##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 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)
  þ o
  o þ o
 o þ
 Applicable only to registrants involved in bankruptcy proceedings during the preceding five years:
 þ o




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TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed Consolidated Statements of Operations (Unaudited)
    
    
    1Condensed Consolidated Balance Sheets (Unaudited)
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    3Condensed Consolidated Statement of Stockholders Equity (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    36Item 6. Exhibits
    
    
    36SIGNATURES
    
    
    37Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### 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)
 Quarter EndedMarch 31,2007
    
    
    2006Revenues:Net sales, including sales to affiliates of $59,485 and $94,674
    
    $
    397,721
    
    
    $
    436,978Cost and expenses:Cost of sales, including cost of sales to affiliates of $64,400
and $92,682, excluding depreciation and amortization expense
    
    
    416,272
    
    
    
    408,118Depreciation and amortization expense
    
    
    9,556
    
    
    
    8,307Selling, general and administrative expense
    
    
    24,784
    
    
    
    20,650Total cost and expenses
    
    
    450,612
    
    
    
    437,075Operating loss
    
    
    (52,891
    )
    
    
    (97
    )Interest expense and other financing costs
    
    
    (9,532
    )
    
    
    (6,151
    )Other income
    
    
    2,527
    
    
    
    2,816Loss before income taxes
    
    
    (59,896
    )
    
    
    (3,432
    )Income tax provision (benefit)
    
    
    
    
    
    
    Loss before minority interest
    
    
    (59,896
    )
    
    
    (3,432
    )Minority interest
    
    
    
    
    
    
    1,322Net loss
    
    $
    (59,896
    )
    
    $
    (2,110
    )Loss per share:Basic
    
    $
    (3.92
    )
    
    $
    (0.15
    )Diluted
    
    $
    (3.92
    )
    
    $
    (0.15
    )Weighted average shares (in thousands):Basic
    
    
    15,287
    
    
    
    14,516Diluted
    
    
    15,287
    
    
    
    14,516
 Note:
   1




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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
(Dollars in thousands)
 (Unaudited)March 31,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,735
    
    
    $
    21,842Accounts receivables, less allowance for doubtful accounts of $3,035 and $2,882
    
    
    202,827
    
    
    
    138,513Inventories
    
    
    233,041
    
    
    
    212,221Prepaid expenses and deferred charges
    
    
    9,427
    
    
    
    27,911Total current assets
    
    
    450,030
    
    
    
    400,487Investment in and advances to affiliated companies
    
    
    124,892
    
    
    
    53,585Property, plant and equipment, less accumulated depreciation
of $109,119 and $114,813
    
    
    449,990
    
    
    
    626,210Deferred income tax benefits
    
    
    32,227
    
    
    
    30,537Restricted cash
    
    
    
    
    
    
    2,163Other intangible assets, less accumulated amortization of $2,145 and $2,136
    
    
    246
    
    
    
    255Deferred charges and other assets
    
    
    8,147
    
    
    
    9,308Total assets
    
    $
    1,065,532
    
    
    $
    1,122,545LiabilitiesCurrent liabilities:Accounts payable, including book overdrafts of $8,524 and $13,842
    
    $
    133,331
    
    
    $
    99,536Short-term debt
    
    
    169,400
    
    
    
    110,000Payroll and employee benefits payable
    
    
    43,950
    
    
    
    34,766Accrued income and other taxes
    
    
    8,189
    
    
    
    10,333Deferred income taxes payable
    
    
    32,227
    
    
    
    30,537Accrued interest and other liabilities
    
    
    23,370
    
    
    
    10,257Long-term debt due in one year
    
    
    6,871
    
    
    
    32,119Total current liabilities
    
    
    417,338
    
    
    
    327,548Long-term debt
    
    
    235,856
    
    
    
    254,961Convertible debt, net of discount of $9,849
    
    
    40,151
    
    
    
    Employee benefits
    
    
    122,721
    
    
    
    121,953Other liabilities
    
    
    12,582
    
    
    
    25,600Total liabilities
    
    
    828,648
    
    
    
    730,062Minority interest in consolidated subsidiary
    
    
    
    
    
    
    106,290Stockholders equityPreferred stock  $.001 par value; 20,000,000 shares authorized;
no shares issued or outstanding
    
    
    
    
    
    
    Common stock  $.01 par value; 80,000,000 shares authorized; 15,305,551
and 15,274,796 issued; 15,298,885 and 15,268,130 shares outstanding
    
    
    153
    
    
    
    153Additional paid-in capital
    
    
    301,423
    
    
    
    289,903Accumulated deficit
    
    
    (64,055
    )
    
    
    (4,159
    )Treasury stock, 6,666 shares, at cost
    
    
    (100
    )
    
    
    (100
    )Accumulated other comprehensive (loss) income
    
    
    (537
    )
    
    
    396Total stockholders equity
    
    
    236,884
    
    
    
    286,193Total liabilities and stockholders equity
    
    $
    1,065,532
    
    
    $
    1,122,545
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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
 Quarter EndedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (59,896
    )
    
    $
    (2,110
    )Adjustments to reconcile net loss to cash used in operating activities:Depreciation and amortization expense
    
    
    9,556
    
    
    
    8,307VEBA, profit sharing and other stock transactions
    
    
    213
    
    
    
    347Other postretirement benefits
    
    
    (421
    )
    
    
    (444
    )Deferred compensation and stock options
    
    
    814
    
    
    
    839Amortization of debt discount
    
    
    226
    
    
    
    Dividends, net of equity income of affiliated companies
    
    
    5,123
    
    
    
    8,345Loss on disposition of assets
    
    
    347
    
    
    
    3Minority interest
    
    
    
    
    
    
    (1,322
    )Other
    
    
    11
    
    
    
    15Changes in current assets and current liabilities:Accounts receivable
    
    
    (68,552
    )
    
    
    (45,385
    )Inventories
    
    
    (30,381
    )
    
    
    (51,867
    )Other current assets
    
    
    16,321
    
    
    
    4,010Accounts payable
    
    
    57,484
    
    
    
    16,958Other current liabilities
    
    
    21,772
    
    
    
    1,800Other assets and liabilities, net
    
    
    1,530
    
    
    
    5,823Net cash used in operating activities
    
    
    (45,853
    )
    
    
    (54,681
    )Cash flows from investing activities:Payments from affiliates
    
    
    
    
    
    
    350Investment in affiliates
    
    
    (15,562
    )
    
    
    (750
    )Cash
transfer to deconsolidated affiliate (see Note 16)
    
    
    (11,159
    )
    
    
    Capital expenditures
    
    
    (5,931
    )
    
    
    (28,172
    )Change in restricted cash used to fund capital expenditures
    
    
    
    
    
    
    (3,899
    )Proceeds from sale of assets
    
    
    10
    
    
    
    Net cash used in investing activities
    
    
    (32,642
    )
    
    
    (32,471
    )Cash flows from financing activities:Book overdraft
    
    
    (4,066
    )
    
    
    (3,991
    )Net change in short-term debt
    
    
    59,400
    
    
    
    68,400Borrowing of long-term debt
    
    
    50,000
    
    
    
    Repayment of long-term debt
    
    
    (44,364
    )
    
    
    (6,542
    )Minority interest investment in subsidiary
    
    
    
    
    
    
    30,000Issuance of common stock
    
    
    418
    
    
    
    Net cash provided by financing activities
    
    
    61,388
    
    
    
    87,867(Decrease) increase in cash and cash equivalents
    
    
    (17,107
    )
    
    
    715Cash and cash equivalents, beginning of period
    
    
    21,842
    
    
    
    8,863Cash and cash equivalents, end of period
    
    $
    4,735
    
    
    $
    9,578See Note 16 for supplemental cash flow information
  3




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WHEELING-PITTSBURGH
CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Statement of Changes in Stockholders Equity (Unaudited)
(Dollars in thousands)
 Accumu-latedCompre-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Otherhensive
    
    
    
    
    
    
    
    Additional
    
    
    Accumu-
    
    
    
    
    
    
    Comprehen-Income
    
    
    
    Common
    
    
    Paid-in
    
    
    lated
    
    
    Treasury
    
    
    sive Income(Loss)
    
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    (Loss)
    
    
    TotalBalance, December 31, 2005
    
    
    
    
    
    
    $
    147
    
    
    $
    276,097
    
    
    $
    (10,640
    )
    
    $
    (100
    )
    
    $
    
    
    
    $
    265,504Net income
    
    $
    6,481
    
    
    
    
    
    
    
    
    
    
    
    
    6,481
    
    
    
    
    
    
    
    
    
    
    
    6,481Stock issued:Employee benefit plans
    
    
    
    
    
    
    
    6
    
    
    
    10,986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,992Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    2,232
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,232Stock option grants
    
    
    
    
    
    
    
    
    
    
    
    326
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    326Adjustment to initially apply
FASB Statement No. 158
without tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396
    
    
    
    396Balance, December 31, 2006
    
    
    
    
    
    
    
    153
    
    
    
    289,903
    
    
    
    (4,159
    )
    
    
    (100
    )
    
    
    396
    
    
    
    286,193Comprehensive loss:Net loss
    
    $
    (59,896
    )
    
    
    
    
    
    
    
    
    
    
    
    (59,896
    )
    
    
    
    
    
    
    
    
    
    
    (59,896
    )Amortization of:Actuarial loss
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236
    
    
    
    236Prior service cost (benefit)
    
    
    (1,169
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,169
    )
    
    
    (1,169
    )Comprehensive loss
    
    $
    (60,829
    )Stock issued:Employee benefit plans
    
    
    
    
    
    
    
    
    
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    213Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    418
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    418Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    739
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    739Stock option grants
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Convertible debt  beneficial
conversion feature
    
    
    
    
    
    
    
    
    
    
    
    10,075
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,075Balance, March 31, 2007
    
    
    
    
    
    
    $
    153
    
    
    $
    301,423
    
    
    $
    (64,055
    )
    
    $
    (100
    )
    
    $
    (537
    )
    
    $
    236,884
 Issued
    
    
    Treasury
    
    
    OutstandingShare Activity:Balance, December 31, 2005
    
    
    14,686,354
    
    
    
    6,666
    
    
    
    14,679,688Shares issued  employee benefit plans
    
    
    559,477
    
    
    
    
    
    
    
    559,477Stock options exercised
    
    
    28,965
    
    
    
    
    
    
    
    28,965Balance, December 31, 2006
    
    
    15,274,796
    
    
    
    6,666
    
    
    
    15,268,130Shares issued  employee benefit plans
    
    
    9,353
    
    
    
    
    
    
    
    9,353Stock options exercised
    
    
    21,402
    
    
    
    
    
    
    
    21,402Balance, March 31, 2007
    
    
    15,305,551
    
    
    
    6,666
    
    
    
    15,298,885
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Notes to Condensed Consolidated Financial Statements (Unaudited)
 (Dollars in thousands, except per share amounts)
 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.The Company owns a 50% voting and non-voting interest in Mountain State Carbon, LLC (MSC), a
joint venture. From inception of the joint venture through December 31, 2006, the Company was
identified as the primary beneficiary of the joint venture, and as such, included the accounts
of MSC in its consolidated financial statements. As a result of certain joint venture agreement
provisions which became operative on January 1, 2007, the Companys variable interest in the
joint venture will no longer absorb a majority of the joint ventures expected losses or receive
a majority of the joint ventures expected residual returns. As a result, the accounts of MSC
were no longer included in the consolidated financial statements of the Company effective
January 1, 2007.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, 2006.2.
    
    New Accounting StandardsThe Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (FASB) No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities, in February 2007. FASB No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. FASB No. 159 is effective for the
fiscal years beginning after November 15, 2007. The Company is currently assessing the impact
of this statement on its financial statements.The FASB issued FASB No. 157, Fair Value Measurement, in September 2006. FASB No. 157 defines
fair value, established a framework for measuring fair value in accordance with existing
generally accepted accounting principles and expands disclosures about fair value measurements.
FASB No. 157 is effective for fiscal years beginning after November 15, 2007. The Company does
not expect the adoption of this statement to have a material impact on its financial statements.3.
    
    Business SegmentThe Company is engaged in one line of business and operates one business segment, the
production, processing, fabrication and sale of steel and steel products. The Company has a
diverse customer base, substantially all of which is located in the United States. All of the
Companys operating assets are located in the United States.4.
    
    Transactions with Affiliates and Related PartiesThe Company owns 35.7% of the outstanding common stock of Wheeling-Nisshin, Inc.
(Wheeling-Nisshin), which is accounted for using the equity method of accounting. The Company
had sales to Wheeling-Nisshin of $43,451 and $71,161 during the quarters ended March 31, 2007
and 2006, respectively. Management believes that sales to Wheeling-Nisshin are made at
prevailing market prices. During the quarter ended March 31, 2006, the Company purchased steel
slabs from Wheeling-Nisshin, at prevailing market prices, in the amount of $24,738. The Company
reported dividends from Wheeling-Nisshin of $7,500 and $10,715 during the quarters ended March
31, 2007 and 2006, respectively. At March 31, 2007 and December 31,
2006, the Company had accounts receivable due from Wheeling-Nisshin of $2,291 and $1,853,
respectively, and had accounts payable to Wheeling-Nisshin of $1,198 and $147, respectively.
 5




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The Company owns 50.0% of the outstanding common stock of Ohio Coatings Corporation (OCC), which
is accounted for using the equity method of accounting. The Company had sales to OCC of $9,173
and $23,513 during the quarters ended March 31, 2007 and 2006, respectively. Management
believes that sales to OCC are made at prevailing market prices. At March 31, 2007 and December
31, 2006, the Company had accounts receivable due from OCC of $6,360 and $3,461, respectively.
At March 31, 2007 and December 31, 2006, the Company has a loan receivable due from OCC of
$5,625, which bears interest at a variable rate, which currently approximates 7.6%. The Company
recorded interest income on the loan receivable of $93 and $121 during the quarters ended March
31, 2007 and 2006, respectively. The Company received principal payments on the loan of $350
during the quarter ended March 31, 2006.The Company owns a 50% voting and non-voting capital interest in Mountain State Carbon, LLC
(MSC), a joint venture, which is accounted for using the equity method of accounting. Through
December 31, 2006, the accounts of MSC were included in the consolidated financial statements of
the Company (see Note 16). The Company acquires coke from MSC at cost, as defined by a coke
supply agreement, plus 5%. During the quarter ended March 31, 2007, the Company acquired coke
from MSC in the amount of $27,373. The Company provides services to MSC under a management and
an operating agreement. During the quarter ended March 31, 2007, the Company billed MSC $10,091
for such services. At March 31, 2007, the Company had accounts payable to MSC of $9,172 and had
accounts receivable due from MSC of $3,991. At March 31, 2007, the Company had a note
receivable due from MSC of $4,523, which bears interest at the prime rate, plus 1.25%. The
Company recorded interest income on the note receivable of $106 during the quarter ended March
31, 2007. The Company made capital contributions to MSC of $15,500 during the quarter ended
March 31, 2007.The Company owns 49% of the outstanding common stock of Feralloy-Wheeling Specialty Processing,
Co. (Feralloy), which is accounted for using the equity method of accounting.The Company owns 50% of the outstanding common stock of Jensen Bridge & Roofing Company, LLC
(Jensen Bridge), a joint venture. The joint venture is accounted for using the equity method of
accounting. The Company had sales to Jensen Bridge during the quarters ended March 31, 2007 and
2006 of $797 and $182, respectively. Management believes that sales to Jensen Bridge are made
at prevailing market prices. At
March 31, 2007 and December 31, 2006, the Company had accounts receivable due from Jensen Bridge
of
$374 and $1,369, respectively. During the quarters ended March 31, 2007 and 2006, the Company
made capital contributions to Jensen Bridge of $62 and $750, respectively.The Company acquired a 50% joint venture interest in Avalon
Metal Roofing and Building Components, LLC (Avalon), a joint venture, during the first quarter of 2007 by making a capital
contribution to the joint venture of $924. The joint venture is accounted for using the equity
method of accounting. The Company had sales to Avalon during the quarter ended March 31, 2007
of $134. Management believes that sales to Avalon are made at prevailing market prices. The
Company had accounts receivable due from Avalon of $134 at March 31, 2007.During the quarter ended March 31, 2007, the Company had sales to Esmark Incorporated (Esmark)
and its affiliates of $5,930. Management believes that sales to Esmark are made at prevailing
market prices. The Company had accounts receivable due from Esmark of $5,498 at March 31, 2007.
During March 2007, Esmark executed a guarantee with one of the
Companys scrap suppliers
guaranteeing the Companys obligations for scrap purchases.5.
    
    Insurance RecoveryDuring the quarters ended March 31, 2007 and 2006, the Company received $6,116 and $12,659,
respectively, in partial settlement of a business interruption insurance claim relating to an
insurable event that occurred in December 2004. Of these amounts, $7,299 was recorded as a
reduction of cost of goods sold during the quarter ended March 31, 2006, with the remaining
amount recorded as a reduction in cost of goods sold in the fourth quarters of 2005 and 2006.
Business interruption insurance recoveries are recorded in the period in
which a sworn statement of proof of loss is received from the insurance carriers or the
insurance carrier otherwise acknowledges an obligation to pay and collectibility is assured.
 6




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6.
    
    Share-Based PaymentsThe Company adopted FASB No. 123 (revised 2004), Share-Based Payment, in the first quarter of
2005 and elected to apply the statement using the modified retrospective method.Non-vested restricted stock:The Company maintains a non-vested restricted stock plan pursuant to which it granted 500,000
shares of its common stock to selected key employees on July 31, 2003. All shares granted under
this plan, net of forfeitures, fully vested in August 2006. In March 2005, the Company granted
10,500 shares of common stock to certain employees under its management stock incentive plan,
all of which fully vested in August 2006. No non-vested restricted stock was outstanding at
March 31, 2007 and December 31, 2006 and there was no activity relative to non-vested restricted
stock during the quarter ended March 31, 2007. No shares granted under these plans were subject
to retirement eligible provisions.Compensation expense under these plans is measured as being equal to the grant date fair value
of the non-vested restricted stock issued, amortized over the vesting or requisite service
period for each grant. Compensation expense related to these plans amounted to $692 during the
quarter ended March 31, 2006. No compensation expense was recognized during the quarter ended
March 31, 2007.Stock options:The Company maintains a management stock incentive plan pursuant to which it granted stock
options to non-employee directors of the Company for 4,637 and 5,888 shares of its common stock
during the quarters ended March 31, 2007 and 2006, respectively, at an exercise price of $23.73
and $17.92 per share, respectively. The options were granted at a price equal to the average
stock price for a five-day period ending on the date of grant, vest upon receipt, are
exercisable at the option of the holder and lapse ten years from the date of grant. If a
non-employee director of the Company terminates association with the Company, outstanding stock
options expire within 90 days from the date of such termination if not otherwise exercised.
During the quarter ended
March 31, 2007, proceeds of $418 were received from the exercise of 21,402 stock options. No
stock options were exercised during the quarter ended March 31, 2006. During the quarter ended
March 31, 2007, stock options for 15,564 shares of Company stock expired.The grant date fair value of stock options granted under the plan is estimated using the
Black-Scholes pricing model. The grant date fair value of stock options granted during the
quarters ended March 31, 2007 and 2006 was $16.13 and $15.37 per share, respectively, determined
using the following assumptions:
 Quarter EndedMarch 31,2007
    
    2006Average risk-free interest rate
    
    
    4.72
    %
    
    
    4.79
    %Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    76.38
    %
    
    
    84.28
    %Expected life (years)
    
    
    5
    
    
    
    5
  7




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##### Table of Contents



WeightedAverage
    
    
    AggregateExercise
    
    
    IntrinsicShares
    
    
    Price
    
    
    ValueOutstanding, December 31, 2006
    
    
    56,187
    
    
    $
    20.58Granted
    
    
    4,637
    
    
    
    23.73Exercised
    
    
    (21,402
    )
    
    
    19.53Expired
    
    
    (15,564
    )
    
    
    26.86Outstanding, March 31, 2007
    
    
    23,858
    
    
    $
    18.04
    
    
    $
    149Exercisable, March 31, 2007
    
    
    23,858
    
    
    $
    18.04
    
    
    $
    149
  Stock unit awards:
   Average risk-free interest rate
    
    
    4.80
    %Expected dividend yield
    
    
    0.00
    %Expected volatility
    
    
    68.00
    %Expected life (years)
    
    
    3Expected turnover rate
    
    
    10.00
    %
 8




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##### Table of Contents



WeightedAverageUnits/
    
    
    Grant DateShares
    
    
    Fair ValueBalance, December 31, 2006
    
    
    282,061
    
    
    $
    18.82Granted
    
    
    182,635
    
    
    
    18.88Forfeited
    
    
    (12,435
    )
    
    
    20.24Vested
    
    
    (35,674
    )
    
    
    18.69Balance, March 31, 2007
    
    
    416,587
    
    
    $
    18.81
  Quarter EndedGrant Date
    
    Stock Unit Type
    
    Units
    
    
    Vesting Date/PeriodMarch 31, 2006
    
    Service award
    
    
    26,606
    
    
    March 31, 2008March 31, 2006
    
    Service award
    
    
    13,319
    
    
    March 31, 2009March 31, 2006
    
    Performance award
    
    
    39,919
    
    
    March 31, 2009December 31, 2006
    
    Service award
    
    
    171,000
    
    
    Ratably over three yearsMarch 31, 2007
    
    Service award
    
    
    118,243
    
    
    Quarterly through December 31, 2008March 31, 2007
    
    Service award
    
    
    47,500
    
    
    Ratably over three yearsTotal
    
    
    
    
    416,587
   7. Pension and Other Postretirement Benefits
  Quarter EndedMarch 31,2007
    
    
    2006Components of net periodic cost:Service cost
    
    $
    405
    
    
    $
    425Interest cost
    
    
    1,516
    
    
    
    1,456Expected return on assets
    
    
    (82
    )
    
    
    (102
    )Amortization of prior service credit
    
    
    (1,169
    )
    
    
    (1,169
    )Recognized actuarial loss
    
    
    236
    
    
    
    270Net periodic cost
    
    $
    906
    
    
    $
    880
 9




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##### Table of Contents



The Company made payments of $1,180 and $1,198 for other postretirement benefits during the
quarters ended March 31, 2007 and 2006, respectively. The Company does not expect to make any
contributions to its defined benefit pension plan during 2007 and expects to make payments of
$4,683 for other postretirement benefits during 2007.8.
    
    VEBA and Profit Sharing ExpenseThe Company incurred no VEBA or profit sharing expense during the quarter ended March 31, 2007.
The Company incurred VEBA and profit sharing expense of $163 during the quarter ended March 31,
2006, all of which was satisfied by issuing common stock during the second quarter of 2006.9.
    
    Termination CostsDuring the first quarter of 2007, the Company initiated a voluntary and involuntary termination
plan to bring about an overall reduction in and reorganization of the salaried workforce. As a
result, the Company accrued $3,929 for termination benefits under these plans for approximately
77 salaried employees during the first quarter of 2007.10.
    
    Other Income
 Quarter EndedMarch 31,2007
    
    
    2006Equity income from affiliates
    
    $
    2,377
    
    
    $
    2,370Other income
    
    
    150
    
    
    
    446Total
    
    $
    2,527
    
    
    $
    2,816
 11.
    
    Income TaxesNo income tax benefit was provided during the quarters ended March 31, 2007 and 2006 as it was
more likely than not that the losses incurred would not result in a reduction of future income
taxes payable.The Company adopted FASB Interpretation No. (FIN) 48 on January 1, 2007. Based on an analysis
prepared by the Company, it was determined that the application of FIN 48 had no material effect
on the recorded tax assets or liabilities of the Company. As a result, no cumulative effect
adjustment was recorded as of January 1, 2007.
 10




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##### Table of Contents



12.
    
    Loss Per ShareFor the quarters ended March 31, 2007 and 2006, a reconciliation of the numerator and
denominator for the calculation of basic and diluted earnings per share is as follows:
 Quarter EndedMarch 31,2007
    
    
    2006Loss available to common shareholders
    
    $
    (59,896
    )
    
    $
    (2,110
    )Weighed-average basic shares outstanding
    
    
    15,287
    
    
    
    14,516Dilutive effect of:Non-vested restricted stock
    
    
    
    
    
    
    Stock options
    
    
    
    
    
    
    Stock unit awards
    
    
    
    
    
    
    Convertible debt
    
    
    
    
    
    
    Weighed-average diluted shares outstanding
    
    
    15,287
    
    
    
    14,516Basic loss per share
    
    $
    (3.92
    )
    
    $
    (0.15
    )Diluted loss per share
    
    $
    (3.92
    )
    
    $
    (0.15
    )
 For the quarters ended March 31, 2007 and 2006, stock options for 60,824 and 68,285 shares of
common stock at a weighted average exercise price of $20.82 and $15.73 per share, respectively,
were excluded from the computation of diluted earnings per share as their effect was
anti-dilutive. For the quarter ended March 31, 2006, 174,500 shares of non-vested restricted
common stock were excluded from the computation of diluted earnings per share as their effect
was anti-dilutive. For the quarters ended March 31, 2007 and 2006, 464,696 and 249,337 stock
unit awards were excluded from the computation of diluted earnings per share as their effect was
anti-dilutive. For the quarter ended March 31, 2007, 2,500,000 shares of common stock into
which debt is convertible were excluded from the computation of diluted earnings per share as
their effect was anti-dilutive.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 99% of inventories are
valued using the LIFO method. Inventory consisted of the following:
 March 31,
    
    
    December 31,2007
    
    
    2006Raw materials
    
    $
    65,675
    
    
    $
    44,189In-process
    
    
    201,396
    
    
    
    212,315Finished products
    
    
    52,992
    
    
    
    58,606Other materials and supplies
    
    
    33
    
    
    
    46Total current cost
    
    
    320,096
    
    
    
    315,156Excess of current cost over carrying cost
    
    
    (87,055
    )
    
    
    (102,935
    )Carrying cost
    
    $
    233,041
    
    
    $
    212,221
 During the quarters ended March 31, 2007 and 2006, certain inventory quantities were reduced,
resulting in liquidations of LIFO inventories carried at costs prevailing in prior periods. The
effect was to decrease operating income by $695 and $440 for the quarters ended March 31, 2007
and 2006, respectively.14.
    
    Convertible DebtOn March 16, 2007, the Company issued convertible notes in the amount of $50,000 to certain
institutional investors and certain stockholders of the Company. The notes are convertible into
common stock of the
 11




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##### Table of Contents



Company upon consummation of a proposed merger between the Company and
Esmark at a price of $20 per share. If the proposed merger with Esmark is not consummated, the
notes are convertible, at the option of the holders, into common stock of the Company at any
time after December 31, 2007 at an adjusted, fair value, conversion price that will not be more
than $20 per share or less than $15 per share. The convertible notes are otherwise payable on
November 15, 2008, subject to limitations in our term loan agreement and revolving credit
facility, and accrue interest at a rate of 6% per annum through December 31, 2007. If the notes
are not converted into common stock of the Company prior to January 1, 2008, interest is
retroactively adjusted from the issuance date to 9% per annum.On the date of issuance of the convertible notes, the fair market value of the Companys common
stock was $24.03 per share. As a result, the beneficial conversion feature of the convertible
notes was computed to be $10,075. This amount was recorded as a discount against the face
amount of the convertible notes and as a credit to additional paid-in capital. The debt
discount will be amortized to interest expense over the term of the convertible notes which
amounted to $226 for the quarter ended March 31, 2007.15.
    
    Short-term and Long-term DebtAt March 31, 2007, we were in compliance with the financial covenants under our amended and
restated revolving credit facility. At March 31, 2007, no financial covenants were in effect
under our term loan agreement. Based on first quarter results of operations, projected results
of operations for subsequent quarters and credit limitations under our revolving credit
facility, no assurance can be given that we will remain in compliance with the financial
covenants under our amended and restated revolving credit facility for quarters ending after
March 31, 2007.If an event of default results in the acceleration of our amended and restated revolving credit
agreement or our term loan agreement, as amended, such event will also result in the
acceleration of substantially all of our other indebtedness pursuant to cross-default or
cross-acceleration provisions.16.
    
    Supplemental Cash Flow InformationAs a result of the deconsolidation of MSC (see Note 1), the accounts of MSC were no longer
included in the consolidated financial statements of the Company effective January 1, 2007. The
Companys investment in MSC is accounted for using the equity method of accounting.The consolidated net assets of MSC as of January 1, 2007 were as follows:
 Assets:Cash and cash equivalents
    
    $
    11,159Accounts receivable
    
    
    4,238Inventory
    
    
    8,637Prepaid and other current assets
    
    
    2,163Restricted cash
    
    
    2,163Property, plant and equipment, less accumulated depreciation of $11,113
    
    
    172,247Total
    
    
    200,607Liabilities:Accounts payable, including book overdrafts of $1,252
    
    
    19,623Other current liabilities
    
    
    1,619Other liabilities
    
    
    13,131Minority interest
    
    
    106,290Total
    
    
    140,663Consolidated net assets
    
    $
    59,944
 12




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##### Table of Contents



17.
    
    Commitments and ContingenciesEnvironmental MattersPrior to confirmation of the Companys plan of reorganization effective August 1, 2003, the
Company settled all pre-petition environmental claims made by state (Ohio, West Virginia,
Pennsylvania) and Federal (U.S. Environmental Protection Agency (USEPA)) environmental
regulatory agencies. Consequently, the Company believes that it has settled and/or discharged
environmental liability for any known Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA or Superfund) sites, pre-petition stipulated penalties related to active
consent decrees, or other pre-petition regulatory enforcement actions.During the second quarter of 2006, the Company received notification from the USEPA advising
that the USEPA and the Ohio Environmental Protection Agency (Ohio EPA) will conduct an inquiry
aimed at resolving various environmental matters, all of which are identified, discussed and
reserved for as noted below. These inquiries commenced during the third quarter of 2006.The Company estimates that demands for stipulated penalties and fines for post-petition events
and activities through March 31, 2007 could total up to $3,060, 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)
$2,244 related to a January 30, 1996 USEPA consent decree for the Companys coke oven gas
desulphurization facility; (b) $591 related to a July 1991 USEPA consent decree for water
discharges into the Ohio River; (c) $101 related to a September 20, 1999 Ohio EPA consent decree
for the Companys coke oven gas desulphurization facility; and (d) $124 related to a 1992 USEPA
consent order for other water discharges issues. The Company may have defenses to certain of
these exceedances.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. The Company estimates the cost of removal of the remaining contaminated
sediments to be $1,397 at March 31, 2007, which has been fully reserved by the Company. The
Company currently expects this work to be substantially complete by the end of 2007.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. The USEPA
approved the Companys investigation work plan, and field activities were completed in 2004. The
Company submitted the results of this investigation to the USEPA in the third quarter of 2005.
It is expected that some remediation measures will be necessary and could commence within the
next three to five years. Based on an initial estimate of the range of the possible cost to
remediate, the Company has reserved $4,613 for such remediation measures.The Company has also accrued $400 related to a 1989 consent order issued by the USEPA for
surface impoundment issues at a coke plant facility owned by MSC, a joint venture.In July 2005, an additional environmental liability was identified regarding the potential for
migration of subsurface oil from historical operations into waters in the Commonwealth of
Pennsylvania. A remediation plan was developed in 2005 and a revised remediation plan was
submitted to the Commonwealth of Pennsylvania during the third quarter of 2006. An estimated
expenditure of $981 is expected to be made during 2007 to address this environmental liability,
which has been fully reserved by the Company.Total accrued environmental liabilities amounted to $10,451 and $10,511 at March 31, 2007 and
December 31, 2006, respectively. 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 and adjusted accordingly. Unless
stated above, the time frame over which these liabilities will be satisfied 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 $5,000.
 13




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##### Table of Contents



CommitmentsIn June 2005, the Company entered into a contract to purchase up to 20,000 tons of metallurgical
coal on behalf of MSC each month for the period from August 2006 through May 2007 at a price of
$94.50 per ton. MSC reimburses the Company for the cost of coal delivered under the contract.
The contract requires the Company to pay an average buy-out cost of $7.50 per ton for each ton
of coal that is not taken under the contract. Payments for delivery of coal under this contract
totaled $3,253 during the quarter ended March 31, 2007. In addition, the Company made a
prepayment of $5,100 under the terms of the contract, which will be applied ratably to reduce
the cash cost of each ton of coal delivered under the contract. As of March 31, 2007, the
unamortized prepayment amounted to $2,007. This amount is subject to forfeiture if coal is not
taken under the contract.The Company entered into a 15-year take-or-pay contract in 1999, which was amended in 2003 and
requires the Company to purchase oxygen, nitrogen and argon each month with a minimum monthly
charge of approximately $600, subject to escalation clauses. Payments for deliveries under this
contract totaled $2,332 and $2,770 during the quarters ended March 31, 2007 and 2006,
respectively.The Company entered into a 20-year contract in 1999, which was amended in 2003 and requires the
Company to purchase steam and electricity each month or pay a minimum monthly charge of
approximately $500, subject to increases for inflation, and a variable charge calculated at a
minimum of $3.75 times the number of tons of iron produced each month, with an agreed-to minimum
of 3,250 tons per day, regardless of whether any tons are produced. Payments for delivery of
steam and electricity under this contract totaled $3,773 and $2,783 during the quarters ended
March 31, 2007 and 2006, respectively. At March 31, 2007, a maximum termination payment of
approximately $27,750 would have been required to terminate the contract.Under terms of MSCs joint venture agreement, the Company and SNA Carbon have agreed to
refurbish a coke plant facility owned by MSC. The Company is committed to make additional
capital contributions of $9,500 to MSC.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.18.
    
    Subsequent EventOn May 8, 2007, the Company issued $23.0 million of senior unsecured exchangeable promissory
notes in a private placement to certain unrelated institutional investors. Pursuant to the terms of the
notes, the notes will be exchangeable into the common stock of New Esmark upon consummation
of a combination of the Company and Esmark at a price of $20 per share, or, if not consummated,
the note will be payable in cash on
November 15, 2008. Interest is payable in cash at an annual rate of 6%, payable quarterly in
arrears. In the event that the combination is not consummated by
January 1, 2008 or extended under the terms of the notes, the annual rate of interest will increase to 14% computed retroactively to the
issuance date. The $23.0 million in proceeds will be used for general corporate purposes.19.
    
    Summarized Combined Financial InformationWheeling-Pittsburgh Steel Corporation (WPSC), a wholly-owned subsidiary of the Company, is the
issuer of the outstanding $40 million Series A notes and $20 million Series B notes. The Series
A and Series B notes were not registered under the Securities Act of 1933 or the Securities Act
of 1934. The Series A notes and Series B notes are each fully and unconditionally guaranteed,
jointly and severally, by the Company and its present and future subsidiaries. WPSC and each
subsidiary guarantor of the Series A and Series B notes are 100%-owned by the Company. Because
the subsidiary guarantors are not material, individually and in the aggregate, the consolidating
financial information for the Company and the subsidiary guarantors has been combined below in
the column entitled WPC and Subsidiary Guarantors.
 14




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2007
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    4,735
    
    
    $
    
    
    
    $
    4,735Trade accounts receivables
    
    
    
    
    
    
    202,827
    
    
    
    
    
    
    
    202,827Inventories
    
    
    
    
    
    
    233,041
    
    
    
    
    
    
    
    233,041Other current assets
    
    
    122
    
    
    
    9,305
    
    
    
    
    
    
    
    9,427Total current assets
    
    
    122
    
    
    
    449,908
    
    
    
    
    
    
    
    450,030Intercompany receivables
    
    
    40,151
    
    
    
    11,908
    
    
    
    (52,059
    )
    
    
    Investments and advances in affiliates
    
    
    247,978
    
    
    
    124,892
    
    
    
    (247,978
    )
    
    
    124,892Property, plant and equipment, net
    
    
    2,255
    
    
    
    447,735
    
    
    
    
    
    
    
    449,990Other non-current assets
    
    
    896
    
    
    
    39,724
    
    
    
    
    
    
    
    40,620Total assets
    
    $
    291,402
    
    
    $
    1,074,167
    
    
    $
    (300,037
    )
    
    $
    1,065,532Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    133,331
    
    
    $
    
    
    
    $
    133,331Short-term debt
    
    
    
    
    
    
    169,400
    
    
    
    
    
    
    
    169,400Other current liabilities
    
    
    2,337
    
    
    
    112,270
    
    
    
    
    
    
    
    114,607Total current liabilities
    
    
    2,337
    
    
    
    415,001
    
    
    
    
    
    
    
    417,338Intercompany payable
    
    
    11,908
    
    
    
    40,151
    
    
    
    (52,059
    )
    
    
    Long-term debt
    
    
    
    
    
    
    235,856
    
    
    
    
    
    
    
    235,856Convertible debt
    
    
    40,151
    
    
    
    
    
    
    
    
    
    
    
    40,151Other non-current liabilities
    
    
    122
    
    
    
    135,181
    
    
    
    
    
    
    
    135,303Stockholders equity
    
    
    236,884
    
    
    
    247,978
    
    
    
    (247,978
    )
    
    
    236,884Total liabilities and stockholders equity
    
    $
    291,402
    
    
    $
    1,074,167
    
    
    $
    (300,037
    )
    
    $
    1,065,532
 15




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    21,842
    
    
    $
    
    
    
    $
    21,842Trade accounts receivables
    
    
    
    
    
    
    138,513
    
    
    
    
    
    
    
    138,513Inventories
    
    
    
    
    
    
    212,221
    
    
    
    
    
    
    
    212,221Other current assets
    
    
    122
    
    
    
    27,789
    
    
    
    
    
    
    
    27,911Total current assets
    
    
    122
    
    
    
    400,365
    
    
    
    
    
    
    
    400,487Intercompany receivables
    
    
    
    
    
    
    10,778
    
    
    
    (10,778
    )
    
    
    Investments and advances in affiliates
    
    
    295,914
    
    
    
    53,585
    
    
    
    (295,914
    )
    
    
    53,585Property, plant and equipment, net
    
    
    2,255
    
    
    
    623,955
    
    
    
    
    
    
    
    626,210Restricted cash
    
    
    
    
    
    
    2,163
    
    
    
    
    
    
    
    2,163Other non-current assets
    
    
    896
    
    
    
    39,204
    
    
    
    
    
    
    
    40,100Total assets
    
    $
    299,187
    
    
    $
    1,130,050
    
    
    $
    (306,692
    )
    
    $
    1,122,545Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    99,536
    
    
    $
    
    
    
    $
    99,536Short-term debt
    
    
    
    
    
    
    110,000
    
    
    
    
    
    
    
    110,000Other current liabilities
    
    
    2,094
    
    
    
    115,918
    
    
    
    
    
    
    
    118,012Total current liabilities
    
    
    2,094
    
    
    
    325,454
    
    
    
    
    
    
    
    327,548Intercompany payable
    
    
    10,778
    
    
    
    
    
    
    
    (10,778
    )
    
    
    Long-term debt
    
    
    
    
    
    
    254,961
    
    
    
    
    
    
    
    254,961Other non-current liabilities
    
    
    122
    
    
    
    147,431
    
    
    
    
    
    
    
    147,553Minority interest
    
    
    
    
    
    
    106,290
    
    
    
    
    
    
    
    106,290Stockholders equity
    
    
    286,193
    
    
    
    295,914
    
    
    
    (295,914
    )
    
    
    286,193Total liabilities and stockholders equity
    
    $
    299,187
    
    
    $
    1,130,050
    
    
    $
    (306,692
    )
    
    $
    1,122,545
 16




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Quarter Ended March 31, 2007
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    397,721
    
    
    $
    
    
    
    $
    397,721Cost of sales
    
    
    
    
    
    
    416,272
    
    
    
    
    
    
    
    416,272Depreciation and amortization expense
    
    
    
    
    
    
    9,556
    
    
    
    
    
    
    
    9,556Selling, administrative and general expense
    
    
    1,222
    
    
    
    23,562
    
    
    
    
    
    
    
    24,784Operating loss
    
    
    (1,222
    )
    
    
    (51,669
    )
    
    
    
    
    
    
    (52,891
    )Interest expense
    
    
    (359
    )
    
    
    (9,306
    )
    
    
    133
    
    
    
    (9,532
    )Other income including equity earnings
of affiliates
    
    
    (58,315
    )
    
    
    2,527
    
    
    
    58,315
    
    
    
    2,527Loss before income taxes
    
    
    (59,896
    )
    
    
    (58,448
    )
    
    
    58,448
    
    
    
    (59,896
    )Income tax provision (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (59,896
    )
    
    $
    (58,448
    )
    
    $
    58,448
    
    
    $
    (59,896
    )
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Quarter Ended March 31, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    436,978
    
    
    $
    
    
    
    $
    436,978Cost of sales
    
    
    
    
    
    
    408,118
    
    
    
    
    
    
    
    408,118Depreciation and amortization expense
    
    
    
    
    
    
    8,307
    
    
    
    
    
    
    
    8,307Selling, administrative and general expense
    
    
    2,019
    
    
    
    18,631
    
    
    
    
    
    
    
    20,650Operating income (loss)
    
    
    (2,019
    )
    
    
    1,922
    
    
    
    
    
    
    
    (97
    )Interest expense
    
    
    
    
    
    
    (6,151
    )
    
    
    
    
    
    
    (6,151
    )Other income including equity earnings
of affiliates
    
    
    (91
    )
    
    
    2,816
    
    
    
    91
    
    
    
    2,816Loss before income taxes
    
    
    (2,110
    )
    
    
    (1,413
    )
    
    
    91
    
    
    
    (3,432
    )Income tax provision (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss before minority interest
    
    
    (2,110
    )
    
    
    (1,413
    )
    
    
    91
    
    
    
    (3,432
    )Minority interest
    
    
    
    
    
    
    1,322
    
    
    
    
    
    
    
    1,322Net loss
    
    $
    (2,110
    )
    
    $
    (91
    )
    
    $
    91
    
    
    $
    (2,110
    )
 17




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Quarter Ended March 31, 2007
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedNet cash used in operating activities
    
    $
    (418
    )
    
    $
    (45,435
    )
    
    $
    
    
    
    $
    (45,853
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    (5,931
    )
    
    
    
    
    
    
    (5,931
    )Investment and advances to affiliates
    
    
    
    
    
    
    (26,721
    )
    
    
    
    
    
    
    (26,721
    )Loan to subsidiary
    
    
    (50,000
    )
    
    
    
    
    
    
    50,000
    
    
    
    Other
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Net cash used in investing activities
    
    
    (50,000
    )
    
    
    (32,642
    )
    
    
    50,000
    
    
    
    (32,642
    )Financing activities:Net borrowings
    
    
    50,000
    
    
    
    65,036
    
    
    
    (50,000
    )
    
    
    65,036Change in book overdraft
    
    
    
    
    
    
    (4,066
    )
    
    
    
    
    
    
    (4,066
    )Issuance of common stock
    
    
    418
    
    
    
    
    
    
    
    
    
    
    
    418Net cash provided by financing activities
    
    
    50,418
    
    
    
    60,970
    
    
    
    (50,000
    )
    
    
    61,388Net decrease in cash and cash equivalents
    
    
    
    
    
    
    (17,107
    )
    
    
    
    
    
    
    (17,107
    )Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    21,842
    
    
    
    
    
    
    
    21,842Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    4,735
    
    
    $
    
    
    
    $
    4,735
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Quarter Ended March 31, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedNet cash used in operating activities
    
    $
    
    
    
    $
    (54,681
    )
    
    $
    
    
    
    $
    (54,681
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    (28,172
    )
    
    
    
    
    
    
    (28,172
    )Change in restricted cash used to fund
capital expenditures
    
    
    
    
    
    
    (3,899
    )
    
    
    
    
    
    
    (3,899
    )Other
    
    
    
    
    
    
    (400
    )
    
    
    
    
    
    
    (400
    )Net cash used in investing activities
    
    
    
    
    
    
    (32,471
    )
    
    
    
    
    
    
    (32,471
    )Financing activities:Net borrowings
    
    
    
    
    
    
    61,858
    
    
    
    
    
    
    
    61,858Change in book overdraft
    
    
    
    
    
    
    (3,991
    )
    
    
    
    
    
    
    (3,991
    )Minority interest investment in subsidiary
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    30,000Net cash provided by financing activities
    
    
    
    
    
    
    87,867
    
    
    
    
    
    
    
    87,867Net increase in cash and cash equivalents
    
    
    
    
    
    
    715
    
    
    
    
    
    
    
    715Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    8,863
    
    
    
    
    
    
    
    8,863Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    9,578
    
    
    $
    
    
    
    $
    9,578
 18




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS CAUTIONARY LANGUAGE
 Certain sections of Managements Discussion and Analysis of Financial Condition and Results of
Operations 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 17 to the Condensed
Consolidated Financial Statements, the disclosures included below under Quantitative and
Qualitative Disclosures About Market Risk, and Item 1, Item 1A, Risk Factors, in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2006.
 OVERVIEW
 ®
    Recent Developments
 Operating Loss
  Production, Shipments and Pricing
  19




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##### Table of Contents



Raw Materials
  Liquidity
     Voluntary/Involuntary Termination Plans
  Termination of Scrap Supply Agreement
  Private Placement
  20




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##### Table of Contents



Merger Proposal
   Credit Arrangements and Covenant Compliance
   21




---



##### Table of Contents



RESULTS OF OPERATIONS
 Quarter ended March 31, 2007 versus quarter ended March 31, 2006
    22




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Cash Flow from Operating Activities
   23




---



##### Table of Contents



Cash Flow from Investing Activities
   Cash Flow from Financing Activities
   Liquidity and Capital Resources
     24




---



##### Table of Contents



25




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##### Table of Contents



$250 Million Term Loan Agreement
      $225 Million Revolving Credit Facility
  26




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##### Table of Contents



Convertible Debt
   $40 Million Series A Notes
  27




---



##### Table of Contents



20 Million Series B Notes
  10 Million Unsecured Note
  OFF-BALANCE SHEET ARRANGEMENTS
  CONTRACTUAL OBLIGATIONS
  28




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##### Table of Contents



Contractual Payments Due(Dollars in millions)Remainder
    
    
    2008 to
    
    
    2010 toTotal
    
    
    
    
    
    
    of 2007
    
    
    2009
    
    
    2011
    
    
    ThereafterLong-term debt
    
    $
    276.7
    
    
    
    (1
    )
    
    $
    4.4
    
    
    $
    199.2
    
    
    $
    73.1
    
    
    $
    Interest on long-term debt
    
    
    55.3
    
    
    
    (2
    )
    
    
    13.9
    
    
    
    34.7
    
    
    
    6.7
    
    
    
    Capital leases
    
    
    6.2
    
    
    
    (1
    )
    
    
    0.7
    
    
    
    1.7
    
    
    
    1.4
    
    
    
    2.4Long-term operating leases
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long term liabilities:Steelworker Pension Trust
    
    
    17.4
    
    
    
    (4
    )
    
    
    9.2
    
    
    
    8.2
    
    
    
    
    
    
    
    OPEB
    
    
    30.1
    
    
    
    (5
    )
    
    
    3.5
    
    
    
    11.7
    
    
    
    14.9
    
    
    
    Coal miner retiree medical
    
    
    1.6
    
    
    
    
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    1.2Workers compensation
    
    
    27.5
    
    
    
    (6
    )
    
    
    4.3
    
    
    
    11.6
    
    
    
    11.6
    
    
    
    Purchase commitments:Oxygen supply
    
    
    91.0
    
    
    
    (7
    )
    
    
    7.7
    
    
    
    20.0
    
    
    
    23.2
    
    
    
    40.1Electricity
    
    
    81.8
    
    
    
    (8
    )
    
    
    5.6
    
    
    
    15.0
    
    
    
    14.0
    
    
    
    47.2Coal
    
    
    6.3
    
    
    
    (9
    )
    
    
    6.3
    
    
    
    
    
    
    
    
    
    
    
    Coal
    
    
    5.7
    
    
    
    (10
    )
    
    
    5.7
    
    
    
    
    
    
    
    
    
    
    
    Capital commitments
    
    
    10.4
    
    
    
    (11
    )
    
    
    10.4
    
    
    
    
    
    
    
    
    
    
    
    Capital contribution  MSC
    
    
    9.5
    
    
    
    
    
    
    
    9.5
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    619.5
    
    
    
    
    
    
    $
    81.3
    
    
    $
    302.3
    
    
    $
    145.0
    
    
    $
    90.9
 
 1.
    
    Represents scheduled principal payments on existing indebtedness.2.
    
    Represents estimated interest payments on existing long-term debt, including amortization of
debt discount of $10.1 million on convertible debt.3.
    
    Represents scheduled principal payments on existing capital lease obligations.4.
    
    Amount represents estimated payments to the Steelworkers Pension Trust, pursuant to our labor
agreement with the USW, through the end of the labor contract, which expires on September 1,
2008.5.
    
    Amounts reflect our current estimate of corporate cash outflows for other post employment
benefits and include the impact of assumed mortality, medical inflation and the aging of the
population. No estimate has been made beyond 2011.6.
    
    Amounts 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. No estimate has been made beyond 2011.7.
    
    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 $0.7 million, subject to escalation clauses.8.
    
    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 $0.5 million, subject to increases for inflation, and a variable
charge calculated at a minimum of $3.75 times the number of tons of iron produced each month
with an agreed-to minimum of 3,250 tons per day, regardless of whether any tons are produced.
At March 31, 2007, a maximum termination payment of $27.7 million would have been required to
terminate the contract.9.
    
    In 2004, we amended our contract to purchase coal each month to a minimum monthly charge of
approximately $0.7 million. The term of the contract expires on December 31, 2007.10.
    
    In 2005, we entered into contracts to purchase 20,000 tons of coal each month from August
2006 through May 2007 at a price approximating $94.50 per ton.11.
    
    Amounts reflect contractual commitments for capital expenditures as of March 31, 2007. Planned Capital Expenditures
  
    
    $81.6 million for improvements to our primary production facility;
    
    $44.8 million for improvements of our finishing facilities;
 29




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##### Table of Contents




    
    $7.4 million for improvements of our corrugating facility; and
    
    $27.9 million for environmental projects.
  VEBA TRUST AND PROFIT SHARING PLANS
   VEBA Trust
  (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.
   30




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##### Table of Contents



Profit Sharing Plans
    31




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Fresh Start Reporting
  Pension Benefits
     Other Postretirement Benefits (OPEB)
  32




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##### Table of Contents



Asset impairments
  Deferred taxes
  Environmental and legal contingencies
  33




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##### Table of Contents



RECENT ACCOUNTING STANDARDS
   
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Commodity Price Risk and Related Risks
   Interest Rate Risk
   34




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##### Table of Contents



Credit Risk
  Foreign Currency Exchange Risk
  
 Item 4. CONTROLS AND PROCEDURES
   35




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 6. EXHIBITS
 (a) Exhibits
 Exhibit No.
    
    Description31.1
    
    Certification of James P. Bouchard, Chief Executive Officer of the Registrant, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) certification).31.2
    
    Certification of Paul J. Mooney, Chief Financial Officer of the Registrant, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) certification).32.1
    
    Certification of James P. Bouchard, Chief Executive Officer of the Registrant, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).32.2
    
    Certification of Paul J. Mooney, Chief Financial Officer of the Registrant, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
 36




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##### Table of Contents



SIGNATURES
  WHEELING-PITTSBURGH CORPORATION/s/
    
    Paul J. MooneyPaul J. MooneyChief Financial Officer(Authorized Officer, Principal Financial Officer
and Principal Accounting Officer)
  37