BETHLEHEM, Pa., Wednesday, January 31, 1996 -- Bethlehem Steel Corporation today reported net income of $32 million, or $.20 per common share, for the fourth quarter 1995 and $180 million, or $1.24 per common share, for the year 1995, compared to net income of $31 million, or $.19 per common share, and $81 million, or $.35 per common share, for the fourth quarter and year 1994. Bethlehem reported sales of $4.9 billion and $4.8 billion in 1995 and 1994 on shipments of 9.0 million tons and 9.3 million tons.
Curtis H. Barnette, Bethlehem's Chairman and Chief Executive Officer, said: "1995 was a year of further progress in implementing our strategic plan.
"Operationally, we continued to focus our actions and initiatives on improving our overall competitiveness. Both Burns Harbor and Sparrows Point, which account for about 85 percent of our steel production and revenues, continued to strengthen their competitive position. Also, we completed a significant transition at Bethlehem Structural Products Corporation (BSPC) and increased the utilization of our recently modernized facilities at Pennsylvania Steel Technologies,Inc.(PST) and BethForge, Inc..
"Financially, our profitability and cash flow improved allowing us to continue to make progress in rebuilding our financial strength. We also entered into a new five-year credit arrangement for $500 million with a group of 15 banks.
"From an employee and citizenship standpoint, we substantially improved our overall safety performance and advanced our environmental programs by becoming the first steelmaker to endorse the CERES environmental principles."
"Recently, market conditions have strengthened, and earlier this month we announced price increases for plates and sheet products, which we believe will be realized during the second quarter.
"Industry capacity additions will increase the intensity of domestic competition in 1996. We will continue to take actions to improve our competitive position by aggressively reducing costs throughout the corporation, improving our product mix and increasing the utilization of our production facilities.
Fourth quarter income from operations was about the same as the third quarter. Lower shipments and lower prices were offset by an improved product mix and lower costs.
During the fourth quarter, as previously announced, we discontinued iron and steelmaking operations at BSPC and closed the 48-inch structural mill. BSPC's remaining structural mill (44-inch mill) was upgraded during a three week planned outage in December. The mill is now being supplied primarily with continuously cast blooms from PST, significantly increasing steel production at PST.
For the year 1995, Basic Steel had income from operations of $311 million, compared to $166 million for 1994. This increase of $145 million was due to higher realized steel prices, partially offset by lower shipments and higher employment costs (principally profit sharing), material costs and depreciation.
The Steel Related Operations segment (BethShip, BethForge and CENTEC) reported losses from operations of $15 million for the fourth quarter 1995 and $42 million for the year 1995 compared to losses of $6 million and $32 million in 1994. During the fourth quarter of 1995, BethForge incurred higher costs associated with the shutdown of its electric furnace shop and began receiving forging ingots from PST. Using steel produced by PST's new steelmaking facilities is expected to reduce BethForge's future operating costs. During the quarter, market conditions continued to remain weak for ship repair.
Cash provided from operating activities in 1995, including selling accounts receivable under our credit arrangement, was $586 million, compared to $384 million in 1994. Principal uses of cash during 1995 included pension funding of $330 million, capital expenditures of $267 million and debt repayment of $121 million.
During 1995, we entered into a new five-year credit arrangement for $500 million with 15 banks to replace our existing $500 million secured credit agreement that was scheduled to expire in December 1996. We now have a separate $300 million receivables sale/purchase agreement and a $200 million secured inventory credit agreement.
Our capital structure improved during the year from our profits and reduction in long-term debt. In addition to the scheduled debt payments, we redeemed all of our outstanding 9 percent debentures due 2000, which totaled $30 million, by using funds from our new receivables sale/purchase agreement, which had lower financing costs.
Major uses of funds for 1996 include an estimated $300 million of capital expenditures, pension funding and repayment of approximately $90 million of debt and capital lease obligations.
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, 1996, to holders of record on February 9, 1996. No dividend was declared on Bethlehem's Common Stock.
CONSOLIDATED STATEMENTS OF INCOME
(dollars and shares in millions, except per share data)
Three Months Ended Year Ended
December 31 December 31
1995 1994 1995 1994
(unaudited)(unaudited) (unaudited)
$1,151.9 $1,224.5 Net Sales . $4,867.5 $4,819.4
Costs and Expenses:
1,002.7 1,073.3 Cost of sales . 4,202.8 4,287.3
70.8 67.3 Depreciation . 284.0 261.1
Selling, administration
27.1 38.6 and general expense . 111.8 137.4
1,100.6 1,179.2 Total Costs and Expenses . 4,598.6 4,685.8
51.3 45.3 Income from Operations . 268.9 133.6
Financing Income (Expense):
(14.4) (9.0) Interest and other financing costs. (60.0) (46.2)
2.0 1.8 Interest income . 7.7 7.1
38.9 38.1 Income before Income Taxes . 216.6 94.5
(6.5) (6.8) Provision for Income Taxes . (37.0) (14.0)
32.4 31.3 Net Income . 179.6 80.5
Dividends on Preferred and
10.5 10.7 Preference Stock . 42.4 43.1
Net Income Applicable to
$ 21.9 $ 20.6 Common Stock . $ 137.2 $ 37.4
$ 0.20 $ 0.19 Net Income per Common Share . $ 1.24 $ 0.35
110.6 110.0 Average Primary Shares Outstanding . . 110.3 106.1
The accompanying Notes are an integral part of the Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
ASSETS
December 31 December 31
1995 1994
(unaudited)
Current Assets:
Cash and cash equivalents . $ 180.0 $ 159.5
Receivables, less allowances (Note 2) . . 374.6 519.5
Inventories:
Raw materials . . 335.5 331.9
Finished and semifinished . . 604.9 534.9
Contract work-in-progress, less
billings . . 17.8 16.1
958.2 882.9
Other current assets . . 13.0 7.2
Total Current Assets . . 1,525.8 1,569.1
Investments and Miscellaneous Assets . . 112.3 124.2
Property, Plant and Equipment,
less accumulated depreciation of
$4,329.5 and $4,167.9 . . 2,714.2 2,759.3
Deferred Income Tax Asset - net . . 885.0 903.2
Intangible Asset - Pensions . . 463.0 426.6
Total Assets . $ 5,700.3 $ 5,782.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable . $ 381.4 $ 387.0
Accrued employment costs . . 358.0 303.8
Accrued taxes . . 72.4 67.6
Debt and capital lease obligations . . 91.5 88.9
Other current liabilities . . 146.3 163.9
Total Current Liabilities . . 1,049.6 1,011.2
Pension Liability . . 1,115.0 1,117.1
Postretirement Benefits Other Than
Pensions . . 1,415.0 1,441.4
Long-term Debt and Capital Lease
Obligations . . 546.8 668.4
Other Long-term Liabilities . . 335.6 388.5
Stockholders' Equity:
Preferred Stock . . 11.6 11.6
Preference Stock . . 2.6 2.6
Common Stock . . 112.7 111.9
Common Stock held in treasury at cost . . (59.4) (59.5)
Additional paid-in capital . . 1,850.6 1,948.6
Accumulated deficit . . (679.8) (859.4)
Total Stockholders' Equity . . 1,238.3 1,155.8
Total Liabilities and Stockholders' Equity. $ 5,700.3 $ 5,782.4
The accompanying Notes are an integral part of the Consolidated Financial Statements.
Year Ended
December 31
1995 1994
(unaudited)
Operating Activities:
Net income . . $ 179.6 $ 80.5
Adjustments for items not affecting cash
from operating activities:
Depreciation . . . 284.0 261.1
Deferred Income Taxes . . . 35.0 13.0
Other - net . . . 2.1 15.8
Working capital (excluding financing and
investing activities):
Receivables (Note 2) . . . 144.9 (22.7)
Inventories . . . (79.0) (28.1)
Accounts payable . . . (5.6) 20.6
Employment costs and other . . . 35.8 45.8
Other - net . . . (10.5) (2.3)
Cash Provided from Operating Activities . . . 586.3 383.7
Investing Activities:
Capital expenditures . . . (266.8) (444.6)
Cash proceeds from asset sales and other . . . 15.1 32.4
Other - net . . . 2.5 (1.4)
Cash Used for Investing Activities . . . (249.2) (413.6)
Financing Activities:
Pension expense . . . 210.0 203.1
Pension funding . . . (330.0) (472.3)
Long-term debt and capital lease borrowings . . . 3.6 31.1
Long-term debt and capital lease payments . . . (120.7) (99.9)
Common stock issued . . . - 355.3
Cash dividends paid . . . (40.4) (40.4)
Other payments . . . (39.1) (16.4)
Cash Used for Financing Activities . . . (316.6) (39.5)
Net Increase (Decrease) in Cash and
Cash Equivalents . . . 20.5 (69.4)
Cash and Cash Equivalent- Beginning of Period . . . 159.5 228.9
- End of Period . . $ 180.0 $ 159.5
Supplemental Cash Payment Information:
Interest, net of amount capitalized . . $ 61.1 $ 41.6
Income taxes . . $ - $ 0.2
The accompanying Notes are an integral part of the Consolidated Financial Statements.
1. Segment Results (dollars in millions):
(unaudited)
1995 1994
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
Net Sales:
Basic Steel Operations $ 1,130.4 $ 1,210.6 $ 1,225.4 $ 1,210.4 $ 1,203.0
Steel Related Operations 28.6 23.8 29.4 36.5 29.7
Eliminations (7.1) (9.7) (4.6) (6.2) (8.2)
Total $ 1,151.9 $ 1,224.7 $ 1,250.2 $ 1,240.7 $ 1,224.5
Operating Income (Loss):
Basic Steel Operations $ 66.5 $ 67.5 $ 97.6 $ 79.1 $ 51.5
Steel Related Operations (15.2) (11.4) (10.3) (4.9) (6.2)
Total $ 51.3 $ 56.1 $ 87.3 $ 74.2 $ 45.3
Shipments
(thousands of net tons):
Basic Steel Operations 2,143 2,291 2,263 2,273 2,294
Raw Steel Production
(thousands of net tons):
Basic Steel Operations 2,533 2,565 2,729 2,596 2,479
2. On September 12, 1995, Bethlehem, through a wholly owned, special
purpose subsidiary, entered into a five-year $300 million receivables sale /
purchase agreement with a group of banks, of which up to $150 million can be
used for letters of credit. As of December 31, 1995, we had sold an ownership
interest in trade receivables to banks in exchange for $30 million in cash and
the issuance of about $82 million of letters of credit. We will receive cash
from the banks upon expiration of the letters of credit.
3. At December 31, 1995, in accordance with required accounting principles, we changed the discount rate for our pension liability from 9.00% to 7.25% to reflect changes in long-term interest rates during the year and recognized the market value of our pension trust assets. The net effect of recognizing the year end market rate and values was essentially no change in our pension liability for the year and a net after-tax charge to equity of $67 million.
4. The Consolidated Financial Statements as of and for the three month and twelve month periods ended December 31, 1995 and 1994 have not been audited. However, the information reflects all adjustments which, in the opinion of management, are necessary to present fairly the results shown for the periods indicated. Management believes all adjustments were of a normal recurring nature.
5. These Consolidated Financial Statements should be read together with the 1994 audited financial statements set forth in Bethlehem's Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Q2, 1995
Q3, 1995
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