-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, a+52T05Y0HUn1BA1E5MswbQ+oUpuNXhVDRPLKTqwkVrpDNJ/fOUJ6gKw2YNFpbxa YaOQW8K4h57qCetw3Bh57w== 0000011860-95-000004.txt : 19950512 0000011860-95-000004.hdr.sgml : 19950512 ACCESSION NUMBER: 0000011860-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BETHLEHEM STEEL CORP /DE/ CENTRAL INDEX KEY: 0000011860 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 240526133 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01941 FILM NUMBER: 95536625 BUSINESS ADDRESS: STREET 1: 1170 EIGHTH AVE CITY: BETHLEHEM STATE: PA ZIP: 18016 BUSINESS PHONE: 2156942424 10-Q 1 FIRST QUARTER 1995 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 March 31, 1995 Commission file number 1-1941 BETHLEHEM STEEL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 24-0526133 (State of incorporation) (I.R.S. Employer Identification No.) 1170 Eighth Avenue BETHLEHEM, PENNSYLVANIA 18016-7699 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 694-2424 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of Shares of Common Stock Outstanding as of May 5, 1995: 110,156,711 2 BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX Page No. PART I. Financial Information Consolidated Statements of Income- Three Months Ended March 31, 1995 and 1994 (unaudited). . . . . . . . . . . . . . . 2 Consolidated Balance Sheets- March 31, 1995 (unaudited), December 31, 1994 and March 31, 1994 (unaudited). . . . . . . . . . 3 Consolidated Statements of Cash Flows- Three Months Ended March 31, 1995 and 1994 (unaudited). . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements . . . . . 5 Management's Discussion and Analysis of Results of Operations and Financial Condition. . . . . . . . 6 PART II. Other Information Item 1. Legal Proceedings. . . . . . . . . . . . 9 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K . . . . 11 Signatures . . . . . . . . . . . . . . . . . . . . . 12 3 Bethlehem Steel Corporation CONSOLIDATED STATEMENTS OF INCOME (dollars and shares in millions, except per share data) (unaudited) Three Months Ended March 31 1995 1994 Net Sales $1,240.7 $1,131.2 Costs and Expenses: Cost of sales 1,068.9 1,005.2 Depreciation 71.0 65.5 Selling, administration and general expense 26.6 34.4 Total Costs and Expenses 1,166.5 1,105.1 Income from Operations 74.2 26.1 Financing Income (Expense): Interest and other financing costs (13.2) (13.6) Interest income 2.5 1.9 Income before Income Taxes 63.5 14.4 Provision for Income Taxes (11.0) (1.5) Net Income 52.5 12.9 Dividends on Preferred and Preference Stock 10.6 10.8 Net Income Applicable to Common Stock $ 41.9 $ 2.1 Net Income per Common Share $ 0.38 $ 0.02 Average Primary Shares Outstanding 110.0 95.1 The accompanying Notes are an integral part of the Consolidated Financial Statements. - 2 - 4 Bethlehem Steel Corporation CONSOLIDATED BALANCE SHEETS (dollars in millions) ASSETS March 31 December 31 March 31 1995 1994 1994 (unaudited) (unaudited) Current Assets: Cash and cash equivalents $ 125.0 $ 159.5 $ 206.3 Receivables, less allowances 504.3 519.5 471.0 Inventories: Raw materials 321.2 331.9 309.9 Finished and semifinished 573.6 534.9 542.1 Contract work-in-progress, less billings 17.4 16.1 22.2 912.2 882.9 874.2 Other current assets 11.2 7.2 6.9 Total Current Assets 1,552.7 1,569.1 1,558.4 Investments and Miscellaneous Assets 119.7 124.2 118.3 Property, Plant and Equipment, less accumulated depreciation of $4,190.4, $4,167.9 and $4,087.2 2,739.6 2,759.3 2,631.0 Deferred Income Tax Asset - net 892.7 903.2 926.2 Intangible Asset - Pensions 412.0 426.6 583.9 Total Assets $ 5,716.7 $ 5,782.4 $ 5,817.8 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 418.6 $ 387.0 $ 405.1 Accrued employment costs 296.6 303.8 267.3 Accrued taxes 64.6 67.6 62.4 Debt and capital lease obligations 94.6 88.9 95.0 Other current liabilities 120.3 163.9 112.7 Total Current Liabilities 994.7 1,011.2 942.5 Pension Liability 1,085.0 1,117.1 1,253.9 Postretirement Benefits Other Than Pensions 1,435.6 1,441.4 1,451.5 Long-term Debt and Capital Lease Obligations 633.8 668.4 696.3 Other Long-term Liabilities 369.2 388.5 419.9 Stockholders' Equity: Preferred Stock 11.6 11.6 11.6 Preference Stock 2.6 2.6 2.7 Common Stock 112.0 111.9 110.9 Common Stock held in treasury at cost (59.4) (59.5) (59.5) Additional paid-in capital 1,938.5 1,948.6 1,915.1 Accumulated deficit (806.9) (859.4) (927.1) Total Stockholders' Equity 1,198.4 1,155.8 1,053.7 Total Liabilities and Stockholders' Equity $ 5,716.7 $ 5,782.4 $ 5,817.8 The accompanying Notes are an integral part of the Consolidated Financial Statements. - 3 - 5 Bethlehem Steel Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions) (unaudited) Three Months Ended March 31 1995 1994 Operating Activities: Net income $ 52.5 $ 12.9 Adjustments for items not affecting cash from operating activities: Depreciation 71.0 65.5 Deferred Income Taxes 10.5 0.5 Other - net (4.2) 2.9 Working capital (excluding financing and investing activities): Receivables 15.2 32.2 Inventories (29.3) (21.7) Accounts payable 30.1 44.8 Employment costs and other (52.3) (16.0) Other - net (12.1) 4.5 Cash Provided from Operating Activities 81.4 125.6 Investing Activities: Capital expenditures (60.5) (118.8) Cash proceeds from asset sales and other 4.5 5.6 Cash Used for Investing Activities (56.0) (113.2) Financing Activities: Pension expense 53.4 55.9 Pension funding (70.9) (406.0) Long-term debt and capital lease borrowings 1.9 6.5 Long-term debt and capital lease payments (30.4) (29.0) Common stock issued - 355.3 Cash dividends paid (10.1) (10.1) Other payments (3.8) (7.6) Cash Used for Financing Activities (59.9) (35.0) Net Decrease in Cash and Cash Equivalents (34.5) (22.6) Cash and Cash Equivalent- Beginning of Period 159.5 228.9 - End of Period $ 125.0 $ 206.3 Supplemental Cash Payment Information: Interest, net of amount capitalized $ 24.3 $ 18.7 Income taxes $ - $ 0.1 The accompanying Notes are an integral part of the Consolidated Financial Statements. - 4 - 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Segment Results (dollars in millions): (unaudited) 1995 1994 First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Net Sales: Basic Steel Operations $ 1,210.4 $ 1,203.0 $ 1,187.6 $ 1,189.9 $ 1,125.7 Steel Related Operations 36.5 29.7 51.3 45.3 10.1 Eliminations (6.2) (8.2) (5.7) (4.7) (4.6) Total $ 1,240.7 $ 1,224.5 $ 1,233.2 $ 1,230.5 $ 1,131.2 Operating Income (Loss): Basic Steel Operations $ 79.1 $ 51.5 $ 29.4 $ 49.3 $ 35.8 Steel Related Operations (4.9) (6.2) (8.8) (7.7) (9.7) Total $ 74.2 $ 45.3 $ 20.6 $ 41.6 $ 26.1 Shipments (thousands of net tons): Basic Steel Operations 2,273 2,294 2,321 2,346 2,290 Raw Steel Production (thousands of net tons): Basic Steel Operations 2,596 2,479 2,187 2,648 2,474 2. The Consolidated Financial Statements as of and for the three month periods ended March 31, 1995 and 1994 have not been audited. However, the information reflects all adjustments which, in the opinion of management, are necessary to present fairly the results shown for the periods indicated. Management believes all adjustments were of a normal recurring nature. 3. These Consolidated Financial Statements should be read together with the 1994 audited financial statements set forth in Bethlehem's Annual Report on Form 10-K filed with the Securities and Exchange Commission. - 5 - 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Review of Results: First Quarter 1995 - First Quarter 1994 Bethlehem reported net income of $53 million, or $.38 per common share, for the first quarter of 1995, a $40 million improvement from net income of $13 million, or $.02 per common share, for the first quarter of 1994. Net sales for the first quarter of 1995 increased 10% to $1.24 billion from $1.13 billion for the year earlier period. Segment Results The Basic Steel Operations segment reported income from operations in the first quarter of 1995 of $79 million, an improvement of $43 million from the prior year. Operating income was $35 per ton, compared to $16 last year. In the first quarter of 1995, demand continued to be strong and Bethlehem's shipments of 2.3 million tons were about the same as last year. Bethlehem realized improved prices for its flat-rolled products and its product mix improved, reflecting an increased percent of higher valued coated products. Bethlehem's operating costs per ton of shipment increased, reflecting the higher costs for raw materials, principally purchased slabs and alloys, profit sharing expenses and depreciation. Bethlehem has a number of actions under way that will reduce its future costs. For example, costs will decrease as Burns Harbor's coal injection facilities become fully operational. Burns Harbor is also proceeding with a relatively low cost investment in equipment that will significantly increase its steelmaking capability. This will bring production and shipment capability into better balance, and thereby reduce this Division's reliance on higher cost purchased slabs. There are a number of initiatives under way at Bethlehem's other operations that will significantly reduce future costs and improve competitiveness. Pennsylvania Steel Technologies, Inc.'s ("PST") newly modernized steelmaking facilities and in-line rail head-hardening equipment are moving up their start-up curve to higher levels of utilization. Additionally, later this year, Bethlehem Structural Products Corporation ("BSPC") will discontinue steelmaking and consolidate all of its production of light to medium wide-flange beams, sheet piling and special sections on the 44-inch mill, which is currently being modernized. This Division will then be supplied with continuously cast steel produced primarily from PST, which will further increase the utilization of assets at both these divisions and improve their overall efficiency. - 6 - 8 The Steel Related Operations segment reported a first quarter 1995 loss from operations of $5 million compared to a loss from operations of $10 million in the first quarter of 1994. The favorable change from the previous period reflects a modest improvement in the ship repair market. The BethForge Division is nearing the completion of its modernization program to improve its cost and quality competitiveness. Later this year, BethForge will discontinue operating its electric furnace steelmaking and ingot production facilities in Bethlehem. Lower cost, higher quality ingots will then be supplied from the newly modernized steelmaking and ingot production facilities at PST. Liquidity At March 31, 1995, total liquidity, comprising cash, cash equivalents and available borrowings under bank commitments, was $541 million compared to $566 million at December 31, 1994, and $500 million at March 31, 1994. Cash and cash equivalents were $125 million at March 31, 1995, compared to $160 million at December 31, 1994, and $206 million at March 31, 1994, and $416 million was available for borrowings under Bethlehem's revolving credit agreement. Bethlehem's accounts receivable and inventories are pledged as collateral under this credit agreement. Cash provided from operating activities in the first quarter of 1995 was $81 million compared to $126 million for the first quarter of 1994. Significant uses of cash during the first quarter of 1995 included pension funding of $71 million, capital expenditures and working capital, including a payment in connection with a legal settlement, which Bethlehem now has under appeal, involving previously owned coal assets. Major uses of funds in 1995 include an estimated $350 million of capital expenditures, repayment of approximately $90 million of debt and capital lease obligations and contributions to the pension fund. Bethlehem expects to maintain an adequate level of liquidity throughout 1995 from cash flow from operations, reductions in working capital and available borrowings under its revolving credit agreement. Labor The labor agreements at BSPC and BethForge include a "snapback" arrangement providing that if Bethlehem does not install a continuous caster at BSPC, employees represented by the United Steelworkers of America ("USWA") at those business units would then be covered by the 1993 labor agreement negotiated for the Burns Harbor and Sparrows Point Divisions. The revised modernization plan announced for BSPC does not provide for installation of a continuous caster and BSPC and BethForge have returned to coverage under the 1993 labor agreement. On March 31 of this year, Bethlehem and the USWA resolved a dispute relative to the participation by BSPC and BethForge employees represented by the USWA in the 1994 profit sharing amounts under the - 7 - 9 "snapback" arrangement. Bethlehem agreed to move the $.50 per hour wage increase originally scheduled for July 30, 1995 to April 2, 1995 for Burns Harbor employees and to May 7, 1995 for Sparrows Point employees. Beginning in 1995, BSPC and BethForge will not be included in the 1993 labor agreement profit sharing plan but will both have their own profit sharing plan. BSPC and BethForge, however, will be eligible for the March 1, 1996 special payment that is conditioned upon 1995 profitability. Bethlehem does not expect any material increase in its overall labor costs as a result of these developments. Dividends On April 26, 1995, the Board of Directors declared dividends of $1.25 per share on Bethlehem's $5.00 Cumulative Convertible Preferred Stock, $0.625 per share on Bethlehem's $2.50 Cumulative Convertible Preferred Stock and $0.875 per share on Bethlehem's $3.50 Cumulative Convertible Preferred Stock, each payable June 10, 1995 to holders of record on May 10, 1995. No dividend was declared on Bethlehem's Common Stock. On April 1, 1995, Bethlehem paid the annual dividend on its Series A and Series B Employee Stock Ownership Plan Convertible Preference Stock in additional shares of Series A and Series B Preference Stock having an aggregate stated value of approximately $4.4 million. Outlook Bethlehem continues to make steady progress toward achieving its objectives. It expects to operate at high levels with continued improvement in its performance during the balance of the year. Market conditions continue to be strong and Bethlehem is receiving higher value for its products. During the first quarter of this year, Bethlehem's customers reduced steel inventories and they advise Bethlehem that import offerings have declined. Customers in each of Bethlehem's major consuming industries are reporting good business conditions. Order entry during the first quarter was strong, export opportunities are increasing and Bethlehem continues to have a very good backlog of orders. Bethlehem's 1995 shipments should be slightly higher than last year and it expects another year of strong industry shipments. Bethlehem expects further reductions in customers' inventories during the second quarter as well as reduced levels of imports during the balance of the year. Bethlehem's prices should continue to improve and costs will decrease as its recently modernized facilities become fully operational. - 8 - 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings. Bethlehem, in the ordinary course of its business, is the subject of various pending or threatened legal actions involving governmental agencies or private interests. Bethlehem believes that any ultimate liability arising from these actions should not have a material adverse effect on its consolidated financial position at March 31, 1995. The following previously reported proceeding had developments during the first quarter of 1995: BethEnergy Mines Inc. (formerly Bethlehem Minerals Company), a subsidiary of Bethlehem, is a party to an action entitled Church and Mullins, et al v. Bethlehem Minerals Company, et al. The case involves a dispute concerning title to coal mined by Bethlehem under a parcel of land in eastern Kentucky. The trial court opinion, delivered February 25, 1987, held that the coal in question was owned by the Church and Mullins interests and awarded damages in the amount of $16.9 million. On appeal, on January 12, 1990, the Kentucky Court of Appeals reversed the trial court judgment in part and affirmed it in part, essentially upholding the trial court's finding on the issue of title but limiting the award of damages. The Court of Appeals decision was further appealed to the Supreme Court of Kentucky, and on June 4, 1992, the Supreme Court of Kentucky, by a vote of four to three, reinstated the decision of the trial court. On June 24, 1992, Bethlehem petitioned the Kentucky Supreme Court to reconsider its ruling. On December 23, 1994, the Court denied the Motion, upholding the original verdict, plus interest. Bethlehem has paid $37.6 million, representing the full amount of the judgment, including interest, into the trial court and has filed a petition for review by the U. S. Supreme Court. An adverse final resolution of the case will not have any other effect on Bethlehem's results of operations because Bethlehem sold its Kentucky coal operations in 1988. - 9 - 11 Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of the Stockholders of Bethlehem was held on April 25, 1995. The following nominees for director named in the Proxy Statement dated March 15, 1995 were elected at the Meeting by the votes indicated: For Withheld Curtis H. Barnette 89,880,619 2,608,278 Benjamin R. Civiletti 89,924,103 2,564,794 Worley H. Clark 89,950,971 2,537,926 John B. Curcio 89,810,936 2,677,961 Thomas L. Holton 89,927,856 2,561,041 Lewis B. Kaden 89,946,143 2,542,754 Harry P. Kamen 89,930,645 2,558,252 Winthrop Knowlton 89,945,532 2,543,365 Robert McClements, Jr. 89,941,385 2,547,512 Gary L. Millenbruch 89,939,106 2,549,791 Roger P. Penny 89,786,676 2,702,221 Dean P. Phypers 89,931,359 2,557,538 William A. Pogue 89,938,707 2,550,190 John F. Ruffle 89,952,724 2,536,173 The votes in favor of the election of the nominees represent at least 97.1% of the shares voted for each of the nominees. Stockholders approved the proposed amendment of Article Fourth of the Second Restated Certificate of Incorporation of Bethlehem to increase the number of authorized shares of Common Stock from 150,000,000 to 250,000,000 by the following vote: For Against Abstentions Number of Shares of Common Stock and ESOP Preference Stock Voting Together as a Class 81,216,801 6,910,168 4,361,928 Number of Shares of Common Stock Voting Separately as a Class 79,327,121 6,291,906 4,281,893 Ratification of the appointment of Independent Auditors was approved by the following vote: For Against Abstentions Number of Shares 91,554,002 411,471 523,424 There were no broker non-votes with respect to any of these matters voted upon at the Meeting. - 10 - 12 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. The following is an index of the exhibits included in this Report on Form 10-Q: 11. Statement regarding computation of per share earnings. 27. Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed by Bethlehem during the quarter ended March 31, 1995. - 11 - 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Bethlehem Steel Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Bethlehem Steel Corporation (Registrant) by /s/ L. A. Arnett ============================ L. A. Arnett Vice President and Controller (principal accounting officer) Date: May 11, 1995 - 12 - 15 EXHIBIT INDEX The following is an index of the exhibits included in this Report: Item No. Exhibit ==== ======= 11 Statement Regarding Computation of Per Share Earnings 27 Financial Data Schedule 16 EXHIBIT (11) Bethlehem Steel Corporation Statement Regarding Computation of Earnings Per Share (dollars in millions and shares in thousands, except per share data) Three Months Ended March 31 Primary Earnings Per Share 1995 1994 Net Income $52.5 $12.9 Less Dividend Requirements: $2.50 Preferred Dividend (2.5) (2.5) $5.00 Preferred Dividend (3.1) (3.1) $3.50 Preferred Dividend (4.5) (4.5) 5% Preference Dividend (0.5) (0.7) Total Preferred and Preference Dividends (10.6) (10.8) Net Income Applicable to Common Stock $41.9 $2.1 Average Shares of Common Stock and Equivalents Outstanding: Common Stock 109,978 94,760 Stock Options 36 346 Total 110,014 95,106 Primary Earnings Per Share $0.38 $0.02 Fully Diluted Earnings Per Share Net Income $52.5 $12.9 Less Dividend Requirements: $2.50 Preferred Dividend (2.5) (2.5) $5.00 Preferred Dividend (3.1) (3.1) $3.50 Preferred Dividend - (4.5) 5% Preference Dividend - (0.7) Net Income Applicable to Common Stock $46.9 $2.1 Average Shares of Common Stock and Equivalents and Other Potentially Dilutive Securities Outstanding: Common Stock 109,978 94,760 Stock Options 36 346 $2.50 Preferred Stock * * $5.00 Preferred Stock * * $3.50 Preferred Stock 12,255 * 5% Preference Stock 2,560 * Total 124,829 95,106 Fully Diluted Earnings Per Share $0.38 $0.02 * Antidilutive EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000,000 QTR-1 DEC-31-1995 MAR-31-1995 125 0 524 20 912 1553 6930 4190 5717 995 634 112 0 14 1072 5717 1241 1241 1069 1167 0 0 13 64 11 53 0 0 0 53 .38 .38
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