-----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, QaoA+U21Z0iCZ2XyB8it+7JSz3Ke3WeIa9Yc45HTltdkQRaqzF7BKv6I3CAZ+e7L bapWiPHIHN4I1zzQSV1CMA== 0000011860-96-000012.txt : 19960513 0000011860-96-000012.hdr.sgml : 19960513 ACCESSION NUMBER: 0000011860-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 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: 96559052 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 March 31, 1996 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 6, 1996: 110,960,415 2 BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX Page No. PART I. Financial Information Consolidated Statements of Income- Three Months Ended March 31, 1996 and 1995 (unaudited). . . . . . . . . . . . . . . . . . . . . . 2 Consolidated Balance Sheets- March 31, 1996 (unaudited), December 31, 1995 and March 31, 1995 (unaudited). . . . . . . . . . . . . . . . . 3 Consolidated Statements of Cash Flows- Three Months Ended March 31, 1996 and 1995 (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 - 1 - 3 Bethlehem Steel Corporation CONSOLIDATED STATEMENTS OF INCOME (dollars and shares in millions, except per share data) (unaudited) Three Months Ended March 31 --------------------- 1996 1995 ---- ---- Net Sales $1,118.5 $1,240.7 -------- -------- Costs and Expenses: Cost of sales 1,009.9 1,068.9 Depreciation 69.9 71.0 Selling, administration and general expense 26.1 26.6 -------- -------- Total Costs and Expenses 1,105.9 1,166.5 Income from Operations 12.6 74.2 Financing Income (Expense): Interest and other financing costs (14.0) (13.2) Interest income 1.5 2.5 -------- -------- Income before Income Taxes 0.1 63.5 Provision for Income Taxes - (11.0) -------- -------- Net Income 0.1 52.5 Dividends on Preferred and Preference Stock 10.5 10.6 -------- -------- Net Income (Loss) Applicable to Common Stock $ (10.4) $ 41.9 ======== ======== Net Income (Loss) per Common Share $ (0.09) $ 0.38 Average Primary Shares Outstanding 110.8 110.0 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 1996 1995 1995 (unaudited) (unaudited) ----------- ----------- ----------- Current Assets: Cash and cash equivalents $ 130.5 $ 180.0 $ 125.0 Receivables, less allowances 335.2 374.6 504.3 Inventories: Raw materials 332.3 335.5 321.2 Finished and semifinished 643.7 604.9 573.6 Contract work-in-progress, less billings 19.2 17.8 17.4 ---------- ---------- ---------- 995.2 958.2 912.2 Other current assets 11.2 13.0 11.2 ---------- ---------- ---------- Total Current Assets 1,472.1 1,525.8 1,552.7 Investments and Miscellaneous Assets 108.0 112.3 119.7 Property, Plant and Equipment, less accumulated depreciation of $4,396.7, $4,329.5 and $4,190.4 2,689.4 2,714.2 2,739.6 Deferred Income Tax Asset - net 885.0 885.0 892.7 Intangible Asset - Pensions 463.0 463.0 412.0 ---------- ---------- ---------- Total Assets $ 5,617.5 $ 5,700.3 $ 5,716.7 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 389.8 $ 381.4 $ 418.6 Accrued employment costs 313.5 358.0 296.6 Accrued taxes 63.2 72.4 64.6 Debt and capital lease obligations 82.4 91.5 94.6 Other current liabilities 121.7 146.3 120.3 ---------- ---------- ---------- Total Current Liabilities 970.6 1,049.6 994.7 Pension Liability 1,152.6 1,115.0 1,085.0 Postretirement Benefits Other Than Pensions 1,418.4 1,415.0 1,435.6 Long-term Debt and Capital Lease Obligations 521.1 546.8 633.8 Other Long-term Liabilities 326.2 335.6 369.2 Stockholders' Equity: Preferred Stock 11.6 11.6 11.6 Preference Stock 2.5 2.6 2.6 Common Stock 112.9 112.7 112.0 Common Stock held in treasury at cost (59.4) (59.4) (59.4) Additional paid-in capital 1,840.7 1,850.6 1,938.5 Accumulated deficit (679.7) (679.8) (806.9) ---------- ---------- ---------- Total Stockholders' Equity 1,228.6 1,238.3 1,198.4 ---------- ---------- ---------- Total Liabilities and Stockholders' Equity $ 5,617.5 $ 5,700.3 $ 5,716.7 ========== ========== ========== 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 ------------------ 1996 1995 ---- ---- Operating Activities: Net income $ 0.1 $ 52.5 Adjustments for items not affecting cash from operating activities: Depreciation 69.9 71.0 Deferred Income Taxes - 10.5 Other - net 6.2 (4.2) Working capital (excluding financing and investing activities): Receivables - operating (20.6) 15.2 Receivables - sold 60.0 - Inventories (37.1) (29.3) Accounts payable 8.2 30.1 Employment costs and other (63.8) (52.3) Other - net (0.9) (12.7) --------- --------- Cash Provided from Operating Activities 22.0 80.8 --------- --------- Investing Activities: Capital expenditures (59.9) (60.5) Cash proceeds from asset sales and other 2.5 5.1 --------- --------- Cash Used for Investing Activities (57.4) (55.4) --------- --------- Financing Activities: Pension expense 47.6 53.4 Pension funding (10.0) (70.9) Long-term debt and capital lease borrowings 0.7 1.9 Long-term debt and capital lease payments (34.8) (30.4) Cash dividends paid (10.1) (10.1) Other payments (7.5) (3.8) --------- --------- Cash Used for Financing Activities (14.1) (59.9) --------- --------- Net Decrease in Cash and Cash Equivalents (49.5) (34.5) Cash and Cash Equivalents - Beginning of Period 180.0 159.5 --------- --------- - End of Period $ 130.5 $ 125.0 ========= ========= Supplemental Cash Payment Information: Interest, net of amount capitalized $ 23.0 $ 24.3 Income taxes $ 3.2 $ - 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) 1996 1995 ------- --------------------------------------- First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter ------- ------- ------- ------- ------- Net Sales: Basic Steel Operations $ 1,095.4 $ 1,130.4 $ 1,210.6 $ 1,225.4 $ 1,210.4 Steel Related Operations 32.2 28.6 23.8 29.4 36.5 Eliminations (9.1) (7.1) (9.7) (4.6) (6.2) ---------- ---------- ---------- ---------- ---------- Total $ 1,118.5 $ 1,151.9 $ 1,224.7 $ 1,250.2 $ 1,240.7 ========== ========== ========== ========== ========== Operating Income (Loss): Basic Steel Operations $ 21.4 $ 66.5 $ 67.5 $ 97.6 $ 79.1 Steel Related Operations (8.8) (15.2) (11.4) (10.3) (4.9) ---------- ---------- ---------- ---------- ---------- Total $ 12.6 $ 51.3 $ 56.1 $ 87.3 $ 74.2 ========== ========== ========== ========== ========== Shipments (thousands of net tons): Basic Steel Operations 2,103 2,143 2,291 2,263 2,273 ========== ========== ========== ========== ========== Raw Steel Production (thousands of net tons): Basic Steel Operations 2,259 2,533 2,565 2,729 2,596 ========== ========== ========== ========== ========== 2. The Consolidated Financial Statements as of and for the three month periods ended March 31, 1996 and 1995 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 1995 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 1996 - First Quarter 1995 Bethlehem reported break-even results with net income of $.1 million on sales of $1.12 billion for the first quarter of 1996 compared to net income of $53 million on sales of $1.24 billion for the first quarter of 1995. After deducting preferred dividends, this results in a loss of $.09 per common share for the first quarter of 1996 compared to earnings of $.38 per common share for the first quarter of 1995. Segment Results The Basic Steel Operations segment had income from operations of $21 million on shipments of 2,103,000 tons for the first quarter of 1996 compared to income from operations of $79 million on shipments of 2,273,000 tons for the first quarter of 1995. This segment's results declined from a year ago principally from lower realized prices and, to a lesser extent, from the effects of the severe winter weather, the consequences of the work stoppage at General Motors, the start-up of an upgraded structural mill and reduced shipments. Results were adversely affected due to lower shipments primarily at Bethlehem Structural Products Corporation (BSPC) and at the Burns Harbor Division. BSPC's lower shipments were attributable to the closing of the 48-inch structural mill in the fourth quarter of last year and the transition to a single structural mill operation. Shipments at Burns Harbor were lower than last year because of lower steel supply resulting from reduced steelmaking productivity in the latter part of 1995 and early 1996. Also, General Motors suspended receipt of deliveries from Burns Harbor for about two weeks due to GM's labor dispute. Sparrows Point had higher shipments as a result of relatively strong steel demand. First quarter 1996 income from operations declined from the fourth quarter of 1995 due principally to higher costs and lower realized prices. Bethlehem incurred higher costs during the first quarter from the severe winter weather, the start-up of BSPC's upgraded structural mill and the increased consumption of higher cost purchased steel at Burns Harbor. - 6 - 8 The Steel Related Operations segment (BethForge, CENTEC and BethShip) reported a loss from operations of $9 million for the first quarter of 1996 compared to a loss of $5 million for the first quarter of 1995. BethForge had lower production due to the severe winter weather which curtailed the ability of Pennsylvania Steel Technologies, Inc. to ship ingots to BethForge. Also, results at BethShip were impacted by lower revenues as market conditions for ship repair remained very competitive. This segment's first quarter loss was less than the loss from operations of $15 million in the fourth quarter of 1995, primarily because of the absence of costs incurred in the fourth quarter related to shutting down the electric furnace shop at BethForge. Liquidity and Capital Structure At March 31, 1996, total liquidity, comprising cash, cash equivalents and funds available under Bethlehem's bank credit arrangements, totaled $431 million compared to $512 million at December 31, 1995. Cash and cash equivalents were $131 million at March 31, 1996, compared to $180 million at December 31, 1995. Cash provided from operating activities during the first quarter of 1996, including selling accounts receivable of $60 million under Bethlehem's credit arrangement, was $22 million, compared to $81 million in the first quarter of 1995. Principal uses of cash during the first quarter of 1996 included capital expenditures of $60 million, working capital of $53 million, debt repayments of $35 million and pension funding of $10 million. Major uses of cash for 1996 include an estimated $300 million of capital expenditures, pension funding and repayment of approximately $90 million of debt and capital lease obligations. 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. Labor Negotiations Bethlehem's labor agreement with the United Steelworkers of America (USWA) provides for reopener negotiations in 1996 of wage and certain benefit provisions (excluding pensions and health care). Discussions with the USWA began in March. On May 7, 1996, Bethlehem and the USWA submitted unresolved issues to final offer interest arbitration. Unless otherwise agreed, any changes will be effective August 1, 1996. - 7 - 9 Dividends On April 24, 1996, 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, 1996, to holders of record on May 10, 1996. No dividend was declared on Bethlehem's Common Stock. Outlook The U.S. economy continues to be on a course of moderate and sustainable growth and low inflation. Demand for steel products continues to be strong and Bethlehem is implementing its previously announced price increases for sheet and plate products that became effective for second quarter deliveries. Bethlehem also recently announced additional price increases for sheet and plate products for third quarter deliveries. Bethlehem expects to continue to operate at high levels throughout the year, although Bethlehem believes that recent and planned industry capacity additions will increase the intensity of domestic competition. Accordingly, Bethlehem is committed to improving its competitive position by taking actions to improve its product quality and mix, increase the utilization and efficiency of its production facilities and improve the management of its working capital. Additionally, Bethlehem is intensifying its efforts to reduce costs throughout the corporation. - 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, 1996. The following previously reported proceeding had developments during the first quarter of 1996: On March 29, 1996, the U. S. Department of Justice, on behalf of the EPA, brought a civil action against Bethlehem in the U. S. District Court for the Northern District of Indiana for alleged violations of the Clean Water Act and the Safe Drinking Water Act at the Burns Harbor Division. The Complaint alleges that, from November 1992 to April 1994, the Division discharged pollutants from its dock wall without a permit as required by the Clean Water Act and failed to meet certain requirements of an underground injection well permit. Settlement negotiations were initiated prior to the filing of the Complaint and the government has suggested settlement for total civil penalties of $441,300 and appropriate injunctive relief. If settlement negotiations are unsuccessful, Bethlehem believes it has meritorious defenses and will vigorously defend the action. - 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 23, 1996. The following nominees for director named in the Proxy Statement dated March 13, 1996 were elected at the Meeting by the votes indicated: For Withheld --- -------- Curtis H. Barnette 96,089,569 1,078,932 Benjamin R. Civiletti 96,135,125 1,033,376 Worley H. Clark 96,136,930 1,031,571 John B. Curcio 96,022,888 1,145,613 Thomas L. Holton 96,102,041 1,066,460 Lewis B. Kaden 96,113,572 1,054,929 Harry P. Kamen 96,131,857 1,036,644 Winthrop Knowlton 96,109,603 1,058,898 Robert McClements, Jr. 96,114,962 1,053,539 Gary L. Millenbruch 96,140,370 1,028,131 Roger P. Penny 96,041,675 1,126,826 Shirley D. Peterson 96,092,651 1,075,850 Dean P. Phypers 96,111,718 1,056,783 William A. Pogue 96,110,735 1,057,766 John F. Ruffle 96,135,957 1,032,544 The votes in favor of the election of the nominees represent at least 98.8% of the shares voted for each of the nominees. Ratification of the appointment of Independent Auditors was approved by the following vote: For Against Abstentions --- ------- ----------- Number of Shares 96,273,218 491,785 403,498 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 Earnings Per Share. 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, 1996. - 11 - 13 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 10, 1996 - 12 - 14 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 - 13 - 15 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 1996 1995 -------------------------- ---- ---- Net Income $0.1 $52.5 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 (0.4) (0.5) -------- -------- Total Preferred and Preference Dividends (10.5) (10.6) -------- -------- Net (Loss) Income Applicable to Common Stock ($10.4) $41.9 ======== ======== Average Shares of Common Stock and Equivalents Outstanding: Common Stock 110,797 109,978 Stock Options 5 36 -------- -------- Total 110,802 110,014 -------- -------- Primary Earnings Per Share ($0.09) $0.38 ======== ======== Fully Diluted Earnings Per Share -------------------------------- Net Income $0.1 $52.5 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 (0.4) - -------- -------- Net (Loss) Income Applicable to Common Stock ($10.4) $46.9 ======== ======== Average Shares of Common Stock and Equivalents and Other Potentially Dilutive Securities Outstanding: Common Stock 110,797 109,978 Stock Options 5 36 $2.50 Preferred Stock - * $5.00 Preferred Stock - * $3.50 Preferred Stock - 12,255 5% Preference Stock - 2,560 -------- -------- Total 110,802 124,829 ======== ======== Fully Diluted Earnings Per Share ($0.09) $0.38 ======== ======== *Antidilutive - 14 - EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000,000 3-MOS DEC-31-1996 MAR-31-1996 131 0 355 20 995 11 7086 4397 5618 971 521 0 14 113 1102 5618 1119 1119 1010 1106 0 0 14 0 0 0 0 0 0 0 (.09) (.09)
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