1996 Annual Report Financial Statements

	Year Ended December 31
(Dollars in millions, except per share data)	*1996*	1995	1994
*Net Sales*	*$ 4,679.0*	$ 4,867.5	$ 4,819.4
*Costs and Expenses:*
Cost of sales	*4,168.2*	4,202.8	4,287.3
Depreciation(Note A)	*268.7*	284.0	261.1
Selling, administration and general expense	*105.5*	111.8	137.4
Estimated restructuring loss (Note C)	*465.0*	-	-
*Total Costs and Expenses*	*5,007.4*	4,598.6	4,685.8
*Income (Loss) from Operations*	*(328.4)*	268.9	133.6
*Financing Income (Expense):*
Interest and other financing costs (Note A)	*(53.3)*	(60.0)	(46.2)
Interest income	*5.9*	7.7	7.1
*Income (Loss) Before Income Taxes*	*(375.8)*	216.6	94.5
*Benefit (Provision) fore Income Taxes (Note D)*	*67.0*	(37.0)	(14.0)
*Net Income (Loss)*	*(308.8)*	179.6	80.5
*Dividends on Preferred and Preference Stock*	*41.9*	42.4	43.1
*Net Income (Loss) Applicable to Common Stock - $(3.15), $1.24 and $.35 per share*	*$ (350.7)*	$ 137.2	$ 37.4

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

Consolidated Balance Sheets

	Year Ended December 31
(Dollars in millions, except per share data)	1996	1995
Assets
Current Assets:
Cash and cash equivalents (Note A)	$ 136.6	$ 180.0
Receivables (Note E)	311.6	374.6
Inventories (Notes A and E)
Raw materials and supplies	332.0	335.5
Finished and semifinished products	667.0	604.9
Contract work in progress less billings of $.5 and $10.9	18.3	17.8
Total Inventories	1,017.3	958.2
Other current assets	22.9	13.0
Total Current Assets	1,488.4	1,525.8
Investments and Miscellaneous Assets (Note A)	106.7	112.3
Property, Plant and Equipment less accumulated depreciation of $3,924.2 and $4,329.5 (Note A)	2,419.8	2,714.2
Deferred Income Tax Asset - net (Note D)	935.0	885.0
Intangible Asset - Pensions (Note G)	160.0	463.0
Total Assets	$ 5,109.9	$ 5,700.3
Liabilities and Stockholders' Equity Current Liabilities:
Accounts payable	$ 410.4	$ 381.4
Accrued employment costs	163.3	208.0
Postretirement benefits other than pensions (Note H)	150.0	150.0
Accrued taxes (Note D)	67.9	72.4
Debt and capital lease obligations (Note E)	49.3	91.5
Other current liabilities	116.5	146.3
Total Current Liabilities	957.4	1,049.6
Pension Liability (Notes C and G)	870.0	1,115.0
Postretirement Benefits Other Than Pensions (Notes C and H)	1,445.0	1,415.0
Long-term Debt and Capital Lease Obligations (Note E)	497.4	546.8
Other Long-term Liabilities	374.1	335.6
Stockholders' Equity (Notes I, J, and K):
Preferred Stock - at $1 per share par value (aggregate liquidation preference of $481.2); Authorized 20,000,000 shares	11.6	11.6
Preference Stock - at $1 per share par value (aggregate liquidation preference of $86.2); Authorized 20,000,000 shares	2.5	2.6
Common Stock - at $1 per share par value; Authorized 250,000,000 shares; Issued 113,851,199 and 112,699,869 shares	113.9	112.7
Common Stock - Held in Treasury, 2,017,662 and 1,992,189 shares at cost	(59.7)	(59.4)
Additional Paid-in Capital	1,886.3	1,850.6
Accumulated Deficit	(988.6)	(679.8)
Total Stockholders' Equity	966.0	1,238.3
Total Liabilities and Stockholders' Equity	$ 5,109.9	$ 5,700.3

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

Consolidated Statements of Cash Flows

		Year Ended December 31
(Dollars in millions)		1996	1995	1994
Operating Activities:
Net Income (Loss)		$ (308.8)	$ 179.6	$ 80.5
Adjustments for items not affecting cash from operating activites:
Estimated restructuring loss (Note C)		465.0	-	-
Depreciation		268.7	284.0	261.1
Deferred income taxes		(67.0)	35.0	13.0
Other - net		9.1	2.1	15.8
Working capital (excluding investing and financing activities):
Receivables - operating		9.1	114.9	(22.7)
Receivables - sold (Note E)		54.0	30.0	-
Inventories		(58.8)	(79.0)	(28.1)
Accounts payable		28.9	(5.6)	20.6
Employment costs and other		(60.6)	35.8	45.8
Other - net		1.2	(10.5)	(2.3)
Cash Provided from Operating Activities		340.8	586.3	383.7
Investing Activities:
Capital expenditures		(259.0)	(266.8)	(444.6)
Cash proceeds from asset sales and other		7.7	17.6	31.0
Cash Used for Investing Activities		(251.3)	(249.2)	(413.6)
Financing Activities:
Pension financing (funding) (Note G):
Pension expense		192.0	210.0	203.1
Pension funding		(170.0)	(330.0)	(472.3)
Long-term debt borrowings (Note E)		3.1	3.6	31.1
Long-term debt and capital lease payments (Note E)		(91.8)	(120.7)	(99.9)
Cash dividends paid (Note K)		(40.4)	(40.4)	(40.4)
Common Stock issued (Note K)		-	-	355.3
Other payments		(25.8)	(39.1)	(16.4)
Cash Used for Financing Activities		(132.9)	(316.6)	(39.5)
Net Increase (Decrease) in Cash and Cash Equivalents		(43.4)	20.5	(69.4)
Cash and Cash Equivalents	Beginning of Period	180.0	159.5	228.9
	End of Period	$ 136.6	$ 180.0	$ 159.5
Supplemental Cash Payment Information:
Interest, net of amount capitalized		$ 52.8	$ 61.1	$ 41.6
Income taxes (Note D)		$ 3.7	$ -	$ .2

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

1996 Annual Report

Financial Statements

Consolidated Statements of Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows