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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 000-50300
 WHEELING-PITTSBURGH CORPORATION
  DELAWARE
    
    55-0309927(State of Incorporation)
    
    (I.R.S. Employer Identification No.)1134 Market Street, Wheeling, WV
    
    26003(Address of principal executive offices)
    
    (Zip code)
  þ o
  o þ o
 o  þ
 Applicable only to registrants involved in bankruptcy proceedings during the preceding five years:
 þ o




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TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed Consolidated Statements of Operations (Unaudited)
    
    
    1Condensed Consolidated Balance Sheets (Unaudited)
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    3Condensed Consolidated Statement of Stockholders Equity (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    37Item 6. Exhibits
    
    
    38SIGNATURES
    
    
    39EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-10.6EX-10.7EX-31.1EX-31.2EX-32.1EX-32.2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
 Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Net sales, including sales to affiliates of $104,505
$80,169, $287,751 and $259,618
    
    $
    482,731
    
    
    $
    374,891
    
    
    $
    1,413,634
    
    
    $
    1,189,636Cost and expenses:Cost of sales, including cost of sales to affiliates
of $87,578, 85,802, $264,513 and $258,218,
excluding depreciation and amortization expense
    
    
    427,401
    
    
    
    371,942
    
    
    
    1,280,903
    
    
    
    1,113,879Depreciation and amortization expense
    
    
    9,315
    
    
    
    7,729
    
    
    
    26,452
    
    
    
    25,621Selling, general and administrative expense
    
    
    20,755
    
    
    
    17,935
    
    
    
    61,830
    
    
    
    52,829Total cost and expenses
    
    
    457,471
    
    
    
    397,606
    
    
    
    1,369,185
    
    
    
    1,192,329Operating income (loss)
    
    
    25,260
    
    
    
    (22,715
    )
    
    
    44,449
    
    
    
    (2,693
    )Interest expense and other financing costs
    
    
    (6,788
    )
    
    
    (5,223
    )
    
    
    (19,963
    )
    
    
    (16,763
    )Other income
    
    
    4,749
    
    
    
    2,842
    
    
    
    11,403
    
    
    
    8,903Income (loss) before income taxes
    
    
    23,221
    
    
    
    (25,096
    )
    
    
    35,889
    
    
    
    (10,553
    )Income tax provision (benefit)
    
    
    6,341
    
    
    
    (3,887
    )
    
    
    11,574
    
    
    
    (71
    )Income (loss) before minority interest
    
    
    16,880
    
    
    
    (21,209
    )
    
    
    24,315
    
    
    
    (10,482
    )Minority interest in loss of consolidated subsidiary
    
    
    472
    
    
    
    62
    
    
    
    256
    
    
    
    62Net income (loss)
    
    $
    17,352
    
    
    $
    (21,147
    )
    
    $
    24,571
    
    
    $
    (10,420
    )Earnings (loss) per share:Basic
    
    $
    1.18
    
    
    $
    (1.47
    )
    
    $
    1.68
    
    
    $
    (0.73
    )Diluted
    
    $
    1.16
    
    
    $
    (1.47
    )
    
    $
    1.66
    
    
    $
    (0.73
    )Weighted average shares (in thousands):Basic
    
    
    14,752
    
    
    
    14,386
    
    
    
    14,600
    
    
    
    14,235Diluted
    
    
    14,972
    
    
    
    14,386
    
    
    
    14,811
    
    
    
    14,235
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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
 September 30,
    
    
    December 31,2006
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    17,194
    
    
    $
    8,863Accounts receivables, less allowance for doubtful accounts
of $3,122 and $2,594
    
    
    205,119
    
    
    
    132,643Inventories
    
    
    213,972
    
    
    
    166,566Prepaid expenses and deferred charges
    
    
    20,729
    
    
    
    21,732Total current assets
    
    
    457,014
    
    
    
    329,804Investment in and advances to affiliated companies
    
    
    52,445
    
    
    
    55,100Property, plant and equipment, less accumulated depreciation
of $102,066 and $75,977
    
    
    613,182
    
    
    
    557,500Deferred income tax benefits
    
    
    27,598
    
    
    
    26,264Restricted cash
    
    
    6,664
    
    
    
    13,691Other intangible assets, less accumulated amortization of $1,795 in 2005
    
    
    
    
    
    
    4,725Deferred charges and other assets
    
    
    11,464
    
    
    
    33,164Total assets
    
    $
    1,168,367
    
    
    $
    1,020,248LiabilitiesCurrent liabilities:Accounts payable, including book overdrafts of $10,900 and $21,020
    
    $
    102,984
    
    
    $
    117,821Short-term debt
    
    
    110,100
    
    
    
    17,300Payroll and employee benefits payable
    
    
    54,295
    
    
    
    41,125Accrued income and other taxes
    
    
    10,399
    
    
    
    11,735Deferred income taxes payable
    
    
    27,598
    
    
    
    26,264Accrued interest and other liabilities
    
    
    8,573
    
    
    
    5,757Deferred revenue
    
    
    1,766
    
    
    
    8,523Long-term debt due in one year
    
    
    32,700
    
    
    
    31,357Total current liabilities
    
    
    348,415
    
    
    
    259,882Long-term debt
    
    
    261,266
    
    
    
    284,100Employee benefits
    
    
    121,961
    
    
    
    123,498Other liabilities
    
    
    26,457
    
    
    
    13,030Total liabilities
    
    
    758,099
    
    
    
    680,510Minority interest in consolidated subsidiary
    
    
    105,616
    
    
    
    74,234Stockholders equityPreferred stock  $.001 par value; 20,000,000 shares authorized;
no shares issued or outstanding
    
    
    
    
    
    
    Common stock  $.01 par value; 80,000,000 shares authorized; 14,930,307
and 14,686,354 issued; 14,923,641 and 14,679,688 shares outstanding
    
    
    149
    
    
    
    147Additional paid-in capital
    
    
    290,672
    
    
    
    276,097Accumulated earnings (deficit)
    
    
    13,931
    
    
    
    (10,640
    )Treasury stock, 6,666 shares, at cost
    
    
    (100
    )
    
    
    (100
    )Total stockholders equity
    
    
    304,652
    
    
    
    265,504Total liabilities and stockholders equity
    
    $
    1,168,367
    
    
    $
    1,020,248
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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows (Unaudited) 
(Dollars in thousands)
 Nine Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    24,571
    
    
    $
    (10,420
    )Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:Depreciation and amortization expense
    
    
    26,452
    
    
    
    25,621VEBA, profit sharing and other stock transactions
    
    
    10,832
    
    
    
    3,786Other postretirement benefits
    
    
    (1,238
    )
    
    
    22Deferred compensation and stock options
    
    
    2,459
    
    
    
    2,244Equity income of affiliated companies, net of dividends
    
    
    1,242
    
    
    
    (1,762
    )Interest paid-in-kind
    
    
    940
    
    
    
    888(Gain) loss on disposition of assets
    
    
    (405
    )
    
    
    716Deferred income taxes
    
    
    11,458
    
    
    
    Minority interest
    
    
    (256
    )
    
    
    (62
    )Other
    
    
    42
    
    
    
    32Changes in current assets and current liabilities:Accounts receivable
    
    
    (72,476
    )
    
    
    (4,647
    )Inventories
    
    
    (47,406
    )
    
    
    (5,239
    )Other current assets
    
    
    1,003
    
    
    
    13,380Accounts payable
    
    
    (4,717
    )
    
    
    452Other current liabilities
    
    
    2,105
    
    
    
    12,221Other assets and liabilities, net
    
    
    6,466
    
    
    
    (7,423
    )Net cash (used in) provided by operating activities
    
    
    (38,928
    )
    
    
    29,809Cash flows from investing activities:Payments from affiliates
    
    
    1,875
    
    
    
    1,650Investment in affiliates
    
    
    (462
    )
    
    
    Capital expenditures
    
    
    (81,910
    )
    
    
    (72,657
    )Restricted cash used to fund capital expenditures
    
    
    7,027
    
    
    
    (12,306
    )Proceeds from sale of assets
    
    
    522
    
    
    
    344Net cash used in investing activities
    
    
    (72,948
    )
    
    
    (82,969
    )Cash flows from financing activities:Book overdraft
    
    
    (10,120
    )
    
    
    588Net change in short-term debt
    
    
    92,800
    
    
    
    Repayment of long-term debt
    
    
    (22,473
    )
    
    
    (13,685
    )Minority interest investment in subsidiary
    
    
    60,000
    
    
    
    50,000Net cash provided by financing activities
    
    
    120,207
    
    
    
    36,903Increase (decrease) in cash and cash equivalents
    
    
    8,331
    
    
    
    (16,257
    )Cash and cash equivalents, beginning of period
    
    
    8,863
    
    
    
    31,198Cash and cash equivalents, end of period
    
    $
    17,194
    
    
    $
    14,941
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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
 
 Condensed Consolidated Statement of Changes in Stockholders Equity (Unaudited)
(Dollars in thousands)
 Additional
    
    
    AccumulatedPreferred
    
    
    Common
    
    
    Paid-in
    
    
    Earnings
    
    
    TreasuryStock
    
    
    Stock
    
    
    Capital
    
    
    (Deficit)
    
    
    Stock
    
    
    TotalBalance, December 31, 2004
    
    $
    
    
    
    $
    144
    
    
    $
    267,327
    
    
    $
    23,194
    
    
    $
    (60
    )
    
    $
    290,605Shares issued:Employee benefit plans
    
    
    
    
    
    
    3
    
    
    
    5,712
    
    
    
    
    
    
    
    
    
    
    
    5,715Restricted stock forfeiture
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    (40
    )
    
    
    Compensation expense
recognized
    
    
    
    
    
    
    
    
    
    
    2,687
    
    
    
    
    
    
    
    
    
    
    
    2,687Stock option grants
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    331Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,834
    )
    
    
    
    
    
    
    (33,834
    )Balance, December 31, 2005
    
    
    
    
    
    
    147
    
    
    
    276,097
    
    
    
    (10,640
    )
    
    
    (100
    )
    
    
    265,504Shares issued:Employee benefit plans
    
    
    
    
    
    
    2
    
    
    
    5,042
    
    
    
    
    
    
    
    
    
    
    
    5,044Compensation expense
recognized
    
    
    
    
    
    
    
    
    
    
    2,220
    
    
    
    
    
    
    
    
    
    
    
    2,220Stock option grants
    
    
    
    
    
    
    
    
    
    
    239
    
    
    
    
    
    
    
    
    
    
    
    239Benefit of pre-confirmation net
operating loss carryforward
    
    
    
    
    
    
    
    
    
    
    7,074
    
    
    
    
    
    
    
    
    
    
    
    7,074Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,571
    
    
    
    
    
    
    
    24,571Balance, September 30, 2006
    
    $
    
    
    
    $
    149
    
    
    $
    290,672
    
    
    $
    13,931
    
    
    $
    (100
    )
    
    $
    304,652
 Share Activity:
    
    Issued
    
    
    Treasury
    
    
    OutstandingBalance, December 31, 2004
    
    
    14,437,223
    
    
    
    4,000
    
    
    
    14,433,223Shares issued  employee benefit plans
    
    
    238,631
    
    
    
    
    
    
    
    238,631Restricted stock issued
    
    
    10,500
    
    
    
    
    
    
    
    10,500Restricted stock forfeiture
    
    
    
    
    
    
    2,666
    
    
    
    (2,666
    )Balance, December 31, 2005
    
    
    14,686,354
    
    
    
    6,666
    
    
    
    14,679,688Shares issued  employee benefit plans
    
    
    243,953
    
    
    
    
    
    
    
    243,953Balance, September 30, 2006
    
    
    14,930,307
    
    
    
    6,666
    
    
    
    14,923,641
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Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in thousands, except per share amounts)
 1.
    
    Basis of PresentationThe condensed consolidated financial statements of Wheeling-Pittsburgh Corporation and
subsidiaries (WPC or the Company) are unaudited. In the opinion of management, these financial
statements reflect all recurring adjustments necessary to present fairly the consolidated
financial position of the Company and the results of its operations and the changes in its cash
flows for the periods presented.These financial statements, including notes thereto, have been prepared in accordance with
applicable rules of the Securities and Exchange Commission and do not include all of the
information and disclosures required by generally accepted accounting principles in the United
States of America for complete financial statements. The results reported in these financial
statements may not be indicative of the results that may be expected for the entire year. This
Form 10-Q should be read in conjunction with the Companys Form 10-K for the year ended December
31, 2005.2.
    
    New Accounting StandardsThe Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 158, Employers Accounting for Defined Benefit Plans and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R), in September
2006. SFAS No. 158 requires the recognition of the funded status of a benefit plan in the
statement of financial position; requires the recognition as a component of other comprehensive
income, net of tax, the gains or losses and prior service costs or credits that arise during the
period but are not recognized as components of net periodic pension cost; requires the
measurement of defined benefit plan assets and obligations as of the fiscal year-end date; and
requires additional footnote disclosure about certain effects on net periodic benefit cost for
the next fiscal year that arise from delayed recognition of gains or losses, prior service costs
or credits and transition asset or obligation. FASB No. 158 is effective for fiscal years
ending after December 15, 2006 except for the requirement to measure defined benefit plan assets
and obligations as of the fiscal year-end date, which is effective for fiscal years ending after
December 15, 2008. The Company will adopt the provisions of SFAS No. 158 for the fiscal year
ending December 31, 2006. Based on December 31, 2005 reported amounts, the effect of this
statement would be to decrease employee benefits by $4,906, decrease other assets by $1,434 and
to record accumulated other comprehensive income of $3,472.The Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB 108) in
September 2006. SAB 108 provides guidance for quantifying and evaluating prior year
misstatements and for reporting the effects of such misstatements. SAB 108 is effective for
fiscal years ending after November 15, 2006. The Company will apply SAB 108 to prior year
misstatements as and when identified.The FASB issued SFAS No. 157, Fair Value Measurement, in September 2006. SFAS No. 157 defines
fair value, established a framework for measuring fair value in generally accepted accounting
principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007. The Company does not expect the adoption of
this statement to have a material impact on its financial statements.The FASB issued FASB Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes,
in June 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprises financial statements and prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company is currently assessing the impact of this interpretation on its
financial statements.The FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments  an
Amendment of FASB Statements No. 133 and 140, in February 2006. SFAS No. 155 eliminates the
exemption from applying SFAS No. 133 to interests in securitized financial assets and allows for
fair value measurement at acquisition, at
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issuance or on re-measurement on an instrument-by-instrument basis in cases in which a
derivative would otherwise have to be bifurcated. SFAS No. 155 is effective for all financial
instruments acquired or issued after the beginning of an entitys first fiscal year beginning
after September 15, 2006. The Company does not expect the adoption of this statement to have a
material impact on its financial statements.
 3.
    
    Business SegmentThe Company is engaged in one line of business and operates in one business segment, the
production, processing, fabrication and sale of steel and steel products. The Company has a
diverse customer base, substantially all of which is located in the United States. All of the
Companys operating assets are located in the United States.4.
    
    Transactions with Affiliates and Related PartiesThe Company owns 35.7% of the outstanding common stock of Wheeling-Nisshin, Inc.
(Wheeling-Nisshin), which is accounted for using the equity method of accounting. The Company
had sales to Wheeling-Nisshin of $81,211 and $52,640 during the quarters ended September 30,
2006 and 2005, respectively, and had sales to Wheeling-Nisshin of $220,262 and $162,573 during
the nine months ended September 30, 2006 and 2005, respectively. Sales to Wheeling-Nisshin are
made at prevailing market prices. During the nine months ended September 30, 2006, the Company
purchased steel slabs from Wheeling-Nisshin, at prevailing market prices, in the amount of
$28,585. The Company reported dividends from Wheeling-Nisshin of $10,715 and $5,000 during the
nine months ended September 30, 2006 and 2005, respectively. At September 30, 2006 and December
31, 2005, the Company had accounts receivable due from Wheeling-Nisshin of $4,110 and $3,439,
respectively, and had accounts payable to Wheeling-Nisshin of $1,059 and $726, respectively.The Company owns 50.0% of the outstanding common stock of Ohio Coatings Corporation (OCC), which
is accounted for using the equity method of accounting. The Company had sales to OCC of $20,905
and $27,529 during the quarters ended September 30, 2006 and 2005, respectively, and had sales
to OCC of $64,481 and $97,045 during the nine months ended September 30, 2006 and 2005,
respectively. Sales to OCC are made at prevailing market prices. At September 30, 2006 and
December 31, 2005, the Company had accounts receivable due from OCC of $9,618 and $8,852,
respectively. At September 30, 2006 and December 31, 2005, the Company has a loan receivable
due from OCC of $5,825 and $7,700, respectively, which bears interest at a variable rate, which
currently approximates 7.0%. The Company recorded interest income on the loan receivable of $83
and $126 during the quarters ended September 30, 2006 and 2005, respectively, and recorded
interest income on the loan receivable of $309 and $410 during the nine months ended September
30, 2006 and 2005, respectively. The Company received principal payments on the loan of $525
and $400 during the quarters ended September 30, 2006 and 2005, respectively, and received
principal payments on the loan of $1,875 and $1,650 during the nine months ended September 30,
2006 and 2005, respectively.The Company owns 49% of the outstanding common stock of Feralloy-Wheeling Specialty Processing,
Co. (Feralloy), which is accounted for using the equity method of accounting. The Company
received dividends from Feralloy of $147 and $147 during the nine months ended September 30,
2006 and 2005, respectively.During the first quarter of 2006, the Company acquired 50% of the outstanding common stock of
Jensen Bridge & Roofing Company, LLC (Jensen Bridge), a joint venture, that produces and sells
corrugated roofing products. The joint venture is accounted for using the equity method of
accounting. The Company had sales to Jensen Bridge during the quarter and nine months ended
September 30, 2006 of $2,389 and $3,008, respectively. Sales to Jensen Bridge are made at
prevailing market prices. At September 30, 2006, the Company had accounts receivable due from
Jensen Bridge of $1,031.5.
    
    Insurance RecoveryDuring the nine months ended September 30, 2006, the Company received $12,659 in partial
settlement of a business interruption insurance claim relating to an insurable event that
occurred in December 2004. Of this amount, $7,299 was recorded as a reduction of cost of goods
sold during the quarter ended March 31, 2006 and $5,360 was recorded as a reduction of cost of
goods sold during the quarter ended December 31, 2005.
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6.
    
    Share-Based PaymentsThe Company adopted SFAS No. 123 (revised 2004), Share-Based Payment, in the first quarter of
2005 and elected to apply the statement using the modified retrospective method.Non-vested restricted stock:The Company maintains a non-vested restricted stock plan pursuant to which it granted 500,000
shares of its common stock to selected key employees on July 31, 2003. These shares vested,
subject to forfeiture, in increments of one-third of the total grant to each individual ratably
over three years. Of these shares, 493,334 shares have vested and 6,666 shares were forfeited.
On August 10, 2006, 164,000 of these shares vested at a fair value of $3,118 and on August 11,
2005, 164,001 of these shares vested at a fair value of $3,088. In March 2005, the Company
granted 10,500 shares of common stock to certain employees under its management stock incentive
plan, all of which vested on August 10, 2006 at a fair value of $200. No shares granted under
these plans are subject to retirement eligible provisions.The grant date fair value of non-vested restricted stock is measured as being equal to the fair
value of the Companys common stock on the date of grant. The 10,500 shares of non-vested
restricted stock granted during the nine months ended September 30, 2005 had a grant date fair
value of $39.01 per share.A summary of activity under these plans as of September 30, 2006 and changes during the nine
months then ended is as follows:
 WeightedAverageGrant DateShares
    
    
    Fair ValueBalance, December 31, 2005
    
    
    174,500
    
    
    $
    16.44Restricted stock granted
    
    
    
    
    
    
    Restricted stock forfeited
    
    
    
    
    
    
    Restricted stock vested
    
    
    (174,500
    )
    
    
    16.44Balance, September 30, 2006
    
    
    
    
    
    $
    
 Compensation expense under these plans is equal to the grant date fair value of the non-vested
restricted stock issued, amortized over the vesting or requisite service period for each grant.
Compensation expense related to these plans amounted to $228 and $691 for the quarters ended
September 30, 2006 and 2005, respectively, and $1,609 and $1,995 for the nine months ended
September 30, 2006 and 2005, respectively.Stock options:The Company maintains a stock option plan for non-employee directors of the Company pursuant to
which it granted stock options for 5,747 and 5,773 shares of its common stock during the
quarters ended September 30, 2006 and 2005, respectively, at an exercise price of $19.14 and
$18.30 per share, respectively. The Company granted stock options for 15,947 and 13,888 shares
of its common stock during the nine months ended
September 30, 2006 and 2005, respectively, at a weighted average exercise price of $20.40 and
$22.83, respectively. The options were granted at a price equal to the average stock price for
a five-day period ending on the date of grant, vest upon receipt, are exercisable at the option
of the holder and lapse ten years from the date of grant. No stock options were exercised
during the quarters and nine months ended September 30, 2006 and 2005.The grant date fair value of stock options granted under the plan is estimated using the
Black-Scholes pricing model. The grant date fair value of stock options granted during the
quarters ended September 30, 2006 and 2005 was $11.50 and $15.53 per share, respectively, and
the weighted average grant date fair value of stock options granted during the nine months ended
September 30, 2006 and 2005 was $14.97 and $17.89, respectively, determined using the following
assumptions:
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##### Table of Contents



Quarter Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Average risk-free interest rate
    
    
    4.93
    %
    
    
    4.27
    %
    
    
    4.98
    %
    
    
    4.28
    %Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    82.13
    %
    
    
    81.57
    %
    
    
    83.40
    %
    
    
    83.73
    %Expected life (years)
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5
 The Company previously used a ten-year expected life assumption relative to stock options, which
was equal to the term of the stock options issued. During the quarter ended September 30, 2006,
the Company changed this expected life assumption to five years, which is a simple average of
the vesting period and the term of the stock options issued. The effect of this change on
previously reported amounts was not material.A summary of activity under this plan as of September 30, 2006 and changes during the nine
months then ended is as follows:
 WeightedAverage
    
    
    AggregateExercise
    
    
    IntrinsicShares
    
    
    Price
    
    
    ValueOutstanding, December 31, 2005
    
    
    62,397
    
    
    $
    15.53Granted
    
    
    15,947
    
    
    
    20.40Exercised
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding, September 30, 2006
    
    
    78,344
    
    
    $
    16.52
    
    
    $
    300Exercisable, September 30, 2006
    
    
    78,344
    
    
    $
    16.52
    
    
    $
    300
 Compensation expense under this plan is equal to the fair value of the stock options granted on
the grant date. The Company recorded compensation expense relative to stock options of $66
and $90 during the quarters ended September 30, 2006 and 2005, respectively, and $239 and $249
during the nine months ended
September 30, 2006 and 2005, respectively.Stock unit awards:On March 10, 2006, the Company granted 145,998 stock unit service awards and 103,339 stock unit
performance awards to certain employees under its management stock incentive plan, as amended.
During the third quarter of 2006, 15,488 stock unit service awards and 10,964 stock unit
performance awards were forfeited. Stock unit service awards will vest to each individual based
solely on service, subject to forfeiture, in amounts equal to 38,128, 61,576 and 30,806 on March
31, 2007, 2008 and 2009, respectively. Stock unit performance awards will vest to each
individual in full, subject to forfeiture, on March 31, 2009, based on a combination of service
and market performance. In general, market performance will be determined based on a comparison
of the annualized total shareholder return of the Companys stock, as defined by the plan, as
compared to the percentage increase in the Dow Jones US Steel Index over the three-year period
ending December 31, 2008. Based on market performance as measured against predetermined
targets, as defined by the plan, all, a portion or none of these stock unit performance awards
may vest to each individual on
March 31, 2009. Each stock unit award is equivalent to one share of common stock of the
Company. The Company, at its sole discretion, has the option of settling stock unit awards in
cash or by issuing common stock or a combination of both. No stock unit awards granted under
the plan vested during the quarter and nine months ended September 30, 2006. No stock unit
awards granted under this plan are subject to retirement eligible provisions.
 The grant date fair value of stock unit service awards is measured as being equal to the fair
value of the Companys common stock on the date of grant. The grant date fair value of stock
unit service awards granted
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##### Table of Contents



during the nine months ended September 30, 2006 was $18.86 per stock
unit service award. The grant date fair value of stock unit performance awards was estimated
using a lattice-based valuation model.Compensation expense for stock unit awards is equal to the grant date fair value of the stock
unit awards, amortized over the vesting or requisite service period for each grant. The Company
recorded compensation expense relative to stock unit awards of $323 and $611 during the quarter
and nine months ended
September 30, 2006, respectively.The Company authorized and issued 500,000 shares of restricted stock under its non-vested
restricted stock plan of which 6,666 shares were forfeited and remain available for issuance
under the plan. The Company authorized 1,000,000 shares of common stock for issuance under its
management stock incentive plan. At September 30, 2006, 10,500 restricted shares of common
stock had been issued under the management stock incentive plan, 78,344 options to acquire
            shares of common stock were outstanding under the plan and 222,885 stock unit awards were
outstanding under the plan.7.
    
    Pension and Other Postretirement BenefitsNet periodic cost for pension and other postretirement benefits was as follows:
 Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Components of net periodic cost:Service cost
    
    $
    495
    
    
    $
    445
    
    
    $
    1,345
    
    
    $
    1,272Interest cost
    
    
    1,456
    
    
    
    1,372
    
    
    
    4,368
    
    
    
    4,021Expected return on assets
    
    
    (102
    )
    
    
    
    
    
    
    (307
    )
    
    
    Amortization of prior service credit
    
    
    (1,169
    )
    
    
    (1,153
    )
    
    
    (3,508
    )
    
    
    (3,546
    )Recognized actuarial loss
    
    
    272
    
    
    
    331
    
    
    
    814
    
    
    
    952Net periodic cost
    
    $
    952
    
    
    $
    995
    
    
    $
    2,712
    
    
    $
    2,699
 The Company contributed $7 and $64 to its defined benefit pension plan during the quarter and
nine months September 30, 2005. The Company made payments of $1,093 and $774 for other
postretirement benefits during the quarters ended September 30, 2006 and 2005, respectively, and
$3,498 and $2,251 during the nine months ended September 30, 2006 and 2005, respectively. The
Company does not expect to make any contributions to its defined benefit pension plan during
2006 and expects to make payments of $4,482 for other postretirement benefits during 2006.8.
    
    VEBA and Profit Sharing ExpenseDuring the quarter ended September 30, 2006, the Company incurred VEBA and profit sharing
expense of $7,440. The Company expects to satisfy $5,788 of this obligation by issuing common
stock during the fourth quarter of 2006. The remaining portion of this obligation will be
settled in cash during the fourth quarter of 2006. During the quarter ended September 30, 2005,
the Company incurred VEBA and profit sharing expense of $500, which was settled with pre-funded
amounts.During the nine months ended September 30, 2006, the Company incurred VEBA and profit sharing
expense of $13,767. The Company satisfied $4,478 of this obligation by issuing 210,041 shares
of common stock in the second and third quarters of 2006 and expects
to satisfy $5,788 of this
obligation by issuing common stock during the fourth quarter of 2006. Of the remaining portion
of this obligation, $1,850 was settled in cash during the third quarter of 2006 and $1,651 will
be settled in cash during the fourth quarter of 2006. During the nine months ended September
30, 2005, the Company incurred VEBA and profit sharing expense of $4,868. Of this amount,
$1,500 was settled with pre-funded amounts. The Company satisfied the remaining portion of this
obligation by issuing 159,897 shares of common stock and by making a cash payment of $26 during
the second and third quarters of 2005.
 9




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##### Table of Contents



9.
    
    Other IncomeOther income consisted of the following:
 Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Equity income from affiliates
    
    $
    3,974
    
    
    $
    2,142
    
    
    $
    9,620
    
    
    $
    6,909Other income
    
    
    775
    
    
    
    700
    
    
    
    1,783
    
    
    
    1,994Total
    
    $
    4,749
    
    
    $
    2,842
    
    
    $
    11,403
    
    
    $
    8,903
 10.
    
    Earnings Per ShareFor the quarters and nine months ended September 30, 2006 and 2005, a reconciliation of the
numerator and denominator for the calculation of basic and diluted earnings per share is as
follows:
 Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Income available to common shareholders
    
    $
    17,352
    
    
    $
    (21,147
    )
    
    $
    24,571
    
    
    $
    (10,420
    )Weighed-average basic shares outstanding
    
    
    14,752
    
    
    
    14,386
    
    
    
    14,600
    
    
    
    14,235Dilutive effect of:Non-vested restricted stock
    
    
    74
    
    
    
    
    
    
    
    101
    
    
    
    Stock options
    
    
    19
    
    
    
    
    
    
    
    14
    
    
    
    Stock unit awards
    
    
    127
    
    
    
    
    
    
    
    96
    
    
    
    Weighed-average diluted shares outstanding
    
    
    14,972
    
    
    
    14,386
    
    
    
    14,811
    
    
    
    14,235Basic earnings (loss) per share
    
    $
    1.18
    
    
    $
    (1.47
    )
    
    $
    1.68
    
    
    $
    (0.73
    )Diluted earnings (loss) per share
    
    $
    1.16
    
    
    $
    (1.47
    )
    
    $
    1.66
    
    
    $
    (0.73
    )
 For the quarters and nine months ended September 30, 2006 and 2005, stock options for
29,588 and 50,896 shares of common stock at a weighted average exercise price of $25.28 and
$16.96 per share, respectively, were excluded from the computation of diluted earnings per share
as their effect was anti-dilutive. For the quarter and nine months ended September 30, 2005,
174,500 shares of non-vested restricted common stock were excluded from the computation of
diluted earnings per share as their effect was anti-dilutive.11.
    
    InventoriesInventories are valued at the lower of cost or market value. Cost is determined by the last-in
first-out (LIFO) method for substantially all inventories. Approximately 95% of inventories are
valued using the LIFO method.
 September 30,
    
    
    December 31,2006
    
    
    2005Raw materials
    
    $
    52,859
    
    
    $
    49,193In-process
    
    
    201,600
    
    
    
    155,860Finished products
    
    
    41,131
    
    
    
    28,870Other materials and supplies
    
    
    43
    
    
    
    152Total current cost
    
    
    295,633
    
    
    
    234,075Excess of current cost over carrying cost
    
    
    (81,661
    )
    
    
    (67,509
    )Carrying cost
    
    $
    213,972
    
    
    $
    166,566
 During the quarters and nine months ended September 30, 2006 and 2005, certain inventory
quantities were reduced, resulting in liquidations of LIFO inventories carried at costs
prevailing in prior periods. The effect
 10




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was to decrease operating income by $404 and $764 for
the quarters ended September 30, 2006 and 2005, respectively and to increase operating income by
$1,499 and $3,876 for the nine months ended September 30, 2006 and 2005, respectively.12.
    
    Other Intangible AssetsUnder the provisions of Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code and SFAS No. 109 Accounting for Income Taxes,
pre-confirmation net operating loss carryforwards and benefits resulting from the reversal of a
valuation allowance applicable to other deferred tax assets are used first to reduce goodwill,
then to reduce other intangible assets, and finally to increase additional paid-in capital.
During the quarter and nine months ended September 30, 2006, other intangible assets was reduced
by $3,216 and $4,384, respectively, representing the tax benefit from the utilization of
pre-confirmation net operating loss carryforwards and the reversal of other deferred tax assets
for which a full valuation allowance had been provided.13.
    
    Variable Interest EntityOn September 29, 2005, the Company and SNA Carbon, LLC (SNA Carbon) entered into an Amended and
Restated Limited Liability Company Agreement of Mountain State Carbon, LLC (MSC), a joint
venture formed to own and refurbish the coke plant facility contributed to it by the Company and
to produce and sell metallurgical coke to and for the benefit of both parties. Upon formation
of the joint venture, each party received a 50% voting interest in the joint venture.In general, all coke produced by the joint venture will be sold to each party at the cost
incurred by the joint venture to produce coke, excluding demolition costs, plus 5%. Pursuant to
coke supply agreements between the parties and the joint venture, the Company will acquire
approximately 60% of all of the coke produced by the joint venture from inception through
December 31, 2006. Each party will acquire 50% of all coke produced by the joint venture for
all periods thereafter. Due to the disproportionate sale of coke by the joint venture from
inception through December 31, 2006, the Company has been identified as the primary beneficiary
of the joint venture in accordance with the provisions of FASB Interpretation No. 46 (revised
December 2003), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51
(FIN 46(R)).At September 30, 2006 and December 31, 2005, the net assets of the joint venture included in the
consolidated balance sheet of the Company were as follows:
 September 30,
    
    
    December 31,2006
    
    
    2005Cash and cash equivalents
    
    $
    14,029
    
    
    $
    3,629Accounts receivable
    
    
    6,769
    
    
    
    962Inventory
    
    
    9,692
    
    
    
    10,120Other current assets
    
    
    2,792
    
    
    
    2,282Total current assets
    
    
    33,282
    
    
    
    16,993Restricted cash
    
    
    6,664
    
    
    
    13,691Property, plant and equipment, net
    
    
    162,344
    
    
    
    99,595Other assets
    
    
    
    
    
    
    15,617Total
    
    
    202,290
    
    
    
    145,896Accounts payable
    
    
    10,040
    
    
    
    21,986Other current liabilities
    
    
    1,103
    
    
    
    119Other liabilities
    
    
    13,637
    
    
    
    86Minority interest
    
    
    105,616
    
    
    
    74,234Total
    
    
    130,396
    
    
    
    96,425Net assets
    
    $
    71,894
    
    
    $
    49,471
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Results of operations of the joint venture included in the consolidated results of operations of
the Company for the quarters and nine months ended September 30, 2006 were as follows:
 Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    15,522
    
    
    $
    
    
    
    $
    31,322
    
    
    $
    Cost of goods sold, excluding depreciation
and amortization expense
    
    
    (12,841
    )
    
    
    
    
    
    
    (22,901
    )
    
    
    Depreciation and amortization expense
    
    
    (1,483
    )
    
    
    (30
    )
    
    
    (3,125
    )
    
    
    (30
    )Selling, general and administrative expense
    
    
    (1,469
    )
    
    
    (21
    )
    
    
    (4,470
    )
    
    
    (21
    )Operating income (loss)
    
    
    (271
    )
    
    
    (51
    )
    
    
    826
    
    
    
    (51
    )Interest income, net
    
    
    361
    
    
    
    
    
    
    
    931
    
    
    
    Income (loss) before minority interest
    
    $
    90
    
    
    $
    (51
    )
    
    $
    1,757
    
    
    $
    (51
    )
 All intercompany accounts, balances and transactions have been eliminated. The minority
interest in the consolidated subsidiary reflected in the Companys consolidated balance sheet
reflects SNA Carbons share of the estimated fair value of the net assets of the joint venture,
based on voting interest. This amount was less than the carrying cost of its investment by
$13,545 at September 30, 2006 and exceeded the carrying cost of their investment by $14,817 at
December 31, 2005.At September 30, 2006 and December 31, 2005, the joint venture had no third party debt
outstanding. No consolidated assets of the Company were pledged as collateral for any joint
venture obligations. The general creditors of the joint venture had no recourse to the general
credit of the Company.14.
    
    Long-term DebtIn March 2006, the term loan lenders and the Emergency Steel Loan Guarantee Board agreed to
waive compliance with the leverage and interest coverage ratios and to amend the fixed charge
coverage ratio under the term loan agreement through the quarter ending June 30, 2007, not
requiring compliance with these covenants until the quarter ending September 30, 2007. The term
loan agreement, as amended, requires the Company to comply with a minimum fixed charge coverage
ratio or to maintain minimum borrowing availability of at least $50,000 at all times under its
revolving credit agreement.The Company was in compliance with its covenants under the
revolving credit facility and the term loan agreement as of
September 30, 2006. However, the Company anticipates a reduction
in production and sales volumes during the fourth quarter of 2006 and
given existing commitments and the uncertainty of improvements in
market conditions, no assurance can be given that the Company will be
able to maintain compliance with the minimum borrowing availability
covenant under its revolving credit facility and its term loan
agreement for periods ending after September 30, 2006.15.
    
    Commitments and ContingenciesEnvironmental MattersPrior to confirmation of the Companys plan of reorganization effective August 1, 2003, the
Company settled all pre-petition environmental claims made by state (Ohio, West Virginia,
Pennsylvania) and Federal (U.S. Environmental Protection Agency (USEPA)) environmental
regulatory agencies. Consequently, the Company believes that it has settled and/or discharged
environmental liability for any known Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA or Superfund) sites, pre-petition stipulated penalties related to active
consent decrees, or other pre-petition regulatory enforcement actions.During the second quarter of 2006, the Company received notification from the USEPA advising
that the USEPA and the Ohio Environmental Protection Agency (Ohio EPA) will conduct an inquiry
aimed at resolving various environmental matters, all of which are identified, discussed and
reserved for as noted below. These inquiries commenced during the third quarter of 2006 and
will continue during the fourth quarter of 2006.The Company estimates that demands for stipulated penalties and fines for post-petition events
and activities through September 30, 2006 could total up to $2,991, which has been fully
reserved by the Company. These claims arise from instances in which the Company exceeded
post-petition consent decree terms, including: (a)
$2,335 related to a January 30, 1996 USEPA consent decree for the Companys coke oven gas
desulphurization facility; (b) $533 related to a July 1991 USEPA consent decree for water
discharges into the Ohio River;
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##### Table of Contents



(c)   $101 related to a September 20, 1999 Ohio EPA consent decree for the Companys coke oven gas
desulphurization facility; and (d) $22 related to a 1992 USEPA consent order for other water
discharges issues. The Company may have defenses to certain of these exceedances.In September 2000, the Company entered into a consent order with the West Virginia Department of
Environmental Protection wherein the Company agreed to remove contaminated sediments from the
bed of the Ohio River. The Company estimates the cost of removal of the remaining contaminated
sediments to be $1,700 at September 30, 2006, which has been fully reserved by the Company. The
Company currently expects this work to be substantially complete by the end of 2007.The Company is under a final administrative order issued by the USEPA in June 1998 to conduct a
Resource Conservation and Recovery Act Facility Investigation to determine the nature and extent
of soil and groundwater contamination at its coke plant in Follansbee, West Virginia. USEPA
approved the Companys investigation work plan, and field activities were completed in 2004. The
Company submitted the results of this investigation to the USEPA in the third quarter of 2005.
It is expected that some remediation measures will be necessary and could commence within the
next three to five years. Based on an initial estimate of the range of the possible cost to
remediate, the Company has reserved $4,614 for such remediation measures.The Company has also accrued $400 related to a 1989 consent order issued by the USEPA for
surface impoundment issues at a coke plant facility owned by MSC.In July 2005, an additional environmental liability was identified regarding the potential for
migration of subsurface oil from historical operations into waters in the Commonwealth of
Pennsylvania. A remediation plan was developed in 2005 and a revised remediation plan was
submitted to the Commonwealth of Pennsylvania during the third quarter of 2006. An estimated
expenditure of $1,000 is expected to be made during 2007 to address this environmental
liability, which has been fully reserved by the Company.Total accrued environmental liabilities amounted to $10,705
and $9,872 at September 30, 2006 and December 31, 2005, respectively. These accruals were based on all information available to the
Company. As new information becomes available, whether from third parties or otherwise, and as
environmental regulations change, the liabilities are reviewed and adjusted accordingly. Unless
stated above, the time frame over which these liabilities will be satisfied is presently
unknown. Further, the Company considers it reasonably possible that it could ultimately incur
additional liabilities relative to the above exposures of up to $5,000.Capital expenditures for environmental projects totaled $4,860 during the nine months ended
September 30, 2006. The Company estimates capital expenditures for environmental projects to be
$5,070 for 2006, $10,560 for 2007 and $8,520 for 2008. 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.CommitmentsIn June 2005, the Company entered into a contract to purchase up to 20,000 tons of metallurgical
coal each month for the period from August 2006 through May 2007 at a price of $94.50 per ton.
Approximately 33,000 tons were pre-delivered under the terms of the contract during the first
quarter of 2006. The contract requires the Company to pay an average buy-out cost of $7.50 per
ton for each ton of coal that is not taken under the contract. In addition, the Company made a
prepayment of $5,100 under the terms of the contract, which will be applied ratably to reduce
the cash cost of each ton of coal delivered under the contract. As of September 30, 2006, the
unamortized prepayment amounted to $3,591. This amount is subject to forfeiture if coal is not
taken under the contract. Payments for delivery of coal under this contract totaled $1,672 and
$4,785 during the quarter and nine months ended September 30, 2006, respectively.The Company entered into a 15-year take-or-pay contract in 1999, which was amended in 2003 and
requires the Company to purchase oxygen, nitrogen and argon each month with a minimum monthly
charge of approximately $600, subject to escalation clauses. Payments for delivery of oxygen
under this contract totaled $3,660 and $2,547 during the quarters ended September 30, 2006 and
2005, respectively, and $9,470 and $7,166 during the nine months ended September 30, 2006 and
2005, respectively.
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The Company entered into a 20-year contract in 1999, which was amended in 2003 and requires the
Company to purchase steam and electricity each month or pay a minimum monthly charge of
approximately $500, subject to increases for inflation, and a variable charge calculated at a
minimum of $3.75 times the number of tons of iron produced each month, with an agreed-to minimum
of 3,250 tons per day, regardless of whether any tons are produced. Payments for delivery of
steam and electricity under this contract totaled $3,526 and $2,413 during the quarters
September 30, 2006 and 2005, respectively, and $9,695 and $7,232 during the nine months ended
September 30, 2006 and 2005, respectively. At September 30, 2006, a maximum termination payment
of approximately $30,675 would have been required to terminate the contract.Under terms of MSCs joint venture agreement, the Company and SNA Carbon have agreed to
refurbish a coke plant facility owned by MSC. Current estimates are to spend approximately
$73,294, $41,130, $11,000 and $19,500 in 2006, 2007, 2008 and 2009, respectively The Company
has committed to make capital contributions of up to $38,000 and SNA Carbon has committed to
make capital contributions of up to $68,000 ($60,000 of which was contributed during the first
six months of 2006) to fund these expenditures. Additional required funding will be made by the
joint venture or the joint venture partners in accordance with the joint venture agreement.GuaranteesIn March 2006, the Company entered into an operating lease for certain mobile equipment, which
contains a residual lease guarantee approximating $581. This residual lease guarantee has been
reflected in the financial statements as an obligation and is included in other current
liabilities.OtherThe Company is the subject of, or party to, a number of other pending or threatened legal
actions involving a variety of matters. However, based on information currently available,
management believes that the disposition of these matters will not have a material adverse
effect on the business, results of operations or the financial position of the Company.16.
    
    Subsequent EventsOn October 24, 2006, the Company and Companhia Siderurgica Nacional (CSN) entered into a
definitive agreement under which CSN will contribute its steel processing facility in Terre
Haute, Indiana, provide the Company with exclusive U.S. and Canadian distribution rights for
CSNs flat-rolled steel products and commit to a ten-year slab supply agreement which will
provide a long-term, guaranteed supply of slabs on favorable payment terms in exchange for a
49.5% ownership interest in a new holding company to be named Wheeling-Pittsburgh Corporation
after the merger. The remaining 50.5% ownership interest in the new holding company will be
held by the Company's current stockholders.CSN will also provide $225.0 million in cash to the new holding company through the issuance of
debt securities that will mature in three years from the date of issuance unless, with the
consent of the USW, the debt securities are converted into approximately 12.2 million shares of
the new holding company prior to maturity. Of the $225.0 million, approximately $150.0 million
will be used for capital improvements, with $75.0 million used to build a new energy-efficient
furnace that will increase the Companys hot strip mill capacity to 4.0 million tons per year
and $75.0 million used to add a second galvanizing line at the Terre Haute facility. The
remaining $75.0 million will be used to repay debt and to enhance the liquidity of the Company.On November 6, 2006, CSN announced that it had proposed an
enhancement to the existing definitive agreement that was entered
into with the Company on October 24, 2006. Under the terms of the
enhanced proposal, the Company's current stockholders, who would
receive 50.5% of the common stock of the new holding company after
the merger, would be given the choice of electing to receive (i)
shares of stock of the new holding company (an "A Share"), (ii)
depositary shares which would be subject to mandatory purchase by CSN
at $30 per share four years after the date of the merger (a "B
Share"), or (iii) a combination of A and B Shares. The total number
of B Shares would be limited to 50% of the total shares issued in
the merger to existing stockholders of the Company and 60% of the
total consideration. The B Shares would be listed for trading on
NASDAQ. CSN and the Company are in discussions to finalize the
enhancement, subject to an amendment of the existing definitive
agreement.The transactions contemplated by the definitive agreement, as
amended by the proposed enhancement, are subject to stockholder
approval.
17.
    
    Summarized Combined Financial InformationWheeling-Pittsburgh Steel Corporation (WPSC), a wholly-owned subsidiary of the Company, is the
issuer of the outstanding $40 million Series A notes and $20 million Series B notes. The Series
A and Series B notes were not registered under the Securities Act of 1933 or the Securities Act
of 1934. The Series A notes and Series B notes are each fully and unconditionally guaranteed,
jointly and severally, by the Company and its present and future subsidiaries. WPSC and each
subsidiary guarantor of the Series A and Series B notes are 100%-owned by the Company. Because
the subsidiary guarantors are not material, individually and in the
 14




---



##### Table of Contents



aggregate, the
consolidating financial information for the Company and the subsidiary guarantors has been
combined below in the column entitled WPC and Subsidiary Guarantors.
 CONDENSED CONSOLIDATING BALANCE SHEETSeptember 30, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    17,194
    
    
    $
    
    
    
    $
    17,194Trade accounts receivables
    
    
    
    
    
    
    205,119
    
    
    
    
    
    
    
    205,119Inventories
    
    
    
    
    
    
    213,972
    
    
    
    
    
    
    
    213,972Other current assets
    
    
    122
    
    
    
    20,607
    
    
    
    
    
    
    
    20,729Total current assets
    
    
    122
    
    
    
    456,892
    
    
    
    
    
    
    
    457,014Intercompany receivables
    
    
    
    
    
    
    7,109
    
    
    
    (7,109
    )
    
    
    Investments and advances in affiliates
    
    
    310,478
    
    
    
    52,445
    
    
    
    (310,478
    )
    
    
    52,445Property, plant and equipment, net
    
    
    2,255
    
    
    
    610,927
    
    
    
    
    
    
    
    613,182Restricted cash
    
    
    
    
    
    
    6,664
    
    
    
    
    
    
    
    6,664Other non-current assets
    
    
    896
    
    
    
    38,166
    
    
    
    
    
    
    
    39,062Total assets
    
    $
    313,751
    
    
    $
    1,172,203
    
    
    $
    (317,587
    )
    
    $
    1,168,367Liabilities and stockholders equityAccounts payable
    
    $
    1,500
    
    
    $
    101,484
    
    
    $
    
    
    
    $
    102,984Other current liabilities
    
    
    368
    
    
    
    245,063
    
    
    
    
    
    
    
    245,431Total current liabilities
    
    
    1,868
    
    
    
    346,547
    
    
    
    
    
    
    
    348,415Intercompany payable
    
    
    7,109
    
    
    
    
    
    
    
    (7,109
    )
    
    
    Long-term debt
    
    
    
    
    
    
    261,266
    
    
    
    
    
    
    
    261,266Other non-current liabilities
    
    
    122
    
    
    
    148,296
    
    
    
    
    
    
    
    148,418Minority interest
    
    
    
    
    
    
    105,616
    
    
    
    
    
    
    
    105,616Stockholders equity
    
    
    304,652
    
    
    
    310,478
    
    
    
    (310,478
    )
    
    
    304,652Total liabilities and stockholders equity
    
    $
    313,751
    
    
    $
    1,172,203
    
    
    $
    (317,587
    )
    
    $
    1,168,367
 15




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEETDecember 31, 2005
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    8,863
    
    
    $
    
    
    
    $
    8,863Trade accounts receivables
    
    
    
    
    
    
    132,643
    
    
    
    
    
    
    
    132,643Inventories
    
    
    
    
    
    
    166,566
    
    
    
    
    
    
    
    166,566Other current assets
    
    
    122
    
    
    
    21,610
    
    
    
    
    
    
    
    21,732Total current assets
    
    
    122
    
    
    
    329,682
    
    
    
    
    
    
    
    329,804Intercompany receivables
    
    
    
    
    
    
    4,940
    
    
    
    (4,940
    )
    
    
    Investments and advances in affiliates
    
    
    267,569
    
    
    
    55,100
    
    
    
    (267,569
    )
    
    
    55,100Property, plant and equipment, net
    
    
    2,255
    
    
    
    555,245
    
    
    
    
    
    
    
    557,500Restricted cash
    
    
    
    
    
    
    13,691
    
    
    
    
    
    
    
    13,691Other non-current assets
    
    
    896
    
    
    
    63,257
    
    
    
    
    
    
    
    64,153Total assets
    
    $
    270,842
    
    
    $
    1,021,915
    
    
    $
    (272,509
    )
    
    $
    1,020,248Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    117,821
    
    
    $
    
    
    
    $
    117,821Other current liabilities
    
    
    276
    
    
    
    141,785
    
    
    
    
    
    
    
    142,061Total current liabilities
    
    
    276
    
    
    
    259,606
    
    
    
    
    
    
    
    259,882Intercompany payable
    
    
    4,940
    
    
    
    
    
    
    
    (4,940
    )
    
    
    Long-term debt
    
    
    
    
    
    
    284,100
    
    
    
    
    
    
    
    284,100Other non-current liabilities
    
    
    122
    
    
    
    136,406
    
    
    
    
    
    
    
    136,528Minority interest
    
    
    
    
    
    
    74,234
    
    
    
    
    
    
    
    74,234Stockholders equity
    
    
    265,504
    
    
    
    267,569
    
    
    
    (267,569
    )
    
    
    265,504Total liabilities and stockholders equity
    
    $
    270,842
    
    
    $
    1,021,915
    
    
    $
    (272,509
    )
    
    $
    1,020,248
 16




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSQuarter Ended September 30, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    482,731
    
    
    $
    
    
    
    $
    482,731Cost of sales
    
    
    
    
    
    
    427,401
    
    
    
    
    
    
    
    427,401Depreciation and amortizaton expense
    
    
    
    
    
    
    9,315
    
    
    
    
    
    
    
    9,315Selling, administrative and general expense
    
    
    1,390
    
    
    
    19,365
    
    
    
    
    
    
    
    20,755Operating income (loss)
    
    
    (1,390
    )
    
    
    26,650
    
    
    
    
    
    
    
    25,260Interest expense
    
    
    
    
    
    
    (6,788
    )
    
    
    
    
    
    
    (6,788
    )Other income including equity earnings
of affiliates
    
    
    18,742
    
    
    
    4,749
    
    
    
    (18,742
    )
    
    
    4,749Income before income taxes
    
    
    17,352
    
    
    
    24,611
    
    
    
    (18,742
    )
    
    
    23,221Income tax provision
    
    
    
    
    
    
    6,341
    
    
    
    
    
    
    
    6,341Income before minority interest
    
    
    17,352
    
    
    
    18,270
    
    
    
    (18,742
    )
    
    
    16,880Minority interest
    
    
    
    
    
    
    472
    
    
    
    
    
    
    
    472Net income
    
    $
    17,352
    
    
    $
    18,742
    
    
    $
    (18,742
    )
    
    $
    17,352
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Quarter Ended September 30, 2005
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    374,891
    
    
    $
    
    
    
    $
    374,891Cost of sales
    
    
    
    
    
    
    371,942
    
    
    
    
    
    
    
    371,942Depreciation and amortizaton expense
    
    
    
    
    
    
    7,729
    
    
    
    
    
    
    
    7,729Selling, administrative and general expense
    
    
    239
    
    
    
    17,696
    
    
    
    
    
    
    
    17,935Operating loss
    
    
    (239
    )
    
    
    (22,476
    )
    
    
    
    
    
    
    (22,715
    )Interest expense
    
    
    
    
    
    
    (5,223
    )
    
    
    
    
    
    
    (5,223
    )Other income including equity earnings
of affiliates
    
    
    (20,908
    )
    
    
    2,781
    
    
    
    20,969
    
    
    
    2,842Loss before income taxes
    
    
    (21,147
    )
    
    
    (24,918
    )
    
    
    20,969
    
    
    
    (25,096
    )Income tax benefit
    
    
    
    
    
    
    (3,887
    )
    
    
    
    
    
    
    (3,887
    )Net loss before minority interest
    
    
    (21,147
    )
    
    
    (21,031
    )
    
    
    20,969
    
    
    
    (21,209
    )Minority interest
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Net loss
    
    $
    (21,147
    )
    
    $
    (20,969
    )
    
    $
    20,969
    
    
    $
    (21,147
    )
 17




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSNine Months Ended September 30, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    1,413,634
    
    
    $
    
    
    
    $
    1,413,634Cost of sales
    
    
    
    
    
    
    1,280,903
    
    
    
    
    
    
    
    1,280,903Depreciation
and amortization expense
    
    
    
    
    
    
    26,452
    
    
    
    
    
    
    
    26,452Selling, administrative and general expense
    
    
    3,885
    
    
    
    57,945
    
    
    
    
    
    
    
    61,830Operating income (loss)
    
    
    (3,885
    )
    
    
    48,334
    
    
    
    
    
    
    
    44,449Interest expense
    
    
    
    
    
    
    (19,963
    )
    
    
    
    
    
    
    (19,963
    )Other income including equity earnings
of affiliates
    
    
    28,571
    
    
    
    11,403
    
    
    
    (28,571
    )
    
    
    11,403Income before income taxes
    
    
    24,686
    
    
    
    39,774
    
    
    
    (28,571
    )
    
    
    35,889Income tax provision
    
    
    115
    
    
    
    11,459
    
    
    
    
    
    
    
    11,574Income before minority interest
    
    
    24,571
    
    
    
    28,315
    
    
    
    (28,571
    )
    
    
    24,315Minority interest
    
    
    
    
    
    
    256
    
    
    
    
    
    
    
    256Net income
    
    $
    24,571
    
    
    $
    28,571
    
    
    $
    (28,571
    )
    
    $
    24,571
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONSNine Months Ended September 30, 2005
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    1,189,636
    
    
    $
    
    
    
    $
    1,189,636Cost of sales
    
    
    
    
    
    
    1,113,879
    
    
    
    
    
    
    
    1,113,879Depreciation
and amortization expense
    
    
    
    
    
    
    25,621
    
    
    
    
    
    
    
    25,621Selling, administrative and general expense
    
    
    1,191
    
    
    
    51,638
    
    
    
    
    
    
    
    52,829Operating loss
    
    
    (1,191
    )
    
    
    (1,502
    )
    
    
    
    
    
    
    (2,693
    )Interest expense
    
    
    
    
    
    
    (16,763
    )
    
    
    
    
    
    
    (16,763
    )Other income including equity earnings
of affiliates
    
    
    (9,229
    )
    
    
    8,842
    
    
    
    9,290
    
    
    
    8,903Loss before income taxes
    
    
    (10,420
    )
    
    
    (9,423
    )
    
    
    9,290
    
    
    
    (10,553
    )Income tax benefit
    
    
    
    
    
    
    (71
    )
    
    
    
    
    
    
    (71
    )Loss before minority interest
    
    
    (10,420
    )
    
    
    (9,352
    )
    
    
    9,290
    
    
    
    (10,482
    )Minority interest
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Net loss
    
    $
    (10,420
    )
    
    $
    (9,290
    )
    
    $
    9,290
    
    
    $
    (10,420
    )
 18




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWSNine Months Ended September 30, 2006
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedNet cash used in operating activities
    
    $
    
    
    
    $
    (38,928
    )
    
    $
    
    
    
    $
    (38,928
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    (81,910
    )
    
    
    
    
    
    
    (81,910
    )Change in restricted cash used to fund
capital expenditures
    
    
    
    
    
    
    7,027
    
    
    
    
    
    
    
    7,027Other
    
    
    
    
    
    
    1,935
    
    
    
    
    
    
    
    1,935Net cash used in investing activities
    
    
    
    
    
    
    (72,948
    )
    
    
    
    
    
    
    (72,948
    )Financing activities:Net borrowings
    
    
    
    
    
    
    70,327
    
    
    
    
    
    
    
    70,327Change in book overdraft
    
    
    
    
    
    
    (10,120
    )
    
    
    
    
    
    
    (10,120
    )Minority interest investment in subsidiary
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    60,000Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    
    
    
    
    120,207
    
    
    
    
    
    
    
    120,207Net increase in cash and cash equivalents
    
    
    
    
    
    
    8,331
    
    
    
    
    
    
    
    8,331Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    8,863
    
    
    
    
    
    
    
    8,863Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    17,194
    
    
    $
    
    
    
    $
    17,194
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWSNine Months Ended September 30, 2005
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    
    
    
    $
    29,809
    
    
    $
    
    
    
    $
    29,809Investing activities:Capital expenditures
    
    
    
    
    
    
    (72,657
    )
    
    
    
    
    
    
    (72,657
    )Change in restricted cash used to fund
capital expenditures
    
    
    
    
    
    
    (12,306
    )
    
    
    
    
    
    
    (12,306
    )Other
    
    
    
    
    
    
    1,994
    
    
    
    
    
    
    
    1,994Net cash used in investing activities
    
    
    
    
    
    
    (82,969
    )
    
    
    
    
    
    
    (82,969
    )Financing activities:Net borrowings
    
    
    
    
    
    
    (13,685
    )
    
    
    
    
    
    
    (13,685
    )Change in book overdraft
    
    
    
    
    
    
    588
    
    
    
    
    
    
    
    588Minority interest investment in subsidiary
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    50,000Net cash provided by financing activities
    
    
    
    
    
    
    36,903
    
    
    
    
    
    
    
    36,903Net decrease in cash and cash equivalents
    
    
    
    
    
    
    (16,257
    )
    
    
    
    
    
    
    (16,257
    )Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    31,198
    
    
    
    
    
    
    
    31,198Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    14,941
    
    
    $
    
    
    
    $
    14,941
 19




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS CAUTIONARY LANGUAGE
 The information contained in this filing, other than historical information, consists of
forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Securities Exchange Act. In particular, statements containing estimates or projections of
future operating or financial performance are not historical facts, and only represent a belief
based on various assumptions, all of which are inherently uncertain. Forward-looking statements
reflect the current views of management and are subject to a number of risks and uncertainties that
could cause actual results to differ materially from those described in such statements. These
risks and uncertainties include, among others, factors relating to (1) the risk that the businesses
of CSN Holdings and Wheeling-Pittsburgh will not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected; (2) the ability of CSN, CSN Holdings and
Wheeling-Pittsburgh to realize the expected benefits from the proposed strategic alliance,
including expected operating efficiencies, synergies, cost savings and increased productivity, and
the timing of realization of any such expected benefits; (3) lower than expected operating results
for Wheeling-Pittsburgh for the remainder of 2006 or for the strategic alliance; (4) the risk of
unexpected consequences resulting from the strategic alliance; (5) the risk of labor disputes,
including as a result of the proposed strategic alliance or the failure to reach a satisfactory
collective bargaining with the production employees; (6) the ability of the strategic alliance to
operate successfully within a highly cyclical industry; (7) the extent and timing of the entry of
additional competition in the markets in which the strategic alliance will operate; (8) the risk of
decreasing prices for the strategic alliances products; (9) the risk of significant supply
shortages and increases in the cost of raw materials, especially carbon slab supply, and the impact
of rising natural gas prices; (10) rising worldwide transportation costs due to historically high
and volatile oil prices; (11) the ability of the strategic alliance to complete, and the cost and
timing of, capital improvement projects, including upgrade and expansion of Wheeling-Pittsburghs
hot strip mill and construction of an additional galvanizing line; (12) increased competition from
substitute materials, such as aluminum; (13) changes in environmental and other laws and
regulations to which the strategic alliance are subject; (14) adverse changes in interest rates and
other financial market conditions; (15) failure of the convertible financing proposed to be
provided by CSN to be converted to equity; (16) changes in United States trade policy and
governmental actions with respect to imports, particularly with respect to restrictions or tariffs
on the importation of carbons slabs; and (17) political, legal and economic conditions and
developments in the United States and in foreign countries in which the strategic alliance will
operate. There is no guarantee that the expected events, trends or results will actually occur.
The statements are based on many assumptions and factors, and any changes in such assumptions or
factors could cause actual results to differ materially from current expectations. CSN, CSN
Holdings and Wheeling-Pittsburgh assume no duty to update forward-looking statements. Reference is
made to a more complete discussion of forward-looking statements and applicable risks contained in
CSNs and Wheeling-Pittsburghs other filings with the SEC. For a discussion of some of the risk
factors that may cause such a difference, see Note 15 to the Condensed Consolidated Financial
Statements, the disclosures included below under Quantitative and Qualitative Disclosures About
Market Risk, and in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q and Item
IA, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
 OVERVIEW
 ®
  20




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Recent Developments
 Background
   Shipments, Pricing and Production
  Raw Materials
   Strategic Arrangement
  21




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Esmark Plan to Seek Election of Directors
  Action by Significant Shareholder
  Termination of Shareholder Rights Plan
  RESULTS OF OPERATIONS
 Quarter ended September 30, 2006 versus quarter ended September 30, 2005
    22




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Nine months ended September 30, 2006 versus nine months ended September 30, 2005
  23




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24




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LIQUIDITY AND CAPITAL RESOURCES
 Cash Flow from Operating Activities
   Cash Flow from Investing Activities
   Cash Flow from Financing Activities
   Liquidity and Capital Resources
  25




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$250 Million Term Loan Agreement
      26




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$225 Million Revolving Credit Facility
    $40 Million Series A Notes
  20 Million Series B Notes
  27




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10 Million Unsecured Note
   Collateral TypeTangible and Intangible Assets andJoint Venture Equity Interest
    
    Accounts Receivable and InventoryDebt obligation
secured by first
security interest
    
    $250 Million Term Loan
    
    $225 Million Revolving Credit FacilityDebt obligation
secured by second
security interest
    
    $40 Million Series A Notes
    
    $250 Million Term LoanDebt obligation
secured by third
security interest
    
    $225 Million Revolving
Credit Facility
    
    $40 Million Series A NotesDebt obligation
secured by fourth
security interest
    
    $20 Million Series B Notes
    
    $20 Million Series B Notes
  OFF-BALANCE SHEET ARRANGEMENTS
  CERTAIN OTHER OBLIGATIONS
  
    
    Modification and assumption agreement between WPSC and Danieli
Corporation. Pursuant to the modified agreement, WPSC paid
Danieli Corporation approximately $2.36 million. Approximately
$3.8 million of the
 28




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balance of the amount owed to Danieli
Corporation was converted into a portion of the secured term loans
under our term loan agreement that is not guaranteed by the Loan
Board. The balance of the amount owed to Danieli Corporation was
converted into a promissory note.
 
    
    Loan modification agreement between WPSC and the Ohio Department
of Development. Under this agreement, we made a $2.0 million
partial prepayment of the $6.985 million owed by WPSC to the Ohio
Department of Development pursuant to a loan, dated as of January
18, 2002, from the Ohio Department of Development and we were
granted a two-year deferral from the effective date of the plan of
reorganization of $4.985 million of such loan at an interest rate
of 3% per annum, which was originally due in August 2005. In
August 2005, WPSC and the Ohio Department of Development agreed to
modify the repayment terms of the loan, providing for a $1.0
million payment in October 2005, a $1.5 million payment in July
2006, and a $2.485 million payment in December 2006.
    
    Loan agreement between WPSC and the State of West Virginia. In
connection with WPSCs repayment of a $5.0 million loan from the
West Virginia Development Office, WPSC entered into a $6.5 million
loan agreement with the State of West Virginia. The loan has a
five-year term expiring on August 1, 2008 and bears interest at a
variable rate, which is reset annually and currently approximates
7.3% per annum.
 CONTRACTUAL COMMITMENTS
  Contractual Payments Due(Dollars in millions)RemainingPortion of
    
    
    2007 to
    
    
    2009 toTotal
    
    
    2006
    
    
    2008
    
    
    2010
    
    
    ThereafterLong-term debt
    
    $
    287.7
    (1)
    
    $
    9.7
    
    
    $
    205.2
    
    
    $
    23.9
    
    
    $
    48.9Interest on long-term debt
    
    
    41.5
    (2)
    
    
    4.4
    
    
    
    26.8
    
    
    
    8.2
    
    
    
    2.1Capital leases
    
    
    6.3
    (3)
    
    
    0.2
    
    
    
    1.5
    
    
    
    1.5
    
    
    
    3.1Long-term operating leases
    
    
    22.2
    (4)
    
    
    1.0
    
    
    
    7.4
    
    
    
    6.1
    
    
    
    7.7Other long term liabilities:Steelworkers Pension Trust
    
    
    20.4
    (5)
    
    
    2.8
    
    
    
    17.6
    
    
    
    
    
    
    
    OPEB
    
    
    24.7
    (6)
    
    
    1.1
    
    
    
    10.4
    
    
    
    13.2
    
    
    
    Coal miner retiree medical
    
    
    3.7
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    3.0Workers compensation
    
    
    26.6
    (7)
    
    
    1.6
    
    
    
    12.5
    
    
    
    12.5
    
    
    
    Special bonus payment
    
    
    5.0
    (8)
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    
    Purchase commitments:Oxygen supply
    
    
    93.4
    (9)
    
    
    2.1
    
    
    
    18.4
    
    
    
    21.6
    
    
    
    51.3Electricity
    
    
    83.8
    (10)
    
    
    1.7
    
    
    
    15.0
    
    
    
    14.0
    
    
    
    53.1Coal
    
    
    11.1
    (11)
    
    
    2.1
    
    
    
    9.0
    
    
    
    
    
    
    
    Coal
    
    
    12.0
    (12)
    
    
    5.7
    
    
    
    6.3
    
    
    
    
    
    
    
    Capital commitments
    
    
    31.4
    (13)
    
    
    15.2
    
    
    
    16.2
    
    
    
    
    
    
    
    Total
    
    $
    669.7
    
    
    $
    52.6
    
    
    $
    346.6
    
    
    $
    101.3
    
    
    $
    169.2
 
 1.
    
    Represents scheduled principal payments on existing indebtedness.2.
    
    Represents estimated interest payments on schedule principal payments on existing
indebtedness.3.
    
    Represents scheduled principal payments on existing capital lease obligations.4.
    
    Represents an estimate of expenditures to be made under existing long-term operating
lease agreements. 29




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5.
    
    Amount represents estimated payments to the Steelworkers Pension Trust, pursuant to
our labor agreement with the USW, through the end of the labor contract, which expires on
September 1, 2008.6.
    
    Amounts reflect our current estimate of corporate cash outflows for other post
employment benefits and include the impact of assumed mortality, medical inflation and the
aging of the population. No estimate has been made beyond 2010.7.
    
    Amounts reflect our current estimate of corporate cash outflows and exclude the impact
of interest and mortality. The forecast of cash outflows is estimated based on historical
cash payment information for the period 2002 through 2005 and anticipates payment of
approximately $6.25 million per year.8.
    
    Special Bonus Program was established in the 2003 Modified Labor Agreement to recognize
the unique contributions and sacrifices made by the hourly workforce and their Union in
helping to keep the Company operating during the Bankruptcy.9.
    
    We entered into a 15-year take-or-pay contract in 1999 that was amended in 2003. The
contract requires us to purchase oxygen, nitrogen and argon each month with a minimum
monthly charge of approximately $0.6 million, subject to escalation clauses.10.
    
    We entered into a 20-year take-or-pay contract in 1999, which was amended in 2003. The
contract requires us to purchase steam and electricity each month or pay a minimum monthly
charge of approximately $0.5 million, subject to increases for inflation, and a variable
charge calculated at a minimum of $3.75 times the number of tons of iron produced each
month with an agreed-to minimum of 3,000 tons per day, regardless of whether any tons are
produced. At September 30, 2006, a maximum termination payment of approximately $30.7
million would have been required to terminate the contract.11.
    
    In 2004, we amended our take-or-pay contract to purchase coal each month to a minimum
monthly charge of approximately $0.7 million. The term of the contract expires on December
31, 2007.12.
    
    In 2005, we entered into contracts to purchase 20,000 tons of coal each month from
August 2006 through May 2007 at a price approximating $94.50 per ton. Approximately 33,000
tons were pre-delivered under the terms of the contract during the first quarter of 2006.13.
    
    Amounts reflect contractual commitments for capital expenditure as of September 30,
2006. Planned Capital Expenditures
    VEBA TRUST AND PROFIT SHARING PLANS
   30




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VEBA Trust
  (i)
    
    40% of operating cash flow, between $16 and $24 of operating cash flow per ton of steel
products sold to third parties, payable in cash;(ii)
    
    12% of operating cash flow, between $24 and $65 of operating cash flow per ton of steel
products sold to third parties, payable at our discretion in cash or common stock of WPC;(iii)
    
    25% of operating cash flow, above $65 of operating cash flow per ton of steel products sold
to third parties, payable in cash; and(iv)
    
    15% of operating cash flow below $30 of operating cash flow per ton of steel products sold to
third parties, payable at our discretion in cash or common stock of WPC, subject to compliance
with dilution limitations.
     31




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Profit Sharing Plans
    32




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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Fresh Start Reporting
  Pension Benefits
    Other Postretirement Benefits (OPEB)
  33




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Asset impairments
  Deferred taxes
  Environmental and legal contingencies
  RECENT ACCOUNTING STANDARDS
  34




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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Commodity Price Risk and Related Risks
   35




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Interest Rate Risk
   Credit Risk
  Foreign Currency Exchange Risk
  
 Item 4. CONTROLS AND PROCEDURES
   36




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PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
   
 Item 1A. Risk Factors
 Net Operating Loss Carryover Limitation
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Item 6. EXHIBITS
 (a) Exhibits
 Exhibit No.
    
    Description10.1
    
    Employment Agreement, effective April 1, 2006, between Steven W.
Sorvold and Wheeling-Pittsburgh Corporation (filed herewith).10.2
    
    Employment Agreement, effective April 1, 2006, between Paul J. Mooney
and Wheeling-Pittsburgh Corporation (filed herewith).10.3
    
    Amended and Restated Employment Agreement, effective August 3,
2006, between Harry L. Page and Wheeling-Pittsburgh Corporation (filed
herewith).10.4
    
    Amended and Restated Employment Agreement, effective August 3,
2006, between Donald E. Keaton and Wheeling-Pittsburgh Corporation
(filed herewith).10.5
    
    Employment Agreement, effective September 1, 2006, between Michael
P. DiClemente and Wheeling-Pittsburgh Corporation (filed herewith).10.6
    
    Employment Agreement, effective September 1, 2006, between Vincent
D. Assetta and Wheeling-Pittsburgh Corporation (filed herewith).10.7
    
    Wheeling-Pittsburgh Steel Corporation Supplemental Executive
Retirement Plan (filed herewith).31.1
    
    Certification of James G. Bradley, Chief Executive Officer of the Registrant, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) certification).31.2
    
    Certification of Paul J. Mooney, Chief Financial Officer of the Registrant, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) certification).32.1
    
    Certification of James G. Bradley, Chief Executive Officer of the Registrant, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).32.2
    
    Certification of Paul J. Mooney, Chief Financial Officer of the Registrant, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
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SIGNATURES
  WHEELING-PITTSBURGH CORPORATION/s/ Paul J. MooneyPaul J. MooneyChief Financial Officer
(Authorized Officer, Principal Financial Officer
and Principal Accounting Officer)  39