We at Bethlehem Steel are committed to implementing strategies that will create value for our stockholders and ensure our long-term success. Our business focus is on providing operational excellence, outstanding service, and innovative solutions. Driving our business plans are three strategic themes: cost competitiveness, accelerated change, and profitable growth.

We are pursuing cost cutting relentlessly at all levels and all operations and offices. We fully recognize that our ability to compete and grow depends on our ability to get our costs in line with the demands of the marketplace - and we must do it quickly. This is our most urgent priority.

While we will continue to aggressively reduce costs, we will not compromise safety, health, or the environment. Last year we experienced the best environmental performance in the history of our company. And, for the fourth consecutive year, we set new records for reducing total and recordable injuries throughout the company. We fully intend to continue, and to improve upon, this performance.

For the future, I believe that bold and urgent actions must be taken by steel companies, the steelworkers union, and the government to address the problems endemic to the steel industry. Consolidation of the domestic industry, including the permanent elimination of noncompetitive facilities, needs to occur. And full and effective enforcement of our existing trade laws would be a major step in correcting unfair steel trade.

For the present, however, our efforts at Bethlehem must continue to be sharply focused on significantly improving our financial performance. We believe that Bethlehem will not only get through these very difficult times, but that we will be one of the most successful competitors in the steel business in the long run. This past year, we have reorganized our businesses, put into place some very capable new leadership, completed and brought on-line several major strategic capital expenditure projects, and reduced our costs.

In addition to our intense cost-cutting efforts, we are also pursuing opportunities to profitably grow our core steel business. We are investing in new facilities, entering into new ventures, introducing new products, and adopting new e-Business initiatives.

New Facilities: Our new continuous cold-rolling mill complex that went into production in 2000 will make Sparrows Point a key player in the most demanding markets for sheet steel - at significantly lower costs compared with the two older cold mills that it replaced. Incorporating the latest world-class technology, the new mill complex is designed to produce 1.5 million tons a year of premium quality sheet steel. It will allow us to aggressively pursue new product opportunities in the higher value markets.

New Ventures: In November, we and our partner opened Columbus Coatings, a 50/50 joint venture in Columbus, Ohio, to produce 500,000 tons a year of high-quality galvanized and galvannealed sheet steel for the automotive market. The products produced by Columbus Coatings will strengthen Bethlehem's position with the major automotive companies. We also produce premium corrosion-resistant sheet for automotive applications at our Burns Harbor Division, at our Lackawanna, New York, Galvanized Products Division, and at our Walbridge, Ohio, joint venture. Bethlehem is a major supplier of steel to the North American automotive market, with Burns Harbor selling about half of its finished sheet products to the automotive industry.

New Products: Hydroforming is a pioneering process that expands steel tubes under high pressure to produce automotive structures that have the advantages of higher strength, lighter weight, and lower cost. In September, we began construction of BethNova Tube, a joint venture in Jeffersonville, Indiana, that will produce steel tubing with the demanding specifications required for hydroforming automobile and truck components. BethNova Tube is a prime example of using advanced technology to produce an innovative product that provides higher value steel for our customers.

New e-Business Initiatives: During 2000, we accelerated our e-Business initiatives. Our customers now have the ability to access online - 24 hours a day, 7 days a week - information about their orders and account status, and to pay us electronically. We are advancing e-Procurement with suppliers through our selection of Ariba's B2B platform. We also have equity investments in MetalSite, an online marketplace for steel products, and in OneBuild.com, an e-Market solutions provider for construction-related industries.

As we pursue new opportunities, part of our strategy is to enter new lines of business that will build on and support what we are already good at - making and marketing steel. We are looking to develop business partnerships with strong service providers and with key customers. We are also working with the member companies of the American Iron and Steel Institute to implement an aggressive program aimed at growing and enhancing the overall market for steel products.