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 intends to sell Lukens' stainless and distribution businesses. Accordingly, Bethlehem is accounting for the stainless and distribution businesses as discontinued operations. Income or losses from these operations are not included in Bethlehem's operating results. Since the date of acquisition, these operations have incurred operating losses of about $17 million. The net assets of these operations are shown separately on the balance sheet and consist primarily of property, plant & equipment and working capital. 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

The accompanying Notes are an integral part of the Consolidated Financial Statements.

Third Quarter, 1998 Report
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Quarterly Financial Statements