For Immediate Release

Public Relations Division
Public Affairs Department
1170 Eighth Avenue
Bethlehem, PA 18016-7699
(610) 694-3711 - Phone
(610) 694-1509 - Fax

BETHLEHEM, Pa., October 30, 1996 -- Bethlehem Steel Corporation today reported net income of $11 million, on sales of $1.17 billion, for the third quarter of 1996 compared to net income of $34 million, on sales of $1.22 billion, for the third quarter of 1995. After deducting preferred dividends, net income per common share was break-even for the third quarter of 1996 compared to $.22 for the third quarter of 1995. Third quarter results included a previously announced restructuring charge of $15 million related to the sale and lease of certain assets of Bethlehem's Eagle Nest coal mine. Without this charge, net income for the third quarter would have been $23 million, or $.12 per common share.

For the first nine months of 1996, net income was $38 million, on sales of $3.53 billion, compared to net income of $147 million, on sales of $3.72 billion, for the first nine months of 1995. Income applicable to common stock was $.06 per common share, compared to $1.05 per common share in 1995.

The Basic Steel Operations segment had income from operations of $32 million and $106 million for the third quarter and first nine months of 1996 compared to income from operations of $68 million and $244 million for the third quarter and first nine months of 1995. Income from operations, excluding the effects of the restructuring charge, was $47 million for the third quarter and $121 million for the first nine months of 1996.

Third quarter results declined from a year ago principally from lower realized prices, lower shipments and the restructuring charge. This was partially offset by an improved mix from a higher percentage of coated and cold-rolled shipments and improved costs at our flat-rolled operations. Income from operations for the first nine months of 1996 decreased from the first nine months of 1995 primarily due to lower realized prices for sheet products. Third quarter 1996 income from operations declined from the second quarter of 1996 principally due to the previously discussed restructuring charge and lower shipments.

During the third quarter, Bethlehem's Burns Harbor Division completed its "Big Heat" project that will increase its steelmaking capability by nearly 400,000 tons per year. This additional steelmaking capability will reduce Burns Harbor's need for purchasing higher cost semi-finished steel. The construction of the Chicago Cold Rolling Joint Venture is progressing on schedule and is expected to commence operations later this year.

The Steel Related Operations segment (BethForge, CENTEC and BethShip) reported losses from operations of $7 million and $24 million for the third quarter and first nine months of 1996, compared to losses of $11 million and $27 million for the third quarter and first nine months of 1995.

At September 30, 1996, total liquidity, comprising cash, cash equivalents and funds available under our bank credit arrangements, totaled $421 million compared to $512 million at December 31, 1995, and $530 million at September 30, 1995. At September 30, 1996, funds available under our bank credit arrangements totaled $315 million.

Cash provided from operating activities for the first nine months of 1996 was $266 million, including proceeds of $60 million from the sale of accounts receivable under our credit arrangements. This compares to $309 million for the first nine months of 1995. Principal uses of cash during the first nine months of 1996 included capital expenditures, pension funding and debt repayments. Capital expenditures were $206 million for the first nine months of 1996 compared to $205 million during the year-earlier period. Capital expenditures are currently expected to be about $275 million in 1996. Major capital projects include improvements at Burns Harbor's 160" Plate Mill and Hot Strip Mill.

We contributed $60 million to our pension fund during the third quarter of 1996, for a total of $155 million so far this year. Additional contributions to the pension fund will be made during the fourth quarter 1996, as appropriate. We repaid $77 million of debt and capital lease obligations during the first nine months of 1996 and expect to repay about $15 million of such obligations during the remainder of the year.

Bethlehem announced today that its Board of Directors has approved a comprehensive restructuring plan to improve financial performance and stockholder value. The plan relates to Bethlehem Structural Products Corporation's Structural Mill, BethForge, Inc., CENTEC Roll Corporation and BethShip Inc.'s Sparrows Point Yard. Bethlehem plans to sell these businesses to qualified buyers. If sales cannot be completed, the operations will be shut down and efforts will continue thereafter to sell the businesses and, if this is not possible, the assets will be sold. In addition, although the Coke Division at Bethlehem, Pennsylvania, will continue to operate as a part of Bethlehem, it will be written off as an impaired asset in accordance with generally accepted accounting principles. As a result of this Plan, Bethlehem said it will recognize an after-tax restructuring charge of about $375 million in the fourth quarter of 1996.

In making the announcement, Curtis H. Barnette, Bethlehem's chairman and chief executive officer, said: "The Plan is consistent with our Vision, Objectives and Strategy and was made in the overall best interests of our stockholders, employees and other constituents.

"The affected businesses, which comprise less than 10% of our total revenues, have continued to be unprofitable, even with our efforts to modernize and improve them. The decisions announced today will enhance our future performance and are in accordance with Bethlehem's basic strategy of concentrating on our core steel businesses, rebuilding our financial strength and improving continuously in everything we do."

Mr. Barnette said that the sale of the Eagle Nest Coal Division during the third quarter and entering into supply contracts for a portion of our metallurgical coal requirements will also help implement these strategies.

Mr. Barnette said that Bethlehem was also issuing today a separate, more detailed announcement about this comprehensive restructuring plan.

Regarding the outlook for Bethlehem, and the domestic steel industry, Mr. Barnette said: "We believe that the U.S. economy will continue on a course of moderate and sustainable growth and low inflation. Demand from the major steel consuming sectors continues to be relatively good. Currently, we have a good backlog of orders and are working to implement our previously announced price increases in our short-term markets.

"Competition remains intense in all of our markets, particularly as certain existing capacity resumes operation and new capacity enters the marketplace. We are concerned about, and we are monitoring closely, the increase of unfairly traded imports in recent months. We are continuing to increase the utilization and efficiency of our production facilities and pursuing cost reduction and working capital improvement throughout the Corporation. We are also investing in facilities that will grow our business, and we will continue to divest businesses that do not achieve satisfactory performance or fit with our strategy of concentrating on steel and rebuilding our financial strength."

Regarding the labor situation at General Motors, Mr. Barnette said: "General Motors is a major and valued customer, and we hope that they will be able to reach a mutually satisfactory settlement with the United Auto Workers in the near future."

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 December 10, 1996, to holders of record on November 12, 1996. No dividend was declared on Bethlehem's Common Stock.