Birmingham Steel Corporation Reports Second Quarter Results.

Business Editors

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Feb. 21, 2000

SBQ Operations Reclassified as Discontinued Operations;

Despite Industry Downturn, Core Operations Reflect

Improved Financial Performance;

Company Amends Financing Agreements With Lenders

Birmingham Steel Corporation (NYSE:BIR) today reported financial results for the second quarter and six months ended December 31, 2000. The results for the current and comparable prior fiscal year periods have been modified to present the Company's special bar quality (SBQ) operations as discontinued operations. Results for the Company's core operations are presented as continuing operations.

The second quarter operating results reflect a continuing economic downturn in the U.S. steel industry, as evidenced by lower selling prices, reduced shipments, higher energy costs and higher manufacturing costs associated with reduced production levels. The results also reflect the impact of a decrease in construction activity related to severe winter weather across the U.S. However, compared with the same periods of the prior fiscal year, the Company's core operations reported overall improved financial results. Results for the second quarter and first six months of fiscal 2001 reflect reductions in selling, general and administrative expenses, start-up costs and other unusual expenses.

For the three months ended December 31, 2000, the Company reported a net loss from continuing operations of $17.3 million ($0.56 per share), compared with a loss of $41.7 million ($1.41 per share) in the same quarter of the prior fiscal year. Results in the current year quarter reflect reductions of $3.8 million in selling, general and administrative expenses associated with aggressive cost reduction measures implemented during the past year. The results for the prior-year quarter reflected $28.5 million of start-up and restructuring costs, as well as unusual expenses related to the proxy contest which ended on December 2, 1999.

Steel shipments in the second quarter of fiscal 2001 were 562,000 tons, down from 607,000 tons in the same period last year. Reflecting a general trend of declining industry selling prices, the weighted average selling price per ton for shipments from the core operations in the current year's quarter was $267, compared with $279 last year.

For the six months ended December 31, 2000, the Company reported a net loss from continuing operations of $24.1 million, compared with a loss of $35.9 million for the same period of fiscal 2000. The results reflect reductions of $4.6 million in selling, general and administrative expenses. The results for the prior-year period included $33.6 million of start-up and restructuring costs and other unusual expenses associated with the proxy contest. On a per share basis, the loss in the current six-month period was $0.78, compared with $1.21 in the same period of the prior year.

Steel shipments for the six months ended December 31, 2000, were 1,215,000 tons, down from 1,249,000 tons in the same period of the prior year. The weighted average selling price per ton for the Company's core operations was $271 in the current-year period, compared with $279 in the first six months of fiscal 2000.

John D. Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "Economic conditions in the domestic steel industry today are the worst in 25 years. Steel producers are under pressure from all directions. Selling prices have dropped because of increased imports and high inventories, and rising energy costs have had an adverse impact on margins. Also, severe winter weather conditions restricted shipments during the second quarter. The decline in shipments has forced producers to curtail production in order to control inventories. As a result, margins have been compressed by lower selling prices and higher production costs."

Correnti continued, "During the past 12 months, Birmingham Steel has significantly reduced SG&A, start-up and unusual costs. Unfortunately, our progress has been overshadowed by the deterioration in industry pricing and demand, which have continued into the March 2001 quarter. Although we expect difficult business conditions for the remainder of calendar 2001, we believe the worst may be over."

Correnti stated, "We recently implemented a price increase of $20 per ton for rebar, which should begin to have a positive impact on results in the month of March. We also announced an increase of $20 per ton for merchant products. Although it is too soon to determine whether the merchant price increase will hold, at this time we do not foresee any further price decline. Although there are signs the overall U.S. economy is slowing, shipments for both rebar and merchant products should improve as we enter the seasonally strong construction period."

Based upon the Company's decision to divest its special bar quality (SBQ) facilities in Cleveland, Ohio, and Memphis, Tennessee, and as required by generally accepted accounting principles ("GAAP"), the Company's SBQ operations are now presented as discontinued operations. For the quarter ended December 31, 2000, the SBQ facilities generated a loss from operations of $12.0 million. In accordance with GAAP, the second quarter results also reflect charges of $89.9 million associated with the pending sale of the SBQ facilities, including estimates for loss on sale of the facilities and operating losses to be incurred until disposal.

Commenting on the pending sale of the Company's SBQ facilities to North American Metals, Ltd., Correnti said, "As we stated in a press release dated January 31, 2001, the Hart-Scott-Rodino filings necessary to complete the transaction have been approved by the appropriate regulatory authorities, and NAM continues to report progress in its efforts to complete the purchase. We are hopeful that financing commitments from NAM's lenders will be in place soon. Based upon the status of NAM's current progress, we have targeted March 23, 2001, as the date for closing of the transaction."

Correnti noted that, upon sale of the SBQ operations, Birmingham Steel expects to reduce its debt and interest expense by approximately 30%. In addition, the transaction will enable the Company to relinquish an off-balance sheet leveraged lease obligation associated with the Memphis facility. The transaction is subject to the approval of Birmingham Steel's lenders.

The Company also reported that it has amended its long-term debt agreements with its lenders to provide modifications to financial covenants and extend maturity dates for principal payments that were previously due before March 31, 2002. The new agreements maintain the interest rates or spreads currently in effect for the Company's debt. The amendments also limit the borrowings under its revolver and other credit facilities to an aggregate of $300 million. In consideration for the financing agreement modifications, and in lieu of cash fees, the exercise price for the common stock warrants held by the Company's lenders has been reduced from $3.00 to $0.01 per share.

Correnti commented, "Because of the decline in overall market conditions, we needed to amend certain financial covenants contained in our financing agreements and extend the dates for principal payments due within the next year. We are pleased that our lenders continue to support management's efforts to return the Company to profitability. We believe the amended financing agreements will provide the Company with adequate financial resources until we can refinance or restructure our debt on more favorable terms. Although steel industry and general economic conditions will influence the timing of our efforts, we expect to refinance or restructure our debt within the next 12 months."

Correnti concluded, "Without question, the U.S. steel industry is in a recession, and we expect industry margins will remain under pressure for the balance of 2001. For Birmingham Steel, our challenges will be complicated by our high debt level. However, we have an excellent workforce and management team, and we will continue to aggressively pursue our plans to improve Birmingham Steel's financial position. We will endeavor to respond to a very difficult industry environment in a manner that will build value for our shareholders."

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 this 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 per share data; unaudited)

                                              December 31,   June 30,
                                                  2000         2000
ASSETS                                                      (Restated)
Current assets:
  Cash and cash equivalents                    $     935    $     935
  Accounts receivable, net of allowance
    for doubtful accounts of $1,739 at
    December 31, 2000 and $1,614 at
    June 30, 2000                                 65,398       76,113
  Inventories                                    110,395      136,257
  Other current assets                             5,132        5,023
  Net current assets of discontinued
    operations                                    34,764       33,837
                                               ---------    ---------
    Total current assets                         216,624      252,165

Property, plant and equipment:
  Land and buildings                             176,330      176,187
  Machinery and equipment                        462,202      463,895
  Construction in progress                        16,030       11,942
                                               ---------    ---------
                                                 654,562      652,024
  Less accumulated depreciation                 (262,417)    (244,324)
                                               ---------    ---------
     Net property, plant and equipment           392,145      407,700

  Excess of cost over net assets acquired         14,578       15,642
  Other                                           23,682       26,739
  Net non-current assets of discontinued
    operations                                    74,432      157,129
                                               ---------    ---------
     Total assets                              $ 721,461    $ 859,375
                                               =========    =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                             $  49,190    $  70,345
  Accrued interest payable                         2,047        2,020
  Accrued payroll expenses                         4,451        9,589
  Accrued operating expenses                       7,653        9,897
  Other current  liabilities                      21,653       17,655
  Allowance for operating losses of
    discontinued operations                       12,252         --
                                               ---------    ---------
    Total current liabilities                     97,246      109,506
Deferred liabilities                               9,571        9,889
Long-term debt, less current portion             560,317      551,965
Stockholders' equity:
  Preferred stock, par value $.01;
    authorized: 5,000 shares                        --           --
  Common stock, par value $.01; authorized:
    75,000 shares; issued: 31,123 at
    December 31, 2000 and 31,058 at
    June 30, 2000                                    311          310
  Additional paid-in capital                     342,352      342,257
  Treasury stock, 38 and 81 shares at
    December 31, 2000 and June 30, 2000,
    respectively, at cost                           (274)        (465)
  Unearned compensation                             (453)        (667)
  Retained deficiency                           (287,609)    (153,420)
                                               ---------    ---------
    Total stockholders' equity                    54,327      188,015
                                               ---------    ---------
    Total liabilities and stockholders' equity $ 721,461    $ 859,375
                                               =========    =========

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

                       Three Months Ended         Six Months Ended
                           December 31,             December, 31,
                        2000         1999         2000         1999
                                  (Restated)                (Restated)
Net sales            $ 148,609    $ 169,613    $ 327,271    $ 346,416
Cost of sales:
  Other than
   depreciation
   and amortization    135,734      143,697      288,473      281,617
  Depreciation and
   amortization         10,638       10,768       21,290       21,415
                     ---------    ---------    ---------    ---------
Gross profit             2,237       15,148       17,508       43,384
Start-up and
  restructuring
  costs and other
  unusual items           (416)      28,547          (16)      33,607
Selling, general and
  administrative
  expense                8,099       11,848       17,020       21,625
                     ---------    ---------    ---------    ---------
Operating (loss)
  income                (5,446)     (25,247)         504      (11,848)
Interest expense,
  including
  amortization of
  debt issue costs      12,582        9,692       25,182       15,970
Other income, net          756          995          689        1,879
Income (loss) from
  equity
  investments               13          (98)          (8)         (90)
Minority interest
  in loss
  of subsidiary           --          3,924         --          5,682
                     ---------    ---------    ---------    ---------
Loss from continuing
  operations before
  income taxes         (17,259)     (30,118)     (23,997)     (20,347)
Provision for income
  taxes                     65       11,558          130       15,564
                     ---------    ---------    ---------    ---------
Net loss from
  continuing
  operations           (17,324)     (41,676)     (24,127)     (35,911)
Discontinued
  operations:
  Loss from
   discontinued
   operations,
   net of tax          (11,985)    (128,856)     (20,211)    (150,276)
 (Loss) reversal of
   loss of SBQ segment,
   including estimated loss
   during disposal period
   (net of income tax provision (benefit) of $0 and $78,704 for the
   three months ended December 31, 2000 and 1999, respectively, and $0
   and $78,704 for the six month periods
   then ended)         (89,851)     151,763      (89,851)     173,183
                     ---------    ---------    ---------    ---------
Loss before
 extraordinary item   (119,160)     (18,769)    (134,189)     (13,004)
Restructuring of debt
 (net of income taxes
  of $924)                --         (1,330)        --         (1,330)
                     ---------    ---------    ---------    ---------
Net loss             $(119,160)   $ (20,099)   $(134,189)   $ (14,334)
                     =========    =========    =========    =========
Weighted average
  shares outstanding    30,987       29,763       30,939       29,734
                     =========    =========    =========    =========
Basic and diluted per share amounts:
  Loss from continuing
    operations       $   (0.56)   $   (1.41)   $   (0.78)   $   (1.21)
  (Loss) income from
    discontinued
    operations           (3.29)        0.77        (3.56)        0.77
  Loss on restructuring
    of debt               --          (0.04)        --          (0.04)
                     ---------    ---------    ---------    ---------
Net loss per share   $   (3.85)   $   (0.68)   $   (4.34)   $   (0.48)
                     =========    =========    =========    =========
Cash dividends
  declared per share $    0.00    $   0.025    $    0.00    $    0.05
                     =========    =========    =========    =========