EX-99 3 jd1-21_ex99.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, 2002 DEBTORS' ADDRESS: Bethlehem Steel Corporation 1170 Eighth Avenue Bethlehem, PA 18016 DISBURSEMENTS: December 1 to December 31, 2002 (millions): $331.9 (see attached schedule for disbursements by Debtor) DEBTORS' ATTORNEY: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Jeffrey L. Tanenbaum (JT 9797) George A. Davis (GD 2761) NET LOSS: December 1 to December 31, 2002 (millions): $378.6 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. DATE: January 21, 2003 /s/ Lonnie A. Arnett --------------------------- Lonnie A. Arnett Vice President, Controller and Chief Accounting Officer BETHLEHEM STEEL CORPORATION Case No. 01-15288 (BRL) through 01-15302, 01-15308 through 01-15315 (BRL) CONSOLIDATED STATEMENTS OF OPERATIONS (dollars and shares in millions, except per share data)
December 31, 2002 ------------------------------------ MONTH ENDED YEAR ENDED (unaudited) (unaudited) --------------- ---------------- NET SALES $ 277.1 $ 3,572.4 --------------- ---------------- COSTS AND EXPENSES Cost of sales 271.7 3,499.8 Depreciation 19.7 246.3 Selling, administration and general expense 8.5 88.8 Special charges (Note 4) 350.0 380.5 --------------- ---------------- TOTAL COSTS AND EXPENSES 649.9 4,215.4 --------------- ---------------- LOSS FROM OPERATIONS (372.8) (643.0) REORGANIZATION ITEMS (Note 5) (1.4) (14.5) FINANCING EXPENSE - NET (Note 6) (4.4) (52.4) --------------- ---------------- LOSS BEFORE INCOME TAXES (378.6) (709.9) BENEFIT FROM INCOME TAXES (Note 7) - 10.3 --------------- ---------------- NET LOSS (378.6) (699.6) DIVIDEND REQUIREMENTS ON PREFERRED AND PREFERENCE STOCK 3.2 39.4 --------------- ---------------- NET LOSS APPLICABLE TO COMMON STOCK $ (381.8) $ (739.0) =============== ================ NET LOSS PER COMMON SHARE: Basic and Diluted $ (2.91) $ (5.64) AVERAGE SHARES OUTSTANDING: Basic and Diluted 131.1 131.0 The accompanying Notes are an integral part of the Consolidated Financial Statements. See Note 11 for Consolidated Statement of Operations for Debtors Only.
Bethlehem Steel Corporation Case No. 01-15288 (BRL) through 01-15302, 01-15308 through 01-15315 (BRL) CONSOLIDATED BALANCE SHEET (dollars in millions)
December 31, 2002 (unaudited) ------------------ ASSETS Current Assets: Cash and cash equivalents $ 67.6 Receivables - net 350.2 Inventories: Raw materials 224.6 Finished and semifinished 516.3 ------------------ Total Inventories 740.9 Other current assets 27.6 ------------------ Total Current Assets 1,186.3 Investments and Miscellaneous Assets 76.9 Property, Plant and Equipment - net 2,615.5 Intangible Pension Asset - ------------------ Total Assets $ 3,878.7 ================== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable $ 167.6 Accrued employment costs 102.6 Secured debt and capital lease obligations - current (Notes 9 and 10) 695.7 Other current liabilities 81.4 ------------------ Total Current Liabilities 1,047.3 Secured Debt and Capital Lease Obligations 84.9 Deferred Gain and Other Long-term Liabilities 123.3 Liabilities Subject to Compromise (Note 8) 6,073.4 Stockholders' Deficit: Preferred Stock 11.3 Preference Stock 2.0 Common Stock 136.1 Common Stock held in treasury at cost (65.9) Additional paid-in capital 1,909.9 Accumulated other comprehensive loss (1,905.0) Accumulated deficit (3,538.6) ------------------ Total Stockholders' Deficit (3,450.2) ------------------ Total Liabilities and Stockholders' Deficit $ 3,878.7 ================== The accompanying Notes are an integral part of the Consolidated Financial Statements. See Note 11 for Consolidated Balance Sheet of the Debtors only.
BETHLEHEM STEEL CORPORATION Case No. 01-15288 (BRL) through 01-15302, 01-15308 through 01-15315 (BRL) CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions)
DECEMBER 31, 2002 ------------------------------------------ MONTH YEAR ENDED ENDED (unaudited) (unaudited) ------------------- ------------------ OPERATING ACTIVITIES: Net loss $ (378.6) $ (699.6) Adjustments for items not affecting cash from operating activities: Depreciation 19.7 246.3 Special charges 350.0 380.5 Recognition of deferred gains (1.8) (21.7) Reorganization items 1.4 14.5 Other - net 2.5 13.6 Working capital (excluding financing and investing activities): Receivables 6.8 (7.8) Inventories (1.9) (16.3) Accounts payable (9.9) (14.0) Other (12.5) 6.5 Funding postretirement benefits: Pension funding less than expense 12.8 135.2 Retiree healthcare and life insurance benefit 0.6 40.3 payments less than expense ------------------- ------------------ CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS (10.9) 77.5 ------------------- ------------------ Reorganization items (1.4) (14.5) ------------------- ------------------ CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (12.3) 63.0 ------------------- ------------------ INVESTING ACTIVITIES: Capital expenditures (18.0) (124.3) Cash proceeds from asset sales 1.3 27.8 ------------------- ------------------ CASH USED FOR INVESTING ACTIVITIES (16.7) (96.5) ------------------- ------------------ FINANCING ACTIVITIES: Borrowings (Note 8) - 90.6 Debt and capital lease payments (Note 10) (2.9) (65.2) Other payments (1.6) (28.3) ------------------- ------------------ CASH USED FOR FINANCING ACTIVITIES (4.5) (2.9) ------------------- ------------------ NET DECREASE IN CASH AND CASH EQUIVALENTS (33.5) (36.4) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 101.1 104.0 ------------------- ------------------ - END OF PERIOD 67.6 67.6 AVAILABLE BORROWING UNDER COMMITTED BANK CREDIT ARRANGEMENTS 132.8 132.8 ------------------- ------------------ TOTAL LIQUIDITY AT END OF MONTH $ 200.4 $ 200.4 =================== ================== SUPPLEMENTAL CASH INFORMATION: Interest and other financing costs, net of amount capitalized $ 3.6 $ 45.2 Income taxes received - (9.4) The accompanying Notes are an integral part of the Consolidated Financial Statements.
BETHLEHEM STEEL CORPORATION CASE NO. 01-15288 (BRL) THROUGH 01-15302, 01-15308 THROUGH 01-15315 (BRL) NOTES TO DECEMBER 31, 2002 CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. These Consolidated Financial Statements are unaudited and should be read together with audited financial statements in Bethlehem's Annual Report on Form 10-K for the year ended December 31, 2001 and other reports filed with the Securities and Exchange Commission during 2002. 2. On January 6, 2003, International Steel Group (ISG) provided Bethlehem with a proposal to purchase substantially all of Bethlehem's assets under section 363 of the Code. Management is currently reviewing the proposal to determine whether it believes such transaction is in the best interest of Bethlehem's creditors and other constituents. Any sale of assets under such proposal will require the approval of the Court and, if approved, an open auction for the assets. 3. On December 17, 2002 the Pension Benefit Guarantee Corporation (PBGC) filed a complaint in the United States District Court for the Eastern District of Pennsylvania alleging there was sufficient cause under applicable laws to terminate the Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies (the Plan). The complaint requests, among other things, that the PBGC be appointed as the Plan's trustee and December 18, 2002 be established as the Plan's termination date. Bethlehem is considering all legal options, including contesting the termination and has until February 23, 2003 to respond. As a result of the PBGC's actions, we recognized a curtailment loss of $176 million in December 2002 in accordance with generally accepted accounting principles and will not record future pension expense under the Plan. This action by the PBGC is an event of default under our credit facility with General Electric Credit Corporation (GECC). However, on December 27, 2002, GECC waived such default and amended the credit facility's pension plan related provisions, subject to Court approval. A Court hearing on the amendment is scheduled for January 24, 2003. Under generally acceptable accounting principles, we are required to record a minimum pension liability at year-end, using our November 30, 2002 measurement date, equal to the unfunded accumulated pension obligation of $2,796 million. The difference between the unfunded pension accumulated and projected benefit obligations represents the projected future increase in salaries and wages used for actuarial purposes. During the fourth quarter 2002, we recorded a charge to stockholders' deficit through other comprehensive loss of $1.1 billion. The following sets forth the status of our pension and other postretirement benefits (OPEB) at December 31, 2002 and 2001 ($ in millions):
Pension OPEB -------------------------------------- ------------------------------------- 2002 2001 2002 2001 ----------------- ----------------- ---------------- ---------------- Projected benefit obligation $ 6,583 $ 6,495 $ 3,107 $ 3,031 Fair value of plan assets 3,677 4,753 16 17 ------------ ------------ ------------ ------------ Unfunded projected benefit obligation 2,906 1,742 3,091 3,014 Actuarial adjustments (110) (125) (1,002) (972) December - net 53 7 9 5 ------------ ------------ ------------ ------------ Balance Sheet Liabilities at December 31 $ 2,849 $ 1,624 $ 2,098 $ 2,047 ============ ============ ============ ============ BALANCE SHEET ACCOUNTS: Liabilities subject to compromise $ 2,849 $ 1,624 $ 2,059 $ 2,006 Current and long-term liabilities - - 39 41 ------------ ------------ ------------ ------------ Total $ 2,849 $ 1,624 $ 2,098 $ 2,047 ============ ============ ============ ============
4. A summary of special charges follows ($ in millions): One Month Year --------------- ---------------- Pension plan curtailment $ 176.0 $ 176.0 Impairment of long-lived assets 89.0 89.0 Employee benefit costs 68.0 78.5 Environmental accruals 17.0 37.0 --------------- ---------------- Total $ 350.0 $ 380.5 =============== ================ As discussed in Note 3 above, the PBGC filed a complaint to terminate Bethlehem's Pension Plan effective December 18, 2002, and we recorded a $176 million non-cash curtailment charge. We continually analyze our ability to recover the carrying value of our long-lived assets. In December, based on the facts and circumstances that had been evolving, we determined that the carrying value of certain assets exceeded the related expected future cash flows. Accordingly, we recognized non-cash impairment losses of $89 million, principally for our Pennsylvania Steel Technologies operation in Steelton, Pennsylvania. During December, we reduced about 245 USWA represented positions at our Pennsylvania Steel Technologies operations in Steelton, Pennsylvania, and reduced about 205 non-represented salaried positions. We recognized a $68 million non-cash charge to account for the required employee benefits. Earlier in 2002, we recorded an $8 million charge for reducing salaried positions in November and a $2.5 million charge for our permanently idled pipe mill in Steelton, Pennsylvania. During December, we received an administrative order from the Pennsylvania Department of Environmental Protection regarding future requirements related to managing acid mine drainage at our closed coal mining facilities. As a result, we increased our estimate of probable total future spending and recorded a $17 million non-cash charge. Earlier in 2002, Bethlehem personnel attended a meeting requested by representatives from the New York Department of Environmental Conservation to discuss the contents and timing of a Consent Order to conduct a RCRA Corrective Measures Study and to begin to implement an agreed upon plan of remediation at our closed steel manufacturing facility in Lackawanna, New York. Based upon the information received and the conceptual agreements reached at that meeting, we recorded a $20 million non-cash charge to reflect Bethlehem's most current estimate of the total probable future remediation costs at Lackawanna. These cash requirements for remediation are expected to be expended ultimately over a protracted period of years, according to a schedule to be agreed upon by Bethlehem and the regulatory agencies. 5. Net costs resulting from reorganization of the businesses have been reported in the statement of operations separately as reorganization items. For the month and the year ended December 31, 2002, the following have been recorded ($ in millions): One Month Year -------------------- ------------------- Professional and other fees $ 1.5 $ 17.9 Gains from termination of contracts - (2.0) Interest income (0.1) (1.4) -------------------- ------------------- Total $ 1.4 $ 14.5 ==================== =================== 6. Interest at the stated contractual amount on unsecured debt that was not charged to earnings as a result of our chapter 11 filing was approximately $45 million for the year ended December 31, 2002. 7. The income tax benefit recorded in 2002 represents a $10 million tax refund as a result of the "Job Creation and Workers Assistance Act of 2002" that was enacted on March 8, 2002. The Act provides us the ability to carry back a portion of our 2001 Alternative Minimum Tax loss for a refund of taxes paid in prior years that was not previously available. We received the refund in July 2002. 8. Liabilities subject to compromise at December 31, 2002 follows ($ in millions): Pension $ 2,849.0 Other postemployment benefits 2,059.0 Unsecured debt 526.7 Accounts payable 190.7 Accrued employment costs 186.7 Other accrued liabilities 194.6 Accrued taxes and interest 66.7 -------------------- Total $ 6,073.4 ==================== 9. Our GECC credit facility and secured inventory financing arrangements mature on October 15, 2003. Accordingly, the outstanding balances of $280.7 million and $289.9 million, respectively, at December 31, 2002 are classified as a current liability. 10. In the second quarter of 2002, we acquired the remaining 50% portion of the Columbus Coatings Company (CCC) and Columbus Processing Company (CPC) joint ventures from LTV Steel Corporation. CCC is an automotive quality, hot-dipped galvanized coating line and CPC is a steel slitting facility, both located in Columbus, Ohio. These interests were acquired on June 5, 2002 for cash, a release of LTV's guarantee of CCC's debt and forgiveness of claims against LTV by Bethlehem and CCC. The acquisition was accounted for as a purchase. CCC's and CPC's results are included in the Consolidated Financial Statements from the date of acquisition. Pro-forma amounts for the year are not significant. The value assigned to assets and liabilities acquired follows ($ in millions): Property, plant & equipment $155.3 Debt and capital lease obligation (105.9) Other - net (.3) ------------ Net assets 49.1 Less: Investment in and receivable from joint ventures and LTV (46.7) ------------ Cash purchase price, net of cash acquired $ 2.4 ============ CCC's construction costs were financed in part with a loan under a 1999 agreement with a group of lenders. Bethlehem has guaranteed the full amount of the construction loan. Bethlehem provided CCC's lenders with a collateralized letter of credit for $30 million and a mortgage on our corporate headquarters building as additional collateral. In July 2002, CCC lenders used the letter of credit to reduce the outstanding loan balance by $30 million. Because of our chapter 11 filing, CCC and Bethlehem are in default under the construction loan agreements which allows the lenders to call the full amount of the loan. We believe that the market value of CCC exceeds the net loan amount. In October, we filed a motion with the Bankruptcy Court requesting approval to refinance with General Electric Capital Corporation the approximate $68 million outstanding construction loan balance. A hearing was held on December 5, 2002 and the motion was approved. Closing on a new financing arrangement has been delayed indefinitely as management considers the impact of the PBGC's termination of our pension plan and considers whether to accept the proposed purchase offer received from ISG as discussed in Notes 2 and 3. 11. Summarized Consolidated Statement of Operations for the year ended and Balance Sheet as of December 31, 2002 for the Debtors only follows ($ in millions):
SUMMARIZED CONSOLIDATED STATEMENT OF OPERATIONS Net Sales $ 3,512.9 Costs and Expenses 3,766.9 Special Charges 380.5 ---------------- Loss from Operations (634.5) Reorganization Items (14.5) Financing Expense - Net (55.4) Equity in Loss of Unconsolidated Subsidiaries (5.5) ---------------- Loss Before Income Taxes (709.9) Benefit from Income Taxes 10.3 ---------------- Net Loss (699.6) Dividend Requirements on Preferred and Preference Stock 39.4 ---------------- Net Loss Applicable to Common Stock $ (739.0) ================ SUMMARIZED CONSOLIDATED BALANCE SHEET ASSETS Current Assets: Cash and cash equivalents $ 54.9 Receivables - net 340.0 Inventories 731.0 Other current assets 25.9 --------------- Total Current Assets 1,151.8 Investments and Miscellaneous Assets 166.2 Property, Plant and Equipment - net 2,410.9 Intangible Pension Asset 0.0 --------------- Total Assets $ 3,728.9 =============== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable $ 155.8 Accrued employment costs 90.2 Secured debt and capital lease obligations-current (Notes 9 & 10) 627.4 Other current liabilities 63.7 --------------- Total Current Liabilities 937.1 Secured Debt and Capital Lease Obligations 84.9 Deferred Gains and Other Long-Term Liabilities 83.8 Liabilities Subject to Compromise 6,073.4 Total Stockholders' Deficit (3,450.3) --------------- Total Liabilities and Stockholders' Deficit $ 3,728.9 ===============
BETHLEHEM STEEL CORPORATION Case No. 01-15288 (BRL) through 01-15302, 01-15308 through 01-15315 (BRL) Monthly Operating Report Schedule of Disbursements
Month Ended Quarter Ended Year Ended (dollars in thousands) December 31, 2002 December 31, 2002 December 31, 2002 ------------------------------------------------------------------------- Bethlehem Steel Corporation $330,106 $955,893 $3,791,930 Alliance Coatings Company, LLC 805 805 24,498 BethEnergy Mines Inc. 189 766 2,998 Bethlehem Cold Rold Corporation 12 12 29 Bethlehem Development Corporation 0 0 0 Bethlehem Rail Corporation 9 22 244 Bethlehem Steel de Mexico, S.A. de C.V. 55 151 627 Bethlehem Steel Export Company of Canada, Limited 0 0 0 Bethlehem Steel Export Corporation 0 0 0 BethPlan Corp. 0 0 0 Chicago Cold Rolling, L.L.C. 568 1,921 6,525 Eagle Nest Inc. 0 0 1 Encoat North Arlington, Inc. 2 29 206 Energy Coatings Company 40 54 60 Greenwood Mining Corporation 0 0 0 HPM Corporation 0 0 1 Kenacre Land Corporation 0 1 1 LI Service Company 109 327 1,399 Marmoraton Mining Company, Ltd. 5 17 70 Mississippi Coatings Limited Corporation 8 2,576 5,152 Mississippi Coatings Line Corporation 1 53 106 Ohio Steel Service Company, LLC 0 0 0 Primeacre Land Corporation 11 44 158 ----------------------- ----------------------- -------------------- $331,920 $962,671 $3,834,005 Note: Inter-company disbursements are excluded from this schedule.
BETHLEHEM STEEL CORPORATION CASE NO. 01-15288 (BRL) THROUGH 01-15302, 01-15308 THROUGH 01-15315 (BRL) Post petition salaries and wages, including employee withholdings and employer related payroll taxes, have been paid in the ordinary course of business. Other post petition taxes, including those for sales and use taxes, property taxes and other taxes have been paid in the ordinary course of business. All insurance policy premiums due, including those for workers compensation and disability insurance have been paid. Accordingly, all such policies remain in force. Details for the above transactions will be provided to U.S. Trustee upon request.