BETHLEHEM STEEL ANNOUNCES FIRST QUARTER 1993 RESULTS
/FOLLOWING IS A REPEAT OF A STORY FROM EARLIER TODAY:/ BETHLEHEM, Pa., April 27 /PRNewswire/ -- Bethlehem Steel Corporation
(NYSE BS) today reported a first quarter 1993 net loss of $41 million, or $.54 per common share.
First quarter 1993 results represent a $45 million improvement in operating performance over fourth quarter 1992 results, excluding the after tax effects of fourth quarter 1992 one-time gains. This improvement was due to higher shipments, lower production costs and an improved product mix. Bethlehem's fourth quarter 1992 results included gains for partial reimbursement of losses on a U.S. Navy contract and LIFO liquidation credits. For first quarter 1992, Bethlehem reported a loss before the cumulative effect of changes in accounting principles of $36 million, or $.55 per common share, and a net loss of $286 million, which included a $250 million charge for the cumulative effect of changes in accounting principles. Curtis H. Barnette, Bethlehem's chairman and chief executive officer, said: "Despite our first quarter loss, there are encouraging signs of an increase in steel demand and the restoration of fair value for our products. In particular, we have experienced a significant increase in orders, primarily from the automotive market. We have also announced price increases for our sheet products and have begun to realize the benefits of these increases during the second quarter. We expect that the improving trend for both the economy and steel markets will continue throughout the year and that domestic steel industry shipments will rise by about 5% to 86 million tons in 1993. We are continuing to focus on cost reductions, product mix improvements and total quality throughout Bethlehem. We expect that these actions, together with continued improvement in steel markets and the achievement of fair trade in steel, will return Bethlehem to profitability this year." SEGMENT RESULTS First quarter 1993 results of the Basic Steel Operations segment improved by $50 million over fourth quarter 1992. First quarter 1993 losses from operations were $29 million compared to $79 million for fourth quarter 1992 and $21 million for first quarter 1992. Barnette said: "The improvement in first quarter 1993 results over fourth quarter 1992 was due to higher steel shipments, lower production costs and an improved product mix. Average realized steel prices in the first quarter of 1993, on a constant mix basis, remained at about the same levels as in the fourth quarter, but were lower than in the first quarter of 1992." At the Burns Harbor and Sparrows Point Divisions, first quarter 1993 shipments were higher than the year earlier period and product mix was better due in part to the new hot-dip galvanizing lines which started up in December 1992 and which are well on their way to achieving full production levels. Barnette reported that the Burns Harbor Division set new production and shipment records during the first quarter. The Sparrows Point Division shut down its large blast furnace on March 12
for planned repairs of a portion of the refractory lining. The furnace resumed operations on April 11, six days ahead of schedule.
Contracts for equipment have been placed and work has begun on the modernization program for Pennsylvania Steel Technologies, Bethlehem's rail products, specialty blooms and pipe subsidiary. The program is scheduled for completion during the latter half of 1994. Bethlehem reduced its reported raw steel production capability to 11.5 million tons from 16 million tons, effective Jan. 1, 1993. Based on this raw steel production capability of 11.5 million tons, utilization of production capability for this segment's steel operations was 87 percent for first quarter 1993 compared to 89 percent for fourth quarter 1992 and 90 percent for first quarter 1992. The Steel Related Operations segment had losses from operations of $4 million for first quarter 1993 compared to $3 million for fourth quarter 1992 (excluding a one-time gain for partial reimbursement of losses on a U.S. Navy contract) and $8 million for first quarter 1992. The BethShip Division had improved results as work proceeded on a tunnel fabrication contract for Boston harbor and from increased levels of ship repair work. The BethForge Division and the CENTEC joint venture continued to experience losses due to weak markets and high operating costs. LIQUIDITY Cash and cash equivalents were $190 million at March 31, 1993, compared to $208 million at December 31, 1992. During the first quarter of 1993 significant uses of cash included higher working capital for increased business activity, repayment of short term borrowing, pension funding and capital expenditures. At March 31, 1993, $270 million was available for borrowing under the 1992 revolving credit agreement. During March, Bethlehem sold 5.1 million shares of Cumulative Convertible Preferred Stock in a private offering, realizing net proceeds of approximately $248 million. $125 million of the proceeds together with an additional $25 million were contributed to Bethlehem's pension fund during the first quarter, for total contributions of $150 million. The balance of the proceeds of the Preferred Stock offering will be used for capital expenditures, primarily for modernization. Bethlehem signed a letter of intent in November 1992 to sell the remaining assets of the Bar, Rod and Wire Division. The prospective buyer was unable to reach an agreement with the United Steelworkers of America (USWA), and the letter of intent expired on March 31, 1993. The remaining assets of the Division are now being marketed and Bethlehem will consider proposals from qualified buyers to acquire all or portions of the Division's facilities. Bethlehem currently expects to generate approximately $40 million from asset sales in 1993, principally from the sale of coal properties and certain assets of the Bar, Rod and Wire Division. Capital expenditures were $62 million during the first quarter of 1993 compared to $89 million during the year earlier period. Capital expenditures for the year 1993 are currently estimated to be approximately $325 million compared to $329 million in 1992. LABOR NEGOTIATIONS Bethlehem and the USWA have recently announced tentative agreement on three new labor contracts for the Structural Products Division, the BethForge Division and the CENTEC joint venture. The new contracts are subject to ratification by union employees at the three divisions. The contracts and a satisfactory business plan for the Structural Products Division are also subject to approval by Bethlehem's board of directors. If all required approvals are received, Bethlehem will proceed with its previously announced modernization program for the Structural Products Division. Bethlehem's basic labor agreement with the USWA, covering most of its USWA-represented employees, expires on July 31, 1993. Bethlehem has ongoing discussions with the USWA and expects to reach a mutually
satisfactory settlement on a new agreement before the expiration of the contract. Bethlehem hopes to have an agreement that will promote productivity and stability and help make Bethlehem more competitive.
CLINTON ADMINISTRATION ECONOMIC PLAN AND TRADE POLICY Barnette said: "We commend the President in his economic plan for focusing public attention on the need to reduce the federal deficit, control surging health care costs, promote growth and accelerate investments aimed at rebuilding America's infrastructure. "We especially want to work with the President on health care reform. Health care is a major expense for Bethlehem. As a result of extensive downsizing over the past two decades, we now have approximately 70,000 retirees compared to approximately 22,000 active employees. Our quarterly expense for providing health care benefits for active employees, retirees and their dependents is approximately $60 million. This quarterly expense exceeded Bethlehem's net loss for the first quarter of 1993. "The proposed energy tax and certain other aspects of the president's economic plan could adversely affect the domestic economy and the international competitiveness of American steel producers. Bethlehem is working with the Administration and the Congress to achieve satisfactory resolution of these issues. "The president has indicated that trade policy will be an integral part of our nation's future economic policy deliberations. Bethlehem supports the president on this and other efforts by the Administration to focus on ways to improve the competitiveness of American business. "Trade cases covering flat rolled carbon steel products are advancing toward final determination of dumping and subsidy margins in June and final decisions on injury by early August. Bethlehem has full confidence in the merits of these cases. We are the low cost, high quality producer in our market, and we want the opportunity to compete in a market governed by fair trade. CONTINUING CHALLENGES FOR BETHLEHEM With respect to the challenges facing Bethlehem, Barnette said: "We are more determined than ever to meet the opportunities and challenges of change. We are looking at every aspect of our business, benchmarking and making changes that will help ensure a strong and competitive company. "We have confidence in our ability to serve our customers because we are building on some very significant strengths, namely high-quality products, an excellent product mix, technologically advanced production facilities, and skilled and dedicated employees. "We have taken many actions necessary to help ensure the long-term viability of Bethlehem Steel. We know there's still much more to be done, but working together we will establish Bethlehem as a world- recognized and profitable supplier of low-cost, high-quality steel products." BETHLEHEM STEEL CORPORATION Consolidated Statements of Income (Unaudited; dollars in millions, except per-share data) Three months ended March 31 1993 1992 NET SALES $1,020.4 $995.4 Costs and Expenses: Cost of Sales 946.9 917.0 Depreciation 66.4 67.4 Selling, administrative and general expense 40.0 39.8 TOTAL COSTS AND EXPENSES 1,053.3 1,024.2 Loss from Operations (32.9) (28.8) Financing Income (Expense): Interest and other financing costs (16.5) (15.8) Interest and other income 1.6 1.3 LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES (47.8) (43.3) Benefit for Income Taxes 6.5 7.0 LOSS BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES (41.3) 36.3 Cumulative Effect of Changes in Accounting Principles --- (250.0) NET LOSS (41.3) (286.3) Dividend Requirements for Preferred and Preference Stock 7.5 6.1 NET LOSS APPLICABLE TO COMMON STOCK $(48.8) $(292.4) Per Common Share Amounts: Loss Before Cumulative Effect of Changes in Accounting Principles $ (0.54) $ (0.55) Net Loss $ (0.54) $ (3.82) Average shares outstanding (thousands) 90,580 76,462 Shipments, Basic Steel Operations (thousands of net tons) 2,219 2,130 Raw Steel Production, Basic Steel Operations (thousands of net tons) 2,447 2,571 /delval/ -0- 4/27/93 /CONTACT: Henry Von Spreckelsen of Bethlehem Steel, 215-694-3711/ (BS)
CO: Bethlehem Steel Corporation ST: Pennsylvania IN: MNG SU: ERN
MP -- PH013 -- 1445 04/27/93 13:27 EDT
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|Date:||Apr 27, 1993|
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