BETHLEHEM, Pa., Wednesday, July 31, 1996 -- Bethlehem Steel
Corporation today reported net income of $27 million, on sales of
$1.24 billion, for the second quarter of 1996, an improvement of
$27 million over the breakeven performance for the first quarter
of 1996. Net income was $60 million, on sales of $1.25 billion,
for the second quarter of 1995. Income applicable to common stock
for the second quarter of 1996 was $.14 per common share,
compared to $.45 per common share for the second quarter of 1995.
For the first six months of 1996, net income was $27 million,
on sales of $2.36 billion, compared to net income of $113
million, on sales of $2.49 billion, for the first six months of
1995. Income applicable to common stock was $.05 per common
share, compared to $.83 per common share for the first six months
of 1995.
Segment Results
The Basic Steel Operations segment had income from
operations of $53 million on shipments of 2,315,000 tons for the
second quarter of 1996, compared to income from operations of $98
million on shipments of 2,263,000 tons for the second quarter of
1995. Segment results declined from a year ago principally due to
lower realized prices and, to a lesser extent, start-up costs
related to our upgraded structural mill, partially offset by an
improved mix from higher coated and cold-rolled shipments and
lower operating costs at our flat-rolled operations.
Second quarter 1996 income from operations improved $31
million from the first quarter of 1996 principally due to higher
shipments at Burns Harbor and Sparrows Point and lower operating
costs. Average realized prices were slightly better reflecting
implementation of price increases for sheet and plate products in
our short-term markets and from slightly higher sales of raw
materials and other products. However, product mix was less
favorable because of higher hot rolled and structural shipments.
For the first six months of 1996, this segment had income from
operations of $74 million, a decrease of $103 million from the
same period last year, primarily reflecting lower realized
prices. Lower shipments were offset by an improved product mix
and lower costs.
The Steel Related Operations segment (BethForge, CENTEC
and BethShip) reported losses from operations of $8 million and
$17 million for the second quarter and first six months of 1996,
compared to losses of $10 million and $15 million for the second
quarter and first six months of 1995.
Liquidity and Capital Structure
At June 30, 1996, total liquidity, comprising cash, cash
equivalents and funds available under our bank credit
arrangements, totaled $486 million, compared to $512 million at
December 31, 1995, and $555 million at June 30, 1995. At
June 30, 1996, funds available under our bank credit arrangements
totaled $330 million.
Cash provided from operating activities for the first six
months of 1996, including selling accounts receivable under our
credit arrangements of $60 million, was $181 million, compared to
$197 million for the first six months of 1995. Principal uses of
cash during the first six months of 1996 included capital
expenditures, pension funding and debt repayments.
Capital expenditures were $137 million for the first six
months of 1996, compared to $120 million during the year-earlier
period. Capital expenditures are currently expected to be about
$300 million in 1996, compared to $267 million in 1995. Major
capital projects include improvements at Burns Harbor's 160"
Plate Mill and Hot Strip Mill. We contributed $85 million to our
pension fund during the second quarter of 1996, for a total of
$95 million so far this year. We repaid $46 million of debt and
capital lease obligations during the first six months of 1996 and
expect to repay about $40 million of such obligations during
the remainder of the year.
Principal uses of cash during the remainder of 1996 include
additional pension funding, capital expenditures and the
repayment of debt and capital lease obligations.
Labor Negotiations
Our labor agreement with the United Steelworkers of America
(USWA) provided for reopener negotiations in 1996 of wage and
certain benefit provisions (excluding pensions and health care
benefits) and for resolving issues in final offer interest
arbitration without any strike or lockout. The labor agreement
covers the Burns Harbor and Sparrows Point Divisions, Bethlehem
Structural Products Corporation and BethForge, Inc. The parties
did not reach a settlement and Bethlehem and the USWA submitted
their final offers to arbitration.
The arbitrator reached a decision to accept Bethlehem's
contract proposal. The revisions to the contract, which are
effective August 1, 1996, will result in an increase to
Bethlehem's represented employees' wage and benefit cost per hour
of about 3% per year for the term of the agreement which expires
August 1, 1999. With this contract reopener finalized, we
will continue to work with the Union and our employees to improve
our productivity and competitiveness.
GM Supplier of the Year
We were selected by General Motors as a 1995 Supplier of the
Year -- the only steel producing company in the world to be so
honored. To win a Supplier of the Year award, a supplier must
meet a number of challenging criteria. Our Burns Harbor Division
supplies high-quality steel used in General Motors cars, vans,
pickups and sport-utility vehicles. Recently, our business with
General Motors has been growing and this includes the transition
to Bethlehem products for their Saturn line. This transition is
on schedule and we expect that they will be using our products
exclusively starting in the third quarter.
Outlook
Curtis H. Barnette, Bethlehem's Chairman and Chief Executive
officer, said: "We believe that the U.S. economy, which has
recently experienced relatively strong economic activity, will
resume its course of moderate and sustainable growth and low
inflation. We believe that this is a good economic environment
for the steel industry and its customers. Demand for our steel
products is strong, inventories at the customer level are
relatively low and we have a good backlog of orders. Currently,
certain of our flat-rolled products are on controlled acceptance
plans and we continue to work on implementing our previously
announced price increases for sheet and plate products in our
short-term markets for third quarter deliveries.
"With respect to our operations, our flat-rolled
businesses are currently running at relatively high operating
rates and we believe that they will continue to do so for the
balance of the year. Our Pennsylvania Steel Technologies, Inc.
business unit is continuing to increase the utilization of its
new steelmaking equipment and its new rail head-hardening
facility is producing high quality product.
"Our Bethlehem, Pa. based structural and forging
operations are continuing to work through their transition of
having shut down their iron and steelmaking facilities late last
year, obtaining their semifinished steel from other sources and
starting up facilities that were recently upgraded. They have
been experiencing operating losses and are being closely
monitored as to their progress and outlook. Our strategy
continues to be that all of our businesses must achieve
satisfactory performance or we will consider exiting them by sale
or shutdown, as appropriate.
"Competition remains intense in all of our markets as new
capacity continues to enter the marketplace. Also, we believe
import levels may increase somewhat later this year. We are
responding to these challenges by continuing to increase the
utilization and efficiency of our production facilities,
investing in facilities that will grow our business where we
believe there are good market opportunities, divesting assets
that do not fit with our strategic plan and pursuing cost
reduction and working capital improvement throughout the
Corporation."
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 September 10, 1996, to holders of record on August 9, 1996. No dividend was declared on Bethlehem's Common Stock.
Main Menu 
Investor Relations Business Units
Commercial Information Environment History
Vision Statement Public Affairs Research