1.35) ======== ======== ======== ======== Diluted Loss Per Share ---------------------- ($34.8) ($89.8) Net Loss ($0.2) ($145.1) Less Dividend Requirements: (2.5) (2.5) $2.50 Preferred Dividend (7.5) (7.5) (3.1) (3.1) $5.00 Preferred Dividend (9.4) (9.4) (4.5) (4.5) $3.50 Preferred Dividend (13.4) (13.4) (0.1) (0.2) 5% Preference Dividend (0.3) (0.6) - -------- -------- -------- -------- ($45.0) ($100.1) Net Loss Applicable to Common Stock ($30.8) ($176.0) ======== ======== ======== ======== Average Shares of Common Stock and Other Potentially Dilutive Securities Outstanding: 132,055 130,404 Common Stock 131,637 130,009 - - Stock Options - - * * $2.50 Preferred Stock * * * * $5.00 Preferred Stock * * * * $3.50 Preferred Stock * * * * 5% Preference Stock * * - -------- -------- -------- -------- 132,055 130,404 Total 131,637 130,009 ======== ======== ======== ======== ($0.34) ($0.77) Diluted Loss Per Share ($0.23) ($1.35) ======== ======== ======== ========
* Antidilutive 15 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 1000000 9-MOS DEC-31-2000 SEP-30-2000 112 0 219 21 872 1190 7258 4408 5466 950 734 0 14 134 1104 5466 3127 3127 2821 3080 0 0 52 0 0 0 0 0 0 0 (0.23) (0.23)
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