##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2005
 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
(State of Incorporation)1134 Market Street, Wheeling, WV
(Address of principal executive offices)
    
    55-0309927
(I.R.S. Employer Identification No.)26003
(Zip code)
 304) 234-2400
 þ o
 þ o
 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)
    
    
    2Condensed Consolidated Balance Sheets (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    36Item 6. Exhibits
    
    
    36SIGNATURES
    
    
    37EX-31.1EX-31.2EX-32.1EX-32.2
   
 1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
  WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
 (Dollars in thousands, except per share amounts)
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2004
    
    
    
    
    
    
    20042005
    
    
    Restated*
    
    
    2005
    
    
    Restated*Revenues:Net sales, including sales to affiliates of $79,610,
$96,866, $179,449 and $162,206
    
    $
    415,237
    
    
    $
    356,121
    
    
    $
    814,745
    
    
    $
    630,327Cost and expenses:Cost of sales, including cost of sales to affiliates
of $79,343, $79,431, $172,416 and $140,682,
excluding depreciation and amortization expense
    
    
    385,979
    
    
    
    292,820
    
    
    
    741,937
    
    
    
    548,889Depreciation and amortization expense
    
    
    8,423
    
    
    
    7,512
    
    
    
    17,892
    
    
    
    15,201Selling, general and administrative expense
    
    
    15,577
    
    
    
    16,437
    
    
    
    34,894
    
    
    
    31,475Total cost and expenses
    
    
    409,979
    
    
    
    316,769
    
    
    
    794,723
    
    
    
    595,565Operating income
    
    
    5,258
    
    
    
    39,352
    
    
    
    20,022
    
    
    
    34,762Interest expense and other financing costs
    
    
    (5,960
    )
    
    
    (5,058
    )
    
    
    (11,540
    )
    
    
    (10,277
    )Other income
    
    
    3,093
    
    
    
    4,653
    
    
    
    6,061
    
    
    
    7,665Income before income taxes
    
    
    2,391
    
    
    
    38,947
    
    
    
    14,543
    
    
    
    32,150Income tax provision (benefit)
    
    
    (236
    )
    
    
    11,950
    
    
    
    3,816
    
    
    
    11,832Net income
    
    $
    2,627
    
    
    $
    26,997
    
    
    $
    10,727
    
    
    $
    20,318Earnings per shareBasic
    
    $
    0.18
    
    
    $
    2.84
    
    
    $
    0.76
    
    
    $
    2.14Diluted
    
    $
    0.18
    
    
    $
    2.79
    
    
    $
    0.74
    
    
    $
    2.10Weighted average shares (in thousands):Basic
    
    
    14,207
    
    
    
    9,500
    
    
    
    14,158
    
    
    
    9,500Diluted
    
    
    14,418
    
    
    
    9,684
    
    
    
    14,418
    
    
    
    9,691
 
 *
    
    Amounts reported for the quarter and six months ended June 30, 2004 have been restated as a
result of the retrospective application of the change in accounting for stock options as
discussed in Note 5.  2




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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
 (Dollars in thousands)
 December 31,June 30,
    
    
    20042005
    
    
    Restated*AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,727
    
    
    $
    31,198Accounts receivables, less allowance for doubtful accounts of $2,427 and $2,697
    
    
    166,735
    
    
    
    144,509Inventories
    
    
    202,329
    
    
    
    156,669Prepaid expenses and deferred charges
    
    
    16,177
    
    
    
    29,953Total current assets
    
    
    387,968
    
    
    
    362,329Investment in and advances to affiliated companies
    
    
    51,386
    
    
    
    53,016Property, plant and equipment, less accumulated depreciation of $60,116 and $42,536
    
    
    509,329
    
    
    
    487,308Deferred income tax benefits
    
    
    15,630
    
    
    
    18,751Restricted cash
    
    
    
    
    
    
    12,502Other intangible assets, less accumulated amortization of $1,563 and $1,346
    
    
    1,142
    
    
    
    5,174Deferred charges and other assets
    
    
    18,442
    
    
    
    16,406Total assets
    
    $
    983,897
    
    
    $
    955,486Liabilities and stockholders equityCurrent liabilities:Accounts payable, including book overdrafts of $12,043 and $8,894
    
    $
    86,344
    
    
    $
    92,434Short-term debt
    
    
    31,500
    
    
    
    Payroll and employee benefits payable
    
    
    47,056
    
    
    
    48,611Accrued income and other taxes
    
    
    11,863
    
    
    
    10,073Deferred income taxes payable
    
    
    15,630
    
    
    
    18,751Accrued interest and other liabilities
    
    
    5,121
    
    
    
    7,843Long-term debt due in one year
    
    
    31,695
    
    
    
    31,427Total current liabilities
    
    
    229,209
    
    
    
    209,139Long-term debt
    
    
    296,968
    
    
    
    302,156Employee benefits
    
    
    134,301
    
    
    
    135,608Other liabilities
    
    
    16,418
    
    
    
    17,978Total liabilities
    
    
    676,896
    
    
    
    664,881Stockholders equityPreferred stock  $.001 par value; 20,000,000 shares authorized;
no shares issued or outstanding
    
    
    
    
    
    
    Common stock  $.01 par value; 14,599,930 and 14,437,223 shares
issued; 14,593,264 and 14,433,223 shares outstanding
    
    
    146
    
    
    
    144Additional paid-in capital
    
    
    273,034
    
    
    
    267,327Accumulated earnings
    
    
    33,921
    
    
    
    23,194Treasury stock, 6,666 and 4,000 shares, at cost
    
    
    (100
    )
    
    
    (60
    )Total stockholders equity
    
    
    307,001
    
    
    
    290,605Total liabilities and stockholders equity
    
    $
    983,897
    
    
    $
    955,486
 
 *
    
    Amounts reported as of December 31, 2004 have been restated as a result of the retrospective
application of the change in accounting for stock options discussed in Note 5.  3




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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
 (Dollars in thousands)
 Six Months EndedJune 30,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    10,727
    
    
    $
    20,318Adjustments to reconcile net income to cash
provided by (used in) operating activities:Depreciation and amortization expense
    
    
    17,892
    
    
    
    15,201VEBA, profit sharing and other stock transactions
    
    
    3,612
    
    
    
    8,548Other postretirement benefits
    
    
    41
    
    
    
    (69
    )Deferred compensation and stock options
    
    
    1,463
    
    
    
    1,430Equity income of affiliated companies, net of dividends
    
    
    380
    
    
    
    (3,723
    )Interest paid-in-kind
    
    
    888
    
    
    
    544Loss on disposition of assets
    
    
    668
    
    
    
    10Deferred income taxes
    
    
    3,816
    
    
    
    11,455Other
    
    
    17
    
    
    
    Changes in current assets and current liabilities:Accounts receivable
    
    
    (22,226
    )
    
    
    (46,399
    )Inventories
    
    
    (45,660
    )
    
    
    11,184Other current assets
    
    
    13,776
    
    
    
    1,082Accounts payable
    
    
    (9,239
    )
    
    
    1,703Other current liabilities
    
    
    (1,894
    )
    
    
    (17,559
    )Other assets and liabilities, net
    
    
    (4,944
    )
    
    
    12,051Net cash provided by (used in) operating activities
    
    
    (30,683
    )
    
    
    15,776Cash flows from investing activities:Payments from affiliates
    
    
    1,250
    
    
    
    725Capital expenditures
    
    
    (39,617
    )
    
    
    (60,211
    )Proceeds from sale of assets
    
    
    344
    
    
    
    6Restricted cash used to fund capital expenditures
    
    
    12,502
    
    
    
    40,142Net cash used in investing activities
    
    
    (25,521
    )
    
    
    (19,338
    )Cash flows from financing activities:Book overdraft
    
    
    3,149
    
    
    
    3,110Net change in short-term debt
    
    
    31,500
    
    
    
    (1,153
    )Borrowing of long-term debt
    
    
    
    
    
    
    1,800Repayment of long-term debt
    
    
    (6,916
    )
    
    
    (1,894
    )Net cash provided by financing activities
    
    
    27,733
    
    
    
    1,863Decrease in cash and cash equivalents
    
    
    (28,471
    )
    
    
    (1,699
    )Cash and cash equivalents at beginning of period
    
    
    31,198
    
    
    
    4,767Cash and cash equivalents at end of period
    
    $
    2,727
    
    
    $
    3,068
  4




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WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Stockholders
Equity (Unaudited)
 (Dollars in thousands)
 Additional
    
    
    AccumulatedCommon
    
    
    Paid-in
    
    
    Earnings
    
    
    Deferred
    
    
    TreasuryStock
    
    
    Capital
    
    
    (Deficit)
    
    
    Compensation
    
    
    Stock
    
    
    TotalDecember 31, 2003 (As Reported)
    
    $
    100
    
    
    $
    149,901
    
    
    $
    (38,930
    )
    
    $
    (6,458
    )
    
    $
    
    
    
    $
    104,613Modified retrospective adjustment,
share-based payments
    
    
    
    
    
    
    (6,351
    )
    
    
    (107
    )
    
    
    6,458
    
    
    
    
    
    
    
    December 31, 2003 (Restated)
    
    
    100
    
    
    
    143,550
    
    
    
    (39,037
    )
    
    
    
    
    
    
    
    
    
    
    104,613Shares issued:Public stock offering
    
    
    37
    
    
    
    99,660
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,697Employee benefit plans
    
    
    7
    
    
    
    21,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,227Restricted stock forfeiture
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    Compensation expense recognized
    
    
    
    
    
    
    2,471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,471Stock option grants
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Modified retrospective adjustment,
share-based payments
    
    
    
    
    
    
    363
    
    
    
    (236
    )
    
    
    
    
    
    
    
    
    
    
    127Net income
    
    
    
    
    
    
    
    
    
    
    62,467
    
    
    
    
    
    
    
    
    
    
    
    62,467December 31, 2004 (Restated)
    
    
    144
    
    
    
    267,327
    
    
    
    23,194
    
    
    
    
    
    
    
    (60
    )
    
    
    290,605Shares issued:Employee benefit plans
    
    
    2
    
    
    
    4,204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,206Restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock forfeiture
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    Compensation expense recognized
    
    
    
    
    
    
    1,304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,304Stock option grants
    
    
    
    
    
    
    159
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159Net income
    
    
    
    
    
    
    
    
    
    
    10,727
    
    
    
    
    
    
    
    
    
    
    
    10,727Balance, June 30, 2005
    
    $
    146
    
    
    $
    273,034
    
    
    $
    33,921
    
    
    $
    
    
    
    $
    (100
    )
    
    $
    307,001
 Issued
    
    
    Treasury
    
    
    OutstandingShare Activity:Balance, December 31, 2003
    
    
    10,000,000
    
    
    
    
    
    
    
    10,000,000Stock issued  Public offering
    
    
    3,719,898
    
    
    
    
    
    
    
    3,719,898Stock issued  Employee benefit plans
    
    
    717,325
    
    
    
    
    
    
    
    717,325Restricted stock forfeiture
    
    
    
    
    
    
    4,000
    
    
    
    (4,000
    )Balance, December 31, 2004
    
    
    14,437,223
    
    
    
    4,000
    
    
    
    14,433,223Stock issued  Employee benefit plans
    
    
    152,207
    
    
    
    
    
    
    
    152,207Stock issued  Restricted stock
    
    
    10,500
    
    
    
    
    
    
    
    10,500Restricted stock forfeiture
    
    
    
    
    
    
    2,666
    
    
    
    (2,666
    )Balance, June 30, 2005
    
    
    14,599,930
    
    
    
    6,666
    
    
    
    14,593,264
  5




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Notes to Condensed Consolidated Financial Statements (Unaudited)
 1.
    
    Basis of PresentationThe condensed consolidated financial statements of Wheeling-Pittsburgh Corporation and
subsidiaries (WPC or the Company) are unaudited. In the opinion of management, these financial
statements reflect all recurring adjustments necessary to present fairly the consolidated
financial position of the Company and the results of its operations and the changes in its cash
flows for the periods presented.These financial statements, including notes thereto, have been prepared in accordance with
applicable rules of the Securities and Exchange Commission and do not include all of the
information and disclosures required by generally accepted accounting principles in the United
States of America for complete financial statements. The results reported in these financial
statements may not be indicative of the results that may be expected for the entire year. This
Form 10-Q should be read in conjunction with the Companys Form 10-K for the year ended December
31, 2004.2.
    
    Bankruptcy and ReorganizationOn November 16, 2000, the Company and eight of its then-existing wholly-owned subsidiaries,
which represented substantially all of the Companys business, filed voluntary petitions for
relief under Chapter 11 of the United States Bankruptcy Code. The Company commenced Chapter 11
proceedings in order to restructure its outstanding debts and to improve its access to
additional funding needed to continue operations. Throughout the Chapter 11 proceedings, the
Company remained in possession of its properties and assets and continued to operate and manage
its businesses with the then-existing directors and officers as debtors-in-possession subject to
the supervision of the Bankruptcy Court.As part of the Chapter 11 proceedings, the Company filed its original Joint Plan of
Reorganization on
December 20, 2002, its First Amended Joint Plan of Reorganization on January 9, 2003, its Second
Amended Joint Plan of Reorganization on May 5, 2003 and its Third Amended Joint Plan of
Reorganization on May 19, 2003, reflecting the final negotiations with pre-petition note
holders, pre-petition trade creditors and unionized employees. The Companys plan of
reorganization was confirmed on June 18, 2003 and became effective on August 1, 2003.3.
    
    Fresh Start ReportingIn connection with its reorganization and 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 made a determination of the enterprise value
of the entity based upon various valuation methods, including discounted cash flow
methodologies, analysis of comparable steel companies, and other applicable ratios and economic
industry information relevant to the operations of the Company. The estimated total equity value
of the reorganized company aggregating approximately $150 million was determined after taking
into account the values of the obligations assumed in connection with the Joint Plan of
Reorganization.As a result of applying fresh start reporting, the consolidated financial position of the
Company and the results of its operations and the changes in its cash flows for the periods
presented may not be comparable to historical information for prior periods.4.
    
    ReclassificationCertain amounts in previously issued financial statements have been reclassified for
comparative purposes.Due to a computational error, a classification correction has been made to the consolidated statement of cash
flows for the six month ended June 30, 2004, decreasing cash provided from operating activities
from $22.3 million to $15.8 million (accounts payable) and increasing cash provided by financing
activities from $(4.6) to $1.9 million (book overdraft). There was no impact on the Companys
net income or cash as a result of this adjustment.
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5.
    
    Change in Accounting MethodThe Company elected to adopt Statement of Financial Accounting Standards No. 123 (revised 2004)
(SFAS No. 123(R)) in the first quarter of 2005 and elected to apply this statement using the
modified retrospective method. As a result, financial statements for all prior periods
presented have been adjusted to give effect to the fair-value based method of accounting for all
awards granted in fiscal years beginning after December 15, 1994. Beginning balances of
paid-in-capital, other non-current assets and retained earnings have been adjusted to reflect
the results of adopting this statement using the modified retrospective method for years not
presented. Amounts previously disclosed as pro forma adjustments have been reflected in
earnings for all prior periods.The effect of adopting this statement and applying this statement using the modified
retrospective method is as follows:
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Dollars in thousands, except per share amounts
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Income from continuing operations,
before adjustment
    
    $
    2,703
    
    
    $
    27,058
    
    
    $
    10,886
    
    
    $
    20,432Effect of adopting fair-value method of
accounting for share-based payments
    
    
    (76
    )
    
    
    (88
    )
    
    
    (159
    )
    
    
    (180
    )Income from continuing operations,
as adjusted
    
    
    2,627
    
    
    
    26,970
    
    
    
    10,727
    
    
    
    20,252Effect of adoption on benefit for income taxes
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    66Net income, as adjusted
    
    $
    2,627
    
    
    $
    26,997
    
    
    $
    10,727
    
    
    $
    20,318Earnings per share:Basic, before adjustment
    
    $
    0.19
    
    
    $
    2.85
    
    
    $
    0.77
    
    
    $
    2.15Effect of adoption
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )Basic, as adjusted
    
    $
    0.18
    
    
    $
    2.84
    
    
    $
    0.76
    
    
    $
    2.14Diluted, before adjustment
    
    $
    0.19
    
    
    $
    2.79
    
    
    $
    0.76
    
    
    $
    2.11Effect of adoption
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.02
    )
    
    $
    (0.01
    )Diluted, as adjusted
    
    $
    0.18
    
    
    $
    2.79
    
    
    $
    0.74
    
    
    $
    2.10
 As of December 31, 2004, accumulated earnings was decreased by $343 thousand, other non-current
assets was increased $127 thousand and additional paid-in capital was increased $470 thousand.
Amounts previously reported as deferred compensation in stockholders equity were reclassified
to additional paid-in capital. The retrospective application of SFAS No. 123(R) had no effect
on cash flow from operating, investing or financing activities. See Note 9 for additional
disclosure regarding share-based payments.6.
    
    New Accounting StandardsThe Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 154, Accounting Changes and Error Corrections, in May 2005. SFAS No. 154
requires retrospective application to prior periods financial statements of voluntary changes
in accounting principles, unless it is impracticable to determine either the period-specific
effects or the cumulative effect of the change. This statement also applies to changes required
by accounting pronouncements if the pronouncement does not provide for specific transition
provisions. SFAS No. 154 is effective for accounting changes made in fiscal years beginning
after December 15, 2005. The Company does not anticipate voluntarily changing any
accounting principle currently being applied and, therefore, does not expect this statement to
have an impact on its financial statements.The Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 47 (FIN 47),
Accounting for Conditional Asset Retirement Obligations, in March 2005. FIN 47 clarifies the
term conditional asset retirement obligation as used in SFAS No. 143, Accounting for Asset
Retirement Obligations. FIN 47 is
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effective for fiscal years ending after December 31, 2005.
The Company does not expect this interpretation to have a material impact on its financial
statements.The FASB issued SFAS No. 153, Exchanges of Non-monetary Assets, an amendment of APB Opinion No.
29, in December 2004. SFAS No. 153 eliminates the exception to fair value treatment with
respect to certain exchanges of non-monetary assets and provides an exception to fair value
treatment with respect to exchanges of non-monetary assets that have no commercial substance.
SFAS No. 153 is effective for non-monetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. The Company is currently reviewing this statement and does not expect this
statement to have a material impact on its financial statements.The FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4, in
December 2004. SFAS No. 151 requires that abnormal amounts of idle facility expense, freight,
handling costs and wasted materials be recognized as current-period costs and not as
inventoriable costs. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005.
The Company is currently reviewing this statement and does not expect this statement to have a
material impact on its financial statements.7.
    
    Business SegmentThe Company is engaged in one line of business and operates in one business segment: the making,
processing and fabricating of steel and steel products. The Company manufactures and sells hot
rolled and cold rolled sheet products, coated products (such as galvanized), pre-painted and tin
mill sheet products. The Company also manufactures fabricated steel products, including
roll-formed corrugating roofing, roof deck, form deck, floor deck, bridgeform and other products
used primarily in construction, highway and agricultural markets.8.
    
    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 $48.1 million and $67.1 million for the quarters ended June 30,
2005 and 2004, respectively. The Company had sales to Wheeling-Nisshin of $109.9 million and
$105.1million for the six months ended June 30, 2005 and 2004, respectively. Sales to
Wheeling-Nisshin are made at prevailing market prices. The Company recorded dividends from
Wheeling-Nisshin of $5.0 million and $2.5 million during the six months ended June 30, 2005 and
2004, respectively. At June 30, 2005 and December 31, 2004, the Company had accounts receivable
due from Wheeling-Nisshin, Inc. of $3.0 million and $1.6 million, respectively, and had accounts
payable to Wheeling-Nisshin of $92 thousand and $2.5 million, respectively.The Company owns 50% 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 $31.5
million and $29.8 million for the quarters ended June 30, 2005 and 2004, respectively. The
Company had sales to OCC of $69.5 million and $57.1 million for the six months ended June 30,
2005 and 2004, respectively. Sales to OCC are made at prevailing market prices. At June 30,
2005 and December 31, 2004, the Company had accounts receivable due from OCC of $10.3 million
and $9.7 million, respectively, and had accounts payable to OCC of $0.9 million at December 31,
2004. At June 30, 2005 and December 31, 2004, the Company had a loan receivable due from OCC of
$8.5 million and $9.7 million, respectively, which bears interest at approximately 5.6% per
annum. The Company recorded interest income on the loan receivable of $0.2 million and $0.1
million and received payments on the loan of $0.3 million and $0.4 million for the quarters
ended June 30, 2005 and 2004, respectively. The Company recorded interest income on the loan
receivable of $0.3 million and $0.2 million and received payments on the loan of $1.2 million
and $0.7 million for the six months ended June 30, 2005 and 2004, respectively.9.
    
    Share-Based PaymentsThe Company maintains a non-vested restricted stock plan pursuant to which it granted 500,000
shares of its common stock to selected key employees. All of these grants vest in increments of
one-third of the total grant to each individual pro rata over three years; one-third of which
have vested and one-third of which will vest two business days after the earnings release for
the second quarter in each of 2005 and 2006. In March 2005, the Company granted an additional
10,500 restricted shares of its common stock under the plan to selected employees, all of which
vest two business days after the earnings release for the second quarter of 2006.
 8




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Compensation
expense related to this plan amounted to $0.7 million and $0.6 million for the quarter ended
June 30, 2005 and 2004, respectively. Compensation expense related to this plan amounted to
$1.3 million and $1.2 million for the six months ended June 30, 2005 and 2004, respectively. At
June 30, 2005, deferred compensation expense relative to non-vested restricted stock amounted to
$3.0 million. This amount will be amortized to expense ratably through August 2006. No shares
granted under the plan are subject to retirement eligible provisions.The Company granted stock options for 5,393 and 7,801 shares of its common stock to certain
directors of the Company during the quarters ended June 30, 2005 and 2004, respectively, at a
price of $19.58 and $13.25 per share, respectively. The Company granted stock options for 8,115
and 12,195 shares of its common stock to certain directors of the Company during the six months
ended June 30, 2005 and 2004, respectively, at a weighted average price of $26.05 and $17.14 per
share, respectively. The options are 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
2005 or 2004. The Company recorded compensation expense relative to stock options of $76
thousand and $88 thousand for the quarters ended June 30, 2005 and 2004, respectively. The
Company recorded compensation expense of $159 thousand and $180 thousand for the six months
ended June 30, 2005 and 2004, respectively. As of June 30, 2005, stock options for 45,123
shares of common stock of the Company were outstanding at a weighted average price of $16.79 per
share.The fair value of each option was estimated on the grant date using the Black-Scholes pricing
model with the following assumptions:
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Average risk-free interest rate
    
    
    4.12
    %
    
    
    3.91
    %
    
    
    4.29
    %
    
    
    3.33
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    77.87
    %
    
    
    85.74
    %
    
    
    80.87
    %
    
    
    85.48
    %Expected life (years)
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
 The weighted average fair value per option granted was $14.09 and $11.28 for the quarters ended
June 30, 2005 and 2004, respectively. The weighted average fair value per option granted was
$19.59 and $14.76 for the six months ended June 30, 2005 and 2004, respectively.10.
    
    Pension and Other Postretirement BenefitsNet periodic cost for pension and other postretirement benefits for employees and covered
dependents was as follows:
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Components of net periodic cost:Service cost
    
    $
    413
    
    
    $
    397
    
    
    $
    827
    
    
    $
    792Interest cost
    
    
    1,325
    
    
    
    1,100
    
    
    
    2,649
    
    
    
    2,200Amortization of prior service (credit) costs
    
    
    (1,196
    )
    
    
    32
    
    
    
    (2,393
    )
    
    
    65Recognized actuarial (gain)/loss
    
    
    310
    
    
    
    63
    
    
    
    621
    
    
    
    125Net periodic cost
    
    $
    852
    
    
    $
    1,592
    
    
    $
    1,704
    
    
    $
    3,182
 The Company contributed $45 thousand and $20 thousand to its defined benefit pension plan during
the quarters ended June 30, 2005 and 2004, respectively. The Company made payments of $0.7
million and $1.4 million for other postretirement benefits during the quarters ended June 30,
2005 and 2004, respectively. The Company contributed $57 thousand and $56 thousand to its
defined benefit pension plan during the six months
 9




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ended June 30, 2005 and 2004, respectively.
The Company made payments of $1.5 million and $3.1 million for other postretirement benefits
during the six months ended June 30, 2005 and 2004, respectively. The Company expects to
contribute $0.3 million to its defined benefit pension plan during 2005 on account of salaried
participants and to make payments of $3.7 million for other postretirement benefits during 2005.11.
    
    VEBA and Profit Sharing ExpenseDuring the quarter ended June 30, 2005, the Company incurred VEBA and profit sharing expense of
$1.8 million. At the sole discretion of the Company, $0.1 million of this amount was satisfied
by the issuance of common stock during the second quarter of 2005 and $1.2 million of this
amount is subject to satisfaction by the issuance of common stock of the Company during the
third quarter of 2005. The remaining $0.5 million of this amount was settled with pre-funded
amounts. During the quarter ended June 30, 2004, the Company incurred VEBA and profit sharing
expense of $10.9 million. At the sole discretion of the Company, $8.6 million was satisfied by
the issuance of common stock during the third quarter of 2004. Of the remaining amount, $1.8
million was settled in cash during the third quarter of 2004 and the remaining $0.5 million was
settled with pre-funded amounts.During the six months ended June 30, 2005, the Company incurred VEBA and profit sharing expense
of $4.4 million. At the sole discretion of the Company, $2.2 was settled by the issuance of
common stock of the Company during the second quarter of 2005 and $1.2 million of this amount is
subject to satisfaction by the issuance of common stock of the Company during the third quarter
of 2005. The remaining $1.0 million of this amount was settled with pre-funded amounts. During
the six months ended June 30, 2004, the Company incurred VEBA and profit sharing expense of
$10.9 million. At the sole discretion of the Company, $8.6 million was satisfied by the
issuance of common stock during the third quarter of 2004. Of the remaining amount, $1.8
million was settled in cash during the third quarter of 2004 and the remaining $0.5 million was
settled with pre-funded amounts.12.
    
    Other IncomeOther income consisted of the following:
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Equity income from affiliates
    
    $
    2,052
    
    
    $
    4,247
    
    
    $
    4,767
    
    
    $
    6,369Other income
    
    
    1,041
    
    
    
    406
    
    
    
    1,294
    
    
    
    1,296Total
    
    $
    3,093
    
    
    $
    4,653
    
    
    $
    6,061
    
    
    $
    7,665
 13.
    
    Earnings Per ShareFor the quarters and six months ended June 30, 2005 and 2004, a reconciliation of the numerator
and denominator for the calculation of basic and diluted earnings per share is as follows:
 10




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Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2004
    
    
    
    
    
    
    2004(Dollars and shares in thousands)
    
    2005
    
    
    Restated
    
    
    2005
    
    
    RestatedIncome available to common shareholders
    
    $
    2,627
    
    
    $
    26,997
    
    
    $
    10,727
    
    
    $
    20,318Weighed-average basic shares outstanding
    
    
    14,207
    
    
    
    9,500
    
    
    
    14,158
    
    
    
    9,500Dilutive effect of:Stock options
    
    
    15
    
    
    
    12
    
    
    
    19
    
    
    
    12Non-vested restricted common stock
    
    
    196
    
    
    
    171
    
    
    
    241
    
    
    
    179Weighed-average diluted shares outstanding
    
    
    14,418
    
    
    
    9,684
    
    
    
    14,418
    
    
    
    9,691Basic earnings per share
    
    $
    0.18
    
    
    $
    2.84
    
    
    $
    0.76
    
    
    $
    2.14Diluted earnings per share
    
    $
    0.18
    
    
    $
    2.79
    
    
    $
    0.74
    
    
    $
    2.10
 For the quarters ended June 30, 2005 and 2004, stock options for 19,529 and 4,394 shares of
common stock at a weighted average price of $27.05 and $24.04, respectively, were excluded from
the computation of diluted earnings per share as their effect was anti-dilutive. For the six
months ended June 30, 2005 and 2004, stock options for 8,115 and 4,394 shares of common stock at
a weighted average price of $26.05 and $24.04, respectively, were excluded from the computation
of diluted earnings per share as their effect was anti-dilutive. For the quarter and six months
ended June 30, 2005, 10,500 shares of non-vested restricted stock common were excluded from the
computation of diluted earnings per share as their effect was anti-dilutive.14.
    
    InventoriesInventories are valued at the lower of cost or market value. Cost is determined by the last-in
first-out (LIFO) method for substantially all inventories. Approximately 99% of inventories are
valued using the LIFO method.
 June 30,
    
    
    December 31,(Dollars in thousands)
    
    2005
    
    
    2004Finished products
    
    $
    36,570
    
    
    $
    46,070In-process
    
    
    160,102
    
    
    
    128,114Raw materials
    
    
    68,439
    
    
    
    23,662Other materials and supplies
    
    
    221
    
    
    
    307Total current cost
    
    
    265,332
    
    
    
    198,153Excess of current cost over carrying cost
    
    
    (63,003
    )
    
    
    (41,484
    )Carrying cost
    
    $
    202,329
    
    
    $
    156,669
 During the quarter ended June 30, 2005 and for the six months ended June 30, 2005, certain
inventory quantities were reduced, resulting in liquidations of LIFO inventories carried at
costs prevailing in prior periods. The effect was to increase income by $4.2 million and $4.6
million, respectively.15.
    
    Goodwill and Other Intangible AssetsThe application of fresh start reporting resulted in an amount being allocated to reorganization
value in excess of amounts allocated to identifiable assets, which was reflected in the
financial statements as goodwill. Under the
provisions of SOP 90-7 and FASB 109, either pre-confirmation net operating loss carryforwards or
benefits resulting from the reversal of a valuation allowance applicable to other deferred tax
assets are used first to reduce goodwill and then to reduce other intangible assets, and finally
as a credit to equity. During the quarter and six months ended June 30, 2005, other intangible
assets were reduced by $83 thousand and $3.8 million, 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. During the
quarter and six months ended June 30, 2004, goodwill was reduced by $11.7 million.
 11




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16.
    
    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 and Federal (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.On March 10, 2005 the Company entered into a consent order with the West Virginia Department of
Environmental Protection relative to air emissions at its coke producing facility in Follansbee,
West Virginia. Under the consent order, the Company is obligated to take certain actions to
correct and control air emissions at this facility. The Company recorded an obligation of $0.2
million in the first quarter of 2005 relating to this matter.The Company estimates that demands for stipulated penalties and fines for activities through
June 30, 2005 could total approximately $2.9 million, which has been fully reserved by the
Company. These claims arise from instances in which the Company exceeded consent decree terms,
including: (a) $2.2 million related to a January 30, 1996 USEPA consent decree for the Companys
coke oven gas desulfurization facility; (b) $0.4 million related to a July 1991 USEPA consent
decree for water discharges to the Ohio River; and (c) $0.1 million related to a September 20,
1999 Ohio EPA consent decree for the Companys coke oven gas desulfurization facility, and (d)
$0.2 million for a one time fine by West Virginia DEP for particulate emissions from the
Companys coke plant.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 work has been performed in phases, and approximately $3.1 million has
been spent on these activities to-date. The Company estimates the cost of removal of the
remaining contaminated sediments at $2.6 million, which has been fully reserved by the Company.
The Company currently expects this work to be substantially complete by the end of 2006.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 will submit 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 a preliminary estimate of the range of the possible cost to
remediate, the Company has reserved approximately $5.0 million for such remediation measures.The USEPA conducted a multimedia inspection of our Steubenville, Mingo Junction, Yorkville and
Martins Ferry, Ohio and Follansbee, West Virginia facilities in March and June 1999. The
inspection covered environmental regulations applicable to these plants. Many of the issues were
resolved and settled prior to emergence from Chapter 11 bankruptcy. Based on current estimates,
the Company has reserved $1.4 million for resolution of outstanding issues.Capital expenditures for environmental projects totaled $2.4 million for the quarter ended June
30, 2005. The Company estimates capital expenditures for environmental projects to be $11.2
million for 2005, $13.2 million for 2006 and $4.1 million for 2007. 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 $12.6 million at June 30, 2005 and $13.4 million at
December 31, 2004. These accruals were based on all information available to the Company. As
new information becomes available, whether from third parties or otherwise, and as environmental
regulations change, the liabilities are reviewed on a quarterly basis and the accruals are
adjusted accordingly. Unless stated above, the time frame
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##### Table of Contents



over which these liabilities will be
paid is presently unknown. Further, the Company considers it reasonably possible that it could
ultimately incur additional liabilities relative to the above exposures of up to $5.0 million.CommitmentsIn June 2005, the Company entered into contracts to purchase 40,000 tons of metallurgical coal
each month for the period August 2005 through December 2005 at the prevailing market price for
the first quarter of 2005. For each ton of metallurgical coal that is not taken under these
contracts, the Company must pay $40 per ton.In June 2005, the Company entered into a contract to purchase up to 20,000 tons of metallurgical
coal each month for the period August 2006 through May 2007 at the prevailing market price for
the first quarter of 2005. The contract requires the Company to pay an average cost of $7.50
per ton for each ton of coal that is not taken under the contract. In addition, the Company is
obligated to make a prepayment of $5.1 million under the terms of the contract, of which $0.5
million was paid in June 2005. The remaining prepayment of $4.6 million will be paid in the
third quarter of 2005. The prepayment will be applied ratably to reduce the cash cost of each
ton of coal delivered under the contract. These prepayments will be forfeited if coal is not
taken under the contract.In 2004, the Company entered into a take-or-pay contract to purchase coal each month with a
minimum monthly charge of approximately $0.6 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 $2.8 million and $3.0 million for the quarters
ended June 30, 2005 and 2004, respectively. Payments for deliveries of coal totaled $5.7
million and $4.3 million for the six months ended June 30,
2005 and 2004, respectively. At June 30, 2005, a maximum termination payment of $3.8 million would have been required to
terminate the contract.The Company entered into a 15-year take-or-pay contract in 1999, which was amended in 2003, that
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 $2.4 million and $3.6 million for the quarters ended June 30, 2005 and 2004,
respectively. Payments for deliveries of oxygen totaled $4.7 million and $8.7 million for the
six months ended June 30, 2005 and 2004, respectively.The Company entered into a 20-year contract in 1999, which was amended in 2003, that requires
the Company to purchase steam and electricity each month or pay a minimum monthly charge of
approximately $0.4 million. Additionally, the contract requires a variable portion 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 $2.4 million and $2.3
million for the three months ended June 30, 2005 and 2004, respectively. Payments for
deliveries of steam and electricity totaled $4.8 million and $4.6 million for the six months
ended June 30, 2005 and 2004, respectively. At June 30, 2005, a maximum termination payment of
$33.4 million would have been required to terminate the contract.GuaranteesIn January 2005, the Company entered into an operating lease for certain mobile equipment, which
contains a residual lease guarantee approximating $357 thousand. 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.
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##### Table of Contents



17.
    
    Subsequent EventOn July 8, 2005, the Company entered into an amended and restated revolving credit facility.
The new credit facility amends and restates the Companys $225 million revolving credit facility
entered into as of July 31, 2003, which was scheduled to mature on August 1, 2006. As compared
to the prior revolving credit facility, the new credit facility extends the maturity date to
July 8, 2009, provides for higher borrowing availability on certain collateral, and lower
borrowing and unused line fee rates, among other improvements.18.
    
    Summarized Combined Financial InformationWheeling-Pittsburgh Steel Corporation (WPSC), a wholly-owned subsidiary of WPC, 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 WPC and its present and future subsidiaries. WPSC and each subsidiary
guarantor of the Series A and Series B notes are 100%-owned by the parent guarantor, WPC.
Because the subsidiary guarantors are minor, individually and in the aggregate, the combined
consolidating financial information for WPC and the subsidiary guarantors has been combined
below in the column entitled WPC and Subsidiary Guarantors.
 CONDENSED CONSOLIDATING BALANCE SHEET
        June 30, 2005
        (Dollars in thousands)
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    2,727
    
    
    $
    
    
    
    $
    2,727Accounts receivable
    
    
    
    
    
    
    166,735
    
    
    
    
    
    
    
    166,735Inventories
    
    
    
    
    
    
    202,329
    
    
    
    
    
    
    
    202,329Other current assets
    
    
    17
    
    
    
    16,160
    
    
    
    
    
    
    
    16,177Total current assets
    
    
    17
    
    
    
    387,951
    
    
    
    
    
    
    
    387,968Intercompany receivables
    
    
    
    
    
    
    4,731
    
    
    
    (4,731
    )
    
    
    Investments and advances in affiliates
    
    
    308,814
    
    
    
    51,386
    
    
    
    (308,814
    )
    
    
    51,386Property, plant and equipment  net
    
    
    2,310
    
    
    
    507,019
    
    
    
    
    
    
    
    509,329Restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other non-current assets
    
    
    896
    
    
    
    34,318
    
    
    
    
    
    
    
    35,214Total assets
    
    $
    312,037
    
    
    $
    985,405
    
    
    $
    (313,545
    )
    
    $
    983,897Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    86,344
    
    
    $
    
    
    
    $
    86,344Other current liabilities
    
    
    292
    
    
    
    142,573
    
    
    
    
    
    
    
    142,865Total current liabilities
    
    
    292
    
    
    
    228,917
    
    
    
    
    
    
    
    229,209Intercompany payable
    
    
    4,731
    
    
    
    
    
    
    
    (4,731
    )
    
    
    Long-term debt
    
    
    
    
    
    
    296,968
    
    
    
    
    
    
    
    296,968Other non-current liabilities
    
    
    13
    
    
    
    150,706
    
    
    
    
    
    
    
    150,719Stockholders equity
    
    
    307,001
    
    
    
    308,814
    
    
    
    (308,814
    )
    
    
    307,001Total liabilities and stockholders equity
    
    $
    312,037
    
    
    $
    985,405
    
    
    $
    (313,545
    )
    
    $
    983,897
 14




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CONDENSED CONSOLIDATING BALANCE SHEET
        December 31, 2004- Restated
        (Dollars in thousands)
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    
    
    
    $
    31,198
    
    
    $
    
    
    
    $
    31,198Accounts receivable
    
    
    
    
    
    
    144,509
    
    
    
    
    
    
    
    144,509Inventories
    
    
    
    
    
    
    156,669
    
    
    
    
    
    
    
    156,669Other current assets
    
    
    16
    
    
    
    29,937
    
    
    
    
    
    
    
    29,953Total current assets
    
    
    16
    
    
    
    362,313
    
    
    
    
    
    
    
    362,329Intercompany receivables
    
    
    
    
    
    
    4,075
    
    
    
    (4,075
    )
    
    
    Investments and advances in affiliates
    
    
    291,625
    
    
    
    53,016
    
    
    
    (291,625
    )
    
    
    53,016Property, plant and equipment  net
    
    
    2,306
    
    
    
    485,002
    
    
    
    
    
    
    
    487,308Restricted cash
    
    
    
    
    
    
    12,502
    
    
    
    
    
    
    
    12,502Other non-current assets
    
    
    1,023
    
    
    
    39,308
    
    
    
    
    
    
    
    40,331Total assets
    
    $
    294,970
    
    
    $
    956,216
    
    
    $
    (295,700
    )
    
    $
    955,486Liabilities and stockholders equityAccounts payable
    
    $
    
    
    
    $
    92,434
    
    
    $
    
    
    
    $
    92,434Other current liabilities
    
    
    276
    
    
    
    116,429
    
    
    
    
    
    
    
    116,705Total current liabilities
    
    
    276
    
    
    
    208,863
    
    
    
    
    
    
    
    209,139Intercompany payable
    
    
    4,075
    
    
    
    
    
    
    
    (4,075
    )
    
    
    Long-term debt
    
    
    
    
    
    
    302,156
    
    
    
    
    
    
    
    302,156Other non-current liabilities
    
    
    14
    
    
    
    153,572
    
    
    
    
    
    
    
    153,586Stockholders equity
    
    
    290,605
    
    
    
    291,625
    
    
    
    (291,625
    )
    
    
    290,605Total liabilities and stockholders equity
    
    $
    294,970
    
    
    $
    956,216
    
    
    $
    (295,700
    )
    
    $
    955,486
 15




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
        Quarter Ended June 30, 2005
        Dollars in thousands
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    415,237
    
    
    $
    
    
    
    $
    415,237Cost of goods sold
    
    
    
    
    
    
    385,979
    
    
    
    
    
    
    
    385,979Depreciation and amortizaton expense
    
    
    
    
    
    
    8,423
    
    
    
    
    
    
    
    8,423Selling, administrative and general expense
    
    
    472
    
    
    
    15,105
    
    
    
    
    
    
    
    15,577Operating income (loss)
    
    
    (472
    )
    
    
    5,730
    
    
    
    
    
    
    
    5,258Interest expense
    
    
    
    
    
    
    (5,960
    )
    
    
    
    
    
    
    (5,960
    )Other income including equity earnings
of affiliates
    
    
    3,099
    
    
    
    3,093
    
    
    
    (3,099
    )
    
    
    3,093Income before income taxes
    
    
    2,627
    
    
    
    2,863
    
    
    
    (3,099
    )
    
    
    2,391Income tax provision (benefit)
    
    
    
    
    
    
    (236
    )
    
    
    
    
    
    
    (236
    )Net income
    
    $
    2,627
    
    
    $
    3,099
    
    
    $
    (3,099
    )
    
    $
    2,627
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
        Quarter Ended June 30, 2004  Restated
        Dollars in thousands
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    356,121
    
    
    $
    
    
    
    $
    356,121Cost of goods sold
    
    
    
    
    
    
    292,820
    
    
    
    
    
    
    
    292,820Depreciation and amortizaton expense
    
    
    
    
    
    
    7,512
    
    
    
    
    
    
    
    7,512Selling, administrative and general expense
    
    
    371
    
    
    
    16,066
    
    
    
    
    
    
    
    16,437Operating income (loss)
    
    
    (371
    )
    
    
    39,723
    
    
    
    
    
    
    
    39,352Interest expense
    
    
    
    
    
    
    (5,058
    )
    
    
    
    
    
    
    (5,058
    )Other income including equity earnings
of affiliates
    
    
    27,194
    
    
    
    4,653
    
    
    
    (27,194
    )
    
    
    4,653Loss before income taxes
    
    
    26,823
    
    
    
    39,318
    
    
    
    (27,194
    )
    
    
    38,947Income tax provision (benefit)
    
    
    (174
    )
    
    
    12,124
    
    
    
    
    
    
    
    11,950Net income
    
    $
    26,997
    
    
    $
    27,194
    
    
    $
    (27,194
    )
    
    $
    26,997
 16




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
        Six Months Ended June 30, 2005
        Dollars in thousands
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    814,745
    
    
    $
    
    
    
    $
    814,745Cost of goods sold
    
    
    
    
    
    
    741,937
    
    
    
    
    
    
    
    741,937Depreciation and amortizaton expense
    
    
    
    
    
    
    17,892
    
    
    
    
    
    
    
    17,892Selling, administrative and general expense
    
    
    952
    
    
    
    33,942
    
    
    
    
    
    
    
    34,894Operating income (loss)
    
    
    (952
    )
    
    
    20,974
    
    
    
    
    
    
    
    20,022Interest expense
    
    
    
    
    
    
    (11,540
    )
    
    
    
    
    
    
    (11,540
    )Other income including equity earnings
of affiliates
    
    
    11,679
    
    
    
    6,061
    
    
    
    (11,679
    )
    
    
    6,061Income before income taxes
    
    
    10,727
    
    
    
    15,495
    
    
    
    (11,679
    )
    
    
    14,543Income tax provision (benefit)
    
    
    
    
    
    
    3,816
    
    
    
    
    
    
    
    3,816Net income
    
    $
    10,727
    
    
    $
    11,679
    
    
    $
    (11,679
    )
    
    $
    10,727
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
        Six Months Ended June 30, 2004  Restated
        Dollars in thousands
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedIncome DataNet sales
    
    $
    
    
    
    $
    630,327
    
    
    $
    
    
    
    $
    630,327Cost of goods sold
    
    
    
    
    
    
    548,889
    
    
    
    
    
    
    
    548,889Depreciation and amortizaton expense
    
    
    
    
    
    
    15,201
    
    
    
    
    
    
    
    15,201Selling, administrative and general expense
    
    
    716
    
    
    
    30,759
    
    
    
    
    
    
    
    31,475Operating income (loss)
    
    
    (716
    )
    
    
    35,478
    
    
    
    
    
    
    
    34,762Interest expense
    
    
    
    
    
    
    (10,277
    )
    
    
    
    
    
    
    (10,277
    )Other income including equity earnings
of affiliates
    
    
    20,781
    
    
    
    7,665
    
    
    
    (20,781
    )
    
    
    7,665Loss before income taxes
    
    
    20,065
    
    
    
    32,866
    
    
    
    (20,781
    )
    
    
    32,150Income tax provision (benefit)
    
    
    (253
    )
    
    
    12,085
    
    
    
    
    
    
    
    11,832Net income
    
    $
    20,318
    
    
    $
    20,781
    
    
    $
    (20,781
    )
    
    $
    20,318
 17




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
        Six Months Ended June 30, 2005
        (Dollars in thousands)
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    
    
    
    $
    (30,683
    )
    
    $
    
    
    
    $
    (30,683
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    (39,617
    )
    
    
    
    
    
    
    (39,617
    )Construction of equipment using restricted cash
    
    
    
    
    
    
    12,502
    
    
    
    
    
    
    
    12,502Other
    
    
    
    
    
    
    1,594
    
    
    
    
    
    
    
    1,594Net cash used in investing activities
    
    
    
    
    
    
    (25,521
    )
    
    
    
    
    
    
    (25,521
    )Financing activities:Net borrowings
    
    
    
    
    
    
    24,584
    
    
    
    
    
    
    
    24,584Book overdraft
    
    
    
    
    
    
    3,149
    
    
    
    
    
    
    
    3,149Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    
    
    
    
    27,733
    
    
    
    
    
    
    
    27,733Net decreaase in cash and cash equivalents
    
    
    
    
    
    
    (28,471
    )
    
    
    
    
    
    
    (28,471
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    31,198
    
    
    
    
    
    
    
    31,198Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    2,727
    
    
    $
    
    
    
    $
    2,727
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
        Six Months Ended June 30, 2004
        (Dollars in thousands)
 ConsolidatingWPC and
    
    
    
    
    
    
    andSubsidiary
    
    
    
    
    
    
    Eliminating
    
    
    WPCGuarantors
    
    
    WPSC
    
    
    Entries
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    
    
    
    $
    15,776
    
    
    $
    
    
    
    $
    15,776Investing activities:Capital expenditures
    
    
    
    
    
    
    (60,211
    )
    
    
    
    
    
    
    (60,211
    )Construction of equipment using restricted cash
    
    
    
    
    
    
    40,142
    
    
    
    
    
    
    
    40,142Other
    
    
    
    
    
    
    731
    
    
    
    
    
    
    
    731Net cash used in investing activities
    
    
    
    
    
    
    (19,338
    )
    
    
    
    
    
    
    (19,338
    )Financing activities:Net borrowings
    
    
    
    
    
    
    (1,247
    )
    
    
    
    
    
    
    (1,247
    )Book overdraft
    
    
    
    
    
    
    3,110
    
    
    
    
    
    
    
    3,110Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    
    
    
    
    1,863
    
    
    
    
    
    
    
    1,863Net decreaase in cash and cash equivalents
    
    
    
    
    
    
    (1,699
    )
    
    
    
    
    
    
    (1,699
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    4,767
    
    
    
    
    
    
    
    4,767Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    3,068
    
    
    $
    
    
    
    $
    3,068
 18




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Certain sections of Managements Discussion and Analysis relate to future events and expectations
and, as such, constitute forward-looking statements. These statements often include words such as
anticipate, believe, estimate, expect, intend, plan, project, target, can,
could, may, should, will, would or similar expressions. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause actual results,
performance or achievements to be different form those expressed or implied in the forward-looking
statements. For a discussion of some of the risk factors that may cause such a difference, see
Note 16 to the Condensed Consolidated Financial Statements, the disclosures included below under
Quantitative and Qualitative Disclosures About Market Risk, and Form 10-K Part I, Item 1 for the
year ended December 31, 2004.
 OVERVIEW
 General  ®
   Bankruptcy and Reorganization
  Fresh Start Reporting
 19




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##### Table of Contents



Change in Accounting Method
 Recent Developments  Industry and Production
  ®
 Coal Supply and Coke Production
  20




---



##### Table of Contents



Joint Venture
 Credit Arrangements and Covenant Compliance
   21




---



##### Table of Contents



RESULTS OF OPERATIONS
 Quarter ended June 30, 2005 versus quarter ended June 30, 2004
       22




---



##### Table of Contents



Six months ended June 30, 2005 versus six months ended June 30, 2004
      23




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Loan Covenant Compliance
     Cash Flow from Operating Activities
 24




---



##### Table of Contents



Cash Flow from Investing Activities
  Cash Flow from Financing Activities
  Liquidity and Capital Resources
  $250 Million Term Loan Agreement
 25




---



##### Table of Contents



$225 Million Revolving Credit Facility
  26




---



##### Table of Contents



$40 Million Series A Notes
 20 Million Series B Notes
 10 Million Unsecured Note
  27




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##### Table of Contents



Collateral TypeTangible and Intangible Assetsand Joint 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 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. In addition, WPSC agreed to pay
Danieli Corporation approximately $2.58 million (of which
approximately $.85 million has been paid as of June 30, 2005, and
the balance of which is to be paid in progress payments as work on
the automatic roll changers project is completed, which is
expected in 2005) to complete the roll-changing project and for
rehabilitation, storage and other costs of Danieli Corporation.
 
    
    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 is due in August 2005. WPSC is currently
discussing an extension of this obligation due August 2005 with
the Ohio Department of Development.
 28




---



##### Table of Contents




    
    Loan agreement between WPSC and the State of West Virginia. In
connection with WPSCs repayment of a $5 million loan from the
West Virginia Development Office, WPSC entered into a $6.5 million
loan agreement with the State of West Virginia. The loan has a
five-year term due August 1, 2008, and bears interest at a rate of
approximately 5.6% per annum.
  CONTRACTUAL COMMITMENTS
  2005(from
    
    
    2006 to
    
    
    2008 toTotal
    
    
    June 30th)
    
    
    2007
    
    
    2009
    
    
    ThereafterLong-term debt
    
    $
    321.0
    (1)
    
    $
    24.2
    
    
    $
    51.8
    
    
    $
    170.1
    
    
    $
    74.9Capital leases
    
    
    7.7
    (2)
    
    
    0.5
    
    
    
    1.7
    
    
    
    1.7
    
    
    
    3.8Long-term operating leases
    
    
    14.9
    (3)
    
    
    1.7
    
    
    
    4.8
    
    
    
    4.0
    
    
    
    4.4Other long term liabilities:Steelworker Pension Trust
    
    
    12.4
    (4)
    
    
    2.0
    
    
    
    7.8
    
    
    
    2.6
    
    
    
    OPEB
    
    
    20.9
    (5)
    
    
    1.8
    
    
    
    8.6
    
    
    
    10.5
    
    
    
    Severance
    
    
    9.5
    (6)
    
    
    3.7
    
    
    
    4.3
    
    
    
    1.4
    
    
    
    0.1Coal miner retiree medical
    
    
    4.5
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.5
    
    
    
    3.4Workers compensation
    
    
    31.0
    (7)
    
    
    3.4
    
    
    
    13.8
    
    
    
    13.8
    
    
    
    Special bonus payment
    
    
    10.0
    (8)
    
    
    5.0
    
    
    
    5.0
    
    
    
    
    
    
    
    Purchase commitments:Oxygen supply
    
    
    67.8
    (9)
    
    
    3.6
    
    
    
    14.4
    
    
    
    14.4
    
    
    
    35.4Electricity
    
    
    64.8
    (10)
    
    
    2.4
    
    
    
    9.6
    
    
    
    9.6
    
    
    
    43.2Coal
    
    
    24.0
    (11)
    
    
    4.8
    
    
    
    19.2
    
    
    
    
    
    
    
    Coal
    
    
    47.6
    (12)
    
    
    28.6
    
    
    
    19.0
    
    
    
    
    
    
    
    Capital commitments
    
    
    27.1
    (13)
    
    
    27.1
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    663.2
    
    
    $
    108.9
    
    
    $
    160.5
    
    
    $
    228.6
    
    
    $
    165.2
 
 1.
    
    Represents scheduled principal payments on existing indebtedness.2.
    
    Represents scheduled principal payments on existing capital lease obligations.3.
    
    Represents an estimate of expenditures to be made under existing long-term operating
lease agreements.4.
    
    Amount represents estimated payments to the Steelworkers Pension Trust, pursuant to our
labor agreement with the USWA, through the end of the labor contract, which expires on
September 1, 2008.5.
    
    Amounts reflect our current estimate of corporate cash outflows for other post employment
benefits and include the impact of assumed mortality, medical inflation and the aging of the
population. No estimate has been made beyond 2009.6.
    
    Amount represents payments under employee buyout program. 650 bargaining employees
elected buyouts that extend through 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 2004 and anticipates payment of
approximately $6.9 million per year. No estimate has been made beyond 2009.8.
    
    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. Payments of $5.0 million are to
be made on December 15, 2005 and 2006. 
 29




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##### Table of Contents



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 $0.4 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. At June 30, 2005, a maximum termination payment of $33.4 million would
have been required.11.
    
    In 2004, we amended our take-or-pay contract to purchase coal each month to a minimum
monthly charge of approximately $0.6 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. At June 30, 2005, a maximum termination payment of $3.8 million would have been
required.12.
    
    In 2005, we entered into contracts to purchase 40,000 tons of coal each month from
August 2005 through December 2005 and up to 20,000 tons of coal each month from August 2006
through May 2007 at a price per ton approximating the prevailing market price in the first
quarter of 2005.13.
    
    Amounts reflect contractual commitments for capital expenditure as of June 30, 2005. Planned Capital Expenditures
 
    
    $82.3 toward completion of a rebuild of the No. 8 coke battery, which is expected to extend the service life by 12 to
15 years, and is expected be completed in mid-2006 (see discussion below);
 
    
    $14.3 million for installation of hot strip mill automatic roll changers at our Mingo Junction facility, expected to
occur in 2005; and
 
    
    $9.0 million for cold mill improvements at our Allenport facility, expected to occur in 2005 and 2006.
     VEBA TRUST AND PROFIT SHARING PLANS
  30




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##### Table of Contents



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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##### Table of Contents



Profit Sharing Plans
    32




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Other Postemployment Benefits (OPEB)
   Asset Impairments
 33




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##### Table of Contents



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
  Interest Rate Risk
  Credit Risk
 Foreign Currency Exchange Risk
 
 Item 4. CONTROLS AND PROCEDURES
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PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 6. EXHIBITS
 (a) Exhibits
 Exhibit No.
    
    Description31.1
    
    
    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)  37