FORM 10-Q
First Quarter, 1996
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
(State of incorporation) | 24-0526133
(I.R.S. Employer Identification No.) |
1170 Eighth Avenue
BETHLEHEM, PENNSYLVANIA
(Address of principal executive offices) | 18016-7699
(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
BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
PART I. Financial Information
Consolidated Statements of Income-
Three Months Ended March 31, 1996 and 1995 (unaudited)
Consolidated Balance Sheets-
March 31, 1996 (unaudited), December 31, 1995 and March 31, 1995 (unaudited)
Consolidated Statements of Cash Flows-
Three Months Ended March 31, 1996 and 1995 (unaudited)
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Results of Operations and Financial Condition
PART II. Other Information
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
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.
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.
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.
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.
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.
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.
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
L. A. Arnett
Vice President and
Controller (principal
accounting officer)
Date: May 10, 1996
EXHIBIT INDEX
The following is an index of the exhibits included in this Report:
Investor Relations