BETHLEHEM STEEL ANNOUNCES THIRD QUARTER 1998 RESULTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Consolidated Financial Statements as of and
for the three month and nine month periods ended September 30, 1998 and 1997 have not been
audited. However, the information reflects all adjustments which, in the opinion of
management, are necessary to present fairly the results shown for the periods indicated.
Management believes all adjustments were of a normal and recurring nature.
2. These Consolidated Financial Statements should be read together with the 1997
audited financial statements set forth in Bethlehem's Annual Report on Form 10-K filed
with the Securities and Exchange Commission. Presentation of certain amounts in the prior
year have been revised to be consistent with the current year.
3. On May 29, 1998, Bethlehem acquired all of the outstanding capital stock of Lukens
Inc. The aggregate purchase price of $563.6 million comprises cash of $327.8 million, the
issuance of 15.1 million shares of Bethlehem common stock valued at $184.8 million, and
transaction related costs of $51.0 million. The acquisition was accounted for as a
purchase and, accordingly, Lukens' results are included in the Consolidated Financial
Statements from the date of acquisition.
The preliminary fair value of the assets acquired
and liabilities assumed is as follows:
| Current assets |
$153.9 |
| Property, plant & equipment |
277.3 |
| Net assets of discontinued stainless
operations |
320.0 |
| Deferred tax asset, other |
70.5 |
| Goodwill |
360.0 |
| Current liabilities |
(109.4) |
Pension and other
postretirement benefit liabilities |
(220.0) |
| Debt |
(268.5) |
| Other long-term liabilities |
(20.2) |
|
|
| Purchase price, net of cash acquired |
$563.6 |
|
|
|
|
Bethlehem expects to finalize all purchase
accounting adjustments, e.g., pension and postretirement benefit liabilities, ultimate
proceeds on disposal of the stainless operations, severance costs from planned employee
reductions, etc., within one year of the acquisition. Any difference between the amounts
reflected above and the final amounts could result in an adjustment to goodwill. Goodwill
is being amortized over 30 years or $12 million per year.
As previously announced, Bethlehem intends
to close the Sparrows Point 160" plate mill and increase the output at existing
underutilized facilities. Accordingly, Bethlehem recorded a charge of $35 million ($29
million after-tax) during the second quarter of 1998 in connection with the planned
closing of the Sparrows Point 160" plate mill.
The unaudited pro forma combined historical
results (excluding Stainless) as if Lukens had been acquired at the beginning of 1998 and
1997, respectively, are estimated to be:
|
|
|
Nine Months Ended Sept.
30 |
|
| (Dollars in Millions,
except per share data) |
1998 |
|
|
1997 |
|
|
|
|
|
|
|
|
|
Net Sales |
|
$3,705.0 |
|
|
$3,892.6 |
|
Income from Operations |
|
$212.7 |
|
|
$338.2 |
|
Net Income |
|
$143.8 |
|
|
$242.6 |
|
|
|
|
|
|
|
|
|
| Net Income per Share: |
|
|
|
|
|
|
Basic |
|
$0.88 |
|
|
$1.66 |
|
Diluted |
|
$0.86 |
|
|
$1.59 |
|
| The pro forma
results presented above are not necessarily indicative of what actually would have
occurred if the acquisition had been completed as of the beginning of each of the periods
presented, nor are they necessarily indicative of future results.
4. On July 29, 1998, Bethlehem received
about $190 million from the sale of the No. 1 Coke Oven Battery at Burns Harbor to an
affiliate of DTE Energy Services, Inc. Bethlehem will continue to operate the facility for
the new owner and purchase the output. The gain on the sale was about $160 million and is
being deferred and recognized over the nine year life of the operating and purchase
agreement.
On June 19, 1998, Bethlehem's wholly owned
special purpose subsidiary amended its existing non-reducing credit facility. The
amendment extends the term of the agreement to July 19, 2003, increases the facilities
receivable purchase agreement from $300 million to $340 million, and increases the credit
facility for inventory from $225 million to $260 million, for a total of $600 million.
5. In 1997 Bethlehem sold all of the operations that comprised its Steel Related
Operations segment. Presented below are 1997 Segment Results (dollars in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter |
|
|
Second
Quarter |
|
|
First
Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales: |
|
|
|
|
|
|
|
|
|
|
Basic
Steel Operations |
$ |
1,109.4 |
|
$ |
1,188.7 |
|
$ |
1,174.3 |
|
|
Steel
Related Operations |
|
10.0 |
|
|
26.8 |
|
|
27.0 |
|
|
Eliminations |
|
(6.0) |
|
|
(8.6) |
|
|
(8.8) |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
1,113.4 |
|
$ |
1,206.9 |
|
$ |
1,192.5 |
|
|
|
|
|
|
|
|
|
Estimated Gain on Exiting Businesses: |
|
|
|
|
|
|
|
|
|
|
Basic
Steel Operations |
$ |
- |
|
$ |
135.0 |
|
$ |
- |
|
|
Steel
Related Operations |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
- |
|
$ |
135.0 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss): |
|
|
|
|
|
|
|
|
|
|
Basic
Steel Operations |
$ |
66.0 |
|
$ |
212.1 |
|
$ |
63.8 |
|
|
Steel
Related Operations |
|
(7.5) |
|
|
(10.1) |
|
|
(7.5) |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
58.5 |
|
$ |
202.0 |
|
$ |
56.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter, 1998 Report
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Quarterly Financial Statements
If you have any questions or comments, please Contact Us
�1999, Bethlehem Steel Corporation
|