WHEELING, W.Va., Aug. 10 /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, 2007.
For the second quarter of 2007, the Company reported an operating loss
of $35.4 million and a net loss of $41.6 million, or $(2.71) per basic and
diluted share. This compares to operating income of $19.3 million and net
income of $9.3 million for second quarter of 2006, or $0.64 per basic and
$0.63 per diluted share.
Steel shipments for the second quarter of 2007 totaled 684,592 tons or
$682 per ton versus 667,944 tons or $717 per ton for the second quarter of
2006 (excluding non-steel product revenue). Net sales for the second
quarter of 2007 totaled $467.0 million as compared to net sales of $493.9
million for the second quarter of 2006. Net sales for the second quarter of
2006 included $15.0 million from the sale of coke to the Company's joint
venture partner. The decrease in net sales versus the year ago quarter was
due to a decrease in the average selling price of steel products sold of
$35 per ton and a decrease in the sale of coke during the second quarter
2007 due to the deconsolidation of the Mountain State Carbon joint venture
effective January 1, 2007, offset by an increase in the volume of steel
products sold.
Cost of sales for the second quarter of 2007 totaled $474.3 million as
compared to cost of sales of $445.4 million for the second quarter of 2006.
Cost of sales for the second quarter of 2007 was reduced by an insurance
recovery of $9.5 million related to a prior year claim. Cost of sales for
the second quarter of 2006 included the cost of coke sold of $11.5 million
and was reduced by an insurance recovery of $0.6 million related to a prior
year claim.
Cost of sales of steel products sold during the second quarter of 2007
totaled $483.8 million, or $707 per ton versus $434.5 million or $651 per
ton during the second quarter of 2006. The overall increase of $49.3
million resulted principally from a per ton increase of $56 and an increase
in the volume of steel products sold. The increase in the per ton cost of
steel products resulted principally from unplanned outages as well as
changes in the cost of certain raw materials including scrap, pig iron and
purchased slabs. The cost of coke during the second quarter of 2007 was
lower than the second quarter of 2006.
As a result of our substantial losses to date in 2007 and the use of
cash for operating expenses, principally due to higher scrap market prices,
changes in vendor contracts and decreased selling prices and volume as well
as for capital investments, management anticipates that the Company may
require additional liquidity in the foreseeable future. These losses,
together with our earnings outlook, make it likely that we will not be able
to comply with our financial covenant under the Term Loan agreement, which
becomes effective on April 1, 2008. While we have been able to obtain
relief from such covenants in the past, at this time we cannot assure that
we will be able to improve our results, obtain additional financing or get
relief from our Term Loan covenant. In addition, our auditors included an
explanatory paragraph indicating that there is substantial doubt about our
ability to continue as a going concern in an amendment to our Form 10-K,
which we filed today as part of our SEC filings related to the proposed
merger with Esmark. Furthermore, in connection with this filing, the
Company reclassified $286.5 million of long- term debt to a current
classification as of June 30, 2007.
James P. Bouchard, Chairman and Chief Executive Officer, said, "Our
second quarter results were disappointing. As we have previously indicated,
results were impacted by unplanned outages of the Electric Arc Furnace in
April, higher than anticipated scrap costs, as well as weaker than expected
market conditions. We knew at the time of the proxy contest that
Wheeling-Pitt's cost structure had to be lowered and that this would take
time to accomplish. There are several actions which we could take to
alleviate the liquidity situation. First and foremost, among these possible
actions is the proposed merger with Esmark, which will infuse between $50
million to $200 million of fresh equity into the combined company. We
expect to refinance our revolving credit facility in connection with the
merger, which should provide substantial additional liquidity. The merger
also brings to Wheeling Pitt the cash flow from the Esmark companies. Post
merger there is also material improvement of the combined company balance
sheet. The merger is proceeding as planned under all of the terms and
conditions agreed to by the Boards of Wheeling Pitt and Esmark."
Management will conduct a live call tomorrow, August 10, 2007 at 1pm ET
to review the Company's financial results and business prospects.
Individuals wishing to participate can join the conference call by dialing
800-289-0529 or 913-981-5523. A replay will be available through August 16,
2007 by dialing 888-203-1112 or 719-457-0820, and using the pass code
9105648. The call can also be accessed via the Internet live or as a replay
through http://www.investorcalendar.com.]
Forward-Looking Statements Cautionary Language
This release contains certain projections or other forward-looking
statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Securities-Exchange Act regarding future events or the
future financial performance of Wheeling-Pittsburgh Corporation that
involve risks and uncertainties. Forward-looking statements reflect the
current views of management and are subject to a number of risks and
uncertainties that could cause actual results to differ materially from
actual future events or results. These risks and uncertainties include,
among others, factors relating to (1) the Company's potential inability to
generate sufficient operating cash flow to service or refinance its
indebtedness; (2) concerns relating to financial covenants and other
restrictions contained in its credit agreements; (3) intense competition,
dependence on suppliers of raw materials and cyclical demand for steel
products; (4) the risk that the businesses of the Company and Esmark will
not be integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (5) the ability of the combined
companies to realize the expected benefits from the proposed combination,
including expected operating efficiencies, synergies, cost savings and
increased productivity, and the timing of realization of any such benefits;
(6) lower than expected operating results for the Company; (7) the risk of
unexpected consequences resulting from the combination of the Company and
Esmark; and (8) certain other risks identified in section "Item 1A - Risk
Factors" of the Company's Annual Report on Form 10-K for the year ended
December 31, 2006, 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. 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.
In connection with the proposed business combination of Wheeling-
Pittsburgh Corporation ("Wheeling-Pitt") and Esmark Incorporated
("Esmark"), Clayton Acquisition Corporation ("New Esmark") has filed with
the SEC a registration statement on Form S-4 and related preliminary proxy
statement with the SEC. Stockholders of Wheeling-Pitt and Esmark are urged
to read the registration statement, proxy statement/prospectus and any
other relevant documents, including the definitive proxy
statement/prospectus, filed with the SEC when they become available, as
well as any amendments or supplements to those documents, because they will
contain important information, including information on the proposed
transaction as well as participants and their interests in the Company and
Esmark. Stockholders will be able to obtain a free copy of the registration
statement and related proxy statement/prospectus, as well as other filings
containing information about Wheeling-Pitt and Esmark, at the SEC's website
at http://www.sec.gov. New Esmark, Wheeling-Pitt, Esmark and their
respective directors and executive officers may be deemed participants in
the solicitation of proxies from the stockholders of Wheeling-Pitt in
connection with the proposed business combination transaction. Information
regarding the participants in the proxy solicitation and their respective
interests may be obtained by reading the registration statement and related
preliminary proxy statement. This document shall not constitute an offer to
sell or the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
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 manufactures
and sells hot rolled, cold rolled, galvanized, pre-painted and tin mill
sheet products. 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,
2007 2006 2007 2006
Revenues:
Net sales, including sales to
affiliates of $62,346,
$88,390, $121,831 and
$183,246 $466,977 $493,925 $864,698 $930,903
Cost and expenses:
Cost of sales, including cost
of sales to affiliates
of $66,236, $83,703,
$130,636 and $176,385 474,284 445,384 890,556 853,502
Depreciation and amortization
expense 9,260 8,830 18,816 17,137
Selling, general and
administrative expense 18,867 20,425 43,651 41,075
Total cost and expenses 502,411 474,639 953,023 911,714
Operating (loss) income (35,434) 19,286 (88,325) 19,189
Interest expense and other
financing costs (10,160) (7,024) (19,692) (13,175)
Other income 4,005 3,838 6,532 6,654
(Loss) income before income
taxes and minority interest (41,589) 16,100 (101,485) 12,668
Income tax provision - 5,233 - 5,233
(Loss) income before minority
interest (41,589) 10,867 (101,485) 7,435
Minority interest - (1,538) - (216)
Net (loss) income $(41,589) $9,329 $(101,485) $7,219
(Loss) earnings per share:
Basic $(2.71) $0.64 $(6.63) $0.50
Diluted $(2.71) $0.63 $(6.63) $0.49
Weighted average shares
(in thousands):
Basic 15,333 14,530 15,310 14,523
Diluted 15,333 14,829 15,310 14,734
Shipments - tons 684,592 667,944 1,288,485 1,288,612
Production - tons 609,024 675,649 1,173,305 1,337,060
Note:
The condensed consolidated statements of operations for the quarter and
six months ended June 30, 2007, the condensed consolidated statement of
cash flows for the six months ended June 30, 2007 and the condensed
consolidated balance sheet at June 30, 2007 do not include Mountain State
Carbon, LLC
WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
June 30, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $8,098 $21,842
Accounts receivables, less
allowance for doubtful accounts of
of $3,104 and $2,882 217,861 138,513
Inventories 225,394 212,221
Prepaid expenses and other current
assets 22,581 27,911
Total current assets 473,934 400,487
Investment in and advances to
affiliated companies 130,676 53,585
Property, plant and equipment, less
accumulated depreciation
of $118,008 and $114,813 447,759 626,210
Deferred income tax benefits 25,224 30,537
Restricted cash - 2,163
Other intangible assets, less
accumulated amortization of $2,155
and $2,136 236 255
Other assets 7,613 9,308
Total assets $1,085,442 $1,122,545
Liabilities
Current liabilities:
Accounts payable, including book
overdrafts of $9,836 and $13,842 $199,572 $99,536
Short-term debt 150,700 110,000
Payroll and employee benefits payable 40,061 34,766
Accrued income and other taxes 9,039 10,333
Deferred income taxes payable 25,224 30,537
Accrued interest and other current
liabilities 26,031 10,257
Convertible debt, net of discount
of $7,624 65,376 -
Long-term debt due in one year 226,196 32,119
Total current liabilities 742,199 327,548
Long-term debt 13,356 254,961
Employee benefits 123,400 121,953
Other liabilities 12,523 25,600
Total liabilities 891,478 730,062
Minority interest in consolidated
subsidiary - 106,290
Stockholders' equity
Preferred stock - $.001 par value;
20,000,000 shares authorized;
no shares issued or outstanding - -
Common stock - $.01 par value;
80,000,000 shares authorized;
15,342,149 and 15,274,796 issued;
15,335,483 and 15,268,130 shares
outstanding 153 153
Additional paid-in capital 301,025 289,903
Accumulated deficit (105,644) (4,159)
Treasury stock, 6,666 shares, at cost (100) (100)
Accumulated other comprehensive
(loss) income (1,470) 396
Total stockholders' equity 193,964 286,193
Total liabilities and
stockholders' equity $1,085,442 $1,122,545
SOURCE Wheeling-Pittsburgh Corporation
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