Birmingham Steel Corporation Reports First Quarter Results; Company Reports Third Consecutive Quarter of Improved Financial Performance for Continuing Operations.

Business Editors

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Oct. 23, 2001

Birmingham Steel Corporation (NYSE:BIR) today reported financial results for the fiscal 2002 first quarter ended September 30, 2001. The Company's financial performance in the first quarter improved from the immediately preceding quarter ended June 30, 2001, and was better than the results reported for the same period of the prior fiscal year.

For the three months ended September 30, 2001, the Company reported a net loss from continuing operations of $2.3 million ($0.07 per share), compared with a loss of $6.8 million ($0.22 per share) in the first quarter of the prior fiscal year. In the immediately preceding fourth quarter ended June 30, 2001, the Company reported a net loss of $3.5 million ($0.11 per share).

Steel shipments in the first quarter of fiscal 2002 were 630,000 tons, compared with 653,000 tons in the same period last year. The average selling price per ton was $272 down from $287 last year, reflecting lower overall average selling pricing, particularly for merchant products.

John D. Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "We are pleased to report another quarter of improved financial performance. With the exception of the Cartersville facility, each of our core operations was profitable for the first quarter." Correnti noted that, in the first quarter, the Company continued to reduce selling, general and administrative expenses, improved operating margins and generated $21 million in EBITDA cash flow (earnings before interest, taxes, depreciation and amortization).

Correnti continued, "Following the unfortunate terrorists' attacks on the U.S. on September 11, 2001, the pace of our steel shipments slowed. As a result, financial performance in the month of September was significantly less than in July and August. Although shipments in October are more in line with expectations, there is considerable uncertainty about the near-term outlook for the steel industry and the general economy. As a result, following a partial restoration of selling values in the fourth quarter of fiscal 2001, rebar prices are again under pressure."

Correnti stated, "We are encouraged by yesterday's actions of the U.S. International Trade Commission and the recent decision by the Bush Administration to support existing anti-dumping laws in the steel industry. However, we expect steel prices will remain under pressure for the remainder of 2001 and for the first half of 2002."

Correnti said the Company is continuing discussions with its lenders regarding the possible restructuring of debt or extension of certain debt maturities, which are currently due April 1, 2002. Correnti said the Company expects to remain in compliance with all covenants pursuant to its debt agreements.

Correnti said, "We expect to maintain sufficient liquidity and availability under our revolver to conduct operations as normal until the maturity of the revolver on April 1, 2002. We appreciate the past support of our lenders during very difficult times in the industry, and we will continue to seek their support in the days ahead."

Correnti also said the Company is progressing with due diligence and documentation regarding the pending sale of the Company's SBQ facilities in Cleveland, Ohio to Corporacion Sidenor, S.A., an SBQ steel producer headquartered in Bilbao, Spain. The Company expects to have completed a definitive agreement with Sidenor by November 9, 2001. Correnti said Sidenor is currently paying the costs for approximately 60 former employees of the SBQ operations in order to retain these workers for a restart of operations upon closing of the transaction. Correnti noted that the transaction with Sidenor would reduce debt and eliminate further cash requirements of the Cleveland facility.

Correnti concluded, "Birmingham Steel has demonstrated progress during challenging times for the steel industry. However, we face continued challenges as we approach the seasonally slower winter months against a background of pricing pressures and general economic uncertainty. Although our task is difficult, we will continue to pursue strategies and make decisions which further our goals of returning to profitability and improving the Company's long-term financial prospects."

Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States. The common stock of Birmingham Steel is traded on the New York Stock Exchange under the symbol "BIR".

Except for historical information, the matters described in the press release are forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, equipment breakdowns or failures, the Company's continued compliance with its financing arrangements and its principal debt agreements, as well as other risks described from time to time in the Company's periodic and special filings with the Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof, and the Company disclaims any intent or obligation to update such forward-looking statements.

BIRMINGHAM STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

                                            September 30,   June 30,
                                                2001          2000
ASSETS                                       (Unaudited)    (Audited)
Current assets:
  Cash and cash equivalents                  $     935    $     935
  Accounts receivable, net of allowance
    for doubtful accounts of $2,236 at
    September 30, 2001 and $2,146 at
    June 30, 2001                               78,554       72,820
  Inventories                                  109,768      105,426
  Other current assets                           3,890        3,013
  Net current assets of discontinued
    operations                                  13,280       14,669
                                             ---------    ---------
      Total current assets                     206,427      196,863

Property, plant and equipment:
  Land and buildings                           177,038      177,038
  Machinery and equipment                      469,137      465,470
  Construction in progress                      11,361       16,041
                                             ---------    ---------
                                               657,536      658,549
  Less accumulated depreciation               (290,546)    (281,151)
                                             ---------    ---------
      Net property, plant and equipment        366,990      377,398

  Excess of cost over net assets acquired       13,515       13,515
  Other                                         18,190       17,514
  Net non-current assets of discontinued
    operations                                  42,389       42,171
                                             ---------    ---------
        Total assets                         $ 647,511    $ 647,461
                                             =========    =========

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                           $  49,392    $  45,118
  Accrued interest payable                       4,623        3,365
  Accrued payroll expenses                       5,564        5,475
  Accrued operating expenses                     7,734        9,555
  Other current  liabilities                    24,898       24,785
  Current maturities of long-term debt         298,200      293,500
  Reserve for operating losses of
    discontinued operations                     12,812       10,137
                                             ---------    ---------
      Total current liabilities                403,223      391,935

Deferred liabilities                             8,284        8,030
Long-term debt, less current portion           253,546      254,000

Stockholders' equity:
  Preferred stock, par value $.01;
    authorized: 5,000,000 shares                  --           --
  Common stock, par value $.01;
    authorized: 75,000,000 shares; issued:
    31,341,816 September 30, 2001 and
    31,142,113 at June 30, 2001                    313          311
  Additional paid-in capital                   344,116      343,908
  Unearned compensation                           (258)        (317)
  Retained deficiency                         (361,713)    (350,406)
                                             ---------    ---------
      Total stockholders' deficit              (17,542)      (6,504)
                                             ---------    ---------
      Total liabilities and stockholders'
        equity                               $ 647,511    $ 647,461
                                             =========    =========


BIRMINGHAM STEEL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data; unaudited)

                                                Three Months Ended
                                                   September 30,
                                                 2001         2000
                                                           (Restated)
Net sales                                     $ 172,765    $ 192,895
Cost of sales:
  Other than depreciation and amortization      143,339      166,972
  Depreciation and amortization                   9,787       10,652
                                              ---------    ---------
Gross profit                                     19,639       15,271

Start-up and restructuring costs and other
  unusual items                                    --            400
Selling, general and administrative expense       8,335        8,921
                                              ---------    ---------
Operating income                                 11,304        5,950
Interest expense, including amortization of
  debt issue costs                               13,691       12,600
Other income (loss), net                             89         (109)
(Loss) income from equity investments                (9)          21
                                              ---------    ---------
Loss from continuing operations before
  income taxes                                   (2,307)      (6,738)
Provision for income taxes                         --             65
                                              ---------    ---------
Net loss from continuing operations              (2,307)      (6,803)

Discontinued operations:
  Loss from discontinued operations,
    net of tax                                   (9,000)      (8,226)
                                              ---------    ---------
Net loss                                      $ (11,307)   $ (15,029)
                                              =========    =========
Weighted average shares outstanding              31,032       30,892
                                              =========    =========
Basic and diluted per share amounts:
  Loss from continuing operations             $   (0.07)   $   (0.22)
  Loss from discontinued operations               (0.29)       (0.27)
  Net loss per share                          $   (0.36)   $   (0.49)