-----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, JTV7sF4vUtfa6ignwC85t3iuWMhZfwdHeOcjV9AsToVL4rYlqtXplGTw1pYvXEyh z9v6ccac06shCTWODAY6bw== 0000011860-95-000038.txt : 19951031 0000011860-95-000038.hdr.sgml : 19951031 ACCESSION NUMBER: 0000011860-95-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951030 SROS: CBOE SROS: CSX SROS: NYSE 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: 95585236 BUSINESS ADDRESS: STREET 1: 1170 EIGHTH AVE CITY: BETHLEHEM STATE: PA ZIP: 18016 BUSINESS PHONE: 2156942424 10-Q 1 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, 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 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 26, 1995: 112,583,820 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, 1995 and 1994 (unaudited). . . . . . . . . . . . . . . . . . 2 Consolidated Balance Sheets- September 30, 1995 (unaudited), December 31, 1994 and September 30, 1994 (unaudited). . . . . . . . . . . 3 Consolidated Statements of Cash Flows- Nine Months Ended September 30, 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 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 ------------------ ----------------- 1995 1994 1995 1994 ---- ---- ---- ---- $1,224.7 $ 1,233.2 Net Sales $3,715.6 $3,594.9 - --------- ----------- --------- --------- Costs and Expenses: 1,069.6 1,120.9 Cost of sales 3,200.1 3,214.0 70.1 61.2 Depreciation 213.2 193.8 Selling, administration 28.9 30.5 and general expense 84.7 98.8 - --------- ----------- --------- --------- 1,168.6 1,212.6 Total Costs and Expenses 3,498.0 3,506.6 - --------- ----------- --------- --------- 56.1 20.6 Income from Operations 217.6 88.3 Financing Income (Expense): (15.8) (11.0) Interest and other financing costs (45.6) (37.2) 1.6 1.7 Interest income 5.7 5.3 - --------- ----------- --------- --------- 41.9 11.3 Income before Income Taxes 177.7 56.4 (7.5) (1.0) Provision for Income Taxes (30.5) (7.2) - --------- ----------- --------- --------- 34.4 10.3 Net Income 147.2 49.2 Dividends on Preferred and 10.6 10.8 Preference Stock 31.9 32.4 - --------- ----------- --------- --------- Net Income (Loss) Applicable to $ 23.8 $ (0.5) Common Stock $ 115.3 $ 16.8 ========= =========== ========= ========= $ 0.22 $ - Net Income per Common Share $ 1.05 $ 0.16 110.5 109.7 Average Primary Shares Outstanding 110.2 104.7 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 1995 1994 1994 (unaudited) (unaudited) ------------ ----------- ------------ Current Assets: Cash and cash equivalents $ 102.4 $ 159.5 $ 119.2 Receivables, less allowances (Note 2) 523.3 519.5 496.2 Inventories: Raw materials 321.3 331.9 332.3 Finished and semifinished 568.4 534.9 528.2 Contract work-in-progress, less billings 21.1 16.1 14.3 ------------ ----------- ------------ 910.8 882.9 874.8 Other current assets 14.2 7.2 8.1 ------------ ----------- ------------ Total Current Assets 1,550.7 1,569.1 1,498.3 Investments and Miscellaneous Assets 121.0 124.2 140.3 Property, Plant and Equipment, less accumulated depreciation of $4,298.0, $4,167.9 and $4,147.2 2,732.0 2,759.3 2,727.7 Deferred Income Tax Asset - net 873.7 903.2 920.5 Intangible Asset - Pensions 391.3 426.6 559.9 ------------ ----------- ------------ Total Assets $ 5,668.7 $ 5,782.4 $ 5,846.7 ============ =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 388.8 $ 387.0 $ 388.3 Accrued employment costs 334.7 303.8 283.5 Accrued taxes 65.1 67.6 62.7 Debt and capital lease obligations 94.1 88.9 94.1 Other current liabilities 126.4 163.9 102.8 ------------ ----------- ------------ Total Current Liabilities 1,009.1 1,011.2 931.4 Pension Liability 1,020.9 1,117.1 1,279.0 Postretirement Benefits Other Than Pensions 1,422.9 1,441.4 1,454.0 Long-term Debt and Capital Lease Obligations 585.2 668.4 674.5 Other Long-term Liabilities 350.1 388.5 426.0 Stockholders' Equity: Preferred Stock 11.6 11.6 11.6 Preference Stock 2.6 2.6 2.7 Common Stock 112.5 111.9 111.7 Common Stock held in treasury at cost (59.4) (59.5) (59.5) Additional paid-in capital 1,925.4 1,948.6 1,905.9 Accumulated deficit (712.2) (859.4) (890.7) ------------ ----------- ------------ Total Stockholders' Equity 1,280.5 1,155.8 1,081.7 ------------ ----------- ------------ Total Liabilities and Stockholders' Equity $ 5,668.7 $ 5,782.4 $ 5,846.6 ============ =========== ============ 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 ------------------- 1995 1994 ---- ---- Operating Activities: Net income $ 147.2 $ 49.2 Adjustments for items not affecting cash from operating activities: Depreciation 213.2 193.8 Deferred Income Taxes 29.5 6.2 Other - net (4.4) 5.8 Working capital (excluding financing and investing activities): Receivables (3.8) 7.0 Inventories (27.4) (23.0) Accounts payable 1.8 28.7 Employment costs and other (8.9) 3.5 Other - net (38.5) (0.9) --------- --------- Cash Provided from Operating Activities 308.7 270.3 --------- --------- Investing Activities: Capital expenditures (204.9) (349.3) Cash proceeds from asset sales and other 13.9 18.5 --------- --------- Cash Used for Investing Activities (191.0) (330.8) --------- --------- Financing Activities: Pension expense 159.2 153.9 Pension funding (220.0) (455.0) Long-term debt and capital lease borrowings 3.1 24.5 Long-term debt and capital lease payments (79.7) (84.4) Common stock issued - 355.3 Cash dividends paid (30.3) (30.3) Other payments (7.1) (13.2) --------- --------- Cash Used for Financing Activities (174.8) (49.2) --------- --------- Net Decrease in Cash and Cash Equivalents (57.1) (109.7) Cash and Cash Equivalent- Beginning of Period 159.5 228.9 --------- --------- - End of Period $ 102.4 $ 119.2 ========= ========= Supplemental Cash Payment Information: Interest, net of amount capitalized $ 53.9 $ 32.1 Income taxes $ - $ 0.2 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 -------------------- -------------------------------- Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter ---------- ---------- ---------- ---------- --------- Net Sales: Basic Steel Operations $ 1,210.6 $ 1,225.4 $ 1,210.4 $ 1,203.0 $1,187.6 Steel Related Operations 23.8 29.4 36.5 29.7 51.3 Eliminations (9.7) (4.6) (6.2) (8.2) (5.7) ---------- ---------- ---------- ---------- --------- Total $ 1,224.7 $ 1,250.2 $ 1,240.7 $ 1,224.5 $1,233.2 ========== ========== ========== ========== ========= Operating Income (Loss): Basic Steel Operations $ 67.5 $ 97.6 $ 79.1 $ 51.5 $ 29.4 Steel Related Operations (11.4) (10.3) (4.9) (6.2) (8.8) ---------- ---------- ---------- ---------- --------- Total $ 56.1 $ 87.3 $ 74.2 $ 45.3 $ 20.6 ========== ========== ========== ========== ========= Shipments (thousands of net tons): Basic Steel Operations 2,291 2,263 2,273 2,294 2,321 ========== ========== ========== ========== ========= Raw Steel Production (thousands of net tons): Basic Steel Operations 2,565 2,729 2,596 2,479 2,187 ========== ========== ========== ========== ========= 2. On September 12, 1995, Bethlehem entered into a Purchase and Sale Agreement to sell substantially all of its trade receivables to a wholly owned, special purpose subsidiary, Bethlehem Steel Funding, LLC (BSF). BSF entered into a five-year $300 million Receivables Purchase Agreement with a group of banks, of which up to $150 million can be used for letters of credit. At September 30, 1995, the banks had an ownership interest in receivables for issuing about $73 million of letters of credit, leaving about $227 million available under the Agreement. BSF will receive cash from the banks upon expiration of the letters of credit. 3. The Consolidated Financial Statements as of and for the three month and nine month periods ended September 30, 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. 4. 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: - ----------------- Third Quarter and First Nine Months 1995 Third Quarter and First Nine Months 1994 Bethlehem Steel Corporation reported third quarter net income of $34 million, or $.22 per common share, compared to net income of $10 million for the third quarter of 1994. For the first nine months of 1995, net income was $147 million, or $1.05 per common share, compared to $49 million, or $.16 per common share, for the first nine months of 1994. Segment Results - --------------- Basic Steel Operations. The Basic Steel Operations segment had income from operations of $68 million for the third quarter of 1995 compared to $29 million for the third quarter of 1994. Results improved by $39 million from a year ago principally from higher realized prices. Operating income increased to $29 per ton compared to $13 per ton for the third quarter of 1994. For the first nine months of 1995, this segment had income from operations of $244 million, an increase of $129 million from the same period in 1994. Average realized steel prices on a consistent product mix were higher and shipments were slightly lower than a year ago. Operating costs were higher because of material costs, employment costs and depreciation. Income from operations declined by $30 million from the second quarter of 1995. This decrease is attributable to lower average realized prices and a less favorable product mix, which were partially offset by slightly higher shipments. Product mix was less favorable principally due to lower shipments to the automotive industry during its normal summer outages and model year changeovers. Bethlehem continues to make progress with regard to Bethlehem Structural Products Corporation ("BSPC") and Pennsylvania Steel Technologies ("PST") which have been unprofitable. During the fourth quarter, as previously announced, Bethlehem will close the 48-inch structural mill and discontinue iron and steelmaking operations at BSPC. Force levels will be reduced by about 1,800. Bethlehem will make the transition to a single structural mill (44-inch mill) - 6 - 8 at BSPC, which will be supplied principally with continuously cast blooms from PST. PST has completed its modernization program including the installation of a new DC electric furnace, a vacuum degasser, ladle furnace, and technology for the production of in-line head-hardened rail. The modernization and restructuring of these two business units will result in significantly higher utilization of their assets and significantly lower costs. Based on its current order patterns, extended backlogs and market outlook, Bethlehem expects its basic steel segment to maintain high operating rates for the balance of the year. Steel Related Operations. The Steel Related Operations segment (BethShip, BethForge and CENTEC) reported losses from operations of $11 million for the third quarter and $26 million for the first nine months of 1995. This segment had losses of $9 million for the third quarter and $26 million for the first nine months of 1994. These losses reflect BethForge's current high cost structure, which is expected to be significantly reduced following completion of a modernization plan early next year. These losses also reflect lower revenues at BethShip, which continued to experience a weak ship repair market, although demand has recently shown some improvement. Liquidity - --------- Cash and cash equivalents were $102 million at September 30, 1995, compared to $160 million at December 31, 1994, and $119 million at September 30, 1994. Cash provided from operating activities was $309 million for the first nine months of 1995, compared to $270 million for the first nine months of 1994. Significant uses of cash during the first nine months of 1995 included pension funding and capital expenditures. Capital expenditures were $205 million for the first nine months of 1995, compared to $349 million during the year earlier period. Bethlehem expects capital expenditures to be about $300 million in 1995, compared to $445 million in 1994. Bethlehem contributed $65 million to its pension fund during the third quarter for total contributions of $220 million during the first nine months of 1995. Bethlehem expects to make additional contributions during the remainder of the year. Repayments of debt and capital lease obligations were $80 million during the first nine months of 1995 and Bethlehem expects to repay an additional $10 million of such obligations during the fourth quarter. In September 1995, Bethlehem entered into a new $500 million five year, non-reducing credit arrangement with 15 banks. The new financing, which replaces Bethlehem's 1992 $500 million secured credit agreement, consists of a - 7 - 9 $300 million receivables purchase agreement and a $200 million inventory credit agreement. Of the $500 million total commitments, $150 million can be used for letters of credit. Under the receivables purchase agreement, Bethlehem has sold and will continue to sell substantially all its trade receivables to a newly created, wholly owned special purpose subsidiary, Bethlehem Steel Funding, LLC. Bethlehem Steel Funding has sold, and will continue to sell when letters of credit or advances are required, an undivided interest in such receivables to the bank group. At the closing, the banks acquired an undivided ownership interest in receivables to support outstanding letters of credit of approximately $73 million. At September 30, 1995, the only usage under the new arrangement was for these letters of credit. During the fourth quarter, Bethlehem intends to use the proceeds from selling receivables under this new agreement to redeem $30 million of 9% debentures due May 15, 2000. Bethlehem expects to maintain an adequate level of liquidity from cash flow from operations, reductions in working capital and available borrowings under its 1995 credit arrangement. Dividends - --------- On October 25, 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 December 10, 1995, to holders of record on November 10, 1995. No dividend was declared on Bethlehem's Common Stock. Outlook - ------- Steel market fundamentals remain strong and customers appear to have reduced their inventories to more normal levels. The automotive market improved recently following summer vacations and model year changeovers and the demand from the construction, machinery, railcar and shipbuilding markets continues to be good. Bethlehem believes the economy will remain on a course of moderate and sustainable growth for the balance of this year and next. This, when combined with continued strong demand from Bethlehem's domestic customers, declining imports and continued strong exports, should help to support levels of steel shipments of about 94 million tons this year and 92 million tons in 1996. - 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, 1995. The following previously reported proceeding had developments during the third quarter of 1995: On May 28, 1992, the New York State Department of Environmental Conservation ("DEC") sent Bethlehem a proposed Order on Consent to resolve various alleged violations of the New York air pollution control regulations due to emissions from the Lackawanna coke ovens for the period from May 1, 1990 through October 7, 1991. Following extended negotiations between Bethlehem and the DEC, a final Order on Consent was issued on August 17, 1995 covering all alleged violations of state air pollution regulations at the coke ovens, all alleged violations of state water pollution regulations at the coke ovens and the other Bethlehem Lackawanna facilities, and all alleged violations of state hazardous waste regulations related to waste carbonate solution at the facilities up to the date of the issuance of the Order. The Order requires Bethlehem to pay DEC a civil penalty of $765,000 by October 16, 1995; to pay $180,000 to purchase New York State-based sulfur dioxide credits over a three year period beginning August 17, 1995; and to spend $150,000 on supplemental environmental projects, to be approved by DEC, at the Lackawanna Coke Division "LCD" over the same three year period. The Order also requires Bethlehem to have an environmental audit performed by an independent consultant to determine the LCD's compliance with applicable environmental statutory and regulatory requirements. Bethlehem paid the $765,000 civil penalty on October 13, 1995, and is complying fully with the Order. - 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 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 September 30, 1995. - 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 30, 1995 - 11 - 13 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 - 12 - 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 - ------------------ ------------------ 1995 1994 Primary Earnings Per Share 1995 1994 ---- ---- ---- ---- $34.4 $10.3 Net Income $147.2 $49.2 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) (9.3) (4.5) (4.5) $3.50 Preferred Dividend (13.4) (13.5) (0.5) (0.7) 5% Preference Dividend (1.6) (2.1) - -------- -------- -------- -------- Total Preferred and (10.6) (10.8) Preference Dividends (31.9) (32.4) $23.8 ($0.5) Net Income Applicable to Common Stock $115.3 $16.8 ======== ======== ======== ======== Average Shares of Common Stock and Equivalents Outstanding: 110,454 109,462 Common Stock 110,200 104,483 9 250 Stock Options 18 256 - -------- -------- -------- -------- 110,463 109,712 Total 110,218 104,739 - -------- -------- -------- -------- $0.22 $0.00 Primary Earnings Per Share $1.05 $0.16 ======== ======== ======== ======== Fully Diluted Earnings Per Share $34.4 $10.3 Net Income $147.2 $49.2 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) (9.3) (4.5) (4.5) $3.50 Preferred Dividend (13.4) (13.5) - (0.7) 5% Preference Dividend - (2.1) - -------- -------- -------- -------- $24.3 ($0.5) Net Income Applicable to Common Stock $116.9 $16.8 ======== ======== ======== ======== Average Shares of Common Stock and Equivalents and Other Potentially Dilutive Securities Outstanding: 110,454 109,462 Common Stock 110,200 104,483 9 250 Stock Options 19 256 * * $2.50 Preferred Stock * * * * $5.00 Preferred Stock * * * * $3.50 Preferred Stock * * 2,616 * 5% Preference Stock 2,616 * - -------- -------- -------- -------- 113,079 109,712 Total 112,835 104,739 ======== ======== ======== ======== $0.21 $0.00 Fully Diluted Earnings Per Share $1.04 $0.16 ======== ======== ======== ======== * Antidilutive - 13 - EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000,000 9-MOS DEC-31-1995 SEP-30-1995 102 0 544 21 911 1551 7030 4298 5669 1009 585 113 0 14 1154 5669 3716 3716 3200 3498 0 0 46 178 31 147 0 0 0 147 1.05 1.05
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