EX-99.1 3 a1-22ex99_1.txt Exhibit 99.1 ------------ UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK Chapter 11 In re: Bethlehem Steel Corporation, et al., Case No. 01-15288 (BRL) Debtors through 01-15302, 01-15308 through 01-15315 (BRL) MONTHLY OPERATING STATEMENT FOR THE PERIOD DECEMBER 1 TO DECEMBER 31, 2001 DEBTORS' ADDRESS: Bethlehem Steel Corporation 1170 Eighth Avenue Bethlehem, PA 18016 DISBURSEMENTS: December 1 to December 31, 2001 (millions): $284.3 (see attached schedule for disbursements by Debtor) DEBTORS' ATTORNEY: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Harvey R. Miller (HM 6078) Jeffrey L. Tanenbaum (JT 9797) George A. Davis (GD 2761) NET LOSS: December 1 to December 31, 2001 (millions): $426.5 REPORT PREPARER: Bethlehem Steel Corporation THIS OPERATING STATEMENT MUST BE SIGNED BY A REPRESENTATIVE OF THE DEBTOR The undersigned, having reviewed the attached report and being familiar with the Debtors' financial affairs, verifies under penalty of perjury, that the information contained herein is complete, accurate and truthful to the best of my knowledge. /s/ Lonnie A. Arnett DATE: January 22, 2002 ---------------------------- Lonnie A. Arnett Vice President, Controller and Chief Accounting Officer BETHLEHEM STEEL CORPORATION Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) (DEBTOR-IN-POSSESSION) CONSOLIDATED STATEMENT OF OPERATIONS (dollars and shares in millions, except per share data)
DECEMBER 31, 2001 ---------------------------------------------- ONE MONTH YEAR (unaudited) (unaudited) -------------------- -------------------- NET SALES $ 199.1 $ 3,334.3 -------------------- -------------------- COSTS AND EXPENSES Cost of sales 236.4 3,468.6 Depreciation 18.6 253.1 Selling, administration and general expense 11.6 106.4 Unusual (gains) losses (Note 5) 351.1 372.3 -------------------- -------------------- TOTAL COSTS AND EXPENSES 617.7 4,200.4 -------------------- -------------------- LOSS FROM OPERATIONS (418.6) (866.1) REORGANIZATION ITEMS (Note 3) (3.5) (8.1) FINANCING EXPENSE - NET (Note 3) (4.4) (91.4) -------------------- -------------------- LOSS BEFORE INCOME TAXES (426.5) (965.6) PROVISION FOR INCOME TAXES - (984.0) -------------------- -------------------- NET LOSS (426.5) (1,949.6) DIVIDENDS ON PREFERRED AND PREFERENCE STOCK 3.1 40.5 -------------------- -------------------- NET LOSS APPLICABLE TO COMMON STOCK $ (429.6) $ (1,990.1) ==================== ==================== NET LOSS PER COMMON SHARE: Basic and Diluted $ (3.29) $ (15.30) AVERAGE SHARES OUTSTANDING: Basic and Diluted 130.4 130.1
The accompanying Notes are an integral part of the Consolidated Financial Statements. See Note 8 for Consolidated Statement of Operations for Debtors only. BETHLEHEM STEEL CORPORATION Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) (DEBTOR-IN-POSSESSION) CONSOLIDATED BALANCE SHEET (dollars in millions)
DECEMBER 31, 2001 (unaudited) ------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 104.0 Receivables, less allowances 350.4 Inventories: Raw materials 259.5 Finished and semifinished 465.8 ------------------- Total Inventories 725.3 Other current assets 22.8 ------------------- TOTAL CURRENT ASSETS 1,202.5 INVESTMENTS AND MISCELLANEOUS ASSETS 129.6 PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation of $4,367.6 2,686.9 INTANGIBLE PENSION ASSET - from minimum pension liability 225.0 ------------------- TOTAL ASSETS $ 4,244.0 =================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 150.1 Accrued employment costs 37.9 Debt and capital lease obligations - current 19.3 Other current liabilities 64.3 ------------------- TOTAL CURRENT LIABILITIES 271.6 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 132.7 DEBTOR-IN-POSSESSION FINANCING (Note 4) 205.6 DEBT SECURED BY INVENTORY (Note 4) 289.9 DEFERRED GAIN AND OTHER LONG-TERM LIABILITIES 146.6 LIABILITIES SUBJECT TO COMPROMISE (Note 3) 4,878.1 STOCKHOLDERS' EQUITY (DEFICIT): Preferred Stock 11.4 Preference Stock 2.0 Common Stock 135.8 Common Stock held in treasury at cost (65.9) Additional paid-in capital 1,908.2 Accumulated other comprehensive loss - from minimum pension liability (833.0) Accumulated deficit (2,839.0) ------------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,680.5) ------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 4,244.0 ===================
The accompanying Notes are an integral part of the Consolidated Financial Statements. See Note 8 for Consolidated Balance Sheet of the Debtors only. BETHLEHEM STEEL CORPORATION Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) (DEBTOR-IN-POSSESSION) CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions)
DECEMBER 31, 2001 ------------------------------------ MONTH YEAR ENDED ENDED (unaudited) (unaudited) ----------------- ---------------- OPERATING ACTIVITIES: Net loss $ (426.5) $ (1,949.6) Adjustments for items not affecting cash from operating activities: Deferred income taxes - 984.0 Depreciation and amortization 18.6 253.1 Unusual items 351.1 372.3 Recognition of deferred gains (1.8) (22.7) Reorganization items (Note 3) 3.5 8.1 Litigation recovery - 13.0 Other - net 3.5 (1.9) Working capital (excluding financing and investing activities): Receivables - operating 43.4 9.6 Receivables - financing - (212.0) Inventories (17.3) 148.7 Accounts payable 7.4 25.1 Other (6.2) (4.6) Funding postretirement benefits: Pension funding less than expense 6.6 94.5 Retiree healthcare and life insurance benefit payments less than expense 5.3 83.0 ----------------- ---------------- CASH PROVIDED USED FOR OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS (12.4) (199.4) ----------------- ---------------- Reorganization items (3.5) (8.1) ----------------- ---------------- CASH PROVIDED USED FOR OPERATING ACTIVITIES (15.9) (207.5) ----------------- ---------------- INVESTING ACTIVITIES: Capital expenditures (13.2) (89.2) Cash proceeds from asset sales 0.9 47.5 ----------------- ---------------- CASH PROVIDED USED FOR INVESTING ACTIVITIES (12.3) (41.7) ----------------- ---------------- FINANCING ACTIVITIES: Borrowings (Note 4) 0.1 408.8 Debt and capital lease payments (6.8) (108.9) Cash dividends paid - (20.2) Other payments (2.4) (36.2) ----------------- ---------------- CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES (9.1) 243.5 ----------------- ---------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (37.3) (5.7) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 141.3 109.7 ----------------- ---------------- - END OF PERIOD $ 104.0 $ 104.0 ================= ================ SUPPLEMENTAL CASH PAYMENT INFORMATION: Interest, net of amount capitalized $ 4.0 $ 91.5 Income taxes paid (received) - (1.4) Capital lease obligations incurred - 5.2 Debt assumed in purchase combination - 18.9 LIQUIDITY AT MONTH END $ 275.8 $ 275.8
The accompanying Notes are an integral part of the Consolidated Financial Statements. BETHLEHEM STEEL CORPORATION, ET AL. CASE NO. 01-15288 (BRL) THROUGH 01-015302, 01-15308 THROUGH 01-15315 (BRL) (DEBTORS-IN-POSSESSION) NOTES TO DECEMBER 31, 2001 CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. The 2001 Consolidated Financial Statements are subject to audit and should be read together with the audited financial statements in Bethlehem's Annual Report on Form 10-K for the year ended December 31, 2000. 2. On October 15, 2001, Bethlehem Steel Corporation and 22 of its wholly-owned subsidiaries (collectively, the Debtors) filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Court). The wholly-owned subsidiaries that did not file for chapter 11 reorganization are not material in relation to Bethlehem's consolidated financial position and results of operations. Bethlehem and its debtor subsidiaries continue to operate their businesses as debtors-in-possession. These consolidated financial statements have been prepared in conformity with generally accepted accounting principles on a going concern basis, which contemplates continuity of operations, realization of assets and payment of liabilities. Under bankruptcy law, actions by creditors to collect indebtedness owed by the Debtors prior to October 15, 2001 (pre-petition) are stayed and certain other pre-petition contractual obligations may not be enforced against the Debtors. As a result of the chapter 11 filing, there is no assurance that the carrying amounts of assets will be realized or that liabilities will be settled for amounts recorded. After negotiations with various parties in interest, the Debtors expect to present a chapter 11 plan of reorganization. A chapter 11 plan will likely change the amounts reported in the financial statements and cause a material change in the carrying amount of assets and liabilities. Due to material uncertainties, it is not possible to predict the length of time the Debtors will operate under chapter 11 protection, the outcome of the reorganization in general, the effect of the reorganization on the Debtors' businesses or the recovery by creditors of the Debtors and equity holders of Bethlehem. 3. These consolidated financial statements have been prepared in accordance with the AICPA's Statement of Position 90-7 Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). SOP 90-7 provides for segregating pre-petition liabilities that are subject to compromise, identifying all transactions and events that are directly associated with the reorganization of the Debtors and discontinuing interest accrual on unsecured or undersecured debt. Except for secured debt and capital lease obligations, all recorded pre-petition liabilities of the Debtors have been classified as liabilities subject to compromise. The Court authorized, but did not require, payments of certain pre-petition wages, employee benefits and other obligations. Net changes in pension, other postemployment benefits and certain other accrued liabilities since October 15, 2001, are included in liabilities subject to compromise. Payments of approximately $106 million have been made on pre-petition obligations, primarily for wages, active and retiree health care expenses and for other employee related costs. Liabilities subject to compromise (in millions) at December 31, 2001 follows: Other postemployment benefits $ 2,005.7 Pension 1,624.0 Unsecured debt 526.7 Accounts payable 220.8 Accrued employment costs 270.6 Other accrued liabilities 152.8 Accrued taxes and interest 77.5 ---------------- Total $ 4,878.1 ================ Net costs resulting from reorganization of the businesses have been reported in the statement of operations separately as reorganization items. For the month and year ended December 31, 2001, the following have been incurred (in millions): Month Year ------------ ------------ Professional fees $ 2.3 $ 7.1 Losses from termination of contracts 1.4 1.4 Interest income (0.2) (0.4) --------------- --------------- Total $ 3.5 $ 8.1 =============== =============== Under bankruptcy law, the Debtors are not permitted to make scheduled principal and interest payments on secured debt, unless specifically ordered as adequate protection by the Court. Interest on unsecured debt that was not charged to earnings for the period from October 15 to December 31, 2001 was approximately $9 million. 4. The Court approved a $450 million debtor-in-possession (DIP) financing with the General Electric Capital Corporation (GECC). The GECC financing is collateralized by, among other things, a senior lien on substantially all of the Debtors' assets, excluding inventory and those assets that had previously been subject to a lien, and a junior lien on inventory and those assets that had previously been subject to a lien. The GECC financing expires on the earlier of confirmation of a chapter 11 plan of reorganization or October 15, 2003. Bethlehem's wholly owned subsidiaries that did not file for chapter 11 reorganization have guaranteed the financing. Bethlehem pays interest on this financing at its option at either (1) an indexed rate, typically based on the prime rate, plus 2.5% or (2) LIBOR plus 3.5%. The GECC financing contains certain financial performance covenants and restricts the ability to pay dividends. Initial proceeds from the GECC financing were used to repurchase $260 million of accounts receivable that had been sold under a previous facility. As part of the GECC financing, the $290 million previously borrowed under an inventory credit facility remains outstanding as secured debt for the term of the GECC financing. Interest is payable monthly in arrears on the GECC facility and as adequate protection on the inventory debt. In addition, the Court has authorized payment of interest on certain secured debt. 5. A summary of unusual items (in millions) for the month and year ended December 31, 2001 follows: Month Year ------------ ----------- Losses (gains) Impairment of Goodwill $ 317.0 $ 317.0 Loss on closure of Lackawanna Coke 40.0 Impairment of Chicago Cold Rolling, LLC 15.2 15.2 Impairment of Burns Harbor 110" Plate Mill 11.4 11.4 Employee termination costs 7.5 7.5 Gain on sale of MBR (22.2) Loss on closure of Metalsite 3.4 -------------- -------------- Total $ 351.1 $ 372.3 ============== ============== As a result of the chapter 11 filing during the fourth quarter of 2001 and the extremely competitive steel market conditions, we analyzed our ability to recover the carrying value of our steel assets and facilities. We determined that the carrying value of certain assets exceeded the related expected future cash flows. Accordingly, we recognized an impairment loss of (1) $317 million for goodwill acquired in the 1998 Lukens merger, (2) $11 million for the 110 inch plate mill at Burns Harbor which is currently now expected to remain idle indefinitely and (3) $15 million for our Chicago Cold Rolling facility which substantially reduced operations during the fourth quarter. Also, during the fourth quarter, we identified approximately 300 non-represented salaried positions that will be eliminated and recognized $7.5 million for related employee benefit charges. Earlier in 2001, we (1) closed our Lackawanna Coke operations resulting in a charge of $40 million principally to recognize related employee benefit costs, (2) sold our interest in MBR, a Brazilian iron ore property, for $4 million in cash and $19 million in credits against future iron ore purchases ($8 million of which has already been used) resulting in a $22 million gain and (3) wrote-off our equity investment in Metalsite, an internet marketplace for steel that ceased operations, resulting in a charge of $3 million. 6. Bethlehem incurred financial accounting losses in 1999 through 2001. Our results during 2001 were worse than we anticipated at the beginning of the year and we will not be able to use any of the NOL expiring in 2001 in our federal income tax return for the year. In the absence of specific favorable factors, application of FASB Statement No. 109, issued in 1992, and its subsequent interpretations require a 100% valuation allowance for any deferred tax asset when a company has cumulative financial accounting losses, excluding unusual items, over several years. Accordingly, in the second quarter of 2001, we provided a 100% valuation allowance for our deferred tax asset, increasing our non-cash provision for income taxes and net loss for 2001 by $984 million. We provided a 100% valuation allowance for our deferred income tax asset for the balance of 2001 and will continue that policy in the future until, at a minimum, a chapter 11 plan of reorganization is confirmed. 7. The following sets forth the status of our pension and other postretirement benefits (OPEB) at December 31, 2001 (in millions):
PENSION OPEB ---------------- -------------- Projected benefit obligation $ 6,495 $ 3,031 Fair value of plan assets 4,753 17 -------------- -------------- Unfunded projected benefit obligation 1,742 3,014 Actuarial adjustments (118) (967) -------------- -------------- Balance Sheet Liabilities at December 31 $ 1,624 $ 2,047 ============== ============== BALANCE SHEET ACCOUNTS: Liabilities subject to compromise $ 1,624 $ 2,006 Current and long-term liabilities - 41 -------------- -------------- Total $ 1,624 $ 2,047 ============== ==============
8. Summarized consolidated Statement of Operations and Balance Sheet (in millions) for the Debtors only follows: SUMMARIZED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2001 ---------------- Net Sales $ 3,304.0 Costs and Expenses 3,803.4 Unusual Items 372.3 ---------------- Loss from Operations (871.7) Reorganization Items (8.1) Financing Income (Expense) - Net (101.1) Equity in Income of Unconsolidated Subsidiaries 14.7 ---------------- Loss before Income Taxes (966.2) Provision for Income Taxes (983.4) ---------------- Net Loss (1,949.6) Dividends on Preferred and Preference Stock 40.5 ---------------- Net Loss Applicable to Common Stock $ (1,990.1) ================ SUMMARIZED CONSOLIDATED BALANCE SHEET DECEMBER 31, 2001 ---------------- ASSETS Current Assets: Cash and cash equivalents $ 99.7 Receivables, less allowances 344.9 Inventories 710.1 Other current assets 22.0 ---------------- Total Current Assets 1,176.7 Investments and miscellaneous assets 130.9 Property, plant and equipment, less accumulated depreciation of $4,110.1 2,627.4 Intangible pension asset - from minimum pension liability 225.0 ---------------- Total Assets $ 4,160.0 ================ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable $ 138.6 Accrued employment costs and taxes 26.3 Debt and capital lease obligations - current 19.3 Other current liabilities 45.5 ---------------- Total Current Liabilities 229.7 Long-term Debt and Capital Lease Obligations 132.7 Debtor-in-Possession Financing 205.6 Debt Secured by Inventory 289.9 Deferred Gains 103.2 Other Long-term Liabilities 1.3 Liabiliites Subject to Compromise 4,878.1 Total Stockholders' Deficit (1,680.5) ---------------- Total Liabilities and Stockholders' Deficit $ 4,160.0 ================ BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Schedule of Disbursements
Month Ended October 15 - (dollars in millions) December 31, 2001 December 31, 2001 --------------------------------------------------------- Bethlehem Steel Corporation $283.6 $590.6 Chicago Cold Rolling, L.L.C. 0.7 1.3 Alliance Coating Company, LLC - - Bethlehem Steel de Mexico, S.A. de C.V. - - BethEnergy Mines Inc. - - Bethlehem Cold Rold Corporation - - Bethlehem Development Corporation - - Bethlehem Rail Corporation - - Bethlehem Steel Export Company of Canada, Limited - - Bethlehem Steel Export Corporation - - BethPlan Corp. - - Eagle Nest Inc. - - Encoat North Arlington, Inc. - - Energy Coatings Company - - Greenwood Mining Corporation - - HPM Corporation - - Kenacre Land Corporation - - LI Service Company - - Marmoraton Mining Company, Ltd. - - Mississippi Coatings Limited Corporation - - Mississippi Coatings Line Corporation - - Ohio Steel Service Company, LLC - - Primeacre Land Corporation - - ------------------------- ------------------------- $284.3 $591.9
Note: Disbursements between the companies are excluded for the purposes of this schedule. BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Schedule of Federal, State and Local Taxes Collected, Received, Due or Withheld December 1, 2001 to December 31, 2001
(dollars in thousands) Gross Wages and Salaries Paid $56,196 Payroll Taxes Withheld $15,680 Employer Payroll Taxes Incurred $3,778 Gross Sales Subject to Taxes $251 Sales Tax Collected or Self-Assessed $101 Property Tax Payments Due (1) $2,349 Property Tax Paid None All Other Taxes Paid Wholesale License Tax - Delaware $15 Foreign Corp. Annual Return Fee - Illinois 4 Business & Occupational Tax - Washington 2 Other 1 ------------- TOTAL $22 =============
(1) Represents the amount of tax payments that were to be due, however the amounts have been classified as liabilities subject to compromise and payment has been withheld. No post-petition property tax liabilities were due to be paid. BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Employee/Employer Federal Income Tax and FICA Tax Paid December 1, 2001 to December 31, 2001 (dollars in thousands) Taxing Authority Date Paid Amount Paid ---------------------------------- ------------------ ----------------- Internal Revenue Service 12/3/01 $4,662 Internal Revenue Service 12/6/01 2,654 Internal Revenue Service 12/7/01 384 Internal Revenue Service 12/10/01 122 Internal Revenue Service 12/13/01 2,097 Internal Revenue Service 12/17/01 458 Internal Revenue Service 12/19/01 238 Internal Revenue Service 12/20/01 2,118 Internal Revenue Service 12/21/01 700 Internal Revenue Service 12/24/01 126 Internal Revenue Service 12/27/01 2,104 Internal Revenue Service 12/28/01 15 Internal Revenue Service 12/31/01 709 ----------------- TOTAL $16,387 ================= BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Payments for State Income Tax Withheld December 1, 2001 to December 31, 2001 (dollars in thousands) Taxing Authority Date Paid Amount Paid ------------------------------- ------------------ ----------------- Illinois 12/4/01 $1 Vermont 12/5/01 1 Minnesota 12/6/01 2 Ohio 12/10/01 2 Georgia 12/10/01 2 Kentucky 12/10/01 1 Michigan 12/12/01 12 Indiana Various 676 Maryland Various 949 Pennsylvania Various 364 New York Various 100 New Jersey Various 4 Other Various 2 North Carolina Various 2 Wisconsin Various 1 California Various 1 ----------------- TOTAL $2,120 ================= BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Payments for Local Income Tax Withheld December 1, 2001 to December 31, 2001 (dollars in thousands) Taxing Authority Date Paid Amount Paid ----------------------------- ------------------ --------------- Virginia Dept. of Revenue 12/4/01 $1 City of Philadelphia 12/13/01 9 City of Bethlehem 12/20/01 12 Indiana Dept. of Revenue 12/20/01 49 Other Various 1 --------------- TOTAL $72 =============== BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Payments for Employer Unemployment Insurance December 1, 2001 to December 31, 2001 (dollars in thousands) Taxing Authority Date Paid Amount Paid ------------------------------------- --------------- ------------------- NONE
BETHLEHEM STEEL CORPORATION, ET AL. Case No. 01-15288 (BRL) through 01-015302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Payments for Sales and Use Taxes December 1, 2001 to December 31, 2001 (dollars in thousands) Taxing Authority Date Paid Amount Paid ------------------------------------- -------------------- ----------------- CUSTOMER SALES TAXES COLLECTED Missouri 12/18/01 42 Florida 12/19/01 2 Maryland 12/19/01 1 Other Various 1 ------------------------ TOTAL 46 SALES AND USE TAX - SELF ASSESSED Indiana 12/19/01 68 Pennsylvania 12/19/01 35 Maryland 12/19/01 29 New York 12/18/01 6 Indiana 12/21/01 3 Other Various 0 ------------------------ TOTAL 141 ------------------------ TOTAL - ALL $187 ========================
BETHLEHEM STEEL CORPORATION, ET AL. CASE NO. 01-15288 (BRL) THROUGH 01-015302, 01-15308 THROUGH 01-15315 (BRL) MONTHLY OPERATING REPORT STATEMENT ON INSURANCE DECEMBER 1, 2001 TO DECEMBER 31, 2001 All insurance policy premiums due, including those for workers compensation and disability insurance, have been paid. Accordingly, all the policies remain in force.