BETHLEHEM, Pa., Wednesday, January 29, 1997 -- Bethlehem Steel Corporation today reported a net loss of $347 million, on sales of $1.15 billion, for the fourth quarter of 1996. The fourth quarter net loss includes restructuring charges totaling $450 million ($370 million after tax) related to the previously announced restructuring plan to improve financial performance and stockholder value. Excluding the restructuring charges, Bethlehem had net income of $23 million, or $.12 per common share, for the fourth quarter of 1996, compared to income of $32 million and $.20 per common share for the fourth quarter of 1995.
For the year 1996, Bethlehem reported a net loss of $309 million, or $3.15 per common share, including restructuring charges totaling $465 million ($382 million after tax). Bethlehem recorded a $15 million ($12 million after tax) restructuring charge in the third quarter related to the sale and lease of certain assets of its Eagle Nest coal mine. Excluding the restructuring charges, Bethlehem had net income of $73 million, or $.28 per common share, for the year 1996, compared to net income of $180 million, or $1.24 per common share, for the year 1995.
"1996 was a very difficult year for Bethlehem, and yet it was a year in which significant actions were taken that will position Bethlehem for improved profitability and the achievement of our Vision to be the Premier Steel Company." said Curtis H. Barnette, Bethlehem's Chairman and Chief Executive Officer. "Three actions were particularly important: We enhanced the competitiveness of our three core steel Divisions, announced and began implementing a restructuring plan and made steady progress in dealing with our pension and health care legacy costs."
Status of Comprehensive Restructuring Plan
On October 30, 1996, Bethlehem announced a restructuring plan to improve the corporation's financial performance and stockholder value. Planned actions include exiting Bethlehem Structural, BethForge, CENTEC and BethShip. Bethlehem is currently negotiating with qualified buyers for the sale of BethForge, CENTEC and BethShip. Efforts to sell Bethlehem Structural have been unsuccessful, and operations will cease during the first quarter of 1997.
The restructuring charge for the fourth quarter includes the write-off of impaired assets at Bethlehem Coke, which continues to operate two coke oven batteries in Bethlehem, Pennsylvania.
Segment Results
The Basic Steel Operations segment had losses from operations of $193 million and $87 million for the fourth quarter and year 1996. The losses from operations include $240 million of the previously discussed restructuring charges recorded in the fourth quarter and $255 million for the year 1996. Excluding the restructuring charges, the Basic Steel Operations segment had income from operations of $47 million for the fourth quarter and $168 for the year 1996, compared to income from operations of $67 million and $311 million for the fourth quarter and year 1995.
Fourth quarter 1996 results, excluding restructuring charges, declined from a year ago due to higher repair and related costs, primarily at our iron and steelmaking operations, and lower average realized prices.
Income from operations for the year 1996, excluding restructuring charges, decreased from 1995 primarily due to lower realized prices and shipments, partially offset by an improved mix.
Fourth quarter 1996 income from operations was about the same as in the third quarter of 1996 as higher realized prices were offset by lower shipments.
Regarding actions taken during 1996 by Bethlehem's three core steel Divisions, Mr. Barnette said: "Our Burns Harbor Division enhanced its competitiveness by making relatively modest capital expenditures to increase steelmaking capability and by modernizing its plate mill and hot strip mill. Our Sparrows Point Division, taking full advantage of its coating lines, further increased its percentage of higher value sheet product shipments and Pennsylvania Steel Technologies doubled its shipments of premium head-hardened rail products, compared with 1995."
The Steel Related Operations segment (BethForge, CENTEC and BethShip) reported losses from operations of $218 million and $241 million for the fourth quarter and year 1996. The losses from operations for the fourth quarter and year 1996 include $210 million of the previously discussed restructuring charges. Excluding the restructuring charges, losses from operations were $8 million for the fourth quarter and $31 million for the year 1996, compared to losses of $15 million and $42 million for the fourth quarter and year 1995. The improvement in the fourth quarter and year 1996 was primarily from lower costs at BethForge and improved pricing and productivity at BethShip.
Liquidity and Capital Structure
At December 31, 1996, total liquidity, comprising cash, cash equivalents and $310 million of funds available under our bank credit arrangements, totaled $446 million, compared to $512 million at December 31, 1995.
Cash provided from operating activities in 1996 declined to $341 million, from $586 million in 1995, due to lower earnings and changes in working capital. Principal uses of cash during 1996 included capital expenditures, pension funding, debt repayments and working capital. Capital expenditures were $259 million in 1996, compared to $267 million in 1995. Major capital projects included improvements at Burns Harbor's 160" Plate Mill and Hot Strip Mill. Bethlehem also repaid $92 million of debt and capital lease obligations during 1996.
Bethlehem contributed $15 million to its pension fund during the fourth quarter of 1996, and a total of $170 million for the year. This contribution, along with better than market performance of the assets in our pension trust fund and a decrease in the pension obligation caused by the increase in interest rates, more than offset the increase in Bethlehem's obligation from the current year's expense and restructuring charges. At December 31, 1996, the pension liability was $870 million, a decrease of about $250 million from December 31, 1995.
Major uses of funds for 1997 include pension funding, capital expenditures of about $280 million and debt and capital lease payments of about $50 million.
Outlook
Regarding the outlook for Bethlehem and the domestic steel industry, Mr. Barnette said: "As we enter 1997, we believe that the U.S. economy will continue on a course of moderate and sustainable growth and low inflation. We believe that demand from the major steel-consuming sectors will continue to be good and we expect that domestic industry steel shipments in 1997 will be close to the estimated 100 million tons shipped in 1996.
"Competition remains intense in all of our markets and new capacity entering the marketplace will further intensify competition in 1997. We are concerned about, and are continuing to closely monitor, the increase of unfairly traded imports in recent months.
"We have four principal goals for 1997: to successfully execute our business plans at every Business Division, Service Unit, Department and for the Corporation as a whole; to effectively implement our restructuring plan; to continue progress with respect to our pension and health care legacy costs; and to continue to advance plans for the improvement of Bethlehem's future profitability."
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 March 10, 1997, to holders of record on February 10, 1997. No dividend was declared on Bethlehem's Common Stock.
Main Menu 
Investor Relations Business Units
Commercial Information Environment History
Vision Statement Public Affairs Research