WHEELING, W.Va., Aug. 9 /PRNewswire-FirstCall/ -- Wheeling-Pittsburgh
Corporation (Nasdaq: WPSC), 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).
SOURCE Wheeling-Pittsburgh Corporation
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