##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended September 30, 2004
OR o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to Commission File Number 000-50300 WHEELING-PITTSBURGH CORPORATION  DELAWARE
    
    55-0309927(State of Incorporation)
    
    (I.R.S. Employer Identification No.)1134 Market Street, Wheeling, WV
    
    26003(Address of principal executive offices)
    
    (Zip code)
 Registrants telephone number, including area code: (304) 234-2400 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 o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes o No x Applicable only to registrants involved in bankruptcy proceedings during the preceding five years: Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes x No o The registrant had 14,053,908 shares of its common stock, par value $0.01 per share, outstanding as of October 31, 2004.




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIESFORM 10-QQUARTER ENDED SEPTEMBER 30, 2004INDEX PagePART I            FINANCIAL INFORMATIONItem 1 Condensed Financial Statements:Condensed Consolidated Statements of Operations (Unaudited)
    
    
    2Condensed Consolidated Balance Sheets (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    4Condensed Consolidated Statement of Changes in Stockholders Equity (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3 Quantitative and Qualitative Disclosures About Market Risks
    
    
    39Item 4 Controls and Procedures
    
    
    40PART II OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    41Item 4 Submission of Matters to a Vote of Securities HoldersItem 6 Exhibits and Reports on Form 8-KSIGNATURES
    
    
    42Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
 1




---



##### Table of Contents



PART I  FINANCIAL INFORMATION 
 Item 1  Financial Statements
 WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES 
 Condensed Consolidated Statements of Operations (Unaudited)  (Dollars in thousands, except per share amounts)
 Reorganized Company
    
    
    
    Predecessor CompanyQuarter
    
    Nine Months
    
    Two Months
    
    
    One Month
    
    Seven MonthsEnded
    
    Ended
    
    Ended
    
    
    Ended
    
    EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    
    July 31,
    
    July 31,2004
    
    2004
    
    2003
    
    
    2003
    
    2003RevenuesNet sales, including sales to affiliates of
$109,496, $271,702, $38,609, $23,092
and $164,273
    
    $
    401,800
    
    
    $
    1,032,127
    
    
    $
    159,789
    
    
    
    $
    81,298
    
    
    $
    570,439Cost and expensesCost of products sold, excluding
depreciation and amortization expense,
including cost of products sold to affiliates of
$91,238, $231,987, $34,656, $20,662
and $143,840
    
    
    321,516
    
    
    
    870,405
    
    
    
    159,314
    
    
    
    
    76,877
    
    
    
    563,832Depreciation and amortization expense
    
    
    7,756
    
    
    
    22,957
    
    
    
    3,568
    
    
    
    
    6,095
    
    
    
    39,889Selling, administrative and general expense
    
    
    17,748
    
    
    
    49,043
    
    
    
    9,004
    
    
    
    
    4,648
    
    
    
    29,906Reorganization and professional fee expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,995
    
    
    
    8,140Total costs and expenses
    
    
    347,020
    
    
    
    942,405
    
    
    
    171,886
    
    
    
    
    89,615
    
    
    
    641,767Operating income (loss)
    
    
    54,780
    
    
    
    89,722
    
    
    
    (12,097
    )
    
    
    
    (8,317
    )
    
    
    (71,328
    )Interest expense and other financing costs
    
    
    (4,392
    )
    
    
    (14,669
    )
    
    
    (3,891
    )
    
    
    
    (1,462
    )
    
    
    (9,185
    )Other income
    
    
    4,859
    
    
    
    12,524
    
    
    
    757
    
    
    
    
    382
    
    
    
    3,228Reorganization income (expense):Fair value adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (152,708
    )
    
    
    (152,708
    )Gain on discharge of indebtedness
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    557,541
    
    
    
    557,541Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,918
    )
    
    
    (4,758
    )Income (loss) before income taxes
    
    
    55,247
    
    
    
    87,577
    
    
    
    (15,231
    )
    
    
    
    390,518
    
    
    
    322,790Income tax provision (benefit)
    
    
    19,657
    
    
    
    31,555
    
    
    
    6
    
    
    
    
    (12
    )
    
    
    (641
    )Net income (loss)
    
    $
    35,590
    
    
    $
    56,022
    
    
    $
    (15,237
    )
    
    
    $
    390,530
    
    
    $
    323,431Earnings per shareBasic
    
    $
    3.53
    
    
    $
    5.78
    
    
    $
    (1.60
    )
    
    
    
    *
    
    
    
    *Diluted
    
    $
    3.42
    
    
    $
    5.63
    
    
    $
    (1.60
    )
    
    
    
    *
    
    
    
    *Weighted average shares (in thousands):Basic
    
    
    10,091
    
    
    
    9,699
    

    
    
    9,500
    
    
    
    
    *
    
    
    
    *Diluted
    
    
    10,393
    
    
    
    9,946
    
    
    
    9,500
    
    
    
    
    *
    
    
    
    *
 * Prior to reorganization, the Company was a wholly-owned subsidiary of WHX Corporation (see Note 2) The accompanying notes are an integral part of the financial statements. 2




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES 
 Condensed Consolidated Balance Sheets (Unaudited)  (Dollars in thousands)
 September 30,
    
    December 31,2004
    
    2003ASSETSCurrent assets:Cash and cash equivalents
    
    $
    15,181
    
    
    $
    4,767Trade receivables, less allowance for doubtful accounts
of $2,814 and $2,061
    
    
    167,414
    
    
    
    104,025Inventories
    
    
    150,721
    
    
    
    146,895Prepaid expenses and deferred charges
    
    
    14,229
    
    
    
    11,583Total current assets
    
    
    347,545
    
    
    
    267,270Investment in affiliated companies
    
    
    49,630
    
    
    
    42,857Property, plant and equipment, less accumulated
depreciation of $32,320 and $10,051
    
    
    458,529
    
    
    
    387,765Deferred income tax benefits
    
    
    20,189
    
    
    
    23,170Restricted cash
    
    
    32,218
    
    
    
    87,138Goodwill
    
    
    
    
    
    
    30,000Other intangible assets, less accumulated amortization
of $1,108 and $423
    
    
    8,390
    
    
    
    9,076Deferred charges and other assets
    
    
    19,188
    
    
    
    21,610Total assets
    
    $
    935,689
    
    
    $
    868,886LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade payables
    
    $
    63,630
    
    
    $
    76,108Short-term debt
    
    
    
    
    
    
    79,251Payroll and employee benefits payable
    
    
    50,718
    
    
    
    57,862Accrued federal, state and local taxes
    
    
    10,428
    
    
    
    10,744Deferred income tax liabilities
    
    
    19,955
    
    
    
    23,170Accrued interest and other liabilities
    
    
    6,268
    
    
    
    9,672Long-term debt due in one year
    
    
    31,505
    
    
    
    2,698Total current liabilities
    
    
    182,504
    
    
    
    259,505Long-term debt
    
    
    312,381
    
    
    
    340,696Other employee benefit liabilities
    
    
    149,495
    
    
    
    142,433Other liabilities
    
    
    20,212
    
    
    
    21,639Total liabilities
    
    
    664,592
    
    
    
    764,273STOCKHOLDERS EQUITYCommon stock  $.01 Par value; 14,057,908 and 10,000,000 shares
issued, 14,053,908 and 10,000,000 shares outstanding
    
    
    141
    
    
    
    100Additional paid-in capital
    
    
    258,471
    
    
    
    149,901Accumulated earnings (deficit)
    
    
    17,092
    
    
    
    (38,930
    )Deferred compensation
    
    
    (4,547
    )
    
    
    (6,458
    )Treasury stock, 4,000 shares, at cost
    
    
    (60
    )
    
    
    Total stockholders equity
    
    
    271,097
    
    
    
    104,613Total liabilities and stockholders equity
    
    $
    935,689
    
    
    $
    868,886
 The accompanying notes are an integral part of the financial statements. 3




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES 
 Condensed Consolidated Statements of Cash Flows (Unaudited)  (Dollars in thousands)
 Reorganized
    
    
    
    PredecessorCompany
    
    
    CompanyNine
    
    Two
    
    
    SevenMonths Ended
    
    Months Ended
    
    
    Months EndedSeptember 30,
    
    September 30,
    
    
    July 31,2004
    
    2003
    
    
    2003Cash flows from operating activitiesNet income (loss)
    
    $
    56,022
    
    
    $
    (15,237
    )
    
    
    $
    323,431Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities:Depreciation and amortization expense
    
    
    22,957
    
    
    
    3,568
    
    
    
    
    39,889VEBA and profit sharing expense
    
    
    21,332
    
    
    
    
    
    
    
    
    Other postretirement benefits
    
    
    46
    
    
    
    (3,056
    )
    
    
    
    (1,565
    )Deferred income taxes (goodwill), including recognition of post
reorganization benefit of $376 (see Note 14)
    
    
    29,986
    
    
    
    
    
    
    
    
    Equity income of affiliated companies, net of dividends
    
    
    (7,998
    )
    
    
    (360
    )
    
    
    
    184Loss on disposition of assets
    
    
    6
    
    
    
    
    
    
    
    
    Reorganization income
    
    
    
    
    
    
    
    
    
    
    
    (400,075
    )Deferred compensation
    
    
    1,851
    
    
    
    417
    
    
    
    
    Interest paid-in-kind
    
    
    544
    
    
    
    
    
    
    
    
    Changes in current assets and current liabilities:Trade receivables
    
    
    (63,389
    )
    
    
    (264
    )
    
    
    
    17,944Inventories
    
    
    (3,826
    )
    
    
    346
    
    
    
    
    19,769Trade payables
    

    
    (12,201
    )
    
    
    (14,184
    )
    
    
    
    9,900Other current assets
    
    
    (2,646
    )
    
    
    (3,120
    )
    
    
    
    918Other current liabilities
    
    
    (23,648
    )
    
    
    (2,901
    )
    
    
    
    (306
    )Other assets and liabilities  net
    
    
    8,158
    
    
    
    1,907
    
    
    
    
    (9,902
    )Net cash provided by (used in) operating activities
    
    
    27,194
    
    
    
    (32,884
    )
    
    
    
    187Cash flows from investing activitiesCapital expenditures
    
    
    (93,053
    )
    
    
    (12,044
    )
    
    
    
    (2,866
    )Restricted cash used to fund capital expenditures
    
    
    54,920
    
    
    
    10,012
    
    
    
    
    Proceeds from sale of assets
    
    
    11
    
    
    
    
    
    
    
    
    201Payments from affiliates
    
    
    1,225
    
    
    
    
    
    
    
    
    600Net cash used in investing activities
    
    
    (36,897
    )
    
    
    (2,032
    )
    
    
    
    (2,065
    )Cash flows from financing activitiesBorrowing of long-term debt
    
    
    2,400
    
    
    
    (666
    )
    
    
    
    (1,334
    )Repayment of long-term debt
    
    
    (2,452
    )
    
    
    
    
    
    
    
    Net change in short-term debt
    
    
    (79,251
    )
    
    
    36,200
    
    
    
    
    Short term debt (DIP facility) borrowings
    
    
    
    
    
    
    
    
    
    
    
    1,724Book overdraft
    
    
    (277
    )
    
    
    1,122
    
    
    
    
    327Issuance of common stock, net of issuance costs
    
    
    99,697
    
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    20,117
    
    
    
    36,656
    
    
    
    
    717Increase (decrease) in cash and cash equivalents
    
    
    10,414
    
    
    
    1,740
    
    
    
    
    (1,161
    )Cash and cash equivalents at beginning of period
    
    
    4,767
    
    
    
    7,382
    
    
    
    
    8,543Cash and cash equivalents at end of period
    
    $
    15,181
    
    
    $
    9,122
    
    
    
    $
    7,382
 The accompanying notes are an integral part of the financial statements. 4




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES 
 Condensed Consolidated Statement of Changes in Stockholders Equity (Unaudited)  (in thousands)
 Additional
    
    
    
    
    
    AccumulatedCommon
    
    Paid-in
    
    Deferred
    
    Earnings
    
    TreasuryStock
    
    Capital
    
    Compensation
    
    (Deficit)
    
    Stock
    
    TotalPredecessor CompanyBalance at December 31, 2002
    
    $
    
    
    
    $
    335,138
    
    
    $
    
    
    
    $
    (646,309
    )
    
    $
    
    
    
    $
    (311,171
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323,431
    
    
    
    
    
    
    
    323,431Fresh start adjustment
    
    
    
    
    
    
    (335,138
    )
    
    
    
    
    
    
    322,878
    
    
    
    
    
    
    
    (12,260
    )Balances at July 31, 2003
(prior to issuance of stock
at reorganization)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Reorganized CompanyIssuance of stock at
reorganization at July 31, 2003
(prior to restricted stock
award)
    
    $
    95
    
    
    $
    142,405
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    142,500Shares issued on July 31, 2003
for restricted stock award plans
    
    
    5
    
    
    
    7,495
    
    
    
    (7,500
    )
    
    
    
    
    
    
    
    
    
    
    Compensation expense recognized
    
    
    
    
    
    
    
    
    
    
    1,042
    
    
    
    
    
    
    
    
    
    
    
    1,042Stock option grants
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,930
    )
    
    
    
    
    
    
    (38,930
    )Balance at December 31, 2003
    
    
    100
    
    
    
    149,901
    
    
    
    (6,458
    )
    
    
    (38,930
    )
    
    
    
    
    
    
    104,613Shares issued on August 15, 2004
    
    
    4
    
    
    
    8,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,549Shares issued on September 21, 2004
    
    
    37
    
    
    
    99,660
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,697Realization of prereorganization
deferred tax assets
    
    
    
    
    
    
    362
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    362Restricted stock forfeiture
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    (60
    )
    
    
    Compensation expense recognized
    
    
    
    
    
    
    
    
    
    
    1,851
    
    
    
    
    
    
    
    
    
    
    
    1,851Stock option grants
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,022
    
    
    
    
    
    
    
    56,022Balance at September 30, 2004
    
    $
    141
    
    
    $
    258,471
    
    
    $
    (4,547
    )
    
    $
    17,092
    
    
    $
    (60
    )
    
    $
    271,097
 The accompanying notes are an integral part of the financial statements. 5




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
  1.
    
    Basis of PresentationThe condensed consolidated financial statements of Wheeling-Pittsburgh
Corporation and subsidiaries (WPC or the Company) are unaudited. In the
opinion of management, these financial statements reflect all recurring
adjustments necessary to present fairly the consolidated financial position
of the Company and the results of its operations and the changes in its cash
flows for the periods presented.These financial statements, including notes thereto, have been prepared in
accordance with applicable rules of the Securities and Exchange Commission
and do not include all of the information and disclosures required by
generally accepted accounting principles in the United States of America for
complete financial statements. The results reported in these financial
statements may not be indicative of the results that may be expected for the
entire year. This Form 10-Q should be read in conjunction with the
Companys Form 10-K for the year ended December 31, 2003.The Company emerged from bankruptcy effective August 1, 2003 (see Note 2),
and applied fresh start reporting as of July 31, 2003. As a result, amounts
reported in the financial statements for the one month ended July 31, 2003
and for the seven months ended July 31, 2003 relate to the Company prior to
its reorganization and the application of fresh start reporting. Amounts
for these periods are referred to as being applicable to the Predecessor
Company. Amounts for periods subsequent to the reorganization of the
Company are referred to as being applicable to the Reorganized Company.
Due to the application of fresh start reporting as of July 31, 2003, amounts
reported for the predecessor company and the reorganized company are not
comparable and have been separated by a black line in the financial
statements.The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.Certain reclassifications of prior year amounts have been made to conform to
the current year presentation.2.
    
    Bankruptcy and ReorganizationOn November 16, 2000, the Company and eight of its then-existing
wholly-owned subsidiaries, which represented substantially all of the
Companys business, filed voluntary petitions for relief under Chapter 11 of
the United States Bankruptcy Code. The Company commenced Chapter 11
proceedings in order to restructure its outstanding debts and to improve its
access to additional funding needed to continue operations. Throughout the
Chapter 11 proceedings, the Company remained in possession of its properties
and assets and continued to operate and manage its businesses with the
then-existing directors and officers as debtors-in-possession subject to the
supervision of the Bankruptcy Court.As part of the Chapter 11 proceedings, the Company filed its original Joint
Plan of Reorganization on
December 20, 2002, its First Amended Joint Plan of Reorganization on January
9, 2003, its Second Amended Joint Plan of Reorganization on May 5, 2003 and
its Third Amended Joint Plan of Reorganization on May 19, 2003, reflecting
the final negotiations with pre-petition note holders, pre-petition trade
creditors and unionized employees. The Companys plan of reorganization was
confirmed on June 18, 2003 and became effective on August 1, 2003. The
Company realized approximately $558 million in cancellation of debt income
as a result of the reorganization.The following is a summary of some of the significant transactions
consummated on or about the effective date of the plan of reorganization:  
    
    WPC amended and restated its by-laws and filed a second amended and
restated certificate of incorporation with the Delaware Secretary of
State authorizing the issuance of up to an aggregate of 80 million shares of 6




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)  common stock, par value $0.01 per share, and 20 million shares of
undesignated preferred stock, par value $0.001 per share.
    
    WPC exchanged, on a pro rata basis, $275 million in senior notes
and $75 million in term notes that existed prior to its bankruptcy
filing for an aggregate of $20 million in cash, $40 million in new
Series A secured notes issued by Wheeling-Pittsburgh Steel Corp.
(WPSC), which are collateralized by a second lien on its tangible and
intangible assets (other than our accounts receivable and inventory)
and its equity interests in its joint ventures and a third lien on its
accounts receivable and inventory, $20 million in new Series B secured
notes issued by WPSC, which are collateralized by a fifth lien on its
tangible and intangible assets, its equity interests in its joint
ventures, and its accounts receivable and inventory, and 3,410,000
shares of new common stock of WPC constituting 34.1% thereof.
    
    WPC cancelled its then-existing senior notes and related indenture
and its then-existing term notes and the related term loan agreement.
    
    WPC cancelled all shares of its common stock that existed prior to
the implementation of the plan of reorganization, at which point it
ceased to be a subsidiary of WHX Corporation.
    
    WPSC entered into a new $250 million senior secured term loan
facility, which is guaranteed in part by the Emergency Steel Loan
Guarantee Board, the West Virginia Housing Development Fund, WPC and WP
Steel Venture Corporation, a wholly-owned subsidiary of WPC, and is
collateralized by a first lien on its tangible and intangible assets
(other than accounts receivable and inventory) and its equity interests
in its joint ventures and a second lien on its accounts receivable and
inventory. WPSC also entered into a new $225 million senior secured
revolving credit facility, which is guaranteed by WPC and WP Steel
Venture Corporation and is collateralized by a first lien on its
accounts receivable and inventory and a third lien on its other
tangible and intangible assets and its equity interests in its joint
ventures and pledged stock of its subsidiaries.
    
    All of the obligations under the Companys $195 million
debtor-in-possession credit facility were satisfied in full and
discharged.
    
    WPC and WPSC entered into an agreement with WHX Corporation
providing for, among other things, a $10 million capital contribution
by WHX Corporation, the capitalization of approximately $40 million in
debt owed by the Company to WHX Corporation, a $10 million unsecured
loan from WHX Corporation and an agreement with WHX Corporation, the
Pension Benefit Guaranty Corporation (PBGC), and the United
Steelworkers of America (USWA), with respect to the Companys
separation from WHX Corporations employee pension plan.
    
    WPC and WPSC entered into an agreement with its unionized employees
represented by the USWA which modified the existing labor agreement to
provide for, among other things, future pension arrangements with the
USWA and reductions in the Companys employee-related costs.
    
    WPC issued 4,000,000 shares of new common stock constituting 40%
thereof for the benefit of USWA retirees in satisfaction of certain
claims under its labor agreement and an additional 1,000,000 shares of
its new common stock constituting 10% thereof to or for the benefit of
the Companys salaried employees.
    
    WPC issued 1,590,000 shares of new common stock constituting 15.9%
thereof to certain of its creditors in satisfaction of various
unsecured claims, including claims relating to trade debt.  There are still several matters pending in the Bankruptcy Court, including
the resolution of disputed unsecured and administrative claims and certain
preference actions and other litigation where we are seeking to recover 7




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)  monies. As of September 30, 2004, approximately 59,456 shares of common
stock issued pursuant to the plan of reorganization were reserved for
distribution to creditors pending resolution of certain disputed claims. If
those claims are ultimately allowed in whole or in part by the Bankruptcy
Court, the appropriate amount of stock will be distributed to those
claimants; if the claims are disallowed, the stock will be distributed to
other creditors of the same class, pro rata. To the extent that certain
administrative and secured claims are allowed by the Bankruptcy Court, those
claims will be paid in cash, in an amount which we expect will not exceed
$100,000 and for which there are sufficient reserves held by the
distribution agent. If and to the extent those claims are allowed as
pre-petition unsecured claims, then those creditors will receive stock,
which has been reserved as described above. In addition, the Company is the
plaintiff in a number of preference actions, where it is seeking to recover
monies from creditors. The Company does not believe that any of these
remaining bankruptcy proceedings, individually or in the aggregate, will
have a material adverse effect on the Company.3.
    
    Fresh Start ReportingIn accordance with Statement of Position 90-7, Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code (SOP 90-7), the
Company adopted the provisions of fresh start reporting as of July 31, 2003.
In adopting the requirements of fresh start reporting, the Company made a
determination of the enterprise value of the entity based upon various
valuation methods, including discounted cash flow methodologies, analysis of
comparable steel companies, and other applicable ratios and economic
industry information relevant to the operations of the Company. The
estimated total equity value of the reorganized company aggregating
approximately $150 million was determined after taking into account the
values of the obligations assumed in connection with the Joint Plan of
Reorganization.The following reconciliation of the predecessor companys consolidated
balance sheet as of July 31, 2003 to that of the reorganized company as of
July 31, 2003 was prepared with the adjustments that give effect to the
reorganization and fresh start reporting.The adjustments entitled Reorganization Adjustments reflect the
consummation of the Joint Plan of Reorganization, including the elimination
of existing liabilities subject to compromise, and consolidated
shareholders deficit, and to reflect the aforementioned $150 million equity
value.The adjustments entitled Fresh Start Adjustments reflect the adoption of
fresh start reporting, including the adjustments to record property and
equipment at its fair value. Pre-Reorganization
    
    Reorganization
    
    
    
    
    
    Fresh Start
    
    
    
    
    
    Post-Reorganization7/31/2003
    
    Adjustments
    
    
    
    
    
    Adjustments
    
    
    
    
    
    7/31/2003(Dollars in thousands)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    7,382
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    7,382Trade receivables, less allowance for
doubtful accounts of $1,916
    
    
    112,649
    
    
    
    (233
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,416Inventories
    
    
    164,322
    
    
    
    
    
    
    
    
    
    
    
    (9,658
    )
    
    
    [d]
    
    
    
    154,664Prepaid expenses and deferred charges
    
    
    6,559
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,571Total current assets
    
    
    290,912
    
    
    
    (221
    )
    
    
    
    
    
    
    (9,658
    )
    
    
    
    
    
    
    281,033Investment in affiliated companies
    
    
    59,982
    
    
    
    
    
    
    
    
    
    
    
    (19,505
    )
    
    
    [d]
    
    
    
    40,477Property, plant and equipment less
accumulated depreciation
    
    
    493,514
    
    
    
    
    
    
    
    
    
    
    
    (133,301
    )
    
    
    [d]
    
    
    
    360,213Deferred income tax benefits
    
    
    27,342
    
    
    
    (3,860
    )
    
    
    [b]
    
    
    
    
    
    
    
    
    
    
    
    23,482Restricted cash
    
    
    
    
    
    
    112,000
    
    
    
    [a]
    
    
    
    
    
    
    
    
    
    
    
    112,000Goodwill
    
    
    
    
    
    
    30,000
    
    
    
    [g]
    
    
    
    
    
    
    
    
    
    
    
    30,000Deferred charges and other assets
    
    
    8,964
    
    
    
    12,844
    
    
    
    [g]
    
    
    
    9,756
    
    
    
    [g]
    
    
    
    31,564Total assets
    
    $
    880,714
    
    
    $
    150,763
    
    
    
    
    
    
    $
    (152,708
    )
    
    
    
    
    
    $
    878,769
 8




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) Pre-Reorganization
    
    Reorganization
    
    
    
    
    
    Fresh Start
    
    
    
    
    
    Post-Reorganization7/31/2003
    
    Adjustments
    
    
    
    
    
    Adjustments
    
    
    
    
    
    7/31/2003(Dollars in thousands)LIABILITIES & STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Trade payables
    
    $
    81,275
    
    
    $
    (1,334
    )
    
    
    [a]
    
    
    $
    
    
    
    
    
    
    
    $
    79,941Short-term debt
    
    
    137,214
    
    
    
    (100,299
    )
    
    
    [a]
    
    
    
    
    
    
    
    
    
    
    
    36,915Payroll and employee benefits payable
    
    
    35,118
    
    
    
    32,795
    
    
    
    [c]
    
    
    
    
    
    
    
    
    
    
    
    67,913Accrued federal, state and local taxes
    
    
    10,054
    
    
    
    1,200
    
    
    
    [a],[c]
    
    
    
    
    
    
    
    
    
    
    
    11,254Deferred income tax liabilities
    
    
    27,342
    
    
    
    (3,860
    )
    
    
    [a],[c]
    
    
    
    
    
    
    
    
    
    
    
    23,482Accrued interest and other liabilities
    
    
    8,026
    
    
    
    2,647
    
    
    
    [a],[c]
    
    
    
    
    
    
    
    
    
    
    
    10,673Long-term debt due in one year
    
    
    43,433
    
    
    
    (39,678
    )
    
    
    [a],[c],[f]
    
    
    
    
    
    
    
    
    
    
    
    3,755Total current liabilities
    
    
    342,462
    
    
    
    (108,529
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233,933Long-term debt
    
    
    11,985
    
    
    
    327,863
    
    
    
    [a],[c]
    
    
    
    
    
    
    
    
    
    
    
    339,848Other employee benefit liabilities
    
    
    17,317
    
    
    
    124,981
    
    
    
    [c]
    
    
    
    
    
    
    
    
    
    
    
    142,298Other liabilities
    
    
    17,150
    
    
    
    3,040
    
    
    
    [a],[c]
    
    
    
    
    
    
    
    
    
    
    
    20,190Liabilities subject to compromise
    
    
    879,455
    
    
    
    (879,455
    )
    
    
    [c]
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    
    1,268,369
    
    
    
    (532,100
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    736,269STOCKHOLDERS EQUITY (DEFICIT)Common Stock  $.01 Par Value; 10 million
shares issued and outstanding
    
    
    
    
    
    
    100
    
    
    
    [c]
    
    
    
    
    
    
    
    
    
    
    
    100Additional paid-in capital
    
    
    335,138
    
    
    
    149,900
    
    
    
    [c],[g]
    
    
    
    (335,138
    )
    
    
    [d]
    
    
    
    149,900Deferred compensation
    
    
    
    
    
    
    (7,500
    )
    
    
    [e]
    
    
    
    
    
    
    
    
    
    
    
    (7,500
    )Accumulated earnings (deficit)
    
    
    (722,793
    )
    
    
    540,363
    
    
    
    [b],[c],[f]
    
    
    
    182,430
    
    
    
    [d]
    
    
    
    Total stockholders equity (deficit)
    
    
    (387,655
    )
    
    
    682,863
    
    
    
    
    
    
    
    (152,708
    )
    
    
    
    
    
    
    142,500Total liabilities and stockholders equity
    
    $
    880,714
    
    
    $
    150,763
    
    
    
    
    
    
    $
    (152,708
    )
    
    
    
    
    
    $
    878,769
  Footnotes:[a] Reflects the borrowing of the $250 million term loan proceeds and
amounts under the post-petition revolver and the payments necessary to
effect the Plan of Reorganization, such as the repayment of DIP facilities,
cash distributions to creditors and the payment of fees and expenses
associated with the exit financing.[b] Reflects the impact on retained earnings of reorganization expenses net
of tax benefit.[c] Reflects the settlement of liabilities subject to compromise, including
the distribution of cash, notes and equity to the pre-petition creditors,
the assumption of OPEB and other pre-petition liabilities (capital leases,
employee benefits, taxes) and the cancellation of debt income.[d] Reflects the adjustments to reflect Fresh Start reporting. These
entries include the write-down of inventories, property, plant and equipment
and joint venture interests to their appraised values, elimination of
accumulated deficits and additional paid-in capital.[e] Reflects restricted stock awards for the distribution of employee equity
into trust.[f] Reflects the cancellation of debt as a result of WHX Corporation
forgiving its portion of the DIP term loan.[g] Reflects the pre-funding of VEBA obligations with 4,000,000 shares of
the Companys common stock, an intangible asset related to joint venture
supply agreements and goodwill.4.
    
    New Accounting StandardsUnder the provisions of SOP 90-7, the Company was required to adopt, as of
July 31, 2003, all accounting guidance that was going to be effective within
a twelve-month period. 9




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  In May 2004, the FASB issued FASB Staff Position (FSP) No. 106-2,
Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003. FSP 106-2 provides
guidance on accounting for the effects of the new Medicare prescription drug
legislation by employers whose prescription drug benefits are actuarially
equivalent to the drug benefit under Medicare Part D. FSP 106-2 supercedes
FSP 106-1 and is effective for the first interim or annual period beginning
after June 15, 2004. As allowed by FSP 106-1, the Company elected to defer
recognizing the effects of the new legislation. Based on a preliminary
assessment and pending issuance of final guidance on determining actuarial
equivalence, the Company cannot make a final determination as to whether its
prescription drug benefits are actuarially equivalent of drug benefits under
Medicare Part D. However, if the Companys prescription drug benefits are
finally determined to be actuarially equivalent to benefits under Medicare
Part D, it is estimated that the effect on operations for the quarter and
nine months ended September 30, 2004 will not be material.The Company adopted FASB No. 132-R (revised 2003), Employers Disclosures
about Pensions and Other Postretirement Benefits an amendment of FASB
Statements No. 87, 88, and 106 (FASB 132-R). FASB 132-R revises employers
disclosures about pension plans and other postretirement benefit plans. It
requires additional disclosures about the assets, obligations, cash flows,
and net periodic benefit cost of defined benefit pension plans and other
defined benefit postretirement plans. Additionally, FASB 132-R requires
public companies to make certain disclosures in their interim financial
statements with respect to net periodic pension expense and contributions
paid. The Company has provided the required interim disclosures in Note 9
to the condensed consolidated financial statements for their postretirement
benefit plan. Due to the immaterial amounts related to the Companys
defined benefit pension plan, disclosure has not been provided.5.
    
    Business SegmentThe Company is primarily engaged in one line of business and has one
industry segment, which is the making, processing and fabricating of steel
and steel products. 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 manufactures a variety of fabricated steel
products including roll formed corrugated
roofing, roof deck, form deck, floor deck, bridgeform and other products
used primarily by the construction, highway and agricultural markets.6.
    
    Sale of ScrapBeginning in the third quarter of 2004, the Company sold all of its
internally-generated scrap to a third party pursuant to a long-term scrap
supply agreement. The internally-generated scrap sold to the third party is
processed and resold to the Company as a part of the total scrap purchased
by the Company under the long-term supply agreement. Revenue from the sale
of internally-generated scrap to the third party is recorded as a reduction
of cost of goods sold in the statement of operations.7.
    
    Related Party TransactionsThe Company owns a 35.7% interest in Wheeling-Nisshin, Inc. and a 50%
interest in Ohio Coatings Company, both of which are accounted for using the
equity method of accounting. During the quarter and nine months ended
September 30, 2004, the Company had sales of $109.5 and $271.7 million to
these entities, respectively. During the two months ended September 30,
2003, the Company had sales of $38.6 million to these entities. During the
one month ended July 31, 2003, the Company had sales of $23.1 million to
these entities. During the seven months ended July 31, 2003, the Company
had sales of $164.3 million to these entities. At September 30, 2004 and
December 31, 2003, the Company had trade receivables due from these entities
of $23.4 million and $15.7 million, respectively, and the Company had trade
payables due to these entities of $1.6 million and $4.8 million,
respectively. At September 30, 2004, the Company had a loan receivable due
from Ohio Coatings Company of $10.2 million bearing interest at
approximately 5% per annum. The loan is to be repaid in November 2006. 10




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  8.
    
    Stock-Based Compensation

In accordance with the Companys plan of reorganization, the Company
established a restricted stock plan pursuant to which it granted 500,000
shares of its common stock to selected key employees as of the effective
date of its plan of reorganization. All of the grants made under the plan
vest in increments of one-third of the total grant to each individual pro
rata over three years.During the third quarter of 2004, 165,333 shares of restricted common stock
vested and 4,000 shares of restricted stock were subject to forfeiture.
Restricted stock expense related to the restricted stock awards totaled $0.6
million for the quarter ended September 30, 2004 and $1.85 million for the
nine months ended September 30, 2004. These amounts were reflected in
shareholders equity as a decrease of deferred compensation.On March 15, 2004, May 14, 2004 and August 15, 2004, respectively, the
Company granted stock options for 4,394, 7,801 and 3,996 shares of its
common stock to certain directors of the Company at a per share price of
$24.04, $13.54 and $26.44, respectively.FASB No. 123, Accounting for Stock Based Compensation (FASB 123) gives
companies the option to adopt the fair market value method for expense
recognition of employee stock options or to continue to account for employee
stock options using the intrinsic value method, as outlined under Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees.
The Company has elected to continue to apply the intrinsic value method to
account for employee stock options and to disclose the pro forma effect as
if the fair value method had been applied. The following table illustrates
the effect on net earnings per share if the Company had applied the fair
value recognition provisions of FASB 123 to stock based employee
compensation. Reorganized Company
    
    
    
    Predecessor CompanyQuarter
    
    Nine Months
    
    Two Months
    

    One Month
    
    Seven MonthsEnded
    
    Ended
    
    Ended
    
    
    Ended
    
    EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    
    July 31,
    
    July 31,2004
    
    2004
    
    2003
    
    
    2003
    
    2003(Dollars in thousands, except per share amounts)Net income (loss)
    
    $
    35,590
    
    
    $
    56,022
    
    
    $
    (15,237
    )
    
    
    $
    390,530
    
    
    $
    323,431Add: Stock based compensation
expense, net of tax
    
    
    396
    
    
    
    1,186
    
    
    
    417
    
    
    
    
    
    
    
    
    Less: Total stock-based compensation
determined under fair value method
for all awards, net of tax
    
    
    (452
    )
    
    
    (1,356
    )
    
    
    (417
    )
    
    
    
    
    
    
    
    Pro forma net income (loss)
    
    $
    35,534
    
    
    $
    55,852
    
    
    $
    (15,237
    )
    
    
    $
    390,530
    
    
    $
    323,431Earnings per share:Basic as reported
    
    $
    3.53
    
    
    $
    5.78
    
    
    
    ($1.60
    )
    
    
    
    *
    
    
    
    *Diluted as reported
    
    $
    3.42
    
    
    $
    5.63
    
    
    
    ($1.60
    )
    
    
    
    *
    
    
    
    *Basic pro forma
    
    $
    3.52
    
    
    $
    5.76
    
    
    
    ($1.60
    )
    
    
    
    *
    
    
    
    *Diluted pro forma
    
    $
    3.42
    
    
    $
    5.62
    
    
    
    ($1.60
    )
    
    
    
    *
    
    
    
    *
 * Prior to reorganization, the Company was a wholly-owned subsidiary of WHX Corporation (see Note 2). 11




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  9.
    
    Post Retirement Benefits Other Than PensionsNet periodic cost for postretirement benefits other than pensions
(principally health care and life insurance) for employees and covered
dependents was as follows: Reorganized Company
    
    
    
    Predecessor CompanyQuarter
    
    Nine Months
    
    Two Months
    

    One Month
    
    Seven MonthsEnded
    
    Ended
    
    Ended
    
    
    Ended
    
    EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    
    July 31,
    
    July 31,2004
    
    2004
    
    2003
    
    
    2003
    
    2003(Dollars in thousands)Components of net periodic cost:Service cost
    
    $
    733
    
    
    $
    2,199
    
    
    $
    417
    
    
    
    $
    243
    
    
    $
    1,701Interest cost
    
    
    1,835
    
    
    
    5,505
    
    
    
    1,186
    
    
    
    
    1,656
    
    
    
    11,586Amortization of prior service credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226
    )
    
    
    (1,582
    )Recognized actuarial (gain)/loss
    
    
    286
    
    
    
    858
    
    
    
    
    
    
    
    
    (1,452
    )
    
    
    (1,770
    )Net periodic cost
    
    $
    2,854
    
    
    $
    8,562
    
    
    $
    1,603
    
    
    
    $
    221
    
    
    $
    9,935
  10.
    
    VEBA and Profit Sharing ExpenseDuring the quarter ended September 30, 2004, the Company incurred VEBA and
profit sharing expense of $14.8 million. At the sole discretion of the
Company, $12.8 million of this amount is subject to satisfaction by the
issuance of common stock of the Company during the fourth quarter of 2004.
The remaining $2.0 million of this amount will be satisfied in cash, net of
pre-funded amounts, during the fourth quarter of 2004.During the nine months ended September 30, 2004, the Company incurred VEBA
and profit sharing expense of $25.6 million. The Company satisfied $8.5
million of this amount by issuing 338,010 shares of common stock during the
third quarter of 2004 and satisfied $2.3 million of this amount in cash, net
of pre-funded amounts. At the sole discretion of the Company, $12.8 million
of this amount is subject to satisfaction by the issuance of common stock of
the Company during the fourth quarter of 2004. The remaining $2.0 million
of this amount will be satisfied in cash, net of pre-funded amounts, during
the fourth quarter of 2004.  11.
    
    Other IncomeOther income consisted of the following: Quarter
    
    Nine Months
    
    Two Months
    
    

    One Month
    
    Seven MonthsEnded
    
    Ended
    
    Ended
    
    
    Ended
    
    EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    
    July 31,
    
    July 31,2004
    
    2004
    
    2003
    
    
    2003
    
    2003(Dollars in thousands)Equity income from affiliates
    
    $
    4,422
    
    
    $
    10,792
    
    
    $
    360
    
    
    
    $
    328
    
    
    $
    2,544Other income
    
    
    437
    
    
    
    1,732
    
    
    
    397
    
    
    
    
    54
    
    
    
    684Total
    
    $
    4,859
    
    
    $
    12,524
    
    
    $
    757
    
    
    
    $
    382
    
    
    $
    3,228
  12.
    
    Earnings Per ShareDiluted earnings per share assumes the exercise of stock options and vesting
of restricted stock, provided in each case that the effect is dilutive. For
the quarter ended September 30, 2004, 16,665 shares of common stock related
to stock options and 285,090 shares of common stock related to restricted
stock were included in the computation of diluted earnings per share. For
the nine months ended September 30, 2004, 13,682 shares of common stock
related to stock options and 233,913 shares of common stock related to
restricted stock were included in the computation of diluted earnings per
share.  Stock options to purchase 3,996 shares of common stock were issued on August
15, 2004 at an exercise price of $26.44 per share. These outstanding stock
options were not included in the computation of diluted earnings per 12




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  share as the option price exceeded the average market price of the common
stock for the quarter and nine months ended September 30, 2004.  13.
    
    InventoriesInventories are valued at the lower of cost or market value. Cost is
determined by the last-in first-out (LIFO) method for substantially all
inventories. Approximately 98% of inventories are valued using the LIFO
method. September 30,
    
    December 31,2004
    
    2003(Dollars in thousands)Finished products
    
    $
    23,091
    
    
    $
    31,227In-process
    
    
    103,744
    
    
    
    90,170Raw materials
    
    
    34,156
    
    
    
    26,808Other materials and supplies
    
    
    198
    
    
    
    378161,189
    
    
    
    148,583LIFO reserve
    
    
    (10,468
    )
    
    
    (1,688
    )$
    150,721
    
    
    $
    146,895
  Cost of products sold was reduced by $2.5 million for the quarter and nine
months ended September 30, 2004 as the result of the liquidation of LIFO
inventories.14.
    
    GoodwillThe application of fresh start reporting resulted in an amount being
allocated to reorganization value in excess of amounts allocated to
identifiable assets, which has been reflected in the financial statements as
goodwill. Under provisions of SOP 90-7, any benefit from the utilization of
pre-confirmation net operating loss carryforwards and any benefit resulting
from the reversal of a valuation allowance applicable to other deferred tax
assets are used first to reduce goodwill. For the quarter and nine months
ended September 30, 2004, goodwill was reduced by $18.3 and $30.0 million,
respectively, representing the estimated benefit from the utilization of
pre-confirmation net operating loss carryforwards and the reversal of the
valuation allowance applicable to other deferred tax assets for the periods
then ended.15.
    
    Sale of Common StockOn September 21, 2004, pursuant to a public offering, we sold 3,719,898
shares of common stock at $29 per share, generating gross sales proceeds of
$107.9 million. These proceeds, net of issuance costs of $8.2 million, were
used to repay $92.7 million due under our revolving credit facility and to
fund a restricted cash account in the amount of $7.0 million to be used to
fund future capital expenditures.16.
    
    Commitments and ContingenciesEnvironmental MattersPrior to confirmation of our plan of reorganization effective August 1,
2003, the Company settled all pre-petition environmental liability claims
made by environmental regulatory agencies arising out of pre-petition
stipulated penalties related to consent decrees and other pre-petition
regulatory enforcement actions. The Company also believes that it has
settled and/or discharged environmental liability for any known
Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA or Superfund) sites arising out of pre-petition activity.The Company estimates that demands for stipulated penalties and fines for
post-petition events and activities through September 30, 2004 could total
approximately $2.3 million, which has been fully reserved by the Company.
These claims arise from instances in which the Company exceeded
post-petition consent decree terms, including: (a) $1.9 million related to a
January 30, 1996 USEPA consent decree for the Companys coke oven gas
desulfurization facility; (b) $0.3 million related to a July 1991 USEPA
consent decree for water 13




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  discharges to the Ohio River; and (c) $0.1 million related to a September
20, 1999 Ohio EPA consent decree for the Companys coke oven gas
desulfurization facility.In September 2000, the Company entered into a consent order with the West
Virginia Department of Environmental Protection wherein the Company agreed
to remove contaminated sediments from the bed of the Ohio River.
Approximately $1.4 million was spent on these activities in 2002 and an
additional $0.4 million in 2003. During removal activities in 2003, the
Company discovered a broader
area of contaminated sediments. The Company identified the spatial limits of
these contaminated sediments and estimate their removal costs at $4.0
million, which has been fully reserved by the Company. The Company
currently expects this work to be substantially complete by the end of 2005.The Company is under a final administrative order issued by the USEPA in
June 1998 to conduct a Resource Conservation and Recovery Act Facility
Investigation to determine the nature and extent of soil and groundwater
contamination at its coke plant in Follansbee, West Virginia. USEPA approved
the Companys investigation workplan, and field activities are scheduled for
completion in 2004. Following this investigation, the Company will perform a
study to determine possible remedial measures. It is expected that some
remediation measures will be necessary and could commence within the next
three to five years. Based on a preliminary estimate of the range of the
possible cost to remediate, the Company has reserved approximately $5.6
million for such remediation measures. However, the field investigation is
not completed and the remediation plan has yet to be submitted to the USEPA;
therefore the full extent and cost of remediation could be different from
current estimates.The USEPA conducted a multimedia inspection of our Steubenville, Mingo
Junction, Yorkville and Martins Ferry, Ohio and Follansbee, West Virginia
facilities in March and June 1999. The inspection covered environmental
regulations applicable to these plants. Many of the issues were resolved and
settled prior to emergence from Chapter 11 bankruptcy. Based on current
estimates, the Company has reserved $1.4 million for resolution of
outstanding issues.Capital expenditures for environmental projects totaled $1.9 million for the
quarter ended September 30, 2004 and $2.4 million for the nine months ended
September 30, 2004. The Company estimates capital expenditures (unadutied)
for environmental projects to be $5.4 million for 2004, $12.6 million for
2005 and $12.1 million for 2006. However, due to the possibility of
unanticipated factual or regulatory developments, the amount and timing of
future capital expenditures may vary substantially from such estimates.Accrued environmental liabilities totaled $14.6 million at September 30,
2004 and $14.7 million at
December 31, 2003. These accruals were based on all information available to
the Company. As new information becomes available, whether from third
parties or otherwise, and as environmental regulations change, the
liabilities are reviewed on a quarterly basis and the accruals are adjusted
accordingly. Unless stated above, the time-frame over which these
liabilities will be paid is presently unknown. Further, the Company
considers it reasonably possible that it could ultimately incur additional
liabilities relative to the above exposures of up to $5.0 million.OtherThe Company is the subject of, or party to, a number of other pending or
threatened legal actions involving a variety of matters. However, based on
information currently available, management believes that the disposition of
these matters will not have a material adverse effect on the business, results
of operations or the financial position of the Company. 14




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  17.
    
    Summarized Combined Financial InformationWPSC is the issuer of the outstanding $40 million Series A notes and $20
million Series B notes. The Series A notes and Series B notes are each
fully and unconditionally guaranteed, jointly and severally, by WPC and its
present and future subsidiaries. WPSC and each subsidiary guarantor of the
Series A and Series B notes are 100%-owned by the parent guarantor, WPC.
Because the subsidiary guarantors are minor, individually and in the
aggregate, the combined consolidating financial information for WPC and the
subsidiary guarantors has been combined below in the column entitles WPC
and Subsidiary Guarantors.Prior to the Companys reorganization in bankruptcy, WPC then a wholly-owned
subsidiary of WHX Corporation, a public company, had issued $275 million
principal amount 9 1/4% senior notes in a registered exchange offer under
the Securities Act of 1933. These notes were fully and unconditionally
guaranteed, jointly and severally, by WPCs then-existing and future
operating subsidiaries. As discussed more fully in Note 2 above, the WPC 9
1/4% senior notes were extinguished pursuant to the Companys plan of
reorganization on or about August 1, 2003  CONDENSED CONSOLIDATING BALANCE SHEETReorganized Company September 30, 2004ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entires
    
    Consolidated(Dollars in thousands)AssetsCash and cash equivalents
    
    $
    
    
    
    $
    15,181
    
    
    $
    
    
    
    $
    15,181Trade accounts receivables
    
    
    
    
    
    
    167,414
    
    
    
    
    
    
    
    167,414Inventories
    
    
    
    
    
    
    150,721
    
    
    
    
    
    
    
    150,721Other current assets
    
    
    17
    
    
    
    14,212
    
    
    
    
    
    
    
    14,229Total current assets
    
    
    17
    
    
    
    347,528
    
    
    
    
    
    
    
    347,545Intercompany receivables
    
    
    
    
    
    
    1,160
    
    
    
    (1,160
    )
    
    
    Investments and advances in affiliates
    
    
    271,332
    
    
    
    49,630
    
    
    
    (271,332
    )
    
    
    49,630Property, plant and equipment  net
    
    
    
    
    
    
    458,529
    
    
    
    
    
    
    
    458,529Restricted cash
    
    
    
    
    
    
    32,218
    
    
    
    
    
    
    
    32,218Other non-current assets
    
    
    1,129
    
    
    
    46,638
    
    
    
    
    
    
    
    47,767Total Assets
    
    $
    272,478
    
    
    $
    935,703
    
    
    $
    (272,492
    )
    
    $
    935,689Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    63,630
    
    
    $
    
    
    
    $
    63,630Other current liabilities
    
    
    
    
    
    
    118,874
    
    
    
    
    
    
    
    118,874Total current liabilities
    
    
    
    
    
    
    182,504
    
    
    
    
    
    
    
    182,504Intercompany payable
    
    
    1,160
    
    
    
    
    
    
    
    (1,160
    )
    
    
    Long term debt
    
    
    
    
    
    
    312,381
    
    
    
    
    
    
    
    312,381Other non-current liabilities
    
    
    221
    
    
    
    169,486
    
    
    
    
    
    
    
    169,707Stockholders equity
    
    
    271,097
    
    
    
    271,332

    
    
    
    (271,332
    )
    
    
    271,097Total Liabilities and Stockholders Equity
    
    $
    272,478
    
    
    $
    935,703
    
    
    $
    (272,492
    )
    
    $
    935,689
 15




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  CONDENSED CONSOLIDATING BALANCE SHEETReorganized Company December 31, 2003ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entires
    
    Consolidated(Dollars in thousands)AssetsCash and cash equivalents
    
    $
    
    
    
    $
    4,767
    
    
    $
    
    
    
    $
    4,767Trade accounts receivables
    
    
    
    
    
    
    104,025
    
    
    
    
    
    
    
    104,025Inventories
    
    
    
    
    
    
    146,895
    
    
    
    
    
    
    
    146,895Other current assets
    
    
    12
    
    
    
    11,571
    
    
    
    
    
    
    
    11,583Total current assets
    
    
    12
    
    
    
    267,258
    
    
    
    
    
    
    
    267,270Intercompany receivables
    
    
    
    
    
    
    495
    
    
    
    (495
    )
    
    
    Investments and advances in affiliates
    
    
    104,593
    
    
    
    42,857
    
    
    
    (104,593
    )
    
    
    42,857Property, plant and equipment  net
    
    
    
    
    
    
    387,765
    
    
    
    
    
    
    
    387,765Restricted cash
    
    
    
    
    
    
    87,138
    
    
    
    
    
    
    
    87,138Other non-current assets
    
    
    896
    
    
    
    82,960
    
    
    
    
    
    
    
    83,856Total Assets
    
    $
    105,501
    
    
    $
    868,473
    
    
    $
    (105,088
    )
    
    $
    868,886Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    76,108
    
    
    $
    
    
    
    $
    76,108Other current liabilities
    
    
    33
    
    
    
    183,364
    
    
    
    
    
    
    
    183,397Total current liabilities
    
    
    33
    
    
    
    259,472
    
    
    
    
    
    
    
    259,505Intercompany payable
    
    
    495
    
    
    
    
    
    
    
    (495
    )
    
    
    Long term debt
    
    
    
    
    
    
    340,696
    
    
    
    
    
    
    
    340,696Other non-current liabilities
    
    
    360
    
    
    
    163,712
    
    
    
    
    
    
    
    164,072Stockholders equity
    
    
    104,613
    
    
    
    104,593
    
    
    
    (104,593
    )
    
    
    104,613Total Liabilities and Stockholders Equity
    
    $
    105,501
    
    
    $
    868,473
    
    
    $
    (105,088
    )
    
    $
    868,886
 16




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS Reorganized
Company
 Quarter EndedSeptember 30, 2004ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entires
    
    Consolidated(Dollars in thousands)Income DataNet sales
    
    $
    
    
    
    $
    401,800
    
    
    $
    
    
    
    $
    401,800Cost of products sold,
    
    
    
    
    
    
    321,516
    
    
    
    
    
    
    
    321,516Depreciation and amortizaton expense
    
    
    
    
    
    
    7,756
    
    
    
    
    
    
    
    7,756Selling, administrative and general expense
    
    
    132
    
    
    
    17,616
    
    
    
    
    
    
    
    17,748Operating income (loss)
    
    
    (132
    )
    
    
    54,912
    
    
    
    
    
    
    
    54,780Interest expense
    
    
    
    
    
    
    (4,392
    )
    
    
    
    
    
    
    (4,392
    )Other income including equity earnings
of affilliates
    
    
    35,533
    
    
    
    4,859
    
    
    
    (35,533
    )
    
    
    4,859Income before income taxes
    
    
    35,401
    
    
    
    55,379
    
    
    
    (35,533
    )
    
    
    55,247Income tax provision (benefit)
    
    
    (189
    )
    
    
    19,846
    
    
    
    
    
    
    
    19,657Net income
    
    $
    35,590
    
    
    $
    35,533
    
    
    $
    (35,533
    )
    
    $
    35,590
 Nine Months EndedSeptember 30, 2004ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entries
    
    Consolidated(Dollars in thousands)Income DataNet sales
    
    $
    
    
    
    $
    1,032,127
    
    
    $
    
    
    
    $
    1,032,127Cost of products sold
    
    
    
    
    
    
    870,405
    
    
    
    
    
    
    
    870,405Depreciation and amortization expense
    
    
    
    
    
    
    22,957
    
    
    
    
    
    
    
    22,957Selling, administrative and general expense
    
    
    668
    
    
    
    48,375
    
    
    
    
    
    
    
    49,043Operating income (loss)
    
    
    (668
    )
    
    
    90,390
    
    
    
    
    
    
    
    89,722Interest expense
    
    
    
    
    
    
    (14,669
    )
    
    
    
    
    
    
    (14,669
    )Other income including equity earnings
of affilliates
    
    
    56,314
    
    
    
    12,524
    
    
    
    (56,314
    )
    
    
    12,524Income before income taxes
    
    
    55,646
    
    
    
    88,245
    
    
    
    (56,314
    )
    
    
    87,577Income tax provision (benefit)
    
    
    (376
    )
    
    
    31,931
    
    
    
    
    
    
    
    31,555Net income
    
    $
    56,022
    
    
    $
    56,314
    
    
    $
    (56,314
    )
    
    $
    56,022
 17




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS Reorganized
Company
 Two Months EndedSeptember 30, 2003ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entries
    
    Consolidated(Dollars in thousands)Income DataNet sales
    
    $
    
    
    
    $
    159,789
    
    
    $
    
    
    
    $
    159,789Cost of products sold
    
    
    
    
    
    
    159,314
    
    
    
    
    
    
    
    159,314Depreciation and amortization expense
    
    
    
    
    
    
    3,568
    
    
    
    
    
    
    
    3,568Selling, administrative and general expense
    
    
    88
    
    
    
    8,916
    
    
    
    
    
    
    
    9,004Reorganization and professional fee expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    (88
    )
    
    
    (12,009
    )
    
    
    
    
    
    
    (12,097
    )Interest expense
    
    
    
    
    
    
    (3,891
    )
    
    
    
    
    
    
    (3,891
    )Other income including equity earnings
of affilliates
    
    
    (15,149
    )
    
    
    787
    
    
    
    15,119
    
    
    
    757Income (loss) before income taxes
    
    
    (15,237
    )
    
    
    (15,113
    )
    
    
    15,119
    
    
    
    (15,231
    )Income tax provision (benefit)
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    6Net income (loss)
    
    $
    (15,237
    )
    
    $
    (15,119
    )
    
    $
    15,119
    
    
    $
    (15,237
    )
 18




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS Predecessor Company
 One Month EndedJuly 31, 2003ConsolidatingandSubsidiary
    
    Eliminating
    
    WPCWPC
    
    Guarantors
    
    Entires
    
    Consolidated(Dollars in thousands)Income DataNet sales
    
    $
    
    
    
    $
    81,298
    
    
    $
    
    
    
    $
    81,298Cost of products sold
    
    
    
    
    
    
    76,877
    
    
    
    
    
    
    
    76,877Depreciation and amortization expense
    
    
    
    
    
    
    6,095
    
    
    
    
    
    
    
    6,095Selling, administrative and general expense
    
    
    34
    
    
    
    4,614
    
    
    
    
    
    
    
    4,648Reorganization and professional fee expense
    
    
    
    
    
    
    1,995
    
    
    
    
    
    
    
    1,995Operating income (loss)
    
    
    (34
    )
    
    
    (8,283
    )
    
    
    
    
    
    
    (8,317
    )Reorganization income (expense)Fresh start adjustments
    
    
    
    
    
    
    (152,708
    )
    
    
    
    
    
    
    (152,708
    )Gain on discharge of debt
    
    
    
    
    
    
    557,541
    
    
    
    
    
    
    
    557,541Other reorganization entries
    
    
    
    
    
    
    (4,918
    )
    
    
    
    
    
    
    (4,918
    )Interest expense
    
    
    
    
    
    
    (2,044
    )
    
    
    582
    
    
    
    (1,462
    )Other income including equity earnings
of affilliates
    
    
    390,552
    
    
    
    964
    
    
    
    (391,134
    )
    
    
    382Income (loss) before income taxes
    
    
    390,518
    
    
    
    390,552
    
    
    
    (390,552
    )
    
    
    390,518Income tax provision (benefit)
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )Net income (loss)
    
    $
    390,530
    
    
    $
    390,552
    
    
    $
    (390,552
    )
    
    $
    390,530
 Seven Months EndedJuly 31, 2003ConsolidatingandSubsidiary
    
    Eliminating
    
    WPCWPC
    
    Guarantors
    
    Entires
    
    Consolidated(Dollars in thousands)Income DataNet sales
    
    $
    
    
    
    $
    570,439
    
    
    $
    
    
    
    $
    570,439Cost of products sold
    
    
    (7,982
    )
    
    
    571,814
    
    
    
    
    
    
    
    563,832Depreciation and amortization expense
    
    
    
    
    
    
    39,889
    
    
    
    
    
    
    
    39,889Selling, administrative and general expense
    
    
    242
    
    
    
    29,664
    
    
    
    
    
    
    
    29,906Reorganization and professional fee expense
    
    
    
    
    
    
    8,140
    
    
    
    
    
    
    
    8,140Operating income (loss)
    
    
    7,740
    
    
    
    (79,068
    )
    
    
    
    
    
    
    (71,328
    )Reorganization income (expense)Fresh start adjustments
    
    
    
    
    
    
    (152,708
    )
    
    
    
    
    
    
    (152,708
    )Gain on discharge of debt
    
    
    
    
    
    
    557,541
    
    
    
    
    
    
    
    557,541Other reorganization entries
    
    
    (211
    )
    
    
    (4,547
    )
    
    
    
    
    
    
    (4,758
    )Interest expense
    
    
    
    
    
    
    (12,677
    )
    
    
    3,492
    
    
    
    (9,185
    )Other income including equity earnings
of affilliates
    
    
    319,540
    
    
    
    1,705
    
    
    
    (318,017
    )
    
    
    3,228Income (loss) before income taxes
    
    
    327,069
    
    
    
    310,246
    
    
    
    (314,525
    )
    
    
    322,790Income tax provision (benefit)
    
    
    3,638
    
    
    
    (4,279
    )
    
    
    
    
    
    
    (641
    )Net income (loss)
    
    $
    323,431
    
    
    $
    314,525
    
    
    $
    (314,525
    )
    
    $
    323,431
 19




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWSReorganized Company Nine Months EndedSeptember 30, 2004ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entries
    
    Consolidated(Dollars in thousands)Net cash
provided by operating activities
    
    $
    
    
    
    $
    27,194
    
    
    $
    
    
    
    $
    27,194Investing activities:Capital expenditures
    
    
    
    
    
    
    (93,053
    )
    
    
    
    
    
    
    (93,053
    )Construction of equipment using restricted cash
    
    
    
    
    
    
    54,920
    
    
    
    
    
    
    
    54,920Other
    
    
    (99,697
    )
    
    
    100,933
    
    
    
    
    
    
    
    1,236Net cash used in investing activities
    
    
    (99,697
    )
    
    
    62,800
    
    
    
    
    
    
    
    (36,897
    )Financing activities:Net borrowings
    
    
    
    
    
    
    (79,303
    )
    
    
    
    
    
    
    (79,303
    )Book overdraft
    
    
    
    
    
    
    (277
    )
    
    
    
    
    
    
    (277
    )Issuance of common stock
    
    
    99,697
    
    
    
    
    
    
    
    
    
    
    
    99,697Net cash provided by financing activities
    
    
    99,697
    
    
    
    (79,580
    )
    
    
    
    
    
    
    20,117Net change in cash and cash equivalents
    
    
    
    
    
    
    10,414
    
    
    
    
    
    
    
    10,414Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    4,767
    
    
    
    
    
    
    
    4,767Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    15,181
    
    
    $
    
    
    
    $
    15,181
 Two Months EndedSeptember 30, 2003ConsolidatingWPC and
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    Eliminating
    
    WPCGuarantors
    
    WPSC
    
    Entries
    
    Consolidated(Dollars in thousands)Net cash used in operating activities
    
    $
    (8
    )
    
    $
    (32,876
    )
    
    $
    
    
    
    $
    (32,884
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    (12,044
    )
    
    
    
    
    
    
    (12,044
    )Construction of equipment using restricted cash
    
    
    
    
    
    
    10,012
    
    
    
    
    
    
    
    10,012Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    
    
    
    
    (2,032
    )
    
    
    
    
    
    
    (2,032
    )Financing activities:Net borrowings
    
    
    
    
    
    
    35,534
    
    
    
    
    
    
    
    35,534Book overdraft
    
    
    
    
    
    
    1,122
    
    
    
    
    
    
    
    1,122Net cash provided by financing activities
    
    
    
    
    
    
    36,656
    
    
    
    
    
    
    
    36,656Net change in cash and cash equivalents
    
    
    (8
    )
    
    
    1,748
    
    
    
    
    
    
    
    1,740Cash and cash equivalents at beginning of period
    
    
    52
    
    
    
    7,330
    
    
    
    
    
    
    
    7,382Cash and cash equivalents at end of period
    
    $
    44
    
    
    $
    9,078
    
    
    $
    
    
    
    $
    9,122
 20




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)  CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSPredecessor Company Seven Months EndedJuly 31, 2003ConsolidatingandSubsidiary
    
    Eliminating
    
    WPCWPC
    
    Guarantors
    
    Entries
    
    Consolidated(Dollars in thousands)Net cash provided by operating activities
    
    $
    (115,882
    )
    
    $
    116,069
    
    
    $
    
    
    
    $
    187Investing activities:Capital expenditures
    
    
    
    
    
    
    (2,866
    )
    
    
    
    
    
    
    (2,866
    )Other
    
    
    (102,485
    )
    
    
    103,286
    
    
    
    
    
    
    
    801Net cash used in investing activities
    
    
    (102,485
    )
    
    
    100,420
    
    
    
    
    
    
    
    (2,065
    )Financing activities:Net borrowings
    
    
    
    
    
    
    390
    
    
    
    
    
    
    
    390Book overdraft
    
    
    
    
    
    
    327
    
    
    
    
    
    
    
    327Other
    
    
    218,382
    
    
    
    (218,382
    )
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    218,382
    
    
    
    (217,665
    )
    
    
    
    
    
    
    717Net change in cash and cash equivalents
    
    
    15
    
    
    
    (1,176
    )
    
    
    
    
    
    
    (1,161
    )Cash and cash equivalents at beginning of period
    
    
    37
    
    
    
    8,506
    
    
    
    
    
    
    
    8,543Cash and cash equivalents at end of period
    
    $
    52
    
    
    $
    7,330
    
    
    $
    
    
    
    $
    7,382
 21




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations 
 Item 2  MANAGEMENTSS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS Certain sections of Managements Discussion and Analysis relate to future
events and expectations and, as such, constitute forward-looking statements.
These statements often include words such as anticipate, believe,
estimate, expect, intend, plan, project, target, can, could,
may, should, will, would or similar expressions. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements to be different form
those expressed or implied in the forward-looking statements. For a discussion
of some of the risk factors that may cause such a difference, see Note 13 to
the Consolidated Financial Statements, the disclosures included below under
Quantitative and Qualitative Disclosures About Market Risk, and Form 10-K Part
I, Item I for the year ended December 31, 2003. OVERVIEW We produce flat rolled steel products for the construction industry, steel
service centers, converters, processors, and the container and appliance
industries. Our product offerings are focused predominately on higher
value-added finished steel products such as cold rolled products, tin and zinc
coated products and fabricated products. In addition, we produce semi-finished
steel products and hot rolled steel products, which represent the least
processed of our finished goods. An operating division of Wheeling-Pittsburgh Steel Corporation (WPSC), Wheeling
Corrugating Company manufactures our fabricated steel products for the
construction, agricultural and highway industries. WPSC also has ownership
interests in two joint ventures, Wheeling-Nisshin, Inc. and Ohio Coating
Company, that together consumed more than 30% of our steel tonnage shipped in
2003, representing 27.5% of our 2003 net sales. These joint ventures produce
value-added steel products from materials and products supplied by us. The steel industry is cyclical and highly competitive and is affected by excess
world capacity, which has restricted price increases during periods of economic
growth and led to price decreases during economic contraction. Beginning in
1998 and continuing through 2000, record high levels of foreign steel imports
as well as a general overcapacity in worldwide steel production caused a marked
deterioration of steel prices, resulting in huge losses and substantial harm to
the domestic steel industry. This record high level of foreign steel imports
over a three year period, coupled with the indebtedness we incurred as a result
of a ten-month work stoppage which ended in August 1997, and approximately $200
million of capital expenditures used to modernize our facilities to increase
quality, efficiency, safety and environmental conditions, resulted in
substantial losses and the severe erosion of our financial position and
liquidity. These losses and erosion of liquidity continued to occur
notwithstanding increases in operating efficiencies resulting from the
modernization of our facilities, various cost saving measures and the
elimination of 20% of our hourly workforce negotiated in 1997, ultimately
resulting in our filing for relief under Chapter 11 of the US Bankruptcy Code,
as described below under the heading Reorganization. Over the past nine months, several factors, including an overall increase in
the demand for steel, particularly in China and other countries, higher raw
material input costs and a continuing weak US dollar have resulted in
substantial increases in steel selling prices in the United States. The cost
to produce steel has also increased, principally due to an increase in the cost
of raw materials, in particular scrap, coal, coke and natural gas. The net
result has had a favorable impact on our operating results and those of most
other domestic steel producers. We are in the process of constructing an electric arc furnace (EAF) that will
transform our operations from an integrated producer to a hybrid producer of
steel, with characteristics of both an integrated producer and a mini-mill.
Construction of the EAF remains on schedule and is nearing completion. On
October 1, 2004, our new ladle metallurgy furnace (LMF) completed its first heat. Startup
of the LMF required major components of the EAF to be operational, including
the electrical substation, the water treatment facility and the baghouse, as
well as ladle cars. Each of these systems will be used by both the LMF and EAF. We
are expecting to produce the first heat with the EAF in November and begin
ramping-up production thereafter. 22




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations REORGANIZATON On November 16, 2000, Wheeling-Pittsburgh Corporation (WPC) and eight of its
then-existing wholly-owned subsidiaries, which represented substantially all of
our business, filed voluntary petitions for relief under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court. We
commenced the Chapter 11 proceedings in order to restructure our outstanding
debts and to improve our access to the additional funding that we needed to
continue our operations. Throughout the Chapter 11 proceedings, we remained in
possession of our properties and assets and continued to operate and manage our
businesses with the then-existing directors and officers as
debtors-in-possession subject to the supervision of the Bankruptcy Court. As part of our Chapter 11 proceedings, we filed our original Joint Plan of
Reorganization on December 20, 2002, our First Amended Joint Plan of
Reorganization on January 9, 2003, our Second Amended Joint Plan of
Reorganization on May 5, 2003 and our Third Amended Joint Plan of
Reorganization on May 19, 2003, reflecting the final negotiations with
pre-petition note holders, pre-petition trade creditors and unionized
employees. Our plan of reorganization was confirmed on June 18, 2003 and became
effective on August 1, 2003. We realized approximately $558 million in
cancellation of debt income as a result of our reorganization. The following is a summary of some of the significant transactions consummated
on or about the effective date of our plan of reorganization:  
    
    WPC amended and restated its by-laws and filed a second amended and
restated certificate of incorporation with the Delaware Secretary of
State authorizing the issuance of up to an aggregate of 80 million
shares of common stock, par value $0.01 per share, and 20 million
shares of undesignated preferred stock, par value $0.001 per share.  
    
    WPC exchanged, on a pro rata basis, $275 million in senior notes and
$75 million in term notes that existed prior to its bankruptcy filing
for an aggregate of $20 million in cash, $40 million in new Series A
secured notes issued by Wheeling-Pittsburgh Steel Corporation (WPSC),
which are collateralized by a second lien on our tangible and
intangible assets (other than our accounts receivable and inventory)
and our equity interests in our joint ventures and a third lien on our
accounts receivable and inventory, $20 million in new Series B secured
notes issued by WPSC, which are collateralized by a fifth lien on our
tangible and intangible assets, our equity interests in our joint
ventures, and our accounts receivable and inventory, and 3,410,000
shares of new common stock of WPC constituting 34.1% thereof.  
    
    WPC cancelled its then-existing senior notes and related indenture and
its then-existing term notes and the related term loan agreement.  
    
    WPC cancelled all shares of its common stock that existed prior to the
implementation of our plan of reorganization, at which point we ceased
to be a subsidiary of WHX Corporation.  
    
    WPSC entered into a new $250 million senior secured term loan
facility, which is guaranteed in part by the Emergency Steel Loan
Guarantee Board, the West Virginia Housing Development Fund, WPC and
WPSCs subsidiaries and is collateralized by a first lien on our
tangible and intangible assets (other than accounts receivable and
inventory) and our equity interests in our joint ventures and a second
lien
on our accounts receivable and inventory. We also entered into a new $225
million senior secured revolving credit facility, which is guaranteed by WPC
and WPSCs subsidiaries and is collateralized by a first lien on our accounts
receivable and inventory and a third lien on our other tangible and intangible
assets and our equity interests in our joint ventures.  
    
    All of our obligations under our $195 million
debtor-in-possession credit facility were satisfied
in full and discharged.
    
    WPC and WPSC entered into an agreement with WHX
Corporation providing for, among other things, a $10
million capital contribution by WHX Corporation, the
capitalization of approximately $40 million in debt 23




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations  owed by us to WHX Corporation, a $10 million unsecured loan from WHX
Corporation and an agreement with respect to our separation from WHX
Corporations employee pension plan.  
    
    WPC and WPSC entered into an agreement with our unionized employees
represented by the United Steelworkers of America (USWA) which
modified our existing labor agreement to provide for, among other
things, future pension arrangements with the United Steelworkers of
America and reductions in our employee-related costs.  
    
    WPC issued 4,000,000 shares of its new common stock constituting 40%
thereof for the benefit of the USWA retirees in satisfaction of
certain claims under our labor agreement and an additional 1,000,000
shares of its new common stock constituting 10% thereof to or for the
benefit of our salaried employees.  
    
    WPC issued 1,590,000 shares of its new common stock constituting 15.9%
thereof to certain of our creditors in satisfaction of various
unsecured claims, including claims relating to trade debt. There are still several matters pending in the Bankruptcy Court, including the
resolution of disputed unsecured and administrative claims and certain
preference actions and other litigation where we are seeking to recover monies.
As of September 30, 2004, approximately 59,456 shares of common stock issued
pursuant to the plan of reorganization were reserved for distribution to
creditors pending resolution of certain disputed claims. If those claims are
ultimately allowed in whole or in part by the Bankruptcy Court, the appropriate
amount of stock will be distributed to those claimants; if the claims are
disallowed, the stock will be distributed to other creditors of the same class,
pro rata. To the extent that certain administrative and secured claims are
allowed by the Bankruptcy Court, those claims will be paid in cash, in an
amount which we expect will not exceed $100,000 and for which there are
sufficient reserves held by the distribution agent. If and to the extent those
claims are allowed as pre-petition unsecured claims, then those creditors will
receive stock, which has been reserved as described above. In addition, we are
the plaintiffs in a number of preference actions, where we are seeking to
recover monies from creditors. We do not believe that any of these remaining
bankruptcy proceedings, individually or in the aggregate, will have a material
effect on us. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with accounting
principles generally accepted in the US requires management to make judgments,
estimates and assumptions that affect reported amounts of assets and
liabilities at the balance sheet date and the reported revenues and expenses
for the period. Our judgments and estimates are based on both historical
experience and our expectations for the future. As a result, actual results may
differ materially from current expectations. We believe that the following are the more significant judgments and estimates
used in the preparation of the financial statements. Fresh start reporting In accordance with SOP 90-7, effective as of July 31, 2003, we adopted Fresh
Start Reporting for our reorganized company and recorded assets and
liabilities at their fair values. Enterprise value was estimated using
discounted cash flow methodologies and analysis of comparable steel companies. Other postemployment benefits (OPEB) The traditional medical and life insurance benefits that were provided to past
retirees were terminated effective October 1, 2003. Pursuant to our labor
agreement, which we entered into in connection with our plan of reorganization,
past retirees will receive medical and life insurance benefits under a VEBA
trust. Future retirees under the new labor agreement will be covered by a
medical and life insurance program similar to that of active employees. All
retirees and their surviving spouses shall be required to make monthly
contributions for medical and prescription drug coverage, which, in the case of
those covered under the VEBA trust, are made directly to the trust. 24




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations Because these benefits provided by us will be paid in the future over what
could be many years, we estimate the accrued liability at each year-end balance
sheet date using actuarial methods. The two most significant assumptions used
in determining the liability are the projected medical cost trend rate and the
discount rate. We estimate the escalation trend in medical costs based on historical rate
experience in our plans and through consultation with health care specialists.
We have assumed an initial escalation rate of 8.25% in 2003. This rate is
assumed to decrease gradually to an ultimate rate of 4.75% in 2008 and remain
at that level for all future years. The health care cost trend rate assumption
has a significant effect on the costs and obligation reported. A 1% increase in
the health care cost trend rate would result in an increase in the accumulated
postretirement benefit obligation of approximately $19.2 million. A 1% decrease
in the health care cost trend rate would result in a decrease in the
accumulated postretirement benefit obligation of approximately $16.7 million.
A 1% increase in the health care costs trend rate would result in an increase
in post-retirement benefit expenses of approximately $1.8 million. A 1%
decrease in the health care cost trend rate would result in a decrease in
post-retirement benefit expenses of approximately $1.5 million. The discount rate applied to our OPEB obligations is based on high quality bond
rates and the expected payout period of our OPEB obligations. The discount rate
used to measure our OPEB obligation at December 31, 2003 was 6.0%. A 1%
increase in the discount rate would result in a decrease in the accumulated
postretirement benefit obligation of approximately $16.8 million. A 1% decrease
in the discount rate would result in an increase in the accumulated
postretirement benefit obligation of approximately $20.5 million. A 1%
decrease in the discount rate would result in an increase in post-retirement
benefit expenses of approximately $2.0 million. A 1% increase in the discount
rate would result in a decrease in post-retirement benefit expenses of
approximately $1.5 million. Asset impairments We periodically evaluate property, plant and equipment for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. Asset impairments are recognized when the carrying value of
productive assets exceeds the net projected undiscounted cash flows from those
assets. Given our integrated operations, asset impairment evaluations are
generally done on a group basis. Undiscounted cash flows are based on
longer-term projections that consider projected market conditions and the
performance and ultimate use of the assets. If future demand and market
conditions are less favorable than those projected by management, or if the
probability of disposition of the assets differs from that previously estimated
by management, asset impairments may be required. The fair values as of August
1, 2003 used for fresh start reporting and the subsequent depreciation rates
reflected our intention to idle one of our blast furnaces. Deferred taxes Full realization of net deferred tax assets is dependent on our ability to
generate future taxable income and maintain substantially our existing
ownership. An ownership change, as defined in Section 382 of the Internal
Revenue Code of 1986, could impose annual limits, or completely eliminate net
operating loss carryovers. We record a valuation allowance to reduce deferred
tax assets to an amount that is more likely than not to be realized. During
2000, our company recorded a full valuation allowance against our net deferred
tax assets due to the uncertainties surrounding realization as a result of the
bankruptcy proceedings. Deferred tax assets that have arisen since that time,
which principally consist of net operating losses, have also been fully
reserved. However, as our operations continue, we will be required to
periodically reevaluate the tax treatment of these deferred tax assets in light
of actual operating results. Environmental and legal contingencies We provide for remediation costs, environmental penalties and legal
contingencies when the liability is probable and the amount of the associated
costs is reasonably determinable. We regularly monitor the progress of
environmental remediation and legal contingencies, and revise the amounts
recorded in the period in which changes in estimate occur. Conclusions
regarding exposure are developed in consultation with legal and environmental
counsel. 25




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations RESULTS OF OPERATIONS The consolidated financial statements from and after the effective date of our
plan of reorganization, August 1, 2003, are those of a new reporting entity
(the Reorganized Company) and are not comparable to the pre-confirmation
periods of the old reporting entity (the Predecessor Company). Quarter ended September 30, 2004  Reorganized Company Net sales for the quarter ended September 30, 2004 totaled $401.8 million on
shipments of steel products totaling 535,575 tons. Steel prices averaged $750
per ton for the quarter, which included an average of $98 per ton relating to
surcharges. Steel prices increased 16% over the prior quarter, of which 3%
related to surcharge increases. Steel prices were up, in general, due to
continuing strong global demand for steel and a general improvement in economic
conditions in the United States. The average steel price per ton reflects a
mix that includes 73.5% value-added products. Cost of goods sold totaled $321.5 million for the quarter. Cost of goods sold
averaged $600 per ton shipped for the quarter. Cost of goods sold increased by
$28.7 million over the second quarter. The increase in cost of goods sold as
compared to the second quarter was principally due to higher raw material
costs of $13.7 million, higher operating costs of $15.4 million
and higher VEBA and profit
sharing costs of $3.8 million, offset by slightly lower volume and mix of $4.5 million.
Raw material costs were impacted by higher freight costs due to the closure of a lock on the Ohio
River in August 2004. Operating costs were impacted by costs associated with preparing for the planned hot
strip mill outage and costs related to measures taken to mitigate the effects of flooding on the Ohio River in September 2004.
VEBA expense was reduced by a non-recurring $5.0 million item resulting from an
agreement with the USWA authorizing the VEBA trust to sell certain shares of
our common stock, with proceeds from the sale in excess of a pre-determined
amount reducing current VEBA expense. The raw steel production operating rate
during the quarter was 93.2% as compared to 97.9% for the second quarter for
the reasons noted above. Depreciation and amortization expense totaled $7.8 million for the quarter on
average fixed assets of $474.1 million. Fixed assets were recorded at fair
value as part of the reorganization. Selling, administrative and general expense totaled $17.7 million for the
quarter. Interest expense totaled $4.4 million for the quarter. Long-term debt averaged
$343.9 million during the quarter and borrowings under the revolving credit
facility ranged from $0 to $102.6 million during the quarter. Interest expense
also includes amortization of capitalized finance costs. Other income totaled $4.9 million for the quarter, principally reflecting
equity earnings from joint ventures. Net income for the quarter ended September 30, 2004 totaled $35.6 million, or
$3.53 earnings per basic share and $3.42 earnings per diluted share. Nine months ended September 30, 2004  Reorganized Company Net sales for the nine months ended September 30, 2004 totaled $1,032.1 million
on shipments of steel products totaling 1,622,750 tons. Steel prices averaged
$636 per ton during the period, which included an average of $71 per ton
relating to surcharges. Steel prices increased 45% over average steel prices
for the fourth quarter of 2003,
of which 16% related to surcharge increases. The average steel price per ton
reflects a mix that includes 73.3% value-added products. Cost of goods sold totaled $870.4 million for the period. Cost of goods sold
averaged $536 per ton shipped, an increase of 23% over costs incurred in the
fourth quarter of 2003. The increase in cost of goods sold is principally due
to higher raw material costs, higher maintenance costs and higher VEBA and
profit sharing costs. Cost of goods sold was reduced by $2.8 million during
the period resulting from the settlement of pre-petition insurance litigation 26




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations and by a $5.0 million non-recurring VEBA expense reduction item. The raw steel
production operating rate during the period was 94.4%. Depreciation and amortization expense totaled $23.0 million for the period on
average fixed assets of $442.0 million. Fixed assets were recorded at fair
value as part of the reorganization. Selling, administrative and general expense totaled $49.0 million for the
period. Interest expense totaled $14.7 million for the period. Long-term debt averaged
$343.0 million during the period and borrowings under the revolving credit
facility ranged from $0 to $102.6 million. Interest expense also includes
amortization of capitalized finance costs. Other income totaled $12.5 million for the period, principally reflecting
equity earnings of joint ventures. Net income for the nine months ended September 30, 2004 totaled $56.0 million,
or $5.78 earnings per basic share and $5.63 earnings per diluted share. Two months ended September 30, 2003  Reorganized Company Net sales for the two months ended September 30, 2003 totaled $159.8 million on
shipments of steel products totaling 370,726 tons. Steel prices averaged $431
per ton. The average steel price per ton reflects a mix that includes 71.8%
valued-added products. Cost of goods sold totaled $159.3 million for the period. Cost of goods sold
averaged $430 per ton shipped. The raw steel production operating rate during
the period was 98.9%. Depreciation expense totaled $3.6 million for the period on average fixed
assets of $362.9 million. Fixed assets were recorded at fair value as part of
the reorganization. Selling, administrative and general expense totaled $9.0 million for the
period. Interest expense totaled $3.9 million for the period. Long-term debt averaged
$343.2 million during the period and the revolving credit facility ranged from
$50.7 million to $92.6 million. Interest expense also includes amortization of
capitalized finance costs. Other income totaled $0.8 million for the period, principally reflecting equity
earnings of joint ventures. Net loss for the two months ended September 30, 2003 totaled $15.2 million.
Prior to reorganization, we were a wholly-owned subsidiary of WHX Corporation. One month ended July 31, 2003  Predecessor Company Net sales for the month ended July 31, 2003 totaled $81.3 million on shipments
of steel products totaling 188,546 tons. Steel prices averaged $431 per ton.
The average steel price per ton reflects a mix that includes 73.4% value-added
products. Cost of goods sold totaled $76.9 million for the period. Cost of goods sold
averaged $408 per ton shipped. The raw steel production operating rate during
the period was 100.3%. Depreciation expense totaled $6.1 million for the period on average fixed
assets, before revaluation, of $1,248.9 million. Selling, administrative and general expense totaled $4.6 million. 27




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations Reorganization and professional fees related to the bankruptcy totaled $2.0
million. Non-recurring gains totaled $399.9 million for the one month ended
July 31, 2003 as a result of our emergence from bankruptcy as of August 1,
2003. The $557.5 million gain on discharge of debt reflected pre-petition
liabilities in excess of distributions made pursuant to our plan or
reorganization. The $152.7 million fair value adjustment primarily reflected
the revaluation of fixed assets. Other reorganization entries amounted to a
loss of $4.9 million. Interest expense totaled $1.5 million for the period, which primarily reflected
interest on the revolving credit facility. Other income totaled $3.2 million for the period, principally equity earnings
of joint ventures. Net income for the month ended July 31, 2003 totaled $390.5 million. Seven months ended July 31, 2003  Predecessor Company Net sales for the seven-month period ended July 31, 2003 totaled $570.4 million
on shipments of steel products totaling 1,305,046 tons. Steel prices averaged
$437 per ton. The average steel price per ton reflects a mix that includes
71.2% value-added products. Cost of goods sold for the seven-month period totaled $563.8 million. Cost
of goods sold average $432 per ton shipped. The raw steel production operating
rate during the seven-month period was 93.7% of capacity. Depreciation expense for the seven-month period totaled $39.9 million on
average fixed assets, before revaluation, of $1,248.3 million. Selling, administrative and general expense for the seven-month period totaled
$29.9 million. Reorganization and professional fee expense totaled $8.1 million for the
seven-month period. Non-recurring gains totaled $400.1 million for the
seven-month period as a result of the Companys emergence from bankruptcy as of
July 31, 2003. The $557.5 million gain on discharge of debt reflects
pre-petition liabilities in excess of distributions made pursuant to our plan
or reorganization. The $152.7 million fair value adjustment primarily reflects
the revaluation of fixed assets. Other reorganization entries amounted to a
loss of $4.7 million. Interest expense for the seven-month period totaled $9.2 million, which
primarily reflected interest on the revolving credit facility. Net income for the seven-month period ended July 31, 2003 totaled $323.4
million. LIQUIDITY AND CAPITAL RESOURCES Since our emergence from Chapter 11 bankruptcy proceedings, our primary sources
of liquidity have been term loans under our $250 million senior secured term
loan facility, revolving credit loans under our $225 million senior secured
revolving credit facility, and a $10 million unsecured loan from WHX
Corporation, which was subsequently sold by WHX to a third party. We used
approximately $199.7 million of the proceeds of the foregoing debt financings
to pay our obligations under our plan of reorganization, including paying off
our debtor-in-possession credit facility and paying other cash claims under our
plan of reorganization. Our revolving credit agreement facility requires us to maintain borrowing
availability of at least $50 million through December 31, 2004. After December
31, 2004, we will be required to maintain borrowing
availability of at least $25 million under the facility. Under the terms of our
amended term loan agreement, we are also limited to a maximum of $150 million
in borrowings, including outstanding letters of credit, under our revolving
credit facility. On September 21, 2004, pursuant to a public offering, we sold 3,719,898 shares
of common stock at $29 per share, generating gross sales proceeds of $107.9
million. These proceeds, net of issuance costs of $8.2 million, were used 28




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations to repay $92.7 million due under our revolving credit facility and to fund a
restricted cash account in the amount of $7.0 million to be used to fund future
capital expenditures. As of September 30, 2004, we had the following amounts available for our
working capital and planned capital expenditures: cash and cash equivalents of
$15.2 million; $32.2 million of restricted cash for construction of the
electric arc furnace and for other capital expenditures; and $137.4 million of
availability under our revolving credit facility, after giving effect to
required reserves, outstanding letters of credit and the $150 million maximum
availability limitation under the facility, as discussed more fully below. For the nine months ended September 30, 2004, we generated cash flow from
operating activities of $27.2 million. Considering our liquidity position as
of September 30, 2004 noted above and provided that business conditions do not
deteriorate significantly, we anticipate being able to maintain $50 million of
required availability under our revolving credit agreement and to fund our debt
service obligations and other contractual obligations without the need for
additional financing. The following table summarizes the categories of collateral that we have
pledged to secure our current debt obligations and the ranking of our debt
obligations with respect to all of the security interests that we have granted
to date: Collateral TypeTangible and intangibleassets andjoint venture equity
    
    Accounts receivable andinterest
    
    inventoryDebt obligation
Secured by First Security Interest
    
    $250 Million Term Loan
    
    $225 Million Revolving
Credit FacilityDebt obligation
Secured by Second
Security Interest
    
    $40 Million Series A Notes
    
    $250 Million Term LoanDebt obligation
Secured by Third
Security Interest
    
    $225 Million
Revolving Credit Facility
    
    $40 million Series A
Notes FacilityDebt obligation
Secured by Fourth
Security Interest
    
    Deferred payment
obligations in respect of
iron ore sales agreement
with Itabira Rio Doce
    
    Deferred payment
obligations in respect of
iron ore sales agreement
with Itabira Rio DoceDebt obligation
Secured by Fifth
Security Interest
    
    $20 Million Series B Notes
    
    $20 Million Series B Notes
 In the event that we are unable to satisfy our payment and other obligations
under our secured debt, the lenders of our secured debt have various rights and
remedies, including the right to force the sale of our assets and to apply the
proceeds thereof to repay amounts owed by us. If such a foreclosure were to
occur, then we may be unable to maintain our operations, our business,
financial condition and results of operations could materially suffer and our
shareholders may lose all or part of their investment. A summary description
of these obligations follows: 29




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations $250 million term loan agreement In connection with our plan of reorganization, WPSC entered into a $250 million
senior secured term loan agreement due August 1, 2014 with a bank group led by
Royal Bank of Canada as administrative agent, which is guaranteed in part by
the Emergency Steel Loan Guarantee Board, or the Steel Board, and the West
Virginia Housing Development Fund as described below. However, if the agent
for the term loan lenders is unable or unwilling, in its sole discretion, to
reoffer certain tranches of the term loan as of November 1, 2008, the maturity
date for each tranche of the term loan will be November 1, 2008. The agent is
required to provide us notice on or before May 1, 2008 as to whether it will
undertake to reoffer certain tranches of the term loan. If the agent does not
reoffer such tranches, we must pay the agent an amount equal to all outstanding
amounts under the term loan agreement on August 1, 2008. Interest on
borrowings is calculated based on either LIBOR or the prime rate using varying
spreads as defined for each of the three tranches in the agreement. The
blended rate of interest was approximately 2.8% at September 30, 2004. The term
loan is to be repaid beginning in the fourth quarter of 2004 in quarterly
installments of $6.25 million with a final payment to the agent of $150 million
due on August 1, 2008 if such loan is not reoffered. Under the original terms of our term loan agreement, we were required to prepay
an amount equal to 50% of the net cash proceeds (as defined in the term loan
agreement) from any issuance or sale of our capital stock and to apply such net
cash proceeds to remaining installments in inverse order of maturity. In June
2004, we entered into an amendment and waiver to our term loan agreement to
eliminate these prepayment requirements with respect to any issuance or sale of
our capital stock on or before January 31, 2005. Specifically, the amendment
and waiver provided that the net cash proceeds from the sale of our common
stock in any offering on or before January 31, 2005 will be applied first to
repay any outstanding principal borrowing under our revolving credit facility
without reducing the commitment amount (excluding any letters of credit then
outstanding), second, to the extent of any excess, to fund up to $35 million in
capital expenditures and third, to the extent of any then-remaining excess, to
repay principal amounts outstanding under our term loan agreement, with such
repayments applied pro rata across all three term loan tranches and pro rata
against each scheduled maturity within each tranche. All proceeds up to $35
million that are allocated for capital expenditures will be held in a
segregated cash account. Additionally, the terms of the amendment and waiver
exclude from our restrictive covenants applicable to capital expenditures up to
$85 million relating to future capital improvement needs for our No. 8 coke
battery. The $85 million for the No. 8 coke battery and up to $35 million to
be held in the segregated cash account for capital expenditures are also
excluded from the computation of our consolidated fixed charge coverage ratio.
The amendment and waiver also limits us from having borrowings, including
outstanding letters of credit, in excess of $150 million under our revolving
credit facility. The amendment and waiver also provides for a 75 basis point
reduction in the interest rate spread for the loans in which the interest rate
is based upon the prime rate and a 120 basis point reduction in the interest
rate spread for the loans in which the interest rate is based upon the LIBOR
rate with respect to tranche B of the term loan, under which $209.2 million in
principal amount is outstanding. On September 21, 2004, we sold 3,719,898
shares of common stock at $29 per share, generating gross sales proceeds of
$107.9 million. These proceeds, net of issuance costs of $8.2 million, were
used to repay $92.7 million due under our revolving credit facility and to fund
a restricted cash account in the amount of $7.0 million to be used to fund
future capital expenditures. Pursuant to the provisions of our term loan agreement, we are subject to, and
are currently in material compliance with, various covenants, including
compliance with the terms and conditions of the guarantee of the Steel Board
and the related guarantee of the West Virginia Housing Development Fund,
limitations on indebtedness, guaranty obligations, liens, sale of subsidiary
stock, dividends, distributions and investments. Our term loan agreement also specifies certain financial covenants, including a
maximum leverage ratio, minimum interest coverage ratio and minimum fixed
charge coverage ratio with which we must comply commencing with the first
quarter of 2005. These financial covenants do not apply prior to that date as
long as we maintain minimum availability under our revolving credit facility of
at least $50 million through December 31, 2004. Whether we will be able to
meet such covenants will substantially depend on our performance and the market
conditions in the steel industry at the time we are required to comply with
such covenants. 30




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations Our term loan agreement also limits our ability to incur certain capital
expenditures, including obligations under capital leases and capitalized
repairs and replacements. Under our term loan agreement, we are permitted to
incur capital expenditures with respect to certain specified projects up to
specified maximum amounts, including the electric arc furnace, an automatic
roll changer system at our Mingo Junction facility, and Allenport cold mill
improvements. In addition, the amendment and waiver permits us to incur
capital expenditures with respect to the rebuild of the No. 8 coke battery in
an amount not to exceed $85 million. We are further permitted to incur
additional expenses for capital improvements for other projects in amounts not
to exceed in the aggregate specified maximums for each calendar year, ranging
from $33.9 million to $44 million. $225 million revolving credit facility In connection with our plan of reorganization, WPSC entered into a three-year
$225 million senior secured revolving credit facility with a bank group
arranged by Royal Bank of Canada and General Electric Capital Corporation.
Interest on borrowings is calculated based on either LIBOR or the prime rate
using spreads based on facility borrowing availability as defined in the
agreement. The facility matures on August 1, 2006. The blended rate of
interest was approximately 4.7% at September 30, 2004. At September 30, 2004,
we had no borrowings under the revolving credit facility and had $137.4 million
of availability, after giving effect to required reserves, outstanding letters
of credit and the a $150 million maximum availability limitation under the
facility. We are subject to, and are currently in compliance with, various
covenants set forth in the revolving credit agreement, which are substantially
similar to those contained in the term loan agreement, as amended, as described
above. Under the terms of our amended term loan agreement, we are limited to a
maximum of $150 million in borrowings, including outstanding letters of credit,
under our revolving credit facility. Similar to the term loan agreement, we negotiated an amendment to our revolving
credit facility. Under the amendment, all proceeds up to $35 million that are
allocated for capital expenditures will be held in a segregated cash account.
The amendment also permits us to incur an additional $85 million in capital
expenditures toward the rebuild of the No. 8 coke battery. Of the $85 million
available for the No. 8 coke battery, only $18 million may be expended prior to
January 1, 2006. The $85 million for the No. 8 coke battery and up to $35
million to be held in a segregated cash account for capital expenditures are
also excluded from the computation of our consolidated fixed charge coverage
ratio. On September 21, 2004, we sold 3,719,898 shares of common stock at $29
per share, generating gross sales proceeds of $107.9 million. These proceeds,
net of issuance costs of $8.2 million, were used to repay $92.7 million due
under our revolving credit facility and to fund a restricted cash account in
the amount of $7.0 million to be used to fund future capital expenditures. $40 million Series A notes On August 1, 2003, pursuant to our plan of reorganization, WPSC issued Series A
secured notes in the aggregate principal amount of $40 million in settlement of
claims under our bankruptcy proceedings. The Series A notes were issued under
an indenture among WPSC, WPC, WP Steel Venture Corporation and Bank One, N.A.,
as trustee. The Series A notes mature on August 1, 2011 and have no fixed
amortization, meaning that except for mandatory prepayments, based on excess
cash flow or proceeds of the sale of joint venture interests, no payment of
principal shall be required until such notes become due. The Series A notes
bear interest at a rate of 5% per annum until
July 1, 2008. Thereafter, such notes bear interest at a rate of 8% per annum.
In the event that at any time the distributions from Wheeling-Nisshin, Inc. and
Ohio Coatings Company (OCC) to WPSC are not adequate to pay all the interest
then due under the Series A notes or WPSC is not in compliance with the terms
of the term loan agreement or revolving credit facility, WPSC must pay both
cash interest and payment-in-kind interest at rates set forth in the Series A
notes. OCC is restricted from declaring dividends under the terms of its
credit agreement with Bank of America, N.A. However, OCC is permitted to make
distributions of interest and principal in respect of its indebtedness to WPC,
subject to certain limitation set forth in its credit agreement and its
subordination agreement. We are subject to, and are currently in compliance
with, various covenants set forth in the Series A note indenture, including
payment of principal and interest on the Series A notes, and limitations on
additional indebtedness, creation of liens, disposition of interests in
Wheeling-Nisshin, Inc. or OCC, and payments of dividends and distributions. 31




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations $20 million Series B notes On August 1, 2003, pursuant to our plan of reorganization, WPSC issued Series B
secured notes in the aggregate principal amount of $20 million in settlement of
claims under our bankruptcy proceedings. The Series B notes were issued under
an indenture among WPSC, WPC, WP Steel Venture Corporation and Bank One, N.A.,
as trustee. The Series B notes mature on August 1, 2010 and have no fixed
amortization, meaning that no payment of principal shall be required until such
notes become due. The Series B notes bear interest at a rate of 6% per annum to
the extent interest is paid in cash. In the event that WPSC is not in
compliance with the terms of the term loan agreement, the revolving credit
facility or the Series A notes or WPSCs excess cash flow (as defined in the
Series B indenture) is insufficient to cover any or all interest payments then
due under the Series B notes, WPSC must pay both cash interest and
payment-in-kind interest at rates set forth in the Series B notes. We are
subject to, and are currently in compliance with, various covenants under the
Series B note indenture, which are substantially similar to many of those
contained in the Series A note indenture. $10 million unsecured note On August 1, 2003, pursuant to our plan of reorganization, WPSC issued an
unsecured note in the aggregate principal amount of $10 million to WHX
Corporation, referred to as the WHX note. The WHX note matures in 2011 and has
no fixed amortization, meaning that no payment of principal shall be required
until such note becomes due. The WHX note bears interest at a rate of 6% per
annum. If cash interest is not paid, WPSC must pay payment-in-kind interest.
Such note is subordinated in right of payment to our credit agreements, the
Series A notes and the Series B notes. In July 2004, the WHX note was sold by
WHX to a third party. OFF-BALANCE SHEET ARRANGEMENTS As of September 30, 2004, we had no off-balance sheet transactions,
arrangements, or other relationships with unconsolidated entities or persons
that are reasonably likely to adversely affect liquidity, availability of
capital resources, financial position or results of operations. We have
investments in three joint ventures, Wheeling-Nisshin, Inc. and OCC and
Feralloy-Wheeling Specialty Processing Co., that are each accounted for under
the equity method of accounting. Pursuant to agreements with Wheeling-Nisshin,
Inc. and OCC and we have an obligation to support their working capital
requirements. However, we believe it is unlikely that those joint ventures will
require our working capital support in the foreseeable future based upon the
present financial condition, capital resource needs and/or operations of these
entities. CERTAIN OTHER OBLIGATIONS In connection with the implementation of our plan of reorganization, we reached
agreements with various parties to defer payments of indebtedness and reduce
costs in order to preserve liquidity upon emergence from bankruptcy. These
agreements include:  (1)
    
    Modification and assumption agreement between WPSC and Danieli
Corporation. This agreement modifies an agreement between WPSC and Danieli
Corporation, dated July 6, 2000, pursuant to which WPSC agreed to purchase
from Danieli Corporation certain roll-changing equipment. Under the
original agreement, WPSC owed approximately $7.36 million to Danieli
Corporation. Pursuant to the modified agreement, WPSC paid Danieli
Corporation approximately $2.36 million. Approximately $3.8 million of the
balance of the amount owed to Danieli Corporation was converted into a
portion of the secured term loans under our term loan agreement that is
not guaranteed by the Steel Board. The balance of the amount owed to
Danieli Corporation was converted into a promissory note. In addition,
WPSC agreed to pay Danieli Corporation approximately $2.58 million (of
which approximately $96,000 has been paid and the balance of which is to
be paid in progress payments as work on the automatic roll changers
project is completed, expected in 2005) to complete the roll-changing
project and for rehabilitation, storage and other costs of Danieli
Corporation. 32




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations  (2)
    
    Loan modification agreement between WPSC and the Ohio Department of
Development. Under this agreement, we made a $2.0 million partial
prepayment of the $6.985 million owed by WPSC to the Ohio Department of
Development pursuant to a loan, dated as of January 18, 2002, from the
Ohio Department of Development and we were granted a two-year deferral
from the effective date of the plan of reorganization of $4.985 million of
such loan at an interest rate of 3% per annum.(3)
    
    Loan agreement between WPSC and the State of West Virginia. In connection
with WPSCs repayment of a $5 million loan from the West Virginia
Development Office, WPSC has entered into a $6.5 million loan agreement
with the State of West Virginia. The loan has a five-year term due August
1, 2008, and bears interest at a rate of approximately 4.564% per annum.(4)
    
    Agreement among WPSC, Itabira Rio Doce Company, Ltd. and Rio Doce
Limited. This agreement provides for repayment, in equal monthly
installments over a period not to exceed eighteen months from May 1, 2003,
of WPSCs $5.1 million deferred payment obligation under a certain iron
ore sales agreement dated October 1, 2001. As of September 30, 2004, $0.3
million remained outstanding under this obligation. In addition, we have ongoing obligations under our labor agreement with the
USWA. Effective May 31, 2004, USWA wage rates increased by approximately 5.8%.
In addition, a 12% temporary wage reduction that had been in effect since May
2003 was eliminated. We also increased wages for our salaried employees by 5%
effective June 1, 2004. All of the obligations referenced in this section,
except for the increase in wage rates, are included in the table of contractual
commitments set forth below. CONTRACTURAL COMMITMENTS As of September 30, 2004, the total of our future contractual obligations,
including the repayment of debt obligations, is summarized below. Contractual Payments Due 2004 (fromTotal
    
    
    
    
    
    September 30)
    
    
    
    
    
    2005 to 2006
    
    
    
    
    
    2007 to 2008
    
    
    
    
    
    Thereafter(Dollars in millions)Long-Term Debt (1)
    
    
    407.2
    
    
    
    
    
    
    $
    16.1
    
    
    
    (2
    )
    
    $
    86.6
    
    
    
    (3
    )
    
    $
    220.0
    
    
    
    (4
    )
    
    $
    84.5
    
    (5
    )Capital Leases
    
    
    10.0
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    5.5Operating Leases:Long Term
    
    
    9.3
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    3.5
    
    
    
    
    
    
    
    3.6
    
    
    
    
    
    
    
    1.8Month to Month
    
    
    44.7
    
    
    
    
    
    
    
    2.1
    
    
    
    
    
    
    
    17.0
    
    
    
    
    
    
    
    17.0
    
    
    
    
    
    
    
    8.6Other Long Term Liabilities:OPEB
    
    
    100.2
    
    (6
    )
    
    
    
    
    1.4
    
    
    
    
    
    
    
    7.6
    
    
    
    
    
    
    
    9.4
    
    
    
    
    
    
    
    Severance
    
    
    17.1
    
    (7
    )
    
    
    
    
    2.6
    
    
    
    
    
    
    
    11.7
    
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    0.5Coal Miner Retiree Medical
    
    
    2.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    2.1Workers Compensation
    
    
    20.2
    
    (8
    )
    
    
    
    
    1.3
    
    
    
    
    
    
    
    10.1
    
    
    
    
    
    
    
    8.8
    
    
    
    
    
    
    
    Purchase Commitments:Oxygen Supply
    
    
    73.2
    
    (9
    )
    
    
    
    
    1.8
    
    
    
    
    
    
    
    14.4
    
    
    
    
    
    
    
    14.4
    
    
    
    
    
    
    
    42.6Electricity
    
    
    116.3
    
    (10
    )
    
    
    
    
    2.3
    
    
    
    
    
    
    
    19.6
    
    
    
    
    
    
    
    22.1
    
    
    
    
    
    
    
    72.3Coal
    
    
    64.2
    
    (11
    )
    
    
    
    
    4.8
    
    
    
    
    
    
    
    39.6
    
    
    
    
    
    
    
    19.8
    
    
    
    
    
    
    
    Other
    
    
    0.3
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital Commitments
    
    
    19.2
    
    (12
    )
    
    
    
    
    16.8
    
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    884.8
    
    
    
    
    
    
    $
    50.2
    
    
    
    
    
    
    $
    215.3
    
    
    
    
    
    
    $
    319.6
    
    
    
    
    
    
    $
    217.9
  (1)
    
    The interest rate associated with the term loan is a floating rate.
Interest payment projections in respect of the term loan assume that the
interest rate for 2004 will be 4% per annum and will increase by 0.5% each year thereafter. 33




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIESManagements Discussion and Analysis of Financial Condition and Results of
Operations  (2)
    
    Includes interest payment obligations for the remainder of 2004 of
approximately: $2.5 million in respect of the term loan; $0.8 million in
respect of the Series A notes and the Series B notes; $153,000 in respect
of the WHX note; no interest payments are due on the loan agreement with
the State of West Virginia; $37,500 in respect of the loan modification
agreement with the Ohio Department of Development; and $22,500 in respect
of the modification and assumption agreement with Danieli Corporation.  (3)
    
    Includes aggregate interest payment obligations for years 2005 and 2006
of approximately: $21.0 million in respect of the term loan; $6.5 million
in respect of the Series A notes and the Series B notes; $1.2 million in
respect of the WHX note; $611,000 in respect of the loan agreement with
the State of West Virginia; $100,000 in respect of the loan modification
agreement with the Ohio Department of Development; $107,000 in respect of
the modification and assumption agreement with Danieli Corporation; and
$283,000 in respect of a 5-year, $3.0 million loan agreement with Junction
Industries which bears interest at 7% per annum.  (4)
    
    Includes aggregate interest payment obligations for years 2007 and 2008
of approximately: $15.9 million in respect of the term loan; $7.0 million
in respect of the Series A notes and the Series B notes; $1.2 million in
respect of the WHX note; $611,000 in respect of the loan agreement with
the State of West Virginia; $5,000 in respect of the modification and
assumption agreement with Danieli Corporation; and $113,000 in respect of
a 5-year loan agreement with Junction Industries.  (5)
    
    Includes aggregate interest payment obligations of approximately: $10.5
million in respect of the Series A notes and the Series B notes; and $1.6
million in respect of the WHX not and $19,000 in respect of a 5-year loan
agreement with Junction Industries.  (6)
    
    Represents the estimated present value of our liability as of September
30, 2004. Amounts included for 2004 through 2008 reflect our current
estimate of corporate cash outflows and include the impact of assumed
mortality, medical inflation and the aging of the population. No estimate
has been made beyond 2008.  (7)
    
    Amount represents payments under buyout program. 650 Bargaining
employees elected buyouts that extend through 2010.  (8)
    
    Amount represents the present value of our liability as of September 30,
2004. Amounts included for 2004 through 2008 and thereafter reflect our
current estimate of corporate cash outflows and exclude the impact of
interest and mortality. The forecast of cash outflows is estimated based
on historical cash payment information and anticipates payment of
approximately $5.1 million per year.  (9)
    
    We entered into a 15-year take-or-pay contract in 1999 that was amended
in 2003. The contract requires us to purchase oxygen, nitrogen and argon
each month with a minimum monthly charge of approximately $0.6 million,
subject to escalation clauses. Payments for deliveries of oxygen totaled
$9.3 million in 2003, $7.0 million in 2002 and $7.5 million in 2001.  (10)
    
    We entered into a 20-year take-or-pay contract in 1999, which was amended
in 2003. The contract requires us to purchase steam and electricity each
month or pay a minimum monthly charge of approximately $0.4 million. A
variable portion of the contract is calculated as $3.75 times the number
of tons of iron produced each month with an agreed to minimum of 3,000
tons per day. Payments for deliveries of steam and electricity totaled
$8.8 million in 2003, $13.8 million in 2002 and $14.6 million in 2001. If
the Company elects to terminate the contract early, a maximum termination
payment of $37.0 million would be required.  (11)
    
    In 2004,we amended its take-or-pay contract to purchase coal each month
to a minimum monthly charge of approximately $1.6 million. The term of the
contract expires on December 31, 2007, while the Company has the sole
option to terminate the contract on or after January 1, 2006. After such
date, the pricing will be subject to market
conditions with a collar. Payments for deliveries of coal totaled $11.8
million in 2003, $16.4 million in 2002 and $7.3 million in 2001. If we elect
to terminate the contract, a maximum termination payment of $37.4 million
would be required 34




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations  (12)
    
    In June 2003, we entered into an agreement for the supply of equipment
and services with Junction Industries, Inc., pursuant to which Junction
Industries has agreed to provide equipment and services to design,
engineer, procure, fabricate, and assist us in the installation,
commissioning, start-up and testing of one 250-ton (tap weight) electric
arc furnace, one Consteel scrap conveyor system, ladle metallurgy furnace,
baghouse and certain other associated equipment for incorporation into the
electric arc furnace melt shop. The total cost of the electric arc furnace
is expected to be $114.9 million. As of September 30, 2004, capital
commitments remaining under the project total $19.2 million, not including
$5.0 million in retained construction payments.. Planned capital expenditures Our planned capital expenditures for the three-year period 2004 through 2006
total approximately $309.1 million, and include, but are not limited to, the
following capital expenditure projects:  
    
    $88.0 million remaining, as of January 1, 2004, for construction of the electric arc furnace, scheduled for completion in
the fourth quarter of 2004. At September 30, 2004, there were $19.2 million in remaining capital commitments, not
including $5.0 million of retained construction payments, both of which are substantially pre-funded through a restricted
cash account;  
    
    $85.0 million toward completion of a rebuild of the No. 8 coke battery, which is expected to extend the service life by 12
to 15 years, and is expected to begin in 2005 and be completed in late 2006;  
    
    $15.9 million for installation of hot strip mill automatic roll changers at our Mingo Junction facility, expected to occur
in 2005; and  
    
    $10.3 million for cold mill improvements at our Allenport facility, expected to occur in 2005 and 2006. In addition to the planned capital expenditure amounts identified above, we are
also contemplating, at our option, and subject to receipt of all necessary
environmental permitting requirements, a rebuild of the Nos. 1, 2 and 3 coke
batteries in 2008 and 2009, at an estimated aggregate cost of approximately
$47.0 million. Our decision to rebuild these coke batteries will depend, in
part, on whether we believe potential revenues from the sale of resulting
excess coke production attributable to the continued operation of these three
batteries justifies these expenditures. Under our credit agreements, we are permitted to undertake the construction of
the electric arc furnace, No. 8 coke battery rebuild, hot strip mill automatic
roll changer installation and cold mill improvements, subject to
pre-established spending limits provided in our restrictive covenants. These
covenants also limit the amounts that we can spend on any other capital
expenditure projects undertaken in 2004, 2005, and 2006 to $33.9 million, $44.0
million, and $37.1 million, respectively, subject to adjustment for permitted
carryover of a portion of any unexpended amounts in these years. During the nine months ended September 30, 2004, we spent approximately $93.1
million on planned capital expenditures. VEBA TRUST AND PROFIT SHARING PLANS Below are summaries of our contribution obligations under the VEBA trust and
our two profit sharing plans, one for our USWA-represented employees and the
other for our salaried employees, excluding our officers. Our future
obligations, if any, under the VEBA trust and these plans are subject to and
based on the level of our profitability (as described below) for each completed
quarter. In addition, we have discretion, to the extent provided by the terms
of the agreement establishing the VEBA trust and the terms of the profit
sharing plans, to satisfy some or all of our funding obligations with shares of
our common stock or cash. 35




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations During the nine months ended September 30, 2004, we incurred aggregate
contribution obligations under the VEBA trust and the profit sharing plans of
$37.7 million. Of this amount, $3.3 million is subject to settlement in cash
($1.8 million of which was paid in August 2004) and $21.3 million is subject to
settlement in cash or common stock at our sole discretion ($8.5 million of
which was settled in common stock in August 2004). The remaining $13.1 million
of the contribution obligation incurred during the nine months ended September
30, 2004 was previously funded to the VEBA trust in the form of cash and common
stock contributions. We are unable to determine our contribution obligations
for subsequent quarters until such time as the financial results for such
periods become available. VEBA trust In connection with our plan of reorganization and our collective bargaining
agreement with the USWA, we established a plan to provide health care and life
insurance benefits to certain retirees and their dependents. The collective
bargaining agreement also required us to create and make contributions to a
trust to fund the payment of these retiree benefits. The trust, referred to
herein as the VEBA trust, is designed to constitute a tax-exempt voluntary
employee beneficiary association under Section 501(c)(9) of the Internal
Revenue Code. Pursuant to our plan of reorganization, we issued 4,000,000
shares of WPC common stock to the VEBA trust (the Initial Shares). Due to
certain restrictions on the VEBA trusts ability to sell stock held by the
trust to fund benefit payments (which are described in more detail below), the
agreement with the USWA provided for monthly cash contributions by us of $1.5
million, beginning in October 2003 and continuing through February 2004, and
$0.3 million from April 2004 through September 2004 for a total of $9.3 million
(collectively, the Initial Funding Obligation). In addition, the agreement
provides for ongoing contributions based on our profitability, payable within
45 days of the end of each fiscal quarter, under the following formula
(collectively, the Variable Contributions):  (i)
    
    40% of operating cash flow, between $16 and $24 of operating cash
flow per ton of steel products sold to third parties, payable in cash;(ii)
    
    12% of operating cash flow, between $24 and $65 of operating cash
flow per ton of steel products sold to third parties, payable at our
discretion in cash or common stock of WPC;(iii)
    
    25% of operating cash flow, above $65 of operating cash flow per
ton of steel products sold to third parties, payable in cash; and(iv)
    
    15% of operating cash flow below $30 of operating cash flow per ton
of steel products sold to third parties, payable at our discretion in
cash or common stock of WPC, subject to compliance with dilution
limitations. During the nine months ended September 30, 2004, variable contributions of
$21.2 million were incurred. Of this amount, $3.3 million is subject to
settlement in cash ($1.8 million of which was paid in August 2004) and $4.8
million is subject to settlement in cash or common stock at our sole discretion
($2.4 million of which was settled in common stock in August 2004). The
remaining portion of the variable contribution was previously funded to the
VEBA trust in the form of cash and common stock contributions. Operating cash flow, for purposes of determining Variable Contributions, is
defined as our earnings before interest and taxes, adjusted for certain amounts
as set forth in the agreement with the USWA (primarily unusual, extraordinary
or non-recurring items). Previously, we contributed $3.0 million, in cash, to the VEBA trust toward
satisfaction of the Initial Funding Obligation. In March 2004, we agreed with
the USWA to satisfy the Initial Funding Obligation, as follows:  
    
    the trustee was authorized to sell up to 400,000 of the Initial Shares,
at its discretion;
    
    the proceeds of the sale of 400,000 of the Initial Shares, not to exceed $6.3
million, and the $3.0 million cash contribution previously made will be
credited, over a limited period
of time, against future Variable 36




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND
SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Contributions due under (i), (ii) and (iii) of the Variable
Contribution formula described above, if any, in accordance with the
terms of the agreement with the USWA;  
    
    the proceeds of the sale of 400,000 shares of the Initial Shares in
excess of $6.3 million, if any, will be creditable, at our discretion
against future Variable Contributions, if any are required under (i),
(ii) and (iii) of the Variable Contribution formula described above;
and  
    
    no later than February 14, 2008, we are required to contribute 400,000
additional shares of our common stock to the trust, minus any shares
of our common stock contributed prior to that date under (ii) of the
Variable Contribution formula described above. To the extent that contributions become due under (ii) of the Variable
Contribution formula described above and we decide to make such contributions
in stock, we have discretion to apply up to 1.6 million of the Initial Shares
as a credit, share for share, against future contribution amounts to the trust.
Shares of WPC common stock contributed to the trust in satisfaction of, or in
the case of Initial Shares applied as a credit against, our obligations, are
valued based on the closing price of WPC common stock for the 10 trading days
immediately preceding the date of contribution. Pursuant to a Stock Transfer Restriction and Voting Agreement, the VEBA trust
has agreed to limit the number of shares of WPC common stock that it may sell
during the four years following the effective date of our plan of
reorganization. During the first two years, the VEBA trust is not permitted to
sell any of the Initial Shares without our authorization unless it holds, at
the time of such sale, fewer than five percent of our outstanding shares of
common stock. During each of the following two years, the VEBA trust has agreed
not to sell more than 50% of the remaining Initial Shares within any
consecutive 12-month period. These restrictions will not apply to any
additional shares that we may contribute to the VEBA trust in satisfaction of
our Variable Contribution obligation, if any. As described above, we
authorized the disposition of 400,000 shares of our common stock held by the
VEBA trust in satisfaction of certain funding obligations with respect to the
trust (all of which had been disposed by the VEBA trust as of September 30,
2004). In connection with the stock transfer restrictions, the VEBA trust has
also agreed that it will abstain from voting 1.3 million shares of common
stock, or such lesser number of shares as it may hold from time to time, for
the election of directors of WPC. Profit sharing plans Pursuant to the collective bargaining agreement with the USWA, and in addition
to our obligations to make contributions to the VEBA trust based on our
profitability as described under VEBA Trust above, we have an obligation to
make quarterly profit sharing payments to or for the benefit of our active USWA
employees in an amount equal to 15% of our profits for the quarter, if any, in
excess of $30 profit per ton of steel shipped to third parties. For this
purpose, profits are defined as earnings before interest and taxes, calculated
on a consolidated basis, excluding effects of certain amounts as set forth in
the collective bargaining agreement. The profit sharing pool will be divided
among all employees on the basis of hours attributed to each employee within
each quarter. We have the discretion to make future payments, if any, in cash
or in WPC common stock. Under the terms of the plan, we must satisfy any profit
sharing obligation with respect to the first, second and third fiscal quarters
within 45 days after the end of the quarter, while any obligation with respect
to the fourth fiscal quarter must be satisfied within 15 days after the date of
the opinion of our independent registered public accounting firm with respect
to our annual audited financial statements. All payments in stock will be
contributed to the participants 401(k) account, while payments in cash, if
any, will be made directly to plan participants. To the extent that
contributions of stock under this plan in any fiscal year, together with stock
contributions to the VEBA trust, exceed 10% of our common stock, on a fully
diluted basis, we may satisfy our contribution obligation in the form of profit
sharing notes. All profit sharing payments that become due are considered 100%
vested when made..During nine months ended September 30, 2004, we incurred a
profit sharing obligation under this plan of $12.9. This amount is subject to
settlement in cash or in common stock at our sole discretion, $4.8 million of
which was settled in common stock in August 2004.
In addition, we have adopted a profit sharing plan for salaried employees under
which we have an obligation to make quarterly profit sharing payments to or for
the benefit of our salaried employees in an amount equal to 4.19% of our 37




---



##### Table of Contents



WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Managements Discussion and Analysis of Financial Condition and Results of
Operations profits for the quarter, if any, in excess of $30 profit per ton of steel
shipped to third parties. For this purpose, profits are defined as earnings
before interest and taxes, calculated on a consolidated basis, excluding
effects of certain amounts as set forth in the plan. The profit sharing pool
will be divided among all salaried employees, excluding officers. During the nine months ended September 30, 2004, a profit sharing obligation of
$3.6 million was incurred under this plan. This amount is subject to
settlement in cash or common stock at our sole discretion, of which $1.3
million was settled in common stock in August 2004. Under the terms of the
plan, we must satisfy any profit sharing obligations with respect to the first,
second and third fiscal quarters within 45 days after the end of the quarter,
while any obligation with respect to the fourth quarter must be satisfied
within 15 days after the date of the opinion of our independent registered
public accounting firm with respect to our annual audited financial statements.
All payments in stock will be contributed to the company stock fund (as defined
in the plan) under our salaried 401(k) savings plan, which restricts
participants from making dispositions of our common stock out of the fund for a
period of 24 months following any contribution other than distributions
following termination of employment, or the death or disability of the
participant. All profit sharing payments that become due are considered 100%
vested when made. NEW ACCOUNTING STANDARDS Under the provisions of SOP 90-7, the Company was required to adopt, as of July
31, 2003, all accounting guidance that was going to be effective within a
twelve-month period. In May 2004, the FASB issued FASB Staff Position (FSP) No. 106-2, Accounting
and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003. FSP 106-2 provides guidance on
accounting for the effects of the new Medicare prescription drug legislation by
employers whose prescription drug benefits are actuarially equivalent to the
drug benefit under Medicare Part D. FSP 106-2 supercedes FSP 106-1 and is
effective for the first interim or annual period beginning after June 15, 2004.
As allowed by FSP 106-1, the Company elected to defer recognizing the effects
of the new legislation. Based on a preliminary assessment and pending
issuance of final guidance on determining actuarial equivalence, the Company
cannot make a final determination as to whether its prescription drug benefits
are actuarially equivalent of drug benefits under Medicare Part D. However, if
the Companys prescription drug benefits are finally determined to be
actuarially equivalent to benefits under Medicare Part D, it is estimated that
the effect on operations for the quarter and nine months ended September 30,
2004 will not be material. The Company adopted FASB No. 132-R (revised 2003), Employers Disclosures
about Pensions and Other Postretirement Benefits an amendment of FASB
Statements No. 87, 88, and 106 (FASB 132-R). FASB 132-R revises employers
disclosures about pension plans and other postretirement benefit plans. It
requires additional disclosures about the assets, obligations, cash flows, and
net periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. Additionally, FASB 132-R requires public
companies to make certain disclosures in their interim financial statements
with respect to net periodic pension expense and contributions paid. The
Company has provided the required interim disclosures in Note 9 to the
consolidated financial statements for their postretirement benefit plan. Due
to the immaterial amounts related to the Companys defined benefit pension
plan, disclosure has not been provided. 38




---



##### Table of Contents



Item 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our quantitative and qualitative disclosures about market risk include
forward-looking statements with respect to managements opinion about the risk
associated with our financial instruments. These statements are based on
certain assumptions with respect to market prices, interest rates and other
industry-specific risk factors. To the extent these assumptions prove to be
inaccurate, future outcomes may differ materially from those discussed herein. Commodity price risk and related risks In the normal course of business, our company is exposed to market risk or
price fluctuation related to the purchase, production or sale of steel
products. In addition, prices for our raw materials, natural gas and
electricity requirements are subject to frequent market fluctuations. Our
companys market risk strategy generally has been to obtain competitive prices
for our products and services and to allow operating results to reflect market
price movements dictated by supply and demand. Additionally, we periodically
enter into contracts for the advance purchase of natural gas in an effort to
hedge against market fluctuations. Due to mark to market provisions in these
contracts, as our market exposure decreases, we can be required to make advance
payments that ultimately are recovered upon delivery of the commodity, but
which can temporarily reduce our liquidity until that time. Interest rate risk The fair value of cash and cash equivalents, receivables and accounts payable
approximate their carrying values and are relatively insensitive to changes in
interest rates due to their short-term maturity. Under the Bankruptcy Code, interest is generally not allowable on unsecured
pre-petition obligations. Pursuant to our plan of reorganization, substantially
all of our pre-reorganization debt was repaid or otherwise satisfied and we
entered into new credit facilities. Under those credit facilities, at September
30, 2004, we had outstanding $87.3 million aggregate principal amount of debt
under fixed-rate instruments and $256.5 million aggregate principal amount of
debt under variable-rate instruments. Since our portfolio of debt is comprised
primarily of variable-rate instruments, the fair value of the debt is
relatively insensitive to the effects of interest rate fluctuations. However,
our interest expense is sensitive to changes in the general level of interest
rates. A 100 basis point increase in the average rate for the variable-rate
debt would increase our annual interest expense by approximately $2.6 million. Credit risk Counter parties expose our company to credit risk in the event of
non-performance. We continually review the creditworthiness of our
counter-parties. Foreign currency exchange risk Our company has limited exposure to foreign currency exchange risk as almost
all of our transactions are denominated in U.S. dollars. 39




---



##### Table of Contents



Item 4 - Controls and Procedures We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this quarterly
report pursuant to Exchange Act Rule 13A-15. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective to ensure that material
information relating to us (including our subsidiaries) required to be included
in our reports we file with the Securities and Exchange Commission is
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms. There have been no changes in internal control over financial reporting that
occurred during the quarter ended September 30, 2004 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting. 40




---



##### Table of Contents



PART II  OTHER INFORMATION 
 Item 1  Legal Proceedings Environmental Proceedings On October 14, 2004, the West Virginia
Department of Environmental Protection (WVDEP) requested that the Company enter into a
consent decree related to alleged noncompliance with the air emissions permit for the Companys
coke producing facility in Follansbee, West Virginia. The
Company has entered into negotiations with WVDEP on this matter and based on
the parameters of current negotiations, the Company does not anticipate that the ultimate settlement will
have a material effect on the operations, financial condition or cash flows of the Company. 
 Item 4 - Submission of Matters to a Vote of Securities Holders  (a)
    
    The Companys Annual Meeting of Stockholders was held on August 5, 2004,
at the Hyatt Regency Pittsburgh International Airport, 1111 Airport
Boulevard, Pittsburgh, Pennsylvania 15231.(b)
    
    At such Annual Meeting, the holders of the Companys common stock elected
the following nominees for director for a one-year term ending at the 2005
Annual Meeting: Nominee
    
    Total Votes For
    
    Total Votes WithheldPaul J. Mooney
    
    
    7,241,674
    
    
    
    1,336,352Alicia H. Munnell
    
    
    6,019,229
    
    
    
    2,558,797Lynn R. Williams
    
    
    7,236,413
    
    
    
    1,341,613
 
 Item 6  Exhibits and Reports of Form 8-K (a) Exhibits Exhibit No.
    
    Description31.1
    
    Certificate of James G. Bradley, Chief Executive Officer of the
Registrant, filed pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. 1350).31.2
    
    Certificate of Paul J. Mooney, Chief Financial Officer of the
Registrant, filed pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. 1350).32.1
    
    Certificate of James G. Bradley, Chief Executive Officer of the
Registrant, furnished pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. 1350).32.2
    
    Certificate of Paul J. Mooney, Chief Financial Officer of the
Registrant, furnished pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. 1350)
 (b) Reports on Form 8-K The Company filed a report on Form 8-K under item 12 on August 9, 2004. 41




---



##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. WHEELING-PITTSBURGH CORPORATION/s/
    
    Paul J. MooneyPaul J. MooneyChief Financial Officer(Authorized Officer, Principal Financial Officer and Principal
Accounting Officer)Dated: November 9, 2004
 42