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Wheeling-Pittsburgh Corporation Announces 2005 Second Quarter Results

Posted on: Tuesday, 9 August 2005, 09:01 CDT

WHEELING, W.Va., Aug. 9 /PRNewswire-FirstCall/ -- Wheeling-Pittsburgh Corporation , the holding company of Wheeling-Pittsburgh Steel Corporation, today reported its financial results for the quarter ended June 30, 2005.

For the second quarter of 2005, the Company reported net income of $2.6 million, or $0.18 per diluted share. This compares to net income of $27.0 million for the second quarter of 2004, or $2.79 per diluted share.

Second quarter steel shipments of 547,000 tons were approximately the same as 548,000 tons shipped in second quarter of 2004. Second quarter 2005 revenue was $415.2 million versus $356.1 million in second quarter 2004, an increase of $59.1 million which included $27 million related to the sale of raw materials as the Company managed its raw materials position to minimize the impact of rising costs and in light of our transition to hybrid steel production, which resulted in certain excess raw material positions. The average selling price per ton of steel products in the second quarter was $710 per ton, compared to $649 per ton in second quarter 2004, a $61 per ton increase.

Cost charged to operations in the second quarter increased $93.2 million versus second quarter 2004 to approximately $410 million. Cost of sales for steel products totaled $371.2 million versus $292.8 million in second quarter 2004, an average of $679 per ton in second quarter 2005, as compared to $534 per ton in the second quarter 2004.

"While our second quarter results were affected by our coal supply issues and the lingering impact of the December 2004 basic oxygen furnace ductwork collapse, the impact of these items was lower than in the first quarter," said James G. Bradley, Wheeling-Pittsburgh Chairman and Chief Executive Officer. "Additional factors affecting our second quarter were our operational transition and ramp-up of our new electric arc furnace and the transition of the flat rolled sheet market."

Wheeling-Pittsburgh and Severstal North America, Inc. (Severstal) have had continuing discussions regarding the formation of a joint venture for the rehabilitation of the Wheeling-Pittsburgh coke plant in Follansbee, WV, and have recently reached revised economic terms. The revised terms continue to provide for substantial capital investments by Severstal and a 50 percent ownership in the joint venture. Wheeling-Pittsburgh will now contribute an additional $20 million of the rehabilitation costs, with Severstal's share being reduced by a like amount. Total cash contributions to the joint venture over four years by Wheeling-Pittsburgh and Severstal are expected to be $40 million and $120 million, respectively. Closing is subject to receipt of certain third party consents, including the approval by Wheeling-Pittsburgh Steel Corporation's term loan lenders and the Federal loan guarantor, The Emergency Steel Loan Guarantee Board, of the finalized agreement.

Severstal informed the Company that it has received the approval of its Board of Directors to proceed to financial closing on the joint venture with Wheeling-Pittsburgh Steel Corporation, subject to certain conditions including finalization of the definitive joint venture agreements and supporting contracts. According to Ronald J. Nock, President and Chief Executive Officer of Severstal North America, Inc., "We have made tremendous progress in shaping this venture in a fashion that will benefit both partners and we expect that our remaining work can be completed by the end of August."

Bradley added, "Our agreement with Severstal represents a win-win for both companies. It will preserve Wheeling-Pittsburgh's ability to remain self sufficient for coke, while providing a significant portion of Severstal's coke requirements."

Management will conduct a live call today at 11 a.m. ET to review the Company's financial results and business prospects. Individuals wishing to participate can join the conference call by dialing 800-240-4186 or 303-262-2143. A replay will be available until August 16, 2005 by dialing 800-405-2236 or 303-590-3000, and using the pass code 11035705. The call can also be accessed via the Internet live or as a replay through http://www.fulldisclosure.com/.

This release may contain projections or other forward-looking statements regarding future events or the future financial performance of Wheeling- Pittsburgh Corporation that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to the "Business - Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2004, and other reports and filings with the SEC, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

These risk factors include, among others, the Company's potential inability to generate sufficient operating cash flow to service or refinance its indebtedness, concerns relating to financial covenants and other restrictions contained in its credit agreements, intense competition, dependence on suppliers of raw materials, the difficulties involved in ramping up production from our electric arc furnace, and cyclical demand for steel products. In addition, any forward-looking statements represent Wheeling- Pittsburgh Corporation's views only as of today and should not be relied upon as representing the Company's views as of any subsequent date. While Wheeling-Pittsburgh Corporation may elect to update forward-looking statements from time to time, the Company specifically disclaims any obligation to do so.

About Wheeling-Pittsburgh:

Wheeling-Pittsburgh is a steel company engaged in the making, processing and fabrication of steel and steel products using both integrated and electric arc furnace technology. The Company's products include hot rolled and cold rolled sheet and coated products such as galvanized, pre-painted and tin mill sheet. The Company also produces a variety of steel products including roll formed corrugated roofing, roof deck, floor deck, bridgeform and other products used primarily by the construction, highway and agricultural markets.

The Company's condensed consolidated statements of operations and condensed consolidated balance sheets are attached.

WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Revenues: Net sales, including sales to affiliates of $79,610, $96,866, $179,449 and $162,206 $415,237 $356,121 $814,745 $630,327 Cost and expenses: Cost of sales, including cost of sales to affiliates of $79,343, $79,431, $172,416 and $140,682, excluding depreciation and amortization expense 385,979 292,820 741,937 548,889 Depreciation and amortization expense 8,423 7,512 17,892 15,201 Selling, general and administrative expense 15,577 16,437 34,894 31,475 Total cost and expenses 409,979 316,769 794,723 595,565 Operating income 5,258 39,352 20,022 34,762 Interest expense and other financing costs (5,960) (5,058) (11,540) (10,277) Other income 3,093 4,653 6,061 7,665 Income before income taxes 2,391 38,947 14,543 32,150 Income tax provision (benefit) (236) 11,950 3,816 11,832 Net income $2,627 $26,997 $10,727 $20,318 Earnings per share Basic $0.18 $2.84 $0.76 $2.14 Diluted $0.18 $2.79 $0.74 $2.10 Weighted average shares (in thousands): Basic 14,207 9,500 14,158 9,500 Diluted 14,418 9,684 14,418 9,691 Shipments - tons 546,688 548,474 1,069,491 1,087,175 Production - tons 596,604 628,031 1,249,867 1,217,368

* Amounts reported for the quarter and six months ended June 30, 2004, have been restated as a result of the retrospective application of a change in accounting for stock options pursuant to Statement of Financial Accounting Standard No. 123(R).

WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands) June 30, December 31, 2005 2004 Assets Current assets: Cash and cash equivalents $2,727 $31,198 Accounts receivables, less allowance for doubtful accounts of $2,427 and $2,697 166,735 144,509 Inventories 202,329 156,669 Prepaid expenses and deferred charges 16,177 29,953 Total current assets 387,968 362,329 Investment in and advances to affiliated companies 51,386 53,016 Property, plant and equipment, less accumulated depreciation of $60,116 and $42,536 509,329 487,308 Deferred income tax benefits 15,630 18,751 Restricted cash - 12,502 Other intangible assets, less accumulated amortization of $1,563 and $1,346 1,142 5,174 Deferred charges and other assets 18,442 16,406 Total assets $983,897 $955,486 Liabilities and stockholders' equity Current liabilities: Accounts payable, including book overdrafts of $12,043 and $8,894 $86,344 $92,434 Short-term debt 31,500 - Payroll and employee benefits payable 47,056 48,611 Accrued income and other taxes 11,863 10,073 Deferred income taxes payable 15,630 18,751 Accrued interest and other liabilities 5,121 7,843 Long-term debt due in one year 31,695 31,427 Total current liabilities 229,209 209,139 Long-term debt 296,968 302,156 Employee benefits 134,301 135,608 Other liabilities 16,418 17,978 Total liabilities 676,896 664,881 Stockholders' equity Preferred stock - $.001 par value; 20,000,000 shares authorized; no shares issued or outstanding - - Common stock - $.01 par value; 14,599,930 and 14,437,223 shares issued; 14,593,264 and 14,433,223 shares outstanding 146 144 Additional paid-in capital 273,034 267,327 Accumulated earnings 33,921 23,194 Treasury stock, 6,666 and 4,000 shares, at cost (100) (60) Total stockholders' equity 307,001 290,605 Total liabilities and stockholders' equity $983,897 $955,486

* Amounts reported as of December 31, 2004, have been restated as a result of the retrospective application of a change in accounting for stock options pursuant to Statement of Financial Accounting Standard No. 123(R).

Wheeling-Pittsburgh Corporation

CONTACT: Jim Kosowski of Wheeling-Pittsburgh Corporation,+1-304-234-2440

Web site: http://www.wpsc.com/

Company News On-Call: http://www.prnewswire.com/comp/967451.html

Source: PRNewswire-FirstCall

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