##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q x
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended March 31, 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 (Exact name of registrant as specified in its charter) 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 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 per value per share
(Title of Class) 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  þ  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  þ There was no market value for shares of the registrants Common Stock, par
value $0.01 per share, as of the last business day of the registrants second
fiscal quarter ended June 30, 2003. 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  þ  No  o The registrant had 10,000,000 shares of its common stock, par value $0.01
per share, issued and outstanding as of April 30, 2004. Documents Incorporated by Reference: None




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TABLE OF CONTENTS PART I.
    
    FINANCIAL INFORMATION
    
    
    2ITEM 1.
    
    Financial Statements (Unaudited)
    
    
    2Consolidated Statements of Operations
    
    
    2Reorganized CompanyQuarter ended March 31, 2004
    
    
    2Predecessor CompanyQuarter ended March 31, 2003
    
    
    2Consolidated Balance Sheet
    
    
    3Reorganized CompanyAs of March 31, 2004
    
    
    3As of December 31, 2003
    
    
    3Consolidated Statements of Cash Flows
    
    
    4Reorganized CompanyQuarter ended March 31, 2004
    
    
    4Predecessor CompanyQuarter ended March 31, 2003
    
    
    4Consolidated Statement of Shareholders Equity as of March 31, 2004
    
    
    5Notes to Consolidated Financial Statements
    
    
    6ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risks
    
    
    26ITEM 4.
    
    Controls and Procedures
    
    
    27PART II.
    
    OTHER INFORMATION
    
    
    28ITEM 6.
    
    Exhibits and Reports on Form 8-K
    
    
    28SIGNATURES
    
    
    29Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  1




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PART I 
 Item 1  Financial Statements 
 WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended March 31
(Unaudited)
(Dollars in Thousands except per share data) Reorganized Company
    
    
    Predecessor Company2004
    
    
    2003Revenues:Net sales, including sales to affiliates
of $65,340 and $67,544
    
    $
    274,206
    
    
    
    $
    238,672Cost and expenses:Cost of products sold, excluding
depreciation, including cost of products
sold to affiliates of $52,279 and $58,537
    
    
    256,069
    
    
    
    
    247,253Depreciation
    
    
    7,689
    
    
    
    
    17,445Selling, administrative and general expense
    
    
    14,946
    
    
    
    
    13,864Reorganization and professional fee expense
    
    
    
    
    
    
    
    3,300278,704
    
    
    
    
    281,862Operating loss
    
    
    (4,498
    )
    
    
    
    (43,190
    )Reorganization expense
    
    
    
    
    
    
    
    (9
    )Interest expense on debt
    
    
    (5,219
    )
    
    
    
    (3,651
    )Other income
    
    
    3,012
    
    
    
    
    1,234Loss before taxes
    
    
    (6,705
    )
    
    
    
    (45,616
    )Tax (benefit) provision
    
    
    (79
    )
    
    
    
    9Net loss
    
    $
    (6,626
    )
    
    
    $
    (45,625
    )Basic and diluted loss per shareattributable to common stockholders
    
    $
    (0.70
    )
    
    
    
    *Weighted average common shares
outstanding basic and diluted
    
    
    9,500,000
    
    
    
    
    *
   *
    
    Prior to reorganization, the Company was a wholly-owned subsidiary of WHX Corporation The accompanying notes are an integral part of the financial statements. 2




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##### Table of Contents



WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in Thousands) Reorganized CompanyMarch 31,
    
    December 31,2004
    
    2003ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,346
    
    
    $
    4,767Trade receivables, less allowance for doubtful
accounts of $2,358, and $2,061
    
    
    119,933
    
    
    
    104,025Inventories
    
    
    129,974
    
    
    
    146,895Prepaid expenses and deferred charges
    
    
    9,466
    
    
    
    11,583Total current assets
    
    
    262,719
    
    
    
    267,270Investment in associated companies
    
    
    42,154
    
    
    
    42,857Property, plant and equipment, at cost less
accumulated depreciation of $17,529 and $10,051
    
    
    405,210
    
    
    
    387,765Deferred income tax benefits
    
    
    23,250
    
    
    
    23,170Restricted cash
    
    
    71,176
    
    
    
    87,138Goodwill
    
    
    30,000
    
    
    
    30,000Deferred charges and other assets
    
    
    28,171
    
    
    
    30,686$
    862,680
    
    
    $
    868,886LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade payables
    
    $
    85,966
    
    
    $
    76,108Short term debt
    
    
    71,898
    
    
    
    79,251Payroll and employee benefits payable
    
    
    60,034
    
    
    
    57,862Accrued federal, state and local taxes
    
    
    11,151
    
    
    
    10,744Deferred income tax liabilities
    
    
    23,170
    
    
    
    23,170Accrued interest and other liabilities
    
    
    5,971
    
    
    
    9,672Long-term debt due in one year
    
    
    1,916
    
    
    
    2,698Total current liabilities
    
    
    260,106
    
    
    
    259,505Long-term debt
    
    
    340,318
    
    
    
    340,696Other employee benefit liabilities
    
    
    142,237
    
    
    
    142,433Other liabilities
    
    
    21,408
    
    
    
    21,639Total liabilities
    
    
    764,069
    
    
    
    764,273STOCKHOLDERS EQUITY:Common stock  $.01 Par value; 10 million shares
issued and outstanding
    
    
    100
    
    
    
    100Additional paid-in capital
    
    
    149,901
    
    
    
    149,901Deferred compensation
    
    
    (5,833
    )
    
    
    (6,458
    )Accumulated deficit
    
    
    (45,557
    )
    
    
    (38,930
    )98,611
    
    
    
    104,613$
    862,680
    
    
    $
    868,886
 The accompanying notes are an integral part of the financial statements. 3




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WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarter Ended March 31
(Unaudited)
(Dollars in Thousands) Reorganized Company
    
    
    Predecessor Company2004
    
    
    2003Cash flows from operating activities:Net loss
    
    $
    (6,626
    )
    
    
    $
    (45,625
    )Items not affecting cash from operating activities:Depreciation
    
    
    7,689
    
    
    
    
    17,445Other postretirement benefits
    
    
    (222
    )
    
    
    
    301Income taxes
    
    
    (79
    )
    
    
    
    Equity income of affiliated companies
    
    
    (2,122
    )
    
    
    
    (889
    )Loss on disposition of assets
    
    
    1
    
    
    
    
    Reorganization expense
    
    
    
    
    
    
    
    9Deferred compensation
    
    
    625
    
    
    
    
    Dividends from affiliated companies
    
    
    2,500
    
    
    
    
    2,500Decrease (increase) from working capital elements:Trade receivables
    
    
    (15,908
    )
    
    
    
    (5,845
    )Inventories
    
    
    16,921
    
    
    
    
    3,443Trade payables
    
    
    9,348
    
    
    
    
    14,196Other current assets
    
    
    2,118
    
    
    
    
    2,784Other current liabilities
    
    
    (1,122
    )
    
    
    
    262Other itemsnet
    
    
    1,307
    
    
    
    
    (1,975
    )Net cash provided by (used in) operating activities
    
    
    14,430
    
    
    
    
    (13,394
    )Cash flows from investing activities:Plant additions and improvements
    
    
    (24,135
    )
    
    
    
    (1,801
    )Payments from affiliates
    
    
    325
    
    
    
    
    600Construction of equipment using restricted cash
    
    
    15,962
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (7,848
    )
    
    
    
    (1,201
    )Cash flows from financing activities:Long-term debt payments
    
    
    (1,160
    )
    
    
    
    (473
    )Short term debt payments
    
    
    (7,353
    )
    
    
    
    Short term debt (DIP Facility) borrowings
    
    
    
    
    
    
    
    11,811Book overdraft
    
    
    510
    
    
    
    
    1,184Net cash provided by financing activities
    
    
    (8,003
    )
    
    
    
    12,522Decrease in cash and cash equivalents
    
    
    (1,421
    )
    
    
    
    (2,073
    )Cash and cash equivalents at beginning of period
    
    
    4,767
    
    
    
    
    8,543Cash and cash equivalents at end of period
    
    $
    3,346
    
    
    
    $
    6,470Supplemental InformationInterest paid in cash
    
    $
    3,877
    
    
    
    $
    2,933
 The accompanying notes are an integral part of the financial statements. 4




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WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
As of March 31, 2004
(Unaudited)
(Dollars in Thousands) Shares
    
    Common
    
    Additional
    
    Deferred
    
    RetainedOutstanding
    
    Stock
    
    Paid-in-Capital
    
    Compensation
    
    Earnings
    
    TotalPredecessor CompanyBalance at December 31, 2001
    
    
    100
    
    
    $
    0
    
    
    $
    335,138
    
    
    $
    0
    
    
    $
    (588,742
    )
    
    $
    (253,604
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57,567
    )
    
    
    (57,567
    )Balance at December 31, 2002
    
    
    100
    
    
    
    
    
    
    
    335,138
    
    
    
    
    
    
    
    (646,309
    )
    
    
    (311,171
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323,431
    
    
    
    323,431Fresh start adjustment
    
    
    (100
    )
    
    
    
    
    
    
    (335,138
    )
    
    
    
    
    
    
    322,878
    
    
    
    (12,260
    )Balance 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)
    
    
    9,500,000
    
    
    $
    95
    
    
    $
    142,405
    
    
    $
    0
    
    
    $
    0
    
    
    $
    142,500Shares issued on July 31,
2003 for restricted stock
award plans
    
    
    500,000
    
    
    
    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
    
    
    10,000,000
    
    
    $
    100
    
    
    $
    149,901
    
    
    $
    (6,458
    )
    
    $
    (38,930
    )
    
    $
    104,613Compensation expense recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    625
    
    
    
    
    
    
    
    625Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,626
    )
    
    
    (6,626
    )Balance at March 31, 2004
    
    
    10,000,000
    
    
    $
    100
    
    
    $
    149,901
    
    
    $
    (5,833
    )
    
    $
    (45,556
    )
    
    
    98,612
 The accompanying notes are an integral part of the financial statements. 5




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WHEELING-PITTSBURGH CORPORATION 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) General The consolidated balance sheet as of March 31, 2004, the consolidated
statement of operations for the quarters ended March 31, 2004 and 2003,
respectively, and the consolidated statement of cash flows for the three months
ended March 31, 2004 and 2003, respectively, have been prepared by
Wheeling-Pittsburgh Corporation (WPC or the Company) without audit. In the
opinion of management, all recurring adjustments necessary to present fairly
the consolidated financial position at March 31, 2004 and the results of
operations and changes in cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. This quarterly report on Form 10-Q
should be read in conjunction with the Companys Form 10-K for the year ended
December 31, 2003. The results of operations for the three months ended March
31, 2004 are not necessarily indicative of the operating results for the full
year. 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. Reclassification Certain reclassifications of prior year amounts have been made to conform to
the current year presentation. Most significantly, amounts in the prior year
Statement of Cash Flows for dividends from affiliated companies have been
reclassified from investing activities to operating activities. Business Segment The 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. Note 1- Bankruptcy and Reorganization On November 16, 2000, WPC and eight of our 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 for the Northern District of Ohio.
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. Following is a summary of some of the significant transactions consummated
on or about the effective date of our plan of reorganization: 6




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
    
    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 Corp. (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 State of West Virginia, 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 cancellation of approximately $40 million in debt
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 million shares of its new common stock constituting 40%
thereof for the benefit of USWA retirees in satisfaction of certain
claims under our labor agreement and an additional 1 million 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 March 31, 2004, approximately 85,811 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 7




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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. Note 2  Fresh-Start Reporting In accordance with Statement of Position (SOP) 90-7, Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code, the Company adopted
the provisions of fresh-start reporting as of July 31, 2003. In adopting the
requirements of fresh-start reporting, the Company engaged an independent
financial advisor to assist in the determination of the enterprise value of the
entity. This value was 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 consolidated financial statements from and after the effective date of
our reorganization 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). 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. Since the financial statements for
periods subsequent to July 31, 2003 have been prepared as if the Company is a
new reporting entity, a black line has been shown on the financial statements
to separate current results from prior-period information because they are not
prepared on a comparable basis. The adjustments entitled Reorganization 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 Fair Value Adjustments reflect the adoption of
fresh-start reporting, including the adjustments to record property and
equipment at its fair value. A reconciliation of fresh-start accounting recorded as of July 31, 2003
follows: 8




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WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
REORGANIZED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited) Pre-Reorganization
    
    Reorganization
    
    Fresh Start
    
    Post-Reorganization7/31/2003
    
    Adjustments
    
    Adjustments
    
    7/31/2003ASSETSCurrent 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 associated company
    
    
    59,982
    
    
    
    
    
    
    
    (19,505
    ) [d]
    
    
    40,477Property, plant and equipment, at cost less
accumulated depreciation
    
    
    493,514
    
    
    
    
    
    
    
    (133,301
    ) [d]
    
    
    360,213Deferred income tax benefits
    
    
    27,342
    
    
    
    (3,860
    ) [b]
    
    
    
    
    
    
    23,482Restricted cash   long term
    
    
    
    
    
    
    112,000
    
    
    
    
    
    
    
    112,000Deferred charges and other assets
    
    
    8,964
    
    
    
    42,844
    [g]
    
    
    9756
    [g]
    
    
    61,564$
    880,714
    
    
    $
    150,763
    
    
    $
    (152,708
    )
    
    $
    878,769LIABILITIES & 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]
    
    
    
    
    
    
    11,254Deferred income tax liabilities
    
    
    27,342
    
    
    
    (3,860
    ) [a]
    
    
    
    
    
    
    23,482Accrued interest and other liabilities
    
    
    8,026
    
    
    
    2,647
    [a]
    
    
    
    
    
    
    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]
    
    
    
    
    
    
    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]
    
    
    149,900Restricted stock
    
    
    
    
    
    
    (7,500
    ) [e]
    
    
    
    
    
    
    (7,500
    )Accumulated earnings (deficit)
    
    
    (722,793
    )
    
    
    540,363
    [b], [c], [f]
    
    
    182,430
    [d]
    
    
    (387,655
    )
    
    
    682,863
    
    
    
    (152,708
    )
    
    
    142,500$
    880,714
    
    
    $
    150,763
    
    
    $
    (152,708
    )
    
    $
    878,769
 9




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##### Table of Contents



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). Also, reflects the cancellation of debt income. [d] Reflects the adjustments to reflect Fresh Start accounting. These entries
include the write-down of property, plant and equipment and joint venture
interests to their appraised values, elimination of retained earnings 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, intangible asset related to joint venture supply
agreements, and goodwill. Note 3  Inventories Inventories 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. March 31, 2004
    
    December 31, 2003Finished Products
    
    $
    29,154
    
    
    $
    31,227In-Process
    
    
    84,161
    
    
    
    90,170Raw Materials
    
    
    18,322
    
    
    
    26,808Other Materials and Supplies
    
    
    25
    
    
    
    378131,662
    
    
    
    148,583LIFO Reserve
    
    
    (1,688
    )
    
    
    (1,688
    )$
    129,974
    
    
    $
    146,895
 Note 4  Loss Per Share Basic loss per share is calculated by dividing net loss attributable to
common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted loss per share is calculated by dividing
net loss attributable to common shareholders by the weighted average number of
common shares outstanding adjusted for potentially dilutive securities. Pursuant to the plan of reorganization, WPC cancelled all shares of its
common stock that existed prior to the reorganization, at which point we ceased
to be a subsidiary of WHX Corporation. WPC issued ten million shares of its new
common stock in satisfaction of certain claims. The ten million shares issued
included 500,000 shares issued as restricted stock awards, which vest over
three years, one-third on each anniversary date. The restricted stock awards
are excluded from the basic weighted average shares outstanding until such time
as the restrictions lapse. Outstanding stock options and restricted stock
grants are anti-dilutive and excluded from the calculation. There were 22,187
shares of outstanding stock options as of March 31, 2004. 10




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##### Table of Contents



Loss Per ShareThree Months Ended March 31, 2004Loss
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    AmountBasic EPS and diluted EPS lossAvailable to common shareholders
    
    $
    (6,626
    )
    
    
    9,500,000
    
    
    $
    (0.70
    )
 Note 5  Contingencies Environmental Matters Prior to confirmation of our plan of reorganization effective August 1,
2003, we settled all pre-petition environmental liability claims made by state
(Ohio, West Virginia, Pennsylvania) and federal (USEPA) environmental
regulatory agencies. Consequently, we believe we have settled and/or discharged
environmental liability for any CERCLA (Superfund) sites, pre-petition
stipulated penalties related to active consent decrees, or other pre-petition
regulatory enforcement actions. Currently, we estimate that stipulated penalties and fines for
post-petition events and activities through March 31, 2004 total $2.1 million.
These claims arise from instances in which we exceeded post-petition consent
decree terms, including: (a) $0.2 million related to a July 1991 USEPA consent
decree for water discharges to the Ohio River; (b) $0.1 million related to a
September 20, 1999 Ohio EPA consent decree for our coke oven gas
desulfurization facility; and (c) $1.8 million related to a January 30, 1996
USEPA consent decree for our coke oven gas desulfurization facility. In September 2000, we entered into a consent order with the West Virginia
Department of Environmental Protection wherein we agreed to remove contaminated
sediments from the bed of the Ohio River. We spent approximately $1.4 million
on these activities in 2002 and an additional $0.4 million in 2003. During
removal activities in 2003, we discovered a broader area of contaminated
sediments. We identified the spatial limits of these contaminated sediments and
estimate their removal costs at $4.0 million. We are 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 our
Coke Plant in Follansbee, West Virginia. USEPA has approved our investigation
Workplan, and field activities are scheduled for 2004. Following our
investigation we will perform a Corrective Measures Study to determine possible
remedial measures. We expect some remediation measures will be necessary and
could commence within the next three to five years. We have reserved
approximately $5.2 million for such remediation measures. However, the
field investigation is not completed and our remediation plan has yet
to be submitted to the USEPA; therefore, the
full extent and cost of remediation could be different from our 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 including RCRA and the CAA. Many of the issues have been resolved
and settled prior to emergence from Chapter 11 bankruptcy. We have reserved
$1.4 million for resolution of outstanding issues. Capital expenditures for environmental projects totaled $0.3 million for
the three months ended March 31, 2004 and $1.0 in 2003. We estimate capital
expenditures for environmental projects to be $4.0 million for 2004, $10.1
million for 2005 and 7.0 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 $14.8 million at
March 31, 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. 11




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##### Table of Contents



Note 6  Common Stock Compensation In accordance with our plan of reorganization, we established a restricted
stock plan pursuant to which we have granted to selected key employees a total
of 500,000 shares of our common stock, as of the effective date of our plan of
reorganization. All of the grants made under the plan will vest in increments
of one-third of the total grant to each individual pro rata over three years.
Restricted stock expense related to the restricted stock awards totaled $0.6
million for the three months ended March 31, 2004. On November 15, 2003, 17,793 stock options were granted at a price of
$6.95 per share to Classes 1,2 and 3 Directors of the Board of Directors of the
Company. On March 15, 2004, 4,394 stock options were granted at a price of
$24.04 per share to the same directors. Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation (SFAS 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
discloses the pro forma effect as if the fair value method had been applied.
The following table illustrates the effect on net loss per share if the Company
had applied the fair value recognition provisions of SFAS 123 to stock based
employee compensation. (Dollars in Thousands except Earnings per Share Amounts)Reorganized Company
    
    
    Predecessor CompanyFor the Quarter Ended
    
    
    For the Quarter EndedMarch 31, 2004
    
    
    March 31, 2003Net loss
    
    $
    (6,626
    )
    
    
    $
    (45,625
    )Add: Deferred compensation expense
    
    
    625
    
    
    
    
    Less: Total stock-based employee
compensation expense determined
under fair value method for all
awards and deferred compensation
expense
    
    
    (717
    )
    
    
    
    Pro forma net loss
    
    $
    (6,718
    )
    
    
    $
    (45,625
    )Loss per share:Basic and diluted as reported
    
    $
    (0.70
    )
    
    
    
    *Pro forma
    
    $
    (0.71
    )
    
    
    
    *
   *
    
    Prior to reorganization, the Company was a wholly-owned subsidiary of WHX Corporation. Note 7  Summarized combined financial information of the subsidiary guarantors
of the $250 million senior secured term loan facility and $225 million senior
secured revolving credit facility WPSC entered into a $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 the Companys tangible and intangible assets
(other than accounts receivable and inventory) and the Companys equity
interests in our joint ventures and a second lien on our accounts receivable
and inventory. The Company also entered into a $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. Each guarantor subsidiary is 100% owned by WPC
or one of its 100% owned subsidiaries, and any subsidiary of WPC that is not a
guarantor is a minor subsidiary individually and all such non guarantor
subsidiaries in the aggregate are minor. Condensed consolidating financial
information for the Company and the subsidiary guarantors are as follows: 12




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEETS
Reorganized Company March 31, 2004(Dollars in Thousands)Subsidiary
    
    Consolidating and
    
    WPCWPC
    
    Guarantors
    
    Eliminating Entries
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    3,346
    
    
    $
    
    
    
    $
    3,346Trade accounts receivables
    
    
    
    
    
    
    119,933
    
    
    
    
    
    
    
    119,933Inventories
    
    
    
    
    
    
    129,974
    
    
    
    
    
    
    
    129,974Other current assets
    
    
    12
    
    
    
    9,454
    
    
    
    
    
    
    
    9,466Total current assets
    
    
    12
    
    
    
    262,707
    
    
    
    
    
    
    
    262,719Intercompany receivables
    
    
    
    
    
    
    758
    
    
    
    (758
    )
    
    
    Property, plant and equipment  net
    
    
    
    
    
    
    405,210
    
    
    
    
    
    
    
    405,210Investments and advances in affiliates
    
    
    98,024
    
    
    
    42,154
    
    
    
    (98,024
    )
    
    
    42,154Restricted cash
    
    
    
    
    
    
    71,176
    
    
    
    
    
    
    
    71,176Other non-current assets
    
    
    975
    
    
    
    80,446
    
    
    
    
    
    
    
    81,421Total Assets
    
    $
    99,011
    
    
    $
    862,451
    
    
    $
    (98,782
    )
    
    $
    862,680Liabilities and Stockholders EquityAccounts payable
    
    $
    
    
    
    $
    85,966
    
    
    $
    
    
    
    $
    85,966Other current liabilities
    
    
    22
    
    
    
    174,118
    
    
    
    
    
    
    
    174,140Total current liabilities
    
    
    22
    
    
    
    260,084
    
    
    
    
    
    
    
    260,106Liabilities subject to compromise
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intercompany payable
    
    
    758
    
    
    
    
    
    
    
    (758
    )
    
    
    Long term debt
    
    
    
    
    
    
    482,555
    
    
    
    
    
    
    
    482,555Other non-current liabilities
    
    
    360
    
    
    
    21,048
    
    
    
    
    
    
    
    21,408Stockholders equity
    
    
    97,871
    
    
    
    98,764
    
    
    
    (98,024
    )
    
    
    98,611Total Liabilities and Stockholders Equity
    
    $
    99,011
    
    
    $
    862,451
    
    
    $
    (98,782
    )
    
    $
    862,680
 Reorganized Company December 31, 2003(Dollars in Thousands)Subsidiary
    
    Consolidating and
    
    WPCWPC
    
    Guarantors
    
    Eliminating Entries
    
    ConsolidatedAssetsCash 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
    )
    
    
    Property, plant and equipment  net
    
    
    
    
    
    
    387,765
    
    
    
    
    
    
    
    387,765Investments and advances in affiliates
    
    
    104,593
    
    
    
    42,857
    
    
    
    (104,593
    )
    
    
    42,857Other non-current assets
    
    
    896
    
    
    
    170,098
    
    
    
    
    
    
    
    170,994Total 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
 13




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Reorganized Company For the Quarter Ended March 31, 2004(Dollars in Thousands)Subsidiary
    
    Consolidating and
    
    WPCWPC
    
    Guarantors
    
    Eliminating Entries
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    274,206
    
    
    $
    
    
    
    $
    274,206Cost of products sold, excluding depreciation
    
    
    
    
    
    
    256,069
    
    
    
    
    
    
    
    256,069Depreciation
    
    
    
    
    
    
    7,689
    
    
    
    
    
    
    
    7,689Selling, administrative and general expense
    
    
    253
    
    
    
    14,693
    
    
    
    
    
    
    
    14,946Reorganization and professional fee expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating loss
    
    
    (253
    )
    
    
    (4,245
    )
    
    
    
    
    
    
    (4,498
    )Interest expense

    
    
    
    
    
    
    (5,219
    )
    
    
    
      
    
    (5,219
    )Other income including equity earnings (losses)
of affiliates
    
    
    (7,193
    )
    
    
    3,012
    
    
    
    7,193
    
    
    
    3,012Income (loss) before tax
    
    
    (7,446
    )
    
    
    (6,452
    )
    
    
    7,193
    
    
    
    (6,705
    )Tax provision (benefit)
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    (79
    )Net income (loss)
    
    $
    (7,367
    )
    
    $
    (6,452
    )
    
    $
    7,193
    
    
    $
    (6,626
    )
 Predecessor Company For the Quarter Ended March 31, 2003(Dollars in Thousands)Subsidiary
    
    Consolidating and
    
    WPCWPC
    
    Guarantors
    
    Eliminating Entries
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    238,672
    
    
    $
    
    
    
    $
    238,672Cost of products sold, excluding depreciation
    
    
    
    
    
    
    247,253
    
    
    
    
    
    
    
    247,253Depreciation
    
    
    
    
    
    
    17,445
    
    
    
    
    
    
    
    17,445Selling, administrative and general expense
    
    
    289
    
    
    
    13,575
    
    
    
    
    
    
    
    13,864Reorganization and professional fee expense
    
    
    
    
    
    
    3,300
    
    
    
    
    
    
    
    3,300Operating loss
    
    
    (289
    )
    
    
    (42,901
    )
    
    
    
    
    
    
    (43,190
    )Reorganization income (expense)
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Interest expense
    
    
    
    
    
    
    (4,899
    )
    
    
    1,248
    
    
    
    (3,651
    )Other income including equity earnings (losses)
of affiliates
    
    
    (44,778
    )
    
    
    600
    
    
    
    45,412
    
    
    
    1,234Income (loss) before tax
    
    
    (45,067
    )
    
    
    (47,209
    )
    
    
    46,660
    
    
    
    (45,616
    )Tax provision (benefit)
    
    
    558
    
    
    
    (549
    )
    
    
    
    
    
    
    9Net income (loss)
    
    $
    (45,625
    )
    
    $
    (46,660
    )
    
    $
    46,660
    
    
    $
    (45,625
    )
 14




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Reorganized Company For the Quarter Ended March 31, 2004(Dollars in Thousands)Subsidiary
    
    Consolidating andWPC
    
    Guarantors
    
    Eliminating Entries
    
    WPC ConsolidatedNet cash provided by operating activities
    
    $
    
    
    
    $
    14,430
    
    
    $
    
    
    
    $
    14,430Investing activities:Capital expenditures
    
    
    
    
    
    
    (24,135
    )
    
    
    
    
    
    
    (24,135
    )Construction of equipment using restricted cash
    
    
    
    
    
    
    15,962
    
    
    
    
    
    
    
    15,962Other
    
    
    
    
    
    
    325
    
    
    
    
    
    
    
    325Net cash used in investing activities
    
    
    
    
    
    
    (7,848
    )
    
    
    
    
    
    
    (7,848
    )Financing activities:Net repayments
    
    
    
    
    
    
    (1,160
    )
    
    
    
    
    
    
    (1,160
    )Book overdraft
    
    
    
    
    
    
    510
    
    
    
    
    
    
    
    510Other
    
    
    
    
    
    
    (7,353
    )
    
    
    
    
    
    
    (7,353
    )Net cash used in financing activities
    
    
    
    
    
    
    (8,003
    )
    
    
    
    
    
    
    (8,003
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    (1,421
    )
    
    
    
    
    
    
    (1,421
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    4,767
    
    
    
    
    
    
    
    4,767Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    3,346
    
    
    $
    
    
    
    $
    3,346
 Predecessor Company For the Quarter Ended March 31, 2003(Dollars in Thousands)Subsidiary
    
    Consolidating andWPC
    
    Guarantors
    
    Eliminating Entries
    
    WPC ConsolidatedNet cash used in operating activities
    
    $
    (5
    )
    
    $
    (13,389
    )
    
    $
    
    
    
    $
    (13,394
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    (1,801
    )
    
    
    
    
    
    
    (1,801
    )Other
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    600Net cash used in investing activities
    
    
    
    
    
    
    (1,201
    )
    
    
    
    
    
    
    (1,201
    )Financing activities:Net borrowings
    
    
    
    
    
    
    11,338
    
    
    
    
    
    
    
    11,338Book overdraft
    
    
    
    
    
    
    1,184
    
    
    
    
    
    
    
    1,184Net cash provided by financing activities
    
    
    
    
    
    
    12,522
    
    
    
    
    
    
    
    12,522Net change in cash and cash equivalents
    
    
    (5
    )
    
    
    (2,068
    )
    
    
    
    
    
    
    (2,073
    )Cash and cash equivalents at beginning of period
    
    
    37
    
    
    
    8,506
    
    
    
    
    
    
    
    8,543Cash and cash equivalents at end of period
    
    $
    32
    
    
    $
    6,438
    
    
    $
    
    
    
    $
    6,470
 Note 8  New Accounting Standards As part of the provisions of SOP 90-7, we were required to adopt on July
31, 2003 all accounting guidance that was going to be effective within a
twelve-month period. In January 2004, the FASB issued FASB Staff Position (FSP) No. FAS 106-1,
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003. The FSP addresses disclosure
requirements which permit a sponsor of a postretirement health care plan that
provides a prescription drug benefit to make a one-time election to defer
accounting for the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act). Signed into law on December 8, 2003,
the Act introduces a prescription drug benefit under Medicare Part D as well as
a federal subsidy to sponsors of retiree health care benefit plans that provide
a benefit that is at least actuarially equivalent to Medicare Part D. However,
certain accounting issues raised by the Act, in particular, how to account for the
federal subsidy, are not explicitly addressed by SFAS 106, Employers
Accounting for Postretirement Benefits Other Than Pension. Therefore, a plan
sponsor may elect to defer recognizing the effects of the Act in accounting for
its plan under SFAS 106 until further guidance 15




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##### Table of Contents



is provided. The Company has
elected to defer the recognition of the Act and is currently reviewing the
financial statement impact of adopting the final provisions of the Act when
issued. The Company adopted (SFAS) 132-R (revised 2003), Employers Disclosures
about Pensions and Other Postretirement Benefits an amendment of FASB
Statements No. 87, 88, and 106". SFAS 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, under the SFAS 132-R, public
companies are required 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. Note 9  Post Retirement Benefits Other Than Pensions Net periodic costs for postretirement benefits other than pensions
(principally health care and life insurance) for employees and covered
dependents are shown in the table below. Post Retirement Benefits
Other Than Pensions
(Dollars in Thousands) Reorganized
    
    
    PredecessorCompany
    
    
    CompanyQuarter
    
    
    QuarterEnded
    
    
    EndedMarch 31, 2004
    
    
    March 31, 2003Components of net periodic cost:Service cost
    
    $
    733
    
    
    
    $
    729Interest cost
    
    
    1,835
    
    
    
    
    4,965Amortization of prior service credit
    
    
    
    
    
    
    
    (678
    )Recognized actuarial (gain)/loss
    
    
    286
    
    
    
    
    (159
    )Total
    
    $
    2,854
    
    
    
    $
    4,857
 
 Item 2  Managements Discussion and Analysis of Financial Condition and
Results of Operations Certain of the statements contained in this Quarterly Report on Form 10-Q,
including Managements Discussion and Analysis of Financial Condition and
Results of Operations, may contain projections or other forward-looking
statements regarding future events or the future financial performance of the
Company that involve risks and uncertainties. Readers are cautioned that these
forward-looking statements are only predictions and may differ materially from
actual future events or results. Because they discuss future events or
conditions, forward-looking statements often include words such as
anticipate, believe, estimate, expect, intend, plan, project,
target, can, could, may, should, will, would, or similar
expressions and the negative thereof. Readers are referred to Item 1  Business
under the heading Risk Factors in this Annual Report on Form 10-K, which
identifies important risk factors that could cause actual results to differ
from those contained in any such forward-looking statements. These risk factors
include, among others, the Companys potential inability to generate sufficient
operating cash flow to service or refinance its indebtedness, concerns relating
to financial covenants and other restrictions contained in its credit
agreements, intense competition, dependence on suppliers of raw materials, an
unscheduled outage of operating equipment, the difficulties involved in
constructing an electric arc furnace, and cyclical demand for steel products.
In addition, any forward-looking statements represent the Companys views only
as of the date of this filing and should not be relied upon as representing its
views as of any subsequent date. While the Company may elect to update these
forward-looking statements from time to time, it specifically disclaims any
obligation to do so. 16




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##### Table of Contents



Critical Accounting Policies/Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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, we adopted Fresh Start Reporting for our
reorganized company and recorded assets and liabilities at their fair values.
Equity value was determined with the assistance of independent advisors.
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 the new
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. Eligible pensioners and surviving spouses shall be required to make
monthly contributions for medical and prescription drug coverage. Because these
benefits provided by us will be paid in the future over what could be many
years, we use an independent actuary to help us estimate the accrued liability
at each year-end balance sheet date. 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 approximate increases in the
accumulated postretirement benefit obligation of $19.2 million. A 1% decrease
in the health care cost trend rate would result in approximate decreases in the
accumulated postretirement benefit obligation of $16.7 million. A 1 % increase
in the health care costs trend rate would result in approximate increases in
post-retirement benefit expenses of $1.8 million. A 1 % decrease in the health
care costs trend rate would result in approximate decreases in post-retirement
benefit expenses of $1.5 million. The discount rate applied to our OPEB obligations is based on an estimate
of the current interest rate at which our OPEB obligations could be settled at
the balance sheet date. In estimating this rate, we consider 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%. Asset Impairments Our company periodically evaluates 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. 17




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##### Table of Contents



Deferred Taxes Full realization of net deferred tax assets is dependent on the ability of
our company 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. Our company records 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 Our company provides for remediation costs, environmental penalties and
legal contingencies when the liability is probable and the amount of the
associated costs is reasonably determinable. Our company regularly monitors the
progress of environmental remediation and legal contingencies, and revises the
amounts recorded in the period in which changes in estimate occur. Conclusions
regarding exposure are developed in consultation with legal and environmental
counsel. New Accounting Standards As part of the provisions of SOP 90-7, we were required to adopt on July
31, 2003 all accounting guidance that was going to be effective within a
twelve-month period. In January 2004, the FASB issued FASB Staff Position (FSP) No. FAS 106-1,
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003. The FSP addresses disclosure
requirements which permit a sponsor of a postretirement health care plan that
provides a prescription drug benefit to make a one-time election to defer
accounting for the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act). Signed into law on December 8, 2003,
the Act introduces a prescription drug benefit under Medicare Part D as well as
a federal subsidy to sponsors of retiree health care benefit plans that provide
a benefit that is at least actuarially equivalent to Medicare Part D. However,
certain accounting issues raised by the Act, in particular, how to account for
the federal subsidy, are not explicitly addressed by SFAS 106, Employers
Accounting for Postretirement Benefits Other Than Pension. Therefore, a plan
sponsor may elect to defer recognizing the effects of the Act in accounting for
its plan under SFAS 106 until further guidance is provided. The Company has
elected to defer the recognition of the Act and is currently reviewing the
financial statement impact of adopting the final provisions of the Act when
issued. The Company adopted (SFAS) 132-R (revised 2003), Employers Disclosures
about Pensions and Other Postretirement Benefits an amendment of FASB
Statements No. 87, 88, and 106". SFAS 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, under the SFAS 132-R, public
companies are required 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. General 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 2001, 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 four 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 18




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##### Table of Contents



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. On November 16, 2000, WPC and eight of our 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 for the Northern District of Ohio,
referred to as the 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 noteholders, pre-petition trade creditors and unionized employees.
Our Third Amended Joint Plan of Reorganization was confirmed by order of the
Bankruptcy Court 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. 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 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 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 State of West Virginia, 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 cancellation of
approximately $40 million in debt 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. 19




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##### Table of Contents




    
    WPC and WPSC entered into an agreement with our unionized
employees represented by the United Steelworkers of America,
or USWA, which modified our existing labor agreement to
provide for, among other things, future pension arrangements
with USWA and reductions in our employee-related costs.  
    
    WPC issued 4,000,000 shares of its common stock constituting
40% thereof for the benefit of USWA retirees in satisfaction
of certain claims under our labor agreement and an additional
1,000,000 shares of its common stock constituting 10% thereof
for the benefit of our salaried employees.  
    
    WPC issued 1,590,000 shares of its 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 March 31, 2004, approximately 85,811 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. 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 March 31, 2004  Reorganized Company Net sales for the quarter ended March 31, 2004 totaled $274.2 million on
shipments of steel products totaling 538,701 tons. Steel prices averaged $509
per ton. Steel prices increased 16.1% over the prior quarter. Steel prices are
up due to raw material shortages and low imports. The average steel price per
ton reflects a mix of products that includes 28.2% hot rolled. Cost of goods sold totaled $256.1 million for the period. Cost of goods
sold averaged $475 per ton shipped. Raw material costs and fuel costs were
impacted by market prices higher than in recent years. The raw steel
production-operating rate during the period was 91.9%. The cost of purchased
scrap increased 56.7% over the prior quarter. Cost of other raw materials
increased 14.1%. The cost of natural gas increased 38.5% over the prior
quarter. Depreciation and amortization expense totaled $7.7 million for the period
on fixed assets totaling $405.2 million. Fixed assets were recorded at fair
value based on independent appraisals as part of the reorganization. Selling, administrative and general expense totaled $14.9 million for the
quarter. Interest expense totaled $5.2 million for the period. Long-term debt
totaled $340.3 million and borrowings under the revolving credit facility
ranged between $71.9 million and $84.1 million. Interest expense also includes
amortization of capitalized finance costs. Miscellaneous income totaled $3.0 million for the period and primarily
reflects equity earnings of our joint ventures. Net loss for the quarter ended March 31, 2004 totaled $6.6 million, or a
$0.70 loss per basic and diluted share. 20




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##### Table of Contents



Quarter Ended March 31, 2003  Predecessor Company Net sales for the quarter ended March 31, 2003 totaled $238.7 million on
shipments of steel products totaling 548,857 tons. Steel prices averaged $435
per ton. The average steel price per ton reflects a mix of products that
includes 26.1% hot rolled. Cost of goods sold totaled $247.3 million for the period. Cost of goods
sold averaged $450 per ton shipped. The raw steel production-operating rate
during the period was 96.9% Depreciation expense totaled $17.4 million for the period on fixed assets
totaling $514.9 million. Selling, administrative and general expense totaled $13.9 million for
quarter. Reorganization and professional fees related to the bankruptcy totaled
$3.3 million. Interest expense totaled $3.7 million for the period. Long-term debt
totaled $340.7 million and the revolving credit facility ranged between $139.3
million and $152.4 million. Interest expense also includes amortization of
capitalized finance costs. Miscellaneous income totaled $1.2 million for the period and primarily
reflects equity earnings of our joint ventures. Net loss for the quarter ended March 31, 2003 totaled $45.6 million.
Prior to reorganization, the Company was a wholly owned subsidiary of WHX
Corporation. 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. We have 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. We expect to use
the remainder of the proceeds to fund our ongoing operations, to service debt,
to fund working capital, to make capital expenditures on our existing
facilities and our planned construction of an electric arc furnace, and for
general corporate purposes. As of March 31, 2004, we had the following amounts available for our
working capital and planned capital expenditures: cash and cash equivalents of
approximately $3.3 million; $71.2 million of restricted cash from borrowings
under our term loan facility for construction of the electric arc furnace; and
$29.9 million of availability under our new revolving credit facility, after
giving effect to the current $50 million minimum availability requirement
discussed more fully below. We expect that the effects of a new labor
agreement, cancellation of indebtedness pursuant to our plan of reorganization
and improved business conditions will produce positive operating cash flows
through 2004. Therefore, we currently anticipate that we should be able to fund
our debt service obligations and satisfy our long-term cash requirements
without the need for additional funding. As of April 30, 2004, we had cash and cash equivalents of approximately
$3.0 million; $65.2 million of restricted cash for construction of the electric
arc furnace; and approximately $23.4 million of availability under our
revolving credit facility, after giving effect to a $50 million minimum
availability requirement. Our credit agreements require us to maintain borrowing availability of at
least $50 million under our revolving credit facility through December 31,
2004. After December 31, 2004, we will be required to maintain borrowing
availability of at least $25 million. We currently expect that we should be
able to maintain this level of borrowing availability through the end of the
current fiscal year. This expectation is based on our present belief that,
among other things, increased raw material costs will be recovered through
increased sales prices for our products and that the demand for and market price of steel products will increase in the near
future. However, if increased costs of raw materials cannot be recovered or if
market prices for steel products or customer demand do not rise as anticipated,
it is possible that our borrowing availability could fall below the current $50
million requirement. 21




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##### Table of Contents



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 Intangible Assets and
    
    Accounts Receivable andJoint Venture Equity Interest
    
    InventoryDebt obligation secured by first security interest
    
    $250 Million Term Loan
    
    $225 Million RevolvingCredit FacilityDebt obligation secured by second security
interest
    
    $40 Million Series A Notes
    
    $250 Million Term LoanDebt obligation secured by third security interest
    
    $225 $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. Off-Balance Sheet Arrangements As of the date of this report we have 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 that are accounted for under the equity
method. Pursuant to the joint venture agreements with OCC and Wheeling-Nisshin,
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. 22




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##### Table of Contents



Contractual Commitments As of March 31, 2004, the total of our future contractual obligations,
including the repayment of debt obligations, is summarized below. Contractual Payments DueTotal
    
    From March 31, 2004
    
    2005 to 2006
    
    2007 to 2008
    
    Thereafter(Dollars in Millions)Long-Term Debt(1)
    
    $
    411.7
    
    
    $
    17.8
    (2)
    
    $
    85.3
    (3)
    
    $
    225.2
    (4)
    
    $
    83.4
    (5)Capital Leases
    
    
    11.0
    
    
    
    1.3
    
    
    
    2.4
    
    
    
    1.8
    
    
    
    5.5Operating Leases:Long Term
    
    
    10.2
    
    
    
    1.3
    
    
    
    3.6
    
    
    
    3.6
    
    
    
    1.7Month to Month
    
    
    49.0
    
    
    
    6.4
    
    
    
    17.0
    
    
    
    17.0
    
    
    
    8.5Other Long Term Liabilities:OPEB
    
    
    100.1
    (6)
    
    
    4.3
    
    
    
    7.6
    
    
    
    9.4
    
    
    
    475.7Severance
    
    
    27.7
    (7)
    
    
    12.3
    
    
    
    12.6
    
    
    
    2.3
    
    
    
    .5Coal Miner Retiree Medical
    
    
    2.9
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    2.0Workers Compensation
    
    
    20.9
    (8)
    
    
    3.8
    
    
    
    10.1
    
    
    
    10.1
    
    
    
    5.1Purchase Commitments:Oxygen Supply
    
    
    76.8
    (9)
    
    
    5.4
    
    
    
    14.4
    
    
    
    14.4
    
    
    
    42.6Electricity
    
    
    120.7
    (10)
    
    
    6.8
    
    
    
    19.6
    
    
    
    22.1
    
    
    
    72.3Coal
    
    
    73.7
    (11)
    
    
    14.3
    
    
    
    39.6
    
    
    
    19.8
    
    
    
    Other
    
    
    2.0
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    Capital Commitments
    
    
    67.5
    (12)
    
    
    65.1
    
    
    
    2.4
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    974.2
    
    
    $
    140.9
    
    
    $
    215.0
    
    
    $
    326.1
    
    
    $
    697.3
   (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 during the projection period.(2)
    
    Includes interest payment obligations for the remainder of 2004 of approximately: $7.5 million in respect of the term loan; $2.4 million in respect of the Series A notes and the Series B notes; $460,000 in respect of the WHX note; $305,000 in respect of the loan agreement with the State of West Virginia; $112,000 in respect of the loan modification agreement with the Ohio Department of Development; $73,000 in respect of the modification and assumption agreement with D
anieli Corporation; and $3,000 in respect of the notes issued to Fata Hunter.(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; and $107,000 in respect of the modification and assumption agreement with Danieli Corporation.(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; and $5,000 in respect of the modification and assumption agreement with Danieli Corporation.(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 note.(6)
    
    Represents the estimated present value of our liability as of March 31, 2004. Amounts included for 2004 through 2008 and thereafter reflect our current estimate of corporate cash outflows and include the impact of assumed mortality, medical inflation and
the aging of the population. 23




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(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 March 31, 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)
    
    The Company entered into a 15-year take-or-pay contract in 1999 that was amended in 2003. The contract requires the Company 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)
    
    The Company entered into a 20-year take-or-pay contract in 1999, which was amended in 2003. The contract requires the Company 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, as of December 31, 2003, a maximum termination payment of $37.0 million would be required.(11)
    
    In 2004, the Company 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 cap collar. Payments for deliveries of coal totaled $11.8 million in 2003, $16.4 million in 2002 and $7.3 million in 2001. If the Company
elects to terminate the contract, a maximum termination payment of $37.4 million would be required.(12)
    
    In June 2003, the Company 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 the Company 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 March 31, 2004, capital commitments remaining under the project total $65.1 million. Planned Capital Expenditures Our planned capital expenditures for the three-year period 2004 through
2006 total approximately $272.3 million, and include, but are not limited to,
the following capital expenditure projects:  
    
    $88.0 million remaining for construction of the electric arc
furnace, scheduled for completion in late 2004. At March 31, 2004,
$71.2 million remained to be spent and is fully funded through a
restricted cash account;
    
    $76.0 million toward substantial 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 targeted for completion in 2007, at an aggregate cost
estimated at approximately $85.0 million;
    
    $12.5 million for installation of hot strip mill automatic roll
changers at our Mingo Junction facility, expected to occur in 2006; and
    
    $10.4 million for cold mill improvements at our Allenport facility,
expected to occur in 2005 and 2006. 24




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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, the installation of the hot strip
mill automatic roll changers and the cold mill improvements projects identified
above, 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.
Our planned capital expenditures for 2004 through 2006 exceed current
limitations applicable to such spending under the existing terms of our credit
agreements. Additionally, funding, if required, for these projects has not yet
been determined. In the quarter ended March 31, 2004, we incurred approximately $24.1
million of the planned capital expenditure amounts included in our business
plan. 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 death benefits to certain retirees and their dependents. The trust
created under the benefits plan, which we refer to as the VEBA trust, is
designed to constitute a tax-exempt voluntary employee beneficiary association.
Pursuant to our plan of reorganization, we issued 4 million 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 below in more detail below), the
agreement with the USWA provided monthly cash contributions by the Company of
$1.5 million, beginning in October 2003 and continuing through March 2004, and
$0.3 million from April 2004 through October 2004 (collectively, the Initial
Funding Obligation. These contributions are to be creditable against variable
contributions earned under (i), (ii), or (iii), below.  (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. Through the first quarter ended March 31, 2004, no Variable Contributions
had been made or incurred. Operating cash flow for purposes of determining such contribution
amounts is defined as earnings before interest and taxes of the Company
adjusted for certain amounts as set forth in the trust agreement. As of March 31, 2004, we had 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 shares of the
Initial Shares, at its discretion  
    
    the proceeds of the sale of 400,000 of the Initial Shares and the
$3.0 million cash contribution previously made will be credited against
future Variable Contributions, if any; and 25




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##### Table of Contents




    
    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, we have discretion to apply up to 1.6
million of the Initial Shares as a credit against such future contribution
amounts to the trust. Shares of WPC common stock contributed to the trust in
satisfaction of our obligations are valued based on the closing price of WPC
common stock for the 10 trading days immediately preceding the date of
contribution Profit Sharing Plan Pursuant to the collective bargaining agreement with the USWA, we have an
obligation to make quarterly profit sharing payments to or for the benefit of
our USWA employees in an amount equal to 15% of our profits for the quarter, if
any, over $30 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. No profit sharing obligations have been incurred to date. We have the
discretion to make future contributions, if any, in cash or in WPC common
stock. All contributions will be to a qualified benefit plan. To the extent
that contributions of stock under this plan, together with stock contributions
to the VEBA trust, exceed certain percentages of our common stock, 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. 
 Item 3  Quantitative and Qualitative Disclosures About Market Risk Our companys 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 new credit
facilities, at March 31, 2004, we had outstanding $92.2 million aggregate
principal amount of debt under fixed-rate instruments and $321.9 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 have increased our first quarter 2004 interest
expense by approximately $0.8 million. 26




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##### Table of Contents



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. 
 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 significant changes in internal control over financial
reporting that occurred during the first fiscal quarter that have materially
affected, or are reasonably likely to affect, the Companys internal control
over financial reporting. 27




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##### Table of Contents



PART II 
 Item 6  Exhibits and Reports on 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).
 28




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##### 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) May 11, 2004 29