Beth Steel orders improve

Prices are up, too, but 4th-quarter loss grows to $547 million

January 24, 2002|By William Patalon III | William Patalon III,SUN STAFF

Despite posting a wider fourth-quarter loss, bankrupt Bethlehem Steel Corp. reported yesterday increased orders and higher prices for its steel, and said it expected to have enough cash to last the year.

"There are signs the U.S. economy is beginning to strengthen, said Robert "Steve" Miller, the turnaround specialist now serving as Bethlehem's chairman and chief executive officer.

"Our order entry is improving and we, and others in the industry, have announced price increases for first-quarter deliveries. Although auto sales are expected to be sluggish in the first half of the year, we anticipate growing strength in the demand for steel by the middle of the year as the economy continues to improve and customers replenish depleted inventories."

If Bethlehem's cash is to last the year, however, it would appear that other factors need to fall in the company's favor.

Take imports. While Bethlehem expects President Bush to say in March how he will redress the harms that imports have allegedly caused domestic steel producers, the company hopes the president imposes the maximum recommended tariffs of 40 percent. Tariffs that high could substantially boost foreign steel prices, while also potentially letting domestic steel makers dominate their home market.

Bethlehem, which is in consolidation talks with rival U.S. Steel and other steel makers, also hopes to escape its $5 billion morass: a pension fund that's under-funded by $2 billion and a projected shortfall of $3 billion to pay for the cost of company workers already retired.

The company is pursuing relief on two fronts. It's seeking what Miller yesterday termed a "modern, flexible labor agreement" with its union-represented employees. And the company wants the federal government "to take a role working with the integrated steel makers on each of these issues, rather than see a further liquidation of steel makers a la LTV," a domestic steel firm that's in Chapter 7 liquidation, said Bette Kovach, a Bethlehem spokeswoman.

To operate its factories as it rides out the year and give its plans time to work out, the company said, it has significantly improved its financial situation. Bethlehem's cash and credit agreements gave it access to $276 million at the end of the fourth quarter - a jump from only $60 million at the third quarter's close.

The company filed for bankruptcy protection Oct. 15.

As part of its financial report, Bethlehem said yesterday that it lost $547.1 million, or $4.27 per share, in the fourth quarter of 2001. That compares with a loss of $143.2 million, or 97 cents per share, in the fourth quarter of 2000. Absent a number of one-time financial items, the company had a loss from operations of $169 million in fourth-quarter 2001, worse than the loss of $109 million recorded in the year-earlier quarter.

Sales declined about 18 percent to $719.9 million in the 2001 quarter from $878.5 the year before, due chiefly to lower prices and decreased steel shipments.

For all of last year, Bethlehem lost $1.95 billion, including $1.36 billion in noncash charges against earnings. Without those charges, the company's loss for last year would have been $594 million, up more than fourfold from the loss of $135 million reported for 2000.

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