10-Q 1 mv11-13_10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 2003 Commission file number 1-1941 BETHLEHEM STEEL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 24-0526133 (State of incorporation) (I.R.S. Employer Identification No.) 1170 EIGHTH AVENUE BETHLEHEM, PENNSYLVANIA 18016-7699 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 694-6997 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes No X ----- ----- Number of Shares of Common Stock Outstanding as of November 13, 2003: 135,486,463 BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX

~~(Note~~PAGE 1)NO. ~~(Note 1) THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS Ended ENDED ENDED ENDED June 30 June 30 June 30 June 30 2003 2002 2003 2002~~ --------~~-------~~ ~~-------------~~PART ~~------------~~I. ~~----------~~FINANCIAL $INFORMATION ~~331.1~~Item ~~$ 933~~1.5 ~~NET~~Financial ~~SALES~~Statements: $Consolidated ~~1,238.8~~Statements $of ~~1,737.3~~Operations -~~--------------~~ ~~-------------~~Three ~~------------~~and ~~-----------~~Nine ~~COSTS~~Months ~~AND~~Ended ~~EXPENSES~~September ~~286.4~~30, ~~931.2~~2003 ~~Cost~~and of2002 ~~sales 1,152~~(unaudited).~~5 1,742~~.~~7 10~~.~~7 62~~.~~4 Depreciation 70~~.~~8 122~~.~~9 5~~.~~5 22~~.~~3 Selling, administration and general expense 22~~.~~5 47~~.~~4 - 20~~.~~0 Unusual charges (Note 3) 2,300~~.~~0 20~~.~~0 --------------- ------------- ------------ ----------- 302~~.~~6 1,035~~.9.................................... ~~TOTAL~~2 ~~COSTS~~Consolidated ~~AND~~Statement ~~EXPENSES~~of ~~3,545.8~~Net ~~1,933.0~~Liabilities ~~---------------~~in ~~-------------~~Liquidation -~~-----------~~ ~~-----------~~September ~~28.5~~30, ~~(102.4)~~2003 ~~INCOME~~ (~~LOSS~~unaudited) ~~FROM OPERATIONS (2,307~~.~~0) (195~~.~~7) (2~~.~~1) (3~~.~~7) REORGANIZATION ITEMS (Note 5) (7~~.~~7) (5~~.~~8) (4~~.~~1) (12~~.~~8) FINANCING EXPENSE - NET (Note 6) (16~~.~~7) (25~~.~~0) --------------- ------------- ------------ ----------- 22~~.~~3 (118~~.9)............................ ~~INCOME~~3 ~~(LOSS)~~Consolidated ~~BEFORE~~Balance ~~INCOME~~Sheet ~~TAXES~~- ~~AND~~December ~~CUMULATIVE EFFECT (2~~31,~~331~~ 2002...................................................... 4) ~~(226.5)~~Consolidated OFStatements ~~ACCOUNTING~~of ~~CHANGE~~Cash -Flows - ~~BENEFIT~~Four ~~FROM~~Months ~~INCOME~~Ended ~~TAXES~~April ~~(Note~~30, 7)2003 -and ~~10.3~~Nine ~~---------------~~Months ~~-------------~~Ended ~~------------~~September ~~-----------~~30, ~~22.3~~2002 (~~118.9~~unaudited)....................... ~~INCOME~~5 ~~(LOSS)~~Consolidated ~~BEFORE~~Statement ~~CUMULATIVE~~of ~~EFFECT~~Receipts OFand ~~ACCOUNTING CHANGE (2,331.4) (216.2)~~ Disbursements- -May ~~CUMULATIVE~~1 ~~EFFECT~~to OFSeptember ~~ACCOUNTING~~30, ~~CHANGE~~2003 (~~Note 4~~unaudited) ~~(12~~.~~5) - --------------- ------------- ------------ ----------- 22~~.~~3 (118~~.~~9) NET INCOME (LOSS) (2,343~~.~~9) (216~~.~~2) 8~~.~~8 9~~.9......................... ~~DIVIDEND~~6 ~~REQUIREMENTS~~Notes ONto ~~PREFERRED~~Consolidated ~~AND~~Financial ~~PREFERENCE~~Statements ~~STOCK~~ (~~Note 9~~unaudited) 18.~~6 19~~.8................... ~~---------------~~7 ~~-------------~~Item ~~------------ ----------- $ 13~~2.5 $Management's ~~(128.8)~~Discussion ~~NET~~and ~~INCOME~~Analysis ~~(LOSS)~~of ~~APPLICABLE~~Results TOof ~~COMMON~~Operations ~~STOCK~~and $Financial ~~(2,362~~Condition.~~5) $ (236~~.0)............................. ~~===============~~12 ~~=============~~Item ~~============~~3. ~~===========~~Quantitative ~~NET~~and ~~INCOME~~Qualitative ~~(LOSS)~~Disclosures ~~PER~~About ~~COMMON~~Market ~~SHARE (BASIC AND DILUTED): $ 0~~Risk.~~10 $ (0~~.~~98)~~......... ~~Net~~16 ~~income~~Item ~~(loss)~~4. ~~before~~Controls ~~cumulative~~and ~~effect~~Procedures.............................................. of16 ~~accounting~~PART ~~change~~II. $OTHER ~~(17.87)~~INFORMATION $Item (1.~~80)~~ -Legal -Proceedings............................................. ~~Cumulative~~17 ~~effect~~Item ~~of accounting change (0~~3.~~10)~~ -Defaults ~~---------------~~Upon ~~-------------~~Senior ~~------------~~Securities............................... ~~-----------~~17 $Item 05.10 $Other (0Information.~~98)~~............................................ ~~Net income (loss) per common share $ (~~17~~.97)~~ $Item (16.~~80)~~ ~~===============~~Exhibits ~~=============~~and ~~============~~Reports ~~===========~~on ~~AVERAGE~~Form ~~SHARES OUTSTANDING: 131~~8-K.~~7 131~~.0............................ ~~Basic~~18 ~~and~~Signatures ~~Diluted 131~~.~~5 130~~.9................................................................. 20

1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BETHLEHEM STEEL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in millions) (unaudited)

~~ASSETS~~(Note ~~DECEMBER~~1) 31(Note 1) THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED September 30 September 30 September 30 September 30 2003 2002 2003 2002 ------------ ----------- ~~CURRENT~~------------ ~~ASSETS:~~------------ ~~Cash~~$ ~~and~~- ~~cash~~$ ~~equivalents~~938.5 NET SALES $ 671,238.68 ~~Receivables~~$ 2,675.8 ------------ ~~net~~----------- ~~350~~------------ ------------ COSTS AND EXPENSES - 887.5 Cost of sales 1,152.5 2,630.2 ~~Inventories:~~- ~~Raw~~64.1 ~~materials~~Depreciation ~~224~~70.68 ~~Finished~~187.0 - 19.7 Selling, administration and ~~semifinished~~general ~~516~~expense 22.5 67.1 - 2.5 Unusual charges (Note 3) 2,300.0 22.5 ------------ ----------- ~~Total~~------------ ~~Inventories~~------------ ~~740~~- 973.98 ~~Other~~TOTAL ~~current~~COSTS ~~assets~~AND 27EXPENSES 3,545.68 2,906.8 ------------ ----------- ~~TOTAL~~------------ ~~CURRENT~~------------ ~~ASSETS~~- ~~1,186~~(35.3) ~~INVESTMENTS~~LOSS ~~AND~~FROM ~~MISCELLANEOUS~~OPERATIONS ~~ASSETS~~(2,307.0) 76(231.0) - (4.9) ~~PROPERTY,~~REORGANIZATION ~~PLANT~~ITEMS ~~AND~~(Note ~~EQUIPMENT~~5) (7.7) (10.7) - (14.0) FINANCING EXPENSE - NET ~~2,615~~(Note 6) (16.57) (39.0) ------------ ----------- ~~TOTAL~~------------ ~~ASSETS~~------------ $- ~~3,878~~(54.72) ~~===============~~LOSS ~~LIABILITIES~~BEFORE ~~AND~~INCOME ~~STOCKHOLDERS'~~TAXES ~~DEFICIT~~AND ~~CURRENT~~CUMULATIVE ~~LIABILITIES:~~EFFECT ~~Accounts~~OF ~~payable~~ACCOUNTING $CHANGE ~~167~~(2,331.64) ~~Accrued employment costs 102~~(280.67) ~~Accrued~~- ~~taxes~~- ~~31.3~~BENEFIT ~~Debt~~FROM ~~and~~INCOME ~~capital~~TAXES ~~lease~~(Note ~~obligations~~7) - ~~current 695~~10.73 ~~Other~~------------ ~~current~~----------- ~~liabilities 50.1~~ ------------ ------------ ~~TOTAL~~- ~~CURRENT~~(54.2) ~~LIABILITIES~~LOSS 1BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (2,~~047~~331.34) ~~LONG~~(270.4) -~~TERM~~ ~~DEBT~~- ~~AND~~CUMULATIVE ~~CAPITAL~~EFFECT ~~LEASE~~OF ~~OBLIGATIONS~~ACCOUNTING ~~84.9~~CHANGE ~~DEFERRED~~(Note ~~GAIN~~4) 81(12.5) ~~LONG~~-~~TERM~~ ~~LIABILITIES~~------------ 41----------- ------------ ------------ - (54.2) NET LOSS (2,343.9) (270.4) 8.7 ~~LIABILITIES~~9.8 ~~SUBJECT~~DIVIDEND TOREQUIREMENTS ~~COMPROMISE~~ON PREFERRED AND PREFERENCE STOCK (Note 89) ~~6,073~~27.43 ~~STOCKHOLDERS'~~29.6 ~~DEFICIT:~~------------ ~~Preferred~~----------- ~~Stock~~------------ 11------------ $ (8.37) ~~Preference~~$ ~~Stock~~(64.0) NET LOSS APPLICABLE TO COMMON STOCK $ (2,371.2) $ (300.0) ~~Common~~============ ~~Stock~~=========== ~~136.1~~============ ~~Common~~============ ~~Stock~~NET ~~held~~LOSS inPER ~~treasury~~COMMON atSHARE ~~cost~~(BASIC AND DILUTED): $ (650.906) ~~Additional~~$ ~~paid-in~~(0.49) ~~capital~~Net ~~1,909.9~~loss ~~Accumulated~~before ~~other~~cumulative ~~comprehensive~~effect ~~loss~~of accounting change $ (~~1,905~~17.074) ~~Accumulated~~$ ~~deficit~~(2.29) - - Cumulative effect of accounting change (~~3,538~~0.610) - ------------ ----------- ~~TOTAL STOCKHOLDERS' DEFICIT (3,450.2)~~ ------------ ------------ ~~TOTAL~~$ ~~LIABILITIES~~(0.06) ~~AND~~$ ~~STOCKHOLDERS'~~(0.49) ~~DEFICIT~~Net loss per common share $ ~~3,878~~(17.784) $ (2.29) ============ =========== ============ ============ AVERAGE SHARES OUTSTANDING: 135.7 131.0 Basic and Diluted 132.9 131.0

The accompanying Notes are an integral part of the Consolidated Financial Statements. 2 BETHLEHEM STEEL CORPORATION CONSOLIDATED STATEMENT OF NET LIABILITIES IN LIQUIDATION (dollars in millions) SEPTEMBER 30 2003 (unaudited) ------------------ CURRENT ASSETS: Cash and cash equivalents $ 94.1 Other current assets 1.3 ------------------ TOTAL CURRENT ASSETS 95.4 INVESTMENTS AND MISCELLANEOUS ASSETS 15.0 ------------------ TOTAL ASSETS 110.4 ------------------ CURRENT LIABILITIES: Accounts payable and other accrued liabilities $ 30.1 LIABILITIES SUBJECT TO COMPROMISE (Note 8) 5,847.7 ------------------ TOTAL LIABILITIES 5,877.8 ------------------ NET LIABILITIES IN LIQUIDATION (Note 2) $ (5,767.4) ================== The accompanying Notes are an integral part of the Consolidated Financial Statements. 3 BETHLEHEM STEEL CORPORATION CONSOLIDATED BALANCE SHEET (dollars in millions) ASSETS DECEMBER 31 2002 --------------- CURRENT ASSETS: Cash and cash equivalents $ 67.6 Receivables - net 350.2 Inventories: Raw materials 224.6 Finished and semifinished 516.3 --------------- Total Inventories 740.9 Other current assets 27.6 --------------- TOTAL CURRENT ASSETS 1,186.3 INVESTMENTS AND MISCELLANEOUS ASSETS 76.9 PROPERTY, PLANT AND EQUIPMENT - NET 2,615.5 --------------- TOTAL ASSETS $ 3,878.7 =============== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable $ 167.6 Accrued employment costs 102.6 Accrued taxes 31.3 Debt and capital lease obligations - current 695.7 Other current liabilities 50.1 --------------- TOTAL CURRENT LIABILITIES 1,047.3 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 84.9 DEFERRED GAIN 81.5 LONG-TERM LIABILITIES 41.8 LIABILITIES SUBJECT TO COMPROMISE (Note 8) 6,073.4 STOCKHOLDERS' DEFICIT: Preferred Stock 11.3 Preference Stock 2.0 Common Stock 136.1 Common Stock held in treasury at cost (65.9) Additional paid-in capital 1,909.9 Accumulated other comprehensive loss (1,905.0) Accumulated deficit (3,538.6) --------------- TOTAL STOCKHOLDERS' DEFICIT (3,450.2) --------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 3,878.7 =============== The accompanying Notes are an integral part of the Consolidated Financial Statements. 4 BETHLEHEM STEEL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions) (unaudited)

(Note 1) FOUR MONTHS ~~SIX~~NINE MONTHS ENDED ENDED APRIL 30 ~~JUNE~~SEPTEMBER 30 2003 2002 -------------------- -------------------- OPERATING ACTIVITIES: Net loss $ (2,343.9) $ (~~216~~270.24) Adjustments for items not affecting cash from operating activities: Depreciation and amortization 70.8 ~~122~~187.90 Unusual charges (Note 3) 2,300.0 2022.05 Cumulative effect of accounting change (Note 4) 12.5 - Recognition of deferred gains (7.2) (1016.93) Reorganization items 7.7 510.87 Other - net 0.7 28.58 Working capital (excluding financing and investing activities): Receivables (27.6) (5037.96) Inventories 38.9 10(20.53) Accounts payable 33.0 6(20.97) Other (12.0) 2025.92 Funding postretirement benefits: Pension funding less than expense (Note 1) - 65103.7 Retiree healthcare and life insurance benefit payments (more) less than expense (7.3) 2535.29 -------------------- -------------------- CASH PROVIDED BY OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS 65.6 228.45 -------------------- -------------------- Reorganization items (7.7) (510.87) -------------------- -------------------- CASH PROVIDED BY ~~(USED FOR)~~ OPERATING ACTIVITIES 57.9 (317.4)8 -------------------- -------------------- INVESTING ACTIVITIES: Capital expenditures (26.1) (5574.65) Cash proceeds from asset sales 11.9 2225.57 -------------------- -------------------- CASH USED FOR INVESTING ACTIVITIES (14.2) (3348.18) -------------------- -------------------- FINANCING ACTIVITIES: Borrowings 15.0 3090.56 Debt and capital lease payments (25.5) (2158.32) Other payments (10.6) (1419.71) -------------------- -------------------- CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (21.1) (513.5)3 -------------------- -------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 22.6 (4217.07) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 67.6 104.0 -------------------- -------------------- - END OF PERIOD $ 90.2 $ 6286.03 ==================== ==================== SUPPLEMENTAL CASH INFORMATION: Interest and other financing costs, net of amount capitalized $ 18.7 $ 1832.04 Income taxes ~~paid (~~received) - 0(8.10) Capital lease obligations incurred - 1.9

The accompanying Notes are an integral part of the Consolidated Financial Statements. 5 BETHLEHEM STEEL CORPORATION CONSOLIDATED STATEMENT OF RECEIPTS AND DISBURSEMENTS (dollars in millions) (unaudited) MAY 1 TO SEPTEMBER 30 2003 ------------------ RECEIPTS: Proceeds from asset sale (Note 1) $872.4 Proceeds from benefit trusts 15.5 Refund letters of credit collateralization 3.1 Litigation settlements 2.9 Returned premiums from insurance policies 2.8 Other 2.2 ------------------ Total Receipts 898.9 DISBURSEMENTS: Debt repayments 617.0 Accrued payroll 66.3 Accrued employee benefits 55.1 Property and other taxes 16.4 Reorganization costs (Note 5) 13.8 Settlement of litigation (Note 1) 10.0 Working capital adjustment (Note 1) 9.3 Collateralize letters of credit 11.6 Other 4.0 Reclamation claim settled 1.3 ------------------ Total Disbursements 804.8 ------------------ CASH ON HAND, ENDING $94.1 ================== The accompanying Notes are an integral part of the Consolidated Financial Statements. 6 BETHLEHEM STEEL CORPORATION NOTES TO SEPTEMBER 30, 2003 CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. These Consolidated Financial Statements are unaudited and should be read together with audited financial statements in Bethlehem's Annual Report on Form 10-K for the year ended December 31, 2002 and other reports filed with the Securities and Exchange Commission during 2003. On October 15, 2001, Bethlehem Steel Corporation and 22 of its wholly owned subsidiaries (collectively, the Debtors) filed voluntary petitions for relief under chapter 11 of the United States Code (the Code) in the United States Bankruptcy Court for the Southern District of New York (the Court). On March 12, 2003, we signed an asset purchase agreement (APA) to sell substantially all of our assets to a subsidiary of International Steel Group, Inc. (ISG) for cash, ISG Class B common stock and the assumption of certain liabilities. The APA was approved by the Court on April 22, 2003. In connection with the approval of the APA, among other matters, the United Steelworkers of America agreed to release substantially all claims against Bethlehem and subsidiary companies; the trustees of the funds under the Coal Industry Health Benefit Retiree Act of 1992 agreed to withdraw their civil action filed on March 18, 2003 in the United States District Court for the District of Columbia for injunctive relief and agreed to settle certain claims against Bethlehem and "related persons"; and the Pension Benefit Guaranty Corporation (PBGC) agreed to release certain claims against any member of Bethlehem's "controlled group" under Title IV of ERISA. Closing of the sale of substantially all of our assets to ISG was completed on May 7, 2003, however, the effective closing date for financial purposes was the opening of business on May 1, 2003. At closing Bethlehem received approximately $752 million in cash and a $120 million receivable (all of which has subsequently been collected), the total of which is expected to be sufficient to satisfy all allowed secured, administrative and priority claims, with any excess cash being paid to ISG before Bethlehem's chapter 11 case is closed. Bethlehem also received at closing ISG Class B common stock, with an expected value of $15 million. Under the terms of the APA, the class B common stock will be returned to ISG if all allowed secured, administrative and priority claims are not paid. The terms of the APA required a minimum level of working capital at April 30, 2003. Subsequent to the sale, Bethlehem and ISG determined that ISG was due approximately $9 million for adjustments to April 30, 2003 working capital. Bethlehem returned this amount to ISG during August 2003. As a result of the sale, Bethlehem no longer has operations effective April 30, 2003. Bethlehem filed a chapter 11 Plan of Liquidation (Plan) and a Disclosure Statement with the Court on July 29, 2003. At a hearing held on October 22, 2003, the Court confirmed the Plan. Under the terms of the Plan, all administrative expense claims, priority and non-priority tax claims and all other secured claims will be satisfied and then Bethlehem and its debtor subsidiaries will either be dissolved or merged into another debtor, as appropriate. Bethlehem expects this process will be completed by December 31, 2003. Upon dissolution, a liquidating trust will be formed to distribute to allowed unsecured creditors the $15 million in ISG class B common stock or the proceeds from the sale of such stock, $0.6 million in proceeds from a benefit trust and proceeds from any bankruptcy avoidance actions. No value will be distributed to Bethlehem's common, preferred or preference equity holders. A copy of the Plan has been filed with the Securities and Exchange Commission. As a result of no longer having operations, the consolidated statement of operations for the third quarter of 2003 does not include any operating results and the 2003 year-to-date results include only four months of operating results through April 30, 2003. The consolidated statement of cash flows for 2003 is for the period January 1, 2003 through April 30, 2003. A consolidated statement of receipts and disbursements for the period May 1, 2003 through September 30, 2003 has been included as part of the consolidated financial statements. Bethlehem has adopted the liquidation basis of accounting effective April 30, 2003 and the consolidated financial statements include a consolidated statement of net liabilities in liquidation as of September 30, 2003. 7 On March 25, 2003, the Court approved a motion under section 1114 of the Code terminating retiree health care and life insurance benefits (OPEB) for claims incurred after March 31, 2003, for substantially all current and future retired employees and their eligible dependents. Claims incurred on or before March 31, 2003 and received on or before May 31, 2003 will be paid. If sufficient funds are available after all allowed secured, priority and administrative claims have been paid, the Court also has required Bethlehem to reimburse up to two weeks of COBRA premiums paid by Bethlehem's COBRA enrollees. Bethlehem expects to have sufficient funds for this reimbursement and has reflected the amounts in other current liabilities at September 30, 2003. As a result of the Court's action, we did not record any OPEB expense for the month of April 2003. On December 18, 2002, the PBGC filed a complaint in the United States District Court for the Eastern District of Pennsylvania alleging there was sufficient cause under applicable laws to terminate the Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies (the Pension Plan). The complaint requested, among other things, that December 18, 2002 be established as the Pension Plan's termination date and that the PBGC be appointed the Pension Plan's ERISA trustee with full responsibility for managing Pension Plan assets and administering Pension Plan benefits. By agreement dated April 30, 2003, the litigation was resolved on the basis that the Pension Plan be terminated effective December 18, 2002 and the PBGC assumed the duties of ERISA trustee of the Pension Plan effective April 30, 2003. As a result of the PBGC's action to terminate Bethlehem's Pension Plan, we did not record any pension expense in 2003. On September 30, 2003 the Court approved an order settling a lawsuit filed by certain former salaried employees related to alleged severance benefits. Bethlehem disbursed about $7 million in October 2003 related to this settlement and has reflected this amount in other current liabilities as of September 30, 2003 in the consolidated statement of net liabilities. 2. As a result of the events mentioned in Note 1, Bethlehem recorded a loss for impairment of long-lived assets of approximately $2.3 billion and a loss for unrecognized past service cost resulting from the termination of OPEB of $10 million in March 2003. In addition, Bethlehem adopted the liquidation basis of accounting as of April 30, 2003. The liquidation basis of accounting required Bethlehem to accrue approximately $28 million as an estimate for expenses to be incurred during the period through closing the chapter 11 case. It also requires that assets be stated at their estimated net realizable value which was accomplished with the impairment charge recognized in March 2003. Bethlehem also adjusted certain liabilities to reflect net realizable value. Bethlehem's pre-petition unsecured liabilities of approximately $6 billion continue to be valued at their historical basis until "legal release" by the Court. This release will occur when the ISG Class B common stock, with an expected value of $15 million, becomes available to distribute to allowed pre-petition unsecured creditors. Such creditors are also entitled to receive the benefits of any bankruptcy avoidance claims that Bethlehem may have. These claims have not been valued at this time. A summary of changes in net liabilities from March 31 to September 30, 2003 follows ($ in millions): Stockholders' Deficit at March 31, 2003 $ (5,816.0) April 2003 net income 22.3 Adoption of liquidation accounting: Accrual of estimated expenses and other liabilities through closing the chapter 11 case and other required adjustments 26.3 ------------------ Net liabilities at September 30, 2003 $ (5,767.4) ==================

8 The pro forma statement of net liabilities as of September 30, 2003 reflecting the revaluation of pre-petition unsecured liabilities upon "legal release" to their anticipated settlement value and other adjustments follows ($ in millions):

~~ASSETS~~BETHLEHEM STEEL CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF NET LIABILITIES SEPTEMBER 30, 2003 (a) Historical Adjustments Pro Forma ----------------- ----------------- ------------------- ASSETS Current Assets: Cash and cash equivalents $ 9894.21 $ - $ 9894.21 ~~Receivables - net 40.0 - 40.0~~ Other current assets 41.93 - 41.93 ----------------- ----------------- ------------------- Total Current Assets ~~143~~95.14 - ~~143~~95.14 Investments 15.0 - 15.0 ----------------- ----------------- ------------------- Total Assets ~~158~~110.14 - ~~158~~110.14 ----------------- ----------------- ------------------- LIABILITIES Current Liabilities: Accounts payable and other accrued liabilities 6130.01 9780.13 ~~158~~110.14 Liabilities Subject to Compromise 5,~~894~~847.57 (5,~~894~~847.57) - ----------------- ----------------- ------------------- Total Liabilities 5,~~955~~877.58 (5,~~797~~767.4) ~~158~~110.14 ----------------- ----------------- ------------------- Net Liabilities $ (5,~~797~~767.4) $ 5,~~797~~767.4 $ - ================= ================= ===================

Notes: a- Adjustment to write-down liabilities of approximately $5.8 billion to anticipated settlement amount and reclass to accounts payable and to record other required adjustments. 3. In March 2003, Bethlehem recorded a loss for impairment of long-lived assets of approximately $2.3 billion and a loss for unrecognized past service costs resulting from the termination of OPEB of $10 million as a result of events described in Note 1 above. In 2002, we recorded a $20 million non-cash charge to reflect the most current estimate of the probable remediation costs at Lackawanna. During August 2002, Bethlehem announced the permanent closing of a facility for producing large diameter pipe in Steelton, Pennsylvania. As a result, we recorded a $2.5 million non-cash charge to account for the required employee benefit costs. 4. On January 1, 2003, Bethlehem adopted FASB Statement No. 143, Accounting for Asset Retirement Obligations. The Statement requires the recognition of a liability and an asset for the estimated cost of disposal as part of the initial cost of a long-lived asset and subsequent amortization of the asset to expense. As a result of adopting this Statement, we increased property, plant and equipment, net by $1 million, other long-term liabilities by $13 million and recorded a $12 million charge for the "cumulative effect of a change in accounting principle" to account for depreciation and interest expense that would have been recorded since the affected assets were placed in service through December 31, 2002. 9 5. Net costs resulting from reorganization of the businesses, prior to the sale of substantially all of our assets to ISG, have been reported in the statement of operations separately as reorganization items. As a result of no longer having operations only four months of costs are reflected in the nine-month 2003 amounts. For three-month and nine-month periods ended September 30, 2003 and 2002, the following have been recorded ($ in millions):

Three Months Ended ~~Six~~Nine Months Ended ----------------------------------- ------------------------------------ 2003 2002 2003 2002 ----------------- ----------------- ------------------ ---------------- Professional and other fees $ ~~2.1~~- $ 35.91 $ 7.8 $ 813.23 Gains from termination of contracts - - - (2.0) Interest income - (0.2) (0.1) (0.46) ----------------- ----------------- ------------------ ---------------- Total $ ~~2.1~~- $ 34.79 $ 7.7 $ 510.87 ================= ================= ================== ================

Net costs resulting from reorganization of the businesses, subsequent to the sale of substantially all of our assets to ISG, have been reported in the statement of receipts and disbursements as reorganization items. For the five-month period ended September 30, 2003, the following have been recorded ($ in millions): Professional and other fees $ 12.1 Contract termination costs 2.0 Interest income (0.3) ------------------ Total $ 13.8 ================== 6. Interest at the stated contractual amount on unsecured debt that was not charged to earnings as a result of our chapter 11 filing was $0 and approximately $19 million for the three and nine-month periods ended September 30, 2003 compared to $11 and $32 million for the three-month and nine-month periods ended September 30, 2002. 7. The income tax benefit recorded in 2002 represents a $10 million tax refund as a result of the "Job Creation and Workers Assistance Act of 2002" that was enacted on March 8, 2002. The Act provides us the ability to carry back a portion of our 2001 Alternative Minimum Tax loss for a refund of taxes paid in prior years that was not previously available. 8. Liabilities subject to compromise at September 30, 2003 and December 31, 2002 follows ($ in millions): September 30, December 31, 2003 2002 ------------------ -------------------- Pension liability $ 2,849.0 $ 2,849.0 Other post-employment benefits 2,047.1 2,059.0 Unsecured debt 526.7 526.7 Accounts payable 144.0 190.7 Accrued employment costs 161.4 186.7 Other accrued liabilities 68.4 194.6 Accrued taxes and interest 51.1 66.7 ------------------ -------------------- Total $ 5,847.7 $ 6,073.4 ================== ==================== 10 The bar date by which creditors, other than employees and former employees, were required to file proofs of claim with the Court was September 30, 2002. The bar date by which employees and former employees as creditors were required to file proofs of claim was July 11, 2003. Differences between the amounts reflected on Bethlehem's records and claims by creditors will be investigated and resolved in connection with our claims resolution process. That process has commenced and, in light of the number of claims filed, will take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known. It is reasonably possible that the amount of claims ultimately allowed by the Court will differ materially from the amounts presently recorded by Bethlehem. 9. Pursuant to Delaware law we are not permitted to declare dividends on our Common Stock, Cumulative Preferred Stock or Preference Stock. No value will be distributed to our equity holders under our Plan of Liquidation. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION On October 15, 2001, Bethlehem Steel Corporation and 22 of its wholly owned subsidiaries (collectively, the Debtors) filed voluntary petitions for relief under chapter 11 of the United States Code (the Code) in the United States Bankruptcy Court for the Southern District of New York (the Court). On March 12, 2003, we signed an asset purchase agreement (APA) to sell substantially all of our assets to a subsidiary of International Steel Group, Inc. (ISG) for cash, ISG Class B common stock and the assumption of certain liabilities. The APA was approved by the Court on April 22, 2003. In connection with the approval of the APA, among other matters, the United Steelworkers of America agreed to release substantially all claims against Bethlehem and subsidiary companies; the trustees of the funds under the Coal Industry Health Benefit Retiree Act of 1992 agreed to withdraw their civil action filed on March 18, 2003 in the United States District Court for the District of Columbia for injunctive relief and agreed to settle certain claims against Bethlehem and "related persons"; and the Pension Benefit Guaranty Corporation (PBGC) agreed to release certain claims against any member of Bethlehem's "controlled group" under Title IV of ERISA. Closing of the sale of substantially all of our assets to ISG was completed on May 7, 2003, however, the effective closing date for financial purposes was the opening of business on May 1, 2003. At closing Bethlehem received approximately $752 million in cash and a $120 million receivable (all of which has subsequently been collected), the total of which is expected to be sufficient to satisfy all allowed secured, administrative and priority claims, with any excess cash being paid to ISG before Bethlehem's chapter 11 case is closed. Bethlehem also received at closing ISG Class B common stock, with an expected value of $15 million. Under the terms of the APA, the class B common stock will be returned to ISG if all allowed secured, administrative and priority claims are not paid. The terms of the APA required a minimum level of working capital at April 30, 2003. Subsequent to the sale, Bethlehem and ISG determined that ISG was due approximately $9 million for adjustments to April 30, 2003 working capital. Bethlehem returned this amount to ISG during August 2003. As a result of the sale, Bethlehem no longer has operations effective April 30, 2003. Bethlehem filed a chapter 11 Plan of Liquidation (Plan) and a Disclosure Statement with the Court on July 29, 2003. At a hearing held on October 22, 2003, the Court confirmed the Plan. Under the terms of the Plan, all administrative expense claims, priority and non-priority tax claims and all other secured claims will be satisfied and then Bethlehem and its debtor subsidiaries will either be dissolved or merged into another debtor, as appropriate. Bethlehem expects this process will be completed by December 31, 2003. Upon dissolution, a liquidating trust will be formed to distribute to 12 allowed unsecured creditors the $15 million in ISG class B common stock or proceeds from the sale of such stock, $0.6 million in proceeds from a benefit trust and proceeds from any bankruptcy avoidance actions. No value will be distributed to Bethlehem's common, preferred or preference equity holders. A copy of the confirmed Plan has been filed with the Securities and Exchange Commission. As a result of no longer having operations, the consolidated statement of operations for the third quarter of 2003 does not include any operating results and the 2003 year-to-date results include only four months of operating results through April 30, 2003. The consolidated statement of cash flows for 2003 is for the period January 1, 2003 through April 30, 2003. A consolidated statement of receipts and disbursements for the period May 1, 2003 through September 30, 2003 has been included as part of the consolidated financial statements. Bethlehem has adopted the liquidation basis of accounting effective April 30, 2003 and the consolidated financial statements include a consolidated statement of net liabilities in liquidation as of September 30, 2003. On March 25, 2003, the Court approved a motion under section 1114 of the Code terminating retiree health care and life insurance benefits (OPEB) for claims incurred after March 31, 2003, for substantially all current and future retired employees and their eligible dependents. Claims incurred on or before March 31, 2003 and received on or before May 31, 2003 will be paid. If sufficient funds are available after all allowed secured, priority and administrative claims have been paid, the Court also has required Bethlehem to reimburse up to two weeks of COBRA premiums paid by Bethlehem's COBRA enrollees. Bethlehem expects to have sufficient funds for this reimbursement and has reflected the amounts in other current liabilities at September 30, 2003. As a result of the Court's action, we did not record any OPEB expense for the month of April 2003. On December 18, 2002, the PBGC filed a complaint in the United States District Court for the Eastern District of Pennsylvania alleging there was sufficient cause under applicable laws to terminate the Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies (the Pension Plan). The complaint requested, among other things, that December 18, 2002 be established as the Pension Plan's termination date and that the PBGC be appointed the Pension Plan's ERISA trustee with full responsibility for managing Pension Plan assets and administering Pension Plan benefits. By agreement dated April 30, 2003, the litigation was resolved on the basis that the Pension Plan be terminated effective December 18, 2002 and the PBGC assumed the duties of ERISA trustee of the Pension Plan effective April 30, 2003. As a result of the PBGC's action to terminate Bethlehem's Pension Plan, we did not record any pension expense in 2003. On September 30, 2003 the Court approved an order settling a lawsuit filed by certain former salaried employees related to alleged severance benefits. Bethlehem disbursed about $7 million in October 2003 related to this settlement and has reflected this amount in other current liabilities as of September 30, 2003 in the consolidated statement of net liabilities. 13 The pro forma statement of net liabilities as of September 30, 2003 reflecting the revaluation of pre-petition unsecured liabilities upon "legal release" to their anticipated settlement value and other required adjustments follows ($ in millions):

Notes: a- Adjustment to write-down liabilities of approximately $5.8 billion to anticipated settlement amount and reclass to accounts payable and to record other required adjustments. The bar date by which creditors, other than employees and former employees, were required to file proofs of claim with the Court was September 30, 2002. The bar date by which employees and former employees as creditors were required to file proofs of claim was July 11, 2003. Differences between the amounts reflected on Bethlehem's records and claims by creditors will be investigated and resolved in connection with our claims resolution process. That process has commenced and, in light of the number of claims filed, will take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known. It is reasonably possible that the amount of claims ultimately allowed by the Court will differ materially from the amounts presently recorded by Bethlehem. 14 REVIEW OF RESULTS: THIRD QUARTER AND FIRST NINE MONTHS OF 2003 THIRD QUARTER AND FIRST NINE MONTHS OF 2002 As a result of the sale of substantially all of our assets to ISG, we no longer have operations and therefore had no net income for the third quarter 2003. As of April 30, 2003, Bethlehem adopted the liquidation basis of accounting and accrued approximately $28 million as an estimate for expenses to be incurred from April 30 through closing the chapter 11 case. Our net loss for the third quarter 2002 was $54 million. Our net loss of $2.3 billion for the first nine months of 2003 includes only four months of operating results. This compares to a net loss of $270 million in 2002. The net loss in 2003 includes a $2.3 billion impairment charge recorded in anticipation of the sale of substantially all of our assets to ISG which occurred on May 7, 2003. LIQUIDITY AND CASH FLOW The closing of the sale of substantially all of our assets to ISG occurred on May 7, 2003. At closing Bethlehem received approximately $752 million in cash and a $120 million receivable, all of which has been subsequently received, that are expected to be sufficient to satisfy all allowed secured, administrative and priority claims, with any excess cash being paid to ISG. Under the terms of the APA, the class B common stock will be returned to ISG if all allowed secured, administrative and priority claims are not paid. At a hearing held on October 22, 2003, the Bankruptcy Court confirmed Bethlehem's Plan of Liquidation (Plan). Under the terms of the Plan, all administrative expense claims, priority and non-priority tax claims and all other secured claims will be satisfied and then Bethlehem and its debtor subsidiaries will either be dissolved or merged into another debtor, as appropriate. Bethlehem expects this process will be completed by December 31, 2003. After dissolution, a liquidating trust will be formed to distribute to allowed unsecured creditors the $15 million in ISG class B common stock or the proceeds from the sale of such stock, $0.6 million in proceeds from a benefit trust and proceeds from any bankruptcy avoidance actions. No value will be distributed to Bethlehem's common, preferred or preference equity holders. In conjunction with closing, Bethlehem disbursed approximately $654 million of the sale proceeds, including: $617 million for debt repayments to fully repay all of Bethlehem's secured debt; $16 million to escrow pre-petition property taxes; $11 million to fully collateralize existing letters of credit; and $10 million to settle litigation. After these disbursements, cash and cash equivalents on hand at May 7, 2003 was $98 million. Subsequent to closing Bethlehem collected the $120 million receivable related to the ISG sale. Bethlehem's disbursements subsequent to closing through September 30, 2003 included: about $66 million for accrued payroll that existed as of April 30, 2003; about $40 million (net of transfers from benefit trusts) for active and retiree medical benefit run-off; and about $14 million for professional fees 15 related to the chapter 11 cases. Total cash and cash equivalents at September 30, 2003 was $94 million. DIVIDENDS Pursuant to Delaware law we are not permitted to declare a dividend on our Common Stock, Cumulative Convertible Preferred Stock or Preference Stock. No value will be distributed to our equity holders pursuant to our Plan of Liquidation. FORWARD-LOOKING STATEMENTS: Certain statements in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated in such statements due to a number of factors, including changes arising from our chapter 11 filing. Due to material uncertainties, it is not possible to predict the length of time we will operate under chapter 11 protection, the outcome of the proceedings in general and whether we will have sufficient funds to pay all of our allowed secured, administrative and priority claims. The forward-looking statements included in this document are based on information available to us as of the date of this report, and we assume no obligation to update any of these statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 4. CONTROLS AND PROCEDURES Bethlehem's management evaluated, with the participation of its Chief Executive Officer and Chief Financial Officer, the effectiveness of Bethlehem's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of September 30, 2003. Based on their evaluation, Bethlehem's Chief Executive Officer and Chief Financial Officer concluded that Bethlehem's disclosure controls and procedures were effective as of September 30, 2003. There have been no changes in Bethlehem's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during Bethlehem's fiscal quarter ended September 30, 2003, that have materially affected, or are reasonably likely to materially affect, Bethlehem's internal control over financial reporting. 16 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On October 15, 2001, Bethlehem and 22 of its direct and indirect subsidiaries filed voluntary petitions for relief under chapter 11 of title 11, United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (Case Nos. 01-15288 (BRL) through 01-15302 (BRL) and 01-15308 (BRL) through 01-15315 (BRL)). As a result of the chapter 11 cases, all pending litigation against Bethlehem and the 22 subsidiaries is stayed automatically by section 362 of the Bankruptcy Code and, absent further order of the Bankruptcy Court, no party may take any action to recover on pre-petition claims against Bethlehem and such subsidiaries. Bethlehem, in the ordinary course of its business, is the subject of various pending or threatened legal actions involving governmental agencies or private interests. Prosecution of certain of these actions may be stayed by Bethlehem's chapter 11 filing. Bethlehem believes that any ultimate liability arising from these actions should not have a material adverse effect on its consolidated financial position at September 30, 2003. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. As a result of its chapter 11 filing, Bethlehem has not made principal or interest payments on unsecured indebtedness incurred prior to October 15, 2001 without approval of the Bankruptcy Court. In addition, Bethlehem is not permitted to pay dividends on its Common Stock, Cumulative Convertible Preferred Stock or Preference Stock. The dividend arrearage from June 30, 2001 through September 30, 2003 is approximately $90 million. ITEM 5. OTHER INFORMATION. On October 29, 2003 all of Bethlehem's directors, other than R. S. Miller, Jr., Bethlehem's Chief Executive Officer, resigned and W. H. Graham, Bethlehem's Senior Vice President, General Counsel and Secretary, and E.P. Reybitz, Bethlehem's current Chief Financial Officer were elected to the Board. The size of the Board was reduced to three. In addition, Mr. Reybitz was elected Vice President, Chief Financial Officer and Treasurer of Bethlehem. The Board determined that following the confirmation of Bethlehem's Plan of Liquidation and the status of Bethlehem's continuing liquidation it was no longer necessary to have a board comprised of a majority of independent directors and independent committees. 17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) EXHIBITS. The following exhibits are included in this Report on Form 10-Q: 2.1 Debtors' Plan of Liquidation under Chapter 11 of the Bankruptcy Code, dated October 21, 2003, as filed with the U.S. Bankruptcy Court for the Southern District of New York (Incorporated by reference from Exhibit 2.1 to Bethlehem's Current Report on Form 8-K filed October 28, 2003) 2.2 Bankruptcy Court Order, dated October 22, 2003, confirming the Debtors' Plan of Liquidation under Chapter 11 of the Bankruptcy Code (Incorporated by reference from Exhibit 2.2 to Bethlehem's Current Report on Form 8-K filed October 28, 2003) 11 Statement Regarding Computation of Earnings Per Share 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (B) REPORTS ON FORM 8-K. Bethlehem filed the following Current Reports on Form 8-K with the Securities and Exchange Commission since the end of its Second Quarter: 1. July 21, 2003 - Consolidated Monthly Operating Statement for the Month of June, 2003, as filed with the Bankruptcy Court. 2. July 30, 2003 - Plan of Liquidation and Disclosure Statement, as filed with the Bankruptcy Court. 3. August 20, 2003 - Consolidated Monthly Operating Statement for the Month of July, 2003, as filed with the Bankruptcy Court. 18 4. August 27, 2003 - Consolidated Monthly Operating Statement for the Month of April, 2003, as amended and filed with the Bankruptcy Court. 5. September 22, 2003 - Consolidated Monthly Operating Statement for the Month of August, 2003, as filed with the Bankruptcy Court. 6. September 23, 2003 - Approved form of Disclosure Statement, as filed with the Bankruptcy Court. 7. October 20, 2003 - Consolidated Monthly Operating Statement for the Month of September, 2003, as filed with the Bankruptcy Court. 8. October 28, 2003 - Confirmed Plan of Liquidation, as filed with the Bankruptcy Court. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Bethlehem Steel Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Bethlehem Steel Corporation (Registrant) By /s/ E. P. Reybitz ------------------------------------------ E. P. Reybitz Vice President, Chief Financial Officer and Treasurer (principal financial officer) Date: November 14, 2003 20 EXHIBIT INDEX The following is an index of the exhibits included in this Report: Item No. Exhibit --- ------- 2.1 Debtors' Plan of Liquidation under Chapter 11 of the Bankruptcy Code, dated October 21, 2003, as filed with the U.S. Bankruptcy Court for the Southern District of New York (Incorporated by reference from Exhibit 2.1 to Bethlehem's Current Report on Form 8-K filed October 28, 2003) 2.2 Bankruptcy Court Order, dated October 22, 2003, confirming the Debtors' Plan of Liquidation under Chapter 11 of the Bankruptcy Code (Incorporated by reference from Exhibit 2.2 to Bethlehem's Current Report on Form 8-K filed October 28, 2003) 11 Statement Regarding Computation of Earnings Per Share 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 21

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