Birmingham Steel Corporation Reports Third Quarter Results.

Business Editors

BIRMINGHAM, Ala.--(BUSINESS WIRE)--May 1, 2000

Management Reports Significant Progress

and Improving Financial Condition

New Financing Accords Expected to be Signed This Week

Birmingham Steel Corporation (NYSE: BIR) today reported financial results for the fiscal third quarter ended March 31, 2000. The Company also reported that a number of significant milestones were achieved during the quarter that have improved financial viability and positioned the Company to significantly improve financial results in the future. The Company also said it expects to finalize new financing agreements with its lenders later this week which will provide $25 million in new funding commitments and provide operating flexibility to enable the Company to return to profitability.

John D. Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "As we had previously communicated, the third quarter financial results continue to reflect the influence of decisions implemented by prior management, as well as expenses associated with the proxy fight and severance of former members of management. The results also reflect wind-down costs related to the Memphis melt shop, which suspended operations on January 1. Third quarter results were also impacted by losses at the Company's SBQ operations and start-up losses at Cartersville. However, management took decisive action during the quarter which will improve future financial performance at these operations"

Correnti continued, "A first blush reading of the financial statements may lead one to erroneously conclude that Birmingham Steel is continuing to flounder financially. However, we are pleased to report several substantial achievements which have strengthened our financial position and laid a foundation for improved financial results in the near future," Correnti said these achievements include:

- Conclusion of all expenses associated with the proxy fight ($6.9 million).

- Conclusion of all expenses expected to be paid in connection with severance payments to former members of management and former Memphis employees ($9.8 million).

- Conclusion of shut-down expenses related to the suspension of operations at Memphis ($5.7 million).

- Net reduction in corporate office expense of more than $2 million annually.

- Implementation of a turnaround plan at Cleveland, which improved financial and operating performance in March.

- $39 million reduction in inventories during the quarter.

- $31 million reduction in accounts payable during the quarter.

- Improved trade credit and relationships with vendors.

- Completion of Phase I of construction at the new Cartersville rolling mill.

- Increasing productivity and sales at the new Cartersville rolling mill.

- Improved borrowing capacity as a result of Memphis shutdown, improvements at Cleveland and Cartersville, and reduction in total inventories.

- Reaching of agreement with lenders regarding a new and more flexible financing arrangement.

- Agreement of the Company's lenders to commit $25 million of new funding upon closing of the new financing agreement.

- Resolution of issues with lenders and co-sponsor concerning the Company's 50% interest in American Iron Reduction.

Correnti continued, "These achievements are substantial and indicate the progress the new management has made in restoring the Company's credibility with lenders, vendors, customers and employees. In addition, these achievements will enhance the Company's future financial performance."

For the quarter ended March 31, 2000, the Company reported a net loss of $25,995,000, or $.85 per share. The loss included charges of (1) $5,857,000 associated with start-up losses at Cartersville; (2) $3,754,000 for writedown of inventories and additional losses of $1,936,000 associated with the winding down of operations at Memphis; and (3) $2,559,000 for proxy and severance expenses. Excluding (1) losses generated by Cartersville; (2) losses at the Company's SBQ operations (Cleveland and Memphis); and (3) proxy/severance expenses, the Company's other divisions achieved income of $6,580,000 for the quarter. In the third quarter of the prior fiscal year, the Company reported a net loss of $15,631,000, or $.53 per share.

Steel shipments for the third quarter reached 825,000 tons, up 16.7% from 707,000 tons reported for the same period a year ago, and 8.7% higher than the 759,000 tons reported in the second quarter of the current fiscal year. Steel selling prices were essentially unchanged from the second quarter, primarily because of pricing commitments through March that had been implemented by previous management.

For the nine months ended March 31, 2000, the Company reported a net loss of $40,329,000, or $1.34 per share. The nine months results reflect the unwinding of discontinued operations accounting treatment initiated by prior management, which were reversed in the second quarter subsequent to the conclusion of the proxy fight and resulting change in management. For the nine months of the prior fiscal year, the Company reported a net loss of $19,573,000, or $.67 per share. Steel shipments for the current nine-month period were 2,370,000 tons, up from 2,212,000 tons for the same period of the prior fiscal year.

Correnti stated, "Financial results in the future should no longer be impacted by proxy expenses, severance costs associated with former management or the suspension of operations at Memphis. In addition, we do not expect further inventory writedowns relating to quality problems from billets produced at Memphis. The turnaround actions recently implemented at Cleveland reduced losses in March, and we expect continued improvement at Cleveland as third party billets are utilized to penetrate the market for higher margin products. Also, reductions in our corporate headquarters staff will result in an annual savings of more than $2 million per year."

Correnti continued, "The new rolling mill at Cartersville was down for three weeks in February to complete the installation of the new electrical control system. Since re-starting operations, productivity trends are positive, and we expect improved financial performance at Cartersville in the fourth quarter. We continue to target July as the first month for Cartersville to achieve breakeven cash operating performance."

Correnti added, "Our goal is for all operations to be profitable. We are focused on completing the Cartersville start-up by the end of the next quarter. We also expect Cleveland to consistently improve its financial performance, and have set September as the target date for Cleveland to breakeven on an operating cash basis."

Correnti noted that, once the new financing agreements are closed, the Company will have more liquidity to continue the financial turnaround. "Once the financing agreements are complete, we can begin making decisions focused on improving earnings rather than conserving cash," said Correnti. He also noted that resolution of the issues regarding American Iron Reduction will enable management to focus more on operations and improving earnings. "Now that the lender issues and American Iron Reduction issues have been resolved, management can now begin to devote more time to running the business."

Correnti noted that the improved balance sheet has enabled the Company to reestablish trade credit with many vendors who had become concerned about Birmingham Steel's financial viability. Improvements in the Company's financial prospects have also enabled Correnti to attract top industry talent to Birmingham Steel. Since December 1999, he has brought three former Nucor managers to the Birmingham Steel ranks.

"I am excited about the future of Birmingham Steel," Correnti concluded. "We still face challenges, and financial results - particularly in the fourth quarter - will be hampered until Cartersville and Cleveland start contributing to earnings. However, I believe we have the management team and dedicated workforce to be successful." Correnti noted the Company's board of directors and management believe the Company is on the right track, and both groups have been accumulating shares of the Company's stock. Correnti said the board and management now own in excess of 3.0 million shares, or approximately 10% of the Company's total outstanding shares.

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, Birmingham Steel's success in implementing the restructuring plan, 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.