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