-----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, BM7nNcCBxBI2jE8ESqXSQpQnlk5/RC6YgH3LNIkigA0uvIoIHcdM4sqW6uAhhy6h +FKgniX5TaoPa7uwN0bpvQ== 0000950172-99-001469.txt : 19991025 0000950172-99-001469.hdr.sgml : 19991025 ACCESSION NUMBER: 0000950172-99-001469 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIRMINGHAM STEEL CORP CENTRAL INDEX KEY: 0000779334 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 133213634 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: SEC FILE NUMBER: 001-09820 FILM NUMBER: 99732569 BUSINESS ADDRESS: STREET 1: 1000 URBAN CENTER DRIVE STREET 2: SUITE 300 CITY: BIRMINGHAM STATE: AL ZIP: 35242 BUSINESS PHONE: 2059701200 MAIL ADDRESS: STREET 1: P.O. BOX 1208 CITY: BIRMINGHAM STATE: AL ZIP: 35201-1208 DEFA14A 1 SCHEDULE 14A (RULE 14A-101) SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant {X} Filed by a Party other than the Registrant { } Check the appropriate box: { } Preliminary Proxy Statement { } Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) { } Definitive Proxy Statement {X} Definitive Additional Materials { } Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 BIRMINGHAM STEEL CORPORATION --------------------------------------------------------- (Name of Registrant as specified in its charter) ---------------------------- (Name of person(s) filing proxy statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): {X} No fee required. { } Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0- 11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transactions: (5) Total fee paid. __________ { } Fee paid previously with preliminary materials. { } Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: BIRMINGHAM STEEL CORPORATION OCTOBER 1999 [TITLE SLIDE] AGENDA - ----------------------------------------------------------------------------- O STRENGTH OF CORE OPERATIONS O BACKGROUND AND BENEFITS OF THE STRATEGIC RESTRUCTURING O THE UNITED GROUP SOLICITATION [SLIDE 1] CORE OPERATIONS - ----------------------------------------------------------------------------- BIRMINGHAM KANKAKEE JOLIET JACKSON SEATTLE CARTERSVILLE PESCO JACKSON SCRAP VANCOUVER SCRAP [SLIDE 2] PROFITABLE CORE MINI-MILL OPERATIONS - ----------------------------------------------------------------------------- DESPITE SOME OF THE WORST INDUSTRY CONDITIONS IN 40 YEARS, BIRMINGHAM'S CORE MINI-MILL OPERATIONS ARE SOLIDLY PROFITABLE (Dollars in Millions, except per share amounts) - -----------------------------------------------------------------------------
FULL YEAR COMPARISON QUARTERLY COMPARISON ------------------------------------------------------------------------------------ FY 1998 FY 1999 Q1 1999 Q1 2000 - --------------------------------------------------------------------------------------------------------------------------------- TONS SHIPPED (000) 2,667 2,389 656 642 NET SALES $836.9 $709.9 $207.5 $176.8 EBITDA 116.4 106.9 34.4 26.7 NET INCOME 39.9 26.8 10.9 5.8 EPS 1.34 0.91 0.19 0.30 PRE-OPERATING/START-UP COSTS 1.3 12.9 1.4 4.5 EPS (BEFORE PRE-OPERATING/START-UP COSTS) 1.37 1.19 0.28 0.30 - --------------------------------------------------------------------------------------------------------------------------------- NOTE: CORE OPERATIONS INCLUDE KANKAKEE, JOLIET, BIRMINGHAM, SEATTLE, JACKSON AND CARTERSVILLE. EXCLUDES NON-RECURRING CHARGES.
[SLIDE 3] POSITIVE CORE OPERATIONAL DEVELOPMENTS - ----------------------------------------------------------------------------- FISCAL YEAR 1999 AND FIRST QUARTER FISCAL YEAR 2000 O CONTINUED IMPROVEMENT IN PRODUCT MIX - INCREASING MERCHANT BAR COMPONENT O CONTINUED PROGRESS IN IMPROVING EFFICIENCY O LOWER MELT SHOP CONVERSION COSTS AND SCRAP MANAGEMENT PROGRAMS HAVE IMPROVED METAL SPREADS IN THE FY 1998/1999 PERIOD O REBAR: $169 TO $174 PER NET TON O MERCHANT BAR: $211 TO $221 PER NET TON O INVENTORY AT FISCAL YEAR-END DOWN $35 MILLION OR 32% FROM FY 1998 O Q3 PRICE INCREASE ANNOUNCEMENTS O MERCHANT $15/TON EFFECTIVE 6/1/99 O REBAR $20/TON EFFECTIVE 6/1/99 O PROGRESS MADE IN CARTERSVILLE START-UP O WINDING DOWN OF MAJOR CAPITAL SPENDING REQUIREMENTS O REORGANIZATION OF COMPANY INTO STRATEGIC BUSINESS UNITS IN NOVEMBER 1998 HAS DRIVEN PRODUCTIVITY AND PROFITABILITY GAINS [SLIDE 4]
CONTINUING STEPS TO BUILD PROFITABILITY - ----------------------------------------------------------------------------- SINCE 1996, MANAGEMENT HAS SUCCESSFULLY IMPLEMENTED SEVERAL INITIATIVES TO IMPROVE PROFITABILITY IN ITS CORE MINI-MILL OPERATIONS PROFIT INITIATIVES RESULTS O EXPANDED REBAR BUSINESS -> O AVERAGE REBAR SHIPMENTS HAVE INCREASED 11% OVER 1996 LEVELS O IMPROVED PRODUCT MIX -> O MERCHANT BAR SHIPMENTS INCREASED FROM 26% TO 36% OF MIX O BROADENED CUSTOMER BASE -> O INCREASE IN OEM SHIPMENTS HAS IMPROVED PROFITABILITY AT SEATTLE AND KANKAKEE O INCREASED OPERATING EFFICIENCIES -> O REDUCED AVERAGE MANHOURS/TON O 1.22 (1994 - 1996) O 1.05 (1997 - 1999) O INCREASED UTILIZATION OF INTERNALLY PRODUCED BILLETS
[SLIDE 5]
CORE BUSINESS OUTLOOK IS POSITIVE - ----------------------------------------------------------------------------- MANAGEMENT INITIATIVES CURRENTLY UNDER WAY WILL FURTHER ENHANCE PROFITABILITY MINI-MILL INITIATIVES - -------------------------------------- ------------------------------------------------------------------------------------ CARTERSVILLE SUCCESSFUL START-UP, EXPANDED MERCHANT PRODUCT OFFERING, AND LEVERAGING MELT CAPACITY THROUGHOUT ORGANIZATION JACKSON CONTINUED GROWTH OF HIGHER-MARGIN MERCHANT BAR AND NICHE PRODUCTS AND IMPROVED VOLUME LEVELS BIRMINGHAM HIGHER VOLUME AND IMPROVED INVENTORY TURNS, RUNNING ROLLING MILL AT CAPACITY WITH CARTERSVILLE BILLETS SEATTLE CONTINUED GROWTH IN MERCHANT BAR SALES, EXPANDED SALES PLATFORM IN CANADA AND HIGHER UTILIZATION RATES DURING WINTER MONTHS KANKAKEE/JOLIET ADDED VOLUME AT JOLIET MILL, USING BILLETS FROM JACKSON TO IMPROVE UTILIZATION RATES - -------------------------------------- ------------------------------------------------------------------------------------
[SLIDE 6] ACCELERATING CARTERSVILLE START-UP - ----------------------------------------------------------------------------- FOCUS ON SUCCESSFUL START-UP AT CARTERSVILLE HAS BEEN INTENSIFIED O IMPLEMENTING OPERATING STRATEGY O STRENGTHENED MANAGEMENT TEAM O QUICKLY BUILDING MELT SHOP VOLUMES O DEVELOPING CARTERSVILLE AS SUPPLIER TO CLEVELAND - MINIMUM 15 M TONS PER MONTH O SUPPLYING BIRMINGHAM PLANT 5 M TONS PER MONTH O WILL HAVE ROLLING MILL COMMERCIAL ON ALL SECTIONS BY DECEMBER 1999 O MEETING NEAR-TERM PROFIT AND LOSS EXPECTATIONS O EXPECT TO BE PROFITABLE BY THIRD QUARTER O GOAL OF BREAKEVEN FOR CURRENT FISCAL YEAR O REALIZING SIGNIFICANT LONG-TERM OPPORTUNITY IN THE MILL O LOW-COST ROD BILLET AND MERCHANT BILLET SUPPLIER O FASTER PENETRATION OF MIDSECTION MARKET [SLIDE 7]
CARTERSVILLE'S PRODUCT RANGE PROVIDES COMPETITIVE ADVANTAGE - ONE-STOP SHOPPING - ----------------------------------------------------------------------------- COMPETITOR PRODUCT AND SIZE COMPARISON 6" - 12" 3" - 12" 3" - 10" 4" - 8" 5" - 14" 8" - 12" 6" - 12" CAPACITY C-CHAN MC-CHAN STD. I BEAM ANGLES FLATS MH BEAMS WF BEAMS Z'S & T'S - ---------------------------------------------------------------------------------------------------------------------------------- BIR 500+ =========== =========== =========== =========== =========== =========== =========== ========= J & L 250 =========== =========== =========== = CHAP-TX 750 =========== =========== =========== =========== CHAP-VA(1) 1,000 ==== ========= NUC-DARL 600 ===== ====== ==== NUC-JEW 600 ===== ====== ==== NUC-BERK(1) 500 ========= == =========== =========== =========== NWS&W 700 =========== ====== ========== ========= NUC/YAM 250 == ==== === =========== =========== ========= SMI-BI 450 ==== ==== ===== ========== ==== BAYOU 500 ===== ==== =========== ====== === NSS-KY 250 =========== =========== ===== ========= ========== LASCO 800 =========== === =========== =========== AMERISTL 400 === === === SDI(2) 800 =========== ======= ======= ========= =========== =========== ========= KY EL 150 ========== IMPORTS 500 =========== =========== =========== =========== =========== =========== =========== === PRODUCTS CAN BE ADDED TO CARTERSVILLE WHEN THE MARKET DEMANDS. (1) NEW ENTRANT 1999. (2) NEW ENTRANT 2000.
[SLIDE 8] A STRONG AND PROVEN MANAGEMENT TEAM - ----------------------------------------------------------------------------- CHIEF EXECUTIVE OFFICER ROBERT GARVEY (JANUARY 1996) CEO AT NORTH STAR STEEL FOR 12 YEARS; BUILT NORTH STAR STEEL INTO THE LEADING NON-FLAT MINI-MILL PRODUCER CHIEF OPERATING OFFICER BRIAN HILL (JUNE 1999) EVP OPERATIONS AT NORTH STAR STEEL UNDER GARVEY DURING PRIMARY GROWTH PERIOD; 31 YEARS WITH CARGILL INCLUDING 15 YEARS OF SENIOR-LEVEL STEEL AND STEEL-RELATED EXPERIENCE WITH NORTH STAR AND CARGILL CHIEF FINANCIAL OFFICER KEVIN WALSH (JULY 1998) 20 YEARS WITH JOHNSON & JOHNSON (DOMESTIC AND INTERNATIONAL); EXTENSIVE FINANCIAL AND OPERATIONAL EXPERIENCE WITH MAJOR MULTINATIONAL CORPORATIONS CARTERSVILLE JACK WHEELER (ASSIGNED JULY 1999) SEASONED MINI-MILL OPERATOR; RESPONSIBLE FOR RECENT SUCCESS AT BIRMINGHAM'S NORTHERN DIVISION (KANKAKEE/JOLIET); RECENTLY GIVEN RESPONSIBILITY FOR CARTERSVILLE OPERATION [SLIDE 9]
THE CORE OPERATIONS HAVE SHOWN SUBSTANTIAL IMPROVEMENT UNDER CURRENT MANAGEMENT... - ----------------------------------------------------------------------------- (DOLLARS IN MILLIONS, EXCEPT PER TON AMOUNTS) 1994 1995 1996 1997 1998 1999 - --------------------------------------------------------------------------------------------------------- SHIPMENTS (000) 1,790 1,743 1,870 2,173 2,667 2,389 AVERAGE PRICE/TON $299 $330 $302 $307 $314 $297 SALES $536.1 $574.6 $564.3 $667.7 $836.9 $709.9 EBITDA(1) 58.5 95.1 50.4 85.9 117.7 119.8 % MARGIN 10.9% 16.6% 8.9% 12.9% 14.1% 16.9% NET INCOME 15.5 36.9 (1.3) 20.9 39.9 26.8 % MARGIN 2.8% 6.4% (0.2%) 3.1% 4.8% 3.8% - --------------------------------------------------------------------------------------------------------- NOTE: CORE OPERATIONS INCLUDE KANKAKEE, JOLIET, BIRMINGHAM, SEATTLE, JACKSON AND CARTERSVILLE. FISCAL YEARS ENDING JUNE 30. (1) EBITDA DOES NOT INCLUDE PRE-OPERATING/START-UP COSTS.
[SLIDE 10] ...HAVE OUTPERFORMED THE PRIOR MANAGEMENT... - ----------------------------------------------------------------------------- RESULTS FROM CORE OPERATIONS(1) (DOLLARS IN MILLIONS, EXCEPT PER TON AMOUNTS) AVERAGE AVERAGE 1994 - 1996 1997 - 1999 - ------------------------------------------------------------------------------- SHIPMENTS (000) 1,801 2,410 AVERAGE PRICE/TON $310 $306 SALES 558.3 738.2 EBITDA(2) 68.0 107.8 EBITDA MARGIN % 12.2% 14.6% - ------------------------------------------------------------------------------- (1) CORE OPERATIONS INCLUDE KANKAKEE, JOLIET, BIRMINGHAM, SEATTLE, JACKSON AND CARTERSVILLE. FISCAL YEARS ENDING JUNE 30. (2) EBITDA DOES NOT INCLUDE CARTERSVILLE PRE-OPERATING/START-UP COSTS. [SLIDE 11] ...AND HAVE PERFORMED WELL RELATIVE TO INDUSTRY PEERS - ----------------------------------------------------------------------------- THE EBITDA MARGIN OF BIRMINGHAM'S CORE MINI-MILL BUSINESS IS WELL ABOVE THE INDUSTRY AVERAGE LTM PERFORMANCE COMPARISON (DOLLARS IN MILLIONS)
COMMERCIAL PEER GROUP BIRMINGHAM NUCOR METALS CO STEEL GSI AMERISTEEL SCHNITZER AVERAGE - ------------------------------------------------------------------------------------------------------------------- REVENUE $709.9 $3,775.0 $2,324.9 $1,428.5 $788.4 $669.3 $270.4 - EBITDA 106.9 581.9 140.5 118.2 30.6 91.7 15.0 - EBITDA MARGIN (%) 15.1% 15.4% 6.0% 8.3% 3.9% 13.7% 5.5% 8.8% NET INCOME 26.8 205.2 45.3 11.8 (47.4) 28.9 (6.8) - - ------------------------------------------------------------------------------------------------------------------- NOTE: EFFECTIVE TAX RATE USED WHERE AVAILABLE, OTHERWISE STATUTORY TAX RATE. NUMBERS ADJUSTED FOR NONRECURRING ITEMS.
[SLIDE 12] BACKGROUND AND BENEFITS OF THE STRATEGIC RESTRUCTURING [SLIDE 13] ORIGINS OF CURRENT SBQ CHALLENGES - ----------------------------------------------------------------------------- BIRMINGHAM'S CURRENT CHALLENGES ARE LARGELY ATTRIBUTABLE TO PAST ERRORS MADE BY JAMES TODD AND HIS SENIOR MANAGEMENT O FAILURE TO COMPLETE AN APPROPRIATE MARKET STUDY O SUB-OPTIMAL FURNACE SIZE FOR SBQ O INABILITY TO DIRECT CAST BILLETS O INADEQUATE EVALUATION OF EQUIPMENT O FAILURE TO INCLUDE CUT-TO-LENGTH CAPABILITIES O FAILURE TO BUILD A MELT SHOP WHEN NEEDED O DRI PURCHASE COMMITMENT [SLIDE 14] WHY SELL SBQ OPERATIONS NOW? - ----------------------------------------------------------------------------- BOARD AND MANAGEMENT HAVE ACTIVELY REVIEWED A BROAD RANGE OF STRATEGIC OPTIONS FOR THE SBQ DIVISION OVER THE PAST YEAR O OPERATIONAL RAMP-UP HAS REVEALED THAT OPTIMIZATION REQUIRES SIGNIFICANT CAPITAL AND MANAGEMENT RESOURCES O OPERATING RESULTS OF SBQ DIVISION HAVE SIGNIFICANTLY UNDERMINED THE COMPANY'S FINANCIAL PERFORMANCE AND INCREASED DEBT LEVELS O CONTINUED FOCUS ON THE SBQ PRODUCT POSES MANY RISKS O OTHER MARKET SEGMENTS PRESENT BETTER GROWTH AND PROFIT OPPORTUNITIES O SBQ SECTOR IS CONSOLIDATING - MEANINGFUL INTEREST IS ANTICIPATED SALE OF SBQ OPERATIONS WILL BEST POSITION THE COMPANY TO BUILD STOCKHOLDER VALUE [SLIDE 15] KEY ELEMENTS OF STRATEGIC RESTRUCTURING - ----------------------------------------------------------------------------- O DIVEST NON-CORE OPERATIONS (SBQ, AMERICAN IRON REDUCTION); REVIEW OPTIONS FOR PACIFIC COAST RECYCLING O ACCELERATE CARTERSVILLE START-UP INITIATIVES - GOAL OF PROFITABLE MILL BY MID-FY 2000 O CONTINUE TO DRIVE PRODUCTIVITY AND PROFITABILITY IN CORE MINI-MILL OPERATIONS O CONTINUE TO REDUCE DEBT LEVELS TO RESTORE FINANCIAL FLEXIBILITY O BIRMINGHAM'S STRATEGIC RESTRUCTURING HAS ALREADY RETURNED THE COMPANY TO NET PROFITABILITY [SLIDE 16] KEY FINANCIAL BENEFITS OF THE RESTRUCTURING - ----------------------------------------------------------------------------- THE STRATEGIC RESTRUCTURING WILL IMMEDIATELY STRENGTHEN THE COMPANY'S BALANCE SHEET AND IMPROVE CASH FLOW O STRENGTHENS CASH FLOW BY ELIMINATING SBQ OPERATING LOSSES O REDUCES DEBT WITH NET PROCEEDS OF ASSETS SALES O RETURNS CAPITAL SPENDING TO MORE NORMALIZED LEVELS (APPROXIMATELY $20 - $30 MILLION) O REDUCES NEED FOR WORKING CAPITAL (LOWER BILLET INVENTORY) O SIGNIFICANTLY STRENGTHENS CREDIT RATIOS O INTEREST RATES WILL INCREASE IF STRATEGIC RESTRUCTURING IS NOT PURSUED. [SLIDE 17] ANALYSTS SUPPORT THE RESTRUCTURING - ----------------------------------------------------------------------------- O "BIRMINGHAM STEEL HAS ANNOUNCED A LONG-OVERDUE RESTRUCTURING WHEREBY THE COMPANY WILL SEEK TO DIVEST SEVERAL UNPROFITABLE BUSINESSES AND FOCUS ON ITS CORE OPERATIONS." (LARRY BENN, GOLDMAN SACHS & CO., 8/19/99) O ". . . THE DIVESTITURE OF THESE BUSINESSES SHOULD HAVE A SIGNIFICANTLY POSITIVE IMPACT ON THE COMPANY'S EBITDA." (LARRY BENN, GOLDMAN SACHS & CO., 8/19/99) O ". . . WE BELIEVE THE DIVESTITURE [OF THE SBQ DIVISION] WOULD BE ADDITIVE UNDER ALMOST ANY TRANSACTION SCENARIO." (MICHAEL S. MICHALISIN/MICHELE KEDEM, DEUTSCHE BANC ALEX. BROWN, 9/16/99) O "IT HAS BEEN THE SBQ DIVISION THAT HAS BEEN THE ISSUE FOR THE COMPANY. I SEE THIS [THE SALE OF THE DIVISION] AS A POSITIVE MOVE." SCOTT MORRISON, DONALDSON, LUFKIN & JENRETTE (IN THE BIRMINGHAM NEWS, 8/19/99) NOTE: PERMISSION TO USE THESE QUOTATIONS WAS NEITHER SOUGHT NOR GRANTED. [SLIDE 18] AGREEMENT REACHED WITH LENDERS - ----------------------------------------------------------------------------- BIRMINGHAM STEEL'S REVISED AGREEMENTS WITH ITS BANKS AND PRIVATE LENDERS WERE A VOTE OF CONFIDENCE IN THE COMPANY, ITS BOARD AND MANAGEMENT, AND THE STRATEGIC RESTRUCTURING O AVAILABLE LINES MAINTAINED AT $300 MILLION EFFECTIVE JANUARY 1, 2000, PROVIDING LIQUIDITY TO MEET THE COMPANY'S NEEDS O INTEREST RATES ON THE BORROWINGS INCREASED AND COLLATERAL PROVIDED TO THE LENDERS O AGREEMENTS - AS REQUIRED BY OUR LENDERS - CONTINUE TO PROVIDE THAT DEBT BECOMES DUE AND PAYABLE UPON A CHANGE OF CONTROL [SLIDE 19] DIVESTITURE UPDATE - SBQ OPERATIONS - ----------------------------------------------------------------------------- O CREDIT SUISSE FIRST BOSTON DIRECTING SALES PROCESS WITH ASSISTANCE FROM BANC OF AMERICA SECURITIES O INITIAL CONTACTS MADE O SELLING MEMORANDA DISTRIBUTED O TARGETED THREE TO SIX MONTH SALES PROCESS O MANAGEMENT ADDRESSING CURRENT OPERATING ISSUES AT MEMPHIS AND CLEVELAND TO MAXIMIZE ASSET VALUES DURING SALES PROCESS WHILE MINIMIZING CASH REQUIREMENTS [SLIDE 20] THE UNITED GROUP SOLICITATION [SLIDE 21] BACKGROUND - ----------------------------------------------------------------------------- AFTER REJECTING BIRMINGHAM STEEL'S EFFORTS TO AVOID A COSTLY AND DISRUPTIVE PROXY CONTEST, A DISSIDENT STOCKHOLDER GROUP OWNING LESS THAN 8% OF THE COMPANY'S STOCK IN EFFECT DEMANDED THE KEYS TO THE COMPANY INITIAL 13D O DISSIDENT GROUP LED BY JAMES MCGLOTHLIN OF THE PROPOSAL UNITED COMPANY AND JAMES TODD, JR., FORMERLY OF BIRMINGHAM O PROPOSAL TO NOMINATE JOHN CORRENTI AS CHAIRMAN AND CEO O REJECTED COMPANY'S EFFORTS TO AVOID COSTLY AND DISRUPTIVE PROXY CONTEST PROXY O NOMINATED SLATE OF 9 DIRECTORS, 7 WITH NO STEEL FILING INDUSTRY EXPERIENCE, 3 ON BOARD OF BANKRUPT HARNISCHFEGER O NO CLEAR STRATEGY TO INCREASE STOCKHOLDER VALUE [SLIDE 22] OBSERVATIONS - ----------------------------------------------------------------------------- CHANGING THE BOARD AND MANAGEMENT NOW IS NOT IN THE BEST INTEREST OF THE VAST MAJORITY OF BIRMINGHAM STEEL'S STOCKHOLDERS O BIRMINGHAM'S BOARD AND MANAGEMENT ARE EXPERIENCED AND FOCUSED: O CORE MINI-MILL OPERATIONS ARE PROFITABLE AND WELL-POSITIONED O CLEAR RESTRUCTURING PLAN FOCUSES THE COMPANY ON THOSE OPERATIONS O CHANGE WOULD BE DISRUPTIVE AND WOULD JEOPARDIZE VALUE CREATED BY THE RESTRUCTURING O THE DISSIDENT GROUP'S PROPOSAL FAILS BECAUSE: O WRONG "PLAN"/NO PLAN O WRONG TEAM O WRONG TIME [SLIDE 23] THE WRONG "PLAN"/NO PLAN - ----------------------------------------------------------------------------- O THE UNITED GROUP HAS NOT PUT FORTH ANY MEANINGFUL STRATEGIC OR OPERATIONAL PLAN O THE UNITED GROUP'S "PLAN" ESSENTIALLY IS TO: O HIRE AND HOPE - BY: O HIRING O CORRENTI O AN AS-YET-UNIDENTIFIED NEW MANAGEMENT TEAM O CONSULTANTS AND O HOPING THEY CAN FIGURE OUT HOW TO ADD VALUE O ELEMENTS OF THE DISSIDENTS "PLAN" INCLUDE: O OPERATING CORE FACILITIES AT OR ABOVE NAMEPLATE CAPACITY - WHICH WE ALREADY DO! O "FIXING" MEMPHIS - NOT SO EASY AND OPERATIONS STILL COSTLY! [SLIDE 24] THE WRONG "PLAN"/NO PLAN - ----------------------------------------------------------------------------- O RE-ESTABLISHING SERVICE CENTER RELATIONSHIPS - ALREADY STRONG SERVICE CENTER RELATIONSHIPS WITH INCREASING VOLUMES O "FIXING" CARTERSVILLE - CARTERSVILLE ON TRACT TO PROFITABILITY O DECIDING ON AN APPROACH FOR SBQ - CANNOT WAIT TO DECIDE O "FIXING" THE BALANCE SHEET - WITHOUT OFFERING NEW EQUITY O "ATTEMPTING" TO BE AN INDUSTRY CONSOLIDATOR - BUT RESOURCES ARE LIMITED O THE UNITED GROUP ADMITS THAT IT CURRENTLY HAS NO SPECIFIC PLANS - AT LEAST THIS IS ACCURATE [SLIDE 25] WHO IS JOHN CORRENTI? - ----------------------------------------------------------------------------- JOHN CORRENTI IS NOT BIRMINGHAM'S SAVIOR O NO KEN IVERSON O HISTORY OF FAILED PROJECTS AND BROKEN PROMISES O TRINIDAD, IRON CARBIDE - ESTIMATED COST: $120 MILLION VS. BUDGETED $65 MILLION O "[THE] NEW TRINIDADIAN IRON CARBIDE PLANT HAS BEEN PLAGUED BY BREAKDOWNS AND DELAYS....THEY TRIED TO BUILD IT TOO FAST AND WITHOUT AS MUCH ENGINEERING AS THEY NEEDED..." (BUSINESS WEEK, 6/5/95) O BERKELEY, S.C. PLANT - ESTIMATED COST: $550 MILLION VS. BUDGETED $450 MILLION O "NUCOR'S EARNINGS DECLINED [BECAUSE OF] UNUSUALLY HIGH START-UP COSTS--IT STARTED UP THE NEW BERKELEY FLAT- ROLLED MILL, HAD CONTINUED PROBLEMS WITH ITS [TRINIDAD] FACILITY..." (MORGAN STANLEY DEAN WITTER, 6/5/97) O "...THE BERKELEY MILL'S CAPITAL COST OF $550 MILLION WAS SIGNIFICANTLY MORE EXPENSIVE THAN ANY OTHER NUCOR MILL..." (DONALDSON, LUFKIN & JENRETTE, 8/2/99) NOTE: PERMISSION TO USE THESE QUOTATIONS WAS NEITHER SOUGHT NOR GRANTED. [SLIDE 26] WHO IS JOHN CORRENTI? - ----------------------------------------------------------------------------- O FLAWED MANAGEMENT STYLE O FAILED MANAGEMENT STRUCTURE (22 DIRECT REPORTS AT NUCOR) O "HAVING NO PRODUCT MANAGERS AND ALL PLANT MANAGERS AS DIRECT REPORTS TO CEO WAS NOT A SIGN OF STRENGTH." (DONALDSON, LUFKIN & JENRETTE, 8/2/99) O NO RETURN ANALYSIS ON EXISTING BUSINESSES AND NO LONG-TERM GROWTH PLANNING O POOR SAFETY AND ENVIRONMENTAL RECORD O FROM 1987 - 1991, WHILE CORRENTI WAS VICE-PRESIDENT AND GENERAL MANAGER OF NUCOR-YAMATO, THREE OSHA INVESTIGATIONS RESULTED IN 17 CITATIONS (EIGHT OF WHICH WERE DESIGNATED "SERIOUS"). (OSHA) O FORCED OUT OF NUCOR WILL JOHN CORRENTI'S MANAGEMENT STYLE SUCCEED AT BIRMINGHAM WHEN IT FAILED AT NUCOR? NOTE: PERMISSION TO USE THESE QUOTATIONS WAS NEITHER SOUGHT NOR GRANTED. [SLIDE 27] WHO IS JOHN CORRENTI? - ----------------------------------------------------------------------------- O NO EXPERIENCE RUNNING A LEVERAGED COMPANY O EXCESSIVE PAY PACKAGE O SALARY.................................................$600,000 O BONUS EQUAL TO 1% OF EBITDA(1)........................1,080,000 O 1 MILLION BELOW-MARKET OPTIONS(2)................... 2,120,000 ----------- $3,800,000 (1) BASED ON CSFB EQUITY RESEARCH OF 2000 CORE OPERATION EBITDA OF $108 MILLION. BONUS CALCULATION IN CONTRACT EXCLUDES EARNINGS FROM ASSETS HELD FOR SALE. (2) BASED ON INTRINSIC VALUE OF $2.12 PER SHARE, THE DIFFERENCE BETWEEN THE TRADING PRICE OF $7.00 (10/20/99) AND THE EXERCISE PRICE OF $4.88 AS STATED IN THE UNITED GROUP'S 13D FILING. [SLIDE 28] SELECTED COMMENTS OF JOHN CORRENTI - ----------------------------------------------------------------------------- O "IT'S A PROBLEM A MONTH." --CORRENTI COMMENT ON THE TRINIDAD IRON CARBIDE MILL THAT, ACCORDING TO BUSINESS WEEK, HAD BEEN "PLAGUED BY BREAKDOWNS AND DELAYS." (BUSINESS WEEK, JUNE 5, 1995) O "IF WE HAD TO DO THE DECISION AGAIN TODAY, WE'D BUILD ANOTHER IRON-CARBIDE PLANT IN TRINIDAD [BUT] WE MIGHT HAVE ENGINEERED A LITTLE MORE DILIGENTLY." (NEW STEEL, APRIL 1997) O "NONE OF NUCOR'S PROJECTS COMES IN ON BUDGET, CORRENTI SAID. 'THEY ALL OVERRUN,' HE SAID. 'ANYBODY WHO SAYS THEY DON'T IS LYING.'" (NEW STEEL, JULY 1998) NOTE: PERMISSION TO USE THESE QUOTATIONS WAS NEITHER SOUGHT NOR GRANTED. [SLIDE 29] WHY NUCOR FORCED OUT CORRENTI: COMMENTS BY CHAIRMAN H. DAVID AYCOCK - ----------------------------------------------------------------------------- O "I'D COME TO SEE CONSIDERABLE DEFICIENCIES BASED ON IMPULSE DECISIONS...YOU NEeD MORE INFORMATION, MORE STRUCTURE AND A BETTER DECISION-MAKING PROCESS." (BUSINESS JOURNAL OF CHARLOTTE, JUNE 19, 1999) O "WE'VE HAD IMPULSIVE MANAGEMENT FOR SO LONG, BUT WE'RE AT A DIFFERENT PLATEAU NOW." (BUSINESS WEEK, JUNE 21, 1999) O "THE EARNINGS [AT NUCOR] HAVE BEEN DECLINING. AND THE RETURN ON ASSETS HAS BEEN IN DECLINE FOR SOME TIME. PART OF THAT WAS MANAGEMENT STYLE." (BUSINESS JOURNAL OF CHARLOTTE, JUNE 19, 1999) O "THE BOARD SAID THINGS HAVE TO CHANGE. WE COULD NOT HAVE A COMPANY THAT WAS DRIFTING...THERE WAS NO EFFORT tO DEVELOP A STRATEGIC PLAN TO CARRY THE COMPANY FORWARD TO THE NEXT CENTURY...THERE [HAVE] BEEN NO SIGNIFICANT INNOVATION AND DEVELOPMENTS IN THE COMPANY SINCE THE VERY EARLY 1990S." (CHARLESTON POST AND COURIER, JUNE 5, 1999) NOTE: PERMISSION TO USE THESE QUOTATIONS WAS NEITHER SOUGHT NOR GRANTED [SLIDE 30] WHY NUCOR FORCED OUT CORRENTI: FURTHER COMMENT BY NUCOR CFO SAM SIEGEL - ----------------------------------------------------------------------------- O "THEY [IVERSON AND CORRENTI] ARE BOTH GOOD COMMUNICATORS, VERY PERSONABLE, VERY CHARISMATIC, VERY LIKEABLE. HOWEVER THERE WAS A WORLD OF DIFFERENCE BETWEEN MR. IVERSON BEFORE HIS MEDICAL DECLINE AND MR. CORRENTI...IN TERMS OF THEIR WHATEVER-IT-TAKES-TO-BE-A-CEO." (CHARLOTTE OBSERVER, JUNE 27, 1999) NOTE: PERMISSION TO USE THESE QUOTATIONS WAS NEITHER SOUGHT NOR GRANTED [SLIDE 31] CORRENTI DID NOT CREATE STOCKHOLDER VALUE AT NUCOR - ----------------------------------------------------------------------------- NUCOR STOCK PRICE PERFORMANCE [Image of a line graph depicting the per share closing price of Nucor common stock from January 1, 1996, the date on which John Correnti was appointed CEO of Nucor, and January 4, 1999, the date on which John Correnti resigned. The price per share of Nucor common stock on January 1, 1996 and June 4, 1999, respectively, was 57 1/8 and 46 7/16.] EBITDA MARGIN [Image of a line graph comparing Birmingham Steel Corporation's EBITDA margins from core operations for fiscal years ending June 30, 1997, 1998 and 1999 against that of Nucor.] EBITDA Margin EBITDA Margin EBITDA Margin 1997 1998 1999 Birmingham 12.9% 14.1% 16.9% Nucor 16.4% 15.6% 15.4% BIRMINGHAM'S EBITDA MARGINS FROM CORE OPERATIONS HAVE IMPROVED DRAMATICALLY SINCE 1997, UNLIKE THOSE OF NUCOR [SLIDE 32] BIRMINGHAM'S CURRENT BOARD IS SUPERIOR TO SLATE PROPOSED BY THE UNITED GROUP - ----------------------------------------------------------------------------- O CURRENT BIRMINGHAM BOARD COMPOSED OF EIGHT INDEPENDENT DIRECTORS AND GARVEY O BIRMINGHAM'S BOARD MEMBERS INCLUDE FORMER CEO'S OF UNION CARBIDE, TEXACO, LTV, ASARCO, AND EATON O 7 OF THE 9 UNITED GROUP NOMINEES HAVE NO STEEL INDUSTRY EXPERIENCE O 3 OF 9 NOMINEES, INCLUDING CORRENTI, CURRENTLY SERVE ON THE BOARD OF HARNISCHFEGER, WHICH RECENTLY FILED FOR BANKRUPTCY [SLIDE 33] THE WRONG TIME - ----------------------------------------------------------------------------- O THE UNITED GROUP IS SEEKING TO GAIN CONTROL OF BIRMINGHAM STEEL AT THE BOTTOM OF THE CYCLE WITHOUT PROVIDING ALL OTHER STOCKHOLDERS WITH ANY CHANGE-OF-CONTROL PREMIUM O CHANGING BIRMINGHAM'S BOARD AND MANAGEMENT NOW WOULD BE COSTLY AND DISRUPTIVE O BIRMINGHAM STEEL ALREADY HAS A HIGHLY QUALIFIED, INDEPENDENT BOARD AND CAPABLE MANAGEMENT TEAM O CORE BUSINESS IS STRONG AND PROFITABLE WITH SOLID PROSPECTS O STRATEGIC RESTRUCTURING PLAN IS IN PLACE AND ALREADY BEING AGGRESSIVELY IMPLEMENTED Birmingham Steel is doing what must be done to build stockholder value [SLIDE 34] SAFE HARBOR - ----------------------------------------------------------------------------- Except for historical information, the matters described in this presentation are forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, equipment breakdowns or failures, Birmingham Steel's success in implementing the restructuring plan, as well as other risks described from time to time in the Company's periodic and special filings with Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof, and the Company disclaims any intent or obligation to update such forward-looking statements. [SLIDE 35] -----END PRIVACY-ENHANCED MESSAGE-----