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 Q1, 1997 BETHLEHEM, Pa., Wednesday, April 30, 1997 -- Bethlehem Steel Corporation today reported net income of $38 million, on sales of $1.19 billion, for the first quarter of 1997 compared to net income of $.1 million, on sales of $1.12 billion, for the first quarter of 1996. After deducting preferred dividends, net income per common share was $.25 for the first quarter of 1997 compared to a loss of $.09 per common share for the first quarter of 1996. "We are making steady progress in advancing our four principal goals for 1997," said Curtis H. Barnette, Bethlehem's Chairman and Chief Executive Officer. "Our business plans are being successfully executed. The actions to implement our restructuring plans are proceeding and we are eliminating the significant losses of the discontinued businesses by closing or selling them. During the first four months of this year we have made contributions of $145 million to our pension trust. These contributions, along with additional contributions we plan to make during the year, should result in further reducing our pension expense and liability. Additionally, we continue to advance plans for profitably growing our business through selective modernization, joint ventures and other actions." In 1996 we announced a restructuring plan to improve financial performance and stockholder value. Planned actions include exiting several of our underperforming businesses, including Bethlehem Structural, BethForge, CENTEC and BethShip Sparrows Point Yard. We have ceased production at Bethlehem Structural and efforts to sell this business have been unsuccessful. We are proceeding with the sale of the structural assets. We are currently negotiating the sale of our BethForge, CENTEC and BethShip businesses. In March the Board of Directors authorized a capital appropriation of $70 million for the modernization of one of Burns Harbor's two continuous slab casters. Extensive modifications will be made to the caster during 1998 to improve slab quality, increase productivity and reduce production costs. Operations have started at our Chicago Cold Rolling joint venture in Indiana which produces light-gauge cold-rolled sheet for the appliance and other specialty markets. We have announced our participation in two other new joint ventures. One is with TWB Company located in Michigan which operates the largest plant in North America producing laser-welded blanks for the automotive industry. The second is with CSR Rinker, the largest building materials company in Florida, to expand the use of steel in residential and light commercial buildings. We are developing plans and implementing actions to further improve the profitability of the entire corporation through a wide range of competitiveness initiatives including enhancing customer service and reliability, improving productivity, aggressively reducing costs and, where appropriate, undertaking selected modernization projects. At Sparrows Point one such project under active consideration is the possible construction of a new cold rolling mill which could be either on-site at Sparrows Point or off-site at another location. Segment Results The Basic Steel Operations segment had income from operations of $64 million on shipments of 2,220,000 tons for the first quarter of 1997 compared to income from operations of $21 million on shipments of 2,103,000 tons for the first quarter of 1996. Results improved from a year ago due to increased steel shipments, lower costs and higher average realized prices. Shipments were higher and costs per ton were lower in the first quarter of 1997 compared to the first quarter of 1996 even though Burns Harbor had an extended outage at its No. 3 BOF. We were able to increase shipments and lower costs compared to last year due to improved operating performance at Sparrows Point and Pennsylvania Steel Technologies (PST), the elimination of operating problems at Bethlehem Structural and the absence of severe winter weather at PST and the work stoppage at General Motors. Additionally, depreciation expense was lower than a year ago principally due to the write-off of assets as! part of our fourth quarter 1996 restructuring charge. First quarter 1997 income from operations increased by $17 million from the fourth quarter of 1996 (excluding a restructuring charge of $240 million) principally from higher shipments and lower costs. Shipments of coated products to the automotive market increased at Burns Harbor, shipments of premium rail and pipe increased at PST and shipments of sheet piling were significantly higher at Bethlehem Structural in connection with its planned shutdown during the first quarter of 1997. Reduced repair andmaintenance costs and higher yields, particularly at Sparrows Point, favorably impacted costs. The Steel Related Operations segment (BethForge, CENTEC and BethShip) reported a loss from operations of $8 million for the first quarter of 1997 compared to a loss of $9 million for the first quarter of 1996. We will exit this segment of our business during 1997 as a result of our 1996 restructuring plan. Liquidity and Capital Structure At March 31, 1997, total liquidity, comprising cash, cash equivalents and funds available under our bank credit arrangements, totaled $469 million compared to $446 million at December 31, 1996. Cash and cash equivalents were $134 million at March 31, 1997, compared to $137 million at December 31, 1996. Cash provided from operating activities during the first quarter of 1997 was $68 million compared to $22 million in the first quarter of 1996. Principal uses of cash during the first quarter of 1997 included capital expenditures of $50 million, working capital of $44 million, debt repayments of $26 million and pension funding of $25 million. In continuing our corporate strategy of concentrating on our core steel businesses and rebuilding our financial strength, on April 1 we sold our equity interest in Iron Ore Company of Canada to North Limited, an Australian resources company. This sale resulted in cash proceeds to Bethlehem of about $145 million and an after-tax gain of $113 million, or $1.01 per share, which will be recorded in the second quarter. Major uses of cash for 1997 include an estimated $280 million of capital expenditures, additional pension funding and repayment of approximately $50 million of debt and capital lease obligations. We expect to maintain adequate liquidity throughout1997 from cash flow from operations, reductions in working capital, proceeds from the sale of our interest in IOC and other assets and available funds under our credit arrangements. Outlook We believe that the domestic economy will continue on a course of moderate and sustainable growth and low inflation in 1997 and that the global economy will show some additional strength later this year. The demand from the major steel-consuming sectors should continue to be relatively good and domestic industry steel shipments in 1997 should be close to the 100 million tons shipped in 1996. We recognize, however, that competition will remain intense in all of our markets as new steel production capacity and unfairly traded imports continue to enter the marketplace. Dividends The Board of Directors today 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, 1997, to holders of record on May 9, 1997. No dividend was declared on Bethlehem's Common Stock. Financial Home E-mail comments to: [email protected]
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